V-mart Retail Ltd (NSE: VMART) Q4 2025 Earnings Call dated May. 05, 2025
Corporate Participants:
Lalit Agarwal — Managing Director
Anand Agarwal — Chief Financial Officer
Analysts:
Jay Gandhi — Analyst
Sameer Gupta — Analyst
Ankit Kedia — Analyst
Tejash Shah — Analyst
Lokesh Manik — Analyst
Bhargav Buddhadev — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Vmart Retail Limited Q4 and FY ’25 Earnings Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. I now hand the conference over to Mr Jay Gandhi from HDFC Securities. Thank you, and over to you, sir.
Jay Gandhi — Analyst
Yeah. Thanks, Steve. This is Jay from HDFC Securities. Welcome to V-Mart Retail’s Q4 FY ’25 earnings call. From the management at V-Mart, we have Mr Lalit Agarwal, Managing Director of V-Mart Retail; Mr Anand Agarwal, CFO of V-Mart Retail. Before we start, we would like to point out that some of the statements made in today’s call may be forward-looking in nature and a disclaimer to that effect has been included in the earnings presentation. Kindly note that this call is meant for investors and analysts only.
With that, I hand over the call to you, for your opening remarks.
Lalit Agarwal — Managing Director
Good morning. Good morning, everyone. Thank you for being in the call early in the morning. Sorry for taking keeping this call up during the market hours. But yes, it was a weekend before we announced our result. So we had to do a call the morning. But anyway, a good healthy signs being visible. We are able to see continued growth in the market from the from the retail perspective in the Tier-2, Tier-3 cities largely. We’ve also seen some upswing in the Tier-1 markets as well because of the fashion changes which is being visible. But otherwise economy looks — looks little confused. I mean, not that it is very low, but there is lot of you and cry over the effect of the tariff in US and stuff. Media is covering a lot of those stuff. So consumer is a little confused in what kind of decisions should they take, what is the impact, which is going to come on. But over the period it is being seen positive. So we don’t see a large impact coming on in our consumer market, in our consumption market in the smaller town. So overall industry has been doing fairly okay and we see growth coming in for most of the value retailers. The bigger retailers or the branded retailers still continue to show a little — little neutral or a negative signs as well. The consumption at that level seems to be little impacted.
Otherwise, the store openings from the competition side has been fairly, fairly agile. They have been very fast, they’ve been very — there’s been a lot of competition, lot of stores which are getting opened up. Everybody has some plans to open up some retail stores in the markets where we exist or which are likely market for us to open up new stores. So we are seeing a lot of dynamism, but yes, we are also seeing lot of movement from unorganized to organized. Consumers are definitely believing more in the organized frame. So the organized retail percentage is moving up and that is being shared by all of these retailers which are opening stores in those markets, including us.
So that’s a good time for organized retail in India. Okay. And then — but that could be a little — little detrimental for the consumers for the smaller what we call the mom pop stores and those people who try to sell from those traditional mode of selling. So — but yeah, I think overall the fashion element has gone up. The consumption also is getting derived from that particular side. Youth is the key driver of consumption now. We see — we are seeing a lot of movement in that. And we have also seen a lot of work being done at V-Mart in trying to attract the young audience, the Gen Z audience, which we have been focusing on. So we have relatively we used to receive around 20% 23% of youth, which is under 25% and now we see that has gone up to 30% to 33%.
So that’s a positive sign that is also a sign that we are being accepted by the young, young crowd and that is the largest population, which is becoming more bigger decision-maker and more bigger consumption maker. So that aspect is very, very, very highly being focused on. We believe that they are just not the — not the — not the consumers, but they are also decision-maker for the family because they are the guys who — the people who have more information versus the elder ones. So that is how the whole consumption is tweaking and that is where we believe that being a content which company being a company with an omnichannel, with a digital presence being with the presence in the store and the kind of variety and the kind of products that we display and highlight. We need to — we need to be a little more impressing to the youth.
So that is where our focus is. That is our entire merchandising team, the design team, the sourcing team, they are getting aligned the whole technology pieces, trying to understand an analytics pieces, trying to understand a little more. So we are building those infra. We are trying to align and integrate these teams together to create a better outcome. And that is — there are lot of stuff which are going on, there are lot of stuff which are on the planning piece, a lot of integration, a lot of automation is something also that we are looking-forward to. So overall business seems to be good. Vendors, vendor community is also growing. The manufacturing capabilities are also becoming little larger, people are investing in the manufacturing.
People are investing in apparel manufacturing as well and which is a positive sign. And also there is a large opportunity of exports. So that could also become a little bit of threat if there is a larger opportunity of exports for Indian manufacturer. So there is — there is one risk that we see that the amount of amount of manufacturers available — good manufacturers available in the market could be a little constrained going-forward if continued over expansion or overinvestment doesn’t happen in this particular sector. So — but yeah, that’s a good sign for apparel and textile industry in India and that is what we are all aiming for. So overall, I think our monsoon seems to be — seems to be looking good till now. We believe the farm income and then the rural income is supposed to grow.
There is going to be more employment is definitely going to be more economical betterment or better consumption that the consumers would have and that is what we are expecting. So we believe that the rate of growth that we have seen for the last year should continue even forward and that is what we are expecting. There is definitely some shift of festivals. Last year, we saw eat coming in the March. This year in the first-quarter, we don’t have an eat. So the April month was not — month-on-month — year-on-year was not great, but period-to-period what we compare to post, we are seeing some growth, continued growth coming in. So that is what we will have. We will definitely focus on strategizing, building the — building the new stores, focusing on adding similar according to 13% to 14% of retail area — net retail area in the coming year.
We may be a little more aggressive if we get good property. So we are looking-forward to all of those. We still continue to be very economical in our property selection, very conservative in our selection as well as the rentals that we pay for those properties. So we don’t want to make mistakes. We are trying to cut-down those mistakes. We are trying to learn from our past mistakes because we have closed down a lot of stores, we closed down some stores in last year as well. We are caller list of the learnings that we have and how do we — how do we not make those mistakes and then open those stores, which have more rate of success. We continue investing in our team. We believe the team is very, very important in the scalable growth of the business and then we see a lot of opportunity, large opportunity coming in.
So we have also — we had issued a big ESOP plan, so that is where you would see some expenses coming in. And we believe in that — we believe in that strategy that we need to partner with our people, we need to really partner with our vendors and how do we really create that ecosystem, which can create value for everyone. So that is how we are trying to grow the organization and that is the whole philosophy. So you see some expenses coming in on that account as well. But that remains our focus to create efficiency in our system, bring in automation, bring in the scalability aspects wherever required, whether it is in terms of process building or in terms of team buildings and integrating with technology.
So I think that is where our large part of our time management’s bandwidth and senior management bandwidth is being devoted. The Board is very actively looking into all of these areas. We continue to be very government oriented company. We still continue to also invest in the ESG measures and then the social measures and then environmental measures. So we will definitely want to be a sustainable and a little more ethical retailer. That is how we are based. But I’ll hand over to Anand has lot to explain and tell you. So over to you, Anand.
Anand Agarwal — Chief Financial Officer
Thank you,, and good morning, everybody. Q4 has been a fairly strong quarter with good profitability, reflecting both strategic execution and improving consumer traction in almost all our core markets. Broad-based improvements across both V-Mart as well as Unlimited led to an 8% overall like-to-like growth with Unlimited actually registering a much stronger 10%. This quarter also faced a lot of weather-led disruptions with winters tapering off earlier-than-expected after a delayed onset. So January and February saw much softer sales, but festive demand around holy and an early in March provided a good recovery tailwind.
Overall, this was the sixth consecutive quarter of sustained growth, reflecting the continued impact of the systematic changes introduced in-product upliftment, particularly in terms of assortment, design, quality and replenishment. Overall revenues grew by 17%, reflecting internal efficiency improvements and benefits coming in from benefits from the strategic closure of the underperforming stores of the previous year as well as the changes done on the product side. The sales per square feet and the sales per store, both the matrices continued to improve in-line with the SSG. Apparel ASPs degrew marginally, primarily due to lower winter and higher summer seasonal mix in the quarter.
There is no further correction planned in ASPs, which should remain in the similar range going-forward, except for any seasonal mix-related changes. And on the margin side, the total margins at 33.1% was 140 bps higher than last year, mainly due to the higher full-price new merchandise sell-throughs from an early summer launch despite a 47% lower revenue contribution from LimeRoad Marketplace business, which flows in 100% into total gross margins. Marginal drop-in provisioning against inventory resulting from better aging profile also helped the margins to grow stronger. The smaller winter window led to lower discounted sales this year, which may lead to slightly higher winter liquidation next year, but nothing substantial. Going forward, I believe the margin should not grow any further, but may remain largely range-bound as we stand ready-to-grow market-share in core growth categories.
Thank you very much. Moving to expenses. At an overall level, total expenses were 130 bps lower than last year, in-line with the 3% reduction in-quarter three. This continued reduction is due to the operating leverage arising out-of-the sustained growth, the reduction in LimeRoad marketing expenditure and also the favorable impact of closure of the unprofitable stores done in the previous years. The manpower cost for the quarter was up by 45%, mainly due to the increased ESOP expense and increased sales incentives, which were in-line with sales growth. The previous year in fact had a reversal of ESOP related expense and hence the growth in the manpower cost in the current year optically looks higher.
With a normalized base, the ESOP and therefore the employee expense should now get normalized going-forward. ESOP expense for the quarter accounted for almost 1% of revenues and 0.5% of revenues for the full-year. The other expenses declined by 10% due to decline in the LimeRoad business and the consequent logistics cost-reduction in marketing cost for both online as well as offline businesses and other efficiency improvements apart from the benefits in — coming in from L2L. Coming to EBITDA, for the core business, EBITDA for the quarter came in at 9.5%, which was 170 bps higher than last year and unlimited at 10.8%, which was also 170 bps higher than the previous year. For total V-Mart, including the 43% reduced loss from LimeRoad, the total EBITDA for the company came in 69% higher at 8.7% for the quarter.
Without the ESOP expense, the EBITDA actually stood at 9.6% for the quarter and 12.1% for the full-year. Thank you. Moving on to the change in the accounting for operating leases and the resultant exceptional gain. During the quarter, we took — we undertook a reassessment of our lease term estimates in accordance with IndAS 116, which is for leases, reflecting a strategic view of the store portfolio. As a result of this excise, the company recognized a net exceptional gain of INR24 crores, which has been disclosed separately in the financials. This is a one-time non-cash accounting gain and supports the strategic plans for sustained higher new-store growth.
Going-forward, this change shall result in roughly 50% lower accounting losses for a new-store in the first-half of its entire lease cycle versus the old practice. This change does not impact the pre-IndAS P&L in any way, which we shall continue to share as in the past in our investor decks going-forward as well. We have provided a detailed note and reconciliation of the pre and post impact on the P&L in the investor presentations for reference. Additionally, I’ll be happy to take-up any additional specific queries related to this separately one-on-one by pre-appointment after the call-in the interest of time for the call. Thank you. Moving on to working capital. The quarter closed at INR987 crores of inventory, which was at 102 days. There has been a slight buildup in the inventory at year-end as we prepare for peak summers and wedding season and also in preparation for new-store launches planned for Q1 in the current financial year. Overall, the inventory remains healthy.
There is a lot of work which has been happening on the product side, which includes technology-led improvements in designing, sourcing, quality-control and replenishment cycles, leading to overall improved sell-throughs and thereby better inventory health. Our capex for the year was at INR122 crores, which included spend on 62 new stores and the upgradation of existing stores. We have been pressing the pedal on renovations of the existing stores with better results. Thank you the working capital has increased temporarily, mainly due to inventory upstocking, but remains in a comfortable range.
Increase in working capital led to a negative net free-cash flow of INR31 crores for the year, despite an improvement of 38% in the overall cash conversion cycle during the year. There is no long-term debt on the books and we remain comfortable on the cash front with ample working capital limits available to leverage future growth, which will be financed through internal accruals. Coming to the store expansion and the outlook, we opened 13 stores this quarter and 62 YTD with nine closures. The guidance for NSO remains at the same around 12% area addition every year, net of 1% or 2% mistakes that may still need closures every year. We celebrated our 500 store opening in the first week of April and as on-date, we now operate a total of 503 stores, having opened six stores — six new stores in the last one month.
So that is all from my side and I now request the moderator to open the house for questions. Thank you.
Questions and Answers:
Operator
Thank you. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star N2. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sameer Gupta from India Infoline. Please go-ahead.
Sameer Gupta
Hi, everyone. Good morning and thanks for taking my question. Sir, firstly on LimeRoad. So there was an expectation that this will be a on EBITDA breakeven, you know at exit of FY ’25. But last 3/4, the absolute amount of losses here at around INR6 crores to INR7 crores have remained steady. So if you can just update the outlook on this going-forward as to when do you expect LimeRoad level EBITDA level breakeven?
Anand Agarwal
Yeah. Hi, Sameer. Hi, sir. So LimeRoad, I think we have talked in the past, in the last quarter as well. We expect the LimeRoad business to continue to build towards the omni omnification for the Vmart setup and thereby it is going to continue to be in a buildup phase for some time, while we still keep on reducing the e-marketplace exposure. And thereby, as a result, we will see continuous improvement in the operating result for, but we are not anticipating or not saying that we will be breaking even in that business in the current year also. So there will be some amount of marginal losses, but they will continue to keep coming down every quarter as we progress. So the last year losses were almost 55% lower than the previous year losses and we also anticipate for FY ’26, while it may not be a breakeven business for the full-year, but it will remain in a very comfortable range of definitely less than 50% of what — or roughly around 50% of losses that we did this year.
Sameer Gupta
Okay. Got it, sir. Got it. This is helpful. Secondly, sir, I mentioned you on employee cost now ESOP of around 161 million this year, do you expect this to be a recurring expense going-forward because this pertains to ESOP that have this year? I’m sure there will be more westing or the — if there are some more vesting that comes in next year. So just from a modeling perspective, is it a part of a recurring expense or it was more like a one-time expense for FY ’25?
Anand Agarwal
So some part of this expense is one-time, because this was the penultimate year for the first lot of performance-led ESOP vesting, which was not, let’s say, provision for in the previous year because of non-performance. But this year there was some amount of expense out-of-the INR16 crores, which was one-time. But largely you should have around INR8 crores to INR10 crores of expenditure on ESOP going-forward, which is again coming from the actuarial valuations. So very difficult to pinpoint or exactly quantify, but there would be some amount of ESOP expenditure going-forward as well.
Sameer Gupta
Okay. Got it, sir. And one last question if I may squeeze in. This is more from a strategic perspective. Now, sir, the whole group of value fashion, which is linked to Tier-2, 3 cities, which is your cell, Vishal, V2, Style, Bazaar, all of which we track. All of these seem to be doing well. Now in your experience, what is the driver here? Is it more like overall, in general, the Tier-2, Tier-3 space, the economy is more buoyant, is it some big retailers who have shut shop or are consolidating, government spending has gone up ahead of crucial state elections or is it reverse migration, less number of people are now migrating to larger towns or anything that you can point out? And how long do you think this momentum can continue?
Lalit Agarwal
So I think the momentum, as I said in my opening remarks as well, this is just not momentum driven by economic. It is a major shift also happening from unorganized, which is the traditional form of retail to a little more formal retail, which is organized retail. So that movement is continuing happening because there is definitely a lot of exposure of retailer, which is happening in these towns and cities, there is definitely a lot of new varieties, new ways of retail, new ambience which is creating created, great comfort which is being given there is real value which is being delivered to the consumers.
So consumers are now finding it very, very convenient to shop from organized retail and that continues. And I don’t think there is a major shift in some economical perspective or this major shift in a particular retail getting closed up or there’s no — there is no such thing which is visible. But largely, I think this is an informed market, as I said, largely driven even by the youths of India who have more information gigs and then they have larger information on their mobile handset now. So they understand where to shop from, where to go and shop to.
And all of these retailers which are opening up shops in these particular markets are creating a better percentage of organized retail and that is what has moved from 15% five years before to now almost 30% 35%. In certain markets, it goes above 35% as well.
Sameer Gupta
Got it, sir. That’s all from me. I’ll come back-in the queue. Yeah. Thank you.
Operator
The next question is from the line of Ankit Kedia from PhillipCapital. Please go-ahead.
Ankit Kedia
Sir, my first question is on manpower. If I look at your store, manpower per store is significantly higher versus some of the peers in Value fashion. Even if I adjust for the store size, given the technology interventions we are doing, do you think you can do with lower manpower in the store while also understand customer experience, some of your peers, the staff is not talking to the customers is only for replenishment, while in your case, they help the customer, but is there a bridge between the two where you can lower the number of employees per store?
Lalit Agarwal
So Ankit, we definitely believe in a little differentiated retailing and I do understand. There is a form of hyper market retailing and then there is a form of value fashion retailing and fashion retailing in general. And we believe our consumers are still a little more semi-literate, they don’t really understand and they get a little confused when they come to a larger store, they don’t understand too much of signages, they don’t understand too much of products. So people have to assist them both for styling as well as the — as well as making them understand their need or getting evolved to their needs. And people still are not very organized, consumers are not very organized in terms of looking at the product, the kind — the way they — the way they handle the product, the way they handle the stacks or handle the hangers in the store.
So people are — people are a little more disorganized in our segment and we believe we need to give a very good service and we believe that we need to definitely provide them with assistance and make the store look better and good every time. It is also a function of the store size and the sales per square feet that the percentage of cost looks. But yes, there is an opportunity. We are definitely trying to explore as an opportunity. It is just not on the front-end retail manpower side, but also on the overall manpower that how do we bring up the productivity, how do we generate higher productivity from the same resources? That is where we are trying to work on. But yes, largely, this will continue as an expense in the front-end. We may not be able to get compared with those little more hyper retail of the market.
Ankit Kedia
Sure. Sir, my second question is regarding your warehouse. Given that over the next two years, we could add 130, 140 stores. Do you think at the back-end at the warehouse now, you know the first leg of the warehouse was done two years back. Now over the next two years, you need to expand your warehouse further for 600, 650 stores over the next two years and we can see some capex come next year for the warehousing?
Lalit Agarwal
Yes, there will be some incremental investment which has to go in because we did not prepare ourselves for the next seven years. We definitely prepared for the first three years and there will be an incremental capex which will go on, but not a massive capex, but yes, small capex because the area that we built was around 5 lakh square feet. The opportunity to build an area in that particular warehouse land is almost around 8 lakh square feet. So we may build it maybe after one more one and a half year. But yes, within the warehouse also, there are few automation investments, which will — which will get added on. So there will be some capex and some regular capex, which will also come in the next year.
Ankit Kedia
Okay. And my last question is from Anand. Anand, this time, if I look at from a post-Inders perspective, unlimited margins are higher than Vmart EBITDA margins. On basis, if you could just say, are the unlimited margins continuing to be high as Vmart or they have reached the Vmart levels and they can sustain or get better from here?
Anand Agarwal
Thank you. So Ankit, while the EBITDA margins for Unlimited are getting better, but they are still not — still not as good as the V-March margins, but as I have been stating for the last many quarters, as we grow and as we include or have more number of unlimited stores — new stores in Southern territory, we will continue to build-up or improve the EBITDA margins for the Unlimited as a chain. The primary reason — underlying reason has always been that the legacy stores roughly around 51, 52 in numbers. There the operating efficiency or the sales per square feet is still marginally lower than the entire chain and the rental costs are still slightly higher, but they are not unprofitable stores, they are profitable stores and we keep continue to build-on them. But as we increase the ratio of the new stores, which perform at much higher profitability levels with lower rental cost, the entire chains profitability will keep on getting better and slowly equate the numbers in the coming years.
Ankit Kedia
Sure. That’s helpful, Anand. Thank you so much. I’ll come back-in the queue. Thank you.
Operator
Thank you. The next question is from the line of Tejas Sah from Avendus Spark. Please go ahead.
Tejash Shah
Hi, thanks for the opportunity. Sir, first question is, what would be the store expansion target for the current fiscal year and what would be the composition will we go deeper into the existing market or will we add new states or new geographies for the year?
Lalit Agarwal
Just as I said in my opening remarks, we would continue to add between 30% to 15% of retail area in our existing base and that could — that could turn out to be around 65 stores or something in this particular area. And we would definitely — we are almost — we have almost reached all the states in India. We would want to penetrate into most of the territories. So we’ve divided our geography into five different zones and each zone there is a target which is issued. So the zones are, as you know, we’ve got a northern zone, we’ve got a UP as a zone, we’ve got Bihar as a zone, you’ve got South as a zone, you’ve got East as a zone, East and Northeast.
So there is — these general team has got their targets. They will penetrate. We’ll penetrate into the existing cities as well as the — as well as the new towns. So some — almost 30% to 35% of our new-store openings should also come from the existing cities where we see a lot of opportunities for adding up more stores. So that is how that is how we would focus on. We will continue to focus little more on the Southern India part as we see more opportunities in that particular market. So we will continue. There are some markets in Southern India like Tamiladu and Kerala, which are looking good. We will continue to invest in those markets, plus there are other markets in the northern — northern zone what we term as it includes parts of and Gujarat and even Pradesh,.
We’ve not been too much — we don’t have too much of penetration in these states, but we want to continue — we want to expand to these markets a little more. And then also continue our expansion in both the strong dominant territory, which is UP and where we still see a lot of opportunity in this market.
Tejash Shah
Okay. Got it. Sir, second, gross margin expansion was strong this quarter and then you have indicated in very strategic intent in past to moderate it. Obviously, on Y-o-Y basis, it actually evens out, but just wanted to know was there an ease effect in seasonality for the quarter where we — where the discounted sale was not there and hence gross margin reflected strongly?
Lalit Agarwal
You are absolutely right. Has also mentioned in his remarks, but there has been one bad winter in this particular quarter where the whole January and the February month where we do sell lot of winter inventory and discounted winter inventory also gets liquidated. And that also got affected because of the erratic weather and it was early summer which came in. And so the summer — incidentally, we launched our summer collection very fast. So we got a very good a full-price sell-through of summer inventory, which also increased the margin and even the e-be factor, which has got and both Holy and got that also added on to the added to the gross margin. But yeah, it is one-off the case. But overall, we haven’t increased our margins.
We haven’t seen any increase in our margin. We would definitely still want to focus more on liquidating the old inventories or the inventory, which is still not discarded as a seasonal inventory. So which we feel against what we targeted, there has been a little higher leftover of the winter inventory. So that can — that will get discounted in the next year.
Tejash Shah
Okay. Sure. And sir, lastly on ESOP plan. So just wanted to know, are there any specific performance target linked to it? And then is the structure geared more towards incentivizing retention or performance? The question is also because we are hearing from other retailers that there is a very genuine squeeze of quality manpower in retail now. So if you can club the thoughts on that and share your insights there.
Lalit Agarwal
Yeah. So I think Tejas, one, we’ve got a — we’ve got this ESOP policy that we have is a long ESOP policy. Earlier, we used to have a term-based or tenure based ESOP. And in the last four years back, we passed the resolution from our shareholders, we would have a performance-linked ESOP and that is where we had issued a four-year performance like ESOP, which is largely driven from a goal or target of at least 20% growth year-on-year that we should target. And then 90% achievement of that, we’ve got some process of issuance of ESOP, where we got more details in our Annual General Report. But largely this is a philosophy that the organization has been believing in that we always believe that our people are our biggest asset and they should also create similar wealth as the shareholders create.
And then they should be a part of our ecosystem and they should also become part of our investor — as a part of our shareholder team. So that is what our philosophy is. So there are more than 80 people who are covered under the ESOP scheme. There is a large team which is there. Most of this team is also a old team which has been existing there. We just don’t — we don’t fear because it’s not coming out-of-the fear that the people will lose other people, but it is coming more out-of-the feeling that we all should create value and we should all create even wealth in for the team going-forward. So that’s the whole perspective. But yeah, on any financial side, maybe Anand can help you. And can you answer Tejesh’s question?
Anand Agarwal
Yeah. Yeah, Tejesh, I think Lalit exactly said that. So this is purely a performance-linked ESOP scheme. So as I have mentioned, this is again linked to the performance of the company and therefore the contribution of the employees. So, and it is spread over four years. So in year-one, you get certain ESOPs and year two, you get certain ESOPs and so on and so forth and it’s a rotating cycle for the policy. And more details you can get on to a separate call, but there are more details also available in the annual report.
Tejash Shah
Thank you. Sure, sure. Thanks and all the best for coming quarters. Thank you.
Operator
Thank you. So before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Lokesh Manik from Capital. Please go-ahead.
Lokesh Manik
Yeah, hi. Good morning to the team. My first question was on SSG growth. So if you can share your vision in terms of how do you expect what are the growth drivers going-forward because we are mostly volume focused, our philosophy is volume focused. So do you see footfall and conversion driving SSG growth or do you see more category addition on the side to the increase or within apparel into more subcategories, how are you seeing SSG growth going-forward?
Lalit Agarwal
Yeah, Lakesh, good question. Largely, we believe that we definitely have a two, three mechanism of bringing in additional revenue or the growth. One, definitely, we believe that we should continue the repeat consumers inflow in the market in the store. So our repeat sales or repeat consumer sales is almost in VMart, almost 70% of our total sales. So that is the biggest cohort of consumers who come back and shop from our stores. Two, we believe there’s definitely had to be some new inflow of consumers.
There are more consumers in the market. There are more consumer — there are more newer consumer set of consumer which are coming in large from teenage group or from the from the young group. So we will definitely have more, more consumer — more consumer walking into our store, but also we would believe that it would also — we should also try to increase the frequency of our existing consumer and have a little larger bill values of our consumer and larger bill valued come both from — both from selling or contributing more to their wardrobe and also adding certain newer categories or certain newer items like maybe we just initiated and launched in some stores, our beauty segment and our jewelry — artificial jewelry segment, which has seen some good traction. We also launched the variable segment, which is the Smart watch and then maybe speakers and they also have shown some promising signs.
So some growth could come from that particular side, but which is going to be very, very small. But larger growth will come from bringing in the newer generation consumers, which is the Gen Z consumer and that is where we grew from our base of 22% to 32% now. And that is where we would continue to focus on and that should drive our same-store sales growth.
Lokesh Manik
Okay. Great. Likely, sir, just a clarification on this. So hypothetically, if we were to see much higher-growth in non-apparel in the variables and the beauty and the artificial journey. Would you still stick to 80% apparel portfolio mix or you would be willing to be a little agilant, let that come down to 70% or how do you see that going-forward?
Lalit Agarwal
It won’t be so much of shift because these are — I mean, we Call-IT as a non-apparel, but these are even fashion items. So we consider them as fashion and these are fashion, accessories and fashion additional items. So I don’t think it is going to be a major shift. But yes, there could be a 2% or 3% shift which can happen over the period of time.
Lokesh Manik
Okay. Great. My second question was for Anand. Anand, so from going-forward from now on after the lease adjustments, would the pre and post PBT be the same?
Anand Agarwal
No,, the pre and post PBT will not be the same. There will still be an impact of India’s adjustment the change which is — which will happen is that the significant delta between the two and post-Indas that used to be roughly around INR60 odd crores or which will keep on growing had the policy changes not happened will continue to come down or will come down materially. So for a new-store, roughly the expenditure that we would book in a P&L would come down by almost 50%.
But for a continuing store because there is multiple stages of the lease contracts, so it is very difficult to quantify at this stage. But because we’ve been following the regime, India’s regime for the last seven years, there are various stages of the unwinding, which will happen. But suffice to say that the pre-IndAS and the post-IndAS EBITDA will not change, but the and post-IndAS PBT will definitely still have some difference, but it will not be as stark as it used to be.
Lokesh Manik
Okay. Great. And just last question on the GST credit accumulation of about INR100 crores, which was last year FY ’24 number. I don’t know the number this year. But what is the strategy to utilize that? I mean that’s an unused fund left at the government level, which then requires you to take debt to fund the cash-flow situation.
Anand Agarwal
So that’s a very, very pertinent question,, very, very good question and that remains a challenge and that remains a challenge for a growing business. And in fact, in this year, there has been an added complexity being added by the government in terms of the reverse charge on rentals for you know, smaller landlords as well. So that balance continues to grow. There is a net addition of probably INR14 crores or INR15 crores in this year as well, almost INR20 crores this year. So that remains a challenge. We are identifying certain areas wherein we can mitigate some part of that challenge, but very, very difficult to, you know, surpass this given these off fares that we currently are in.
Lokesh Manik
But Anand, do you see this if you grow the non-apparel, this arises because of the GST difference between expense and sales. Sales is at 5% because of your apparel and expenses are at 18%. So these non-apparent category can compensate for this, do you see that happening so you can get — and plus you can grow the non-apparative side also.
Lalit Agarwal
So this happens — this happens largely because you keep investing into newer store expansions as well. All the new-store expansion, which we do, which is the capex investment and all of these capex investment also has very large portion of GST, which is almost towards 28%, 80% to 28%. And that whole accumulation of asset GST credit is something which creates a larger part of that credit dues which we have. So for practical purposes, I would call-out that we need to include that as a part of our capex investment because EAP, I mean, we may not be able to get back this money from the GST authorities and it will be very difficult for growing organization to — which is always increasing in inventory as well as increasing in the assets to actually this particular problem. But if you spend 18% GST products, then you can take an input tax credit. No, but we still have the 18% input credit that you have. So it will be difference will be only small margin. Understood. Understood. Fair enough. Fair. That’s it from my side. Thank you so much. Thank you. The next question is from the line of Barga from Ambit Asset Management. Please go ahead.
Bhargav Buddhadev
Yeah, good morning, team and thank you for the opportunity. Sir, my question is on the average transaction size. So if you look at the transaction size value, it’s flat on a Y-o-Y basis at close to about INR97. Is it possible to sort of see an increase in this amount going-forward?
Lalit Agarwal
The average transaction value per is — I understand what you asking. But you know for us the average transaction size as we are going-forward and as we see more-and-more youth coming into the market and into the store, then generally, we have seen that you don’t do a bigger size basket. They come and buy one-piece, one odd piece. Their frequency of coming in is much larger, but their number or the build size is a little lower and that is what we are also focusing on. So we may not be able to immediately transact the higher — higher, higher ABV, ABS.
So we still believe that we want more consumer to come in multiple number of times and check-out the inventory regularly. And we are also focusing more on fast fashion. We are focusing on larger drops at the store at every week level. So we do believe that consumer will want to come back and want to shop again and again. And that is what we are trying to promote, not promote too much of overbilling, overbilling by the consumer at one point of time.
Bhargav Buddhadev
So I mean in terms of cross-selling, we don’t believe that in our stores, there is a potential for cross-selling other categories.
Lalit Agarwal
Definitely there is and that is how you’ve got almost four there are four pieces in the basket that we have and that definitely is an outcome of cross-category sales. But as I said, going-forward, if I ask — if I say that, okay, we’ll be able to grow this ABS or the average bill size a little more higher, it is still difficult. It will definitely come in and what we see the difference is whereas there is a — wherever there is a higher per-capita income, we are seeing a very-high ABS, but states like Bihar and Odisha where there is a very low per-capita income, build sizes are really very low. So it also depends upon the economy of the country and then also the state-of-the small towns in India, which is also the rural population.
And sir, my second question is that this decline in conversion is more a function of increase in footfalls, right? I mean, there has been a substantial increase in footfalls and hence the drop-in conversion. Yeah, because we believe now the consumers are just not coming to one store. They do check-out with multiple stores and they want to because in the same layer, in the same road, there are multiple stores which are there. So they would come to one store, go out, check with other stores and then come back to shop again.
So there is a higher inflow of consumer and an outflow consumer that happens, but they do — but the consumers are definitely more aware, they want to be more informed and they definitely want to take the decision after checking out the complete market. So that philosophy we are seeing more-and-more happening. Wants to add something?
Anand Agarwal
So, while the full-year conversion numbers at least till the 3rd-quarter were coming on the declining side, but if you look at the quarter-four numbers, the conversion actually has inched upwards and now largely stabilized. And in fact, what has been saying exactly has been now holding through. So we have come to sort of a plateau where we should see either stabilizing around these numbers or marginal up or increase, but we should not see any significant reduction going forward?
Bhargav Buddhadev
And sir, my last question was on the RFID status, is there any progress on that front?
Lalit Agarwal
We are — I mean, we are trying to evaluate the ROI also of RFID because as of now, I’m not able to see a lot of our ROI of the RFID, but still we are piloting with one of the — with one segment of the business and few stores in the business. And once the looking at the success of the whole pilot store and the pilot area, we will take a call-in maybe after six to eight months.
Bhargav Buddhadev
Okay, sir. Thank you very much and all the very best.
Operator
Thank you. The next question is from the line of Varun Singh from AAA PMS. Please go ahead. Hello, Mr. Varun. Hello, Mr. Varun, can you hear us?
Lalit Agarwal
Yeah, can we? Can we leave this question?
Operator
Oh, yes, sir. We’ll move on to the next question. It’s from the line of Jai Gandhi from HDFC Securities. Please go ahead.
Lalit Agarwal
Moderator, are you not able to connect Jay?
Operator
Yes, sir, just a second. Yeah, second, we just come in Jay.
Lalit Agarwal
Maybe by the time Jay comes, maybe we can move on to the next question.
Operator
Yes, sir.
Lalit Agarwal
Great. Moderator, maybe we can end this call.
Operator
Yes, sir.
Lalit Agarwal
So I think let me put a final comment. I — if there are any questions left, maybe you can connect directly to the team, and thank you for being there. It is definitely a very good opportunity. Yeah. So it looks like there is a great opportunity in the market. There’s definitely a lot of lot of consumption upswing that we would anticipate coming forward in the next three to five years. We definitely are getting up, prepared for all of the same. The entire market is very, very booming, a lot of lot of action happening in the value retail space. We would continue to focus on our focus on our key things. We have no — we are in no hurry to reach to a certain locations or certain geography or certain number of stores.
We are — we continue with our expansion plan at that level, we would continue with our similar growth rate of between 70% to 20% overall level and have the trust in us. We are — we are seeing a lot of positive things happening in the organization as well as in the market. Thank you so much for being there. Have a good day.
Anand Agarwal
Thank you. Bye. [Operator Closing Remarks].