Siyaram Silk Mills Limited (SIYSIL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the CRM Silk Mills Limited Q1FI27 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 star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Devanshi. Thank you, and over to you.

Thank you, Ananya. Good morning, ladies and gentlemen. I welcome you to the Q1FI27 earnings conference call of CRM Silk Milk Limited. To discuss this quarter's performance, we have from the management, Mr. Gaurav Kodars, President and Executive Director, Mr. Ashok Jalan, Senior President and Director, Mr. Surendra Shetty, Chief Financial Officer, and Mr. Dinesh J. Delia, Vice President, Finance. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking in nature and may involve risk and uncertainty. For more details, kindly refer to the investor presentation and other fillings that can be found on the company's website. Without further ado, I would like to hand over the call to the management for their opening remarks, and then we can open the floor for Q&A. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining us today for CRM Silk Mill Limited's Q1 FY27 earnings conference call. As we begin a new financial year, we are pleased to connect with our shareholders, investors, analysts, and stakeholders to discuss the company's performance and key developments during the quarter. Our financial results and investor presentation have been made available on the stock exchanges and on the company's website for your reference. Over the years, Siyaram Silk Mills Limited has established itself as one of India's most trusted names in premium fabrics, apparel, and textile products. While remaining deeply rooted in its rich fabric heritage, the company is embracing a new phase of growth through Siyaram 2.0, marked by sharper design thinking, contemporary merchandising, and a retail-first approach. This transformation is being driven by Zcode and Devo, two retail brands designed to cater to the evolving aspirations of today's consumers. Through these brands, Tear Arms is strengthening its direct connect with customers by offering modern fashion, enhanced shopping experiences, and greater accessibility. Building on our long-term retail strategy, we continue to expand our presence across key markets through Zcode and Devo brands. During the quarter, we added three Z-Code stores and two Devo stores, taking the total store count to 30 and 19, respectively. We plan to reach approximately total 70 stores across both brands in FY27. All this expansion is funded through internal approvals. Coming to the overall industry, the demand environment remains stable during the quarter. Although wedding and occasion-led consumption witnessed some moderation due to the adhik-mask period, which traditionally leads to the postponement of discretionary purchases. Consumer spending also remained value-conscious, while inflationary pressures on the input costs persisted during the quarter, influencing purchasing decisions across segments. Against this backdrop, CRMs remained focused on driving growth through our strong brands, diversified product portfolio, and extensive distribution network. We are putting consistent efforts to strengthen our market presence, expand customer reach, and enhance execution across channels, enabling us to make steady progress across our businesses during the quarter. As we progress through FY27, our efforts remain focused on deepening consumer relationships, enhancing brand visibility, and driving operational excellence across the organization. Along with the continued expansion of our Zcode and Devo network, we are working across the value chain to ensure greater efficiency and scalability. With our expansion plans, we are also intensifying our marketing efforts to strengthen brand visibility and deepening consumer engagement. We began FY27 on a positive note with total income increased to INR 466 crores in Q1 FY27 from INR 400 crores in the corresponding quarter of the previous year, representing a growth of 16.4%. This performance demonstrates the resilience of our business supported by operational discipline, customer-centric initiatives, and sustained momentum across our operations. As a significant corporate development during the quarter, the scheme for issuing cumulative non-convertible redeemable preference shares by way of bonus to the equity shareholders of the company has been approved by the NCLT Mumbai via its order 21st July 2026. The Board of Directors at its meeting held on 30th July 2026 took note of the NCLT order and made the scheme effective from 30th July 2026. The company has also fixed 22nd August 2026 as the record date for determining the eligible shareholders entitled to receive these redeemable preference shares under the scheme. As we move forward, we remain committed to executing our strategy with discipline and agility while creating long-term value for our stakeholders. With that, I would now like to invite our CFO, Mr. Surindra Shetty, to take you through the financial highlights for the quarter. Thank you.

Thank you, Gavroji. Good afternoon, everyone. Let me now take to our stand-alone financial performance for the first quarter of FY27. Our total income for quarter 1 FY27 stood at INR's 466 course as compared to INR's 400 course in the quarter 1 FY26, reflecting a year-on-year growth of 16.4%. Our revenue mix for the quarter comprise fabrics at We are pleased to report an EBITDA of INR 30 course for the quarter compared to INR 33 course in the corresponding period of last year, registering year-in-year growth of 22.3 percent. EBITDA margin for the quarters today 8.6 percent. Profit after tax for the quarter 1 FY27 stood at INR 11 course as against INR 5 course in the quarter 1 of financial year 26, representing a year-on-year growth of 144.4%. The growth is largely due to operating leverage playing out. Pat margin for the quarter stood at 2.4%. Our debt-to-equity, as on 30th June 26, stood at 0.24. With that, I conclude my remarks and would now request the moderator to open the floor for the question and answer. Thank you.

Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchstone phone. 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.

We will wait for a moment while the question queue assembles.

The first question is from the line of Yash Siddani from Integrity Ventures. Please go ahead.

Hi, Dr. Gawani. Just a question on Z-Code specifically first. How are you looking at profitability and basically breaking on this road, and how are the competitive environment considering the... As a brand, opening similar kind of set-up stores in your territory.

So, thank you for your question. With regards to Z-Code, see, we are still about 18 months into business, and stores are still not mature as yet, and we've indicated about two years, one and a half to two years for store profitability. For some of the stores that we've opened, we have seen very positive results, and I've indicated earlier that some stores have turned EBITDA positive, but it's too early to come to those conclusions, and we are very positive on this business. In terms of the competition, see, this fast fashion market is a very large market and is growing much faster than the overall apparel market. There are many players, and each one has a different strategy. We believe that we have a unique USP that we bring to the consumer, which we are very confident that will help us grow our business. It's still a very small business, but it's something that we are looking at very seriously for the long term and looking at it as a good future for the company.

Thank you, sir. And the second question would be around basically how the company is moving in terms of long term, maybe three, five years in capital allocation strategy, like most of the capital left after paying dividend to NCD. Is company going to invest those amount in G-Code and Devo mainly?

Yes, so over the last few years, if you have noticed, then the company has been very prudent in terms of managing the free cash flows that it has received. And there has been positive free cash flow received in the last few years, and we continue to expect that to happen in this year as well. The capital expenditure that we had envisaged for this year, as indicated earlier, was close to about 100 crores, with about 40 to 50 crores going into the retail project. This is largely because the retail project is in an initial phase where we are doing multiple things at the same time, which is building the foundation blocks and getting operational efficiency as well as increasing store network. As we go forward, obviously, this capital is there for us, but we will want to use it more prudently and look at store expansion rapidly only after there is some stability in the business in terms of predictability And also having some mature stores to have proven a robust business model.

Got it. And when can we start coming to disclose the numbers of Zcode and Geo specifically from main business?

I think that this retail business is a business for the long term, and it takes a lot of time to mature. I think that in a fast fashion business, it's all about volumes, and we are running at about 25, 30 stores as on June, and these numbers are still very small to be able to talk about anything, and hardly a few stores have run over a year, so the sample size also is very small. For any retail business, particularly in the fast fashion business, you need at least about 100, 125 stores running for at least over a year to be able to make any sense out of these numbers. And that is why we are holding back on disclosing these numbers, although we internally study these and try to derive conclusions from them and take actions accordingly.

Well, good. I understand. Thank you so much.

Thank you. The next question is from the line of Tikshit Toshi from Whitestone Financial Advisors Private Limited. Please go ahead.

Yeah, thanks for the opportunity, and, you know, if you can mention that how much, let's say, in terms of our EBITDA, how much loss both this retail put together would be having, and also, if you can, you know, elaborate more in terms of Zcode and Devo board, how is the performance and, let's say, those stores were, you know, at least one year old. Whether you know they are consistently hitting the EBITDA positive or like they are one month they are hitting one month they are not hitting the EBITDA positive. I know you don't share the exact details but any broad picture will help us. And let's say once we feel that the model is right, then are we looking for, let's say this year we are opening 25 stores. Let's say by the end of this year, many of the stores will be one and a half, two year old. So if you plan for any aggressive expansion, will you be looking for, you know, franchisee model next year?

So, the first question you asked was about the EBITDA laws, and we have already given an indication of an annual drop in EBITDA by about 150 basis points, and we hope to be well within that budget. We don't look at it on a quarterly basis because the rest of the business, the core business, is very seasonal, and therefore the numbers vary a lot, but on an annual basis, a 150 basis point drop in EBITDA is what we had indicated, and we feel confident to be well within that range. In terms of the performance of retail, performance has been very encouraging. In terms of Devo, Devo is an ethnic wear model, which is a very, very seasonal business. It's a wedding-related, festive-related business, and for that, we have to wait for the festive season to start to really assess the kind of performance that that business will have. So it's very skewed in terms of that, whereas for Z-Code, it's more non-planned purchase, where fast fashion and value pricing, these kind of things are less seasonal-driven. So, that is why we have seen a faster response in terms of the Zico stores. Because of the business model, both businesses have very different consumers and different behaviors of consumers. So, there have been only a few stores that have been old in terms of Z-Code. There have been only about 10-12 stores, and that sample size is too short. But in both businesses, when you look at the first quarter, there has been growth in terms of store-to-store performance. But these numbers are so, you know, stores are not yet mature to be able to give anything out. When you talk about EBITDA positive stores, there are some stores in Zcode that are EBITDA positive and they continue to be positive. It's not just stores that are one year old, some stores that are new and we've been able to get the model right. We've seen some experiences where even stores that are less than one year old are EBITDA positive. So, it's not a function of being one year old, it's just a function of the whole model coming together and us learning from this experience and moving forward. But all of these things are very early, and I would look at the business only after a certain sense of maturity to be able to give a broad-based number. At the moment, we can talk about macro things. And in terms of franchisee, you see this franchise business model is an established model in both these businesses, whether it is fast fashion or whether it is ethnic wear. We have not considered that as of now. Obviously, that's an opportunity available to us. At the moment, we are looking at the operational efficiency and using our own internal capital to build these stores. We have sufficient capital internally. And then franchisee is always an option once everything is set up and there is a return that the company makes and then there is a possible return to give to the investor that comes on as a franchisee.

Okay, and just a couple of clarifications. One, you mentioned 150 basis point, you know, EBITDA laws on an annualized basis. This is without the rent, right? Because rent we book in depreciation and interest. Or you are saying that this is including that?

No, including everything, all store of things.

Including rent, you are saying one and a half basis.

We have to report the numbers, the way of saying, but in our internal calculation, we are assuming everything.

Yeah, so this one and a half percent is assuming all the cost.

This is the ballpark number one at this point. Yeah, yeah, ballpark.

And last question is, this quarter we have almost 22 crore of other income, so was there any one-off or it's mostly, you know,

interest and rent is a normal. Most of the other income is normal business income, like the delay payment of interest, rent income, etc. It is every year we are getting. There is some percent of mark-to-market gain from the investments that we have made, which is something that could vary quarter on quarter. About 20% of the other income, 30% of the other income.

Okay, so 6, 7.

Thank you. The next question is from the line of Naetik from NB Alpha. Please go ahead.

Hi, sir. Thanks for taking your question. Sir, my first question is, you know, if you could give us some sense on the revenue that we have generated in the portal from the retail stores and what sort of expectation we have for the full year, a rough number would also help.

So, from the retail business, in this quarter, we've generated about close to 30 crores of revenue, and as indicated earlier as well, the full-year expectation is about 160 crores.

So, almost doubling from the last year's 70-80 crores that we had. Yes, yes. And then the second question is, you know, if I look at P&L for this quarter, if I choose 24, 25 euros that they spend on developing the land, the margin seems to be much better from the core operations that we have, you know, around 90 to 10%. So I just wanted to understand what has led to this expansion in margin of IOI.

I think EBITDA numbers are quite stable. If you look at the land expense, then that is just an entry that has been passed from moving into inventory to expenses. So at the margin level, it remains the same. And in terms of overall gross margins and even EBITDA margins, it's quite standard. But at the same time, I would like to highlight that this is a quarter that is, you should not look at or model the business based on one quarter. It's a seasonal business. And therefore, we prefer talking of an overall annual basis.

Sir, this is just one clarification to this.

See, this is the land development charges, which as per the standard, we will have to route it through the profit and loss account. So it is included in the other income, and the same manner, it was included in the inventory also. The netted effect is nil. So, this is any land development. Whenever we are taking into revenue, at that time, we will take it whenever the things are, inventories are, means we will have to take the certificates from the various agencies, then only we will recognize as a revenue in that. Till then, it will be other expenses and it will be in the inventory. But the net effect is nailed.

And sir, from when do we expect the project to sort of start some training?

So, we have already received the required approvals and have completed part of the tendering process. In this quarter, we expect to start construction and we expect 24 months for this project to be completed.

All right, sir. That's it, Thomas. Thank you. Thank you.

Thank you. The next question is from the line of Nakul Doshi from Sankhla Family Office. Please go ahead.

Thank you for the opportunity. So I have a couple of questions. Firstly, since the beginning of Q2, have you observed any meaningful changes in consumer spending pattern across the program and the value segments? Like, specifically, are we seeing any divergence in demand trends or any particular signs across key categories in the markets?

So, as you know, the business is very seasonal and driven by Diwali and festivities and wedding seasons. This year, Diwali is pushed by, I think, three weeks or so. So, we expect that delay in terms of demand. But overall, since ours is a channel-driven business, we interact a lot with our distributors. We have conferences and events that we keep doing, and we are in the midst of all of this right now. So, the sentiment towards how the season will go is very positive. Overall, everyone is very hopeful that this year also goes as planned. So we are very positive on reaching the guidance that we had indicated. But again, looking at it month-by-month is not the most accurate way of looking at it.

Right. And any particular pattern which you would have observed, like the premium could grow much faster than the value segment, anything on that?

It's a mix, really, because we offer all kinds of products. First of all, there is suiting and shirting, which have different value realizations completely, and then within those categories, we have premium to mass, all kinds of products, and the reason we have so many brands and so many subcategories is to have the network that we can expand. So, it's a positive scenario on all aspects, and then we have to see how the market responds. And that is why being an asset-like company helps us to maneuver very quickly to wherever the demand is and whatever category we find that, you know, we don't plan too far ahead in terms of inventory. We are a rotating inventory model where wherever we feel there is further demand, we can plan more. So, in that sense, we are quite agile.

Got it. Secondly, what's like on our retail network expansion network, like as we continue to invest in our retail network, in terms of balancing the growth investments and also maintaining the return ratios. As well as the shareholder payout commitments, what are the key thresholds or the return hurdles that guide your capital allocation over here? Like you already mentioned that we are on an asset-like model, but any particular ratios or thresholds you would like to highlight?

The company is in the phase of... Good morning, everyone. A mature business, which is a core business, and generating positive cash flows consistently, more cash flow than that is being invested in the company in terms of capex. And even after rewarding shareholders and all of those things, there is still investments that are being increased every year on the balance sheet. Going forward, again, this retail expansion is something that we are looking at not from a speed point of view, but more from a business and long term perspective, where we are building the foundation blocks and expanding at the same time. That speed of expansion maybe you can increase once the building blocks are built. So, investments of CapEx are investment of funds that are accrued is not so much of a concern at the moment because it is very prudently discussed. As we mentioned earlier, the CapEx for the year is about 100 crores, and even after that and the other dividends and other things, there will still be a positive surplus of cash flow that the company will have in the end of the year.

Okay, understood. That's very encouraging, and thank you so much for answering my questions. Thank you so much.

Thank you. The next question is from the line of Ravi Dubey from RD Investments. Please go ahead.

Yeah, I'm audible.

Yeah, yeah. Yes, we can hear you.

Thank you for the opportunity, and congratulations to the management for strong quarter one performance. So, my question is that our input cost inflation has remained elevated during the quarter. So, sir, in that context, how do you expect our raw material cost to trend through rest of the FI 27? And, sir, could you also guide us on the possible impact on our margins?

So, in the last few months, maybe one or two quarters, we've seen a lot of volatility in the global scenario, which has affected all kinds of raw materials, whether it is direct raw material or even chemicals and other things. And that has had an impact across different industries and also in the textile industry and also our company. We've been able to manage with colder raw materials and new materials and being able to balance that. As a brand, of course, we have the leverage of passing on some of these cost increases to customers, although we cannot... Follow the same pattern as raw material increase because that remains very volatile, and that kind of price pass-on cannot happen. So, that pass-on happens on a gradual scale. Some pass-on was done in the first quarter, and if raw materials remain high and margins start getting shrunk, then some might continue to be passed on, which is the general standard that we follow. So, I believe that in terms of the EBITDA guidance of about 14% that we give, we feel confident that we will remain with that kind of guidance, apart from the drop of the retail business.

Okay, sir. That's it from my side. Thank you, sir, for the opportunity.

Thank you. Reminder for all participants, please press star and one to ask a question. Participants who wish to ask a question may press star and one. The next question is from the line of Yash Sadani from Integrity Ventures. Please go ahead. It's a follow-up question. I'm sorry to interrupt. I'm sorry to interrupt. Mr. Yash, your voice is not very clear. Could you please readjust your handset or mic, whatever you're using?

Sure. Is it audible now?

Yes, yes, yes. Please go ahead.

Just to follow up question on trade receivables and the inventory levels, I think in March, you accumulated both to certain levels, you affected the overall cash flow. How the trend has been in this three, four months?

I think that working capital, if you look at it, the oncoming season is something that we have to be ready for, because now we are going to welcome the festive season in the second quarter and carry forward to the wedding and other seasons in the third quarter. So this is the time we build inventory and we start planning for the season, and therefore looking at this number now is not a good indicator of where the business is. So it's better to look at March-to-March numbers. If you look at the March number, then in the number of days, it was almost similar to that as per last year. Of course, because of the increase of retail business, there is an additional inventory that we have to put out that adds onto the balance sheet, and that will continue as we increase stores, because these are all on the books of the company. But in the core business, we feel confident to be in those numbers.

Good morning, everyone.

Okay. And in terms of point of guidance, do you reiterate on the volume growth or overall growth on main business plus retail business?

We have given guidance earlier in the last quarter of about approximately 12% revenue growth with a 14% kind of EBITDA margin with a drop of 150 odd basis points of the retail business.

Thank you. The next question is from the line of Rajiv Chen from Arcane Investments. Please go ahead.

Hello. Hello, Animin.

Yes, we can hear you.

Thank you for the opportunity, and congratulations for increasing set of results. So, I just have one question, and it's on new store locations. So, what factors determine your choice of new store locations? And additionally, have these criteria revolved based on your initial experiences, if you could shed some light on that?

Yes, so when we chose, we started looking at, when we started the business, of course, we started on a cluster-based approach, so we had to select one particular cluster. For Z-Code, we chose Karnataka, and Bangalore as a hub for that, because the reason for that was Bangalore itself was a big market for Gen Z consumers, it has IT, you know, community, it has student community, so it fits well within the product that we are trying to build. Now, within Bangalore itself or Kernataka itself, when you look at stores and location, then you try to find stores which... You know, are in the market where footfall is already present. Since we're a new brand, we don't expect consumers to come looking out for us, but we need to build that brand visibility. So there's a lot of research done on how we choose a store location. We also use AI available tools to help us understand what the market scenario is at that micro market and then look at stores like that. Also, malls are a good opportunity where there is already a generated footfall and then you have to be able to convert that footfall. So it's a mix of different things. In terms of evolution, one thing that we realized was when we started, we started with the smaller format stores of approximately 4,000 square feet on high street. We gradually moved that to larger format stores. Now we have an average size of approximately 7,000 square feet. And we've seen better results in these larger stores because the product portfolio that we cater to now is better displayed in the larger format stores and also the consumer experience that we're able to offer is far greater. So that is something that we've evolved and seen positive results.

Understood, sir. Understood. Thank you for answering my question, and all the best for future quarter. Thank you.

Thank you. The next question is from the line of Raj Patel from RK Investment. Please go ahead.

Yeah, thank you for the opportunity. Congratulations for the good set of numbers. So, I just wanted to ask with regards to the festival and wedding season. So, how do we expect this season will contribute our growth in second half of FY21? Especially after the impact of adhick mass in Q1.

So, we don't look at it on a quarterly basis, but instead look at an annual basis. So, the earlier guidance of about 12% on an annual basis is something that we feel confident of achieving. The festivities and wedding periods continuously move every year. This year, Adikmas was there, but every year there is some kind of movement. Wedding dates differ. So, it's difficult to map it on that basis, on a particular aspect, but we look at it from an overall perspective, and we are confident of achieving the guidance we are indicating.

Got it, sir. My next question was with regards to Zcode and Devo. So, what kind of revenue contribution do we expect from this in FY27, and what will be the meaningful profitability out of this?

So, as indicated earlier, the revenue expectation from the retail business, we did about 80 crores last year, and we hope to close this year around 160 crores, and we've already indicated 150 odd basis point drop in EBITDA because of this retail business.

Got it, sir. Got it, sir. That was all from my side. Thank you.

Thank you, Raj.

Thank you. The next question is from the line of Rudi Vora from SAS Capital. Please go ahead.

Hello, may I order this? So, sir, the question is, the company has adopted a major expansion strategy so far. So, what milestone or execution metric would prompt you to increase the pace of store addition and growth?

I think we are not looking at it as a number, and I think that there is an improvement that will happen every day, and there is something that we are looking at on a more softer basis. Actually, we are waiting for some stores to be mature enough to be able to assess. As indicated earlier, some Z-Code stores have performed better than our expectation, and overall, we are still increasing store counts based on the basic volumes that we need to bring in. Fast fashion is a format where you need large volumes, and we are working on building the infrastructure for the business, whether it is technology or hard infrastructure. We are building the building blocks based on operational efficiency. So we are doing multiple things at the same time. Once we feel confident that we have evolved to a certain scale, then we will start store expansions at a greater scale.

Okay, okay. Thank you. This was from my side. Thank you.

Reminder for all participants, please press star and one to ask a question. Participants who wish to ask a question, may please press star and one. To ask a question, please press star and one. The next question is from the line of Yash Sadani Integrity Ventures. Please go ahead.

Sir, this is a clarification on cost towards development of property. 24.6 crore included in PNN as part of cost towards development of property. The range of revenue is how much is booked in revenue from operations?

At the moment, there is no revenue booked. There is no sale that has happened on account of residential projects, so there is no revenue booked so far.

Okay, so to have the understanding on margins on the main business, can we exclude this 246 crore and see the margins which would be right to see?

So basically, how you need to see is 24 crores is the expense that has happened on the real estate project so far. The entry that has passed on the P&L is that it has been removed from the inventory. So the gross margin has increased to that extent, and then we have reduced it from expense. So the EBITDA and other margins are the same. So you don't need to do anything to assess the business margin.

A similar assessment has been made in inventory, which is reflected in changes in inventory and has the effect of use.

Correct. So there is a net effect of not impacting anything.

Thank you. The next question is from the line of Sikshit Toshi from Whitestone Financial Advisors, Private Limited. Please go ahead.

Yeah, a couple of things. Firstly, in terms of this guidance, what we are giving 12% kind of revenue growth and 14% margin, this is including the retail business, right?

That's right.

Okay, and just one thing on this preferences which we are going to issue, so if you can just help me understand that like how it will be treated in terms of tax session to the investors.

I think there is a full tax in the hands of the investor.

Okay. So it will be like capital gain or it will be kind of... It won't be capital.

As any other, like dividend income.

It will be like dividend income whenever we sell.

But you will get it at the time of redemption. Whatever the amount you will be getting in the redemption, that will be treated as like a dividend income.

Okay, and I think these are going to get listed. So, in case I sell before the redemption, then it will be like capital gain.

Yeah, that you'll have to look into.

Okay, understood. Thank you.

Thank you. That was the last question for today. I now hand the conference over to the management for closing remarks.

I would like to thank you all for taking the interest and asking the questions that are so relevant to us. Please reach out to our IR agency in case you have any further questions. Thank you and looking forward to seeing you in the next quarter.

On behalf of CRM Silk Mills Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.