Sky Gold And Diamonds Q4 FY26 Earnings Conference Call | Concall.in

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[00:00:01]Ladies and gentlemen, good day and welcome to the Sky Gold and Diamonds Limited Q4 and FI26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Miss Vasa from MFG time. Thank you and over to you ma'am.

[00:00:34]>> Thank you. On behalf of NUMG enti, I welcome you all to Sky Gold and Diamonds Limited Q4 and FI26 earnings conference call. On the management side, we have Mr. Mahan, managing director, Mr. Wilson Shawan, whole time director, Mr. Sadat Sapani, Chief Financial Officer, and Mr. Akas Tamilara, resident sales. I hope everyone had an opportunity to go through our investor deck that we have uploaded on Explain and the company's website itself. I would like to mention a short disclaimer before we begin the call. This form may contain some of the forward-looking statements which are completely based upon our belief, opinion and expectation as of today.

[00:01:12]These statements are not a guarantee of our future performance and involve unforced risk and uncertaintities. With this now I hand over the call to Mr. Mang. Over to you sir.

[00:01:23]Uh good afternoon everyone. Manges Shan here, managing director of Sky Gold and Diamond Limited. First I want to thank my team. They delivered a strong performance despite a tough market. I will assume you have reviewed our latest results and presentation.

[00:01:42]The strategic evaluation of Sky Gold has systematically unfolded across three distinct operation phases. Phase one, our primary objective was establishing portfolio credibility and securing initial corporate client penetration.

[00:02:00]We were ahead of the curve in anticipating the shift from unorganized to organized in retail and jewelry manufacturing.

[00:02:08]Also in fifth towards lightweight jewelry. In all these three aspects, the bets are paying off. Now phase two utilizing a combination of IPO proceeds and internal acruance we expanded our client ecosystem and scale capacity via our loying facility following our preential capital raise we originally guided for FI27 revenue of ILR 5,000 cr a 3.5% pat margin and a 25% grossy Having sub subsequently revised our benchmark upward multiple times, we are on track to exceed even our most recent guidance.

[00:02:55]Phase three, unlike previous phases funded by a mix of internal and external capital, phase three pes entirely on an organic self-sustaining financial architecture.

[00:03:11]Growth will be funded strictly through internal cash generation to achieve a net debt-free balance sheet by SY30.

[00:03:20]On debt reduction strategy, we would like to highlight based on our current plan.

[00:03:27]We would be reducing net debt by 50% above in FY27 itself through land sale and operational improvement.

[00:03:38]I repeat there would be a debt reduction of 50% plus in FY2 it returns a larger portion of debt reduction would be due to operational reasons our Q4 FY26 performance significantly outpaced most industry peers driven by strong wedding season sustainability seasonability bolstered by key festive occasions like guri paradva aka alongside materially Improved customer engagement through our B2B portfolio B2B portfolio.

[00:04:16]Unlike several industry peers high B2B focused manufacturing model effectively captured peak rating and demand through higher production volumes.

[00:04:26]Strategically we p toward higher margin in lightweight and spread jewelry which enhance renovation and profitability.

[00:04:35]We defend strategic partnership with major retail chain stores including but not limited to jewels carb golden gold jewelry joana jewelry jewelry jewelry title gold and many more in this group expanded our distribution networks and grew our advanced gold business also extended working capital efficiency and provided greater order visibility across the value chain, financial guidance and capital discipline.

[00:05:15]Our forwardl looking framework balances aggressive market share capture with single balance sheet discipline.

[00:05:23]Target both metrics. We are targeting a sustainable revenue tagger of 30 to 30% to 35%. projecting a P of 945 cr by 2030.

[00:05:36]I want to make a small change to the guidance we have provided in the past.

[00:05:40]We would like to stick to our PT guidance by FYI to 30 but we would like to avoid revenue or volume guidance primarily because of the volatility in the gold price which is beyond our control. Also top line is vanity is sanity and cash in the bank is reality.

[00:06:00]controlled velocity given the large address of a market opportunity. We possesses the capacity to expand at twice this velocity. However, doing so would compromise our operating cash flows. Therefore, prime expansion is intentionally capped at 30 to 35% to further strengthening the balance sheet.

[00:06:22]Cash conversion engine. Our model targets a consistent conversion of 20% to 25% of patch into operating cash flow underscoring a lean high velocity growth engine that is rare among high growth Indian enterprises.

[00:06:39]This dual commitment ensures optimal steing alongside robust cash generation cash flow generation.

[00:06:46]Sedat Khani has has been thinking continuously and how to grow our institution governance and promoters re promoter realignment to address historical industrywide corporate governance discounts and maximize long-term share the value management is implementing best-in-class institutional framework framework global audit oversight as it we have appointed MSKO and associate LLB member of Video International or promoter removal alignment beginning FY 27. The promoters will transitions transition to a zero salary compensation model migrating exclusively to a division only framework. Promoters will financial reward solely from share ownership outcomes.

[00:07:41]Capital distribution disciplines.

[00:07:44]Dividends will be funded safely out of operating cash flows. This structural realignment ensures promoter incentives are perfectly matched with minority servers, reinforcing physical discipline.

[00:08:00]Moving forward, our institutional skills remains anchored by our three core operational pillars. First, creativity which is through design innovation.

[00:08:11]Second, second is technology which is through process automation. Third is manufacturing excellence.

[00:08:18]In today's forum, we anticipate several inquiries regarding prevailing jewelry demand trends following our honorable prime minister Modi's recent national address. We view the honor honorable prime minister's call to curb gold import and protect our nation's current account deficit as a clear necessary directive by the entire industry. We embarrass our broader national responsibilities in support of this macroeconomical goal. As the wider sector is experiencing phase of demand softness as a result of this tagging condition business model is explicitly built to thrive in such an environment.

[00:09:00]Our expertise in lightweight building places us in a superior position.

[00:09:06]Historically proactive regulatory policy have been introduced around gold metal loans to manage capital and import flows. Skyward limited zero GM exposure today. While we refrain from speculating on future policy directions, our internal operational structure was fully prepared for any further measures the government may need necessary to safeguard the economy and articulated in our previous interactions. Our core mandate remains the culturation of a federalist balance sheet. The objective is heavily safeguarded by our announced task.

[00:09:45]Commercial guidance participated as we move through FI.

[00:09:51]The jewelry manufacturing and retail landscape is initially working capital internship by aggressively executing our new leveraging strategy with targets of 50 50% and above debt reduction during FI 27. Scalboard will drastically reduce his credit reliance. This guarantees that our capital structure remains robust, resilient and fully self-sustaining. Living are securely insulated even if institutional lending loss become significantly more stringent.

[00:10:23]We would also provide another comfort to investors. Our exit plunder for Q4 of Rs 1911 cr is close to the guidance of 8,100 cr provided for FI 23rd. Hence we will not require substantial incremental working capital for growth.

[00:10:42]I now request John for his update on new development of good.

[00:10:48]Hello good afternoon everyone. Uh nursing director today as we look back at the past quarter and the journey of sky gold and diamonds one things becomes very clear. Our growth is not only because of strong business performance but because of strong relationships, trust, innovation and teamwork that defines this organization.

[00:11:12]Over the years, Skyold has built a strong leadership position in lightweight class jewelry manufacturing and expanded successfully across multiple jewelry categories. We've continued strengthening our partnership with leading retailers across India and globally through our strong co-creation, merchandising and customization capabilities even during challenging global conditions including difficult times in international markets. Our teams showed resilience and adaptability through Sky in Dubai, diversification into newer ter c territories, wider product categories and continued innovation. We successfully navigated business challenges while continuing to grow. We also invested heavily in technology, systems, people and culture.

[00:12:02]One of the proudest moment for us this year was recognizing long-erving employees and star performers through ESOP initiatives, appreciating team members who have spent five plus years contributing to the company's success.

[00:12:17]Because at Skyold, we believe people are our greatest strength. Our journey has also been recognized across the industry through prestigious awards, recognition and participation at leading national and international jewelry platforms.

[00:12:31]This achievement reflects the collective effort of every employee, carer, partner, retailer, investor and stakeholder associated with Sky Golden.

[00:12:42]And now as PYO enters its next phase of growth, expansion and global vision, the management is pleased to announce a new leadership milestone for the organization.

[00:12:52]Further, we are happy to announce today that we propose to elevate Akash Telera currently presidential to the role of CEO subject to bold approval. This strategic appointment reinforces our commitment to professionalizing management, enforcing strong governance and positioning the company for accelerated growth. As we advance toward our FY30 target of achieving sales of Rs 18,000 to 90,000 cr with a nil net position, we extend our heartfelt congratulation to Akash on this welldeserved promotion to CEO of Sky Gold and express full confidence in his vision and leadership to drive Skyold's next phase of expansion, innovation and value creation for all stakeholders. Congratulations and wishing you great success in this new journey. Thank you everyone for your trust, support and belief in sky gold and diamonds.

[00:13:53]>> Hi everyone, this is first of all a big thank you to the management for believing in me and giving me the responsibility of leading this organization as a CEO. For me this is not just a designation or a position. It is a responsibility towards every employees, customer, partner, investor and every person connected with the sky gold and diamonds.

[00:14:20]What makes me most proud about Sky Gold is not only our growth numbers or achievements but the culture and relationship we have built over years.

[00:14:33]At the sky golden diamond people do not just come to work they they become a part of the family. This is the reason many people do not like leaving this organization.

[00:14:47]There there is a trust here. There is respect here and most importantly there is a strong sense of belonging.

[00:14:55]As mentioned earlier during the inauguration of one of our subsidiary facility by Mr. AJ Savla MD of Titan Group. We witnessed one of the most emotional and meaningful initiative from the organization this year was with introducing ESOPS for the employees who have been a part of the Sky Gold journey for more than 5 years along with our star performers.

[00:15:21]This was one small way of saying thank you to the people who stood by us in the company contributing with dedication and helped build Sky Gold into what we are today.

[00:15:33]We wanted our employees not only to work for the company's growth but also to become part of the growth story themselves because we truly believe that loyalty, commitment and consistent hard work should always be respected and rewarded.

[00:15:52]These initiative have created a strong sense of ownership, a deeper emotional connect and even greater motivation within the organization.

[00:16:02]And this is the real strength of Sky Golden Diamond, our people. Our effort has also been recognized through several prestigious award and the industry recognitions including the global market entry leadership award for manufacturing, the India business leader and excellence award and the John Alukaras Pride 2026 recognition for for partnership excellence and innovation in design.

[00:16:33]We were also honored as a valuable vendor partner at the circle of India ceremony by the Aditya GLA Bidla group.

[00:16:42]In addition, Skyold was recognized as one of the fastest jewelry manufacturing company uh through the AOG. He also got uh MD and CFO awards along with the several other manufacturing leadership recognition, excellence award, industry trophy and certificates. These recognitions are not just awards for the company. They represent the collective hard work, commitment and passion of our employees, retailers, partners, chargers, leadership team and every stakeholder associated with Sky Gold and Diamond. Thank you again and I'll pass on back to Malay.

[00:17:25]>> Thank you Akash. Uh the success of Sky Gold is based entirely on the blessings and support of our stakeholders. The moment that truly touched my soul was honoring our longstanding employees. It was a small gesture of gratitude for their years of loyalty and it brought back to so many memories of our early days. These are the people who built Sky and celebrating them was the highlight of it of it all. I want to hand it over to Siddhat Shivani. Before Siddhivani takes you through the financials, I want to congratulate Siddhat on implementing stringent processes. General manufacturing is a highly capital incentive business. As you know, we are growing at a fast pace. Implementing processes in such a growth phase is not an easy task.

[00:18:17]that successfully prevent the working capital of our business without those being impacted and our net working capital has successfully dropped from 71 days for quarter ended March 25 to 59 days for this quarter March end 26 also successfully onboarded MSKA and associated LLP a part of video international as our secretary auditors thereby transitioning from midsize to global audit firm as a part of our step in strengthening our corporate governance framework.

[00:18:54]I gave him a 2-year window within which he had to reduce working capital below 60 rates, appoint a global article and get to neutral operating cash flow.

[00:19:05]Within the first year, he has successfully reduced the working capital intensity of the business and there is and there is no need to raise external capital.

[00:19:15]Sedat is a special for us. Hand over to you Sat.

[00:19:26]Thank you Mang for your kind words and thank you to the entire leadership team at Skyold for your support. I am truly honored to be part of Thai's growth journey and this achievement belongs to entire finance and sales team. I am confident we will continue building a stronger more efficient sky gold that creates enduring value for all stakeholders.

[00:20:02]Before discussing our S4 performance, I would like to outline our strategy for cash flow management and debt reduction. As Mang Y highlighted our annualized Q4 exit run rate for uh revenue of 7,650 crores is already close to our FY 27 guidance of 8,100 crores. Because of this, we will need very little extra working capital to fund our growth.

[00:20:44]Additionally, we are shifting our business model toward the advanced gold format. As a result, we expect our operating cash flow to cash conversion in FY27 to be much higher than our long-term spend guidance. We have also included a detailed slide in our presentation covering this FY 27th debt reduction plan. In our last call, we broke down our gross margin expansion from the current year to date. Our consolidated gross margin stands at 8.45% up 245 basis points from 6% in ad 24.

[00:21:32]This improvement comes from three main areas. A 100 basis point gain from reducing gold loss, a 70 basis point gain from our growing advanced gold business and the remainder from high margin value added products like 18 KT, 9K, diamond study and our unique co-creation designs. Looking ahead, our revenue growth will be driven by three clear levers. Increasing our share with existing corporate clients, expanding our distributor market network, and scaling up exports.

[00:22:17]For this call, we want to walk you through our future pack margin expansion. We know there are questions about whether these margins are sustainable or if we are over earning due to rising gold prices. As a management team, we only provide achievable targets and we routinely outperform them. In fact, our current FY27 guidance is already 30 to 40% higher than our initial estimates.

[00:22:50]Investors will also see that our debt production timeline is moving much faster than expected.

[00:22:58]We would like to categorically state that our operations are backto back test. However, for those who still question the sustenance of our margins, our profit margins naturally improve as our share of advanced gold increases.

[00:23:15]Our FY26 fat margin stands at 4.5%.

[00:23:21]Under the advanced gold model, we only record the job fees as revenue, whereas our traditional model records the entire jewelry value as revenue.

[00:23:34]Therefore, as advanced gold volumes grow, our absolute profit and margins improve. Even though it creates a deflationary effect on the topline revenue figure, we expect our gross margin to expand by 60 to 90 basis points due to better mix of advanced gold and studied. This is our first margin lever. Our second lever is reducing interest cost. Today interest expenses account for 1.25% of sales which is a significant drag. As we transition towards a net debtfree balance sheet, this cost will drop to zero giving us a combined 200 basis points margin expansion opportunity.

[00:24:25]While these levers offer strong upside, we have guided for a conservative 5.25% 25% pack margin by FY 2030 which represents an expansion of 75 basis points from current levels. We choose to be prudent with our guidance because our long-term aspiration is to become the largest global jewelry manufacturer. To achieve this, we plan to invest heavily in international infrastructure and use strategic pricing to solidify our global presence.

[00:25:05]Now, let us review the financial highlights for Q4 and FY26.

[00:25:11]Notably, our working capital cycle improved, dropping to 59 days from 71 days in March 25, mainly driven by one increase in advance gold business volumes to 11 12% for the year 26 versus 5.7% for the previous financial year.

[00:25:34]Secondly, increase in exports to 11% for the year versus 6% in the previous financial year and prioritizing shorter credit term customer. Our cash firm operations improved from -272 cr to near neutral operating cash flows of rupees 45 cr negative which is in line with our guidance. Further other income stood at 16.3 cr for the quarter of which 3.7 cr was attributable to gain on sale of investments and balance mainly includes all operational income like exchange gain on exports of 8.4 crores and interest income of 4.5 crores for FY26.

[00:26:26]Now I give the podium back to Mang for his comments. Thanks Sid for the update.

[00:26:33]Before opening forum for Q&A, I have stressed multiple times in the past that having a corporate a strong corporate culture is the bedrock of the company.

[00:26:45]To achieve our FI30 pack guidance of rupees 945 cr we need to implement at multiple front fun fronts to be the globally largest manufacturer over the next decade. Investing in people is essential. That is one of the reason we rolled out ESOPS for all loyal and deserving employees. We will further expand the ESOP pool strategically. We would also be creating a group conference with global industry veterans to guide us on the journey ahead.

[00:27:17]Finally, we kindly ask participants to avoid speculative question regarding future government policies.

[00:27:24]Our view is that no further restrictive measures will be introduced. However, even if the regulatory environment becomes more seren organized players like Kyle are best positioned to benefit and capture market share. Thank you everyone. Now we open the floor for the question and answers.

[00:27:42]>> Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to please use handsets while asking the question. Ladies and gentlemen, we will now wait for a moment while the question assembles.

[00:28:08]Our first question is from the line of Uchka with Ruma Capital. Please go ahead.

[00:28:14]Uh thank you sir for taking us through the presentation and congratulations on the good results. Uh I just had a couple of questions. Uh first is uh due to recent increase in the customs duty and the government's appeal to reduce gold consumption. Uh do you think this will affect our revenues or volumes in any way?

[00:28:34]So this is not the first time the government is increasing or decreasing the duty. We are doing the business for last two decades 20 years I've been in this business. So I have seen this type of event many times uh in the Congress government also in this present government also increasing the duty as per the requirement as per the fiscal deputies and all and again reducing the duty whenever the environment is good and all. So this is the measures taken by the government and uh as per the consumer level uh they they takes as for the MRP of the gold now gold 55,000 they take it as a cost of buying.

[00:29:11]So uh again governments take measures uh whenever it's requirement. So uh as we are into lightweight jewelry right now till now we have not uh find any uh uh lower of the order or softening of the demand at the B2B level because we are into a lightweight jewelry uh segment and nowadays retailers has announced so many gold exchanges schemes and uh who gold exchange they will get more benefit in the meeting charges. Many schemes are rolled out. uh we have heard that at the retail level the gold exchange uh has gone up to 20 to 40% above. So regularly 20% gold exchange business it has gone to 40%. And again by talking to our large uh customers large corporate pool and the owners with them I'm talking to they are also telling it is very early to predict uh in a one week. So they will they are analyzing June month July month how the consumer behavior is going to happen but right now there is no uh uh suffering of demand at the B2B level uh a stable demand is there.

[00:30:13]Got it. Got it sir. Uh thanks for that.

[00:30:16]Uh second question is more around sir uh the recent uh transfer for conc calls of Titan PNG the retailers they have said that they're seeing higher demands in lower car jewelries and towards gold bars and coins. Uh do you think this shift of consumers towards lower car affects in any way?

[00:30:37]So this is a part and parcel uh of the strategy because some denies uh uh goes for 9 k 18 uh so uh all genes look for 9 k and 14 car the mid generation goes for 18 car there is some shift we are also seeing that 18 car is going up and taking place of 22 car but 22 cars again is the leader in the India it is at 70 75% of the sales so again bian and coins are sold at the retail level because some of the customer want to invest in bullion and gold. So for the country they they want to buy high jewelry after 6 months. They take the bullion and coin and then they give the bullion and kind replace with the jewelry. So uh this is the shift of uh uh from uh the budget price shifting also going on. So making target higher in the lower in 9 and 14 18 our margins are better. So it's a mix of business we have to do. We have to plan the strategy as for the gold rates and the market conditions the the customer keeps on introducing new credit new strategies and all. So again diamond delivery we speaking up because of the gold rates and all the diamond delivery we are at 1 and a half%. So this is a strategy played by the retailers as and will require as per the environment of the markets and all.

[00:31:51]Uh perfect. Uh thank you sir for that.

[00:31:53]And just one last question. Uh this is more around the working capital cycles as well. So for these previous two branches and corn calls I think we were also trying to push for gold metal loan which was able through which we were able to get lower interest rates from the banks or financial institutions. Uh in this presentation actually I don't see any mention of that. So is there any strategic shift we have taken to reduce the gold metal loan?

[00:32:21]So again gold rate on we we were using in last quarter and this quarter uh uh we are not treating because gold rates are higher in GML because uh when we are market is uh uh market rates are below 3 4 lakhs for of the gold mater if you buy from the bank we are getting at 1 cr 62 lakh in the market we are getting at 57 lakh or 50 and the costing is going in the market so we go as for the part what is whatever it is quite accurative right now gold metal loan is uh very much costing Yes, of the cost as as for the first side not as for the interest. So we we are at zero gold right now and again the government strategy is going on for this uh my uh imports and all. So we are at zero gold right now as for the secretive uh whatever we will go for. So again sat something on. Yeah perfect uh thank you.

[00:33:15]Uh actually we are assessing the gold rates uh and uh which a gold rate is beneficial to us on a overall fat level we are going by that option at this point of time considering the market uh uh uh the actual prices the local market is uh at a cheaper uh rate versus when we buy from banks and that is is why uh as of March our GML outstanding is near but we have 170 crores of GML facility function with us and uh as soon as uh we are having a better uh pricing for the GML we will uh we will uh we will go for the GML borings.

[00:34:13]Got it. Got it. Thank you. Thank you sir for answering the questions and all the best for for future.

[00:34:19]>> Thank you.

[00:34:21]>> Thank you. Our next question is from the line of Janet with Gir Capital. Please go ahead.

[00:34:29]>> Yes. Hi. Thank you for the opportunity and congrats to the team for walking the talk all through these years and I congrat for for the uh you know uh for the promotion.

[00:34:41]uh couple of question if you can uh provide volume numbers for your for the quarter because that was mentioned in the presentation uh for 101 as well as um uh I know you retained from retained from asking uh the volume and price uh in your guidance uh which are provided for 30 but directly from the current uh you know cases of control terms and goals processing capacity we currently have. Uh where do you see uh the capacity required to you know scale up from here on to achieve that that level of uh u revenue and what kind of capital is required to to um to scale that capacity. So that that will be the first question and I'll come back.

[00:35:36]So again volumes uh for just a second existing per say uh we would like to just uh in uh inform that uh in the last Q4 per se uh we have done around 650 kgs per month and that is in line with our guidance that we have pro uh that we have provided. However, uh from a a go forward perspective, we are uh uh we are expecting a growth of 30 to 35% in terms of the top line and since our major focus is on the advanced gold model of uh of business which has increased from 6% in FY24 to uh to uh around 12% in FY26.

[00:36:38]We expect that our capacity utilization will improve uh going forward because of advanced gold.

[00:36:48]Huh. Because of overall advanced gold and volume also the same.

[00:36:53]>> Okay. So why I'm I'm asking you know is because if you if you see uh uh the G uh the advance going on you don't uh don't u recognize the entire gold uh in your revenue right because uh add your job work right so revenue is a little bit uh misnomer number we we we should ignore revenue guidance or revenue number per se because if you shift your model from 11 and a half% to say 20% or 30% over the next few years to advance gold business then the revenue will definitely not look like what what it is today then it will completely different right but the volume the underlying volume and the processing capacity is what what will matter in the future right uh so that is the reason why I'm emphasis on my emphasis is on the volume side of the uh calculation uh rather than the value side of the calculation uh if it makes sense to you.

[00:37:56]>> No, what you are saying is perfect and in my speech I have uh that is why I have explained the entire accounting policy for the advanced gold uh business and the current uh projection that we are giving for by 30 of 18,000 to 19,000 cr considers 30% of advanced gold business. The exit run for exact uh for the advanced world is close to 20%. and uh and the overall average is close to 12%.

[00:38:32]And we are focusing on overall cash flows per se. And so the main focus will be on cash flow generation and also on the growth of 30 to 35% uh in terms of the absolute sales number uh percent.

[00:38:56]So again you I will say that you you understood the business well and we tell that we have guided 305% of the revenue uh uh uh achievement of the target and again the advanc will be the additional to that. So it will not come as a revenue but it will add on to the profit margin. So our profit will be increased as advanc and advanc will help us to uh improve the volume also and again 30 35% is the revenue growth we are getting.

[00:39:22]both we are we are not only the profitability improvement but it also improves your balance as well because doesn't require us to you know fund the gold >> correct industry three four major clients are also only there in the gold business so we are targeting them from the advanc and regular our major 15 25 clients on the same basis so again same revenue also will come and grow by 30 35%. This is the additional business we are gaining and we were at 0% now we at 12%. So 100% you tell is you told is very better that our cash flow uh working cycle will improve and our cash flow will improve as business correct and lastly if I try to understand the gross margin right if you do the advanc side you just put the revenue for the job which is equivalent to your gross profit correct is there between uh is there any differential between uh you know uh in the gross margin between the uh goods provided by us versus gold or it will move broadly be in the same line uh you know the gross margin I'm not asking like the mix will every item or every 18 carat or 20 to you know smaller car will have a different growth margin for you but on a lifelike is is there any differences between a 18 karat funed by a funded gold funded versus 18 karat gold which we provide to retailer or an adverse metal business whether both are has the similar method and if there is any difference >> so I will uh uh answer you uh from both from operations and from the finance perspective from the operations perspective what we are saying is right uh The gross margin for the advanced gold business is lower by 70 bits to 1.25 125 bits. But uh also we do not have to invest our working capital on it and we save on the interest cost. Hence overall if we look at it from a PAT perspective it is patractive.

[00:41:48]While on the finance side uh since the advanced world business has a infinite ROC since it does not needs any working capital and plus it is tax that accredited because there is only recognition of the service income and the uh value of the gold doesn't get captured. I hope I have answered what you are trying to ask.

[00:42:12]>> Correct. Correct. I got it. Uh I'll jump back. We have couple of more questions.

[00:42:17]>> Sure. Thank you. Thank you.

[00:42:20]>> Thank you ladies and gentlemen. In order that the management is able to address questions from all participants in the queue, you are requested to please restrict yourselves to two questions only. You may rejoin the queue if you have any further questions.

[00:42:33]Our next question comes from the line of Deep Sha with Equidist Securities.

[00:42:38]Please go ahead.

[00:42:40]>> Hi sir, congratulations on good set of numbers. Uh so just two three questions from my side. First if you see uh recently government also put restriction on import of duty-free gold uh they they were restricted to 100 kgs and considering that we did set up our Dubai office for duty-free gold how does it impact our our plans in terms of importing the duty free gold.

[00:43:05]>> Okay. Uh so the first thing is that this duty-free gold there is no uh uh period uh for us the the duty-free gold restriction is for the advanced authorization license only. Uh at this point of time we have we are not importing any gold under the advanced license uh thing. So there is no impact of Thai gold because of this uh recent change in the government policy. Further I would like to just add that in terms of the local market uh gold availability is not an issue and further for exports as well gold is available but uh at banks as well as the nominated uh uh agencies as well. So uh so the availability of gold for uh for manufacturing and export or sales is not a uh is not an issue on ground at this point. Okay. See basically I know that we are currently not importing any sort of PTC gold but the purpose of setting up Dubai office was to import that gold right because ultimately we were going to export it back. So how does it affect our plan going? I'm not talking uh I know that we are not importing it right now.

[00:44:36]>> So uh let's understand the background of this policy change. So this policy change has been made so that only the the eligible exporters get the required allocation. Previously there were some uh nonwanted uh companies also who who were getting this uh this uh this advanced license per se. And secondly the license is not restrictive. One can get up to 100 kgs per say and on fulfillment of 50 kgs of export one can once again apply for the advanced license and can get okay.

[00:45:24]Okay, got it. So uh so second is on the working capital side. Uh we have seen the material improvement in our receivable days. Uh if you see it's still below what it used to be in FI24.

[00:45:36]So do we expect our residual days to go back to FI 24 levels around 2022 days or uh we should stabilize where we are right now.

[00:45:46]So again advanced business is increasing and again uh so we are uh going for the quality uh selected business those who are lesser trades and exports as a less tradition. So 100% in four to six quarter we will be back to that uh 22 23 days and it will take four to six quarter but 100% you will be there because uh our working cycle is improving as far by all the exports also at the domestic level we have controlled our uh uh efficiency of business and all and again the business.

[00:46:17]>> Okay great to hear that. So one last thing uh can you just break down uh how has been the performance in the domestic business and how has been the international performance if you just can break down. Yeah.

[00:46:28]>> Yeah. So out of uh total uh revenue uh uh uh around 12% is for exports and uh remaining uh uh remaining 88% is for the domestic business.

[00:46:47]>> Okay. Got it. Thanks for the opportunity. Thank you and thank you. Our next question is from the line of Palashal with Noama. Please go ahead.

[00:46:58]Thank you for the opportunity and congratulations to the team for very good set of numbers. Uh you see any uh pressure on international demand is so uh internationally we are at the 78% right now. We are at the result of 11%.

[00:47:18]And uh uh uh Dubai and UA is going back to normal. Uh it has 50% business has come back to normal and uh we are expecting uh good uh business from we are concentrating Malaysia, Singapore also. So we are expecting one quarter will be back to 12%. Right now we are 8% and the balance 4 to 5% we are covering from the Indian markets and again the customers like Malwar Kalyan and are same at the Dubai and U and here also and they have committed us the balance profession from here. So again we are now uh uh first time doing exhibition in London UK uh uh new segment we will sering that market also from Dubai office. So uh I I can say uh the decent uh 70% business is going at the international level.

[00:48:08]>> Okay. Okay. Thank you for that sir. And so your inventory days were little higher. So any comment on that?

[00:48:15]>> So again was April. So some of the products were ready in the delivery was taken in first of because at the market forecast nobody wants to uh build the products and all. for the time and again in April it was >> okay. Okay. And the last question uh any update on land monetization?

[00:48:38]>> Yeah, we are only we have appointed the two three agencies also. We are expecting it by uh August I think August or September last September uh we will and cash return. So we have opened two agencies for the sales process also.

[00:48:54]>> Okay. Okay. And sir uh I don't know if I heard you right or not. Your exit run for advanc 30 30% is right.

[00:49:01]>> 20%. 30% 20%. Okay.

[00:49:07]Yes. Yes. Okay. Okay. Thank you. Thank you so much. That's that's it from >> Thank you. Our next question is from the line of Har Sha with Bund Asset Management Company. Please go ahead.

[00:49:22]Hi Dean. Uh am I on? Yeah.

[00:49:27]Hi hi hi team. uh see first question uh basically is uh on your guidance uh basically revenue uh going 3x in 4 years right especially when we also targeting our uh you know triple I mean from current level 3% in 30 this means that our volumes actually should grow at a much faster pace right I mean 40 40 is that understanding right sir So again uh 100% we we have guided the revenue also if you are guided 35% revenue so 27 28% will come from volumes only and again the advanced business is so you are predicting that volumes will also increase but there is a risk of 9 18 22 and 24 and again so we because dates are now stable and came down also can last three four days it is corrected by 10%. So this is a very positive signal for Indian market and we are getting a report from yesterday only that customers are keen to buy because gold itself turned down. So uh again our uh hello uh it depends on the price but we we are guiding 30 35 in that 27 28% automatically volume filter and additional of good okay but it should be ideally high enough if you see it currently basically 650 KBs uh monthly revenue right uh we are doing average let's say 100 kgs of uh advanced code right at 20% exit roughly right so uh and as you said that you know advanced place on your overall uh revenue because we only record the value addition not the entire amount of plus value addition right so if we are driving for 30 35% revenue ideally our volume should be much higher because we are targeting even higher share of GMI so uh for advanc go so my mean understanding that we are in some way building in two tons of uh you know uh gold per month in FI30 roughly.

[00:51:40]Uh so uh basically for uh in in terms of the the revenue for by 27 we are expecting 8,100 cr and uh by 2030 we are expecting a 30 to 35% growth uh reaching to 18,000 to 19,000 cr with a guidance of advanced gold uh model uh advanced gold is strength of 30%. So what you are saying is right. Uh so we are looking at a growth in the volumes uh as well as uh growth in the business but with a uh but with an eye on the overall cash flow from operations as well and uh uh and we want to balance all three of them uh uh in the in this new phase of uh Skyward 3.0. So again adding to that if gold prices go down the volume get accelerated and if gold prices go up the volume gets moderate. So it's a combination of high price and a low price.

[00:52:46]>> Got it. And this this guidance of how much would be the proportion of revenue coming from uh overseas business.

[00:52:57]So at this point of time the exports is close to uh 12%. we are uh uh we are expecting that this uh the expose should be close to 20% of the the the overall sales is is what we expect. So that does not change that does not change no that doesn't change businesses okay there can be some peripheral we are serving Singapore Malaysia and again now right now we are doing exhibition in London also so many countries are being from the office of >> I was wondering if the proportion would go higher than 20 that is why the question right given the guidance but >> no at this point of time we are expecting 20% % of export sales. As we uh reach closer to 20% of the export business, we will again uh reook at at this. But I I would just like to uh to uh let you know that export business we are concentrating more because it has a better ROC since the overall receivable date for the export business is uh better versus the uh uh the local business per se and uh so so this overall improve our business is no advance it is completely on an outright model which is the traditional model. Yeah. Yeah.

[00:54:26]>> Okay. Okay. Got it. And second question is for first of all as you move into your new role.

[00:54:37]Thank you so much.

[00:54:41]What would be the three key priorities going into FI27?

[00:54:46]>> Okay. So the main priority would be as Sedat and Manish have mentioned that we want to go full-fledgedly in export market. If if you see my past experience has always been to export and and like this is one of the this territory which we have to explore further also we want to give horizontal and vertical growth to the company which means we want to improve our diamond business lateral business overseas.

[00:55:11]uh so I personally feel that we are we we we still are at the tip of the iceber but we have a lot of things to capture overseas so so that is our key focus we have a u a big area right from UK to Malaysia Singapore there are a lot of untapped potential which we still have to explore so we are now slowly and gradually targeting creating the product line ensuring that whatever we have done it in India which is with the co-creation activity and merchandizing with the retailers ensuring that uh we can work in sync with them and create better product and better collections so that they are dependent on us similar way the same module we'll take it overseas also and uh I'm I'm very happy to share that as Darren mentioned in his speech also that we have smoothly navigated uh through the storm which you know that enters Middle East crisis of war but we were able to navigate through it and which gives us a very big confidence that we'll go full circuit with the export market all the >> thank you our next question is from the line of Bat Jani with Research please go ahead.

[00:56:36]Uh yeah team uh congratulations for a great set of numbers. Uh uh so my first question is uh what is the uh gold hing percentage uh that is there currently uh which we are following. So you alluded to uh some reduction in the GNL. So just wanted to check you know what is the overall hedging that we do for gold as of now. So we are head approximately 99% or something half a% or 75% uh uh then we cannot control that but uh you can say 99%.

[00:57:11]And uh so 99% is hing so uh I mean how it is h because earlier we used a combination of if I if I understand correctly we used to do it via n features or we used to do GML as well. So, so I mean so what is the proportion of each element now if you can elaborate?

[00:57:32]>> We are at zero usage of zn. So we are putting hging in M6 which is the only one tool available in India. So uh we use the MC tool and every sale and purchase is headed and uh we have a hedging team and a pricing team and uh they follow the rules and uh so we have the again to ask the question MC is the only tool we have and we h there okay great and uh so just want to check on the uh uh the capacity as well. So basically we said that you'll be monetizing the uh the current factory and move to a leased factory. Uh so uh I mean uh so currently what is the uh capacity currently that we have and if you move to a leak will you have a a bigger size plant or the capacity or how do >> so again 1.2 capacity we have we are at 650 kg last quarter as well. So we are at 55% since 2020 28th March we don't have any problem of the capacity and again it's the uh if we need we are planning for a supply model so whenever we need we can go for rental and again what the same the land we have put the many agencies are coming with the proposal that we will buy as a land and whatever requirements we will build up and give you for the rental they need whatever the percentage of rental is going in the market. So many proposal are coming. We are looking into it. How we go for it? Uh we are planning on it if we move total facility to the one facility or we take one one and a half lakh more and again continue with this facility. So as for the requirement when the times come we'll do the policies and loans but we are looking for the agencies who come to us and buy this brand and give us uh construct the building on their cost and give us on the rent in the future. We are open to that. So uh again it will be needed in 2020 after 28th March. after there are many options open many agencies are many independent buildings are also available for rental >> thank you ladies and gentlemen in the interest of time we will take that as our last question for today I would now like to hand the conference over to Mr. Mangeshan for closing comments. Over to you sir.

[00:59:53]>> Thank you so much uh all of you. Uh and ending this Q&A question we want to increase our portfolio in domestic and export market also. Again we will say we are a design company not just a B2B manufacturer. We want to be a globally largest manufacturer. So again the team with Akash Sedat and again many more person has to be around CEO and we are planning on that. So second layer of management is uh building the empire totally. Uh thank you so much uh thank you everyone for joining us today for our continued trust and support. We hope we have been able to address your queries and provide meaningful insight into our performance and future outlook.

[01:00:34]On behalf of the management team, Sky Gold management team would like to express our mutual appreciation to all our shareholders, customers, banking partners, employees, suppliers and other stakeholders for their continued confidence in the company and for being an integral part of our growth journey.

[01:00:50]In case you have any query for further details, you may please contact MUFG in time, our investor partner. Uh thank you so much. Good afternoon. Yes, thank you everyone for your time.

[01:01:04]Thank you. On behalf of Sky Gold and Diamonds Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.