Vedant Fashions Ltd (NSE: MANYAVAR) Q4 2025 Earnings Call dated May. 07, 2025
Corporate Participants:
Unidentified Speaker
Vedant Modi — Chief Revenue Officer
Rahul Murarka — Chief Financial Officer
Analysts:
Unidentified Participant
Sameer Gupta — Analyst
Gaurav Jogani — Analyst
Tejas Shah — Analyst
Varun Singh — Analyst
Prerna Jhunjhunwala — Analyst
Ankit Kedia — Analyst
Presentation:
operator
Sam. Ladies and gentlemen, good day and welcome to the Q4 and FY25 earnings conference call of Manyavar hosted by IIFL Capital. As a reminder, all participant line will be in 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 Star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Sameer Gupta from IIFL Capital. Thank you. And over to you sir.
Sameer Gupta — Analyst
Hi. Good evening ladies and gentlemen and thank you for joining the Manavar fourth quarter earnings call.
Without taking more time, let me hand it over to the management. Over to you Vedanta.
Vedant Modi — Chief Revenue Officer
Thank you. Good afternoon and a warm welcome to all the participants. I am Vedant Modi, the Chief Revenue Officer of the company. Thank you for joining us today to discuss the Vedant Fascist Limited Quarter 4 and Full Financial Year 25 results. I hope everyone got an opportunity to go through our financial results and investor presentation which have been uploaded on the Stock Exchange as well as the company’s website.
In this quarter we expanded our retail footprint by adding approximately 36,000 square feet of net retail area. We also rolled out one exclusive brand outlet of TVAME and one brand outlet of Mohe.
During the quarter in the financial year 25, we have expanded our retail footprint by approximately 85,000 square feet of net retail area. We have also successfully rolled out three EBOs of tomeaf. In this financial year, as of March 25, Vedant Fashion’s EBO area stands at 1.79 billion square feet spanning across 678 stores in 256 cities and towns globally.
The national EBO footprint tallies at 662 stores spread across 244 cities and towns. In Q4FY25, sales of our customers were rupees 5207 million growing by about 1.9% compared to the same period last year. During financial year 25, sales of our customers were Rupees 18,929 Million reflecting a growth of approximately 2.2% over financial year 24.
During the quarter end and throughout the year, we implemented a comprehensive suite of marketing initiatives across marketing channels and brands thereby further strengthening our brand’s reach, positioning and consumer appeal. Our approach encompassed category focused campaigns, occasion based festive marketing, collaboration with celebrities, sports personalities and influencers as well as targeted in store promotions.
Collectively, these efforts elevated our brand visibility and reinforced our connection with consumers. Throughout the year we executed successful campaigns across several brands to boost consideration. Our flagship campaign Aapka Ban Raha Mandyawar reinforced our strong association with the wedding category across platforms.
Our Mohe brand campaign Jabab Tayar Hum Tayar also received widespread recognition contributing to its strong performance during the year. We continued to build Swami’s identity through the campaign reflecting its truly you philosophy while Divas gained early momentum driven by new offerings and strategically targeting festive marketing.
Collectively, these initiatives have financed our brand presence and deepened consumer engagement. We’ve also partnered with leading quick commerce platforms to offer instant delivery of our Indian web alongside targeted campaigns to build the category. Additionally, our festive and celebration wear offering Divas continue to receive positive response from consumers.
The Company’s performance in FY25 was impacted by subdued consumer sentiments and severely impacted Quarter 1 Financial Year 25 with extremely low negligible wedding dates overall. However, in the nine months period from July to March, FY25 retail sales grew by 9.3% with like to like sales growing by about 2.9%.
Despite these challenges, the company successfully maintained strong margin metrics and positive retail KPIs reflecting resilient business fundamentals. Looking ahead, we are confident in our business strong foundation and preparedness supported by relevant inventory and designs, a robust tow network, multidimensional marketing initiatives, efficient auto replenishment systems and a strong back end infrastructure positioning us well for sustained long term growth.
With this I will now hand it over to Mr. Rahul Murarka to take you through the financial performance of the company.
Rahul Murarka — Chief Financial Officer
Thank you Vedant Namaskar and good afternoon everyone. I would like to highlight the key financial performance metrics for fourth quarter and full financial year ended 31st March 2025. Starting from Q4FY25 performance update. Revenue from operation during the period was around 367 crore with a growth of 1.2% over Q4 of FY24.
The company continues to report industry leading Gross margin of 66.2% and healthy EBITDA margin of 45.6%. The company reported strong pack margin of around 27.5% and the profit after tax stood at around 101 crore. Sale of our customer during the quarter was around 521 crore with a growth of around 2% over Q4 of FY24.
Now coming to FY25 performance update. The company reported revenue from operation of around 1387 crore with a growth of around 1.4%. Sale of our customer during the year was around 1893 crore with a growth of 2.2%. The company continued to report industry leading gross margin of around 67.2% and healthy EBITDA margin of around 46.6%. The EBITDA during the period stood at around 646 crore.
The company also reported strong PET margin of 28% and the profit after tax stood at around 389 crores. Our performance during the year got majorly impacted because of subdued consumer sentiments and very exceptional Q1 with almost negligible wedding dates nationally. However, during the remaining nine months period from July to March 25, sale of our customer grew by 9.3% with FFG loan of 2.9%. Despite these challenges, company has been able to achieve healthy profitability matrices along with positive retail KPI reflecting resilient business fundamentals.
Thank you and Namaste everyone. We can now move to the Q and A session.
Questions and Answers:
operator
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 touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets 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 Scaurav Jogani from GM Financial. Please go ahead.
Gaurav Jogani
Thank you for the opportunity. So my first question, you know is with regards to if you can throw some light on, you know what is leading to this tepid demand overall would you elude this to the overall slowdown in the macro environment? Was it also due to the lower store openings during the year? What exactly would you like to pinpoint this to?
Vedant Modi
Thank you for the question. So you know I think there are multiple factors here and firstly I feel overall the mid premium side of consumer businesses have seen weak consumer sentiments overall which has been the biggest cause of the relative slowdown. Secondly in our case if I talk about the full financial year Q1 had a major impact in terms of our overall financial year numbers having no close to no wedding gains. Thirdly, like I had mentioned in the last earnings call, AP Telangana played a detrimental role this year for us where even if I look at the full financial year overall our EBO SSG is flat if we remove AP Telangana data and at the quarter four level it’s positive if we remove AP Telangana from the data and our overall exposure to that region is much higher than typical retail companies both because of higher demand of Indian wear over the course of years from Mandevar Mohe and the acquisition of MABAS combined.
So that has been another big impact overall from our perspective. And lastly, we do acknowledge the fact that we are operating in a market where over the course of last two to three years a significant number of newer players have entered the market with a huge number of store openings across.
So that is again another factor where I feel the impact is relatively much smaller compared to the other three points I mentioned before. And finally again like you mentioned about the store openings, so at a gross level we opened about 1.8 lakh square feet this year, which is entering the most important markets of India where we were not present or expanding our presence in our important existing markets.
The net looks a lot smaller because we’ve been a little aggressive on consolidating our fleet which is not required as per today’s business needs. So all in all, while we would have liked to have a little more net area given the kind of retail inflation we’ve been seeing on the ground, it has been a challenging environment to open stores with a lot of speed. So and all that said, I think the current need of the business is to really focus on like to like growth and ensure we are able to deliver on that.
Gaurav Jogani
Thanks Vedant for this detailed answer. My second question again is with regards to the overall category as a whole, if you can highlight something on, you know, how the category has grown over the past two to three years because you know, in FY23 is when we really saw a good spurt of demand there and which I think attracted a lot many players in the system. But how has been the condition of those players who have been entering into this market? Has any of them been able to gain significant market share? Anything that you can throw some light.
Vedant Modi
So pretty interesting question. I think the way this can be answered is I definitely think that the Indian men’s market has definitely not gone down. It has definitely been stable or growing and in one part to it, the other question that you have regarding competition, the number of stores might have tripled over the last two to three years that were there in India doing men’s Indian wear. So there has been a large influx. However, has one player taken any market share? That has not been the case. Certainly it’s a large number of players opening a few stores.
That is what we’re seeing on the ground majorly. And if I give you an example of a city, let’s say like Raipur, we used to have one exclusive brand outlet which we operate and maybe another 2550 stores would have opened in that market. But we are still able to operate at 90 to 110 rupees compared to the 100 rupees mark we were at before these amount of stores open. So in retrospect, it also gives us or shows us the strength of the brand that even with so much competition opening, we’ve been able to stand our ground in that market.
And if we look at the financial data of all these number of stores opening, hardly any of them are at a mark where business is sustainable in the midterm also. So certainly there is a lot of, you know, macroeconomic pressure which we’ve seen. But overall the category will definitely grow in the future.
Gaurav Jogani
Sure. Vedant, thank you for this. I’ll come back another question.
Vedant Modi
Thank you.
operator
Thanks. Thank you. The next question is from the line of Tejas Shah from Eventis Park. Please go ahead.
Tejas Shah
Hi Vedant, thanks for the opportunity. You broadly touched upon this in your opening remarks and the previous questions also. But what specific measurable actions are we taking to reverse our current growth, deceleration and more importantly, how are we tracking validating effectiveness of those initiatives?
Vedant Modi
Great question. Thank you for that. So, you know, firstly, I would also like to raise one important point here. We are not trying to be defensive as a company when we say that these were the reasons. I think there is certainly a need to do better in everything that we do. Times are tough but we need to take hard measures to ensure that we are able to grow in the future. And some of those initiatives, I would rather break them into three components, product, marketing and operations. So I would say these are the three core pillars of the company in terms of product.
What we insured in the last financial year and we will double down on that strategy as we move forward is we tremendously increase the number of new designs that we launch in the market. So if we used to launch one design this year, we did close to 2.3, 2.4x of the number of designs, ensuring if there’s any trend in the market, we’re able to understand them early and have it available across our fleet. We want to double down on this. We want to ensure that there is no trend of India that we are missing and want to be more fashionable than we ever were.
So we will be working a lot harder in ensuring our production times are faster, our turnaround time for the stores is faster and continue focusing on that. The second part is marketing. There is a large change in marketing ecosystem over the last few years. According to what we have been witnessing in the industry, majority of the Companies had very high offline spends and what has happened is if you look at the last three to four years, any new apparel player that has become big has become big after becoming a big online player and then opening retail stores.
So it does show us the imminent need of being a digital first marketing company, which is the sort of strategy we have been following for the last three years, but in a more hybrid model where our budgets are deployed both towards the big campaign outdoor TV spends along with focus on digital. But I think what we are now strategically taking a call on is there a high need to be 100% digital and to have a lot more focus on how campaigns are done with rapid speed and instead of one or two big campaigns doing 12 to 13 mini campaigns.
So this is something which we have been discussing quite heavily on and I believe this is something we will be going after and really changing the way modern marketing has been functioning. And finally when it comes to operations, we’ve also tried to, we’ve also highlighted this in our investors presentation, worked on a lot of fundamental aspects. One of the biggest innovations that was done by us this year is we created our own app which we call Vfl Parivar. And every single fashion advisor in our ecosystem is sent a one to two minute market training material every morning.
And what we’re able to do is connect a lot better with our retail employees and teach them something new on a daily basis. Otherwise in typical retail training is done two to four times a year for each store and the learning is lost in that quarter or in the six month period. But by reinforcing it on a daily basis we are seeing uptake in our KPIs which we are training them on. And I think this has been a game changer in terms of how training should be done in the future. So these are just a few examples but we are also ensuring that we take any other measures that are needed.
Tejas Shah
Vedant, thanks for very detailed answer. So the second part of that question was that let’s say if you have rolled out these initiatives in 10% or 15% of our network, are we seeing materially different outcome in terms of numbers versus the rest of the network or is it like very early stage where we have not rolled out at all?
Vedant Modi
Yeah. So when it comes to product I think we’ve certainly seen good changes in some pockets of the market where we’ve taken specific focused actions for so if I give you an example of Bihar, there were specific product actions taken for that market and we saw a significant delta in that state over the other states throughout the year. So similarly, we are enacting on this strategy for our other important markets. When it comes to marketing, like I mentioned, this is something which is due to happen. We are in the process of having this transition, but what we also witnessed is taking strategic actions, especially in a market like Ripur.
We are seeing a very good delta in our Q1 performance which is first April to date in that market, majorly on account of what we’ve done outside the store in that particular market. So there are initiatives showing us results and now the core focuses on how do we focus on key markets and really ensure that these efforts are bringing us the delta growth we’re looking for.
Tejas Shah
And if I may squeeze in the last one. So vedant, our model really relies on our ability to recruit franchise partners. Now historically our franchise partners also would not have seen such a difficult period. So any comment, any insights on the morale of the franchise partners and our ability to attract that capital which is very crucial for our growth.
Vedant Modi
So I think there are two sides to this question. One is attracting newer partners. So the way our company functions is we sign a store without finding a franchisee partner. So the business development team does not look at the fact that do we have a partner ready for this market. The goal is to first find the property. So till now we’ve never faced a situation where there has been a dose of a partner. Rather, even now I would say that has not been a challenge at all and is still one of the easier things to achieve.
The second part is regarding existing partners now. Certainly with lower revenue per square feet, their overall ROI falls. But given how profitable our model has been for them, they continue to make decent money. So there is no challenge when it comes to franchisee profitability in majority of the cases. However, we do have a lot more conversations and business reviews happening on the ground on how we can get that business back to the levels they were or even beyond that point. So there is a lot of drive from our partners as well, who have been associated with us for many years and understand the situation of the market and understand the need of the hour and where they need to focus on as well.
Got it.
Tejas Shah
Thanks and all the best for coming.
Vedant Modi
Thank you so much.
operator
Thank you ladies and gentlemen. You may press Star and one to ask a question. The next question is from the line of from aaapms. Please go ahead.
Varun Singh
Am I audible?
Vedant Modi
Yes.
operator
Yes.
Varun Singh
Yeah. Thank you for the opportunity. So my first question is maybe if you can throw some light over last one year, you know, with regards to store closures which would have happened. So what are your key learnings from. From that? That’s my first question.
Vedant Modi
See, you know when we look at the closures we’ve done, these are majorly markets which are stopped performing for any brand. So there are multiple examples where a market moves from one place in the city to another place in the city. So we’ve already opened a much better store in that newer market and that older market is now where we’ve removed the store from. So that’s one big use case. The other big use case that we’ve seen is There are certain tier 3 towns in the overall market where we had a very small store. But either in that same town or in a very nearby town, we’ve opened a flagship store making that really small store redundant.
So these two, three other major use cases in terms of closure and some larger stores have been proper relocation where let’s say in Allah Bagh we had close to a 10,000 sq ft store which we’ve closed to shift into a 16,000 sq ft store in the next building.
Varun Singh
Understood. So none of the closure would be related with regards to under performance of the store due to competition. That understanding would be fair, right?
Vedant Modi
Not. Not in the larger ecosystem. Not at all.
Varun Singh
Sure, understood. And secondly, given the price points where we belong to, you think that this price point is maybe significantly scalable to make the overall retail area maybe 3x4x5x from the current level or you believe that you know, maybe similar to trend the way they started a different format itself, video at a half the half the price point that opportunity for us, you think? I mean given that we have created the specialist brand image for ourselves in this category itself. So similar to Mohe in the in Manevar franchisee itself or with a similar brand name.
I mean if you can throw some light with regards to this, you know, improving the addressable market for us. And in that context on Mohi also if you can throw some light with regards to how much we have been able to scale and the scalability potential which the way we are looking at it over next one to two years.
Vedant Modi
Sure. I mean very interesting question again so just answering your first part. Our understanding of long term Indian consumers is that upper middle class is where brands typically flourish. If you look at it globally as well. And this is one area where brands have really benefited throughout the entire globe and that’s the target audience we go after. Sadly, you know, last two to three years as we’ve seen consumer sentiment in this part of the market and retail industry has been very weak in tepid and value has done a lot better just as you mentioned.
Varun Singh
Sorry, sorry, sorry Vedant to cut you over here but I think my earlier understanding was that our category is immune to subject consumer sentiment given that wedding is an essential thing and the exposure that we had to wedding that had a larger role to play. So I mean how consumer sentiment in our case would explain the revenue growth under performance. That is something, I mean I’m sorry I could not track you over the last two three quarters if you would have already mentioned about this.
Vedant Modi
Yeah, so you know again here the major piece is that if you look at our revenues, 40% odd revenue comes from the grooms and the brides and the remaining 60% come from the family wedding attendees. Now when we say consumer sentiments impact us, it will impact how much the 40% is willing to spend but they will still continue to buy. But the 60% behaves very similar to the other lifestyle markets of India where consumer sentiments demand how much they will actually buy. Will they buy a brand or what will they sort of consume during this festive period as well.
So that’s one major piece from our end and sort of coming back to the earlier point I was trying to make longer term perspective, we still think that the 5 to 50 lakh rupee income bracket Indian is going to grow rapidly which has been at a bit of a pause in the last two to three years. But it will definitely from a five to ten year horizon be the meatiest part of consumption market in India which is where we want to sort of stick. And you know when you sort of talked about Mohi there has been quite a large delta in terms of growth so Mohey would have a close to 25% odd delta in terms of the company from a growth perspective.
We have taken a large strategic shift from saying we are a bridal web brand to transforming ourselves into a wedding web brand. And this strategy has worked very well in our favor. We see improved footfalls, we see a lot more conversions happening on the floor. So overall this strategy is working for us. And having understood this we are doubling down on this in the current financial year.
Varun Singh
When you say from bridal wear to wedding wear I mean you mean that to sell more of lower ASP product.
Vedant Modi
So relatively lower ESP to a bridal lehenga but still women’s wear has a lot more work involved so it will still be higher ASP compared to the companies as a gsp. So if I give you more perspective, bridal lehenga’s in our company are at an average ESP of about 2223,000. And the other products of MoHE are at about 7 to 8000 rupees while company ESP average is 4000, 4500. So the growth that we are seeing is coming from the other categories in Mohe like sarees, Kirk Lehengas spit suits and these are the categories we are really doubling down on.
Varun Singh
But you think that Mohi is taking more time than we expected to fix to maybe fine tune the business model and then rapidly scale it up. I mean what’s your current understanding on Mohi?
Vedant Modi
So I mean there are two parts here. One is that Mohi we have been growing a lot faster than any other brand in the company. Even from a retail footprint perspective. Close to about 40% of the retail area we opened was Mohi this financial year. In terms of our existing stores as well, we’ve been increasing the kind of Mohe merchandise. Even if you look at our overall working capital days, it’s increased on account of adding more Mohe stock to existing stores. So there is a lot of initiative in terms of driving Mohey business. Even in terms of EBOs, we have now reached sort of 5, 6 EBOs and we continue to open stores across India where we feel that there is potential for a Mohe.
But no maneuver Mohe store is present in that area as of now. So those actions are also being taken. And last earnings call had mentioned that productivity levels of Mohe is growing a lot faster. So once we reach a decent level we will be in a place to, you know, sort of even be more aggressive at the plant. But as per our understanding, last year Mohit did the budgeted numbers which we were happy with.
Varun Singh
Yeah, sure. But honestly only 5, 6 CBO is not, I think inspiring much to us as an investor because I mean we see so many companies, you know, doing retail expansion, etc. 10 to 12 store. I mean I don’t know that what is stopping us to, you know, grow at a relatively faster rate given our business economics, cash flow situation and everything. So I mean maybe if you can offer some comment with regards to what is FY26 target and how are you looking to scale up this franchise? That’s my last question.
Vedant Modi
Yeah, one easier piece which I think has to be, you know, sort of explained again is Mohe has close to now 2.5 odd lakh square feet. So it is not that we have not continuously expanded with Mohe. If you understand the Indian retail landscape, there are top 100 markets in India. Each of these Hundred markets have a flagship Manevar Mohe store. So we’ve already covered the best of the best markets with a large Mohe square feet presence. Wherever we can, it is the remaining markets where we might have only Mandevar store where we are continuing to add Mohe flagships in the form of EBO.
So we will continue to deploy EBOs. But one important factor to not be missed is Manyavar Mohi continues to be the primarily channel for Mohi as a brand and majority of the time investment that the Mohi team does is towards those stores ensuring that Mohey grows more and more within this ecosystem. Because the footfall we generate because of Manjevar also has a great sort of effect on sales for Mohe. So we want to ensure that we’re capitalizing on all these things and if required we will increase the space of Mohe in these stores. If required we will open even larger stores to incorporate better size for Mohe.
But having the rub effect of both consumers is great for the business overall.
operator
Thank you. The next question is from the line of Predna Janjanwala from Elara Capital. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. Just wanted to understand how the demand now, I mean how has IGDRIL been and are you seeing impact of higher number of wedding days in this quarter against last year? Some initial feelings would help.
Vedant Modi
I think there are two perspectives here. So overall we do see green shoots majorly on account of having wedding dates this year versus negligible wedding dates last year. So business is better on that account. But overall in terms of expectations, I would say that still overall sentiments we can see from the market are weak and not the best. So while there are green shoots in the business, it’s majorly on account of better wedding dates and we sort of expect all the strategies we’ve been working on to start firing from Q2 mid Q2. And so any results of any new work we do on marketing or product will be seen in the later part of the year.
Prerna Jhunjhunwala
Okay, and how are you looking at space expansion? Because last you had mentioned was that you would go slow on space expansion. So how should we look at that?
Vedant Modi
I mean one important piece here is as a company we feel business is dynamic. The need of the hour is to have extreme focus on like to like growth and driving that. While opening newer stores remains to be an important KPI, we will focus a lot more on L2L this year. On the other hand, as retail inflation starts to come down, which is something we’ve been seeing now in a Few markets. We will continue to open stores wherever we see potential and ensure that a decent number of stores are opened by the end of the year.
Prerna Jhunjhunwala
Okay, and could you also elaborate on your LFS or or MBU strategy, if any, to gain geographical reach or customer reach across the country?
Vedant Modi
Absolutely. So overall when it comes to lfs, we stick with fewer number of partners but try to go deeper with them. This ensures better inventory control, better experience at the ground level. So we’ve been continuously expanding with a few of the partners we have and are going deeper with them overall to have better reach. On the other hand, when I speak about MBOs, with the addition of Divas to our portfolio, our overall platform for MBO has become a lot deeper because there were multiple kinds of multivariant outlets. Some want mid premium products, some want slightly more festive based value offering.
So now that our bouquet has increased significantly with Divas, we feel that last year was a trial and bookings that start in May will actually show us how Divas will be helping this side of the business. And there’s a lot more focus in terms of improving the overall Mandavat business there as well.
Prerna Jhunjhunwala
Okay.
Vedant Modi
Tier 3 end market and TFO markets just like you mentioned.
Prerna Jhunjhunwala
Okay. And how is Andhra and Telangana market doing now? I mean do they continue to drag?
Vedant Modi
Do you mean in Q1 of the. Current financial year
Prerna Jhunjhunwala
Q3, Q4 as well as Q1? Because we don’t know about Q4 as well, right?
Vedant Modi
No. So like I mentioned, even if I talk about Q4 our like to like growth will actually become positive if we remove the numbers of AP Telangana. So it was a big drag to the company’s numbers in Q4 as well. Q1, I think we’ve only seen one month while the one month performance has been decent there, it’s still I think too short a time frame to comment on anything.
Prerna Jhunjhunwala
AP Telangana is your Nebaaz network or do we have many of our stores as well there? I mean just trying to understand is it mebas which is impacting or is it Manavar as well?
Vedant Modi
Both are equally as big in the market and so Manavar Mohe sales would be equal to the sale of MEBAs in AP Telangana broadly and both are heavily impacted.
Prerna Jhunjhunwala
Okay.
Vedant Modi
And the same when we validate with similar Mid premium brands operating in the men’s industry, whoever we are closer to, we see similar deltas with those brands as well.
Prerna Jhunjhunwala
Understood. Thank you.
Vedant Modi
For a lot of the brands, AP Telangana has been hit in comparison to the rest of India at similar levels.
Prerna Jhunjhunwala
Any particular reason why AP Telangana particularly are hit?
Prerna Jhunjhunwala
I think the challenges are a lot more macro in nature. That is why a lot more brands are facing the heat in that market. And we see a lot of other challenges with the market as well reflecting slower economic sort of slowdown in that entire belt.
Prerna Jhunjhunwala
People must be shifting to unorganized players for price points. That could be a fair assumption I.
Vedant Modi
Think again, what if that was the case? Then our dealer network would have showed us better growth or would have told us that they are seeing better numbers from their stores. But even with our embryo players across AP Telangana belt, we see similar degrowth happening. So we don’t see that being the real reason at all. It has got something to do at a more macroeconomic level.
Prerna Jhunjhunwala
Okay. Okay. Thank you so much for the detailed answer. I’ll come back to the question. Thank you.
Vedant Modi
Thank you.
operator
Thank you. The next question is from the line of Ankit Keria from Philip Capital. Please go ahead.
Ankit Kedia
Hi Vedant. Two questions from my side. You mentioned that Mohe would have around two and a half lakh square feet. Is it fair to assume you know, 14% of area revenue also there would be you know, 12 to 14% levels or in throughput they are you know, still significantly lower than Maneuver today.
Vedant Modi
So while we don’t give the exact numbers, it’s it’s ballpark in that region. It’s lower than Manavar. It’s not exactly as close as Manjavar. It’s slightly lower but it’s catching up.
Ankit Kedia
Sure. My second question is for Rahul ji, you know, why is the inventory and receivables both gone up in the quarter? I can understand we will be expecting a better quarter and hence inventory build up. But even receivables have gone up some franchisees.
Vedant Modi
So basically inventory buildup we did strategically because in this year EID was at the end of this quarter which is March. So when heat is there we have a lot of artisans and workers wherein the production is disrupted during that period. So that is why strategically we pre planned our production process and payment levels were increased because of that. And of course you know, with the upcoming Q1 which we believe have good number of weddings. So that is why the inventory levels were good. And in last year if you see it was in April and the Q1 also had like negligible wedding date.
So purposefully we had lower level of inventories in last year. In terms of receivables, you see increase in receivables majorly because of the store additions which we have done during the year.
Ankit Kedia
Yeah, but we are also closed store. Right. So net avi addition is not significant. So if I look on net basis then why is that? You know receivables majorly.
Vedant Modi
Look at our receivables have increased around 50 crores and it is majorly because of the store edition. We had 83 90,000 square foot net addition during this year. It was more than 50% is because of that only because of store area addition. And if I just may add a small point, it’s probably 50 plus percent come from new stores and the remaining comes from adding Mohi and Tamer in some of the existing stores as well. And if you see, look, our primary secondary growth, it is moving in a similar direction. It is similar growth which we have seen in both primary and secondary.
Ankit Kedia
Right. Which means we have pushed more inventory to the franchisees. Right. And we are not getting the same sales.
Vedant Modi
But if that would have been the case, the growth in primary and secondary would not have been similar. No.
Ankit Kedia
So X of the X of the new stores. So that would be a new stores. But if I have some Vedant’s point of Mohe and Tamir that means that inventory is not moving for the remaining 50% of the receivables.
Vedant Modi
No, no, no, that is not a fact. As we mentioned, majority of the increase in return is on account of store addition. Okay. And if you look at our growth in primary as well as secondary revenue, our primary revenue has grown by 1% and our secondary revenue has grown by 2%. So what you are mentioning is not actually, you know, collating with the facts. So replenishment is a phenomenon of, you know, what is selling there. And it is, it moves in a similar direction as we have seen historically as well both primary and secondary sh.
Ankit Kedia
Next year we add another one and a half lakh square feet. Receivable will further increase.
Vedant Modi
Yeah, of course. I mean, you know, as a model as and when we increase our specific area the debtors would increase to that extent.
Ankit Kedia
Understood. My last question is on the rental cost. How do you see now? You know, with more bigger stores opening you are taking more rentals on your books. And in such a scenario where SLG is negative and low single digit that pressure is coming on to the margins. How do you balance that in medium term?
Vedant Modi
I think there are multiple things we are doing here. I think financially we are a prudent company and we take conservative measures. So like I mentioned, we have been slow in terms of overall number of stores we’ve opened majorly on account of not signing wrong stores at wrong Prices because these are 10 to 12 year leases and we don’t want to make those wrong decisions. So we are trying to ensure we are not signing the wrong stores in the first place. The second is where we have not seen great ssg but rent escalation demands have come.
We are renegotiating those contracts and ensuring that we don’t have to pay any escalations. And thirdly, in places where we see that overall this store is not making sense for us anymore as a market, which we did last year, that market has shifted from one area of the city to another, but rents have stayed at similar levels. We are taking hard calls in closing those stores. So this is the overall scenario where we want to ensure that rent OC is kept as low as possible. And overall it might have gone up by about 1.5 to 2% this year at the company’s books level, majorly on account of having negative operating leverage.
Ankit Kedia
And just to follow up on that rental part, the last quarter we mentioned we have closed the smaller stores, right? Some thousand 1200 square feet stores. Now you are seeing that we also closed stores which the market has moved. So can you quantify both the stores which we have closed, how much is because of business and how much is the small store strategy which we are closing?
Vedant Modi
It’s a mix of both. Rather if I explain it in details, typically the small stores are the ones we had signed eight to 10 years ago, 12 years ago, and at that time those markets were great. And these are the markets which are now shifting. So it’s not one or the other. In majority of the cases, this is hand in hand. The small stores did exist in the market that are moving out now.
Ankit Kedia
Understood. Fair point. Thank you so much, Viram.
Vedant Modi
Thank you.
operator
Thank you. The next question is from the line of Sameer Gupta from IIFL Capital. Please go ahead. Mr. Sameer, I would request you to please unmute your line and speak.
Sameer Gupta
I’m so sorry, I was on mute. Thanks for taking my question. Just wanted to understand this competitive aspect in little more detail. Now, in your experience over the last decade of running maneuver, have you witnessed this kind of competitive frenzy when even in any particular micro market it need not be at a pan India level that so many stores, so many people have opened so many stores.
Vedant Modi
We have certainly witnessed competition in the last two decades of us operating this brand. Nothing at these levels for sure. And typically what we’ve noticed is people open up a single store in a city, do decently well and as they sort of scale up to a state level to a region level. That’s when things start to go south. This industry has to understand the hack of sort of understanding consumer preferences and understanding data at a very deep pin code level. Because what works in one part of the city does not work in the other part of the city.
This is what has been our core mode over the last few years and continues to be. And this is something which is detrimental to anyone opening sort of business in this particular industry. But we’ve definitely not seen these number of stores ever opening up because it’s all happened in a very short period of time. Last two to three years earlier as well, when there was competition. There were a few stores here and there, but nothing at this scale.
Sameer Gupta
So just trying to understand that what is the trigger now? I mean, it’s not like the overall consumption is booming or suddenly, you know, these players have got funding from somewhere. So why now and what’s so special?
Vedant Modi
Well, on the lighter side of things, people say it was our market cap three years ago and that might have attracted a lot of people. But overall I think this space just seemed interesting. And without many brands with only one large player operating. So probably why it attracted a lot of competition. And yeah, I think it’s again a difficult question to answer why. Exactly.
Sameer Gupta
Okay, so let me ask another question on a similar line by when do you expect consolidation? Because what I understand is that you only said that none of them are doing well. So I mean, by when do you see this consolidation here in this market?
Vedant Modi
See, this is very difficult to answer because it’s answering from other people’s perspective. And it really depends on how those businesses would have had identified their strategy. Like I mentioned, majority of the people that have opened stores don’t have great financials as of now, which is what we understand. But will they consolidate and when will they consolidate? Is again a very difficult thing to answer. What we have witnessed in our tracking is that people who’ve been a lot older competitor of ours in terms of being in this market have had a reduction in the number of stores they have from last year to this year.
So the legacy competitors, we’ve seen the number of stores go down compared to last financial year. But on the same hand, what we’ve seen is the other newer players adding the stores.
Sameer Gupta
But in your experience, let’s say in any particular micro market, you might have faced this situation, anything then you had witnessed that. You know, it takes these many years for people to, you know, consolidate or nothing like that.
Vedant Modi
I wouldn’t have access to this kind of data. Actually,
Sameer Gupta
okay, no worries.
Vedant Modi
We haven’t seen frenzy like this before like I mentioned.
Sameer Gupta
Got it, got it. That’s very clear. Second and last question on retail area. Now this year has been on both sides. So there has been a consolidation and there has also been a lower than what your usual increase in retail area is even at a gross level. So FY26 onwards, at least the consolidation part, are we done or do you expect more store closures to happen? And of course the retail area addition will depend on a number of things. But used to be a 14, 15% retail area growth. Any guidance or any tidbits on what is the expected strategy as it looks like today, that would be great.
Vedant Modi
So if I’m being Extremely honest here, FY26 is one financial year where we will take some hard decisions wherever it’s needed on account of higher rentals, where we have newer stores next to it. So wherever decisions are required, we will take those. However, at maybe third quarter onwards, I think we are quite sure of getting back on decent retail area growth. And most importantly, one thing which I want to sort of bring some light on is quality retail area will grow tremendously from a complete financial year perspective. Any sort of cleanup that needs to be done needs to be done with retail area which is not adding too much value to the business.
And when it comes to signing new stores, we will ensure that low rent OC high productive stores are being signed. So the goal is to add very high quality net retail area to the business and the entire financial year. And the hopes are high that retail inflation sort of comes down by Q1, Q2 so that we can get back on the retail store expansion 3 as well.
Sameer Gupta
Got it. That’s all from me. And thanks and all the best.
Vedant Modi
Thank you very much.
operator
Thank you. Thank you. Ladies and gentlemen. That was the last question for today. I now hand the conference over to the management for closing comments.
Vedant Modi
Thank you very much for attending the call. It’s always amazing interacting with all of you. We’ve come out of a difficult year, but as a company we are more driven than we ever were and we will ensure that no stones are unturned with whatever we can do as a company to ensure that we are able to get on a path to much better growth. Namaskaran, thank you very much.
Rahul Murarka
Thank you.
operator
Thank you on behalf of IIFL Capital. That concludes this conference. Thank you for joining us. And you may now disconnect your line.