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Dollar Industries Ltd
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Ladies and gentlemen, good day and welcome to the Dollar Industries Limited Q4 and FY '20 Earnings Conference Call hosted by Equirus Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vikas Jain from Equirus Securities Private Limited. Thank you, and over to you, sir.
Thank you, [ Stephen ]Good afternoon, everyone. On behalf of Equirus Securities, I would like to welcome all of you to the 4Q and FY '20 earnings conference call for Dollar Industries Limited. From the company, we have with us the key senior management, including Mr. Vinod Gupta, the MD; Ms. Shashi Agarwal, Senior Vice President, Corporate Strategy and IR; and Mr. Ankit Gupta, the CFO. I would now like to hand over the call to the management for their opening comments, post which we'll open the floor for the Q&A. Thank you, and over to you.
Yes. My name is Vinod Gupta, the Managing Director of Dollar Industries Limited. Good afternoon, and a very warm welcome in the earning call of Dollar Industries Limited for Q4 FY '20. Right now, the world is going through unprecedented times of experiencing changes which we have never seen before. We all know that the coronavirus, COVID-19, has put everything under the lockdown. The lockdown started in India on 25th of March and have been continuing ever since in phases. The entire country was immobile at least for a month. Everyone was confined to their homes. Relaxations begin in phased manner from May onwards. This has put the economy in the enormous pain. In a report released by the World Bank earlier this month, it expects India's GDP to contract by 3.2% this fiscal year. We are all aware of the impact of COVID-19 which we have on our economy, but I would like to speak about the positive initiatives taken by the company during this COVID era. We are working towards minimizing the financial impact, keeping the safety of our employees as a priority. We initiated work-from-home strategy for the employees to the extent possible. We also started reaching out our retail network through telecalling. We are experiencing spike in demand as the relaxation was initiated by the government. We are replacing changes in consumer behavior also. Like e-commerce platform has been a surge in demand as consumers preferred to shop online than physically visiting the stores. Even for the consumers physically visiting the market, the consumers are reaching for nearby stores in the locality which they would not have otherwise visited. This is creating additional demand at all the retail shops in the market and also helping in increasing the retail network. The work-from-home culture has now led to increasing in demand of the [ recent ] category of our products, which we have recently launched and experiencing a lot of traction there. The company also started manufacturing masks and PPE kit for the Dollar Protect brand to contribute to the demand of mask and PPE kit. The company also initiated [indiscernible] activities to help people fight coronavirus during the lockdown period by donating food, masks and PPE kits. The company also resumed production and started to cater to the demands in the market. But currently, we are trying to take the production level as it was in pre-COVID era. Currently, we are not operating at full capacity as the labor force is still fearing the virus. However, we are working on the makers to up the production levels, and we are showing that we will soon overcome this challenge as well. We are optimistic that we will soon overcome the challenges posed by COVID-19 as the product manufactured by the company fall under the basic necessity category. So the consumers might defer the purchases for a month or so, but cannot do away with the purchases completely. Now moving on to the joint venture company packages in the Fashion Project Limited. We are treading now cautiously, as any company, given the current situation. The focus of the JV company is on the current market and e-commerce platform. The JV company is looking at aggressive growth in e-commerce platform and add the new distributors in the existing regions. This is all from my side, and I will now hand over to Ankit to talk to you about the financial performance of the company this quarter.
Thank you, sir, and good afternoon to everyone present. The company achieved total revenue of INR 240.89 crores and INR 974.03 crores for the Q4 FY '20 and FY '20, as compared to INR 298.5 crores and INR 1,030.96 crores for Q4 FY '19 and FY '19. We have seen a de-growth of 19.3% and 5.52%, respectively. The EBITDA of the company for Q4 FY '20 and FY '20 stood at INR 24.21 crores and INR 109.29 crores which is 10% and 11% as against 11.76% and 13.37%. So we see a de-growth of 31.01% and 20.73%. The PBT for the Q4 FY '20 and FY '20 stood at INR 16.83 crores and INR 79.78 crores, which is 7% and 8%; as against INR 27.53 crores and INR 111.03 crores for Q4 FY '19 and FY '19, which stood at 9.23% and 10.77%. The PAT for the Q4 FY '20 and FY '20 stood at INR 12.31 crores and INR 56.79 crores, which is 5% and 6% versus INR 22.7 crores and INR 75.86 crores in Q4 FY '19 and FY '19. Which was 7.6% and 7.36%. The debt, as on 31/3/2020, stood at INR 360.09 crores, approximately 133 days as compared to 110 days as on 31/3/2019. The inventory as on 31/3/2020 stood at 304.96 crores, that is 118 days as compared to 108 days as on 31/3/2019. The creditors, as on 31/3/2020, stood at INR 120.34 crores which is 50 days as compared to 46 days as on 31/3/2019. The total working capital cycle stands at 200 days as compared to 117 -- 171 days. The company will continue its endeavor to reduce the debtor days by working with the distribution efforts and we are sure that we'll be able to further [ firm up ]working capital cycles. The last [indiscernible] joint venture for Q4 FY '20 and FY '20 stood at INR 101 crore, 13 lakhs and INR 2 crores, 11 lakhs. Now moving on to the revenue breakup for FY '20. Bigboss stood at 42%; Champion at 0.5%; Force Go Wear, 4%; Force NXT, 2%; Pepe, 0.5%; Missy, 9%; regular, 31%; thermals, 9%; Dollar Soft, 2% I'll now open the forum for question-and-answer session.
[Operator Instructions] The first question is from the line of SivaKumar from Unifi Capital Private Limited.
Yes. What was the loss of revenue due to the lockdown in Q4 FY '20?
Siva, that -- this is Shashi. Hi, Siva. That would be around to a tune of INR 80 crores to INR 100 crores, approximately.
Okay. And how is it looking for Q1 and beyond?
Siva, we have to appreciate that the entire April, it was a complete immobile kind of situation, no movement. Even in May, when we started resuming, as per the government guidelines, production has been seasonally hampered for -- starting 25th March. Even today, we are not having migrant labor issue, but the labor issues are there in terms of people fearing to return to work, especially in the job working areas. So we have not been able to pick up the production as we would have -- we would wish to have that. So in spite of we having those orders and that there has been a demand or rise or spike in demand, the entire -- this quarter, we are not able to cater to those demands in a 100% capacity. So there is little loss of sales from our side, I would say a bit of that, because of the unavailability of the stock or finished goods present or we're not able to scale up the production as we would want to. So though the demand is very high. We need to make sure that we scale up the production as soon as possible.
Right. So do you mean to say that the supply chain has extinguished all the inventory which was there in the channel?
I guess we are supplying some of the depots to the extent possible and the production which is happening. We are absolutely at, I would say, at a reasonably -- the inventory would not be that high, hopefully by 30th of June, when we have the balance sheet as we speak as of today. The inventory numbers would look a lot better.
Okay. And what about the receivables side? That would also improve from the current 133 days?
Yes, yes, absolutely. So now let me -- as we speak, as on 30th June, when I'm seeing my working capital cycle -- working capital credit limits with the banks, they are absolutely down to a very good level. This says that definitely my receivables have been good during this 2 months. And the simple reason is that there's a spike in demand, as we are talking about. So we are putting the pressure on the distributors to first pay up their old dues and only then we'll supply. So we, right now, have an opportunity to pick and choose and supply to the distributors. So that's definitely improving our debtor days as well.
Okay. And when you say spike in demand, this is both offline and online channels, right?
Exactly.
Modern retail is anyway shut now. So it will be the general trade which is bringing this demand?
Yes, absolutely. So you will -- actually, the reason of the supply -- that this demand going high is, generally, people will have stocked up at the March end, that's the fiscal end. Neither the retailers nor the distributors could do that because of the sudden close. Now, they are exhausting the inventories. And people also, this entire 3 months, people have not been going out, consumers have not gone out and bought anything. And this being a basic necessity, as our MD so says, that this is a basic necessity that you might defer the purchases by month or so, 2 months, 3 months. But you cannot do away with the purchases. You need it. It's daily there, whether you stay indoors or not, you need to have that, looks like a second skin. So the demand is there. It's just about uneven for everybody, just not for us. One of the industry players are working at the 100% capacity today. So as it is, there's a shortage of products in the market. So there is a demand coming both from the distributor channels. And definitely, online has pegged up.
All right. And Shashi, we have heard from the other management saying that the demand is more pronounced in the athleisure segment, not specifically in the [ innovate ] segment. Is it different in your case?
Hi, Shiva, this is Ankit here. We have seen a good response in athleisure segment. But nonetheless, the Innovate segment, we have also seen a huge demand jump in the Innovate segment as well. And since we launched athleisure last year only, so we are seeing a good sales in athleisure in the first quarter.
Okay. And one last question from my side. What explains the steeper decline in the gross margins in Q4? And -- because one would assume that the cotton prices were softer during the quarter. So one actually expected that the margins would at least sustain from the Q3 levels, but we saw a very steep decline. And how is it looking for Q1, because cotton prices have been very soft of late.
Siva, here, I will take up this question again. This is -- definitely, the prices were softer. And as we really look at the numbers, that's -- on a year-to-year basis, the cost of material consumed comes at around 46% as compared to 42% full year basis. You will have to appreciate we -- none of us could be -- do the hard closing as such, which we do every time. There was a lot of work in progress, which has come into the material consumption because after the particular deadline, we do not issue any raw material. We ensure that all the [ jobbers ] have a [ real good ] stock at their end. And these are all things what could not have been done. It was all work in progress for us. So there was a lot of work in progress which was sitting there, number one. Number two, again, the sales went down, per unit sales has gone down. So if you really see that sales number, it's the absorption of these costs which gets into the sales if it is higher, they reduce. That's another reason which they have got the margin -- gross margin going lower and material consumption percentage going higher.
Okay. And how is the outlook for Q1?
Q1, again, I see the raw material supply is -- I will not say this is a shortage in supply per se. Again, the logistics and the supply chain issues in terms of getting the raw material [ flat run ], that's a little kind of an -- have been past for me. June things have smoothened out, so we are getting uninterrupted supply of the raw material. The margins, right now, it is too early for us to comment at how it would really look, because even in Kolkata, we experienced some of the -- some damages in raw material due to this Amphan. So those things are being prepared and working across. But as such, the demand is good, the labors -- production is something which you have to make sure that we come up, that's one thing I can say. Margins, it would be too early for us to comment right now. Class margins, it is a little difficult for us to comment. Otherwise, I don't think there should be any reason for not -- this start to be in line with what it has always been.
Okay. So subject to logistics issues and labor issues being sorted out, you're confident of getting back to Q3 kind of margins, right? Can one say that?
Yes, we can.
Okay. And then can you share an approximate number as to how much of the capacity is being utilized currently?
All put together, we are around about 65% to 70% capacity, which we are working at.
Okay. Great. And if you were to go to 100%, there is adequate demand out there to actually take up that...
And losing sale as of now, I would say. But if I could really produce at 100% capacity, it would have been beneficial for me.
Okay. And any geographical insight into where this strong demand is coming from? Because the metros are more or less closed for business, right?
Yes. So these are mostly in key areas, in key areas and Tier 2 and Tier 3 cities. And the areas where you do not have much of a lockdown. That's an area where you can supply, where the COVID is not that high, the numbers of the COVID cases are not that high, where the markets are opening up. We still don't see demands from the COVID-impacted areas like Maharashtra, Rajasthan. These are the states where the demand is a little lower. Whereas as if you compare to come to other city -- states where we do not have that high an impact, you see a demand coming in there. Even if the demand is there, there's no way to supply. The DB doesn't open up. The DB cannot supply to the retailers. That's the challenge which we are facing right now.
Right. And Shashi, as we move into July and given the fact that West Bengal government has imposed a lockdown from July, right? Please correct me if I'm wrong. Will it get increasingly difficult in terms of logistics for you to supply to people who are asking for the products?
So we have the permissions and requisite approvals from the authorities to move around, to at least do our bit. I guess it would be an issue when it comes to a DB, when we supply to the DB. We have to reach out to the local retailers. Again, depending on the localities and the areas which there are, the retailers might be able to open up or not. So again, it's like the areas where you do not have much of COVID cases, we can -- definitely, the retailers are opening up and the DB's are also supplying. So this changes. It's a dynamic situation. The area which was closed till yesterday can open up the next week and the vice versa. As such, there is no problem in terms of movement. You are not only allowed to move to the areas where -- which is under lockdown or it's kind of completely set apart. It's declared a contaminated zone. You don't get into those areas. Otherwise, supplies and distribution is okay. And we see, okay, if I look at April statistics, definitely okay. And if you talk about [indiscernible] definitely, it is not okay. So in the current situation, I said, yes, I would simply put it this way, that, yes, we are able to supply. Depending on the contaminate -- the zone which you have to work in, and even for the distributors, it goes the same.
All right. And one last question. Are there any cost-cutting measures that you are taking internally to -- in order to get in line with the new normal?
Yes. I will hand it over to Ankit to answer this question.
Yes. So in the advertisement part, where we used to spend -- like in FY '19, we spent around INR 101 crores. And FY '20, we spent INR 72 crores, INR 73 crores because of the new brand architecture that we were working upon. So this year, we have targeted that we'll spend around INR 70-odd crores. And so -- like in between INR 65 crores to INR 70 crores in advertisement. So we'll curtail our advertisement expenditures this time. Also, we have brought a maximum of our sales team on telecalling so that their safety is also maintained, and their movement is also restricted. So in that case, we'll be saving on -- we'll be saving on the expenditure, like the ADA, the regular expenditure which is almost equal to the monthly salary every month. So we'll be saving on that sales expenses also. We are implemented -- we're trying to implement work-from-home for most of our employees who can be at home and work. So their movement is also restricted. Apart from that, the traveling of the management people or HOD of our business purposes, it is very much restricted till now. And I -- and I think this will go until the month of December. So minimum December. So we'll save a lot of amount in the travel. And the consensus, we used to have like twice a year. So we used -- we had a huge expenditure on those conferences also, when we used to take our distributors abroad and conducted our conferences. So we'll be saving on that travel and conference amount as well. So these are the overall cost-cutting things that is going on. But apart from that, I don't see any other costs coming down.
I would also like to add, indeed in terms of -- in finance expenses, financial charges which we pay as well, we are trying to maintain the cash flow steady and with minimum credit facilities from the bank. So we might experience some cut in net financial charges as well. And to top it up, we are getting a very good rate from the banks right now, so both the credit facilities are avail and the rate of interest would definitely give us a benefit in our P&L this year.
Right. And Shashi, what is the status of those pilot projects driven by vector?
So April, middle of May kind of situation, it was completely on the dropdown itself again. Having said that, what we did and initiated in this time, we ensured that the team, our sales team go on telecalling system. So our sales team was sitting back home, even -- and that happened in April as well, for the areas where people could actually supply and people could reach them. So what we did was we had trained them how to use the telecalling system and their sales module, which we have, and try and take orders from the retailers to the extent -- connect with the distributor and supply them. But definitely, from mid of May, we had that going full on. So that is one thing which we initiated, and this would help us to move on to the projects, TOC projects which we're working on more efficiently. Because now, I would say my pan-India team understands the language and importance of telecalling system. They understand the importance of supply in limited quantities, and in terms of using the technology, et cetera. So we've just kick-started now to roll out in Maharashtra, Gujarat, AP and Telangana. Along with that, we are seeing if it's possible for us to take it into account pan-India simultaneously because this 2 months has put us in a back foot. Now we want to surge it up, take it ahead in an aggressive manner. Because our team is now trained. So for this 1.5 months, we could utilize in training our team, bringing up to the curve, all these kind of things. We worked across on the DMS system, reporting systems, methodologies, training the team with the IT infrastructure, et cetera. So this has really taken us ahead in terms of maybe it has put us backwards on a backdrop for the revenue part, but it has taken us ahead in terms of training the team. So I think that we are now prepared to take the pan-India in a full stomp. But nonetheless, these 4 states, Maharashtra, Gujarat, AP, Telangana, is in focus, and they will be rolled out this month.
[Operator Instructions] The next question is from the line of Mohit Baheti from L&T Mutual Fund.
This is Mohit from L&T Mutual Fund. So first question was that you mentioned that x of COVID, your sales would have been higher by INR 80 to INR 100 crores. So if it is calculated by that, that would be a 10% growth Y-o-Y on a quarterly basis. So do we see that growth coming back or revival happening in the overall market?
Yes, as we hope that this is a basic necessities to last. There has been demand or a demand overall because we cannot do away with the purchases completely. You might just be able to defer it. Most however, people could not stock up their inventories lines, both at the DB level and at the retail level. So that also adds up to the demand. That's there. And this work-from-home culture has definitely asked us, people are more -- prefer to be more into relaxed, comfortable track pants, trousers, t-shirts, et cetera, rather than being in the formal way. Only when they're attending a virtual meeting is where they really need to get into formal clothing. So this has actually increased the demand in athleisure as well. Both innerwear and Athleisure demand are going -- we see a spike in demand there. So we definitely see a revival for the industry. I will -- it might take some time for really to jump back to the peak of [indiscernible], but yes, we would say that this industry would be on a growing trajectory. It will not fall flat much. This quarter 1 definitely would not be very good for any one of us. But going forward, we definitely see a growth trajectory.
All right. My question was more specifically to Q4 only. So if I just add that INR 80 crores in Q4, then my growth would have been in the 7%, 8%, which was highest in the year. So that is what was I comparing that. Is it the case that in Q4 itself, we have started seeing growth coming back?
Yes, absolutely. Because that's -- Q4 historically has been the highest selling month for any of the players in the industry. So that is what it was there. We had orders in hand to the tune of INR 8,200 crores.
Got it. Got it. And when we say that we are operating at 70% capacity and given that the demand is strong, we're not able to get into all the demand. Is it the case that more of this is a pent-up demand or you are saying that even after doing the pent-up demand you are saying good fresh demand as well?
It would be a lot of -- at log of would be pent-up demand because April went flattish. March was not -- we could not stop it, as I said, so most of them is definitely a pent-up demand. Only in July, August onwards is something you would be able to understand that what is the fresh demand coming in. But as of now, people are -- the demand is there. We do not actually expect that. But looking at the current scenario where the retail shops were closed, where people are sitting back home, we did not expect such kind of demand coming into the market. But it is there. We have good number of orders lined up. But to your question, the fresh demand, the demand definitely as was the regular what the industry was having in a pre-COVID era. It would take some time for us to reach there, but there would be coming up soon as well.
All right. And on the Vector project. You said that we are extending it to full sales. But I do believe that we already have implemented in Bangalore a quarter or 2 of that, right? So what do you know, how has been the response? And are the benefits what we thought of as far as expected from this project, how far we have met them or how far we have achieved them?
So currently, in Karnataka, Mohit, we have worked with this out with [ DBs] . So -- and the results which we are seeing is that we have increased the number of retailers in the locality which we are serving before than we are serving now. There has been increase in the, I would say, range selling in with these distributors, there has been increase as well. And we are also seeing that the distributors, some of the distributors, they are kind of in understanding the system and happy with the way it is going. So definitely, there has been positive results along the Vector project. But the entire April and May has taken us in a back foot in terms of expansions and catering to their demands and catering to the retailers in the area. So as you are aware, even today, when we speak, Bangalore is again getting into kind of a lockdown situation where it's been restricted -- the movement has been restricted, the retail shops are closing back again. So that is actually not able to help -- it's giving -- we are facing difficulty in terms of assessing how it would go. But before -- pre-COVID, I would say it was -- things were pretty good.
All right. My last question was, bringing athleisure under which brand?
Would you want to take that?
So. Actually, what happened is now the brand with the brand architecture changing, we have Dollar Man, Dollar Woman, Dollar Junior, Dollar Thermals and Dollar Always, which is our economy range of products. So athleisure comes on the Dollar Man now.
And what would be that as a percentage of overall scheme of things? Would it be ...
We just launched last year. So it is not a very huge percentage with respect to sale. I think it would be somewhere around 2%, 2.5%.
All right. And the EBITDA margins are similar to other [indiscernible].
No, not really. We would see a better EBITDA margin in athleisure range. It would be somewhere between 13%, 14%.
The next question is from the line of Nihal Jham from Edelweiss.
Shashi ma'am, Ankit, Mr. Vinod. Hope you all are doing fine. My first question was on the quarter. Could you give a breakup between the sales for Jan and Feb and how March was impacted specifically because of COVID?
Tough one, Nihal, I'm not having those numbers ready with me as of now because I'm just carrying the quarter numbers. Is it okay if we want to take it up this one -- you can just call me and you can just take it one-on-one?
I'll do that. That's fine. The second question was on the brand architecture and also the brands that you've come out with recently. If I'm looking at the classification right, most of the brands are obviously classified in the new architecture that you've created. I don't see Force NXT and Pepe as a part of that. So that would obviously sit under the mens or -- I just wanted to understand exactly what different would it be once the new brand of architecture is implemented other than the logo edition.
Okay. So Dollar was one umbrella brand and Force NXT was another. We never used to mention Dollar in Force NXT brand, right? It was a stand-alone separate brand, separate premium brand, which we used to have, which we are having. So the brand architecture, which took place was for the umbrella brand Dollar and not Force NXT. And if you take -- if you consider Pepe, Pepe is a JV company. It's like a third company has been formed with them. And only the bottom line gets consolidated with us. So it would be not good to, like, include it in our portfolio. And that's why you won't see any change in Force NXT. Force NXT will go as it is, as it was going in the past. But the classifications have been changed for Dollar umbrella brand and its sub-brands, basically.
Absolutely. Ankit, just a follow-up on the brand mix. If I see how the growth or the mix has been for all the major brands for FY '20, and I do understand there was a disruption for COVID at the end. But the share of Force Go Wear and Force NXT, which are the premium brands has more or less remains stagnant. So I just wanted to understand from you the weight of the issues we are having can possibly increases the distribution or the acceptance of these products specifically.
Nihal, I'll take this question. If you really look at the total turnover of Force NXT, though it is growing if you -- it's a very small number right now as compared to BigBoss, which is a INR 400 crore -- more than INR 400 crore brand. Any increase in Force NXT in itself will be overshadowed by the growth in terms of the Big Boss will be having. So precisely, the contribution is -- it's taking some time for it to show an increase in the total contribution per se. But if you really look at the numbers, if I have to look at the numbers in terms of what my growth has been there. So it's been really phenomenal there, I would say, it's for me being around about INR 25 crore, 30 crore brand right now as compared to INR 15 crore, INR 18 crore brand. So we are having an increase there. And this being just being a stand-alone brand, the acceptability in the market would definitely take some time. So we are hopeful that in another 2 years time, we should definitely do something different. And more so ever, if I really look at my numbers and the breakup internally, the athleisure segment has really picked up very well in Force NXT. So I would say the acceptability would be very soon. It's like next -- another 2 years, we see the numbers should go ahead.
Sure. Just last few questions from my side. For the implementation of the Vector project, when you're saying that Bangalore is done, and obviously, now you're running the exercise in Maharashtra, Gujarat, AP and Telangana. Wherever that starts again post-COVID, I just wanted to understand what is the contribution of these 4 states to our total sales rep?
Statewise contribution, Nihal, I would not have it ready. What is the contribution coming from 4 states right now. Maybe if you can just -- we can get in touch and we'll have them handy now, Nihal.
Last question from my side, Shashi. In the presentation, as you mentioned that the sales team is reaching out to each of the dealers separately. If I understand a dealer network is 80,000 to 1 lakh outlets, so is it that the sales team is trying to reach each of them separately, and it's like a bypass to the distribution that we directly have a connect there now or I just want to understand the [indiscernible] is interesting as a challenge.
So Nihal, we are not trying to bypass any of our distributors. So the thing is we took the buying of our distributors, took their permission, ask them for the list of the retailers as well, let's combined with our list. The list which we used to have about our retailers, right? And all the sales teams are now working in sync with the distributors, and we are trying to reach all the retailers through telecalling. So that there's shift in movement for the sales team also because of the safety purposes. And also when you are on a physical bid, you don't know which retail would be opened, which would be closed. And so to bring efficiency level also, they are reaching all the retailers over telecalling.
[Operator Instructions] The next question is from the line of Kimberly Paes from Anand Rathi.
Ma'am, I just want to know if you'll be able to share the volume numbers for Q4 and FY '20.
Yes, sure. Ankit ji [indiscernible].
So in Q4, our total volume was 4.53 crore pieces. And for the '19, '20, like for the FY '20, it was 15.78 crore pieces.
And what would be the Y-o-Y figure for this?
Okay. So 15.78 for FY '20 and for FY '19, it was 18.05.
Okay. And Q4?
And Q4 It was 5.55, which is now 4.53.
[Operator Instructions] The next question is from the line of [ Sharan Sadarangani ] from [ Longview Finance ].
I was just wondering if you can comment on the share of the unorganized market because the current commentary is that the organized players will be able to take market share from the unorganized players. In lieu of fact that the unorganized players aren't able to operate at full capacity due to the labor constraints, so when do you think that you will get back to 100% capacity with your labor? And do you think that you will be able to take market share from the unorganized sector?
I'll take this question. So to your question that how do we take or when do we take the share of unorganized market players and the shifts to the organized one, so I'll just go back a year and we'll talk about the pre-GST era where we were having similar other talks. That at the implementation of the GST, we will take over the unorganized market and take over, there will be a bigger crunch coming there because they would not be able to follow the system, they will not be able to cope up with so many returns and formalities. So either they would be left with an option to merge with these bigger players or they would be wiser from the scenario. But I think nothing happened. Everybody is functioning as they are. So not really sure if this would really happen. Definitely, we definitely try to take that share. We work towards it. But then again, would it really happen is my worry because we did not see this happening. And we were very, very sure about it. We were very positive on to this part in the GST -- pre-GST. But until now, they all exist. So I'm not very sure how this would pan out. And to this question is when we will be able to resume with the 100% capacities? It is -- we are trying to work around with the laborers, giving them -- teaching them the sanitization. Again, it's about educating them how to be safe and secure, providing them the transportation, et cetera. Because these laborers are not migrant laborers. It's just they are living in the interiors, obviously, in Bengal itself. And they have to find other mode of transportation because the local trains are not running. They have issues coming to the workplace, going back home. We are working around solutions like providing transportations to them if possible, teaching them the sanitization methodologies and how to stay safe, the importance of wearing a mask and stuff like that, giving them the PPE kits. So these are the measures which the company is taking and is hopeful that we should very soon resume our own 100% capacity.
Okay. My second and last question is that what steps specifically can we take to improve our working capital? You mentioned about specific steps, improving the accounts receivable. So what steps is the company taking just to make sure the working capital position is better?
So whether right or wrong, but this COVID has come as a blessing in disguise for at least my accounts receivable. So now today, I pick and choose my the [ BDs ] whom I need to supply. The demand is there always. And at this particular era now, I can dictate terms. If I do not get my realization and I might -- I would not supply them. I pick and choose in supply. So that has got my accounts receivables as on 30th June, as we speak, it has got us under control. I just want that this remains this way going forward as well, we are working on that. So it's a blessing at least for the account receivable portion for me, that we have this opportunity that we could pick and choose.
The next question is from the line of [ Pranay Kapadia ], individual investor.
I want to know about accounts receivables. If you see our accounts receivable is about 80% of our total reserves. So practically, according to you, how much percentage can we reduce our account receivables to the reserves? I just wanted to know that.
We have been working on this for quite some time. The accounts receivable that they have gone up. If you really look at the numbers of the other competitors as well. It's kind of an -- except for the leader in the market, mostly the accounts receivables is like pretty bad. And this has been a result of the events which has happened one after the other for the last 2 years. So as I told, that yes, it was all our efforts in terms of channel financing, advocating -- picking up, making new distributors, splitting their brands with the distributors. So these are the measures which the company has already taken with these distributors. But unfortunately, none of them yielded results. So that's one of the pain areas for the company. It has been one of the pain areas, but now we definitely see it in a decline, as I spoke, that this has -- this COVID era has helped us to get this receivables done. Because right now, we are dictating terms to our distributors in terms of the supply, because we have multiple orders and we are not able to cater to all the orders. So we have to make sure that we choose the right distributor where the receivables or the payments are timely and they are clearing their old dues. So this has given us an opportunity to get things in line, more in line now. And we are hopeful that this should continue. This improvement in receivables, this should continue.
Okay. So my further question to this would be that in a long-term perspective, like 2 years or 3 years or 5 years down the line, can you, like, put a number, like, approximately this much percentage, can you bring it down to, like, practically with a long-term perspective?
Pranay, right now it is too early because we are in a very, very uncertain times right now. We don't even know that when we would get the vaccine of the disease which we are facing, this pandemic which we are facing right now. So in this current situation, I don't think that it would be prudent for me to commit any numbers or giving numbers right now.
The next question is from the line of Laxmi Narayan from ICICI Mutual Fund.
A couple of questions. In terms of your brand reconfiguration which you have bid, right, you mentioned that the mass product is clubbed as regular. Am I -- did I hear it right?
The economy range of products that we used to have like Lehar, Bravery, Commando, Comfort. So everything has been combined and moved under Dollar Always.
Dollar Always, okay. Because I'm just looking at your presentation where you mentioned the brand contribution. There's something called regular and then there is a BigBoss. So I was just thinking that what does that regular mean?
We just launched the new brand architecture in the market in the month of May through an e-launch, which was a digital launch. And since we are talking about FY '20 figures, all the bifurcations have been done on the basis of the sub-branch we used to have. That's why -- there's BigBoss, Champion or [ let's say ] regular thermals.
Can you just explain a bit about your distribution, both in terms of, I mean, your route to market of reaching these multi-brand outlets and also your -- in which regions you are strong in? And how it has moved in the last couple of years, right? So that will be helpful.
Our -- like in North region, we are around 44%. East and West are almost equal, 24% and 26%, respectively.
Between East and? Sorry, East and?
East and West. So West contains the Central part as well. So it is 26%. East is 24% and South is the remaining 7-odd-percent. The changes, we are pretty weak in Southern part of India. But overall, if you see, we are equally distributed. North, you can see 44% just because UP and Rajasthan, 2 big states coming in together. That's why it is 42%. And none of our state contributes to more than 11% or 12% of our total sales.
And which are the top 3 states for you, if you can say that?
Rajasthan is one of our top states. We are good in Maharashtra, UP. These would be our top-performing 3 states.
And what kind of distribution setup you have, right? So -- and the...
Sorry to interrupt, but your voice is ...
No, no, my -- okay, my question is that what kind of distribution setup you have like the routes reaching through wholesalers to the multi-brand outlet site?
Yes, so we have distributor in all our -- all the districts and some of the districts have multiple distributors. We [ meet ] with the distributors through our branch offices or the depots in every state. And the distributor in turn supplies to the retailers and retailers make the tertiary sales to the consumers. And our sales team, which is around 350 in number, they provide sales support to the distributor, but not up to the 100% of the total sales that they gave us.
Sorry, you mentioned that you have around 350 distributors.
We have around 950-plus distributors.
Got it. And you mentioned that the account receivables is an issue, but then you also mentioned that it's a blessing in disguise, right? Can you just clarify those 2?
Sorry, Mr. Narayan. You might have to repeat that question. Your voice is not ...
Yes. So you mentioned that there is -- account receivables are now in control and you also mentioned that, that is one area which you are actually working on, right? So can you just explain that a bit in terms of what is your credit policies with these distributors? And what these changes have actually done that to reduce your receivable base?
So currently, our receivables are high, but we are trying to advocate channel financing to them. Plus also, we are asking them to leave certain brands and we are making new distributor in that particular district for the other brands. So therefore, overall pressure of the distributor decreases and also in coming times, our receivable from them also decreases. The distributor who is not -- who can't afford or who can't invest more in the brand. We are taking away some of the brands from them and giving it to the new distributors. So these are the 2 steps that we are taking right now. And plus currently, just for this 2, 3 months when the demand is at an all-time high, and we are unable to supply them at the 100%, so we are -- we have a more bargaining power with them. So we are asking them to pay early and then only they'll get the goods. So we are seeing a good receivables in this first quarter.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you so much for joining the earnings call of Dollar Industries Limited for the quarter 4 FY '20. And we thank you, and wish you to be safe -- stay safe and stay sound. Thank you so much. Goodbye.
Thank you. On behalf of Equirus Securities Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.