Sky Gold and Diamonds Limited (541967) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Earning Conference Call of Sky Gold Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from Orient Capital. Thank you, and over to you.

[ Thank you, Dorwin. On behalf of Orient Capital, I welcome you all to ] Sky Gold Limited's Q1 FY '25 Earnings Con-Call. From the management side, we have Mr. Mangesh Chauhan, Managing Director and Chief Financial Officer; Mr. Jayesh Sanghavi from the Finance Team; and Ms. Nikita Jain, Company Secretary. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and the company's website. A short disclaimer I would like to mention before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinions and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, now I hand over the call to Mr. Mangesh Chauhan. Over to you, sir.

Thank you, Parth. Good morning, everyone. Thank you for joining us today as we discuss our Q1 '25 quarterly performance. As we look into our quarterly performance for Q1 '25, we are pleased to start the new financial year on a positive note. The company reported yet another quarter of robust operation performance marked by improvement across multiple levels. This includes higher capacity utilization and turnover level, increased export exposure, use of technology in inventory management and automation resulting in operational leverage. We feel we have just started to get materialized with a lot more potential leverage yet to contribute as we grow and achieve our goal of INR 6,300 crores by 2027. Coming to our robust Q1 numbers, revenue for the quarter stood at INR 723 crores, registering a growth of 92% year-on-year, 40% quarter-on-quarter. PAT stood at INR 21 crores, registering a remarkable growth of almost 100% for the second consecutive quarter in a row. Speaking about the industry we operate, jewelry market is expanding at a robust rate of 15% to 16% and expected to reach INR 145 billion by '28. The overall jewelry sector has seen an approximate 8% revenue CAGR during FY '19 to '24, with the organized segment growing at a much faster rate of 18% to 19%. The organized market is expected to continue with robust pace and target of achieving 40% to 43% of total market. This is driven as a result of multiple drivers in the industry leading to such rapid growth, driven by rising disposable income and improving mix for regular jewelry wear, enhanced product offering such as design and diamond, trust building through hallmarking and better buying experience at organized retail outlets. This, along with recent announcement by government to reduce import duty, will have a long-lasting positive impact on the jewelry market in India. Reduction in import duties has lowered the overall cost of raw materials, making it more affordable for the manufacturing to procure gold. The duty cuts have also had a positive impact on the market by making gold jewelry more accessible to a broader range of customers. With lower prices, demand has surged, promoting manufacturers to meet this growth demand by ramping up their production capacities. Additionally, the duty cut has alleviated some of the financial pressures faced by the industry, allowing companies to invest more in innovation design and advanced manufacturing techniques. This has not only enhanced the quality of jewelry, but also improved efficiency in production processes. Overall, the duty cut has acted as a catalyst for the growth in the gold jewelry manufacturing sector, driving higher production volumes and fostering a more dynamic and competitive market environment. This shift is gradually capturing a larger share from the unorganized sector, providing us with significant opportunities to drive volume growth. At Sky Gold, we are uniquely positioned to capitalize on this trend, especially as consumers increasingly prefer branded jewelry of high quality. Over the past few years, Sky Gold has strategically positioned itself as a leader in the jewelry manufacturing sector. With a strong focus on corporate partnerships, currently, 65% of businesses drive from corporate clients, while the remaining 35% come from distributors. Our goal is to elevate our corporate business share to 100% over the next 3 years, aligning with our mission to become a leading jewelry manufacturer serving large retail chains in India. Our inventory primarily consists of products within INR 5,000 to INR 1 lakh range and with a smaller portion from 1 lakh to INR 2 lakh segment. We specialize in casting jewelry, offering a wide range of necklaces, bracelets, earrings, rings. Currently, casting jewelry accounts for about 35% of retail sales, presenting a substantial addressable market to us. In line with our vision, we had mentioned in our previous earnings call that we have acquired 2 entities, Starmangalsutra Private Limited and Sparkling Chains Private Limited, and promoter-owned private. Even though both these entities are into jewelry manufacturing, the product portfolio is completely different from Sky Gold. These entities were kept separate since the design and manufacturing capabilities are different. However, considering our current long-term strategy, we have acquired [ both ] as the promoter do not own any other entities. With our recent acquisition, the total addressable market will be -- has now risen to 65%. This means we can target more than 2/3 of offerings in the retail stores. It also creates more -- a lot of more value for Sky Gold in front of its customers. We can now consider Sky Gold as their preference partner for jewelry across diversified product offerings. Exports, which contribute 6% to our overall revenues in FY '24, have done phenomenally well for us. In Q1 '25, the exports contributed 11% of the total revenue for the quarter on a much wider base because of the robust increase in overall revenues as well, showcasing the robust demand for Sky Gold products in the export market as well. With our strategic initiative, we initiated maintaining this figure in FY '25. Our production capabilities are unmatched with 2,000 new designs being introduced monthly, ensuring exclusivity for our corporate clients. The ability to consistently deliver fresh, trendy designs has become a strong competitive advantage for Sky Gold. In Q1 '25, our volume turnover stood at 349 kgs per month as compared to roughly 270 kgs a month in the previous quarter and 200 kgs a month a year ago for the same quarter. Our capacity utilization now stands at 45% of the -- including our acquisitions. So our consistent increase in turnover and export number highlights our capability to scale operations and strengthen our position in the gold jewelry market, both in India and globally. The recent integration of Starmangalsutra and Sparkling Chains into Sky Gold is perfectly aligned with our growth strategy. These acquisitions are expected to boost our margins through the synergies they bring to the enterprise. By consolidating our operations, as mentioned, we are broadening our total addressable market and expanding our product presence in numerous retail outlets, which itself are expanding at a very high rate. Our design and R&D team, comprising of more than 80 talented designers, focuses on identifying and setting trends on a monthly, quarterly, yearly basis. The relentless pursuit of innovation has enabled us to establish a solid foothold in the market. As we look to the future, we aim to expand our corporate client base. These shifts in consumer preference towards branded jewelry and the government's favorable policies supporting organized retail have played a significant role in our growth. Over the past 5 years, we have concentrated on building our customer base. Now our focus is on enhancing margins through value-added products, which will be -- which have significantly worked on margins as we grow. In a competitive landscape, we differentiate ourselves through our expertise in casting jewelry, rapid inventory turnover and robust corporate relations with some of them are now more than a decade. To support our growth ambitions, we have planned a fundraise of INR 270 crores, which will be utilized across the multiple parameters and effectively help the company to achieve the goal of INR 6,300 crores. In conclusion, Sky Gold jewelry manufacturer and designer company is well on its way to becoming a leader in jewelry manufacturing in India with a growing global presence. Our strategy is clear, we are committed to capturing market share, delivering value to our corporate clients and ensuring sustainable, profitable growth for our stakeholders. Now I will quickly discuss the Q1 '25 financial performance before we open the floor for questions and answers. The consolidated revenues for the current quarter stood at INR 723 crores versus INR 375 crores FY '24, thus registering a growth of 92%. The gross margin stood at 6.5%. Quarterly volatility in gross margin is due to product mix changes. Structurally, we would like to sustain the margins for 6%, 6.5% through the product mix and exports. EBITDA for the quarter was INR 37 crores compared to INR 18 crores Q1 '25, showing a growth of 100% in margins by 19-point basis, taking EBITDA margin to 5.2% for the quarterly basis. PAT for the quarter stood at INR 21 crores as compared to INR 10 crores in 21 -- INR 10.7 crores in Q1 '24, thus registering a year-on-year growth of 99%. With this, I would like the moderator to open the floor for questions and answers.

[Operator Instructions] The first question is from the line of Palash Kawale from Nuvama Wealth.

Congratulations for the very good set of results.

Thank you so much.

Sir, my first question is on volumes. So if I look at our volumes year-on-year, the volumes have grown by 75%. And since last 4 quarters, there has been an average sequential growth of 15% every quarter. So do you expect this 15% quarter-on-quarter growth to continue for the rest of the year? And how do you see the volumes -- average volumes for the full year?

Already, we have done 270 kgs per month last full year, and this quarter we have done 345 kgs. So it's a growth of approximately 25% to 27%. So we can -- for this year, we are targeting is to keep up to 350 to 360 kgs per month we will produce in this year.

Okay, sir. And sir, given this high growth, how do you see your operating cash flow spanning out? When do you expect to be cash flow positive?

Cash flow positive, we are expecting after INR 5,000 crores -- when we will reach INR 5,000 crores revenue in 2026 end, then we will start generating cash flow positive.

Okay, sir. And sir, what was the inventory level after the Q1?

It is INR 250 crores inventory. Last March, inventories were high because we had taken the debt in the March month only. Now this year, this quarter, inventory is lower from the last quarter, and our sales have also increased.

And sir, our exports have shown a tremendous growth, contributing 11%. So do you see this 11% number sustaining for the whole year?

Sir, we have already given the guidance in the last quarter that in this year, we will go up to 10 to -- 9% to 10% from the exports. So we will sustain this growth up to 9% to 10%. This quarter is 11%, but 10% is sustainable for this year.

Okay, sir. And sir, my last question is, what are your plans with utilizing the funders? If you could give a detailed answer around that?

Yes. We will be utilizing some of the funds in the 2 subsidiaries. We have hired some 18-carat operations heads. Last year, we produced 97% of 22-carat and 3% of 18-carat. Now the market is expanding for 18-carat also. In India, it's about -- 22-carat market was 99%; now it is 95%; 5%, 18-carat market also has grown. So we will be using some of the funds in 18-carat inventory. We will be using some funds in diamond jewelery, which we have started last year. In this quarter, we have done INR 5 crores sales of diamond jewelry, which was very low. But it started at a very low level. So we will be investing in 3, 4 segments to increase the margin also and create the volumes also.

The next question is from the line of Yash Bajaj from Lucky Investments.

Congratulations on a great set of numbers. Sir, my first question is, so we have grown on a year-on-year basis, almost doubled. And our clients which are -- I mean the top 4, 5 clients have grown on a relatively lower clip. So what has led to this kind of growth? I mean, what are we doing in terms of growing faster than the industry? That's my question.

Yes, we -- last August only, we were in the older facility. We were at 20,000 to 25,000 square feet facility. We came in August with a new facility of 80,000 square feet, which is the largest of the Maharashtra. So we have encased this facility. From the last 2 quarters, we were preparing -- we were scaling this facility. So we -- in the older facility, we were not taking orders much from the corporates because we were at 110% utilization. From August to September, we told them -- they visited our facility and we told them, we can produce more for you. And so we have improved our stake in the corporates. Already, we were -- like Malabar Gold, we were giving 7%, now we are at 9% of their purchase. So we are -- sales are coming from the existing corporates also. We have again acquired mid-corporates also, which are at 5 to 10 stores. We are going to be at 50 stores, 3 to 5 stores, which are going to be at 10 to 20 stores. So our sales are coming from all the mid, small and large corporates. Existing corporates have grown by 15% to 20%. We have grown by 30% because we have increased our sales in these corporates. So our stakes have increased in these corporates, yes.

Sir, like -- and so like you said that in Malabar, we would be 9% of their purchase. Any similar number, if you can give for suppose the -- I mean the remaining 3, like a ballpark number also? Just to understand how much...

In the parent company, we are making casting jewelry. So we -- if in Kalyan Jewellers, we were at 5%, now we are at 7% of their casting jewelry. And I can't give you more details because of some competitive reasons. Yes.

Got it. Sir, my second question is, so you have in the presentation given the capacity utilization numbers, so Q4 -- which is 4 months. So Q4 was 300 kilos and Q1 is 349 kilos. So that increase, 300 to 349, is a 15%, 20% increase in capacity. But when it comes to sequential numbers like a top line for Q4 and Q1, that has grown by 40%. INR 500 crores has gone to INR 720 crores. So I mean how should we look at this, sir? I mean what -- or you can just give us the volume number for these respective quarters, Q1, Q4?

Yes, I think I will give you the last year average. Last year average was 270 kg per month last year, for the whole year. And this year quarter, we have made 345 kgs. So 270 kgs is 25% or 26% from the volume growth.

Okay. And sir, my next question is, on the GML loan, did we see any benefit of GML loan this quarter? And if not, then when do we see that coming?

Yes, yes. Already this quarter, we have shifted -- we were using 2 or 3 -- about the [ 300 kg debt ], we were using 10% of GML. This quarter, we will be using approximately 30% of GML. And December quarter, 100% we will be using GML. So until December quarter, we'll be at 100% GML. And this quarter, we will be utilizing about 30% to 40% of the rest in GML.

Got it. And my last question, sir, is that our recent acquisitions which we have made, when do we see that getting consolidated in our numbers? Because I think this quarter, we haven't seen any of those numbers coming in, right?

About -- pardon, can you ask once again?

The recent acquisitions which we have made that...

Yes. Already, we are in the acquisition process. So it will take some 10 days more. When it will be a Sky Gold entity, it is a process of 1.5 months. So then from September 1, you can see some consolidation of 1 or 2 months results. But the better clarity you can see in December quarter, the full results will be added in that.

The next question is from the line of Vikrant Kashyap from Asian Markets Securities.

Sir, congratulations on a very good set of numbers.

Thank you, sir.

Sir, just on the client concentration, could you please highlight which are your top 5 clients and how much revenue you get from them?

We have -- Malabar Gold is our largest client, which is topmost of the world, fourth. Seventh -- Tanishq is on seventh. Malabar Gold, Kalyan Jewellers, Senco Gold, Joyalukkas, these are our major clients. Kalyan Jewellers, then GRT Jewellery, Bhima Jewellery, other than that, our clients are also there. So this blended business comes from all these 5 majors or 5 clients.

So you are saying Tanishq is our client?

No, Tanishq is not our client, sir. I would have -- yes, pardon, pardon.

So I'm just trying to understand, since we have almost all of the big players, big domestic jewelers in our bucket, why we don't have -- able to crack Tanishq as our client?

Before August, you can see, we were at -- our facility was very small of 22 -- 20,000 square feet, which was not eligible for Tanishq's criteria. From August, we came into the new facility. Already, we have many talks with Tanishq. They have visited our facility. And our up to mark -- the facility is up to mark to their requirements. Our products are up to mark to their requirements. It's all about the waiting process because it is a lengthy process with such a big company to onboard the clients. They have conveyed us that we have done all the process, but whenever the Board decides and whenever the vendors are open for the casting, you are in the nearest number to be onboarded. So just we are waiting for that confirmation. Already, all processes are already done.

Okay. Great. Wish you best of luck for that. Second question, on the mix of gold and studded diamond, so we have been growing in the both segments. Do you see the mix changing towards studded diamonds or it is likely to remain the same? How do you see that trend going ahead?

No, gold studded -- about real diamond, you are telling?

Gold studded, yes.

Yes, gold studded about -- you are talking about real diamond or studded with cubic zirconia?

No, no, I'm talking about real diamond.

Okay, okay. No, gold has a major upper hand in the market. Always, gold will be the major upper hand. We are working on increasing share of diamond jewelry also because we have started diamond jewelry in last 2 quarters only, which will result in gross margin -- most gross margin. But gold market share is always upper hand. Diamond jewelry share is stagnant in the market.

Okay. No, but in the mix of the industry, so I understand almost 20% demand is for diamond studded average. We are now -- we have just started this business, and we can improve our margin based on the mix -- improvement in the mix. Here, I am trying to understand, since you have given a target of INR 6,300 crores of revenue in '27, do we see improvement in the mix, which will result in the improvement in margin? Though we have a strong margin, no, I don't doubt on that, but I'm just trying to understand, do we have further leverage to improve that?

Yes, 100%. Because we have just started the diamond jewelry, we are into gold jewelry 100%. So we have a gap of taking this turnover to 10% to 20% of our whole turnover. So we understand the industry is moving towards studded products also. We are also working on that direction. Our mix will change. We don't -- but we don't want to have category-wise growth. So yes, so 100% advantage of diamond jewelry.

I mean we are seeing latent demand, and it will take some time for us to shift the mix. That is what...

Yes, it will take 4 quarters. I think we are on the right what we have already started. But in 4 quarters, diamond jewelry sales will come to 10% to 15% of our turnover. That will help us to improve our margin, yes.

Great, great. I understand you have leveraged for the margin from operating mix also and from the operating leverage also since we have to scale up our utilization levels. My next question pertaining to the duty cut on budget. You highlighted the benefits of that. How much impact you are seeing on your inventory that you were carrying on the date of announcement?

So I request the participant to wait for a moment. The management phone has got disconnected. Just give me a moment, I'll connect them again. The management is now online. Sir, please go ahead.

Sorry, can you repeat the question, sir?

Yes. I was asking you on the date of the announcement of budget on the duty cut, you had -- you must have some inventory where you are taking gold loan, metal loan, et cetera. So do you have any impact on your inventory that is going to come in the next quarters?

Nothing because we -- our inventory is totally hedged in the MCX. So we don't have any impact of any rise also or fall also in the inventory.

Okay. So budget duty does not impact on your inventory? You have a structural gains...

Yes, yes, totally, limits are hedging in the MCX.

The next question is from the line of Prerana Amanna from Amanna Capital.

Congratulations on a very great set of numbers. I have 2 questions. The first one is, I understand you have a revenue guidance of INR 6,300 crores by FY '27, and you are on track to achieve it. But what is the revenue guidance for this year, that is the end of this year? And we are also on track to achieve the PAT margin of 3.5% by the end of this year, I believe. So do you want to increase the guidance, this 3.5% of PAT margin to anything else further?

About the revenue guidance, already, we have given INR 2,700 crores from the parent company and INR 500 crores to INR 600 crores from the subsidiaries, both the subsidiaries. So subsidiaries sales will come from, I think, mid-August in this company. So INR 3,300 crores, INR 3,400 crores revenue growth we have targeted this year. About the PAT margins, I think it will be approximately 3% to 3.5% till March because we are going to gold metal loan. So we don't want to -- we'll not like to increase the PAT -- we'll sustain that margin till the March, we'll reach 3.5%.

Okay, sir. The next question is regarding the gold metal loan. I believe you already answered it. But how much percentage did you use of GML in this quarter, that is Q1 FY '25?

In the September quarter, we will be using 30% to 35% limit, about INR 100 crores GML in September quarter. And December quarter, 100% utilization will be there of GML.

The next question is from the line of Bharat Gianani from Moneycontrol.

Congratulations for a great set of numbers and a good guidance. So just my question was like -- so this, again, on the -- because of the custom duty impact, many of the jewelry retailers indicated that the margins will be under pressure because of the Indian [ break ]. So I just wanted to know, you earlier said that we would not have any impact. So is it that you have kind of a fixed price of the gold, which you are going to manufacture and supply to the client, that is why you will not have any impact? Because jewelry retailers could be impacted for it. So are -- like can you explain why you've not had any impact because of the duty cut, which has resulted in the inventory loss?

100%, because it's a process that we follow. We have our hedging team, our pricing team. Whenever -- in our industry, I will explain you properly that whenever the orders comes to our industry, if Malabar Gold has given 20 kg orders to us, so we -- at the time of order, the rates are not fixed with the consumers. We buy bullion from the bank or a licensed importer. We sell it in the MCX to produce the order. And then when the order is ready for dispatch, we fix the price with the consumer and we hedge it against in the MCX to reverse the impact. So our sale, everything is hedged in the MCX. So there is no impact of inventory. Much of the -- more of our clients who are large corporates are following the same process. About the small retailers or unorganized, I don't know. If they have impact or no impact, I don't know. But whichever order clients also are there or large corporates, they will follow all the same process which we are following.

Okay, sir. Okay, fine. And sir, the second question is on this INR 270 crores kind of a fundraise that you have announced. So sir, what will be the utilization of that, if you can break it up? Like how much will be for inventory? How much will be for you spending on R&D? Or how much you would -- so if you can highlight that. I mean, if any capacity utilization -- I mean, obviously, you have shifted to a very new facility. So just wanted to understand what exactly is the INR 270 crore utilization, if you can split by function like -- a broad assumption, not the exact.

Yes, I will not give you the perfect figure. But we will invest some of the part in the -- when we raise, we'll invest some of the part in the 2 subsidiaries to grow them more like Sky Gold. And some of the part will be used for 18-carat. We have hired some new operations head for 18-carat. I already told in some -- one question that 18-carat, we are growing very much. So we are investing in INR 18 crores -- 18-carat also. And in diamond jewelry also, we'll invest some of the parts. So -- and some part, we'll be keeping for the R&D. We are doing for the U.S.A product, which we are making -- we are planning for in 2 quarters to export to the U.S. also. Some corporates are there in the U.S. So this is in the R&D phase. So we'll be investing that also. So profile segment, new segment, we are investing in that.

Okay. So new segment, when we say 18-carat and diamond jewelry, that is the new product introduction, right?

Yes, yes, yes.

The next question is from the line of [ Vivek Kumar ] from [ Luna Capital ].

Congratulations on a super-duper number this quarter. It's very heartening to see that you are on the track to reach where you have guided to reach. Just one query I had around that. So we are talking about roughly anywhere from 2.5 to 3x more utilization over the next 1.5, 2 years. So just wanted to understand your strategy about, is it more towards increasing the wallet share? Or is it about more towards adding more customers? And what is your -- how are you going about it? And if I can just follow that up with another question is, what are different constraints you may see or foresee in achieving these large volume utilization numbers?

Yes, we are already increasing our export market also. We are increasing our customers in Dubai, Singapore, Malaysia. Already we are working with Jwala Jewellery in Dubai; Singapore, Mustafa Jewellery. So many corporates from Malaysia are also joining hands with us, which have 5 to 10 stores, which are equivalent to 50 stores which are larger stores. So industry is also growing. Our unorganized market is shifting to organized. So unorganized market is shifting. Also organized market share is increasing very high. So we'll gain share from that also. We are increasing our new customers. So as I said, the mid-corporate customers, we are increasing, which have 5 to 10 stores, which are not in limelight in this market right now. But we are seeing that this will be, in 2 years, you'll see the names which are going to 50 to 100 stores. Some 3 to 5 stores, which have very small corporates, we are planning to go to 10 to 15 stores. So this will be like Malabar, Kalyan, Senco, many more 5 to 10 companies are coming ahead in the market. So we have onboarded there. So we are increasing our wallet share of small and mid-corporate also. Large corporates are already there in our pocket. So they are -- in them, we are supplying. Our percentage is increasing of supply. So all from these 3, our sales is coming. And we are increasing exports also in Dubai, Singapore and Malaysia.

That's fantastic. If you can just answer the other part of it, what are the different constraints you may foresee in achieving such a high growth? Like will it be in terms of resources, manpower, working capital? What are the different challenges you may foresee?

Already, we are in a convenient position with the working capital and the funds, we have good funds in our company. So there will be no constraint of the -- manpower is every time available in Mumbai because it's very favorable for the -- favorable city for the workers to come up. There is no constraint in reaching -- I think if your products are up to mark, you are very much on the product which we are launching every month. We are launching every month, 2,000 designs. This August also, we had an exhibition in Goregaon, and there was so much tremendous response overall in the jewelry market because of the duty cut and all. So if you have up to mark to your designs or the design you are working on it, what we are launching in every quarter after 12 months, what will be changing in the generation, what will be the trends shifting, where, and we are reading it. And properly, we are launching the product. There is no constraint for the manufacturer, I think.

The next question is from the line of Divyesh Mehta from Dinero Wealth.

Just wanted to understand, there is a Slide #23 in your presentation, which shows your sub-brands like Zenna, Kimora, Sky9 Diamonds and all. So how do we deal with such kind of brands, sir? So where do we deal it, sir?

Yes. We exhibit every quarter in India with GJEPC, and we display our brands. This helps the corporates to identify which -- how many segments we have in casting jewelry, so how many product lines we have. So this brand is for our corporate clients, our clientele, not for retail. So this brings us -- yes, definitely, for the corporates, they can identify whichever which brand we have, which we deal in and which is the line of products we have.

So this is not also on the distributor side also, right?

For distribution also, yes.

No, no. I'm saying we don't deal with such kind of brands even with the distributors also, I'm saying. It's only for purely corporates.

Yes, corporates. Corporates, yes, yes, yes.

And second thing, sir, I just wanted to understand the 2 acquisitions which we have done right now. So I understand that we are taking a fund infusion for the same, and we are going to deploy either through working capital or either for the growth plan for the same. But sir, can you just help us to understand the numbers? What I understand is around INR 350 crores of the top line, both of the brands are generating right now.

Yes, yes. Yes.

Yes. So what is the scalability we can expect from both of these brands going forward in the next 2 years, sir?

So we have -- both have capacity to go up to INR 1,200 crores and INR 1,300 crores in 2 years. Already last year, both entities did INR 370 crores last year. And this year, we can make it INR 600 crores to INR 700 crores from both the entities.

And sir, what kind of margins...

We have given guidance put together for INR 6,300 crores, INR 5,000 crores from the parent company and INR 1,300 crores from the both companies, subsidiary companies.

And margins more or less will be the same, right?

Yes, margins are basic, like Sky Gold in both the entities, but we have much scope in both the entities to work on. We'll start working from August 15 on that. We'll create more fancy products from different type of chains, different visible products which where we can create more margins.

Next question is from the line of Dipanshu Suman from Sattva Ventures.

Sir, congratulations for a super performance. Sir, just wanted to check with you, what kind of volume growth we are looking on a quarter-on-quarter basis from here? So 345 kg, we have already done. So in our stand-alone business, how should we look at 5%, 6% kind of quarter-on-quarter volume growth from here for coming 3 quarters?

We will sustain -- approximately whole year, this will be 350 kgs annually. I can give you annual guidance. We'll be up to 350 kgs, 360 kgs. But here and then, 10, 15 kg for the each quarter. So annually, we will come up to 350, 360 kgs. Yes.

So -- but with the upcoming, say, marriage season, et cetera, like it's a strong marriage season this year. So are the orders already in place? Or you are going to receive further, say, higher orders, which is for October, November? I just wanted to understand the ordering cycle. So is it 3 months before, 1 month before? What kind of ordering cycle is there?

Already, we have ordering cycle of 30 to 45 days. Basically, these are very confidential. We can't give much on this. But we have a cycle of 30 to 45 days.

Okay. Second thing, sir, on this, say, per kg realization price of, say, gold. Because of this tax cut, et cetera, so is your realization per kg, is there a chance that if the gold price comes down, what has happened? So is there a chance that the realization price can come down? And if so, can it impact the gross margins?

Not much because already they have reduced the 10% margins duties. So -- and prices are about 7% to 8% down. So there is not much difference in the -- in our labor cycle.

Understood, sir. Sir, also in your press release, we saw that you are going ahead with new regional head hiring and also hiring people on the export side. Any color you want to say that how these guys are joining and how much contribution, from when these contributions will start to come in?

Yes. Already, we have hired 18-carat operations head. We have hired 22-carat operations head last 6 months before. We have development head hired. So we are now ahead -- our international sales head also, he will be joining from September. So he will also add in our margins and revenue as and when he will join. So we'll give guidance in next quarter when he will join, but he's joining from next month. Yes.

[Operator Instructions] The next question will be from the line of Manan Vandur from Wallfort PMS.

Congratulations on the numbers, sir.

Thank you, sir.

Sir, I had 2, 3 questions. I wanted to understand that are we planning to get into other new geographies? Or are we planning to -- which existing geographies we have, are we going to like penetrate more or like both we are going to do?

No, we are basically concentrated in corporates only. We will be with large, mid and small corporates. We're not going into much single-single retail stores. So we are much concentrated into corporates only. We'll be planning to grow more in export corporates also, whichever have 50, 100 or 150 stores in exports. So we'll be joining hands with them also. But our main focus is on corporates only.

Yes. So like geographies like, let's say, like other countries. So we are already in a few countries. So more countries, I'm asking.

Yes, we are into R&D. Already, we are into Singapore and Dubai. We are into R&D phase. We are developing a product for U.S.A. It will take some 2 quarters, and we are planning to enter into the U.S. market.

Okay, sir. And have we added any clients in this quarter, like any export client or Indian clients?

Yes, 3, 4 more new clients we have added in this quarter. Yes.

Okay. And another, one last question that, do we have like a particular criteria that they should have so many stores only, then we can go and approach them to -- so that we can be their distributor, something like that? Do we have like a certain criteria?

See, every customer is important to us, but we like to join hands with which have at least 3 to 5 stores or which have -- which we can give sales up to yearly at least INR 30 crores to INR 50 crores or something. We can't serve the small retailers who will take yearly INR 1 crore or INR 2 crore products because they have a small capacity. So we are into it that some corporate -- our minimum criteria is try to 3 to 5 stores they should have, and they should take INR 20 crores to INR 30 crores or INR 50 crores sales yearly.

The next question is from the line of Bharat Gianani from Moneycontrol Pro.

I have just one clarification, sir. FY '27, you have given a revenue guidance of INR 6,300 crores. So just wanted to check what would be the revenue target for Sky Gold stand-alone and the 2 subsidiaries as well? So can you provide a breakup of that?

Yes. For Sky Gold, we have already given INR 5,000 crores revenue to 2027 March; and for the subsidiaries, INR 1,300 crores. So consolidated will be INR 6,300 crores.

Okay. Okay. And sir, the subsidiary margin -- PAT margin is currently -- I mean what's -- what the PAT margin the subsidiary is making? And what is the target?

Already last year, the subsidiaries were at 2% PAT margin. Now this year, we are expecting the PAT margin from them also 2.5% to 3% in this year. So we'll be placing them like Sky Gold. They have a capacity to grow like Sky Gold. And we'll be putting efforts and putting some funds also in that inventory, and we can bring them also to the Sky Gold level.

The next question is from the line of [ Ash ], who's an individual investor.

I have some questions around the GML. You said that GML will be 100% by December. So will it have an impact on the finance cost? Because right now, if I look at the finance cost from March to June, it is almost double. So will it have impact on the finance cost as well?

100%. We had risen the debt in the last quarter, the March quarter. That's why the finance cost has risen. But GML will help us to reduce 0.5% of the sales, which 0.5% PAT will be improved because of the GML. So that will help us improve 0.5%.

All right. And in terms of, say, top 10 customers, I think last year, it was like top 10 customers contributed 75% of the revenue. What does that number look today, like top 10 customers contribute how much percent approximately as revenue?

Yes, total corporate -- total mid, large and small corporates contributed 65% to 70%. Large 10 contributed approximately 40% or something.

The next question is from the line of [ Varun ] from [ EVK ].

I'm sorry, I joined the call late. It's already been answered. Maybe sorry for repetition. So there are 2 questions. One is on a quarter-on-quarter basis, the employee cost and the other expenses have gone down. Any reason behind that?

About gone down, about the?

The quarter -- on quarter-on-quarter basis, our other expenses and employee expenses have gone down. It has reduced. So...

Just I have to see on that. I'll skip that question because I don't have data on that. So I'll mail you that. Sorry for not answering that.

Okay. So -- and sir, till last quarter, I remember in the -- for fundraising, your plan was that no more fundraising is required and we are self-sufficient right now. But suddenly now, this has come up. What is the plan for the utilization of this?

Yes. Before that, we have not acquired more entities when we said that no fund is required, but we acquired 2 more entities so we can fuel them. And we have started 2 more divisions. 18-carat, we are scaling up. 18-carat, we were very low. So we are putting funds in 18-carat also, and we have started diamond jewelry also from last quarter. So we are putting -- so we are -- we have 4 segments to invest in. Already, we have funds for 22-carat. We don't need funds for 22-carat, which is our core. So we are expanding our arms in 18-carat diamond jewelry and 2 more subsidiaries of Mangalsutra and Chains. That's why we are into fundraise.

Okay. And what is the preferential route? I mean, what way are we thinking of? Is it like QIP or a preferential allotment? Or I mean, any -- or we have a rights issue? What we are planning for on this?

Maybe a combination of both. As and when required, we will inform the exchange -- everybody.

And tentatively, by when you expect it to happen?

Sir, these are -- we will inform as and when required to the exchange and all of you. So...

Okay. Okay. And when we see, is this -- because we were reading for other retailers, jewelry retailers, there is a significant increase of gold jewelry demand because of reducing prices. Have you also started feeling or getting some trend whereby there is a significant increase or it is just like the way you expected it to be a normal growth or it is a certain spark that has happened?

No, no, it's extraordinary growth we are seeing because right where we were in the exhibition from 9th August, I just skipped today. Today, also exhibition is going on. So I think historic buying is there and the total historic booking is there. The clients -- retail clients are saying that we have seen so much demand. It's like 2008, when in 2008, some -- this type of demand has come, domestic demand has come. So that type of demand we are seeing in the exhibition. We -- in the exhibition, we don't have a space, too, so and so for the consumer, which were fully packed. So I think it's a great response. Nirmala Sitharaman has taken a very historic decision and never any government has reduced the import duty, but this is a master stroke for unorganized market.

Got it, got it. One last thing. We were targeting one of the largest retail chain in the country. And also, is there any further progress on that?

Already I've answered this question that we have already done all the process. They have visited twice our facility. Products also are shown in this exhibition also, we showed the products. But it's a matter of time when they open the doors for the vendors, and they have a process when to onboard a vendor for the casting value. But we are very much on the high numbers to be onboarded.

And as a general industry trend or someone like them, is that they are primarily outsourcing or they have their in-house facilities also to produce?

Major corporates are outsourcing because outsourcing is a good choice for them. So Titan also outsourcing 70%, 80% from outside. Malabar Gold, Kalyan Jewellery, everybody is -- Malabar Gold is producing 10% to 15% inside, but major all are outsourcing 100% from the manufacturers.

And barring that, if you -- I mean, if you say that from this industry size of outsourcing in top 10 manufacturers or contract manufacturers, where do you think we will stand in an overall country perspective?

There are many segments in the jewelry. In the gold jewelry alone, we are -- I'll give an example of a Sky Gold parent company is at, I think, second number; our competitor, Emerald Jewellery, is at first number here, doing INR 6,000 crores per year. Per year, we are in the track to achieve INR 2,700 crores. So we are about second number in the casting jewelry. So there are many segments different. In the Mangalsutra and Chain we have acquired, we are at, I think, eight or ninth number. But at the parent company, we are at second number for the casting jewelry.

Okay. So why I'm asking is, see, someone like Titan is not part of us and they are the market leaders. And we being on the second, is it like they don't procure that kind of this jewelry or 18-carat too much? Is it like because of that? Because how they will operate if majority is outsourced...

Someone is supplying to them, so they don't because it's not about that, but it's about the timing, and Titan takes every vendor 1.5 years to onboard. Already we have -- from last 2 years, we are in talks with them. So Titan is not about that your product is good and we are creating 10% margin on that, and we will onboard that. And what you are doing for them, right, what is about your facility and all. So already they have done the R&D for our company as we are getting the information. But earlier, we were -- our facility was very small to reach them. Now we are free and eligible for them. It's a matter of time, sir.

The next question will be from the line of Amit Agicha from H.G. Hawa & Company.

Congratulations for a good set of numbers. My question was with respect to capacity, total capacity that we have and how much can we increase after the consolidation of the subsidiaries?

Already, in parent company, I told we have put in the PPT also that we have 750 kg per month capacity. And subsidiaries, both together, we have 300 kg per month capacity. So both together can go up to 1,050 kg per month. And yearly, 12 ton we can produce. We have produced 3 tons only in the last year. So we have a higher road to go ahead.

So at present, like we are working on 350 per kg per month, right?

Yes, in the parent company.

So that comes to roughly 30%, 40% utilization.

Yes, 40%, 45%.

And any plans of the strategy of the companies to like come to like 80%, 90% capacity utilization? Any guidance?

Yes, 2027, we have already told in that we will be at 100% utilization. Thank you so much, ma'am. So can we conclude it or no?

Yes, sir. Ladies and gentlemen, that was the last question for today. In the interest of time, I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for joining us. I hope we have been able to answer all the queries. In case you have -- require any further business, you may please contact for Orient Capital, our Investor Relations partners. Thank you so much. Thank you for being a part of our Sky Gold journey. Thank you so much.

Thank you very much. On behalf of Sky Gold Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.