Aditya Birla Nuvo Ltd.

Transcript of conference call

held on 4th May 2015
Consolidation of Branded Apparels businesses

Management team:

Sushil Agarwal Whole time Director & CFO, ABNL

Ashish Dikshit Business Head, Madura Fashion & Lifestyle
Shital Mehta CEO, Pantaloons Fashion & Retail Ltd.
S. Visvanathan CFO, Apparels Business

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Disclaimer

Certain statements in the earnings call transcript may not be based on historical information or facts and may
be forward looking statements within the meaning of applicable securities laws and regulations, including,
but not limited to, those relating to general business plans & strategy of the Company, its future outlook &
growth prospects, future developments in its businesses, its competitive & regulatory environment and
management's current views & assumptions which may not remain constant due to risks and uncertainties.
Actual results could differ materially from those expressed or implied. The Company assumes no responsibility
to publicly amend, modify or revise any statement, on the basis of any subsequent development, information
or events, or otherwise. This transcript does not constitute a prospectus, offering circular or offering
memorandum or an offer to acquire any shares and should not be considered as a recommendation that any
investor should subscribe for or purchase any of the Companys shares.

Moderator: Ladies and gentlemen good day and welcome to the conference call of
Aditya Birla Nuvo. The call will begin with a brief overview by the
Management followed by a question and answer session. Please note that
the conference call will be focused on the announced consolidation of the
Branded Apparels businesses. Since Aditya Birla Nuvo and Pantaloons will
be declaring Quarterly Results shortly, the management will not be able to
share any estimate relating to Q4 earnings. With this I hand the conference
over to Mr. Sushil Agarwal, Whole Time Director & CFO of Aditya Birla Nuvo.
Thank you and over to you sir.

Sushil Agarwal: Good afternoon Ladies and Gentlemen. Welcome to the conference call of
Aditya Birla Nuvo. With me I have Ashish Dikshit Business Head of Madura
Fashion & Lifestyle Business, Shital Mehta the CEO of Pantaloons and S.
Visvanathan CFO for Apparels Business.

Hope you have gone through the investor presentation and press release. I
will briefly touch upon the key highlights of the transaction.

In line with our vision Aditya Birla Nuvo has invested in promising sectors
and built a leadership position across the businesses over the last decade. As
you may recall all our gestating businesses became profitable in 2011. Post
that as a part of shareholders value maximization exercise we divested two
of our sub-scale businesses Carbon Black and BPO to focus on other
businesses and strengthen our balance sheet to support growth capital
requirements of our core businesses. It has been the endeavor of the
company to unlock value for its shareholders once the business attains a
large size and can stand on its own feet to meet its future requirements. The
creation of Indias largest branded fashion company having an unparalleled
scale and size is a move in this direction. It will unlock value for the
shareholders by giving them a direct access to a pure play in the branded
fashion company.

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If you look at the structure, Pantaloons Fashion and Retail Ltd. has 9.3 Crore
shares today. It will be issuing 68 Crore new shares to the shareholders of
ABNL for consolidation of Madura business. This implies fair value of Madura
being more than seven times of the fair value of Pantaloons. We believe that
both Madura and Pantaloons were not getting fair value under the current
structure. Pantaloons particularly since it was in the investment phase for
the last few years and having lower public float and Madura in the absence
of pure play. With this consolidation we aim to address both of these issues.

The combined branded fashion entity will be a unique proposition with India's
number one branded Menswear player and number one branded
Womenswear player coming together to create one of the fastest growing
and among the most profitable company in the branded fashion space. The
trailing 12 months sales for the combined business is close to ` 5,300 Crore
and EBITDA is around ` 500 Crore as of December 2014. With a strong
Balance Sheet and internal accruals, the combined entity will be able to
accelerate growth in the business and continue to outperform the industry.
On a combined basis the branded business has grown at a CAGR of 40% in
the past five years in terms of revenue and 43% in terms of EBITDA.

Another area where we stand strong and distinguished is that we are not just
the retailer of brands; we are the owners and creators of these brands. In
Madura we own the largest selling Menswear brand in India viz. Louis
Philippe and Van Heusen. In Pantaloons 60% of our sales come from private
brands. Madura generated 64% ROACE in FY14 and in nine months ended
December 14 it generated 70% ROACE which reflects the strength of its
brands and multi-channel distribution business model. There has been a
marked improvement in Pantaloons financials since the acquisition.
Increased share of private brands in revenue from 47% to 60% has led 400
bps improvement in the gross margin. The combined entity will have the
largest retail network in the fashion space with around 1,869 stores spanning
across 5 million sq. ft. as of March 2015. The consolidation will also enable
tapping of operational synergies on various fronts such as sourcing, real
estate and technology platforms.

With this we are now open for the question and answer session. Thank you.

Moderator: Thank you very much sir. Participants, we will now begin with the question
and answer session. We have the first question from Edelweiss. Please go
ahead.

Abneesh: Hi sir. This is Abneesh this side. My first question is if I see the two entities
which are getting merged, Pantaloons is at 3% EBITDA margin and Madura is

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at 12%. When do you see these aligning towards each other and Pantaloons
especially when it was acquired with the earlier promoter group it was
reporting much higher margin, so if you could go into details as to why the
margins are much lower?

Ashish Dikshit: So clearly what you suggest is when would Pantaloons margin improve
further from where they are today? As you can see from current trajectory
and current performance, this year over nine months our margin
improvement has been about 60%. We have increased our margins from
2.3% last year nine months to 4.2% this year. Our longer term strategy is to
continue to create larger share of private brands. We inherited a business
which required a deeper investment and sort of revival of many stores and
that's where a lot of investments have gone in last 2-3 years. Its a clearly
improving trend over last couple of quarters and its difficult to predict how it
will come to 12%. I think nobody in the industry who is in large format retail
today is anywhere close to that but we clearly believe there is a lot of room
that we inherently see in Pantaloons trajectory going forward.

Abneesh: Could you talk about the synergy benefits. I do not want any specific
guidance but if you could elaborate in terms of cost, in terms of revenue,
what could be the synergy benefits because earlier also they were a part of
essentially the same promoter and now they will be a part of the same
entity, so how much of the synergy is still doable? And in terms of Pantaloons
again are we done in terms of the re-branding and the repositioning or since
it is a combined entity now, there will be a further rethink on that?

Ashish Dikshit: As far as the brand Pantaloons is concerned and its proposition from
consumer point of view, a lot of fundamental work has already happened and
now its a matter of actually spreading it out, expanding distribution and
leveraging that new positioning stronger. So I don't think there is a lot of
work on that account which is likely to happen. And on no account because
of this transaction is there any possibility of any changes in the consumer
facing side of the business, so Pantaloons brand, its formats are targeted
towards a certain customers with a certain proposition and that will continue
to remain. On the question of synergy I think you have rightly said being part
of a larger entity there are many elements of synergy which are somewhat
already built in, it gets informed by similar eco-system, there is a lot of
knowledge sharing which happens across the businesses and therefore the
synergy going forward is really about deepening the same areas. Going to
the market together was not always possible but many of the real estate
positions can be now stronger as a combined entity when you go with a
multitude of small brand formats and a large brand format, so we see
synergy there where perhaps our leverage with malls will improve. Now
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some of this needs to be seen and evolved as we go forward. The other area
of synergy is really about talent where capabilities on both sides can be
combined to help each other far more seamlessly than what we have been
able to do so far. The third is in the backend which is on Synergy side. Both
the businesses have built strengths in complimentary areas, one in the
womens side other in the mens side. There is a lot to be shared in
combined sourcing, in increasing the volume and therefore getting some
benefits from the economies of scale that could come up. But all these are
things which need to be executed as we go forward.

Abneesh: Any guidance that you may provide on how much can be the sales figure for
the entity and how much will be the margin improvement from a 3-4 year
perspective?

Ashish Dikshit: As mentioned we are hopeful for multiple synergy benefits, but we do not
wish to predict that right now.

Moderator: Thank you. Our next question is from the line of Rishabh Chudgar from Enam
Holdings. Please go ahead.

Rishabh Chudgar: I have a couple of questions from my side. My first question is if you can just
tell us little bit in terms of what is the Capital Expenditure of the CAPEX plans
or the expansion plans for both businesses as a combined entity going
forward over the next 2-3 year period. My second question is, are there any
further plans to integrate other businesses of the larger Aditya Birla Group.
There were talks on news that the MORE value format was also being
considered, so are there any future plans on that regard that you can share
with us? That's all from my side. Thank you.

Sushil Agarwal: Let me answer the second question. We do not have any plans as of now of
merging ABRL. The branded apparel business is getting consolidated in this
transaction. On Capex guidance, Ashish will take you through.

Ashish Dikshit: If you look at the pace at which we are expanding, we are opening around
250 - 300 stores per year in Madura and Pantaloons has also accelerated its
expansion now, opening in excess of 30 stores per year. So that's the kind of
trajectory that we have in the pipeline going forward. In terms of CAPEX
because lot of Maduras expansion is built through franchisee model, so not
all of it is linearly connected with our CAPEX but overall I think the combined
business would look at around ` 250 - 300 Crore for CAPEX that we see year-
on-year going forward.

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Rishabh Chudgar: Just a follow up on that, there was a lot of work that was done on the
Pantaloons format in terms of getting the store renovations done and trying
to improve the look and the feel of the stores. Is that process now largely
behind? And most of the CAPEX going forward will be expansion CAPEX or is
there still a work in progress?

Shital Mehta: You are right, In the last two years we have renovated 40 odd stores and
with that, by and large the renovation part of the existing network we are
done with. Therefore almost the entire CAPEX going forward is going to be
expansion led and any normal renovations which you have every year, but
otherwise the large-scale renovation exercise has already been done.

Rishabh Chudgar: Great. That's all.

Moderator: Thank you. Our next question is from the line of Abhishek Ranganathan from
Phillip Capital. Please go ahead.

Abhishek Ranganathan: I have a question largely on the synergy that you mentioned. One is also I
wanted to see if there would be any significant savings in the Corporate Cost
once we have an entity of the size and scale under one roof? And second is if
you could share with us the nature of the capital employed in Madura. We
don't have the breakup, the Working Capital and an idea of Fixed Assets?
And lastly would be on the taxation part, because we understand there is
almost ` 450-500 Crore of accumulated book losses on Pantaloons Fashion,
so how would that play out and what would be the impact on effective tax
rate going ahead including MAT?

S. Visvanathan: So, clearly as you mentioned that there are losses sitting on the balance
sheet of Pantaloons and on the other hand Madura is a very profitable
division. Once it gets merged there is a clear scope of getting those losses
adjusted. And as you also must have seen the balance sheet of Pantaloons,
at the time of acquisition there was a large goodwill created on account of
the brand value, the depreciation on which will be available for the benefit
on account of taxes. What was your other question?

Abhishek Ranganathan: First question was on the corporate cost savings, second was on the capital
employed and if you could share some breakup on the capital employed for
Madura particularly.

Ashish Dikshit: As you know whenever there is integration of businesses, we have not really
done the exact calculations, but there are always some benefits which get
accrued on account of the corporate costs. And so far as the Madura capital
employed is concerned, it has been in the range of around ` 550 Crore.

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S. Visvanathan: Half of the Madura Capital employed is deployed in Fixed Assets and the
other half is Net Working Capital.

Abhishek Ranganathan: Okay. So which means that coming to correlate to that how many of our
stores are actually owned? If I just want to go back calculate and just to get a
sense of the CAPEX ahead and historical CAPEX what portion of the retail
space of 2.4-2.5 million sq. ft. is our owned and then what portion would be
franchised?

Ashish Dikshit: Incrementally as we are going forward close to 80% of the stores from CAPEX
point of view are being invested by franchisees. Our own investment in
stores in relation to our overall expansion is only about 20% in absolute
number of stores. These happen to be slightly more impactful and
strategically important stores. May be in value terms our investment and
CAPEX will be equal to 25% of the network. But we have a model which is
largely franchisee invested model for all practical purposes for large part of
our business.

Abhishek Ranganathan: So even currently you can say about 20-25% of this space would be owned
and 70-75% would be franchised?

Ashish Dikshit: So they are two different questions you are asking. One is about who invests
in CAPEX, second who owns the stores.

Abhishek Ranganathan: Yes. Basically what I am trying to understand is probably all the Fixed Assets
sitting on the books, what area does it represent?

Ashish Dikshit: Fixed Assets sitting on the books would represent about close to 30% of
retail store area because historically the share of franchisee CAPEX has gone
up year on year. On a total retail network basis, about 30-35% at best would
be our own CAPEX in retail stores.

Abhishek Ranganathan: And in terms of distribution we have a significant amount of distribution

through Large Format Stores and wholesale. So on these channels after the
integration do we see any change in terms? I know you mentioned that the
front end would not change as much but do you see a closer or higher share
of sales being driven through Pantaloons especially on the Large Format
Stores side?

Ashish Dikshit: No we dont. We always had choice and opportunity to increase Maduras
share at Pantaloons or reduce it. All those will be driven by consumer
strategies and therefore I don't see a dramatic shift of business moving from
one channel to another. It is business as usual as far as that is concerned.

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Abhishek Ranganathan: And this ` 250-300 Crore CAPEX, would it be carrying on for a good
foreseeable amount of time?

Ashish Dikshit: It's difficult to say going forward how nature of business would change but
Pantaloons expansion would obviously be more internally CAPEX led, i.e.,
have to be funded internally. While Maduras expansion as I said for 75-80%
of stores roll out will continue to be done externally by franchisee. As we go
forward hopefully acceleration and expansion in both businesses may be
possible and to that extent CAPEX would perhaps be in a similar zone.

Abhishek Ranganathan: Right. And on the Tax Rate so basically we will be looking at absolutely no
tax on our business for at least a good amount of time as we see it?

S. Visvanathan: As we discussed earlier there is going to be a tax shield on Pantaloons

losses.

Abhishek Ranganathan: And there will be no MAT also?

S. Visvanathan: MAT, the way it is calculated, it might be levied.

Moderator: Mr. Tejas Shah from Spark Capital. You may go ahead with your question.

Tejas Shah: Just wanted to know what the exposure of Madura Garments was last year to
Online Retail and how it has panned out in last nine months? And how are we
managing Online versus Off-line conflict which has actually aggravated in
last 9-12 months or so?

Ashish Dikshit: Last year in FY14, it was negligible. In FY-15 it is about less than 3% for last
nine months, so it is still very small part of our business. The second
question on how we are managing conflict; we are managing conflict by
exercising discipline ourselves and also working with partners who are willing
to exercise that discipline as far as our brands are concerned. To that extent
we have ensured that the price conflicts for consumer doesn't remain. We do
not want our brands to be sold at a discount on an online platform while we
are trying to sell through a very large network at full price and that's really
the nature of engagement we have with our partners.

Moderator: We will proceed with the next question that's from the line of Aman Batra
from Goldman Sachs. Please go ahead.

Aman Batra: This is on Madura; the Net Working Capital you said is roughly 50% of the
capital employed which is roughly like ` 275 Crore. On Pantaloons you seem
to be managing with almost negligible Net Working Capital, so why this huge

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difference and is it because of the various formats you are running, if you
can throw some light on that?

Ashish Dixit: If you look at, one is a pure retail business where you need Working Capital
primarily for your inventory at stores. In Madura business we have a large
part of wholesale business and also close to one-third of Madura business we
manufacture ourselves so there is raw material which is there in the pipeline,
so it is not just finished goods, it is first of all inventory at stores as well as
inventory meant for wholesale. So therefore warehouse inventory to that
extent will be higher for Madura. And secondly it is an end-to-end play that
we have in Madura with close to one-third of our products being
manufactured ourselves, where WIP and fabric and rest of the part of the
value chain is also absorbed in that.

Aman Batra: The second question is on Pantaloons, in the rollout you are saying 30+
stores per year, that will be the standard format size or is it 2 to 3 different
formats that you have figured out?

Shital Mehta: We have what we are calling FOUR formats approach depending on the
catchment size and the nature of it which is ranging from what we call as
entry level format which is around 10,000 sq. ft., we have a fashion format
which operates anywhere around 15,000 sq. ft., Lifestyle format which
operates around 20,000 and a Mega Destination format which could be a
very large format store maybe as high as (+30,000) sq. ft. So these formats
are already there in each of the catchments have been mapped out in terms
of as and when we are able to secure the real estate which format will go
into which catchment all that has been mapped out for the next couple of
years.

Moderator: Thank you. Our next question is from the line of the Girish Achhipalia from
Morgan Stanley. Please go ahead.

Girish Achhipalia: Congratulations to the team on this unlocking. Just one question on
valuations if you could just throw some light as to how, whats the thought
process behind the swap ratio and how you have arrived at the 5 to 26 and
other swap ratios. Thanks.

Sushil Agarwal: The valuation has been done by independent valuers - Bansi S. Mehta and
Price Waterhouse and fairness opinion has been given by JM Financial for
Pantaloons and Axis Capital for Aditya Birla Nuvo. As I had explained that
Pantaloons currently has 9.3 crore shares outstanding and 68 Crore fresh
shares will be issued to the shareholders of Aditya Birla Nuvo as the value of
Madura. So typically it has been valued at 7.3 times of Pantaloons. And

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broadly in my own personal view, Pantaloons because it was in investment

phase and as Shital was also articulating that in last 2 to 2.5 years not only
the new stores have been added but even in the existing stores there was
heavy renovation getting done. Also since there was a very limited float
which was available in the market, possibly because of that too current
market price may not be fair representation of the right value of Pantaloons
and so at this stage I think we will be able to only give you this sense. The
independent valuers obviously must have taken various methodologies into
account while calculating the actual number based on the trailing multiples
of comparable cases, market cap and discounted cash flow etc.

Girish Achhipalia: The second question is on the plans going forward on the Capital Structure.
Is there any plan on raising further equity in this new entity now and second
what kind of debt reduction targets do we foresee in the next 2 to 3 years?

Sushil Agarwal: So first on capital raising, I do not think there is a need for the company
because the combined entity looks a very profitable company and as we
have shown growth of 40% in revenues and 43% in EBIDTA over last five
years, so if you see that as a backdrop, clearly we do not see any
requirement for raising capital in the combined company and given the
strong balance sheet of the combined company and with the CAPEX number
which Ashish and Shital had given a reference to, there would be a reduction
of the debt as we go along.

Moderator: Thank you. Our next question is from the line of Resham Jain from Batliwala
& Karani Securities. Please go ahead.

Resham Jain: Sir just wanted to understand with respect to Madura what are the inventory
receivables and payables days if you can just highlight?

Ashish Dikshit: Our payable days are between 85 - 90 days and they keep varying
depending on the season. Our debtors are typically between 22 to 25 days
again seasonality has some impact on that because large wholesale
customers buy large quantities upfront in the season but it is around 25
days. Inventory on overall network would be about 130 - 140 days and again
average here depends on seasonality.

Resham Jain: Right so this was my first question. Second is on the debt side, the debt
which is getting transferred to Pantaloons ` 473 Crore, is it related to Madura
specifically or how that figure is arrived if you can just explain?

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Sushil Agarwal: As you know that on a Mirror Demerger basis there are allocated debt which
goes to the various businesses so there is an allocation and a small part is on
the account of Madura specific loan.

Resham Jain: Okay, because you mentioned the 70% ROACE, so just wanted to understand
the amount of equity into the business because 70% ROACE on ` 600 Crore
of capital employed and close to ` 473 Crore of debt getting transferred to
Pantaloons, if you can help us in understanding the same?

Sushil Agarwal: It is largely allocated debt calculated in line with the demerger provisions. I
don't think we will be able to explain the exact calculation on the call but we
can take you through later. But ROACE as you know we have been reporting
all along and ROACE has been growing for a period of time which is now
reached to 70%.

Moderator: Thank you. Our next question is from the line of Subhankar Ojha from SKS
Capital. Please go ahead.

Subhankar Ojha: It is a related question, what is the consolidated debt of the entity post this
consolidation?

Sushil Agarwal: Broadly, I think as of March the Pantaloons Balance Sheet will have roughly
`1300 Crore debt and ` 473 Crore debt is getting transferred along with
Madura - that will give you the consolidated debt in the combined entity.

Subhankar Ojha: So that is approximately ` 1800 Crore?

Sushil Agarwal: Nearly, yes.

Subhankar Ojha: Okay. And you mean the EBITDA of the entity will be approximately ` 500
Crore?

S. Visvanathan: For trailing 12 months ending December 2014, yes.

Moderator: Thank you. Our next question is from the line of Tanushree Rao from
Edelweiss. Please go ahead.

Tanushree Rao: Sir we just want to confirm that are we the owners of these two brands, Louis
Philippe and Van Heusen?

Ashish Dikshit: Yes.

Tanushree Rao: And what about Allen Solly - are we not the owners and just the franchisee
for it?

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Ashish Dikshit: We have perpetual ownership through long-term license rights of these
brands and it holds true for Louis Philippe, Van Heusen, Allen Solly, and Peter
England. Globally however, Van Heusen is the only brand which has another
owner, which is a simultaneous license available to PVH in USA. So except to
that we are the global owners of these four brands.

Tanushree Rao: Okay so we are the owners for these brands, because I had the impression
that these brands are already created long back, so we are the owners of
these brands for all over the world, right?

Ashish Dikshit: So in Van Heusen, there is another owner of the brand for different
geographies of the world which is PVH. So for Van Heusen, we have
ownership rights in India as well some other geographies of the world. For all
other three brands, we have global ownership rights and not for just India.
And these rights are for perpetuity.

Tanushree Rao: So we have bought these brands long back from them, right?

Ashish Dikshit: Yes.

Tanushree Rao: Second thing is consolidated sale of these 4 - 5 brands what we have is
`3,500 Crore but is it possible to get the breakup like how big is Louis
Philippe or Van Heusen or Allen Solly?

Ashish Dikshit: We don't give brand level revenues but needless to say these are the largest
brands in the industry.

Tanushree Rao: Any ballpark number like Louis Philippe or Van Heusen will be ` 1000 Crore
brand or who is the biggest of the four brands, logically it looks Louis Philippe
but still?

Ashish Dikshit: Louis Philippe and Van Heusen are very close to each other and they are
very close to the number that you have mentioned.

Tanushree Rao: So is ` 1000 Crore or ` 1500 Crore a safe number to assume for these two
brands each?

Ashish Dikshit: We have four big brands Louis Philippe, Van Heusen, Allen Solly, and Peter
England. They are marginally different in terms of their revenues and we
don't want to actually get into a brand level revenue disclosure.

Tanushree Rao: Because I am sure the formats are different, the quality is different, their
positioning is very different, so I was just a little curious to know how these
brands sizes are?
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Ashish Dikshit: They are large brands. Louis Philippe, Van Heusen, and Peter England are the
largest three brands and they are very close to each other in terms of the
size.

Tanushree Rao: Okay. Now since we are not discussing the brand-wise revenues. Is it
possible that you can give me the concept of EBOs or departmental or how is
that break out or Online across the brands?

Ashish Dikshit: Its very similar. We look at it at network level. Retail is close to 45% of our
revenue, between 45-50% it varies between the brands. The large format
stores are between 10-15%, between 25-30% is multi-brand outlets. There is
about 8 to 10% which is through factory outlets, discount stores and other
miscellaneous institutional orders etc. Online is yet to register a meaningful
share as far as our business is concerned so far.

Moderator: Thank you. We have the next follow-up question from the line of Rishabh
Chudgar from Enam Holdings. Please go ahead.

Rishabh Chudgar: Just a couple of questions from my side. Just wanted to understand the
depreciation in Pantaloons, the current run rate on an annualized basis is
close to about ` 180 Crore and if I exclude out the goodwill that sits on the
books, the rate of depreciation seems to be pretty high. So just wanted to
get an understanding as to what the depreciation on a proforma basis for the
combined entity would be on a going forward basis?

S. Visvanathan: In the case of Pantaloons we have provided for an accelerated depreciation

in the case of some stores where we have undertaken a complete
refurbishment of the existing stores and where the store closure has taken
place, so to that extent the number looks higher than what it normally
should look like.

Rishabh Chudgar: So what would be the normalized run rate from next year onwards because
since your store renovations are behind I would assume that you wouldnt
have these expenses going forward.

S. Visvanathan: That will depend upon the number of stores that come into effect in this
quarter, etc.

Rishabh Chudgar: The second question was as a result of this transaction do we see any excess
goodwill that is being sort of created on the Pantaloons Balance Sheet?
Going forward is there any sort of thought process on amortizing goodwill or
impairing goodwill going forward?

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Sushil Agarwal: We are still in discussion with the auditors.

Moderator: Thank you. Our next question is from the line of Avinash Agarwal from
Sundaram Mutual Fund. Please go ahead.

Avinash Agarwal: As a result of this merger do you see any benefits coming in terms of the
interest rates on the Pantaloons side?

Sushil Agarwal: Yes clearly I think someone had asked earlier if the debt level is going to go
down, irrespective there would be a lower interest cost and from a rate point
of view, with strong balance sheet and as interest rate is generally on a
falling side, clearly there would be some benefit.

Avinash Agarwal: What can we assume as the Interest Rate for the combined entity?

Sushil Agarwal: If you look at Nuvos credit lines, we have been broadly around 8.5-9% and
Pantaloons little higher than 10%, so we are in the process of renegotiating
on the existing loans for Pantaloons. As we do, we will communicate to you.

Moderator: Thank you. Next question is from the line of Varun Ahuja from UBS. Please go
ahead.

Varun Ahuja: I have just got one clarification to be made. This ` 473 Crore, is it fair enough
to assume that the standalone debt will get reduced by ` 473 Crore because
you mentioned that there is some allocated debt and everything, so just
wanted more clarity on that.

Sushil Agarwal: Thats right.

Moderator: Thank you. We have the next question from the line of Nishit Rathi from CWC
Advisors. Please go ahead.

Nishit Rathi: Could you please share the details between Menswear and Womenswear,
what would be the break-up between Menswear and Womenswear? And
what would be our market share approximately in the industry in the
respective segments?

Ashish Dikshit: Madura is heavily skewed towards Men. Womens wear business is just about
10% of Madura business. In Pantaloons, Womens business share is 45% and
Mens is about 35%.

Nishit Rathi: And the balance 20% in Pantaloons would be?

Shital Mehta: Kids, non-apparel, and accessories.

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 Aditya Birla Nuvo Ltd.

Nishit Rathi: Okay. And in the 45% womenswear will be primarily private labels?

Ashish Dikshit: No I think the private brands ratio in the case of Women is close to 65-70%.

Moderator: Thank you. Next question is from the line of Jaimin Shah from RWC Partners.
Please go ahead.

Jaimin Shah: Hello sir, congratulations on the deal. The shareholders have clearly
rewarded both the companies. I just have two quick questions. One is who
owns the brand portal Trendin? How is it consolidated between Pantaloons
and Madura because it sells both the brands?

Ashish Dikshit: Trendin was an initiative at Madura. Its about a year-and-a-half and we first
started with Madura brands. We have started to sell Pantaloons brands in the
last six months which is like any other third party arrangements, so Madura
buys products from Pantaloons and sells at Trendin.

Jaimin Shah: Okay. So all the profits at Trendin probably comes to Madura, will be
consolidated in the entity?

Ashish Dikshit: Thats right.

Jaimin Shah: Okay. And the second question I wanted to understand is on Madura, on the
backend side how is our utilization and the capacity? As in, do we need any
more capacity if you are expanding or we kind of self sufficient for a few
years here?

Ashish Dikshit: If you look in apparel industry, the outsourcing ability is widely available to
every player in the industry. The reason we have some part of manufacturing
in-house is primarily in the areas and products, especially premium
expensive products we would want to control and make sure the quality
remains at our levels and thats the only reason, otherwise its very easily
possible to manufacture outside and source outside which is what we do for
two-third of our business. The second part is manufacturing apparel and its
a very low investment category in setting up a manufacturing plant. We
dont see a meaningful investment in manufacturing considering the size of
the company going forward. It would be incremental in terms of expansion.
Most of our capital would go towards frontend, building rich stores, building
e-commerce and more consumer facing part of the business.

Jaimin Shah: Okay. The outsourcing you mentioned is all from India or do we kind of
import anything?

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 Aditya Birla Nuvo Ltd.

Ashish Dikshit: For some premium products we also import from outside.

Jaimin Shah: Okay, thats it. Thank you.

Moderator: Thank you, participants that was the last question. I now hand the floor back
to Mr. Sushil Agarwal for any closing comments. Thank you and over to you
sir.

Sushil Agarwal: Thank you for your participation. In case of further queries you can get in
touch with Mr. Romi Talwar or Mr. Saket Shah in our corporate office.

Moderator: Thank you sir. Ladies and gentleman, with that we conclude this conference
call. Thank you for joining us. You may now disconnect your lines.

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