Vishal Mega Mart Ltd. — Q1 FY27 earnings call

So firstly, I must say that to begin with, we were experimenting with a smaller format, and we wanted to ensure that the results are exactly in line with our expectations. Our target was twofold. Firstly, to ensure that the relevance of the small format is established in smaller towns, and we have pretty much established that with revenue per square foot, not the absolute revenue, the revenue per square foot in line with that of the larger format. The second was to establish that the financial outcomes are the same and as attractive as the larger format. And again, we've been able to establish that the return on capital employed in the smaller format stores is pretty much the same as the larger format. Now we are at a stage in 2 states where we can start expanding more rapidly in the smaller format. But I must say that while we are opening the small format stores in these towns, we equally are opening large format stores also because while the opportunity is largely exploited in these places, it is not completely finished. So, for example, this quarter, while we are looking at small format Uttar Pradesh, we've opened 5 large-format stores also. And similarly, while we've opened new stores in small formats in Haryana, we've opened 2 large format stores also, and this will continue in the future also. We will further accelerate the opening of small format stores. And I'm totally aligned with the spirit of your question, we can see an opportunity of almost 3,000 small format stores in the country. And as we progress forward, you will see increased momentum on the small format.

So at this moment, I think I had mentioned the last time that we were experimenting with 2 stores in Delhi NCR. At this moment, we are rolling out RFID into all the stores in Delhi NCR. So that Vishal Mega Mart Limited July 23, 2026 Page 5 of 14 is the current status. And we will go one state at a time because the way we are rolling out is that we have to first put RFID tags on all the existing stocks in the stores. And then we will need to maintain a separate supply chain for the RFID tag stores because those stocks will go to the stores with RFID tags, whereas the rest of the network will continue to get stocked without the RFID tags. So at this moment, we are doing Delhi NCR. Again, we want to be 100% sure that it's working very well, and we keep rolling it out. But I think the entire rollout will slightly exceed 1-year time frame. The benefits we've been able to establish quite clearly for the RFID tags, the first and the obvious benefit is better inventory management. So earlier, for example, counting the entire store stock in clothing would be an overnight exercise. With the RFID tags, we can count the entire store and the clothing stock in 4 to 5 hours, and therefore, we can do a stock count almost every week. Secondly, with the stock count, we can also get all the details of what the merchandise is, its ageing and so on and so forth. So the quality of information available would be of a significantly higher order. Thirdly, and quite obviously, we expect the shrink to come down in the RFID tagged stores. For example, the RFID tags that we are using, after a lot of development, is a tag which cannot be removed unless the merchandise has been checked out. So as we can appreciate, once the merchandise is checked out, it can be assumed that it has been paid for and it is not stolen merchandise and only then can the RFID tags be removed. Otherwise, they cannot be removed. And so on and so forth. There is a lot of analytics that we can generate from the RFID tagged stores. So we have quite clearly established all these benefits in our pilot and experimentation. And we are progressing with RFID maximum possible speed. But one has to appreciate that to launch RFID in a store, the first step is to put RFID tags in all the existing stock in that store. And then set up a supply chain from the distribution center, which is separate for these stores because the stock from the distribution center to the store will be moved only after putting the RFID tags. So yes, it will take us slightly over 1 year to complete the network.

Yes, Vivek, you’re audible. Good evening. Vishal Mega Mart Limited July 23, 2026 Page 6 of 14

Vivek, your voice is not coming through.

Yes. Now you are.

Nihal, we can hear you and we got your first question. Can you go to the next one, please?

Okay. Good. So I will take the first 2, and I'll request Amit to come in for the third. On the gross margin, the improvement that you've seen this quarter from 28.4% to 28.7% is largely because of the fact that our promotional expenditure has been lower than the previous year. Our focus this quarter has been to ensure that we maintain prices and to ensure that all the numbers add up, etcetera, the impact of maintaining prices has been pretty good on our same- store sales growth, as you can see from the numbers. And therefore, we've had to promote less as compared to the last year same quarter. So that's on the first question. Secondly, yes, Sashi has replaced Manoj. Manoj is moving on from the company. As you know, Manoj has been with us for more than 10 years and has played an excellent role in the evolution of our business. And now he's moving on. As a consequence of that, there has been no change in the org structure. It is just that Sashi is going to replace Manoj in the same role. And I will request Amit to take on the third question quickly. Vishal Mega Mart Limited July 23, 2026 Page 7 of 14

So Nihal, this is in line with our disclosures in DRHP and the idea is to ensure that the company remains Indian owned and controlled.

Yes, Vivek, go ahead please.

So Vivek, just to clarify, we were Indian owned and controlled even before the IPO and as we speak today also, our foreign holding is close to 20%. However, we want to make sure that we remain as Indian owned and controlled entity. That is the reason why we are proactively putting this cap to 49.99%.

No, no, that's true. So we are doing multi-brand retailing in our wholly owned subsidiary, which is Airplaza. So obviously, that entity is into the multi-brand retailing, and that would require approval. So keeping that in mind, we have passed this resolution.

So Vivek, our endeavour has been to ensure that the price hikes, two things. Firstly, they are totally minimized, as I mentioned in my response to the earlier question. And the second thing which we have ensured, without any exception at all, is that the price increase has not been affected in any of the opening price points or mid-price points. The price increases if any, have been affected only in the higher price points. And this has not been done across the board. It has been done only in selected merchandise categories where, again, two things, the price increase to the minimum possible extent had become absolutely critical. And again, in merchandise categories, which are extremely price sensitive, the price increases have either not been implemented, or they've been implemented to the minimum possible extent. Vishal Mega Mart Limited July 23, 2026 Page 8 of 14 As we had mentioned earlier also, our effort this entire quarter has been to ensure that we become more cost efficient in every which way across the board as far as the gross margin is concerned and also to rationalize our promotion expenses, as I mentioned in the earlier answer. So yes, so that's the way we've gone about it. We are very, very aware that our customers need to be protected from price inflation. And wherever necessary, it has to be done in a very thoughtful and sensitive manner.

So Vivek, our firm view is that our price discount to the market leaders has to be almost in every case, actually slightly higher than earlier or at the very least, the same. Under no circumstances, would we allow a price discount to the market leader become lesser than before. So I can assure you that our private brands will be either as attractive as earlier or even more attractive than earlier for our customers. And few merchandise categories in FMCG, where almost the entire market has taken price increases, but we have chosen not to take a price increase. So our private brands will continue to be either as attractive as before or even more attractive.

So firstly, I must clarify that, as I mentioned, wherever it became critical, we have taken price increases, but we have not taken any price increase in the opening price points in any of our Vishal Mega Mart Limited July 23, 2026 Page 9 of 14 categories. Opening price points are the lowest price points, and they are typically bought by the least affluent people in our consumption group. All the price increases have been largely around the highest price points, which are purchased by the most affluent lot of our consumption target group. So those have been affected. And at this moment, we do not feel the need to take any further price increases beyond what we have already done. This is, of course, based on the assumption that the situation will continue as is and will not get any worse. As we mentioned in the commentary in the subsequent quarters, we expect the situation to actually become slightly better. Secondly, we know which of our categories are more price sensitive than others and categories which are extremely price sensitive. And I can give you examples like children's clothing is very price sensitive or some of the staple foods are very price sensitive. We have actually chosen not to take any price increases to protect our customers. And last but not the least, it's important for me to highlight to you that despite these price changes, A, our total growth continues to be double digit. And secondly, the growth of our highest price points is the fastest. So for example, while our total business has grown 10% same- store sales growth, in apparel, our highest priced fashion merchandise has grown at 13.9% same- store sales growth. So to summarize, I would say that at this moment, no further price increases. I can't say anything about the future because it's difficult as to how will that pan out. Secondly, despite the challenging environment, we continue to maintain double-digit same-store sales growth. And lastly, our highest priced merchandise, which is the fashion price points in clothing continues to grow the fastest at 13.9% same-store sales growth.

So I actually have no problem with that, but it's difficult to add the volume of apparel with FMCG and GM. That becomes a somewhat meaningless number. But I can share with you the constituents of our same-store sales growth. Our total number of customer acquisitions in the quarter has gone up by 8%. So we have served 8% new customers in our store. And our existing customers have bought 3% more approximately in this quarter, and that's how we have achieved approximately 10% same- store sales growth. But my apologies, it's impossible to add the volumes of the general merchandise products and apparel and FMCG.

So the transaction value for our existing customers has gone up by 3% this quarter versus same quarter last year. And as I mentioned, we have acquired 7% new customers probably through market share gain in this quarter.

Sure. So firstly, I must tell you that there is no new competitor in the market. All the players who are competing in clothing market, they've been around for a while. Of course, different players have different ambitions. But there has been no increase in the expansion pace significantly from any of the players. Of course, they're all expanding, but they've been expanding for a while, like we've been expanding for a while. So there is no, either new competitor or new aggression in terms of expansion that we witnessed in this quarter. Of course, the spirit of your question is absolutely correct that this is a very competitive market with lots of very good quality competitors. But we've been around in this market for a while, and we've been growing at double-digit rates as we've been reporting same- store sales growth.

Thankyou, indeed.

So I'm sorry, I could not hear all your questions, but I could gather that it was about loyalty customers. I'll try and answer, but if I fail to completely answer, please point it out to me because it was a bit patchy for me. So we have 17.5 crores loyalty customers. And these customers are contributing ~95% to our revenue. And they continue to grow as we acquire more and more new customers through market share gain. And our loyalty customers provide to us extremely valuable analytics which is used every day of the year for us to sell more to our existing customers. Now if I missed any part of your question because I couldn't hear it, you could please ask me. Vishal Mega Mart Limited July 23, 2026 Page 11 of 14

I think if we understood your query correctly, the 10% same-store sales growth is testimony of the fact that we are getting a lot of value from our existing customers. So yes, I mean, it's working for us.

Maybe your query was not very clear, but what we could gather is that you spoke about 75% revenue coming from our own brands. What exactly you are looking for in that?

So, the 75% market share that we have in private brands, the constituents of that are as follows. That will help clarify if I got your question right. 100% of our clothing business is private brands. Right, 100%. So obviously, the penetration is 100%. The buying rates are upwards of 30% of any new option that we introduce. In general merchandise, 75% of our business is private brands. And only category where we have significant share of third-party brands, in fact, the only 2 categories. One is kitchen appliances, where we have a brand called Tandem, which has almost 50% market share. And the balance 50% is with third-party brands such as Bajaj, Prestige and so on. Again, on the products that are present in tandem, they've been around for a while, so it's quite stable. There isn't any significant new revenue, which may have come to us through early product trials and is likely to disappear because of repeat buying rates. It's been around for a while. The third category is FMCG, where 60% by volume of the share in our FMCG is of our private brands. Again, these brands have been around for several years now, and they're quite stable. So the idea of penetration trial and repeat buying is relevant for new things that are introduced. These are all quite stable businesses. But when we had introduced our new brands, again, we had experienced repeat buying rates, as I mentioned, upwards of 30%, but that was quite some time back. Okay? So these are all stable, steady private brands, which have stood the test of time and are preferred by our customers, 60% by volume over the third-party brands, which are available in our store.

Thankyou very much, indeed. Vishal Mega Mart Limited July 23, 2026 Page 12 of 14

So you're absolutely right, Videesha. We had mentioned that we are working on a new format. But I must point out to you that we will be first going in with pilot store. And then based on the response that we received in the pilot stores, and we will not have only one pilot store. We'll have more than one pilot stores. And then based on the response, we will either need to fine-tune the mix or roll it out. I may not be able to share with you the exact date. But I will take the liberty of telling you that we are very close to the launch of our first pilot store, which will be followed by either 1 or 2 other pilot stores. And then we will read the response and decide on the further course of action. We are quite close to the first launch.

Inventory -- sorry, inventory?

So you're looking for exact inventory numbers or…

So our closing inventory for quarter 1 is INR 1,900 crores.

So our quick commerce, different stores are getting added at different points in time. So I can tell you the range. They are currently contributing to anywhere from 2% to 9% to the store revenue. But in majority of the places, the contribution is at least 5% to our store revenue now, which has been very encouraging for us because when we had started this journey, we had said that our goal would be 5% of store revenue. So in most places, we are achieving the 5% level. But in our best places, we are going up to 9% to 10%. Vishal Mega Mart Limited July 23, 2026 Page 13 of 14 That is -- I understand your first question. The second -- on the second question, in terms of average bill value, our quick commerce customers are buying slightly more than -- but not significantly more than our offline customers. So average bill value of quick commerce customers is about INR 800. The third fact that I can share about quick commerce is that the share of our private brands I mentioned that for our offline stores, it is 75% revenue. But in quick commerce, it's even higher than 75%. So more number of customers are trying our private brands on quick commerce and sticking with our private brands. And last but not the least and terribly exciting for us is that 20% of our quick commerce customers have never shopped at a Vishal store. And therefore, they are net incremental for the entire Vishal franchise.

Yes, Harish. So this quarter, we have seen a significant increase in minimum wages across multiple states like Haryana, UP, Telangana, Karnataka and so on and so forth. Obviously, the base has gone up, but we will continue to look for opportunities and try and optimize as much as possible. But obviously, this is a structural change, and we'll see how much we can mitigate that.

Thankyou.

Not to any significant extent.

If the current assumptions and the current cost structure continues, we are quite confident. There is absolutely no challenge. But I'm not saying that I can see the future any better than any of us on the West Asia crisis and so on. So that piece is entirely speculative. But if the current circumstances continue and do not even improve, we do not see any significant issue.

Thankyou. Vishal Mega Mart Limited July 23, 2026 Page 14 of 14

Well, thank you very much for your time. And I must thank you also for joining in and taking out time from your busy schedule for our conference call. We've always been very encouraged and enthused with your consistent support, and we deeply appreciate that. So once again, thank you, all the very best and look forward to seeing you again on the next quarter call. Bye. Take care.