Note that this conference is being recorded. I now hand the conference over to Mr. Parth Patel from Orient Capital. Thank you, and over to you, sir.
Thank you, Sagar. On behalf of Orient Capital, I welcome you all to Sky Gold Limited's Q3 FY25 and 9 months FY25 earnings conference call. From the management side, we have Mr. Mangesh Chauhan, Managing Director and Chief Financial Officer, Mr. Jay Sanghi from the finance team, and Ms. Nikita Jain, Company Secretary. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and the company's website. 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 involve unforeseen risks and uncertainties. With this, now I hand over the call to Mr. Mangesh Chauhan. Over to you, sir.
Thank you, Parth. Good morning, everyone. Thank you for joining us today as we discuss our Q3 FY25 quarterly performance. In Q3, the company maintained its strong growth momentum, achieving its highest ever quarterly revenues and operating profits with year-on-year growth of 116.7% and 217 point odd %, respectively. We continue to onboard new clients and expand our customer base as part of our vision to become one of the largest B2B gold jewelry manufacturers in our segment. This quarter, we successfully onboarded Aditya Birla's Novel Jewels , In-Driya brand , marking a significant milestone that highlights our ability to cater large-scale premium projects. Additionally, we strengthened our presence among major jewelry retailers by partnering with CaratLane and P. N. Gadgil in the past quarter.
The jewelry industry as a whole is witnessing aggressive expansion, with leading brands rapidly increasing their retail footprint to capture a larger share of organized market. Our existing clients have also expressed plans for aggressive expansion, further enforcing growth opportunities. Demand for wedding jewelry remains strong despite fluctuation in gold prices, with customers adapting to market changes. Sky Gold diversification into new jewelry segment has gained strong traction this quarter, further strengthening our market presence. The expansion includes 18 carats natural diamond jewelry and lab-grown diamond jewelry. Both exports and domestic market remain key focus areas. We enforce our distribution network in Singapore to drive export revenue growth. Additionally, we have announced plans to rebrand Sky Gold Limited as Sky Gold and Diamonds Limited. This rebranding reflects our strategic shift, highlighting the company's broader focus.
We are moving to include diamonds, lab-grown diamonds, and other precious stones, offering a more comprehensive view of our operations. We are pleased to announce an update on Sky Gold's credit rating from India Ratings, subsidiaries of Fitch Group, which has assigned a rating of A- Stable to the company bank loans. The fund-based working capital limit and proposed fund-based working capital limit have been rated A- Stable and A2+. India Ratings has based its assessment on Sky Gold's significant operation expansion, driven by increased installed capacity, inorganic growth, and along with effective working capital management. Rating is expected to reduce the company's cost of funds. Collateral requirements will. The impact may not be immediate.
This structural improvements will strengthen the company's financial positions, leading to better negotiation terms and lower borrowing costs in the long term and improving ROC and ROE. This quarter, our monthly production volume averaged 447 kg, up significantly from 270 kg per month last year, marking a robust 66% growth, year-on-year growth. Exports continue to make healthy contributions, with sales of reaching INR 71 crore, marking a 12% growth as compared to previous quarter. I will discuss our Q3 financial performance. The consolidated revenue for the quarter stood at INR 998 crore versus INR 460 crore in FY 2024, thus re-registering a growth of 160% on year-on-year basis. The gross margin was 7.3% as compared to 5.3% on Q3 2024.
EBITDA for the quarter was INR 57.3 crore compared to INR 18 crore, showing a growth of 217%. EBITDA margins of the quarter stood at 5.7% as compared to 3.9% in Q3 2024, improved by 182 basis points on a year-on-year basis. PAT for the quarter stood at INR 36.5 crores as compared to INR 8.9 crores in Q3 2024. PAT margins for the quarter stood at 3.7% as compared to 1.9% in Q3 2024, hence improving 172 basis points on year-on-year basis.
In moving to the nine-month FY 2025 financial performance, the consolidated revenue for nine months stood at INR 2,489.8 crore versus INR 1,232 crore in nine months FY 2025, thus registering a growth of 102% on year-on-year basis. The gross margin was 6.8% as compared to 5.6% on nine months FY 2024. EBITDA for nine months FY 2024 was INR 133 crore compared to INR 151 crore, showing a growth of 156%. EBITDA margins for nine months stood at 5.4% as compared to 4.2% in FY 2024, improving 115 basis on a year-on-year basis.
PAT margin for FY nine months FY 2025 stood at INR 94 crore as compared to INR 26.9 crore in FY 2024. PAT margin for nine months for FY 2025 stood at 3.8% as compared to 2.2% in nine-month FY 2024, hence improving by 161 bps on a year-on-year basis. We have delivered a strong performance in the first nine months for the financial year, and remain on track to achieve our annual revenue target of INR 3,300 crore, driven by new client acquisition, operation efficiencies, and enhanced management capability. To support our growth, we have strengthened the leadership team by bringing in industry veterans across key roles, including plant head, sales head, designers, to further propel the business forward. I now request the moderator to open the floor for questions.
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 their touchtone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Akash Kaval from Nuvama Wealth. Please go ahead.
Hi, sir. Thank you for the opportunity, and congratulations on a great set of results. My first question is on volumes. What was the volume out of 447, what was the volume for the Sky Gold standalone entity?
the 9 months was 997 kgs and 134 kg. 975 kgs and 181 kgs for Sparkling Chains and 182 kgs for Sky Gold. Totally, we select 1,339 for the 9 months
Okay, okay. Sir, out of this, have you started the delivering to Aditya Birla as well in this quarter, in Q3?
Yeah, already we have started delivering. Currently we are delivering monthly 20 kgs. Aditya Birla already got an order of last quarter only of 20 kgs. This quarter, already we have started delivering the products. This quarter, the numbers will come how much we are delivering this quarter to Aditya Birla.
sir, in upcoming years, like FY 2026 and or FY 2027, how much do you expect to deliver to these two companies, which are CaratLane and Aditya Birla?
We now we are making monthly 450 kg per month with the subsidiary. We are expecting 10% of revenue from more growth from CaratLane and Aditya Birla. We are expecting monthly 50 kg from both CaratLane and Aditya. This will add 100 kg extra production from our regular guidance. I think CaratLane, we are on very track. Every month we are getting order. Aditya Birla, first order has already dispatched, so this quarter will be a trial basis, and then we'll get a regular order. We are expecting to add next, from next quarter, 50 kg from both the companies.
Okay. just to be clear, you said that 10% from both the companies you can deliver by FY2026, FY2027?
Yeah, yeah. Okay.
Sir, you don't have to take gold on your balance sheet, right? It will be very capital efficient.
Inventory also, because they provide us their billion gold material. For this, we make them and we charge the making charge. Making charge will add on to the gross margins and sales. We just make a bill of making charges, which will add directly to our gross margin.
Okay. It will be like adding to your cash flow as well, and, yeah, that's great to know.
Inventory also.
Yeah, yeah.
That's a good sign there, if these all corporates are growing, giving us more productions.
sir, any change in guidance after adding this customer for FY 2026 or FY 2027? Are you planning to, like you have guided for INR 6,300. Will you be changing that guidance?
Yeah, already we are at INR 6,300, now we are guiding at INR 7,300 crores. As we have already, we are already reaching out of INR 3,300 crore, we have already done INR 2,500 crore. We have changed our guidance to INR 7,200 crores, because these are clients we have not counted in our guidance of INR 6,300 crore. This new three, two clients already we added, and P. N. Gadgil also was not there. We have revised our target to INR 7,200 crore by FY 2027.
Okay, that's great to know, sir. Sir, what would be your PAT margins on this INR 7,300 crore business?
We are expecting from 3.5%-4% in between that.
Okay, okay. Sir, how is Q4 shaping up, since 2 months are already done? If you could just give a directional guide update that, would you be crossing this 447 kg mark? Would you be reaching 500 kg per month for Q4?
100% we are on track. We will not talk about the number of the ongoing quarters, but this quarter is much better than the December quarter.
Okay, sir, that's great to know. That's it, that's all from my side. Thank you for your answers. All the best for the future.
Thank you. Thank you.
Thank you. The next question comes from the line of Chintan Sheth from Kedia Capital. Please go ahead.
Thank you for the opportunity. I missed your number on the standalone volume for 3Q and subsidiary volume from for the third quarter.
By number INR 70 or INR 70 crore we done from Sky Gold, and subsidiary INR 135 crore and INR 134 crore. Together we are.
INR 998 crore. No, I'm saying, from 447 kg per month, in third quarter, how much came from standalone and how much from the subsidiary?
Okay, volume-wise, 447 kgs. You can send me the mail, I will send you the details. Yeah, I right now I'm not having the substrate kgs with me.
Sure. Okay, no worry. Second is on the gold loan GML side. Where are we now? Last time we were at 20-25% of our loan converted to GML. Any progress and what should we expect by the year end?
We're, yeah, we are expecting by March end, 60%-70%. We were expecting by December, we have gotten it slower by 1 quarter because of some banks have closed their model, so we have to shift to ICICI Bank. SBI is also on the process. We are like at 20%-25% right now also. We are, I think we are sure that we'll move by March quarter to at least 55%-60%. We are on track. Banks have their system to change this all.
Mm-hmm.
They have to go to committees and change, but little bit, we are slow on this. We were expecting by December Quarter, but let's see, we will be at 55%-60% by March Quarters.
Right. Right, right. If you can, provide a split in terms of volumes, if you can provide, or revenue, whichever is available, you know, the split between 22 karat, 18 karat, you know, and the studded ones, if you can provide?
Yeah. 18 karat, we were at 3% last quarter, and now we have done 5% of this revenue in 18 karat.
Okay.
The last quarter, we sold diamond, natural diamonds of 400 carats. 400 carat, and this quarter we have done 800 carats. Eight, sorry, eight. I will give you the exact figure. Last quarter, we approximately sold 400 carats. This quarter we sold 883 carats of diamonds. Last quarter-
Okay.
we were at 37 kgs of 18 karat. This quarter we are at 49 kgs of 18 karat, which is, we were at 3% of the production, now we are at 4%, 5% of the production. 18 karat, we told that we are concentrating on 18 karat rose gold and white gold yearly, which is bringing us again, margin to us. We are more concentrating on 18 karat also. Natural diamond also, we doubled the carats in this quarter. These two segments we are concentrating and one good news is that we already started lab-grown diamond and our first we'll also shift to Limelight Jewelry, which has 25 stores. We, lab-grown diamond also, we shift the first our production.
Okay. Okay, got it. Lastly on the guidance, you mentioned 7,200 crore by FY 2027, that implies that you will be almost utilizing or exhausting your existing capacities, right? Any growth, you know, plans for further expansion capacity and how you will be funding it? So far right now, given that our working capital, our operating cash generation is still negative, and we were targeting somewhere turning positive in the upcoming year. If you can highlight how are you going to, you know, expand your capacities for future growth beyond FY 2027, and how you will be funding that?
We have in mind that after FY 2027 March, we'll build a new facility as new clients are onboarded, big clients are onboarded. As and when, we will plan and we'll inform the exchange, and we'll inform the exchange. Right now, we are in the comfortable, but as and when required, we are so, we will be cash flow positive in 2027, as you can see. The client onboarded are giving us the raw material by their own, so we don't have.
Right.
to fund that inventory. We are adding those clients only.
Correct.
We are targeting Reliance also for that. Already Tanishq is in pipeline, so we are targeting them also. We are concentrating on those clients who are providing raw material. Basically, we're not requiring much capital to fund them, and we'll be cash flow positive by 2027.
Okay.
After 27 March, we'll need a new facility. We have in mind, so we are referring for that, but let as and when board approves, we will inform the exchange.
Sure, sure. All the very best, sir. Thank you and all the best.
Thank you. The next question comes from the line of Srinath Krishnan, an individual investor. Please go ahead.
Good morning, sir. The first question is on capacity expansion. This is a very large expansion that you're undertaking. What gives you the confidence that you would be able to utilize this capacity maybe even in four, five years? This is like a 4-5x increase in capacity, right?
Sure. You can see that this currently now is planning for, I think, 300 more stores as he has moved his subsidiary from Tanishq to Tata. Earlier, they were Tanishq subsidiary, they were not able to keep all the inventory because Tanishq was hitting. Currently now itself, the CEO from Tanishq has came to complain that they are planning to open 300 stores, more stores in 2 years. Like that, Kalyan Jewellers, Senco Gold, Malabar Gold & Diamonds, and Khazana Jewellery , all are planning aggressively in 2 years, 24 months. They are aggressively opening 100 stores, somebody is opening 150 stores. Which they have opened, they have taken 7-8 years to open 50 stores, now they are opening in 1 year.
They are into an aggressive plan, and we are in the mindset that after 2 years, we will need a new facility when we will have Tanishq also and I think major clients are onboarded. We are in talks with Reliance also. The growth will come is from the organized market, which is unorganized market is shifting to organized very much drastically. Earlier, they were expecting to shift it by 2030, but now they are expecting that in 6th year only, much of the higher percentage of the unorganized market will shift to organized, and it will come to 78%, which we are expecting in 10 years, it will happen in 5 years only because of the stable government and BJP government and also policies they are taking.
We are expecting a huge growth in the stores opening. We have opened all the corporates right now in Dubai. Singapore also, we have appointed a distributor. Export also growing very much. We are expecting lab grown diamonds to grow very much in these two years. We need a good space. We are putting in a small space in Sky Gold only for lab grown, but we need a huge space for lab grown also. 18 carat is accelerating very much for rose gold, white gold, and yellow gold. As the gold rates are going up, 18 carat will, market share will also grow.
Understood.
Keep in mind that we are into all the segments. We have to plan a huge facility where this client will, growing very aggressively and we have to cope up with them. We have in mind, let's see, we'll, well, as and when we are planning on more, we'll inform the exchange.
Sure. The next one is, sir, like, is on the capital employed in the business. If you look at it, one effort you're taking is Gold Metal Loan, and also, importantly, the customers are going to give you, reduce the capital employed.
Okay, sir.
Yes, that is also a very large point, 50% of your capital employed.
Uh-
Yeah. Can you hear me now? Can you hear me now?
You can repeat the question? Yes.
Yeah. 50% of your You know, you're taking care of your gold bullion, right? Like, because the customers are going to give it to you.
Yeah.
Large portion of your capital employed, and the rest is receivable. What is because reduction there will also significantly reduce the capital employed and improve the ROCEs and cash flows. What is the effort that you're taking there directionally? Where can we move towards in terms of receivable cycle from the 25 days we are at?
100%, 30 days or we are at 25 days, but later days we are at 25-30 days, we will come down blendedly, because nowadays, whichever is we are exhibiting yearly 4 times, and we are totally doing the cash and carry business with them. We are now targeting, now our Vice President, Akshay Tanna , has joined us, and he is totally targeting the customers who are giving the bullion advance or we are doing the cash and carry business. In 2 years span of time, we are expecting that this CaratLane, Abharan Jewellers , Reliance, and if we are successful in onboarding Tanishq also.
They will give only 50% of production of their bullion, and 50% out of 1,000 kgs, we have a capacity, 500 kg will be from their raw material, and 500 kg only we have to fund and fund the data. Blendedly, automatically it will come down to 15 days or something. Already, you can see we are concentrating on data there, and we are expecting it to come to 15 to 10 days because 50% business from right now, from here, to approximately 27 March, we are targeting 30% business should come from their raw material. We don't have to fund that raw material and data also, blendedly it will come down.
From, you know, 30% of your business will come from people who are giving bullion, right?
Yeah.
Also exports will also be another 20%-30%, where what is the receivable cycle there?
Exports is again 10 to 15 days, is 7 days, 10 days. It's much better than India. Their receivables is very fast from India. Blendedly exports also we are concentrating. We are at 1 or 2%, we are at now 8, 9%, and we are targeting to take it to 15%.
Okay. All these put together will be nearly, you know, something 30%-40% of your revenue, which will have very low receivable cycle.
Yeah, yeah. We are on track for that.
Okay. Thank you, sir. Thank you.
Thank you. The next question comes from the line of Jahan Bhate from Nirmal Bang. Please go ahead.
Yeah. Sir, my question is on the borrowings front. What are the current borrowings as on December?
It's approximately INR 380 crores to INR 4 lakh, approximately.
Okay, okay. Any of the funds that we raised recently of INR 270 crore, they are going to be used for working capital?
Yeah. already we used 70 crore in subsidiaries, and INR 140 crore in the subsidiaries, maybe subsidiaries, and out of the INR 130 crore, INR 100 crore we used in Sky Gold and INR 30 crore for the general corporate expenses. we have already infused, we are 18 carat and natural diamond and lab grown diamond, we have increased the new capital, and there we increased in the star models with its partnership. all the divisions we have spreaded and invested. we have seen the growth in 18 carat also, we have grown from 3%-5%. we have grown natural diamond also by 50%, quarter and quarter.
Okay. Sir, how should we look at debt, for, by the end of this year and, by end of next year, where should the debt figure be?
I think by end of this year, we are at INR 380-400 crore only. We are in a comfortable situation. Next year, we can increase some INR 50-100 crore debt, not much than that, because we are getting GML right now, so it will be not cost and for our interest cost will be lower because of GML. Already ICICI Bank has granted us INR 100 crore of GML. We will be much of taking GML only, which will not impact our-
Right.
fat margins.
Yeah, that I understood, sir. Yeah, the gross debt will be how much?
Gross debt will be approximately, next year we are planning. This year it is INR 400 crore, from INR 550 crore-INR 600 crore.
Okay, okay. Thank you, sir.
Thank you. Next question comes from Raj Sarraf , from Finvestor. Please go ahead.
Sir, congratulations on great success number. Sir, how would be the margin outlook, sir, on EBITDA and the gross margins, sir? Will it sustain this level or what would be the outlook, sir, for going forward, FY 26 and FY 27?
We have worked very hard for the continuously, we have improved our gross margin also. EBITDA also increased, we maintain this EBITDA for 8.5% approximately, VAT margins were 3.5%. We have improved and we maintain this in this quarter also. We are largely concentrating on the margin-based products, which are like adding a natural diamond lab, also adding, first, it may only gone from a small amount of INR 15 lakh-INR 20 lakh, it's going to grow by, I think, out of our revenue lab only have a place of 5% in next three, four quarter or six quarters.
I think lender margin will be at 7% and EBITDA at 5.5% and added 3.5%.
Sir, and sir, you have given guidance for this year, 3,300 crores. If we maintain the same run rate for next quarter, we'll be already crossing this number. What could be the guidance for this year and FY 2026, though you've already given the guidance for FY 2026, that is 72.4-100 crores, sir?
Already we have guidance, given a guidance of INR 5,700, we have revised the guidance to INR 5,700 crore for the FY 2026 and INR 7,200 for 2027.
For 26, sir, can you repeat again?
Uh, five thousand seven hundred for FY twenty-six and seven thousand two hundred for FY twenty-seven.
Okay, sir. This year we will maintain the guidance of INR 3,300 crore?
Yeah, 100%. I think we will, it will be better than that, but we'll not open the numbers, but this quarter is much better than last year.
Okay, sir. Okay. Thank you very much, sir. That's all from my side.
Thank you. Next question comes from the line of Manan Mundra from Walfort PMS . Please go ahead.
Yes, thank you so much for the opportunity. Sir, I had a few questions. First one would be that for the past few quarters, we are seeing that-
Excuse me, your voice is not coming sir, properly. Can you.
Manan, may we request you use, handset, please?
Hello, is it proper?
Yeah, now it's clear, sir.
Okay. Sir, for the past few quarters, we are saying that we will onboard Tanishq. Where are we on that front?
I think we are right now in a good position because we have supplied 2, 3 times to the CaratLane and CaratLane, we have become a regular vendor to the CaratLane. It's not the first time we submit, supplied 2, 3 times more we supply to Via. Orders are coming back-to-back. It will get very good impact in the Tanishq also because more members meet, every time and they discuss about the vendors, and there is a, very good, very good review about our company's product and selling time of our product. It will help us to onboard Tanishq also. We are regularly meeting them, only, our Vice President, Rakesh Sundar, is targeting them.
Already we meet twice in last week also, but we are expecting, let's see, one quarter we will be. We are able to achieve Novel Jewels, Aditya Birla on board, then currently now Tanishq is the only remaining part, so, but we are very nearby.
Correct. Understood. Sir, second will be, when did you say that we will be cash flow positive?
by FY 2027, we'll be cash flow positive.
Okay, okay, understood. By FY 2027. Okay. Sir, the next question was that, like, when you spoke about the CapEx, I couldn't get it. How much kgs per month are we planning the next CapEx, and what will be the total capacity after that?
We are not anything on the plant, just have in mind that we are planning for this, we will go up to 4 ton capacity. We are at 1 ton capacity. We'll go up to 4 ton capacity because by FY 2027 months after that, we'll reach the capacity, and we will make now our competitor, Emerald, he has the capacity of. He's making 2 ton, and he has a capacity of 2.5-3 ton. We want to make a 4 ton capacity facility.
Mm-hmm.
... including all lab grown natural, diamond carat, and all. let's see, we are planning for that.
Mm-hmm.
All very strong, approved by the board and is coming.
Mm-hmm.
We have in mind that we should have a capacity of 4 tons per month.
4 tons per month. Okay, understood. Sir, the last question would be that last quarter, you said that we might have other income in Q3 of about 15 crores order, but we had around something 7 crores. Will the balance 8 crore come in Q4? How can we look at that?
Which, can you repeat? Yeah.
Sir, last quarter concall we asked. You said that for the quarter three, we might get other income from sale of shares or something, about INR 15 crores. This quarter we had around INR 7 crores. Will the balance INR 8 crores come in quarter four?
You can see we have at least against the bank limits for it, we are getting every quarter the interest income also. This year, from sale of investment, we got INR 3.4 crore. Some of our investments are with some single bank or SBI, they're in the process. I think if they get released in this quarter, we'll get the income of other income also in this quarter. Some INR 35 crore of shares are with, lying with SBI, they are in the release process. If they'll get released, we'll get. Also we'll get, but we already got in this quarter also INR 3.3 crore from the sales from investment and INR 2.4 crore from the interest income.
Okay, understood. Sir, last question will be: Sir, I couldn't understand the debt part of it. You said that next year our debt will be around INR 550 crores-INR 600 crores. Could you please explain a little why will our debt increase? I couldn't get it.
We are expanding in many segments like 18 carat also, lab grown also into natural diamond, also 18 carat. To fund the growth, we have to take the debt. We are now getting GML, so interest part will be only 3-4% yearly, other than 9% from the CC limits. We are getting good orders from all the segments. I think lab grown, we have started on laminate jewelry, which has 24 stores now. Bundled diamonds, we are approaching towards 20 stores. Lab grown has a huge potential in next 2, 3, 4 quarters. We'll fund that also, we'll fund 18 carat also.
As and when required, we'll take the debt, but we are projecting it INR 550 crore-INR 600 crore. We have revised the number also of the growth. To fund the growth, we'll take the debt, yeah.
Correct. Okay, understood. Sir, very last question only. Sir, you said that FY 2027, we will be cash flow positive. In terms of if I take cash flow by EBITDA, so what would be the conversion? Like, more than 50%, or how would it be? For example, it's just an example. EBITDA is, for example, INR 500 crores.
Yes.
Will our cash flow be more than INR 250 crores or something like that?
Yeah, yeah, yeah.
It will be more than 50%, you are saying, our cash flow?
100%, 100%.
Okay, okay, understood. Okay, thank you so much. That's it.
Thank you. Next question comes from the line of Bharat Gianani from Moneycontrol Pro. Please go ahead.
Yes, sir. Thank you for the opportunity and congratulations for a great set of numbers. Sir, my first question is that on the natural diamond side and also on the especially on the lab grown diamond side, we have seen the price of the lab grown diamond correct very significantly in the last 2 years or so. The prices are now stable, again, you know, as the technology evolves, there is a risk that, you know, we may see a further price correction.
As a lab-grown diamond manufacturer that you have started this segment, I know it is a very small portion right now. What is your risk in terms of if the price of the lab-grown diamond continues to correct? What risk do you have as a manufacturer of that? If you can throw some light on that.
Sure, sir. Thank you, Bharatji. I will throw a light on that, because lab grown is a devaluing asset. Every time, every quarter, rates are falling. Earlier it was falling drastically, now it's falling in a limited... We, as a manufacturer, all over the industry works on that model only. We also procure that only also to the lab grown growing companies, about that company only, which we get the fixed order of that. We didn't keep in the stock of this inventory. We got an order of 500 carat, we order to the growing company. We do not grow inside because there's a big setup and now we are a very small in debt.
As a manufacturer, we grow inside of say, 20, 27. We take the inventory as which order is fixed. Retailer are also working on the same model. If they are keeping a inventory of 300 carat, as they sold 50 carat in one week, they order 50 carat, they sell 50 carat. All industry is working on that model because all of them know that this rates are falling and will fall much ahead also. All industry is working on the same model. Whichever order is there, we order the material, we dispatch. Once other order come, then we order.
In the same process, we do for the natural diamond also, because natural diamonds also, and the small diamond rates are fall 10%, 15%. Solitaire, we don't keep solitaire jewelry, but solitaire also fall back to 20%, 25%. The same model, that also natural diamonds we keep, procure the diamonds as per the orders of the company. When new rates come, we quote the new rates to the corporate, and then they approve for the new rates. Every quarter or 6 months, we change the rate as and when the rates fall. We also pick up on the same rate. That's why we keep a limited order for a limited demand, we don't keep in the inventory also.
Okay, just so got it. Basically, as now what you are trying to say is that, as the business model that you have now for the gold, once you receive the order, you fix the price and then, you know, start manufacturing. That model will apply to the lab grown and natural diamond also?
Yeah. As and when required, and when we are in a good position, we will grow inside also, because machineries are available to grow inside. Now quantity is very less, so we don't have to do capacity for lab grown diamond.
Okay. Sir, one more question from my side is, I missed your point. You said that new clients that you are onboarding are giving you the raw material, for example, CaratLane or Aditya Birla. You gave some %, but I missed that number. What % of the revenues that you have, the clients give you the raw material and what that % will be going in next two years?
In next 2 years, we are expecting 30%-40% from this client will grow, in 1,000 kg. At least 300-350 kg should we get from this advance billion, 650 kg from our inventory. Now, we are getting per month 15-20 kg from CaratLane, and Aditya Birla just started. In this month only, we got 5-10 kg per month. Coming 6 quarters, we are expecting, after 6 quarters, we are expecting 30%-35% business from this client. Out of 1,000 kg capacity, we are expecting 350 kg from this client and 650 kg from other.
Okay, on an overall basis, in the next two years, you're saying that about 30%-40% of the raw material will be provided by the client?
Yeah, yeah, we are expecting like.
Okay. Okay, sir. Thanks and all the best.
Thank you. Next question comes from the line of Amit Akeesha, from H.G. Vora . Please go ahead.
Good morning, Samo RBC.
Yes, sir.
Thank you for the opportunity, and congratulations for excellent set of numbers. My question was connected to exports, like, how much of the total revenues from exports, and what is the company's export revenue target for FY 2026 and 2027, and how is the demand shaping up in Middle East, UAE, Singapore, and Malaysia?
Already we are at 8% this quarter, 8%, sorry, 7% this quarter. 71 total export we have done, and we are at 0.2% year before, and we next in 2 years, we are expecting it to take it to 13%, 14% or 15%. Majorly, 85% we will rely on India only, because India has a good potential. UAE demand is stable and good. Singapore also, we have appointed a distributor, so we will be starting in delivering in this quarter. UAE, Singapore, and Malaysia, decent growth is there, but India is very strong growth we are seeing. India is going to, because unorganized market is big, shifting to organized.
We are relying 80% on India, and this 8-9% we are taking, we are expecting to go to 13%, 14% or 15% by FY 2027.
Thank you, sir. Last question was connected to the employee, like, what initiatives are being placed in to retain skilled artisans and karigars in the competitive market?
pardon?
What initiatives are in place to retain these skilled artisans and karigars in the competitive market, like employee, I'm talking about?
We already we are giving many incentives on because their designs how design they are made and how it's working on the market. To design also, artisans also we have kept many method project type incentives to them, how much production they are taking. We are giving initially facilities also there. We have made here gymnasium, swimming facility for them. These are the basic facilities we are giving, and incentives also we are giving to them.
You're going to increase the hirings in the coming quarters?
already we were at 600 employees, now we together, subsequently, we are at 900 and 950 employees.
900 and?
950 employees are there, together, subsequently.
Okay.
We are at 950 employees. We'll be hiring as and when every quarter we are hiring little bit where the karigar, the karigar level. Not much designer are needed, because designer and merchandising team we have, we will increase 10 by 10%, but at worker level, the polish department finally we have to increase every quarter. I for the for doubling the production, we'll not need a double employees. We'll need we need one-third employee lesser because technologies are coming. We have already increased US electropolishing machines, then 3D printers have came, which is reducing our manpower. In 2 years, we are expecting that for doubling the production, we will not need to double the employees.
We have to just, the, one sixth of the employee we have to hire.
Okay, that was helpful. All the best for the future. Thank you.
Thank you.
Thank you. Next question comes from Nilesh Jain, from Astute Investment Management. Please go ahead.
Hi, for the opportunity and congratulations on great earnings. My first question was on the GML side. You know, like you mentioned, by end of FY 2025, you're planning to target to bring it to 50%-55%. When I talk about the FY 2026, you know, what percentage of overall debt, you know, you would like to convert to GML? How much of that savings would, you know, flow into your finance costs?
We want to grow, go up to 80%, 75%-80%. Already it will help because we have already get a rating of A- from Fitch Ratings. We were at triple B stable, now we are at A-, there's a good sign that we have got a good rating, which is help us to reduce our finance costs in CC limits also and GML also, and reduce our collateral power also. We want to go up to 70%-80% GML, but by March we are expecting 50%-55%.
Okay, okay. How much would that, you know, flow into your as a finance cost? You know, right now it's around 1, between 1%-1.3%.
Yeah, it will help us to improve by 5.5%. 0.5% will be improved, so we are 1.23% we are there, so it will come down to 0.7% or to 0.65%.
Okay, okay. My second question was, you know, like increase your guidance to INR 70-100 crore by FY27. Does it include any new, you know, clients which you plan to add, or it does take into account only your existing clients, and then your 2 accounts which you added, which is CaratLane and Aditya the 2 one?
We are, we have increased the guidance on the base of the existing client only because their showroom are increasing drastically. Their accelerated showroom as Malabar Gold is opening 100 stores in a year. We have given revising guidance on the base of the existing customers only. Whichever, other bullish on, certain they will give their own bullion. In that, our revenue will not increase, our gross margin increase, because we are making charge bill only will be made. They will give their bullion and we'll make from them. In that our gross margin will improve and our revenue guidance increase on the base of the existing client only, Kalyan Jewellers, Senco Gold, Malabar Gold , Sangam Jewellers, GIA, Delhi Khazana.
These all are growing drastically and opening their showroom. That's why we have revised our revenue guidance.
Okay, because, I remember you mentioned that, you know, you were in a final agreement stages with Reliance. I mean, say suppose you sign up by FY 2026, you know, Tanishq and Reliance, both of them, that would eventually increase your guidance, like on the upside, given, right now you've not included that.
In that, KGs wise % will increase. Our KGs wise volume-wise guidance will increase 100% because they will give their own bullion. That will help us to improve much in our gross margins.
Okay, That is right now not taken into consideration, okay?
No, I have not taken, we are not taking consideration in the guidance. Right now also, we have not taken much consideration of the CaratLane, also Aditya Birla, because they are in the initial stage.
Mm-hmm.
After April quarter, we'll see and change the guidance of that also.
Okay, okay. My last question is, you know, because right now with the new clients which you've added, you are trying to take the inventory directly from them. Are you in conversations with your existing client, you know, to plan to change the model which you have right now, you know, where you are taking inventory on your balance sheet, to, you know, changing the model to taking inventory from them, with your existing clients?
We right now we are not planning, because every corporate has their own model, because some corporates work on this model, some corporates work on to fund inventory from ourselves also. They are large corporate, they have their own models. When we come to 30-40%, then we are in a position when we will talk to the existing corporate also to come to that model. In this next two years, we'll first bring these clients on board and bring the volumes of 300-400 KGs from their bullion, and then only we can negotiate with these clients also. Every corporate has their own models to work.
This Malabar Gold & Diamonds and Kalyan Jewellers, they don't work on that model to give inventory to us they are in the mindset they buy they will only fund the inventory for 25 days, and they can open more stores and keep the inventory on their stores. Other mix of models are there for the other corporates. When we are at 30%, 40%, we are getting the bullion from this big corporate, then we can see no strategy, I think.
Right. Right. Just last question, you know. Any inorganic acquisition or any companies which you are looking to have in mind, talk about that, just like you had acquired Star Mangalsutra Pvt Ltd ?
Nothing right now, but as and when required, as and when there will be any stronger will in from the board. Actually.
Okay, sure. Thank you and all the best.
Thank you. A reminder to all the participants, if you wish to register for a question, you may press star and one on your touchtone phone. Our next follow-up question comes from Palash Kavale from Nuvama Wealth. Please go ahead.
Sir, what was the inventory and debt-
Palash, your line is unmuted. Please proceed with your question.
Yeah. Am I audible now?
Yes, Palash, tell me.
Yeah. sir, what was the inventory and debt position by the end of December?
End of this?
By the end of Q3.
Okay. I think I will send you the numbers with the finance team.
Okay. Okay. No problem. Yeah, that's it from my side, sir. Thank you. Thank you.
Thank you. The next question comes from the line of Shanmugan Selvanathan, an individual investor. Please go ahead.
Hello, sir. Congratulations on your excellent set of numbers in Q3.
Thank you, sir.
Yeah. I have just one question. Because of the rise in gold prices, currently we are facing the gold is at all-time high. Do you face any kind of impact in your demand from the current retail clients, or how is the wedding season currently going on, sir?
Wedding season is good. We as a manufacturer, we are backed by orders every month because there is a wedding season, Akshaya Tritiya comes for April, March, orders will come for Akshaya. Now we are making for wedding season. At retail level, there is 10-15% of impact is there for a short term of 10-15 days. I think nowadays, as and when gold rates go, youngsters want to buy the gold as they assume that gold will go to INR 1 lakh or something, there is a assumption in the market. In the manufacturer level, because we are ordered back, corporate has to give us orders, we have to prepare for other occasions will coming forward.
Retail level, there is the impact of 10%-12%, I think it's short. As we talk to the corporates, they are telling us the impact of 5-6 days or 7 days.
Mm-hmm.
Back to normal in seven days.
Mm-hmm. Okay. Do you feel any, because of this, any impact in the revenues in the current quarter or in the Q1?
Nothing, because we are getting good orders of 18 K also, because of the rate 18 K, 18 K are coming, orders are coming much, because 18 K is a budgeted jewelry. In that, the rate impact is better because it comes in the budget. Some shifts is there in 18 K. 18 K orders are coming much in this quarter also. Again, we have good orders in lined up, and we are packed of orders, so there's no impact on our manufacturing level.
Mm-hmm.
It's natural that when rate goes up, when 3, 4 days, impact come in the retail of 10%-15%, and it goes back normal to the normal.
Okay, thank you very much, sir. That's it from me.
Thank you. The next follow-up question comes from the line of Bharat Gianani from Moneycontrol Pro. Please go ahead.
Yes, thanks for the opportunity. I just wanted to check on the margin guidance for FY27, at gross EBITDA and net profit margin.
Gross margins, we are expecting to be at 7%. EBITDA is 5.5% and 3.5% PAT.
sir, PAT, how much you said?
3.5%.
3.5%. Okay, okay. Okay, sir, thank you again. That's all for me.
Thank you. The next follow-up question comes from Raj Sarraf from Finvestors. Please go ahead.
Sir, thank you, sir. Sir, is there any difference in gross margin of export and domestic?
nce of half a percent, not much in UAE countries. It's similar to India, in Singapore, Malaysia, so half a percent is better there. But of course, Europe and U.S. is different, gross margins are there, but we don't make products of U.S. and Europe. It's totally different products, so our products match to UAE country and Singapore, Malaysia. But the business is much of cash and carry and less data, so that's the advantage. We can turn the inventory fast, but margins is a difference of half a percent.
Okay. Sir, one request from my side, sir. Actually, the investor presentation, which has been posted of conclusion of Q3, we got now so many fresh updates on this conference call. It will be helpful if you can please post a new investor presentation with so much updates. It will be helpful, sir. That's a request from my side.
Planning to have been updated in seven days.
Yeah. Okay, sir. sir, one thing, sir, the volume guidance which you have given for FY 2026, that was from 550-600 KG. what could be the volume guidance for, now, the updated volume guidance for FY 2026?
We are expecting to 650 KG, approximately. 650-700 KG. As we told that, we'll update new PPT guidance also in this call, in this 7 days in our action item. I think we are expecting the 650 KG.
Okay, sir. For FY 2027, it will be beyond 1,050 KG?
Yeah.
Yeah. Okay. Thank you, sir. Thank you, sir, and congratulations, and I wish all the best for the future.
Thank you so much, thank you.
Thank you. Ladies and gentlemen, in the interest of time, this will be our last question. I now hand the conference over to the management for closing comments.
Thank you everyone for joining us. I hope we have been able to answer all the queries. In case you have inquired any further business, you may please contact us or Orient Capital, our investment relationship partner. Thank you so much. Thank you for being a part of our Sky Gold journey. Thank you so much.
Thank you. On behalf of Orient Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.