Earnings Call Transcript - XNSE:SHANTIGOLD 2026-11-04

Operator

Ladies and gentlemen, good day and welcome to the Shanti Gold International Limited Q2 and H1F527 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 call, please signal an operator by pressing start and zero on a touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Harshal Ganshani. Thank you and over to you, sir.

Speaker 16

Yes, thank you, Amirad. For afternoon, everyone, I am Ashil Ganshani from AdFractor's Investor Relations Team. On behalf of Shanti Gold International Limited, it is my pleasure to welcome you all on the Q2 and H1 F26 Earnings Conference Call. Joining us on the call from the Management Team, we have Mr. Sankaj Kovar Jagavad, Chairman and Managing Director, Mr. Sriram Ayangar, International Director. We'll begin today's call with opening remarks for the management, following which we'll open the floor for a Q&A session. Before we begin, I would like to remind everyone that certain statements made in today's call may be forward-looking in nature. These statements are based on management's current expectations and are subject to risk and uncertainty. That could cause the actual results to differ materially. Shanti Gold International Limited undertakes no obligation to publicly update or revise any forward-licking statement based on subsequent events or new developments. With that, I would like to hand over the call to Mr. Pankar, sir, for his opening remarks. Thank you, sir. Over to you, sir.

Pankaj Kumar Jagawat, Chairman

Good afternoon, everyone, and a very warm welcome to our King's Kind H1 at my 27th morning. Let me begin by highlighting the strong operation momentum that we sustained during the first half of FY27. Our focus has been on driving volume growth, expanding our manufacturing capabilities and strengthening our relationships with retail partners. This has translated Thank you. In Q2 FI 27 and 102.3 in H1 FI 27. Our volume also increased by 25.4% in the quarter and 41.0, 41% in the first half, reflecting healthy demand from all our retail partners and our ability to scale up education. The performance reflects the progress we are making in building a larger and more capable manufacturing platform. During the period, the commencement of operations at our extended manufacturing facility in Marul added capacity and flexibility to our operations. The facility has contributed to our business, enabling us to service a wider range of customers and requirement and support the growth involved. Alongside capacity expansion, we continue to broaden our product portfolio and strengthen our customers' relationship. We have been expanding our offering across categories including designer and Turkish Jewelry, while deepening engagement with existing customers on onboarding new retail clients. Our focus remains on becoming a home. During the quarter, we also successfully raised approximately INR 99.83 crore through a riot issue. Thank you. Product authenticity, traceability, and reliability at scale. We believe this shift creates a meaningful opportunity for organized manufacture with its established capabilities, infrastructure, and execution track record. With legacy of 25 years, Shanti Gold is well-positioned to participate in this opportunity. Our priority remains clear, strengthen the manufacturing platform, deepen relationships with existing customers, onboard new retail partners, and respond to changing market work preference. We believe our ability to cater to multiple customers fully varied requirements and operate at scale will remain an important competitive advantage. Political expansion is another important part of our growth strategy. Our upcoming Jaipur facility is intended to introduce machine-made green gold jewellery and strengthen the presence in North India. This will complement our existing manufacturing capabilities and product portfolios which allow us to serve customers across a wider market. Looking ahead, we would like to reiterate to the revenue guidance of communicated. We had a guidance to revenue of approximately INR 3200 crores to INR 3500 crores for the full financial year FY27. This would represent growth of a 60% compared to FY26. We remain focused on delivering on this guidance through volume growth, capacity utilization, customer addition, and continued execution while maintaining discipline in working capital management. To conclude, the first half of FI27 has been encouraging with strong growth in both volumes and revenue. We believe the investment made in manufacturing capacity, the strengthening of our product portfolio, and customers' relationship. Together with the support from the right issue, provide a solid foundation for the next phase of growth. Our focus will remain on scaling the business in a sustainable and disciplined manner. With that, I would like now to hand over the call to Mr. Sriraminder, our CFO. Who will take you through the financial performance of the company for Q2 and H1FI27 in a greater detail over this company?

Shira Mahinger, CFO

Thank you, Pankaji, and good afternoon to everyone. I would also like to extend my warm Diwali wishes to all our investors, analysts, and stakeholders, and their families. I hope the festive season brings happiness, prosperity, and success to all. Now, I will take you through the financial performance of the company for TU2 and H1 FY27, beginning with the second quarter. Reunion from operations. Student INR 746 crores compared to INR 430 crores in Q2, FY26, registering year-on-year growth of 73.5 percentage. For the quarter was INR 430 crores compared to INR 36.8 crores in the corresponding period last year, representing growth of 15.6%. Profit of the tax stood at INR 29.6 crores compared to INR 26 crores in Q2 F526, registering year-on-year growth of 13.5 percentage. The quarter was supported by healthy demand from our retail partners, resulting in a 25.4% year-on-year increase in volumes to 535.5 kg. For the first half of FY27, Revenue from operations stood at INR 1462.3 crores, compared to INR 722.9 crores in H1 FY26, registering a year-on-year growth of 102.3%. EBITDA stood at INR 114 crores, compared to INR 88.2 crores in the corresponding period last year, representing growth of 29.2%. Profit of the tax for the first half student INR 80 crores, compared to INR 60.4 crores in H1 FY26, registering a year-on-year growth of 32.5% each. The additional capacity at our moral facility enabled us to meet sustained demand, taking volumes of 41% year-on-year to 1057.6 kg. Diwali and the wedding season that follows are among the most important demand period for the jewellery industry in India. As retailers have been a century ahead of this occasion, we have seen healthy traction from our retail partners in the run-up to the festive season.

Pankaj Kumar Jagawat, Chairman

And we remain optimistic about demand through the session above.

Shira Mahinger, CFO

To conclude, Q2 and H1 P5 27 reflect strong growth in revenue and volume. Supported by a healthy demand from our retail partners. As we move into the second half of the year, our focus will be on sustaining this operating momentum, making customer requirements through the festive and fading season, and executing our growth plan with continued financial and working capital discipline. With this, I would like to conclude our opening remark and begin the question and answer session. Thank you.

Operator

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Hina Parek from Starkloom Investments. Please go ahead.

Speaker 5

Thank you for the opportunity and congratulations with set of numbers. When the company has delivered a strong H1 performance with revenue growth of over 100%, volume growth of over 41%, I just want to know, like, what were the key drivers behind this? And is it sustainable for the coming quarters, particularly since we've recently commissioned the mineral capacity now being operational, right? And do we see this, I mean, how do we see the growth outlook for the second half of the year? Are there any seasonal demand trends or any other order visibility? How are any other business factors? Can you show some color on that as well?

Speaker 10

Yes, thank you for the question. Yes, good set-up numbers to begin with. 73% YOY growth in Q2 and 100% in H1. So that speaks volumes about the kind of business that we are in, the kind of expertise that we are in. Now, the key drivers of the business that I would like to let you know. The growth has been driven by a combination of increased customer acquisition. The penetration with existing customers, capacity expansion and a broader product portfolio. We have also been benefited from increasing formalization in the jewelry industry and growing preferences for organized manufacturers. So our strategy remains very simple to focus on gaining market share rather than optimizing for short term margins. The investments that we made in manufacturing capabilities Product development and customer relationship are now translating into a strong top-line group in the coming years. So we believe that there remains significant headroom for growth given the size of the addressable market in the near future.

Speaker 5

Got it, got it. And yes, got it. And like you mentioned, like we are expanding our manufacturing capacity. And I think even in your opening commentary, you mentioned that we are selling good retail partnerships. Do we see the similar kind of growth potential over the next two to three years as well?

Speaker 10

Yeah, man, absolutely, yes. We can see a good growth. The foundation for the future growth has been laid. We have, you know, just as you know, as we also mentioned in that, the foundation has been laid, the facility has been expanded, new facility coming in. So the overall market looks good. In the coming future, in the near future, we are quite positive about, you know, going with great numbers, and we are quite bullish in this segment. And as you may also know, we have come with the Dubai office also. So on book, all the approvals are in place. Maybe once the thing settles down, the volumes will start coming from that market also. Other than apart from, you know, penetration in the Indian market.

Speaker 5

Great, great. Perfect. Thanks a lot and all the very best.

Operator

Thank you. The next question is from the line of Prisha Shah from Shah Family Office. Please go ahead.

Prisha Shah, Analyst — SS Family Office

Hello. Hi, sir. Sir, I have a couple of questions. So, firstly, pertaining to your business volumes. So, as we are observing that the business volumes are continuing to expand, so given that, how do you anticipate the working capital cycle to evolve in coming quarters? If you could just throw some light on that aspect.

Speaker 10

Yeah. See, as you know, ma'am, this industry is basically the working capital intensive. So, that's for sure. So, more the capital, more the gold, more the business. It's as simple as it can go. So, if you could see, in the first half of the year, we have raised debts, we have raised equity. These are nothing, these are just to fuel the growth trajectory of the company. So, as of now, we look comfortable given the guidance for this current year. Over the period of time, if the market requires something more than this, what we have, we will certainly go for debt in the near future.

Prisha Shah, Analyst — SS Family Office

That answers my question. So I have one more question, you know, regarding the inventory management. I just wanted to understand what are the initiatives we are, you know, taking to strengthen the inventory management, you know, maybe possibly also if you could help me, how are we optimizing the stock levels and improving overall customer collection efficiency, that would be great.

Speaker 10

Yeah, again, ma'am, this is a very peculiar type of question. Inventory management is the key. Having said that, as I said in the speech also, we are in a growing phase. We are in a consolidating phase. We need more inventory, more the gold, more product launches are there. So my money will get stuck in the inventory for some time till, you know, we find our feet on the ground. So, there will be some inventory holding in a couple of quarters because there are product launches coming in, there are manufacturing facilities being commenced. On top of that, we are also planning to come with Jaipur facilities. So, there will be inventory built up in the initial phase. And then once that inventory built up has to be supported with market expansion going ahead, and I think we will be doing good with the kind of setup, because the foundation has been said, what we need is more of an inventory, more of a working capital, and as I said, it will be more in the form of, there will be a balanced mixture between both equity and debt.

Prisha Shah, Analyst — SS Family Office

Okay, thank you. That answers my questions. Thank you so much, and look forward to talking to you next quarter. Thank you, ma'am.

Operator

Thank you. The next question is from the line of Bhavya Agarwal from Share India. Please go ahead.

Speaker 3

Yes. Hi, sir. Thank you for taking my question. So, I have a couple of questions. My first question is regarding that the short-term borrowings, you know, have increased during the first half of F-27. Can you please elaborate on the key factors driving the higher working capital requirement and your expectations for the borrowing levels going forward?

Speaker 10

Yeah, so I just, I think I answered it. This being a working capital intensive. The fund has to come in. We have just come up with the commencement of new factory at Moro. So that requires a lot of, you know, inventory built up and all. So that needs to be funded both with the debt fund and with the equity. So that's the reason you saw an increase in the borrowing as well as in the rights issue. Having said that, I am still sitting very comfortable at the debt equity level of 0.5x. That gives me enough headroom also going ahead to do additional borrowing should the situation demand to meet the working capital requirements of the company.

Speaker 3

Got it. So, what is the, you know, debt to equity level that we can afford at the maximum level?

Speaker 10

Not in the industrial level, but at the company level. As of now, we are planning to go up to 1x debt equity. At this level, we will be comfortable. It's not that you won't go there, but as of now, looking at the current situation, up to 1x, we are quite comfortable to go to have that kind of a debt equity level.

Speaker 3

Makes sense. Got it, sir. And lastly, how does the company intend to balance its growth plans with the discipline debt management and sustainable cash flow generation?

Speaker 10

Yeah. See, debt management, as I said, again, I'm saying it, this industry is a very working capital intensive, so debt will be required all through. If you want to grow, if you want to scale, it has to be either funded by the fund or debt. And by the equity, raising of equity funds. So that's said and done. So having said that, going forward, we intend to bring that operational efficiency also coming into the play. And we should... As we are catering to many markets, new geographies and all, certainly we will need more of a fund. Having said that, we are also looking at adding one more vertical of advanced gold in the coming future. So, yeah, many things are in the pipeline. So, we are consciously building scale in the coming years.

Speaker 3

Okay. Okay. Got it. Thank you for that answer to my question.

Operator

Thank you. The next question is from the line of Lavita Lacerado from Bank of Veroda Capital. Please go ahead.

Lavita Lacerado, Analyst — Bank of Veroda Capital

Thank you for the opportunity. Congratulations on your set of numbers. I have two questions. So, first, I wanted to understand how is Shanti positioning against the other organized players in the manufacturing space, since we have bigger capacities in plans, and how are we differently positioned in terms of product mix? And my second question is on the margin side. So considering the gold price is false, what would be our sustainable margins going forward?

Speaker 10

Yeah. So to answer your first question, how are we going to position ourselves? We look ourselves as one of the leading manufacturers in the gold segment, so that's for sure. The new setup at Marol, the Dubai factory, the Jaipur factory, these are all the gateway for the future roadmap of the company. So that, I think, speaks volume about the kind of position that we want to be in in the coming years. So, having said that, you said about the margins, right? Dubai office, I think, again, it will be operational and a lot of volume is going to come in the coming years that you can see. So, as long as you talked about this price correction and all, let me tell you very clearly, the commodity market goes through a period of, you know, periodic research and all. So, there will be a correction on and off. As long as our business... Structure remains very clear. The structure remains same. The structure remains very positive. Our business model remains same. I don't think so. We will be impacted on any movement in the gold prices. Our core margin will remain intact. Broadly speaking, we should be in the range of 5 to 7% EBITDA looking at the current dynamic, current market situation because... Having laid a strong foundation, we are open to all kinds of product mix, whether it be playing category, we seize it, whether it is advanced, because it gives a lot of headroom. So having led the strong manufacturing setup. So broadly speaking, I mean, because it's this kind of evolving product mix, broadly it should be in the range of 5 to 7%. And we will continuously work hard towards getting the perfect length of margins, even in the future. Just we have silence if some products are high volume, low margin, some products are high margin, low volume. So as long as we don't get the perfect mix, we will continue inventing ourselves and get the right mix at the right time.

Lavita Lacerado, Analyst — Bank of Veroda Capital

Thank you. Thank you.

Operator

Thank you. The next question is from the line of Shruti Sharma from Sharda Family Office. Please go ahead.

Speaker 1

Hello. Thank you for the opportunity. So, my first question is about how would you describe the current demand environment for organized gallery manufacturers in India?

Speaker 10

Yeah, the current demand is very good. As we see, very many people are getting listed, they are expanding. There is a need to have a, as there is a formalization in a B2C segment, there is formalization happening even in the B2B space. Large retailers prefer a big B2B manufacturer with a large inventory, with a rolling out of new designs, with, you know, the inventory turned around being at the faster, the brand credibility is there. So, it is panning out very well, looking at the current dynamics and all. So, yeah, with many people coming, many people also in the pipeline to get listed, and some people like Lalisa Jewelry, they already got listed. They are expanding their showrooms and all. So, ultimately, their sources are coming from a B2B manufacturer like us. So, that speaks volumes about the position that we are in, and we see a large demand coming from this chunk of formalized sector. So, that should really push the momentum going in our favor in the long run.

Speaker 1

Okay. And, sir, have you noticed any shifts in customer ordering patterns or buying behavior in response to recent fluctuations in gold prices?

Speaker 10

Yeah, see, we are basically in the B2B space. We roll out new designs. So as long as there are takers in the market, we keep getting demand from the B2C or the large retail chains. So we have faced not any issues as of now because we have our own set of designers, you know, designing, rolling out new designs day in, day out, looking at the preferences and all. Having said that, yes, the price factor can be a matter, but as long as you create value to them, you create a great design, there are takers in the market, so that helps us, you know, keeping the momentum high.

Speaker 1

Okay, okay, that was all from my side, sir. Thank you, and all the best for your next quarter.

Speaker 10

Thank you.

Operator

Thank you. The next question is from the line of Anuj Panwar from family office. Please go ahead.

Speaker 3

Yes. Hi, everyone. Am I already good?

Speaker 14

Yeah.

Speaker 3

Thank you for the opportunity, sir. I wanted to check as you are expanding your customer base and your product portfolio, I wanted to understand how are you planning to drive the growth from your existing marketing customers while leveraging the opportunities from the newer retail partners as well as the international markets? If you can give some light to that, then that would be helpful.

Speaker 10

Yeah, so couple of things. First of all, we are trying to, you know, come as launch. We have already launched a few product verticals. So we give them a big basket of, you know, product to choose with. Initially, we were only present with a few product verticals. Now we have increased the product mix. So we are giving them a choice. We are giving them good designs. And we are giving them good support, which in the current market, you cannot expect from the unorganized sector. So that's the number one thing where we can play out very well to increase the share from our existing customer. That's number one. Number two, we are expanding in new geographies, whether it be, initially we were present only in South India, then we reached out to West Market, now we have increased our presence in North India and also in East India. So there is market penetration happening, that's the second leg. Third, the Dubai office is coming in, which maybe once the market settles down because of the ongoing wars and all, I think you can expect export sales coming up in the coming months and all. So that again will add good numbers to the sales. And last but not the least, this manufacturing setup, this inventory built up and all. The large detailers, they like sourcing from the people who have a good setup inventory with good designs, with good handholding, with good support and all. So this will be the key drivers driving our sales in the near future.

Speaker 3

Understood, sir. That was helpful. Thank you so much.

Operator

Thank you so much. Thank you. The next question is from the line of Divya Daga from VGSPL. Please go ahead.

Divya Daga, Analyst — VGSPL

Hi, sir. I have a couple of questions. One of my questions is, what is the status on the airport facility? When are we going to commercial?

Speaker 10

I think most probably we will be starting in the

Pankaj Kumar Jagawat, Chairman

Jaipur facility, the furniture, the interior work and things are going on. Very soon we should be starting a month it's finished. Maybe a giant affair for something.

Divya Daga, Analyst — VGSPL

Okay. And how much of our revenue came from Exports and what is the expected revenue from Exports in coming years?

Speaker 10

See, as of now, you can already see that the export has already doubled. We are at 82CR. Going forward, once this Dubai office is also in place, we are expecting a large chunk of the business coming from that end also, that market also. So, holistically speaking, now almost 6-7 months are gone, but still, we are hopeful of 6-7%. Already, there is an increase in the share from 4%, we have reached to 6%. So, it should settle down between 6-7% this year, but from the next year onwards, yes, we see a good volume coming from the international market.

Divya Daga, Analyst — VGSPL

Okay. One last question. Out of our total data, how much is from GML and what is our future target for this?

Speaker 10

Sorry, how much is the debt? Debt MM, I have already said, we are still sitting comfortable at 0.5x, so that gives us enough headroom to go for additional round of debt rise to fuel the working capital needs of the company. As far as GML is concerned, that's a lever we employ every now and then, because looking at the market scenario, GML is a good gateway to hedge our things, so we do keep checking GML. As of now, it's still 15-20% of the stock profile, but we are comfortable going up to 30% looking at the current market dynamics and all. But there is no certain rule. As long as, you know, if we require the GML line, we will keep going for the GML. We are open for that. Yes, market should support. It also depends upon the availability and all. But going forward, this is one of the levers we are looking to hedge our inventory also. So as of now, it's roughly from 15 to 20%. We are comfortable at going 30% of the stock level.

Divya Daga, Analyst — VGSPL

Okay. Thank you so much. Thank you.

Operator

Thank you. The next question is from the line of Priyam Tolia from Choice Institutional Equities. Please go ahead.

Priyam Tolia, Analyst — Choice Institutional Equities

Yeah. Hi, sir. Sir, a couple of questions from my side. When it comes to... The inventory cost as of now, I've been saying that the margins in this quarter have been lower, and account cost, the benefit of that inventory which we used to have is not that right. So just wanted to understand what is the current average cost of inventory as of now. And I think I missed about the EBITDA margins or the FAC margins guidance for you going away. How should we look at it from the FAC and the FAC onwards?

Speaker 10

Okay. You talked about this current rate, right? Every yielding as of now, I am at maybe 13,500 per gram. So that's why we are standing as of now. The second question is of the EBITDA margin, right? So EBITDA margin, I think I already said that. Going forward, the sustainable EBITDA margin, looking at the current market dynamics of product mix and all. So we are giving very cautious guidance of 5 to 7 percent because there are many levers in the plate concerning the product mix, the kind of design that we are rolling out, the kind of market we are in, the kind of price mechanism that is That is being played out. So on that basis, roughly we should be comfortable between 5-7% EBITDA margin and we feel this is sustainable in the future.

Priyam Tolia, Analyst — Choice Institutional Equities

All right, and second question, when it comes to the FI 28 and 29 onwards, let's assume the gold prices, you know, remain at its current level, 130, 140 kind of a level, let's assume. How much volume growth should we anticipate for the next two years? Of course, the Jaipur facility is also likely to come. Because the Jaipur facility, I think, it is getting delayed because the guidance was around November something, now it has been to GenFEP. So, if we exclude Jaipur facility from this year and, you know, if we build up the numbers for the next 28 and 29, how should we look at it from the volume growth perspective?

Speaker 10

See, volume growth historically, I have been telling, see, I won't be able to give more on the future guidance and all, but having said that, we have been historically growing at a Kagar of 43% over the past few years. So, that's one thing I can tell you, because that's something we have been achieving it, and it will push the momentum. And as far as the volume growth is concerned, what we have been doing it, something around 25 to 30 percent, we are comfortable given the current market scenario and all, we should be easily able to get in those zones.

Pankaj Kumar Jagawat, Chairman

And once for Jaipur facility and all the facilities starts, we should be like at around 75 to 80% of the manufacturing capacity we should be utilized in coming years.

Priyam Tolia, Analyst — Choice Institutional Equities

All right. Thanks for the clarification, sir. And, sir, on the rights issue funds, so we have utilized the entire fund for the working capital, right, as of now? Yeah, that's right.

Pankaj Kumar Jagawat, Chairman

No, no, no, we have utilized the entire N98 cross has been utilized for the entire N98 cross.

Priyam Tolia, Analyst — Choice Institutional Equities

Okay, and sir, what is the stand on your GML as of now, percentage, you can just highlight in terms of the hedging.

Pankaj Kumar Jagawat, Chairman

So, GML is around 15 to 20%, but going forward, we will look, we are deciding it on a management, we might increase it on a GML.

Priyam Tolia, Analyst — Choice Institutional Equities

All right. That's it from my side. Thank you so much. I'm all the best for the future. Thank you, ma'am.

Operator

Thank you. The next question is from the line of Mahek from KLM. Please go ahead.

Mahek, Analyst — KLM

Hi. Thanks for the opportunity. So, I have two questions. Firstly, you know, I wanted to understand, you know, you've delivered healthy revenue and, you know, volume growth. But the EBITDA has, you know, slightly moderated QQ. So, you know, with the Merol facility ramp up and production volume increases, how, if you can, you know, give some direction on the margin trajectory, and also, you know, if you expect the operating leverage and improved capacity utilization to support this margin recovery over the medium term. And secondly, you know, wanted to understand given the expansion in the manufacturing capacity and your increasing scale, how does the management see the opportunity for, you know, the operating leverage to play out in the company's orders and any new product categories, any stronger design that you're looking at, if you can share some light.

Speaker 10

Yeah, good question. I think this question needed clarification, better clarification, I would say. See ma'am, the current margin profile should be viewed in the context of a growth and investment. So, we are growing, we are in a consolidating phase. So, that means the EBITDA margin should be viewed in the context of a growth and investment phase. See, over the last few quarters, we have launched new product verticals, expanded manufacturing capacity, and invested in building scale. These initiatives involve upfront cost, and operating leverage takes time to fully kick in. It will take some time. So as you rightly said, as the utilization levels improve and the new businesses mature, we expect operating efficiencies to improve and therefore we see the current margin moderation as transitional rather than structural. So over a period of time, as the business matures, as the utilization improves, you will definitely see the margins looking better. But now, since we are in a building space, consolidating, we are in a growth space, consolidating this, so there may be temporary hit in the margin, EBITDA margin, but in the long run, looking from the long-term point of view, this august very, very well for the company, given the fact that the moral factory is operational, the Dubai office is coming, the Jaipur factory is coming. So, we have built scale, we are consciously building or investing money in scaling the organization. So, in future, the numbers should improve and the product mix also should, you know, come into the play with better margins.

Mahek, Analyst — KLM

Okay, got it. Thank you. That answers my question.

Operator

Thank you. The next question is from the line of Anshul Thakkar from Thakkar Investments. Please go ahead.

Anshul Thakkar, Analyst — Thakkar Investments

Hello, sir. Am I audible?

Speaker 10

Yeah, yeah, yeah.

Anshul Thakkar, Analyst — Thakkar Investments

Thank you for the opportunity and happy diwali to you. I had a couple questions. My first was to better understand the hedging policy. I think in one of the participants asked and you said that 15 to 20% is hedged through gold metal loans. But do we do anything else except like with MCX or something like that?

Speaker 10

See, basically, to answer to your question, let me make certain things very clear. Our risk management policy is centered around natural aging and inventory discipline. That's number one. Having said that, gold has historically demonstrated resilience across economic cycles. Most importantly, see, as we do the natural hedging, the price gets reset in a span of one to two months and all. So there is an equilibrium being maintained. At every level, because at every level there is a buying happening, at every level there is a selling happening. So there is a price equilibrium at a market level. So it does happen. Having said that, we are open for other levers, whether be it MCX, be it EML loan. So we are open for that. But our hedging philosophy has been around natural hedging only. But in future, should the situation demand, should there be a bigger correction, we are open to engage all kinds of levers, be it JML or be it NCF.

Anshul Thakkar, Analyst — Thakkar Investments

Understood. And so right now, gold has fallen like, you know, 6-7% in the past month. So do you think that will have an impact on your Q3 margins?

Speaker 10

See, as I told you, we don't look at inventory gains as a part of our game. So if it comes, if it comes, if it doesn't, it doesn't. Our business model remains very strong. Our structure remains very strong. So we, you know, we put our money on the scale that we are planning to, on the scale that we are looking into, the efficiency that will come into the play, the product meets market expansions. We are not rather focused on gold moving north or south. Our focus remains in acquiring or getting larger market share, improve the efficiencies, and then see how it stands out. So, we are not looking from the pride movement point of view. We just want our business model, the business structure to be in place, and the operational efficiencies should certainly come into the play once the volume comes up in the books.

Anshul Thakkar, Analyst — Thakkar Investments

Understood. Sir, another question that I had was that we invested about 18 crores in Ratnaveer and Lalita jewelry. So is this like a one-off or a standing activity that we plan on doing with Shanti Gold?

Speaker 10

Yeah, see basically that needs to be taken as something in the context of treasury management rather than a strategic diversification of your core business. So that's one of the things I think you answered in the question itself. Our primary goal remains to be heavily invested in the business. That's what we are very clear about it. And that was one of the things. And it was more, it should be viewed more in the context of treasury deployment of funds rather than a strategic one.

Anshul Thakkar, Analyst — Thakkar Investments

Understood. So, just one last question. Could you provide a detailed answer on the timeline of the Jaipur facility? Because it was delayed a few times. So, do you guys have any internal targets or when it should operationalize?

Pankaj Kumar Jagawat, Chairman

So, Jaipur facility is like in three acres of land and the building which is coming up around 65,000 square feet. It was 50,000 square feet, but which we have built more than 15,000 square feet now. So, the interior work is going on. So once this is finished, it should be... Yeah, it should come in the operation.

Anshul Thakkar, Analyst — Thakkar Investments

Could you...

Speaker 10

Yeah, as of course, there are already other facilities are there. So, our first concern was to, you know, ramp up the inventory at the model factory and all, and Dubai office coming in. So, but yes, this is in the pipeline. And the interior work is going on right now.

Pankaj Kumar Jagawat, Chairman

So, the building is ready, only the interior work is going on.

Anshul Thakkar, Analyst — Thakkar Investments

Understood. Okay. Thank you, sir. That's it.

Speaker 10

Thank you.

Operator

Thank you. The next question is from the line of Bharat Sanghi from DYTX Advisors. Please go ahead.

Speaker 15

My question is, we have another company, group company, promoter company, Utsav Gold, which is also into a similar business in B2B jewelry segment. Just wait until the thought process, why we have a group promoter level company, and who manages which company, and do we have any product overlap or customer overlap in both the companies?

Pankaj Kumar Jagawat, Chairman

So, it is managed by different management. So, we have different management in Utsab. So, Utsab was basically started in 2007 on an MRP basis and shop-in-shop and online business. So, that's how this factory was started. And it was handled by different management and it's still handled by different management. Shanti Gold is concerned, both managements are different, and we don't overlap each other's customers, and Jewelry is a huge line of product mix, so they are having their own product line, and we are having our own product line over here.

Operator

Thank you. The next question is from the line of Aditya Sara from Rocha Family Office. Please go ahead.

Aditya Sara, Analyst — Rocha Family Office

Yeah, I just want to get some sense on the JAPO facility. You said that this will be like delayed by one or two months. I'm expecting it won't come in F527. But that your guidance which you have given for the full year guidance of the volume, that is 30%, right? For the volume. Yeah, for the volume. So if you like do the calculation, some sort of multi-type by 1,000,000. Gold price. That comes to around like your yearly sales of around 3163 crores versus you have guided almost like 3,500. So how this will going to work? Yeah, 3,500. So how this, because they're willing to overlap on this, this part, this character.

Speaker 10

Now, see, basically, that was a guidance we were given roughly. Volume growth, we stand by it because we were given a volume growth of 25 to 30 percent and on the value we had given 50 to 60 percent. Having said that, I also made it very clear that we have been consistently growing at Kagar of 44 percent. So we should certainly be doing better than that. And we should be nearly there at 3,000 plus and all. I won't be able to give the exact number as such per se, but yes, 3,000 plus, it's in the 3,100 to 3,200, we should be in that zone. So I think we are quite in line with the target that we have given in the previous concourse.

Aditya Sara, Analyst — Rocha Family Office

Okay, but like, just like in the previous question, we have revised it from 3,200 to 3,500. So, 3,500 won't be the case.

Speaker 10

So, we are quite optimistic. It should be somewhere in between that. I cannot give something very forward-looking statement. So, yes, we can give a conservative number, but we are very confident it should be between that range only.

Pankaj Kumar Jagawat, Chairman

3,200 to 3,500. But I can't give you that exact number.

Speaker 10

That's in no one's hand, and it would look like a, it will be construed as a horrible thing, but we should be there, no worries on that.

Aditya Sara, Analyst — Rocha Family Office

From 3,200 to 3,500. 3,200 to 3,500, okay, and like, it's been like falling gold prices, so it can come down as well, because I've taken this.

Pankaj Kumar Jagawat, Chairman

Sir, gold price has already fallen down, so when we had given this thing, gold was trading at 1,50,000 rupees a kilo per 10 grams. Now, gold is already trading at 1,40,000 rupees per 10 grams, so still we are on to 3,200 to 3,500, we should achieve it.

Aditya Sara, Analyst — Rocha Family Office

Makes sense. And my next question is on the EBITDA margin front because earlier you were reciting this on the sense that you book the gold the right moment you receive the order. So this does not impact your EBITDA margins and this does not impact the hedging as well. You don't have to hedge from that point. So why exact reasons that our EBITDA margin has declined?

Speaker 10

Yeah, see, I think I have already given a clarification. The basic reason is we are in a growing and consolidation phase, that's number one. We have invested heavily in building scales. So, and more importantly, I told you, there are a lot of product verticals, product expansion going on, new facilities coming in. So initially, the amount will get absorbed in this kind of a thing. There will be certainly a ramp-up cost initially. But as scale comes in, definitely there will be improvement in the margin. And we should be in the side of that. Mainly, the main reason for revising the guidance was the evolving product mix. See, as a manufacturer, I have laid the foundation. The setup is ready. Now each certain product works very well. We are open for that tomorrow. And there are many product mix also. There are high volume products with low margin and low margin, and there are other products also with high margin with lower volume. So we are open for all that. But on a blended level, we should be easily in the range of 5 to 7% and especially on the product mix.

Operator

Thank you.

Pankaj Kumar Jagawat, Chairman

Thank you.

Operator

The next question is from the line of Ayusha Garwal from Asset Yogi. Please go ahead.

Speaker 14

Hello. Hello. Hi, team. I'm already there.

Pankaj Kumar Jagawat, Chairman

Yeah, yeah. Please go.

Speaker 14

Yes, sir. Personally, I wanted to know about one thing that recently we made an investment in Ratnavi decision. So, I would like to know the Ratnavi in that investment because That business is kind of something unrelated to our whole business. So how do you see that?

Speaker 10

See, as I made it very clear, that was one of the decisions and that was to be viewed from the context of treasury deployment of funds and not from the strategic point of view. Our priority remains very clear. We stay heavily invested in our business, our core business, our capital allocation was, you know, that remains very intact. So that was one of the decisions, maybe with a view to optimize short-term return, but having said that, we had taken care of enough liquidity and all. It was a small investment, very liquid in nature, and I think, and as I made it very clear, it needs to be only viewed from the treasury deployment of funds and not a strategic one.

Speaker 14

Okay, okay, got it. And one more question that one of our competitors, they are moving to advanced goals. Like, they have better margins and all due to this. So, how much are you planning to go for that in advanced goals, particularly?

Pankaj Kumar Jagawat, Chairman

Looking forward, even we are planning to go for advanced goals.

Speaker 14

Okay, okay. Any number for that, like, any percentage, 5%, 10%, or anything?

Pankaj Kumar Jagawat, Chairman

Maybe in coming years.

Operator

Okay, thank you. Thank you. The next question is from the line of Saurabh Gupta from Kenby Capital. Please go ahead.

Speaker 15

Hi. Actually, a couple of things. Last time when I asked the question regarding the EBITDA margin, why your EBITDA margin is higher, you told like the product category you have is far better than your competitor. But this time your competitor beat the margin by, they have EBITDA around 8%, you have 5.7%. Even the paid margin, we are having 5.5%, around 5.5%, and you guys have around 4%. You categorically mentioned last time also that, okay, we are going to basically have similar EBITDA margin. But this call, you reduce the EBITDA margin and paid margin drastically. Means, why is it so? And another question is, like, You have Usra and Usra, both promoters. Why don't you merge into one company to have a basically better operating leverage? Third question is like the JEPO facility is more about the chain, which is going to have a lower margin. And that might decrease the margin further. That may increase the volume, but actually the margin actually might be decreased further. Yeah, these are the teachers.

Pankaj Kumar Jagawat, Chairman

So, Jaipur facility is not only going to be a chain, it's again going to be a product mix, which is around like, with a lot of product mix, we are going to start over there. And in the year, about your EBITDA margin going down, we have started a lot of product mix over here, when last, in this three months, we have added a lot of new lines of jewelry, from handmade chains to many other things. And as said earlier, Thank you. Where we have deployed, means new facilities we have started, so a lot of things have been deployed over a year and all. That's how you are getting to see a difference.

Speaker 10

See, this is basically, this change is basically with the evolving product mix, nothing else. We are investing in scale. As a manufacturer, I need to a big basket of my product verticals. That will really improve in increasing the value of existing customers. We need to penetrate more into other geographies also. So, we just don't want to play it by, you know, sticking to one line of product. So, we are very consciously investing in building scale. And in the process, we are building a lot of product verticals. Of course, it not only increases the market share of the customer, but it also helps us penetrate more deeper into the market and also have an international footprint. And initially, as I said, EBITDA, there is also temporary hit. I would say, you should take it from the point of view only the numbers. I think one should look from the long-term percent. It should be viewed as something in the context of our growth and investment case, not anything else. And with volumes coming in, with the new protocols coming in, the margins should certainly improve. And of course, over a period of time, the operation leverage will also start coming. When the, our, our, that the utilization level starts to improve.

Speaker 15

And my third one, why don't you merge these two entities, Ussav and Shantikwalt? I know that why you started Ussav, but now it makes sense. Because I'm invested in all the three companies, and I want like an operating level to be kicked on.

Pankaj Kumar Jagawat, Chairman

So, it's not like that, why we are not merging it on? Basically, it's run by different management, and we have not even like, we are not over this thing also, we won't be doing it. So, we are not... Against merging also, and you're not on merging also. With that time, you will decide if it's required, you might take a call.

Speaker 15

Basically, one more thing. I understand due to growth and new categories, you are launching and basically you are having hit on EBITDA. But in future, do you think actually the similar kind of margin, you can achieve like 8% of EBITDA margin in future? Or it's not possible you are not working towards it based on all this? It's a great time.

Pankaj Kumar Jagawat, Chairman

We can again achieve EBITDA margin on a higher level. Now, we've studied a lot of product mix, jewelry and all, and new line of jewelry, what we started, which is not operational on full this. They're just on the operation of 10 to 15 percent right now, but Marul facility and all, and Jaipur facilities, which has not come up, which we were supposed to come up by Jan now this year, November this year. So, it's getting delayed due to interior work and all. So, it's a manufacturing unit. So, the interior work and electrical thing has to be done very perfectly. So, that's how, when everything gets in 100%, around 75% to 80% operational, the margin should again improve.

Speaker 15

And do you think, actually, in longer run, like, do you have a five-year reason kind of thing where you can see your company by, let's say, 10,000 crore or 20,000 crore company in future?

Pankaj Kumar Jagawat, Chairman

100% we have seen that one. The Jaipur facility is in a land of three acres of land. So it's like 25,000 square feet we can build up over there. So that land we purchased it seeing. How much ever we want to increase our facility, we can increase it over there. So right now, we've made a 65,000 square feet building over there with limited machines and all with the gold what we have. And not at present, not increasing our debt from the internal money what we have, we are going to transfer over there. And with this kind of leverage, we are looking out for 12 minutes. We have started a facility of 1200 kilos. But that facility is too huge, which can go in tons. Tons and tons of every year.

Speaker 15

Any plan for equity valuation to raise the capital so that you can just go by 10x from the current revenue?

Pankaj Kumar Jagawat, Chairman

So, at present, we have not decided on diluting any equity or raise now debts and all. Once the facility Jaipur starts and all, and how the demands and all we get from our customer on that basis, because we are looking out for advance gold and all also from our customers. So, after once the facility has started, you know, the management will take a call how to increase the debt or how to raise it through equity.

Speaker 14

Okay.

Speaker 15

And in subsequent call or presentation, are you planning to have a 5-year reason kind of thing, so that actually we can get a clear idea where the company is going?

Pankaj Kumar Jagawat, Chairman

We can, next call we can give a 3-5 years roadmap also.

Speaker 15

And also some clarity like in the margin just to get, because there is a lot of confusion whether to get into the call or whether to get into Santhi.

Pankaj Kumar Jagawat, Chairman

So, I don't think so there is any conclusion because both the facilities are managed by different management. There are a lot of listed companies and so same as Ustav and Shanti Gold are also listed companies and customers' product range are also different in both the companies. So, but yeah, I wouldn't say that we are not merging it or merging it. Means we are opening it with Srikant.

Speaker 15

Yeah, thanks.

Operator

Thank you. The next question is from the line of Stityagarwal from Chhattisgarh Investments Limited. Please go ahead.

Speaker 5

Hello, am I audible?

Speaker 10

Yeah, yeah, yeah. Please go.

Speaker 1

Thank you for the opportunity. I just wanted to ask, what is the capitalization level that we are operating currently, and what is the roadmap for the next two to three years, the ramp-up for the Marol and Nebo facility?

Speaker 10

The next two, three years looks very good. I mean, the foundation has been laid. We are investing heavily into building scale. So, that speaks about the future and all. So, yes, we are quite there. We are, as I told you earlier, also, we are positioning ourselves as one of the leading manufacturers in this segment, and we are pretty confident we will be there. And yes, the foundation is only from that point of view only, man. So, basically, I would just request everyone to, you know, just don't... Look beyond those quarter-to-quarter numbers and all. We are heavily invested in building scale. One should look from the long-term point of view. The foundation has been laid. The product portfolios have been increased. Everything is there. Roadmap is red. So people, we would encourage investors to look from the long-term point of view. And yes, the great numbers are going to come in. And we are very hopeful of getting in a very high-volume growth in the near future.

Pankaj Kumar Jagawat, Chairman

And if you see from the time we've got listed and before listing also year on year we've grown very drastically.

Speaker 1

Okay. Thank you, Phil.

Operator

Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day. And now I would like to hand over the conference to Pankat sir for closing comments. Over to you sir.

Pankaj Kumar Jagawat, Chairman

Thank you, everyone, for participating in the earning calls of Shantigold International Limited. We hope we have been able to address most of your queries. Should you require any further clarification or additional information, please feel free to reach out to Smitsha from the AdFactors PR, and the team will be happy to assist you. We appreciate your continuous support and look forward to interacting with you all again. Thank you. Thank you. I wish you a very, very happy Diwali and a happy new year.

Operator

Thank you. On behalf of Shanti Gold International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect.