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

Ladies and gentlemen, good day, and welcome to Sky Golden Diamonds Limited Q4 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Vidhi Vasa. Thank you, and over to you, ma'am.

Thank you. On behalf of MUFG Intime, I welcome you all to Sky Gold and Diamonds Limited quarter 4 and FY '25 earnings conference call. On the management side, we have Mr. Mangesh Chauhan, Managing Director and Chief Financial Officer; Mr. Darshan Chauhan, Whole-Time Director; Mr. Siddharth Sipani, Group Finance Controller; and Mrs. Nikita Jain, Company Secretary. I hope everyone had an opportunity to go through our investor deck that we have uploaded on exchange and the company's website. I would like to mention a short disclaimer before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our belief, opinion and expectations as of today. These statements are not a guarantee of our future performance and involves unforeseen risks and uncertainties. With this, now I hand over the call to Mr. Mangesh Chauhan. Over to you, sir.

Thank you. Good morning, everyone. Welcome to the Q4 FY '25 conference call. Just to give a recap of our business model, we are a design-led B2B jewelry manufacturer, meaning design is central to what we do. We collaborate with large corporations to co-create products, leveraging our strong understanding of end customer needs with various micro markets to foster strong consumer relationships. We differentiate ourselves from a typical B2B converter through this collaborative design approach. At present, we are in the growth and scaling phase. We were among the first organized Indian jewelry manufacturer to directly target the corporate market, a departure from the distributor-led strategy of the market leader at the time, allowing us to build stronger customer relationships. While this corporate focus was initially questioned 15 years ago, the strong growth in this sector has proven to be right approach, particularly with the ongoing shift from unorganized to organized players in retail jewelry. Large corporations increasingly prefer to partner with organized manufacturers like us as we assure them consistency, quality, positive working conditions and innovative designs. Our strategic strength lies in lightweight jewelry, highly relevant to today's gold prices. For example, we manufacture our products at 15% to 20% lower weight compared to our competition. We are also supporting a major retailer's 18-carat gold growth. Our manufacturing capabilities ranges from 9- to 24-carat gold, including unique colors like rose gold, white gold, yellow gold. Our consistent approach is customer to co-creation aiming for preferred partner status. Our planned 4x expansion will make us India's largest jewelry manufacturer. Why do we have right to win in this space? Our addressable market is substantial, both domestically in India and international. As a B2B design leader, our strength lies in not being limited to a single geographic region, allowing for a high scalable and asset-light business model. We currently partner with the majority of Indian corporations and are expanding our global presence by establishing overseas offices. Darshan Chauhan will elaborate on the strategic implication on this international growth. The largest competitor in India produces 4 to 5, 6x more than us, operating at 2 to 3 tonnes per month and hold a leading position with advanced gold making 90% of their manufactured volumes. This is largely because of their scale and extensive design portfolio. We respect our leader in this space. What is the structural advantage we have? How does scale help in our industry? Sky Gold is 50% more frugal compared to our competitors. Our employee cost and other expenditure add up only to 1.5% approx of sales, which our competitor operates at a 2x higher cost. Our PAT margins are superior despite operating at a lower markup compared to the leaders. The turnaround time for the competitor is 30 to 45 days, while our turnaround time is 15 to 25 days. As a result, we have been growing at 2 to 3x more than the organized players. Until 2023, we had a manufacturing capacity of 200 kgs per month, and this quantity was manufactured across multiple locations. Our cost structure was not favorable and we experienced a gold loss of more than 1.5%. Now our gold loss has dropped to 0.5%, and we see further room for improvement. We feel that Sky Gold is at an inflection point to gain market share from the large unorganized base and organized players in the space. This is one of the primary reasons why we went to expedite our plans to increasing our capacity from 1 tonne per month to 4 tonne per month. On the design bank front, we have been silently strengthening our design team over the last 3 years, which has led to this growth. In addition, we have recently opened a design studio in Andheri. Like BKC in the financial space, Andheri is a heart of jewelry design. High-profile designers find it hard to travel to our Navi Mumbai facility. Also, the work environment required for our designers is totally different from the manufacturing facility. Just to elaborate on the importance of the design facility, until a few years back, our designers were not complex. Designs were not complex. We were working on co-creation projects with one of the publicly listed companies in the retail space on lifestyle design. These designs were exclusively for the customer and lock as well. Our business model has shifted from selling generic design to more complex designs. As a result, we can command superior gross margin and payment terms from our customers. Our design team of 110 employees plus freelancers have been split into 10 to 12 verticals where each designer focus on a particular category. As a direct result of these initiatives, we have been able to build close relationship with the founders of large retailers, a contrast to our prior limited access. Let's now discuss our organizational structure. A crucial element for scaling is our capacity to attract and compensate top-tier talent. As the founder, we have learned the importance of being willing to invest more for exceptional individuals. We have brought on board some highly experienced professionals with 15, 20 years in the industry and strong networks. We are providing invaluable in attracting further talent. Of our hiring -- of our recent hires, I would like to highlight a few key individuals. Akash Talesara will lead our sales efforts. He has been crucial in our transition to a customer-specific project business model and conceived the Andheri design studio, previously associated with major brands like Asian Star, Gold Star and Emerald Industries. Akash will now focus on shifting a significant portion of our revenue towards advanced gold. His prior experience includes high markup gold categories, diamond jewelry and exports. Sandeep Roy heads our operations and oversees our 18-carat gold segment. With over a decade of experience in the Chinese jewelry industry, he possesses a strong understanding of advancement in this field. Since his arrival, we have seen a notable improvement in the finish of our products. [ Thiru ] brings nearly 3 decades of experience to our team, including 13 years at Titan and 8 years at Emerald. He is responsible for ERP implementation, gold loss reduction and productivity has -- gold reduction and productivity improvement. Since his arrival, our gold loss has halved and employee productivity has increased by 20%, 25%. Previously, he led [ Kariger Trading ] and continues -- and continues to emphasize the training at Sky Gold. We are implementing a modern ERP system, a significant improvement over our previous one. Despite the complex implementation in the jewelry industry due to numerous SKUs, the long-term benefits are substantial. The new system will allow for close monitoring of employee productivity, gold loss, inventory positions and customer receivables. We began this in the second half of the previous financial year and currently training and we plan to have this operation by this year. Siddharth Sipani will head our finance focus -- finance functions, bringing over 2 decades of experience, including time with Big 4 firms. We will instrumental in -- he will be instrumental in transforming our auditing practices and possess a deep understanding for regulation for international office operations. Additionally, as an operational CFO, he will work closely with operations and sales to reduce working capital. Recognizing the need for improved corporate governance in the gold industry, Siddharth will lead initiative for best-in-class audit practices. Important updates will follow. Now I will hand over to Darshanbhai to give a small speech.

Thanks, Mangeshbhai. Let's begin by discussing our advanced gold strategy, which is especially designed to sharply decrease our capital employed. In this model, the customer procures and provides the gold, thereby reducing our need for capital investment. Our revenue will only reflect the value of manufacturing work we perform. This will optically enhance our profitability margins. Crucially, it also eliminates the need for us to hold inventory and manage receivables related to gold itself. A key performance indicator of our new Head of Sales, Mr. Akash Talesara, is to increase the proportion of advanced gold in our total production. Our recent 200 kg monthly export order exemplifies this. With a gradual increase in shipment starting with 70 kg in Q1 FY '26. Similarly to the auto ancillary industry, the scaling of this will depend on customer time lines. We are optimistic about our success in the export market and anticipate significant growth over the next 12 to 16 months. In Q1 FY '26, Advanced Gold made up about 5% of our total volume, a level we expect to maintain through FY '26, a substantial increase from its minimal presence in FY '25. We project this to contribute 10% of our total revenues by FY '27, growing to 30% by FY '29-'30, with endeavor to focus new customers onboarding on advanced gold terms. Due to competitive sensitivities, we cannot disclose the specific financial details of Advanced gold. However, we do see opportunities for premium pricing when we utilize our own gold, particularly during periods of high market prices. Now coming to Diamonds. Our name Sky Gold and Diamonds reflect the significant potential we see in the diamond category. Through our Sky9 Diamond brand, we are offering lightweight contemporary jewelry that merges international designs with the Indian craftsmanship. While diamonds provide high gross margins, they typically have longer receivable cycles. However, their return on capital is superior to that of plain gold. Our strategy includes both natural and lab-grown diamonds. To enhance our capabilities in this area, we have brought on board Mr. Shivakumar Gangadhar, a seasoned professional who was a Senior Purchase Manager at Jos Alukkas for many years. We have noted that rising gold prices are encouraging customers to buy studded jewelry, often with lower gold content. Currently, diamonds contribute about 1% to our revenue, and we anticipate this increasing to 4% by FY '27. And for the exports, FY '25 marked a turning point for Sky Gold with our export revenue tripling from approximately INR 100 crores in FY '24 to INR 300 crores in FY '25. Exports now contribute about 8% of our total revenue. To further leverage the substantial Indian diaspora in the Middle East and Malaysia, we are establishing local offices in Dubai to enhance our market presence. We have identified key team members for our Dubai office who have collectively handled sales of 600 kgs per month. We foresee significant contributions from Dubai and Malaysia, aiming for exports to represent 20% of our volume by FY '27. Strategically, this expansion into exports also help us to reduce our capital employed due to the shorter receivable cycles compared to our domestic operations. The total receivable days in our export operations is less than 15 days. Finally, we are implementing a new strategy to target the significant unorganized retail sector, which still accounts for over half of the industry. These retailers typically source through large distributors who in turn work with smaller jewelry manufacturers. Our approach will be to introduce fresh designs to this market, focusing exclusively on advanced gold due to the importance of collection. We anticipate this new vertical will significantly accelerate our growth. Our primary efforts will be directed towards scaling Advanced Gold and decreasing working capital associated with customers. I will be heavily involved in improving collections and accelerating our receivable cycle. Consequently, managing the receivable cycle is a key KRA for all our key sales team members. Now Mangeshbhai will take over to explain the unit economics of the business.

As we move into Q1 FY '26, our primary focus will be on working capital management. As previously communicated, despite achieving growth, improved gross margin and profit growth, we recognize the critical need to optimize our working capital levels and reduce interest costs. Our working capital cycle peaked at 72 days in Q4 FY '25 due to Akshaya Tritiya preparation, but has since decreased to approximately 60 days to achieve a neutral operating cash flow by FY '27. We aim for a working capital cycle of 50 to 55 days, achieving through inventory days of 30 to 33 days and receivable of 20 to 22 days. This improvement will be driven by enhanced inventory control via our new ERP system and more disciplined approach to receivable collection led by Darshan Chauhan. Our long-term goals include reducing working capital below 50 days and increasing PAT margins to 5% from our current existing margin of 3.7%. Key drivers for PAT margin expansion are Advanced Gold, gold metal loans and our high-margin diamond business, along with operating leverages from scale. A significant part of my responsibilities in the first half of FY '26 is procuring gold metal loans to strengthen our capabilities in this area and lower interest expenses. We have brought on Siddharth Sipani, who has specific expertise in gold metal loans. As you all know, the gold metal loan interest rates have been volatile and terms were not favorable to us. We have now received proposals which are favorable to us. Siddharth Sipani has handled gold metal loans of more than INR 500 crores across India, UAE and U.S. markets. Finally, regarding corporate governance, a key priority for us, we are committed to further strengthening our audit processes, and we will share updates on this soon. Thank you very much. Now we can start our question-answers.

[Operator Instructions] The first question is from the line of Nilesh Jain from Astute Investment Management.

Congratulations on a good set of numbers. My first question is on the working capital, like you mentioned, so I wanted to understand largely for this financial year or for the last quarter, what has led to a massive increase in the receivable days from 21 days to almost 47 days. So for this financial year, if you can talk about.

Sure, sure, sure. So our inventory days shot up in March because of the Akshaya Tritiya was on 30th April, and many orders of delivery was getting postponed in the first week because March rates were gold rates have gone up. So we pushed up the delivery in March only to achieve our targets also. And we've given a comfort to the corporates that they can pay in 7 days -- take a credit of 7 days more or 10 days more. So to achieve the target of March and to push up the deliveries of Akshaya Tritiya as gold rates were very high, all-time high. But now the receivables at 30th April have already gone down to 60 days. So this was a short-term comfort given to the corporates.

Okay. So we expect this to normalize...

So already, we have normalized on an average of 60 days, and we are targeting ahead for 50 to -- 50 to 55 days. So again, in the last March '24, we were shot above -- inventory were shot up because Akshaya Tritiya was in the May end. So deliveries were in first week of April. So inventories were high. In this March, days were high because we pushed the delivery Akshaya Tritiya was earlier and payments we given a comfort of 17 days to the corporates because of the rates option out. But now it's all regular and business on a regular account. Now receivables has come below [ 300 ] on absolute terms.

Okay. Okay. In your initial comments, you mentioned that Advanced Gold has been about certain percentage of volume. Can you help me with that number? What has been -- what is that number?

About the percentage of Advanced Gold business bank?

Yes, of your overall volume, how much percentage is...?

Yes. Already, we have closed with 5% to 6% last year. And now we are targeting for 7.5% in this year. So last year, we achieved 5% of gold this Advanced Gold business. So this year, we are expecting good Advanced Gold business because CaratLane already came up at the rate of 10, 15 kg per month from 2 kg and Aditya Birla and Reliance, we onboarded. Already last quarter onboarded Aditya Birla and given us samples to them, and they are about to start the business. And Reliance, we started the agreement phase, already agreement phase has done, and we are expecting from them also Advanced Gold business. So this year, Advanced Gold business, conservatively, we will be at 7.5%.

Okay. And last question is we want to increase our capacity from 1 tonne to almost 4.5 tonne and you mentioned that we are looking at INR 100 crores of investment to set up the plant, the capacity. What would be our working capital investment apart from the INR 100 crores for the fixed asset?

So again, we have just secured a land and building, keeping in mind the future demand, the corporates that are onboarding like Reliance, Aditya Birla and CaratLane we onboarded. And again, some more will be onboarded. So this will lead to -- our capacity will be utilized by '27-end or starting of 2028 start. So we will need some use facility at that time, and we are in a plan mode. We will come up with all these details after June quarter and what will be our CapEx plan and how we'll be executing it. Right now, we have just purchased a plant -- land and building and which we are replacing with the bank with our collaterals, which were FDs are with the collaterals, just we have replaced with the bank for the collaterals. So again, we will come up with the plan of going for 4x. By 2028, we'll open this facility. And we are in the phase of making the plan and we'll come up with after June quarter and how much CapEx will be done and how the working capital will be recovered.

Just lastly, on the guidance you've given of INR 7,200 crores by FY '27, what is our assumption on the realization of the gold price? Like how much appreciation we are expecting?

So we have conservatively taken a gold rate of INR 90,000 per 10 gram because we cannot predict 2 years because it has gone up by 30% this year. So expect it consolidate for 2 years. So we have conservatively taken a INR 90,000 rate, which is a very conservative rate because 2 years, it can be stability also or it can go up also, but we have taken a conservative rates. So we have given guidance of INR 5,400 crores and INR 7,600 crores in the new PPT.

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

Congratulations for a great set of numbers. Sir, I have 2 questions. First, coming back to the guidance side. We have seen in the press release that FY '27 revenue guidance is INR 7,200 crores. So sir, I just wanted to check on the margin front, what would be the EBITDA margin and the PAT margin guidance till FY '27, considering that you have highlighted a lot of efforts to increase the exports, to increase the share of Advanced Gold, to increase the share of diamonds. So just wanted to get a flavor of what is the margin guidance for FY '27 on EBITDA and PAT level?

So we are at current 3.7% PAT, and we are expecting to go to 4.5% conservatively by FY '27 March. EBITDA we are at now 5.7% approximately 5.6%, 5.7% and we will go up to 6.2%, 6.3% of EBITDA. Conservative, 6.2%.

Okay. And sir, second, considering on this GML part. So basically, I guess, GML rates were volatile, as you rightly pointed out. But now you gave the comment that we have started receiving favorable rates. So can you elaborate like what is the GML rate that we are currently getting? And what is the proportion of inventory that is funded by GML now? And what is your target to take it up?

So already, we were using 15%, approximately, 15%, 20% earlier. We surrendered the GML last before Trump tariff and all because the availability was dried up and also the rate has gone up in the last quarter to 8%, 9% and 10% has also gone up. So we stopped using last quarter. And this quarter, we are seeing it has stabilized to 5%. Now today's rate were 4.75% and they are telling that in 1 month time, it will go down to 3% or 3.5%. So availability has also in normal phase now. Earlier quarter, availability was not there for 2 to 3 days. So now we are planning -- Siddharth Sipani also joined us, who has a good experience in GML. So he has done a good meeting with all bankers, and we are planning to use from July next quarter. This quarter has already came up to end up with 30 days spending. But in second quarter, we will start using it and rates will be approximately 3.5% to 3.7%. As per my assumption, it will not come down to 3% as earlier in a short time. But in a longer time, in the third quarter or fourth quarter, it will come up to 3%. So we'll be slowly starting using it in the second quarter.

Okay. Okay. And sir, what proportion of inventory do you plan to fund via GML? So earlier, as you said, like in quarter 4, it was 15%, 20%. So what will be the proportion that you're now targeting for GML?

It may go up to 80%, 85% -- 80% because the bank also gave up to 90%, there is a cap of 10%, but we plan to go up to 80%, 85% in 3, 4 quarters from here. So first quarter, we are targeting is 20%. And against second quarter, we are targeting 35%, 40% to go up to.

The next question is from the line of Agastya Dave from CAO Capital.

Am I clearly audible?

Yes, sir.

Thank you so much for providing such an extensive commentary at the start of the call. Many of the questions got addressed there. I had a question about the expansion and when it will get operational, but I guess I'll have to wait till Q1. Sir, the export order that...

To start the facility, making the facility by 2026 opening and to conclude it by 2028 opening. So we are on it. Already Siddharth joined last month already, we are preparing all these plants and all. In next quarter, by June quarter, we'll be with all this plant going to 4x from here. So we have a plan of 4x, 4.5x from the turnover of INR 20,000 crores. So we will -- INR 27,000 crores. So we will be giving this plan after June quarter surely.

Right, sir. I'll wait for that, I'll keep my questions till that point. Sir, my question was on the export order that you have gotten. That's a single very large order for you. What is the scope with the customer going forward? I mean, after you reach the 200 kg mark, can you -- like can that customer give you a bigger -- I mean, can you have a bigger wallet share with that customer? And also, what is the overall addressable market here? How much can you do in exports? And how many such opportunities are there, which you can easily capture going forward? And let's take probably next -- over the next 2 to 3 years, how many such opportunities can come your way?

Yes, sure. So this is just -- this is a strategic relationship with the customer in Malaysia, and he came to our facility and given a confirmation of order 200 kg per month. So we have already delivered 60 kgs. So this is on the basis of advanced USD he is providing to us, and we are making -- again, chase is created. This is not like a job work. gold cannot be send it by Advanced Gold. There is some process in that. So he's sending U.S. dollar advance, and we are sending -- already only 1 tranche of 60 kg has gone up, and they are in the QC model and all. So this is -- this run rate will come by in 3 to 4 months from here. And he is a distributor -- we have appointed him a distributor from Malaysia. Totally Malaysia country, we have given a whole and sole distributor to him. So again, exports, there is a huge opportunity because we are opening -- that's why opening office in Dubai because the reason behind opening is that there is a difference of dollar rate here. When we get export metal in India from bank, we have to pay some $4, $5 premium here and the same charge to the customer. Again, in Dubai, gold is cheaper by $10, approximately after 365 days, 350 days, $10 cheaper because gold has come from every country in Dubai. So they want the rate what is going in Dubai. So we will be procuring gold in Dubai and sending here for job work and giving the -- passing this rate to customers, this difference of the $15 rate, which is very hurdle for going to more exports if we want to do, we have to give the comfort of this dollar to them. So we'll get the gold in Dubai and send here for job work. And this will give a comfort to the customer. They are getting the same rate of gold as it is in Dubai. So this will scale our business. Many customers will be added in this. So exports has a good potential. We are targeting 20% from here in this year from Dubai, Singapore and Malaysia. Already Malaysia, we have appointed the distributors for whole time. And I think for exports, Darshanbhai can also give a comment on this.

Yes. While looking at the demand of Indian jewelry in the export market, it is going quite fantastic. Last year also, you can see it was a very good performance in export market for us. So going forward, Dubai market, GCC countries like Bahrain, Oman, Qatar, Saudi, all are growing at a large scale. So we are getting good demands from the clients over there. So especially, we have started -- we are going to start an office in Dubai to serve them more better, to give them more better services and to give the comfortability of logistics and everything. So Dubai, Malaysia and Singapore, these areas are core market for our jewelry, wherein Indian diaspora is main at purchasing our jewelry. So we are focusing main on increasing our export share in this. Again, the corporates in this international market, like how we are conducting business in Indian market with the corporates, the international corporates also, we are planning to make a co-creation and tie up with them to give them new, new designs and multiple Indian designs, which are in very huge demand right now in the international market.

Understood, sir. Sir, so my understanding on this matter is slightly, I mean, nonexistent basically. But when you will import from gold from Dubai and send like the manufactured piece from India, there will not be any duties, any taxation on you?

Already duties are not here also. We get the without duty bullion from Indian banks also. But here, there is a premium of $4, $5, which is very nominal, $0.10. But in Dubai, gold rates are discounted by $10. So we have a subsidiary there, and our funds will be there. They will purchase gold from Dubai and do send our Sky Gold Mumbai factory for a job work, and we can deliver from that order. So that will be help...

That will not attract any taxation from Indian government?

No, no, no. The taxation, we are charging a making charge from here only. So we will be paying tax here only. Yes.

So that tax you will be paying here. But on gold itself.

Normally, big company practices this type of model.

Understood. Understood. So then the market can be very large for you, if you can do it.

Yes, because some -- see some big distributor, there is a order of rate of Indian premium of $4, $5, and they are getting discount at $10 in Dubai for the gold rate. So we are not -- so we will be able to touch that customer also.

Understood, sir. Understood. Sir, one last question again on the exports. So what kind of marketing -- you described that you are bringing in people to take care of the marketing and sales specifically. But on this export opportunity, what kind of presence do you have in terms of like your team members, how many people are like catering to export markets exclusively? And how are you going to build that team?

So I will elaborate on this. We are taking an experienced sales team from the Dubai market who are having experience of the Dubai market for last 30 years, last 20 years. So 2 persons we have selected for our office who are having collectively experience of selling 500 to 600 kgs of gold. So one is experience in the local GCC markets and the Dubai market and the local GCC countries. And the other one is having expertise in the international markets like Far East Asian markets or their African markets or their Australia, Canada, everywhere. So we are having a mix of good salespeople. They will give good marketing services to the international market and everywhere. And we are doing co-creation with them and the local retailers there in Dubai, Saudi, Bahrain, they are looking for co-creation. So we will provide them the design they are looking for their market.

You have some wonderful plans. I hope you're successful.

Thank you for your blessing, sir.

The next question is from the line of Palash Kawale from Nuvama Wealth.

Congratulations on very good set of results. Sir, my first question is that is it safe to assume that in FY '26, you will be doing around 4% of PAT margins?

So again, yes, again, we are -- because of GML, we will be saving 0.3%, 0.4% consecutively. So we can reach 4%, I think it's reachable in 2026.

And sir, any new customer additions for this quarter are planned or you have added in last quarter?

Already in March quarter, we added Aditya Birla. And this quarter, we added Reliance. Added means we have already done the agreement phase, and they are going to order in 1 or 2 months, the processes of 2, 3 months of onboarding and all. So we added this one. Again, PMJ Jewelry, we added PMJ Jewelry who is -- who has 50 stores in Hyderabad in Andhra. We are launching 24-carat jewelry with them. We have made a 24-carat exclusive jewelry, which is made in China majorly. In India, it is very rare. So we have a metro [indiscernible] expert in our production team. He has made it possible. So we have made rings also, necklaces also, earring also, which is very difficult in 24-carat. So India has allowed 995 gold to Hallmark as 24-carat jewelry, and he will be putting this jewelry in all the 50 stores in August month -- from August month. And he has done a tie-up with us for 24-carat jewelry. So we have added PMJ Jewelry. Like [ Murari Jewelry ] in Hyderabad who has 12 stores, he's planning to go up to 30 stores. So we have -- in large corporate, we have majorly all kinds, CaratLane also, Tanishq, we don't have. But again, we are concentrating right now on 10, 15 stores, those who are concentrating in the region, like Kerala, those who have 10 to 15 stores, we have onboarded them. Andhra, those who have 10 to 15 stores, and they are -- have an expansion plan seeing this corporate growing. They are also going to 30 store, 40 store, 50 stores. So we have concentrated this also in last quarter. Mid-corporate segment also, we have concentrated much because seeing the opportunities, they are also availing the bank loans and facilities and expanding the stores. So again, large corporates, I have already stored CaratLane, we onboarded 2 quarters before, last quarter, Aditya Birla, and this quarter, Reliance. So mid-corporate and small corporates are going -- adding every quarter. Those who are 2 to 3 stores also, we are adding because they are also going to have 7 to 10 stores in 2, 3 years or something. So all the blended business, we are getting from them.

Okay. Okay. That's really helpful, sir. Sir, again, on your guidance of INR 7,600 crores by FY '27 with 4.5% margins, that comes out at INR 340 crores of PAT from your guidance of INR 250 crores, which was there. So does it also include the revenue and PAT numbers from the recently acquired entity?

No, we have not given the guidance of this one. After June quarter, acquisition will be over, and we will add the guidance of this in -- this will add up to our gross margins also and EBITDA also will be improved because this company operates on Advanced Gold business totally.

Okay. Okay. And sir, you plan to be operating cash flow positive on this -- in FY '27, right?

Yes, yes. We are -- we will be cash flow positive in FY '27 March -- after FY '27 March.

[Operator Instructions] The next question is from the line of Vijay Chauhan from RH PMS.

Congrats on excellent set of numbers and good execution. So looking at the commentary, it is wonderful. So what -- is it fair to assume like going ahead, let's say, if we go for the expansion that we are already targeting, so exports will contribute significantly more than the domestic player in the incremental volume share? Is it fair to assume?

No, we mostly rely on Indian market because it is a huge market, 140 crore of population. There's a huge potential in India. But export again has a different potential. So it will not be like we are going for 60%, 70% export. But again, there can be a 70-30 ratio. So going ahead, we can be -- India, we can be 70%, 75% and export can be 20%, 25% or 30%. So India is a huge capacity, and we are very small for it because we are at now INR 3,500 crore turnover and India is a INR 5 lakh, INR 6 lakh crores of market in India available -- organized market. Again, unorganized market is INR 9 lakh crores. So there will be a ratio of 25, 75, I think going ahead. Huge unorganized market is shifting to organized, which is INR 9 lakh crores unorganized market is available. So that will be the ratio. This capacity expansion, our sales will come from India also, exports also. Again, from mid-corporate, we are expecting a good sales because many 10, 12 stores, which are not in the market, names are in the market, but they are growing very fastly. And again, from organized manufacturer, we can expect a good Advanced Gold business, which can help us to achieve this 4.5 tonnes -- Advanced Gold business will help us to achieve this, which will need a lesser working capital in this huge facility. So this facility will show our strength of manufacturing, which will be stand-alone -- one of the largest in India. In Coimbatore, it is one of the largest in India, it is 5 lakh square feet store, and we will be stand-alone, one of the largest in India if we build up this facility and go in this -- so we have an aim to become a 4.5 tonne -- at least in India, you can see 800 tonnes of gold is imported and 600 tonnes of jewelry is made, 200 tonnes of bullion and coins are made. So out of 600 tonnes, we have -- we want to be somewhere about 7%, 8%, 9% of the market share, somewhere in this market share. So this will drive from existing large corporate also and mid-corporate also from export also, advanced gold business also.

Excellent. And is it fair to assume like this year's exit run rate per month will be more than 650-odd FY '26 on the volumes front?

Yes. April was very good quarter for us. April was -- and run rate -- as we have given the -- we have -- will be a run rate of INR 1,200 crores, INR 1,300 crores per quarter.

Okay. Okay. Okay. And the FY '26 exit run rate can be -- I'm asking per month, it will be like 600 plus, 650 kg per month when we complete the FY '26?

Yes, 650 to 700 kg per month, yes.

Okay. Okay. And lastly, on the -- when it comes to exports, so can you elaborate like the design differences or the preferences they have versus the domestic preference? And how we are building like -- if there is a substantial difference in terms of designs on jewelry side. So are we building some differentiated design portfolio for export market or there is no much difference?

No, no. Darshanbhai will speak on this one.

I'll elaborate on the design aspect of the international market. Moreover, we are specialized in the South Indian jewelry market, like we have a very good deep knowledge of the South Indian jewelry market. So that jewelry is going on very good in the international market. Apart from that, there are some concepts and some regional-specific and country-specific designs that we are also building on with them. We are doing co-creation with them. We have developed a design studio in Andheri for especially developing the export-oriented designs, which are special and new in the international market. So yes, some of the designs from the existing portfolio and some of the new designs with co-creation from the international clients we are developing. So as in all, we are a design-based company. We are a co-creation company. So we have to provide best designs to the customers.

Right. And those designs will be, let's say, whatever we create new design, so those will be exclusive to export players or we will be also able to launch in Indian market?

No, no. I can add up to Darshanbhai. We have 150 designer team, every 10, 15 batch of designers, head and designer team works over for a corporate or a segment. So 2 verticals are working for Dubai and Singapore, Malaysia region. And we keep a lock-in for the design. Like one of the public-listed company, we started lifestyle jewelry segment for them, and we made a specially design for them 1,500 design, and we keep a lock-in for them. So we don't use the design for Indian market because there should be some specialty and monopoly should be given to them. So we especially designed for these countries and make for them and take the order from them only. So out of 10, 15 verticals, 1 or 2 verticals for the exports, 3, 4, 5 verticals for the major corporate, then mid-corporate and all mix.

The next question is from the line of [ Snehdeep Edge ], an individual investor.

Am I audible?

Yes, sir.

So recently, gold prices hit its record high. So do you facing any decline in your client side and in the end customer side or any behavioral changes?

So there are inventory changes going on. You can see our inventory falls below -- we are into lightweight jewelry segment, where impact is very lesser. Heavy jewelry, INR 3 lakh, INR 4 lakh, INR 5 lakh, INR 10 lakhs impact is there 20%. So our lightweight jewelry falls below INR 1 lakh, 80% and INR 2 lakhs -- 20% below INR 2 lakhs. So there is a inventory shift. The customer going for 10 grams are going for 9 grams. We are -- we have brought in 8 to 9 3D printers last year only when we came into this capacity. So we are able to reduce our weight by 15%, 20% in the inventory. So inventory shift is there. Ticket size shift is there, but number of pieces are gaining. So our average ticket size was INR 55,000, INR 60,000, earlier it got up to INR 45,000, INR 50,000 and number of pieces are increasing. So lightweight jewelry is very lesser impact because of the rates and all. But again, 18-carat, we are expanding very much. 18-carat, we were at 3.7% last to last year. And now this year, we at 6.6% this quarter, we closed. So 18-carat market share is going up with the gold rates. So again, this is helping to accelerate our volumes and all. So yes.

Okay. So are you looking for 14-carat in your portfolio?

Already, we have started a sample for 2 customers in lab-grown diamond. We had added 1 customer in lab-grown diamond last year for lab-grown diamond jewelry. Again, 2 customers, I will not take the name because we have not done an agreement already, we are in the phase for it, but we have developed a 14-carat sample for them and they are approved for us. Both are in lab-grown diamond jewelry in the channel stores and both want -- so we have developed 14-carat for lab-grown diamond jewelry. And I think some market share will gain for 14-carat also in India because of the rate and coming modern youngsters like teenagers of 18 years, 20 years, 25 years, nowadays, 15 years, 16 years, boys and girls are wearing 18-carat and 14-carat. Earlier, our parent not used to allow them to wear, but nowadays lightweight jewelry and white gold and colors are there. So they are able to purchase and they have a purchasing power right now. And they are also shifting to 18 and 14-carat. So we see some market of 14-carat growing here.

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

Just one clarification. We had about -- I mean, current investments to the tune of about INR 100 crores. I'm not aware of the number in FY '25. But then for GML, I guess, you have to keep that as a collateral if you want to increase the GML. So just wanted to get a sense that if we keep that for the GML thing, for the new plant, the CapEx that we are going to do INR 100 crores, that would come from -- I mean, I just wanted to check if the security deposit is -- we'll be using for GML, then how will we do the CapEx for the new plant? So that was just my question.

Sure. So already we have acquired a land building here, which will be placed to the bank, and we can take a INR 300 crore GML from them, which will be at 3% or 3.5%, which will be very beneficial for the company. Again, for the CapEx part, already I mentioned we are into plan. And our total detail will come with the June PBT, what will be the CapEx and how much years we'll do. It will -- from internal accruals, mostly it will be done. And per year, how much it will be done from the profit. Assuming 2027, we are at INR 250 crores, INR 300 crores PAT. So we'll be using from that also from internal accruals. But we are not strongly made the plant. We have already acquired, and we will be making this facility 100%, but we will come up with all this CapEx plan and the 2030 plan in June quarter, we will give the glance of 2030, how will we reach 4 tonne capacity, a turnaround 4x from here. And what will be our profit margin, who will drive the sales, what -- how we will achieve this after 2027, how it will go to 1.5 tonne or 1.7 tonnes and again, 2.5 tonne and 3 tonne and 4 tonne. So a plan is totally in process, and we will be giving up in June quarter that will be sure.

The next question is from the line of Palash Kawale from Nuvama Wealth.

Sir, when can we expect this 200 kg per export order to like go to 200 kg per month? By which quarter?

Already we are at a run rate of 60 kg -- every month, we get the order. It will be gradually increasing. This month also, we got 60 -- we are getting 60 kg advanced USD from there. Gradually by -- in 12 months, we will be at 200 kg run rate. I think in 1 quarter, we will be at 100 and 150 kg in July quarter, 100 kg run rate. And again, December quarter, we'll be at 150 kg run rate and March quarter will be 200 kg.

And sir, any other player in India who does similar kind of exports to distributors, like you mentioned one of the competitors who is very big competitor. But do they also do such kind of orders or...

Emerald Jewelry, who is very big than us, he is in exports also in domestic also, and he is also exporting. And again, we are second largest in casting jewelry. We are also trying to achieve this export market and get the capture of this one.

Thank you very much. Due to time constraint, that was the last question. On behalf of Sky Gold and Diamonds Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you all of you.