Electronics Mart India Ltd
NSE:EMIL
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Earnings Call Analysis
Q2-2024 Analysis
Electronics Mart India Ltd
In the first half of 2023, the Indian consumer electronic market demonstrated significant growth, with an emphasis on high-quality, innovative products. While smartphone sales slightly declined by 4%, a 12% value increase reflected consumer preference for higher-end devices. Technical consumer goods grew in value by 8%, while the consumer electronics sector expanded in volume by 13%. The company is riding this wave of transformation by offering a wide range of over 100 electronic brands and maintaining strategic partnerships, some over 15 years long.
Electronics Mart India Limited reported a strong 7% revenue growth in Q2 FY '24, and an impressive 14% year-on-year growth in the first half of FY '24. The company's EBITDA increased by 28% in Q2 and 31% for H1 FY '24, while EBITDA margins improved to 7.4% and 7.5% respectively. This financial performance was achieved even with the expansion to a total of 140 stores, both multi-brand (127) and exclusive brand outlets (13).
The company's profitability is evidenced by a 55% growth in PAT for Q2 FY '24 and a 51% increase for H1 FY '24, contributing to a robust annualized ROCE and ROE of 22.1% and 15.2%, respectively. Effective inventory management and supply chain efficiencies helped maintain healthy gross margins, with cash flows from operations rising notably to INR 280 crores post Ind-AS effect in H1 FY '24, compared to INR 6 crores in the previous year's first half.
The product mix in Q2 FY '24 stood with 48% in mobile phones, 37% in large appliances, and 15% combined for IT and smaller appliances. Large appliances comprised a slightly higher proportion of sales in the past, indicating a shift in consumer purchases towards other categories this quarter. Furthermore, nearly all of the company's revenue, approximately 99%, is generated from the retail segment, showcasing its strength in frontline sales.
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Ladies and gentlemen, good day, and welcome to the Electronics Mart India Limited Q2 and H1 FY '24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Karan Bajaj, CEO from Electronics Mart India Limited.
Thank you, and over to you, sir.
Thank you. Good evening and a very warm welcome to everybody present on the call. Along with me, I have Mr. Premchand Devarakonda, Chief Financial Officer and Strategic Growth Advisors, our investor relationship advisers. We have uploaded our results and investor presentation for the quarter and 6 months on the stock exchange and company's website. I hope everyone had a chance to go through the same.
To start with, the Indian consumer electronic market experienced notable growth and development in the first half of this year. In the dynamic landscape of consumer technology in India, the first half of 2023 has bought about a note worthy shipped. Even though there has been a minor 4% decrease in smartphone sales, their growth has risen by an impressive 12%.
This implies that consumers are gravitating towards high-end devices. The Indian consumer market is undergoing a transformation driven by evolving consumer preferences and a growing appetite for innovative products. The growth highlights the resilience and adaptability of the Indian consumer market in the face of changing dynamics. The technical consumer goods market executed an 8% growth in value meanwhile the consumer electronics sector saw a 13% growth in volume, demonstrating a strong market presence.
Industry report elicit growth across diverse product categories, emphasizing the prospect within the Indian consumer market. While online shopping provides convenience, it's worth noting that a substantial portion of buyers conduct online research, but ultimately make their purchases offline, which indicate the blending of the lines between online tradition and traditional off-line stores, reflecting evolving consumer landscape.
Currently, our company designated with more than 100-plus electronic brands with over 6,000-plus FTUs and has a long-standing relationship of more than 15 years with a certain number of brands, which operate in product categories, such as large appliances, mobile phones, smart appliances, IT and other categories.
Coming to Q2 FY '24, we have delivered strong growth of 7% revenue year-on-year and 14% year-on-year in H1 FY '24. Our EBITDA for Q2 FY '24 grew by 28%. For H1 FY '24, it grew by 31%. Our EBITDA margin improved to 7.4% for Q2 FY '24 and 7.5% from H1 FY '24, even after opening of new stores across regions.
In H1 FY '24, we have opened a total of 14 stores of with 13 multibrand outlet and 1 is a exclusive brand outlet. Currently, we have a total of 140 stores, 127 stores, which are MBOs and 13 stores, which are EBOs.
Out of 140 stores, 119 stores are leased, 11 are owned and 11 are partly-owned and partly-leased. As on date, we are present in 52 cities across 4 states. Even after absence of festive period in the later part of Q2 FY '24, we have managed to have a good store sales, growth of 8% plus in H1 FY '24 and 2% plus in Q2 FY '24. Current quarter Q3 FY '24 is filled with festivities and looking forward for busiest business times ahead. We believe that our local market knowledge, supply chain efficiencies and effective inventory management has enabled us to attain higher cost competitiveness and consistent profitability. Our customized product assortment and comprehensive product portfolio enables us to achieve better visibility, brand recognition, deeper market penetration and increase customer base.
To repatriate, our focus lies on providing the consumer experience, better product availability and dual connectivity spending the horizon of EMI in all directions.
With this, I request Mr. Premchand Devarakonda, our CFO, to update you on the financial performance. Thank you, all.
Thank you, Karan. Good evening, and warm welcome to all the participants. Now I would like to present the financial overview of our company.
For the second quarter of financial year '24. Our total revenue stood at to INR 1,313.2 crores as against INR 1,227.7 crores with a growth of 7% year-on-year. For H1 FY '24, our revenues stood at INR 3,002.3 crores as against INR 2,636.2 crores with a growth of 14% year-on-year. EBITDA for Q2 FY '24 stood at INR 96.6 crores as against INR 75.4 crores, which has a growth of 28% year-on-year.
For H1 FY '24, EBITDA stood at INR 266.6 crores (sic) [ INR 226.6 crores ] as against INR 172.4 crores, a growth of 31% year-on-year. EBITDA margin for Q2 FY '24 stood at 7.4%. And for H1 FY '24, it stood at 7.5%. PAT for Q2 FY '24 stood at INR 37.4 crores as against INR 24.1 crores with a growth of 55% year-on-year.
For H1 FY '24, PAT stood at with INR 97.6 crores as against INR 64.8 crores, with a growth of 51% year-on-year. Our annualized ROCE and ROE for H1 of FY '24 stood at 22.1% and 15.2%, respectively. The working capital days stood at 59 days. The gross debt to equity at the end of the quarter stood at 0.3x and the net debt to equity was 0.2x. Further, our net debt-to-EBITDA stood at 0.68x. Our cash flows from operations for H1 of FY '24 stood at INR 280 crores post Ind-AS effect, which was INR 28 crores (sic) [ INR 6 crores ] in the previous year first half.
If you see pre Ind-AS cash flows from the operations for H1 FY '24, it stood at INR 225 crores as against negative cash flow in the same period last year. For H1 FY '24, same-store growth rate stood at 8.4%. For H1 FY '24, around 44% of our retail sales came from large appliances, 42% from mobile and 14% from small appliances and IT. Around 99% of our revenue came from retail segment. With this, I open the floor for questions and answers. Thank you one and all.
[Operator Instructions]
The first question is from the line of Manish Poddar from Invesco Asset Management.
So just two questions. One is, can you help with the mix for this quarter versus the base quarter?
Is it the product mix for this quarter?
Yes. Yes. Product mix for this quarter versus the base quarter Q2 FY '23?
So the product mix on mobile phone was around 48%. Large appliances was around 37%, and other categories like IT and smaller appliances all put together were around 15%.
And what was the same number in the base quarter?
For the base quarter, it would be -- one second. So it was around 40% for -- one second. Yes. So the 49%...
This quarter, it was -- for larger appliances, it was 49% and then 36% for mobile and 15% for others.
So Manish, just to add on to another thing. So last quarter, there was INR 150 crores, the sale of -- Diwali sale that got started at 24th of September last year. So that usually is a heavy quarter for -- the period is heavier for large appliances and that category, television, washing machine, air conditioners, all put together. So that is why you would see a mobile mix higher in Q2 this year versus last year. It usually would be heavier on the appliance side.
So if I have to understand this gross margin better, if I look at the gross margins Y-o-Y, you've got about 130 bps expansion. And is mobile sales have improved by 12%, and that is a lower margin business. What explains the improvement in the gross margin?
Yes. This year, we got a lot of contribution -- gross margin contribution from the sale of extended warranty.
Okay. So how much was that sale [indiscernible] this quarter, if you have to quantify that number what would that be.
Look first half year of the current year, it was INR 31.5 crores as against INR 18 crores in the last year. So where our gross margin rate is quite high. And second thing, we also --
[Technical Difficulty]
Yes, sir, I think you have mentioned about the gross margin revenue.
It was a blend of improvement that we have done. So firstly, as you know that, definitely, the mobile gross margins are the lowest but the growth rate was there. But the exercise on other product categories where the margins were higher, plus the lower introduction of the brands together like brands that we added like Panasonic, Haier, [indiscernible] across category. Then we got a very small amount coming in from the growth of AC where market growing up during that quarter also because a blend of everything that has emphasized us to enhance the margins. So extended warranty, other exceeded businesses all put together. So I think that is why you would see an improvement in the gross margin there.
So the bigger question is how 1 should look at this margin going ahead as what I'm trying to understand? Because I thought generally quarter 2 margins are lower than quarter 1, if I look at the trend of the last few years.
Yes, very true, very true. So historically, that is what has been happening. We usually would see a Q2 gross margin being lower than Q1 because Q1 is heavier on the higher-margin products like AC and air coolers, refrigerator. So -- but now what has happened is that this is an extraction. This is a maximum extraction that you would see because new product categories got added, there were efficiencies across all categories. The margins have been improved. So all put together, this is a better number that was delivered during the quarter 2 results.
Okay. One more, if I can, just on this inventory part, if I look at the balance sheet, the inventory, I understand year-end inventory has ACs generally. And if I look at the -- but I look at the absolute amount, INR 740 crores versus INR 773 crores at the year-end, despite, let's say, also opening more stores, there's a shift in Diwali, the lower stocking of inventory, what should 1 read from that?
Sir, last year, as I told you, the 24th September was Navratri first day. So usually, we pick up our stock by 10 to 12th of September. So lastly, we would see a higher stocking coming in for the Rath Yatra period starting early last year. So this year, we started a...
No, no. I'm comparing to margin....
but it was not as aggressive, it is mainly only for the phones because Apple was launched during the last week of September this year. So we picked up used inventory on Apple. So that was 1 major thing where the inventory went up, but for larger appliances started as early as the first week of October.
Okay. Okay. So you're saying that this number will get bumped up in this quarter?
Right now, if I currently tell you, it has bumped up a little more higher to what festival period it would be. So it again come down for the Diwali season because 12th November is the Diwali, we start stocking up by now.
The next question is from the line of Ankit Kedia from PhillipCapital.
If I look at your revenue, first, thank you for giving us an north and south cluster revenue separately. Now if I add both the revenues and take your net revenue reported number, the difference would be the other operating income, which is typically the commission income and the incentives which we get, I see there's a INR 20 crore of decline in this number from INR 117 crores, INR 118 crores to INR 98 crores. Now what is leading to this decline in the quarter?
Sir, what has happened now is these are incomes pertaining to the other incentives that we usually get from the brand. So what we started doing now, we started emphasizing on the brands to give this discounting for us in the invoice itself. That is why you would see a lot of the invoicing going up in invoicing itself rather than getting attributed to the other income category. So over a period of time in the future also, you might see a decline in that number is because the income that we would receive earlier in the previous quarter would be worth invoicing. Now we are trying to get that in the bills itself so that we enjoy that margin upfront.
Sir, so if I -- okay, let me put it the other way. If I add this incentive in the South business, because North is very small. And then if I look at Delhi, then the growth is only 3% in the revenues, right? Partly could be due to the shift in festive, but what calls for only a 3% revenue growth ex of Delhi than the total revenue.
So that would -- that absolute number would be around 7% if I look at that number. If I look at the Delhi contribution, the Delhi contribution was very miniscule in terms of the numbers. So because it was around INR 55 crores. I would see a hardly growth of INR 20 crores, INR 22 crores coming in from that season whereas the total overall number of growth was around INR 100 crores in the absolute revenue sale, not the other income put together and talking about the net product sales.
So that was around INR 110 crores, out of which the Delhi contributed around INR 25-odd crores. There are some margins like Andhra grew for us up country Telangana grew for us. Definitely, it's the most mature stores for us are in the Hyderabad City that is where the lease growth has come in around 4%. But if I look at the overall number, the majority of growth has come in from under Andhra up country store and Telangana up country stores.
No. Sir, initially, what we said is now the brands are giving incentive in the bill itself. So we will not see that in the operating income. We'll see it in the product income only, right? Now if I assume this quarter also, that INR 98 crores have put that in the product income completely. And then if I look at ex of Delhi, then we are only 2.5% growth. So that number comes to around INR 1,260 crores.
So that number would not come up there -- the number will come in the quarter. I think Premchand would explain that better to you. I'll give it over to CFO now.
Yes, I didn't get your question, right? Please can you repeat that?
It's on your revenue, if I renew INR 55 crores of Delhi, I get a INR 1,258 crores revenue. And in the base quarter, if I remove Delhi INR 26 crores, I get INR 1,202 crores, that is a growth of only 2.5% ex of Delhi revenue growth. What accounts for such a low growth ex of Delhi market?
Okay. If I remove the Delhi from the revenue -- and here is the bifurcation. I'm talking about the retail sale. We'll talk...
Sir I'm talking about total revenue. Sir I'm not talking about retail sales, because the difference in the incentive is very difficult for us to calculate, right? And most of the incentives because Delhi is a very small percentage, I'm assuming that all the incentive is coming for South. And if there itself, we are not seeing growth, we are seeing decline then the absolute revenue growth is only 2.5% for us.
Yes sir, one second, one second. Sir, we're just noting down those numbers. Give us a second for that, please? Can we go to the other question? And Ankit Ji, can we come back to you a little later?
No worries. No I appreciate it. That's my second question on other expenses. Other expenses broadly flat from INR 72-odd crores to INR 73 crores. What is happening in the Delhi market. While on the EBITDA front, we have turned around Delhi, but in the base quarter, how much was the expense? And now how should we look at this turnaround or margin expansion in the Delhi market, if you can highlight, that will help us..
Sure sir, I give you a little breakdown on the major expense that we note down, where there was a decrease or increase. So partly, advertising and promotion because coming back to the same festival period last year, we started spending money on our outdoor, prints, radio and all. So there is a decline in -- definitely a declined in the Q2 versus Q2 revenue spend on the advertising, which has significantly gone down. And sales promotion and directly proportionate, which are the costs that we bear with NBFC, which are directly proportionate to the increase in sales or decrease in sales that was one major thing.
The power and fuel has gone up by a little smaller number. And apart from that is other expenses that we bear as all other expenditures like maintenance and all, which would include housekeeping staff security, which are directly proportionate to the stores which we launched during that period, which will not operational or operation, we still have to put in security and little manpower. So these store directly, the cost for the maintenance and those things have gone up because of housekeeping security and little manpower that we've deferred for those store.
So that was a major thing. But the major savings came in during the quarter in advertising front in the marketing and advertising front, which we came approximately around INR 5 crores, which would then come in probably increase in this quarter because festival period started this quarter from 15th October.
Sure. And sir, my last question is on the CapEx front and store opening front. How are we looking at next 6 months of store opening? And what will be the CapEx, remaining CapEx? Because we have done around INR 57 crores of CapEx in the first half. So for the remaining period, are we buying any more land? And how many stores are we looking to open? If you can just separate from MBO and EBO?
Yes. The total IPO expense, the total IPO that we had raised initially last year out of which INR 81.6 crores is less because in the CapEx had for us to spend, all of which we will be spending around INR 30-odd crores by this financial end, year-end and so that is the plan because we already have stores that are in pipeline, 115 stores that are in pipeline yet to open up in the next 2 quarters that we are operating in.
Apart from that, there is nothing major, no major land acquisition or building acquisition left apart from the 1 large percent of property that we were yet to pick up, which we had given in advance last year that we procured and finish the registration last month for it. Apart from that, everything is organic where it is on the lease model. So that is the plan so we'll be opening around 15-odd stores in the coming times, in the next couple of quarters, this quarter and the next quarter.
So we have already opened 14 stores. You were saying another 15 stores will open. So we'll end the year at around 29 stores addition. INR 57 crores of CapEx we have done, another INR 30-odd crores, so around total INR 90 crores CapEx for the full year is what your are guiding.
[Foreign Language]
[Operator Instructions]
The next question is from the line of Disha Kansara from Molecule Ventures.
Sir, somebody asked to you regarding improvement in gross margins, where you mentioned the numbers of warranty. So if you don't mind, could you please repeat that for me?
So ma'am last year, the same quarter, the base quarter, it was around INR 18 crores, which has gone up to INR 32 crores approximately.
For the quarter?
For the H1. So the quarter...
For the quarter, last -- for the base quarter, it was INR 4.6 crores whereas the current quarter, it is INR 18 crores.
Okay. Okay. Got it, sir. And sir, my second question is regarding growth. So our SSSG this quarter was close to 2%. So sir, are we facing any kind of growth challenges as such? And if you have been, so which factors were responsible for this drop in SSSG?
Right. Ma'am, if I look at the SSSG, this is predominating for the stores, which were operational during the last quarter and during the last year. So if I look at the overall number, it would be a little higher, but as it pertains to the same quarter whereas the operating without the festival period because festival period actually starts off a major growth for us. And then the dull period with Ashada Masam start, they actually came in the September month where last year, we started -- finish that starting with Navratri on 24th. So festival gap usually makes a major difference between INR 177 crores was the absolute number that we did in the 10 day business during the first day of Dasara, first 10 days of Navratri in last year, which we didn't do it because of the Navaratri being on15th of October and before that there was [ shutdown ] in the Northern region and the Southern region where there is a [ shutdown ] a similar way like charges and not.
So those things definitely would impact. And then overall, the sentiment during that period is lower. So people usually wait for the good day to start, the festival period to start because there are a lot more offers starting off during the festival period so the customers usually wait for the festival Diwali of the main period, especially in South, Dasara is a bigger festival especially in Andhra. So that is why we would see that difference in quarter-to-quarter. But historically, if I look at October, November, December, where all the festivals both the festival are in the same quarter, you would see a similar number and growth.
But the SSSG for us, we will look at the absolute value of the volume on the stores across category. We saw the good trajectory coming especially from mobile phones and AC. So that has been on a good higher growth side. So ACs are still growing by almost 28%, 30%, same thing with mobile phones. So that is a good sign. Whereas right now being World Cup so you would see a good growth coming in television as well.
Television was a little lower last quarter, whereas this quarter, the television sales have gone up especially for high end screens contributing to the World Cup sales.
Okay. So can we expect this number to normalize in Q3?
Normalized in terms of the split, the product split?
No, no. The sales in SSSG.
So SSSG, yes. Yes. So definitely would definitely see an improvement because the overall number would grow, so you will definitely see that growth coming from the existing stores also. And from the store that we are -- which were operational year older.
Okay. Okay. And sir, just and you've given the margin breakup for our Delhi stores and our stores in South. So currently, the EBITDA in Delhi NCR is close to 0.4%. Yes. So sir, I just wanted to understand the road map or your thought process regarding these Delhi NCR stores. So how are we planning to improve our economies of scale in Delhi stores?
Right. So Delhi is a market that has been quite exciting for us personally to make sure that we deliver our numbers in that region. There was a lot of learning initially, a lot of thinking that we had to do because the current markets that we're operating or the brands that we are operating with were had to change a little bit so product mix got a little change there. But the productivity that we are doing every day gives us the optimate look out for the future that Delhi is definitely going to deliver us a bigger number in the future.
So in the pipeline, as we talked, we've got 13 multiband outlet and 1 exclusive brand outlet, another 7 to 10 stores in what we have in the pipeline, we'll be opening 1 store right before Diwali. The new stores that we're opening are majorly in the larger areas, which are more prominent or the top 10 locations for Delhi as a consumer durable market, which are Janakpuri, Pitampura, Rohini, Lajpat Nagar, Sector 29 and Gurgaon. So these are prominent markets where our stores also will be visible. So eventually, they are just a year old. So we know that the track we are on with the growth that they're delivering for Delhi in the future.
Overall, put together, we will see a higher growth coming in. And I think this number that we've delivered now plus -- and this was through the bad summer season there because summer was really bad in North. So we could not deliver the AC and cooler sales that you were expecting in the Q1, which are going to help us grow better, but Diwali is on track.
So we I'm pretty sure that at least last summer didn't go well but this summer is going to do well. So we are on track and once the new stores open up. We are quite confident that these numbers will definitely improve.
Okay. Okay, sir. And sir, just 1 last question. Can you give us the advertisement expense number for South and for Delhi.
So Delhi, the total number that we have spent on advertising. For Q4, it was INR 9.3 crores, out of which Delhi we've spent around INR 1.1 crores. So around INR 9.3 crores, out of which INR 2 crores, approximately INR 1.1 crore we spend in Delhi, the rest of INR 8 crores approximately spend in the existing market in Telangana.
[Operator Instructions]
The next question is from the line of Dolly Choudhary from Niveshaay Investment Advisors.
I had few questions. So just someone asked about the land. So we are currently holding INR 236 crore worth of land. So I wanted to know if you're planning to buy any more stores. So how can we see this figure going forward?
So nothing major that we have in pipeline nor we've discussed anything. So the 1 pending building that we had for which we had already paid in advance was in Delhi, Lajpat Nagar, which we just bought out recently. Apart from there, nothing that we signed for now, nor we have looked at property that we will be buying at least in the next -- I mean this financial year. Nothing major acquisition to buy land or building.
Okay. And sir, I also wanted to know regarding the employee cost, like as a percentage of revenue is quite low comparatively from our peers. So can you just throw some light on this?
So there are 2 things in this from majorly how we operate on the store level is that we don't have our sales guys on the floor, it is only the managers and the cashiers and the back-end staff whereas the major sales team comes in from the respective brands only. That is why you would see a major differentiation between us and the top 4, 5 players, they have their own manpower. So that's why our manpower cost is a little lower, number one.
Number 2, the second cost that you need to attribute is towards the security and housekeeping, which comes under a different head so that is all outflows, right? So for that reason, they don't come under our direct employee cost. But when we calculate internally, we look at that as an employee cost as well, but the absolute number would be a little higher than.
Regarding like the revenue guidance for Delhi region. So like the margins have been like quite low from there, so if we see the contribution and revenue increasing from Delhi regions, will it take a hit on like EBITDA margins going forward? Like because the margins have been quite intact. But as an under Delhi contribution increases, the margins can decrease. So like how can you see that when.....
There will not be an absolute decline on the gross margin or the EBITDA margin per se. But what will happen is once the productivity goes on an optimal level that we have decided for you'll see an announcement and a growth coming. I said right now, what has happened in the last few quarters or the last financial year, we were actually leading or burning money there, right? So because we just started operations, we started spending money on rental manpower, electricity and other expenses without booking any revenue. So those things now are which is in terms of the breakeven will be to -- we spend across around INR 30 crores last year to operate in that region, which has come down and that money also would be safe, so that will add up to our profits as well eventually. So the margin will definitely gets improve because the gross margins in both the regions remains same. So once the productivity goes up, once we open up the newest stores, once we are more visible and the throughput increases in first store, we'll come back to normalcy levels.
You'll -- initially because this year, our contribution of Delhi would hardly be around INR 300 crores. So that kind of a number will not impact the overall plan that we have for this year.
Okay. And like I wanted to know the company's approach regarding the Telangana region like specifically for Hyderabad. So we have around 50 stores there. So Hyderabad and we've majority of market share, but is the market so significant because no market cannibalization happening there. I wanted to know company's take on that if you're planning to open any new stores in Hyderabad also.
So definitely any region that we operate in, let it be Ghotki, Vijayawada or Hyderabad, the existing markets. Wherever we see an opportunity if the organic growth is there and the markets are growing, where the residential areas where the markets grow beyond where our stores are not available. We will definitely look into this market, and we are always open to expand in existing markets as well.
So like we have any expansion, importunate your planning in Hyderabad region currently?
Nothing right now. Probably for Diwali now those of you who have reminded me that I need to look at Hyderabad market as well, definitely after Diwali, we will look into that market But nothing as of now in Hyderabad.
So like we have 50 stores there. So like is the market such like big in Hyderabad and no market cannibalization...
So if I give you a direct comparison, there are a few markets [indiscernible] Vijay Sales, Reliance or Croma are available where we don't have a store because we think the markets are quite small there in Hyderabad which are the territories of Hyderabad City. So once we know that these markets are mature or developed, then definitely we would like to open the store there.
Okay. And just 1 last question. Like in our current assets, you hold a significant portion for balances with government authorities. So can you give like what is that about?
Yes. So that pertains to GST majorly, which will -- so the balance of government authorities..
Ma'am, that is nothing that input credit, which we have to analyze.
[Operator Instructions]
Next question is from the line of [ Lakshmi Narayan from Songwa Investments ].
So what is your sales mix between OE product sales...
You are not audible, can you repeat the question?
I want to know what is the sales mix between OE sales, the original equipment sales and non-original equipment sales. If we go to warranty, installation, TV stands and all the other things [indiscernible] comes around. What is that...
I will just give you a broader number out of the INR 1,330 crores that we have done, that number would be around 4.5%, sir. For other categories like fans, the insurance, accessories and other categories all put together in terms of revenue.
Installation, services and all those...
Yes, sir.
Okay. And how does it grow? Like I mean, as a promotion in the last 5 years, has it grown higher for in segment?
Those are definitely have grown higher because this category were not dealt with us earlier. So the category like [ fan ] built-in appliances, kitchen appliances, they are growing. But if you look at extended warranty accessory business, the new category business at we had in the last 14, 18 months, they definitely are turning around and growing. But they would be at a similar level. They'll not grow over more than 1% of the total revenue or 2% of the total contribution to top line, sir.
Got it. And what is the sales mix between cash and noncash and if I say -- people actually paying on cash and people who are paying through cards and UPI and other things.
So that trend, the last 7 quarters have remained the same, there's not much of a change there. So it all remains the same only. So a credit card, NBHC for us is quite prevalent. So credit card -- so that remain -- cash anyway is very insignificant in the Southern region.
So what proportion cash sales will be?
The cash would be less than 10%, sir.
Got it. And how much would be EMI plus finance sales in this overall...
65% plus.
[Operator Instructions]
The next question is from the line of [ Divij Shah from Bricht Capital ].
I have one strategic question regarding our brands. Sir, ground level in Andhra and Telangana, we are famous as the Bajaj Electronics as retail stores. But whereas company is concerned, we are listed as Electronics Mart. So don't you feel that in the long run, there is a cliche of brands between Bajaj Electronics and Electronics Mart. So I want your thought process to why not consolidate one brand to get the benefit in the next 4, 5 years.
Right. So definitely, sir, we would look into that. So we had a different strategy for it. So once we are clear and confident that, that strategy work for us because for longer term, right now, we are just a year old, but for a long-term perspective, we had a different ideology for doing a different brand in that region. So in the future, we feel like we need to change the name or have a single name across the country, that definitely we'll do that. But right now, it is working for us, and it is in line with what Idea had under that brand that we wanted to grow.
But sir, majority, we are known as in the Hyderabad and Telangana as Bajaj Electronics.So it is simpler to change...
Sir our advertising or other -- editing is localized. So we don't feel that the recognition of brand Bajaj, or the recognition of brand, Electronic Mart in Hyderabad or vice versa, would impact us in terms of recognizing our brand because we had a different -- it's all localized that we're doing, so the customer base is very different. If it had been then the Andhra and Telangana market, which are similar state then probably we would have added hindrance in telling customers that is the same brand. But in operating 2 different geographies altogether, we don't consider the customer base to be similar there. But a long-term perspective, as we said correctly, we would look at incorporating or merging it in a way where customers are not agree that is the same entity.
Okay. Okay, sir. And sir, my next question is what is our general lease rent per square foot? Generalized.
General rent per square foot. Sir if I look Tier 2, Tier 3 cites so it is differentiated between 3 clusters that is as [indiscernible] up country market in Telangana, 1 is very Delhi NCR and one is Hyderabad region, so in the Hyderabad region, we pay out around INR 75, INR 80 on an average whereas the Tier 2, Tier 3 cites then it come around INR 40, INR 45, and Delhi NCR comes around INR 120 to INR 130.
Sir, who is our the nearest competitor in Delhi?
Sir, our nearest competitor in Delhi. Sir, Delhi is a market, the 2 things. Firstly, Vijay Sales, Reliance and Croma are the largest people in terms of organized players. But Delhi, again, is 1 of the largest markets in the country for distribution mom-and-pops. So around 65% of the market share in across Delhi NCR including smaller satellites around it are still run by the mom-and-pop and distribution channel. So they are equally quite strong in that region, whereas out of more organized and more develop than the other players.
The next question comes from the line of Ankit Kedia from PhillipCapital.
So if your hear the commentary of other discretionary companies. We are seeing some pressure in demand so are you seeing any differential demand for the month of October or early November in terms of, say, Hyderabad, up country Andhra or Delhi market, any difference in demand are you witnessing?
So Ankit, yes, definitely. I will -- that is what I also found out that even the market were little slower in few of the [ coastal ]. But this is part and parcel of the business. But the strategy that we are on the target that we had taken for the season, we are on track for that, sir. So I don't need to -- well, we don't need to worry or nothing. But definitely, yes, a few of the other regions that we were looking into, those that didn't perform the way they were supposed to perform this festival period. So like what they were doing in the previous festival period in last year and the year before that.
And which regions would that be or which are not performing well and which are doing better than your expectations?
So that is -- so sir, for me, the base in Delhi itself is so small that I can't comment whether it is performing, good or not but for me, I'm getting good growth in Delhi anyway. So that is a new market for us. We are growing and expanding. So then I would not directly look into the market over there in terms of whether that is performing or not. But each is a little slower this time. So Kerala belt is little slower, but apart from that, all major regions are doing well so.
Sure. If I look at the margins in the South, Andhra, a lot of your stores are new stores in Andhra, less than 2 years. So if I've to remove Hyderabad as a city and then if I have to -- see the actual growth in the Hyderabad. How would the margins be ex of Hyderabad for you in the South market because those are still growing and not mature stores out there.
Sir, if you look at the AP and the Telangana up country split, 1 advantage that today we hold there is that the product mix for mobile phone is a little lower than Hyderabad City. So automating the larger appliance or larger product category would have a higher gross margin. So the blended margin there would be a little higher, 0.2 basis higher than the Hyderabad City margin because of product mix.
Sir, but if I take your top 10 stores in Hyderabad, they would be doing INR 1,000 crores plus revenue and those would be more ownership stores, rental would be pretty much not there in those stores.
I was looking at a broader number, but it will actually based on store wise then definitely yes, Hyderabad, the EBITDA store level, EBITDA for these stores will be higher because they're old store and productivity rate would be the highest there. So the cost of expense in terms of manpower electricity, everything would be in 2-point percentages. But if I look at the active number for Andhra and Telangana to comparatively compare to it, then you would look at a regular store EBITDA margin of 7%, 7.5%, 8% kind of a number.
So should I assume right that as the stores mature in Andhra, the margin expansion can happen? Or do you think they've reached the peak margins at around INR 25 crores, INR 30 crores revenue mark, which they're currently at.
So definitely, once we emphasize on the productivity per store, that will definitely help us increase our EBITDA at store level. But again, the Tier 2, Tier 3 market have their limitations on how much we can extract out of a certain market because the market clusters are very small there and non-premium clusters.
Sure. And sir, any update on the revenue question of mine, which we discussed previously.
Prem sir is ready.
Last year, we earned about -- during the second quarter, we are about 7.5% incentive income. So it is 2.5% on the retail sale. So this quarter, we earned only 4.9% on the retail sale. And we earned same rate of return during the current quarter and without considering Delhi revenues, the growth in our revenues would have been 7.9%.
Sure. Sir, so this drop in incentive, is it because of festive delay? Is it because of market share loss or the brands have reduced incentive? And can we get back this incentive in quarter 3. So can we see a disproportionate growth in incentive in quarter 3?
No, no, no. What happened this time we have 2 types of incentives. One is on purchase. That is what we call it as sell-in. The other one is sell-out commission or sell-out incentive which is calculated on the sales targets rectitude by us. So what happened this time, most of the sellout, we asked the brand to give it on the invoice itself without waiting til the product is sold. Thereby, we will pay out the cash outflow. So that is a shift from sellout, which is a separate line item in the P&L. So from sell-out, it moved to -- because what incentive we earn on purchases will be reduced from the cost of goods. So this is a movement from one line to other lines. So that is the reason why we -- I mean if you look at the top line -- I mean, total revenue growth, it is -- it shows a little lesser growth.
Sorry, I didn't understand, but I'll take it offline with you after the call to understand in more detail.
The next question is from the line of Gaurav Arora from Equirus.
Sir, my question is on competitors...
Sorry to interrupt Mr. Gaurav, we are unable to hear you clearly. Can you come a little bit closer to the mic.
Sir, my question is on competitor and density in the large finances segment. So the demand seems to be a bit weak over there right now. So 2 questions regarding that. If I look at Q1 versus Q2 and so far in Q3, have you seen competitive intensity getting more intense or a let up in the same. And in case -- and how does that impact your margins? I mean, does higher competitive intensity within the brand? Does it benefit you? And to what extent does it do so?
Right. So Gaurav, very true. This is -- if I look at the H1 of this year, the demand for the cooling products went a little down but AC kept on growing, AC was still growing and still growing. So AC is still up by 30%, if I look at it. Let's say, if it went a little down, washing machine was a little sluggish last quarter. Television was a little sluggish, but again, I see a growth coming in during the World Cup and the festival period this year for the larger client category especially for television and high and above 65 inches or less than 75 inches, into that category. So if I look at the overall blended margin, the decrease in 5% or 6% kind of a number or growth of 5% in few of the categories, plus or minus, has not impacted the overall margin level for us, because most of the larger appliance category would remain in the similar gross margin level. But if I hear the drastic product change, product mix change, then definitely, yes, we would look at 0.5 percentage change in margins here and then, but the demand, as you said very correctly was a little sluggish last quarter and then the festive period starting this year would be on 15th of October with the first Navaratri starting in the Q3.
So now we're seeing the trends coming in, but as somebody earlier on the call were already discussing the market sentiment, a few of the regions were real slow, like Onam didn't do that well in Kerala. Kerala was a little slower this year again, each market didn't perform the way it performed during the last Durga Purja or the summer this year. The Q1 was quite good for the East market this year, whereas North, South and West was struggling for summer this year, so a lot of external factors actually affect the product mix and especially the cooling product categories. But festival period, overall your North and South looks good and we are hoping that we sail through this with good numbers.
[Operator Instructions]
As there are no further questions, I now hand the conference over to the management for the closing comments.
I would like to thank you all for joining into the call. I hope that we were able to answer all your questions. And for any other further queries, you may get in touch with us or SGA, our Investor Relations advisers. We will be happy to address all your queries, and we wish you all a very happy Diwali and happy festival season in advance. Thank you, everybody.
Thank you, members of the management team. Ladies and gentlemen, on behalf of Electronics Mart India Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.