Quick commerce became the dominant lens, LFL fell 9.9% to 8.4%, DMart Ready pivoted from pickup to home delivery (232 points shut), Minimax shelved, North India became Neville's focus as Anshul tak…

First question to CEO-designate Anshul. You spent 30 years in Unilever. How do you see these four to five months you have already spent in DMart? What made you join the retail sector? In last 10 years India has changed dramatically. How would you see the massive consumption change? Will the priority be more on doing the same but increase the speed given UP entry?

It's been 10 years that I've been away from India. India has changed quite dramatically. I personally have enjoyed the dynamism that this market and the people here have, and the opportunities that exist in business, especially in retail like DMart. 30 years in Unilever have been highly enriching. One thing remains consistent - organizations succeed only when they are customer-centric, which is even more important in retail. In my last four months at DMart, between Neville and myself we've had a structured and planned approach of this transition. I've spent time in stores, distribution centres, met many people. The business is on very strong fundamentals, built over the last 20 years with the vision and leadership of Mr. Damani and a very strong management of Neville and his team. These fundamentals and culture don't really need to change. There are opportunities to improve, to accelerate. We need capabilities spread across more geographies and a talent pipeline.

On gross margin - if I see slide 5, two categories declined as percentage of sales. Foods has gained. Could you elaborate the dip in margins in last one year? How much is because of mix gain? Foods is higher by 78 bps as mix and we see 40 bps drop in EBITDA margin. Are you seeing more rational competition and national players coming back in core non-foods and core foods?

Gross margin has slightly been better this year than last year. Two things are happening - continuous competition in FMCG space, very competitive on pricing. And on non-FMCG, the mix is shifting more towards lower-priced products. There has been a margin-mix impact but no major adverse impact. Alternate modern trade formats are emerging - in apparel there is more innovation and competition. Apparel continues to be a little softer compared to general merchandise. On innovation, D2C brands are doing significantly better job than incumbent large FMCG companies. Wherever we see opportunity to capture, we try and do that. Large FMCG companies are trying hard but there are fundamental challenges. DMart as a platform operates on the principle of value - the format automatically creates a level playing field for anybody who has good products and can deliver at great value.

On white spaces in North India - we saw you open a store or two in UP. Can you talk more about how this new cluster will evolve? Any differences compared with earlier clusters? What made you decide to enter UP? Second on private labels/exclusive brands - distributed by Align Retail (mostly DMart Ready) plus exclusive brands - any sense on scale of brands outside Align Retail?

North India and UP is a very large part - large clusters of population, very large cities. We came in here late as we are West-focused and South-focused retailer. Huge opportunity. Over the next six to eight months I'm going to put disproportionate time personally because North of India is what I'm going to handle from real estate standpoint. Doubling our bets on North India. The model works everywhere - DMart is equally successful in Punjab, Tamil Nadu, Rajasthan, Gujarat, AP. Going to newer states is not complicated except for supply chain. On private labels - private label optically seems a very interesting margin maximiser. It's a long game. You have to run this business like FMCG without overheads of FMCG. Competing with strongest brands and brightest minds. India has very smart entrepreneurs - lot of local entrepreneurs run FMCG with strong brands at decent margins. Slow and steady approach. Reasonably pleased with how our private label team is running the business.

On liquid detergents - fairly large category, growing rapidly. You have two brands operating there. With D2C brands using same manufacturing facilities - does it mean there are already manufacturers coming up as we push away from two-three dominant brands? Gives you opportunity over a five to seven-year period to grow that business meaningfully?

Lovely category. Liquid detergent was always dominated by premium high-selling-price-per-litre by two largest MNCs. Suddenly huge disruption - some other guys coming in, positioning at mid-tier segment, cost per litre plummeted. With FMCG companies operating with razor-sharp focus on segmentation, these are categories getting created. Private label has space where category is already very well evolved, has been there long, strong brands have got created, brands kept fatter margins, consistent growth at decent base. It is in those places that private label has an opportunity. Creating categories is not our job - it's a brand company's job. We should focus on being a strong retail operator. First priority is running the retail business, not creating brands or private label portfolio. Don't go there in new categories.

On private labels - while I hear you on FMCG, when you think about general merchandise and apparel part, is there a case to take private label share higher at the earliest?

There is no reason for you to see any of the products on shelf on general merchandise and apparel to not be a private label. They are actually all private labels or pseudo private labels. Some manufacturer putting his own label doesn't allow him to charge any major premiums. We negotiate cost of manufacturing plus his margin and that is selling price to us. Very small component of GMA is really a brand from the true sense of FMCG branding.

On D2C brands doing better than FMCG - thoughts on onboarding D2C brands on the platform, particularly premium D2C brands on FMCG side? That's missing on DMart Ready platform.

That's because they have their own perception. D2C brands are the premium guys, very clear about their positioning. All elite residents or businessmen think DMart is for middle class and lower middle class - that's the perception. Can't help it. They decide not to come. We break our heads chasing them saying why don't you launch? They refuse to launch. So it's not us, it's the other way around. DMart attracts all population strata of society within 3-5 km radius. DMart Ready is a relatively higher socio-economic strata of society who would like material to come to home and are not as price sensitive. We do not like to launch a very small revenue size D2C brand. We don't believe in the long tail, even in e-commerce format.

On recent quarter - we talked about deflation in staples which resulted in some impact to P&L. In the past, what kind of inflationary benefit have we seen?

Whenever inflation is in range of 5%-7%, consumption trends don't change so much at product or category level. When inflation rates go double-digit or higher, you see huge swing in consumption. Coconuts inflation is 50%, consumption dropped some 20%-25% in volume terms. Indians continue to be extremely value-conscious shoppers. We see this even in fruits and vegetables. Indian consumer is very price sensitive. Whenever there is deflation, you get huge volume pickup in those categories - people buy more and substitute something else.

We talked about investments to build superior tech-related investments for e-commerce. To what extent will this continue for us to scale up faster?

Our scale up on e-commerce has got nothing to do with our tech investment. Our tech ecosystem is very robust. It works really well. It is the choice the organization has taken in terms of speed and scale at which the e-commerce business has to grow. It is more a decision making, thought process rather than capability of build-up. All tech is already built up. Tech works well, everything is fine. It's also scalable. There is no limitation on tech standpoint. It's the choice in terms of how to calibrate the growth.

When you look back, are there any areas you think you could have done differently or better?

Better would be a better thing to say. Differently, no - I don't think I would have done anything differently. We are all very proud of what we've created. But better - we could have accelerated store expansion better. That job is unfinished, so I'll continue to chase that. We should have been maybe 600 stores by now or maybe 650 stores by now. To that extent, yes, that could have been better.

On long leases - you have experimented with long leases. Do you think that could have been an answer?

No. Long lease doesn't solve the problem of availability of high-quality or decent quality real estate. We just need to hunker down and put in more bodies, more minds, more acceleration on property acquisition. Real estate is a very micro market business. You don't have a pan India real estate operator. Developers, land acquisition, focus on micro markets - some only operate in Kandivali-Borivali or Chembur. Here is a retailer trying to acquire real estate all across the country - it's not easy. We like to do stuff that is difficult, that's how you create moats.

Is owning the land mainly because of constraint in securing long leases?

It's one of the reasons. This has come from the promoter thinking. We are there for good. We want this business to survive beyond our lifespans, our children's lifespans. That's the thinking from Mr. Damani. Real estate strategy is very clear that we are there for good.

If you reduce discounts and taxes, QC market size is about INR 70,000 crores. You have grown 20% but is that enough in industry growing 100%? You have underperformed meaningfully versus peers?

I have no comment on that. We will set up our own course. You're absolutely right basis the derivation of your numbers. But we will run the business the way we think is right from a long-term perspective. One of the best ways to counter quick commerce is not actually really digital - it is to have more and more DMart stores. Because from a value proposition we have an amazing positioning. For a value customer spending 5,000-10,000 rupees a month, they will save significantly more when they come to the store. There is top 20%-25% population of a city who wouldn't mind paying a little bit extra to get product delivered at home. We're trying to bridge that gap - high convenience high price point at one end, deep value DMart stores at other - we see opportunity in between.

Given new realities and that you yourself acknowledged that to counter QC you need to grow faster - is the 10% to 15% kind of network area still underwhelming ambition? Should it go back to 20% growth trajectory? What would it take to get there?

You've always been consistent with your pushing. Probably you could look at the management change from that perspective - while Anshul focuses on running the business, probably I'll have more time to focus on adding more and more stores. I'm very confident that we'll have a significantly larger number of store openings. Very, very bullish that we will be able to accelerate. It will also have disproportionate time from my side to focus on this area.

Marginal expansion would come largely in Tier 2, Tier 3 towns where throughput is lower. Net revenue would be slightly lower. Is this a fair understanding that revenue growth should have a little lowering down impact?

Smaller the town, less is the revenue per square feet, but then less is the investment. End of the day, ROI is the key. Acceleration of store additions will mean a better CAGR on top line growth rate. Considering competitive context including QC, we will double down on investments on store additions because we don't see store financial metrics deteriorating because of online.

QC is changing assortment every month. Have you picked up learnings to change assortments? Is there assortment thinking change because environment is changing? Is there change in general merchandise thought process?

Throughout 20-25 years nothing remains static. You are constantly observing what's happening online, offline, what products are selling, what are not. Continuous process. Our merchandising team's job, their basic existence is to look at this. Our job is to reduce friction for vendors. We have a Tuesday walk-in - you don't need an appointment, just walk in unannounced. If you qualify, you immediately get a meeting and product is launched.

On DMart Ready - after two years of consolidation, how are you looking at it? What's the next phase? Margins - last time you said potential for improving gross margin by looking at mix - hasn't fallen through this year?

I do remember saying that for DMart Ready, but there is competitive context. Broadly, this DMart Ready business will not make you lose too much money. From cost of operations standpoint, opportunity to reduce costs but in expansion phase that gets postponed. Believe there is opportunity to accelerate fulfilment centres and go closer to market. There could be opportunity to enhance margins but dependent on competitive context and positioning of value. Can't give forward-looking points of view on when profitable or breakeven. Broadly we feel this business can be broken even in a couple of years.

The niche you're targeting is value with bit of convenience for DMart Ready?

Broadly, our view is that over a period of time customers will see the benefit of shopping or migrating from other platforms of e-commerce to us because they see value. We will be focusing on delivering that in the most efficient way so that we can compete in the market and still account a small margin.

On store addition - do you have a number in mind? Should we look at 10 to 15 going to 15 to 20?

Very difficult. We've always said we'll not be able to give precise numbers. You'll see the numbers coming on quarterly basis. I can't give you a number. For next year - it won't be less than 50.

On Quick Commerce - given the performance seen in last year, you think a lot of it is already seen? Is what we see in numbers a reflection of QC plus weak demand, or that 1%-1.5% impact is behind?

We had a gut feel - 1.5%. FY24 vs FY25 like-for-like, from 9.9% we went to 8.4%. So more or less that. City-wise, depending on which city has what level of intensity on pricing/discounting, we see impact in our stores. This discounting comes in waves. When they come in waves, we also compete. Has marginal impact on like-for-like growth for those stores or cities. Please remember we also lose share to our own DMart Ready. DMart Ready has very dominant share of DMart stores in Mumbai. We won't restrict DMart Ready growth to protect DMart store sales. Promoters are very clear that business has to make money or come close to breaking even.

Anything you are doing differently in offline business because of how big QC has become - in terms of service levels? On DMart Ready - work on slotted vs immediate delivery? Refreshed thoughts?

Will we deliver in next 30 minutes or 20 minutes or 1 hour? Obviously not. Can we do deliveries in next 3 hours or 6 hours? Of course yes. Our basket values are significantly larger - that gives us sense customers like us. Stickiness factor of DMart Ready vis-a-vis other online retailers - our stickiness is order of magnitude larger. People who know us love us. We don't spend that kind of money to acquire customers. We don't believe in jargons about slotted and non-slotted. We have around 11% of orders being delivered in three hours. 65% delivered in 12 hours. Practically all orders within 24 hours. Our vision is to deliver almost all orders in six hours.

Need for immediacy may not be there but spread of QC is creating that need. Is not going for less than one hour largely a cost decision?

My first priority is value and then immediacy. Within concept of delivering value without losing money, how much earlier can I deliver? That's how we'll think about the business rather than thinking immediacy is first priority. We love competition. We don't mind if same shopper is buying from somebody else and also buying from us. We just want to take a larger pie of the pantry.

Headline ROC moderated last two years. Should we worry? Transient phase or fundamentally lower ROC because of competitive situation?

Reduction in ROC is primarily because of accelerated property acquisitions and capital employed - which effectively should be seen in a positive light because we are looking at a larger inventory of stores coming in the future. Real estate prices are going up - that should also be factored. Per location prices going up and some new stores opened are of higher value.

Costs related to improving consumer experience - is this offline, online, large part already happened or in progress?

Primarily offline more or less. We've done decent investments, it should remain the same. If I open 100 stores a year, financials are going to deteriorate because of new stores where operating costs are higher than existing base. In large metros where intensity of QC was higher, we said even if it means losing few basis points on profitability, we have to double down on experience in store. Hence slight deterioration on margin profile of stores.

From customer perspective - certain discount DMart still offers offline vs QC. Checkout time, travel time involved. If discount has been shrinking and not compensated enough for customer to step out - is the cohort going to QC small? What incrementally does a DMart store offer?

When you look at QC/e-commerce vs brick-and-mortar retail across the globe, value brick-and-mortar retailers have tremendous economic positioning. It is a moat. Brick-and-mortar value retailer has a huge moat. Global data on big retailers - nothing has happened to them. Look at operating cost of QC vs operating cost of value retailer like DMart. That's the moat. We believe it will exist. The market is huge - we just need to focus on our business.

Manpower addition up 20-25%. Post-COVID number per store had gone down. Now built back in line with focus on improving customer service. Is it back to optimum or still building up?

Probably we've overdone it a little bit. There is opportunity for calibration. Stores can be run more efficiently with better focus on execution. There's an opportunity to improve execution at stores. We need more dedication, focus on running stores efficiently. But will that reflect in P&L next year? Maybe not, because if I add more stores per year, P&L may get deteriorated. We are talking all in basis points. From capability standpoint, we've done a decent job.

Bulk of the drag on margins has been because of staff cost and other expenses. Setting aside store expansion, would that drag now hit a bottom at about 8% margin? Are these threshold margins?

That's the direction internally. We will not be bothered so much about gross margins or expenses because these move few basis points here and there. We really don't bother about that. What we are paying attention to is how fast can we grow. Bigger question is what is the CAGR rate at which we need to grow. Deterioration on gross margins, a little bit of deterioration on operating costs is perfectly fine because those are always in basis points.

Balance sheet is constrained because of real estate acquisition. Have you built pipeline as you indicated or open to stretching balance sheet to accelerate?

We've discussed internally. Reasonable debt is fine. So if we get great opportunities from real estate acquisition standpoint, we are happy to raise that, but limited, under control. So that's not off the table.

On investing in increasing service levels for last two quarters - what does this mean? Examples of what you have changed to improve service quality?

Basically focusing on having better headcount, better supervision. Better headcount so you have better experience as shopper, especially on weekend - no out-of-stocks, queues not long, all checkouts operational. Sometimes because of over-obsession of cost control, managers decide not to hire appropriately. Trying to pay attention to all those things because metro city shopper has been more discerning. In non-store area, rapid inflation on warehousing - rentals, employees - unprecedented inflation in wages. Had to take huge call on increasing wages beyond the usual.

Have all these initiatives been implemented or are they in process? Apart from store acceleration leading to cost increase.

More or less done. More or less done.

On private labels - in proper FMCG branded private labels, what percentage discount do private labels need to be at vs other brands? Is it materially margin accretive?

We follow a 20-20-20 principle. First, do we have an opportunity to at least gain a 20% share? If not, we prefer not to operate. Second, 20% share will only happen if we have minimum 20% lower price - ECP to buyer compared to a main brand. Third, can I make 20% more margin than the main brand? If main brand is making 10% margin, am I making 12%?

You're MD till Jan 26. You'll concentrate on store additions etc. Going to be associated with DMart after Jan 26?

That is for the Promoter and the Board to take a call. Can't comment post Jan 2026. My association with DMart is beyond just the position I hold. I have decent equity in the company. I'm available in whatever form. Real estate, project development, staples business take time to understand. We want Anshul to focus on the core retail business first.

Number of D2C brands or new players that you stock in stores - has it seen an increase? How is sale contribution? Are these margin accretive?

It's a sea of products. Are you saying this is moving the needle much on profitability? Of course not. They're very small. But it's good to have them - more successful products you have means you're making the format more aspirational for people to come and shop. We are always on lookout for successful brands to give good throughput. When you see good outcomes, it puts pressure on incumbents. Cumulatively beneficial for everyone - helps incumbent supplier to be more competitive, helps customer, helps us. Win-win for all.

On QC - reading of shifting consumer preference towards convenience vs value? How do you see this medium term when Gen Z population becomes larger part?

If I zoom out 15-20 years, QC has emerged not because retail hasn't been doing good job. The biggest headache for every retailer is real estate cost. If real estate cost is more reasonable, you'll see more physical retail. Biggest arbitrage QC plays on is cost of rent significantly lower compared to regular retail operator. Another reason QC doing better is infrastructure - in metro towns to move from point A to B is challenging. Becomes limitation factor for physical retail to expand. If those things get solved, quite likely you'll see reversal. But what is the moat for DMart? The moat for DMart is its gross margin. We are fine. We'll compete. Are we growing at 18%, 20%, 25% CAGR - that's what matters.

Apart from mix, what other levers do you see for margins? Tailwinds seem limited. Other big retailer is increasing private label. QC creating discounting pressure. Threshold margin medium term?

I'll give longer-term perspective - 5-10 years. Two levers - private label, which has tremendous opportunity. And getting into horizontals, which we are not into right now but suits our format. When country grows at 7%-8% GDP, DMart kind of store will automatically be ideal platform for many other categories. Look at developed country value retailers - what all they sell vs what we sell. As prosperity improves, products and sub-products have more segmentation. Opportunity to make more margins automatically emerge. Does that mean margins will go significantly up? No. We are very clear we'll not earn more than 15% or thereabouts.

On new stores in non-metro Tier 1 cities - how are they ramping up in revenue? Faster or slower? Do we open smaller stores to protect margins?

Our new store average has remained consistent in fact, or larger than our base in certain years. All our stores more or less hover around 40,000 square feet. We have a base template - same state, same cities or vicinity. Template of assortment remains more or less the same. We try to keep variables as few as possible. New stores' throughputs will always be significantly lower than older stores. That's okay - data shows trending has been the same. As they age, revenues just rapidly go up. Younger the store, CAGR growth rates are significantly higher compared to older stores.

On cost side - employee cost has gone up significantly last 18 months. Significant employee additions. Higher attrition or building new capabilities?

DMart employee attrition has fallen from last year, by almost 2-3%, from 13.9% to 11.3%. Senior leadership attrition is very low. Headcount increased significantly in stores to improve service levels. Cost of employee increased significantly in warehousing space. Certain component of headquarter costs also increased. I have paid disproportionate time over last two years considering my decision on not continuing - in building solid team at corporate office, visualizing what this company would be in next 10 years. Some part of cost is being built because of that. Will take another couple of years.

On accelerated store expansion - is there a reason because of guardrails point of view in terms of per square feet rate you want to pay? Are you dropping the guardrail a bit on cost given competition?

DMart operates on principles of DMart. Even real estate strategy is - how many stores we need to have because it is profitable and adds on. CAGR on top line and bottom line just moves. DMart Ready expansion seen from different standpoint. We don't think because I'll have more DMart stores it will become better for DMart Ready. We just feel now is the time for us to accelerate faster. With re-org, reasonably confident acceleration will be faster.

On UP - last 8-10 years track record, when entering new state, initial 2-3 years is 4-5-7 stores because of micro nuances and supply chain. Same for UP/North or faster ramp up?

We remain steadfast in positioning - new states will always be more calibrated in growth compared to existing states. One of greatest gifts is to be in right industry in country like India - 130-140 crore population. Size is on the plate for all of us. While we are overemphasizing on North, we should appreciate this country has opportunity in lot of other states. Number of stores added last year was equally distributed reasonably across all existing markets. My colleague Ramakant Baheti has been a stalwart in real estate acquisition. I'm joining him saying I do North India, you do the rest. New states will be more calibrated but reasonably more optimistic and aggressive in going to market.

Minimax - third year, 17 stores. Have you seen this becoming an answer to opening more stores in cities like Mumbai where real estate availability is challenge?

It was an experiment, everything has been tried. Now it's very simple, two prongs - DMart stores current format 40,000/30,000 sq ft, and DMart Ready home delivery. That's it. Two things, rest we should not distract ourselves. We are very clear about it.

EBITDA/PBT growth has been below revenue growth last two years. Looking ahead with accelerated store expansion - PAT growth slightly below top line is fair?

We don't over think on these things. We know we're running a business as if we own the business. We know in long term this is beneficial. In short term, if there is deterioration in P&L profitability, opex - all impact in basis points - then why not capture the market? If we have ability and management bandwidth to run stores well, then we can accelerate. 100 stores opening was just an example - please don't release analyst notes saying DMart will open 100 stores.

Pre-pandemic to now major shift in GMA from 27-28% to 22-23%. Over next 5-10 years, can salience go back to different levels?

I have a different take. While I understand concern of GMA contribution going down, triage data with how my PATs have trended over same period and how my gross margin trended. Having more shoppers buying more FMCG and grocery is driving footfalls, making business stronger. We are not really worried that GM and apparel contributions have gone down. Whenever we start a new store the GMA contribution is significantly higher. As it ages, FMCG business contribution increases. It's a secular trend where stores' grocery and FMCG buying contribution keeps increasing.

On DMart Ready - more confidence in model. You've refrained from spending on advertising. Any change in approach to create more awareness?

We have spent the last few years finessing the model and making course corrections. Pivoted is a loaded word, but we've course corrected and started focusing more on home delivery. The whole idea of not going to town in big way in advertising was to make sure we stand by the promise to customer. We are in better position today than earlier. We have started ramping up our outreach efforts and you'll start to see more of it in coming months.

Long-term owners of businesses. From 10-15 year perspective, DMart has been positioned as value company. What about positioning further as value company by reducing gross margin and making position stronger?

Where we are today is fairly okay. If competitive context around you is at level very different, or higher than you relatively, then we are okay where we are.

Difference in pricing has been reducing. The biggest moat is gross margin, value perception and value promise. Other ways to sharpen continued moat of DMart?

You can continue to remain at same gross margin and still make price lower for customer. If relationship with supplier is such that supplier is more transparent and mutual benefit is appreciated on both sides, over period of time there could be opportunity to bring price further down for shopper, even without reducing my margin.

How should we think of DMart Ready positioning and pricing from 10-15 year perspective vs DMart physical stores?

The positioning is we stand for value. We would want DMart Ready also to stand for value. Will it be as cheap as a store? Obviously not - then you will never make money. Our philosophy in longer term is at small incremental cost because we are doing two things extra for shopper - picking and delivering. Basic laws of economics will prevail. There has to be cost associated with that. If you are able to recover that, we are okay.

Revenue per square feet in FY20 was around INR 35,500 and right now also similar. Despite five years of inflation it has not increased while costs are increasing. How much is impacted by QC in metro towns?

These are metrics we hardly look at. Only time I look at turnover per square feet is three or four days prior to analyst call. If 88% of my property is ownership, we take a call on what money this location will make basis what we invest. Turnover per square feet is a vanity from that standpoint. For us, ROI at the store is what we look at. We are pretty okay.

Cost per square feet increasing higher pace vs sales per square feet impacting margins?

My gross margins are getting impacted because of competitive context. EBITDA margins are getting impacted because of opex. Opex impacted primarily because of employee costs. Real estate costs are increasing - amount required to buy new real estate per square feet is going up. Broadly, ROI is the key.

Using DMart stores as fulfilment centre - thought of 3-6 hour delivery to accelerate DMart Ready?

Existing stores operate at very high efficiency. Having a DMart Ready store there is detrimental to operations of the DMart store. There is no dearth of FC availability. We can operate at smaller sized FC. Earlier we had issues confidence in running fulfilment centre at smaller scale. We've done few tests. Now we can run fulfilment centre at smaller scale, but we need it to be separate from the store. Competition has just gone ahead and opened FCs/dark stores at very high pace because availability is very easy. We are very clear that has to be separate from store.

What is the focus geography of expansion?

Broadly the focus on expansion now is almost everywhere except Northeast and a few states east of the country. We will be looking at everywhere broadly.

Delhi NCR was about 8 stores couple years back, still about 9-odd. Any operational or regulatory bottlenecks?

NCR, some pockets, there's no real estate. That's the problem. Number of options available are very few but we're trying our best. We still believe NCR kind of location, in current situation, can have 100 stores in 5-year horizon. Of course you can have.

Some business models running at 14% EBITDA margin with private label range. While definitely have L'Oreal, Pantene, Dove, also options for lower-end customers - your private branded shampoos to migrate them. Helps in ladder of premiumisation - maybe makes sense for you, adds gross margin?

This all we keep doing, work in progress. For us first thing is what does shopper want and what trust we want to build. Three people involved - shopper, OEM, retailer. We are custodians of shopper's interest. Margin is not the driver. First criteria is products we are confident about, are safe, have utility and performance capability at that price. Work in progress.

Multi-brand retailers tried 20-30-50-70% private label to combat real estate cost. If you could have private label 20-30% lower than Lever/P&G, customer can take your product. Flow through is good?

We're doing that. But should we push beyond a point? No. Let the customer decide. We are very particular about which segments and sub-segments we have private labels in. If I don't have confidence in having a private label in a shampoo or toothpaste category, then I will not bring the private label on the shelf. It's a question of DMart's reputation.

Any target for private label - 25-30% in 10 years going to 40%?

We don't work like that. It's an everyday thing. Targets are great up to a point. After that, targets are detrimental to everybody's interests.

Pre-COVID apparel did well, post-COVID hasn't worked out. Any breakthrough? Other diversified retailers getting their act on apparel - good gross margin business.

We are primarily a food grocer. Being a food grocer has limitations on doing apparel up to an extent. Market allowed us to do long, broad-range apparel because competitive intensity was not so much. As more specialists came into apparel, we pivoted to focusing more on basics. You have to align format to what works for you. Basic apparel only makes sense for business like ours. Stock turns are very important. Salience to format is very important.

Theoretically TAM is more than 1,000 stores or at least 1,000 stores?

Back-of-the-envelope calculation. We have broadly for the country around 1,800-1,900 stores as a gap across the country. 2,200 is approximately number of stores, of which 400-something is what we already have. So 1,800 approximately is the opportunity. Very conservative outlook.

DMart Ready - increase in transportation cost and labour cost. Margins under pressure for prolonged period? Target for breakeven at EBITDA?

On EBITDA per Ind-AS it'll be faster, but rent comes below EBITDA. Transportation costs increased because home delivery significantly increased. The more home delivery we get, opportunity to earn better gross margin improves. Wages went up - this industry has gone through fire on hiring delivery boys/girls. Wages there have significantly increased - market phenomenon, demand-supply. Our view is at P&L level, PAT, we have to break even at that level, not EBITDA. All attempts being made to grow at reasonable level and try to be as close to break-even as possible. Can't give clear number, working on it.

Last call you highlighted UP and Odisha. We have not seen adding two states in same year. Will Odisha be first or UP? Bandwidth to populate two states?

Possible to do both states, but we'll see more stores in UP for obvious reasons. We have inventory there. We have acquired some locations. UP has larger opportunity compared to Odisha, from city standpoint.

Among new initiatives - Minimax and Reflect Healthcare - any thoughts on pharma side scaling up?

Pharma also has great opportunity. Work in progress. We have seven pharmacy stores now operational and encouraging results. All these subsidiary businesses should not be seen as revenue by itself. They complement and make main DMart store format stronger. Reason they're built as separate business is because nature of business is different - needs different lens. My advice to incoming management team - don't go outside DMart stores. Do this for DMart to make DMart stronger. We do whatever we do to make the DMart store stronger and stronger.