Mallcom (India) Limited (539400) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Mallcom India Limited's Q3 and 9 Months FY '24 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good morning, everyone. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations for Mallcom India Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the third quarter and 9 months ended financial year 2024. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Rohit Mall, General Manager; and Mr. Shyam Agarwal, CFO. Without any further delay, I request Mr. Rohit Mall to start with his opening remarks. Thank you, and over to you, sir.

Thank you, Purvangi. [Foreign Language] It is a pleasure to welcome you all to our earnings conference call for the third quarter and 9 months ended of the financial year 2024. In this quarter, our company achieved a significant milestone, marking 40 years of successful operations. We are excited to share the news that our recently established garment unit in West Bengal is now fully operational following the successful reallocation of our previous garment unit. Our focus on branding local market development and recognizing high growth opportunities has led to a shift in turnover ratio between export and domestic market, which now stands at approximately 56 exports : 44 domestic year-to-date compared to 64:36 previously. Progress continues on our greenfield project at Sanand, Gujarat for Protech and other product categories with development proceeding according to schedule. We have already invested INR 28 crores in this project with an additional investment of approximately INR 32 crores expected over the next 2 quarters before the unit becomes operational in Q1 FY '25. Now I will request Mr. Shyam Agarwal, our CFO, to give a briefing about third quarter 9 months financials.

Thank you, Rohit, and good morning, and a Happy Saraswati Puja to all the participants. I would like to provide an overview of our financial performance for the third quarter and 9 months ended financial year 2024. In the third quarter, the company attained operating revenues of INR 96 crores, representing a year-on-year decline of 4% and a quarter-on-quarter decline of 12%. This decline can be attributed to temporary disruptions in our raw material supply chain and the relocation of our existing garment unit, resulting in higher operational costs under-recovery. However, we anticipate recovering some of the lost volume for garments in the current quarter of FY '24. EBITDA for the quarter stood at INR 12 crores, resulting in EBITDA margin of 12.13%. EBITDA margin is declined by 230 basis points year-on-year and 209 basis points quarter-on-quarter. The quarterly net profit amounted to INR 7 crores, translating to a PAT margin of 7.11%, which experienced a decline of 371 basis points year-on-year and 138 basis points quarter-on-quarter. Over the 9-month period, the company operating revenue reached INR 298 crores, indicating flat growth. EBITDA for the company stood at INR 41 crores, marking EBITDA margin of 13.81%, which degrew by 23 basis point year-on-year. The net profit for the 9 months was reported at INR 25 crores with a PAT margin reported at 8.21%, which declined by 92 basis point year-on-year. Amidst challenges, our net profit for the 9 months ended December 31, 2023, experienced a decline, primarily due to increase in depreciation costs, marketing costs, brand promotion costs, operating expenses and finance costs. Thank you. With this, we can now open the floor to the question-and-answer session.

[Operator Instructions] We have our first question from the line of Adityapal Singh from Motilal Oswal Financial Services.

Hello? Am I audible?

Yes, sir. You're audible. Please go ahead, sir.

So quickly wanted to understand the status on where we are with the supply chain issues that we faced last quarter with our garments supply?

Right. So this supply chain issue, which was created last quarter, continuing into this quarter, and that's why you see a little bit dip, especially in our export turnover or not as expected revenue. So we are moving out of it. Gradually, as we speak, the activities are ongoing. It was already started in December and January. So I think it will take this quarter entirely to move away. And we are on the path, and we have successfully been able to develop other vendors or with another set of vendors, we have been able to develop the same kind of product. So I think by this year-end, we'll be completely out of it, and we should be -- we should start seeing results in the coming quarters for the year and the following year.

Understood. And can I attribute the entire degrowth in Europe to this garment raw material, sir?

Sorry, can you repeat?

Can I attribute the entire degrowth in Europe. So Europe, as a geography, degrew by 20% for us. So what would that...

Yes. So a big reason was the supply chain, but also Europe's economy itself has not been performing so well. As you can see, the interest rates and the pressure on them and the unemployment and everything that just added on and the war et cetera. So that just added on to the troubles. But largely, for us, it was the supply chain and then their economy.

Understood. And going forward, how are we looking if you can give me geography-wise growth project because a few geographies -- delivery in a few geographies have actually degrown. So we are at two ends of the curve.

Yes. So definitely, we see a lot of growth coming out of Asia, primarily India then Middle East. And then North America is also a market where we are pushing and starting to see some good movements. South America has been a mixed bag for us. So countries like Argentina have their own issues of unable to remit foreign currencies. And -- but other countries have positively been impacted. So that's kind of a mix bag. But this is where we see most of our growth. Europe will definitely remain our key market. But the scale of growth, the quantum of growth in Europe will not be as high as, let's say, the other countries that we have seen.

Understood. And because -- so for example, 2 geographies, South America performed really well in the 9M period, right, going from INR 30 crores to INR 45 crores. And same North America actually degrew. So any comments over there?

Yes. So see, in any kind of this business, it takes time for the shift to happen. We were talking about China plus strategy in all these while. So now it's taken almost gestation period of 1, 1.5 years and now we have started to see effect. So a lot of this effect will have spillover for the next financial year. So we are very confident of North America growing in the next financial year. And even in the 12-month period, there should not be a big degrowth from that economy. We should see same or maybe some positive growth there. South America, like I said, it's been a mixed bag. We should have expected more growth if countries like Argentina didn't go into a big trouble themselves. But yes, it was -- we were able to recoup and get some other markets. But yes, some -- there's some dependencies on how the countries and how the political scenario and the economic scenario there is as well.

Understood. And the gross margins has improved actually. So what will -- like -- how can I attribute? What will be the percentage of value-added products as a percentage of sales?

Shyam ji, if you could address.

Yes. So we -- most likely it should remain same -- whatever margin we are working upon, it should remain same. Only for this quarter, as you see that in case of garmenting because of lower turnover, which we -- which was impacted by both supply chain management as well as shifting of the unit also was some issue, which we could complete in this -- in last quarter. So otherwise, the EBITDA margins should remain in the range in which we are working till now.

No, Shyam ji, what I wanted to understand that your gross margins have improved from 38% to 43% over the quarter. So my question was that how can I attribute? What would be the percentage coming from decreasing raw material cost? And...

That margin for the quarter, it was lower raw material cost for some of the product categories, yes. That's why only -- but that is -- we see that as a temporary. But going forward, margins should remain in that range only.

Which is 38% to 40%?

Yes, yes.

[Operator Instructions] The next question from the line of Ankit Gupta from Bamboo Capital.

Rohit, any green shoots that you are seeing from the European markets? Or there are -- it is expected to remain subdued for the next 1 or 2 more quarters at least, if not more?

So this -- so they've have just started their new financial year. And definitely, the talks are on and it's been a little better than the last 6 months. I would say, at least the talks and some of the inquiries and orders flowing in. So we expect it to improve in the next coming 2 quarters, for sure, because the unemployment rate is also going down and the inflation rate in some of these countries are going down. So we expect improvement in the coming quarters. We hope that the worst is behind unless there's another geopolitical issue coming up, which we don't know about. But we expect it to get better now.

Okay. And on this China plus strategy, which was happening, we have seen across many other products where -- because there was -- because there has been some slowdown and some talks about China plus one, the Chinese companies have started dumping products in the market at lower prices. So how is the case with our products? Are we seeing some dumping from them at lower prices? Or that's not an issue in our products?

No, that's definitely happening in some of our product categories where they are just to get -- have the same market share or increase it, they are dumping the products at some political prices. But there are also buyers who are very clear that they want to have a parallel supply chain even if it comes at a cost, so we're happy to do it. And also, we are trying to pitch such kind of products where countries like India are inherently good because of the availability of the raw material. And we are trying to also reposition in terms of the kind of services that we can provide and long-term association because they're happy with the outlook of India for the coming years. So that's how we are pitching. But definitely, we are seeing a lot of dumping and even some countries are starting to recognize it and maybe put some kind of antidumping on China as well. So that's also helping. So it's mixed because we have seen some success also, but we have seen this kind of issues as well.

[Operator Instructions] We have our next question from the line of Astha Sundarka from Niveshaay.

Hello? Am I audible?

Yes, Ms. Astha. Please go ahead.

My first question to you is that what is the target year to touch INR 1,000 crores off-line?

So it remains same as previously also stated. There's no change in that. And even though this year, may not have been the greatest of the years, but that does not change for now.

Okay. And sir, my next question is that what is the revenue potential of Ghatakpukur plant? And from this, how much is the old capacity shifted here?

So Rohit, let me answer this. So this -- now this plant for garmenting can give us almost INR 200 crores of turnover per annum only for garments. And almost the shifted capacity is around INR 80 crores, INR 90 crores, which we are doing at the previous plant. So that is one. And we have almost double space here. And yes, we are -- we need to add some machineries there, plant machineries, which can be done at a very short notice. But overall, at full capacity, it should be giving us around INR 200 crores turnover for garments only.

And one last question from my side. What is the current capacity utilization of plant on an average?

So it is around -- as of now around 70% to 80% for garments. And yes, for garment, it is around that.

[Operator Instructions] We have our next question from the line of [ Yash Dhoni ], a shareholder.

So my first question is regarding with the Ghatakpukur plant. So we have that as fully operational. When can we expect the commencement of Phase 2 CapEx plans?

Sir, I can take this.

Yes, Rohit, you can answer.

So. We have already started the talks for the Phase 2 and hopefully, by Q1 '25, we'll start the CapEx there, like the actual groundbreaking and setting up the facility there. And hopefully, within FY '25, that should be completed.

[Operator Instructions] We have our next question from the line of [ Rahil Shah from Crown Capital ].

In the previous call, regarding your target of INR 13,000 crores in the next 4 years or so, you had said the growth will be gradual, 15% or so. And you expected the same to happen for this year as well. But since the last 2 quarters have been muted, including this one, so any changes there? Or what are your expectations now?

No. Like I mentioned, there's no change on the target or the year in which we are trying to achieve it. It remains same. Yes, last couple of quarters have not been the greatest, but there have been good developments, nonetheless. And these are we considered to be some operational roadblocks or some headwinds. But like you see in other geographies and India have been performing well. So we are still confident that we should be able to hit our targets.

I specifically meant for this year as well, 15% or so you can achieve on the top?

No, maybe not for this year. Yes, I'm not sure about it. We are trying our level best in the last couple of months to hit the target. But this year, I'm not sure if we'll be able to hit the 15% target.

But you expect the growth to accelerate next year definitely with the key developments you have seen?

Yes.

What about the margins trajectory, then are they sustainable? Or will they be impacted as well?

I think margins should remain at the same level. If I'm not wrong, Shyam ji can address. But I don't expect it to change a lot.

Yes, I've already answered. So I have already answered. So margins would remain in the range which we have been working for quite some time now. So that should not -- that is not likely to impact anyhow.

Right, right. Okay. And lastly, just -- so what new are we thinking to try going ahead in the next couple of quarters? Do you know that -- to see that revival of growth now other than these new capacities and everything. So any other areas where you are focusing more, which will help us grow further?

See one of the biggest things that hindered our growth was the supply chain issue, and we've already started -- we have worked on it, and we have tried to derisk ourselves and ensure that this issue is taken care of. So that was the major work that we were doing, and we are on the path of completely moving away from that situation. So that -- for the next immediate like a couple of months, that's what we are working on and ensuring that we can get some revenue -- some lost revenue recovered from that.

You mentioned the new -- the North America market, you're expecting good growth. South America seems a bit dicey. And you also mentioned Asia, Middle East, those promising geographies, right? What about the domestic market? How is the -- our prospects over there in terms of growth?

Yes. So when I mentioned Asia, it's largely India, I'm talking about. And there, we have seen good growth and consistent growth. And there, we are confident of consistently hitting the 15%, 20% growth numbers.

Any change in product mix or its largely the same?

Right now largely -- like global product mix, yes, it has changed again, because the garments turnover has gone down. So you'll see lesser of garment in the mix and which has been taken over by having shoes, footwear largely. That's the change that's has happened. But we consider it to be again something temporary. We don't expect our product mix to change significantly.

Rohit, going forward, I would like to mention that, yes, we are looking for newer products like for the product mix, we will be launching some new products in hand safety segment. And helmet is again something which is our new product, we are concentrating more on developing our market share there. So yes...

And are they margin et cetera? Do they provide better margins or similar?

Yes, yes. It would be like in hand safety segment, the margins would be similar. And helmet is something which need to -- we are still trying to develop our markets and the product. So let us see how it develops.

We have our next question from the line of Dhwanil Desai from Turtle Capital.

Sir, my first question is, you mentioned in your commentary that we lost some volume and revenue because of the supply chain issues and shifting of the plant. So can you quantify this number?

So it should be -- for the 3 months, it should be in the range of around INR 10 crores to INR 12 crores, which we lost for garment's turnover.

Okay. Okay. And that is mainly on the garment side?

Yes, only for garment. So both due to supply chain issue as well as shifting of the plant. So now it is on track. So as we mentioned, some of the turnover we should be recovering in this quarter also.

So 50%, 60% of that can be recovered? Is that a fair assumption?

Not sure. We are trying hard. So now the unit is fully operational and we would like to -- because the order is not an issue. So it is all about products and supply of the pending orders.

Yes. Also, I'd just like to add, it's not easy to just recover the lost revenue because the production capacity is still intact and more or less the same. So a lot of shifting had happened and you can't increase capacity overnight. So that takes time. And it cannot happen 50% in the last 2 months, it will take longer time than that because it's a function of increasing the production capacity and the orders not being lost because of delays and other such issues.

Right. Right. Right. That is now well understood. So second question is, if I look at our company last 2, 3 years, we have done significant CapEx. And we are still going ahead with the Sanand project. There also, we're putting a lot of CapEx. And as you have been mentioning in the last few con calls, the export market is a bit soft. So given all this, and we have observed that you guys are very conservative at putting capital. So what gives you this confidence that while the Ahmedabad unit is still ramping up. Ghatakpukur also, we're in the transition mode. And we're still going ahead with Sanand. So what gives you that confidence to put up such large capital?

So there are a couple of reasons why we are doing this. One is -- so a lot of plant machinery and everything were getting old and we were running out of space. So that is one of the reasons. It so happened that they kind of converge at the same point that we are just running out of space. So that was one of the reasons for having a CapEx or shifting of capacities. Second is the potential in the Indian market that we are seeing and the Middle East market, these kind of markets that we're seeing where we are doing our own branded sales. And third, definitely, apart from Europe also, like we have mentioned some countries, South America and then North America are showing good potential. And if there has to be the China plus one thing going on. So these -- because China has larger -- much larger capacity, so we need to ensure that we have capacities that we can offer to some of our buyers. So it was a mix of all these that led us to do this kind of CapEx.

Okay. The reason I'm asking this is that I wanted to understand whether when you put up such CapEx and when things are fluid, is it that you get some kind of an indication or soft commitment from customers? Or is it more of our understanding of how things will evolve in the next 3, 4 years. So how does it work?

No. We -- this is based on our understanding and our talks with the customer, our understanding of our branded market. There's no such soft commitment. It's just verbal, nothing on paper that we get from the customer. So this is largely on our estimation.

Right. But customers still do give you some indication that if you put up such capacity, we are willing buyers, that kind of a thing, those are the kind of conversations we are having?

Yes. So we -- yes, we regularly keep them updated about what we are planning to do. And if we are going in the right direction and get some samples and everything. Yes, we're doing that regularly.

Okay. Okay. Third question is, I think, Sanand plant, we have mentioned that head protection is going to be one of the important pillars for Sanand. Now in this head protection segment, I think, in Indian market, there are already very well-established players. So how do we compete in this market and gain market share? If you can talk a bit about that because are there any specialty variants in the head protection segment? Or it is all the same, if you can again talk a bit about that?

See, the biggest reason is the size of the market. So India as a market is so large that it's not -- it cannot be serviced by 1 or 2 players in any of the product category. So that is number one. Number two is, we are seeing the shift in India where more and more people are turning towards certified products and even BIS is getting stronger. And a lot of these local small unorganized players are not selling certified products. So that is, again, a market which will increase. So one is the regular growth of the market, then new market being added. And thirdly, this is a product category which is missing from the basket, and we would like to be a one-stop shop for everybody asking for PPE, head to toe. So this is a missing category, and it goes from similar distribution channel. So we are confident that we'll be able to push this product also and get some recall on it as well with our brand and with the USPs that our brand gives in other product categories. In the same product category also, there will be takers.

Okay. Okay. And last question from my side. So any kind of a traction you are getting on the Australian market post-FTA? And any updates on that?

Yes. So Australian market and New Zealand market are combined together, Australian specifically, yes, there's been improvements there, especially on the value-added products, and we are further confident that it will improve because we see some delegations from there coming over. So we are confident about that market. It's not a very large market because the population is limited. But definitely, we are seeing better interest from that market than what was earlier.

[Operator Instructions] We have our follow-up question from the line of Adityapal Singh from Motilal Oswal.

Sir -- Shyam, sir, just wanted to understand, in Phase 2 in Ghatakpukur plant, what would be the incremental CapEx? And what would be the incremental revenue capacity from this plant?

Yes. So CapEx, as of now, we estimate CapEx to be in the range of INR 15 crores to INR 20 crores. And it will not be for the same product, it will be different product. And then different product -- talking about different products, it will be safety shoes, and then we have like it will be sort of providing us some shoe upper and some manufacturing capacity. So in safety shoes segment, we target almost -- whatever turnover we project, almost 1/3 of that should be out of safety shoes. So this unit should be getting to the overall setup of our production capacity for safety shoes.

But if I were to put a number of the revenue capacity from the incremental because I assume that garment is doing INR 200 crores?

See, as I mentioned, talking of -- if INR 1,000 crores turnover we are projecting by FY '28, then almost INR 300 crores turnover should be coming out of safety shoes -- INR 330 crores. And this unit is not going to produce finished shoes, it will be making, maybe the shoe upper also. So this unit becomes the intermediary product, we are not selling directly. So that way, this will be the feeding unit and some manufacturing also. So overall turnover, we project in the range of 1/3 of the projected turnover or total turnover.

Understood. Understood. And sir, what -- I understand that you are at 70% to 80% in garments, but what about other products? What will be the capacity utilizations over there?

Yes, the overall capacity for all the products is in the range of that 70%, 80%. But that is always in our type of product category, it is also scalable. So there can be change in shift, there can be a little bit of outsourcing of production, so that way we can increase the productivity as per requirement. But overall productivity range for all the products remains in 70%, 80% category.

Understood. And just one last question. So FY '24, we are expected to close with a high single-digit growth. Is that fair to assume?

Pardon? Will you please repeat the question?

I'm saying that, in FY '24, we'll close with a high single-digit revenue growth.

Yes, that is most likely, that should be the figure, yes.

[Operator Instructions] We have our next question from the line of [ Dipesh Sancheti from Manya Finance ].

Am I audible?

Yes, sir, you're you audible.

Okay. Just wanted to know what is the capacity expansion which we have done at Sanand? And after this, what will be your total capacity? I mean, percentage wise, how much will be our incremental capacity?

So Sanand, we are going mostly for -- the Phase 1 is mostly Protech, glove. So it will be almost 50% -- additional 50% of our existing capacity for these gloves. And for the helmet range, it should be almost -- it's a little bit of shifting of capacity also plus new capacity. So again, 50% of our existing capacity.

Okay. And when are you planning to completely finish off all the phases of expansion?

In Sanand, so we have only right now started and decided for Phase 1. Phase 2, we haven't planned yet. So I'm expecting somewhere in FY '26 is when I'm planning. But we have to -- we are yet to decide on the time line.

Okay. So just shifting on the capacity -- after shifting of the capacity, what are your plans for the Ahmedabad unit? I mean, you're using the real estate to get some cash or how is it? Still the work is going over there?

No, no, Ahmedabad unit is different, and that will continue its operations as is, and there's no shifting from the Ahmedabad unit.

Okay. So -- and what is the position of the debt right now? And for this expansion, how much -- I mean, what is the source of the expansion? Is it internal accruals?

So we -- yes, source of the funding for all the CapEx is through internal accruals. And as of now, we don't have any long-term debt and only working capital borrowing, which we do. And that also each supported by equally, almost we are invested into liquid cap. So going forward, yes, so as of now hardly any borrowing, a little bit of working capital only.

Okay. So what is the capacity utilization right now expected in this quarter and maybe for this coming year also? What will be the capacity utilization according to after the expansion done?

Sorry, can you repeat?

Yes. What is the current capacity utilization? Like what is the run rate for this in the last 2 months? And going ahead, what capacity expansion -- what capacity utilization are we expecting to do?

So Rohit, let me answer. Yes. So as I mentioned the overall capacity utilization is in the range of 70%, 80% for all product categories. And yes, going forward, also, what we are doing like the infrastructure which we are creating, it is more of creating, building up -- building and creating this space. So going forward, whatever plant and machinery we install, that would be as per requirement, and it can be done on short notice. And yes, capacity utilization should be in the range of that only. Based on requirement, we keep investing into plant and machinery.

Okay. So just wanted to understand because in the previous call, you mentioned that you will be doing single-digit growth for the next year. Since our capacity expansion has already happened and even that will come in line and we will be expecting the same utilization, why wouldn't we be looking at around 20% to 30% growth?

No, I mentioned of current year. For FY '24, you wanted to know. So whether in a single-digit growth, so this is what we are projecting. And definitely, for the next year FY '25, the growth should be in the double digits.

I mean -- so what I said approximately 20% to 30% should be viable?

How much?

20% to 30% growth we should expect?

Yes, we should expect, yes.

And just one last question, if I can squeeze in. Hello?

Yes, go ahead.

What is the percentage of online and off-line sales? Because we were doing something -- some online sales before.

Yes. Online is negligible right now as compared to our off-line.

So what is our focus? Since you're coming into the Indian market, are we looking at doing online sales ahead or no?

Yes. We are looking and we are continuing to do so, but this kind of product category, it's not a completely retail product. So we don't expect it to be greater than even 5% or even 2%, 3% to start off with as compared to that overall sales.

We have our next question from the line of [ Khushi Kabra from Pegasus Growth ].

Am I audible.

Yes, ma'am.

Okay. I just wanted to know if you guys are seeing any increase in freight costs due to the Red Sea issue?

Yes. We are seeing increase in freight costs. We are also seeing delays in deliveries because of Red Sea, but maybe usually pass it on to the customer.

Okay. And do you expect any improvement in operating costs due to the shift in production to the new Ghatakpukur unit?

Yes. So for temporarily, the operational costs have increased. We expect it to normalize in the given -- in the coming months.

We have our next question from the line of [ Raunak Kapoor from Systematix Group ].

So can you just briefly stress on the market size in India and what do you expect the market to grow? And like what is the current market share like I believe there are a lot of unlisted players in the segment. So what is like -- are we the top 2, top 3 in the segment? And what is the moat over our competitors?

Okay. So market size, we expect it to be around anywhere between INR 12,000 crores to INR 15,000 crores. Almost 50% to 60% would be unorganized. And in terms of market share, it's very difficult to ascertain that kind of data. But yes, we would be around, I think, 4%, 5% of the entire market, if I'm not wrong, but there's no published data for this. We are trying to build a brand in India, and we've been trying to do this for the last 15 years or so. And we focus on the quality of our products. We only sell certified products. Even where there's no Indian certification available, then we rely on European certification. And we ensure the availability of our product and that we are launching new products and providing entire head-to-toe solutions. That's what our focus is.

So in India, like what would be your standing like it will be #2, #3 or...

There is no published ranking. And like you also said, a lot of smaller unlisted players, so we don't have their numbers. And also, it will depend from category to category.

Okay. Because -- and are you also into firefighting equipment like...

No, we don't do firefighting. We do flame retardant coveralls and garments. We do heat resistant gloves, but we don't specifically do firefighting equipment.

Okay. And just one more question based on your current capacity utilization -- optimal utilization, assuming there's no further CapEx, what would be your revenue like ideal revenue you expect?

Yes, it should be in the range of around INR 600 crores to INR 700 crores we can achieve with existing capacity only without putting any machinery -- additional machineries also.

And in terms of margins, like you think EBITDA margin of 14%, 15% is -- will be sustainable or it can be increased on a long run?

Yes, yes. Yes, it is. No, it should be in that range only as of now, yes.

So by FY '28, you all are targeting INR 1,000 crores. So you expect like 14%, 15% growth.

Yes.

There's no scope for the margin expansion?

Not yet. No, we don't see that right now.

[Operator Instructions] As there are no further questions, I now hand the conference over to management from Mallcom India Ltd for closing comments.

Thank you all for participating in this earnings conference call. I hope we were able to answer your questions satisfactorily and at the same time, offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to the -- to our Investor Relations Manager at Valorem Advisors. Thank you. Stay safe and stay healthy.

On behalf of Mallcom India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.