SKY GOLD AND DIAMONDS LIMITED (SKYGOLD) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Sky Gold and Diamonds Limited's Q1FI27 Earnings Conference. 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 a touch-tone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Vidi Vasa from MRFG Impact. Thank you and over to you ma'am.

Thank you, Sumit. On behalf of MUFG, in time, I welcome you all to Sky Gold and Diamonds Limited Q1 F527 Earnings Conference Call. From the management side, we have Mr. Mangeesh Chauhan, Managing Director, and Mr. Siddharth Sapani, Key Financial Officer. I hope everyone had an opportunity to go through our investor deck that we have uploaded on exchange and the company's website. I would like to mention a short disclaimer before we begin the call. This call may contain some of the forward-looking statements which are completely based upon our beliefs, opinion, and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risk and uncertainty. With this, now I hand over the call to Mr. Mangay Strong. Over to you, sir.

Thank you so much. Good afternoon, everyone. On behalf of Sky Gold & Diamond Limited, I extend a warm welcome to all the participants to the Q1 FY27 Financial Reserve Earning course. Along with me is Sudha Sifani, our CFO. We have uploaded our investor debt and earning press release on the stock exchanges and the company website. I hope everybody had an opportunity to go through them. Before I begin, I am delighted to share an important development in our leadership journey. We are pleased to welcome Mr. Akash Karnesha as a CEO of Sky Gold & Diamonds Limited. Mr. Akash brings over two decades of rich experience across the Jameson jewellery industry. With deep expertise spanning jewellery sales, merchandising, business development, and market expansion. Over the course of his career, he has successfully led growth initiatives, strengthened market presence, and built high-performing teams across both domestic and international markets. At SkyGold, we have always believed that feasibility is built not through promises, but through consistent delivery. Over the last several years, we have established a track record of setting clear goals and executing against them and detailing to our stakeholders with results and results that validate our commitments. When we first outlined our growth roadmap, it reflected our confidence in the long-term potential of the business and the possibilities we saw ahead. Over the subsequent quarters, our team has consistently delivered on key milestones, reinforcing our confidence in both our strategy and execution capabilities. One of the strongest validation of our execution capabilities has been our ability to consistently increase our long-term targets while remaining on course to achieve them. Our current FY27 revenue target of INR 6100 crore is meaningfully higher than the outlook we had communicated 9 months ago. This upward revision reflects the expansion of our capabilities, deeper customer relationships, and the significant opportunities we continue to see across the market. Our business today stands at the intersection of three powerful capabilities, lightwell jewellery manufacturing, advanced production technology, merchandise excellence. Over the last few years, we have made substantial investment in building differentiated capabilities across 3D printing, laser cutting, stamping, and lightwell textured jewellery manufacturing. At the same time, we have significantly strengthened our design and merchandising infrastructure by juggling the size of our team and establishing dedicated product development and diamond design studios. More importantly, we increasingly see ourselves as a design-led company rather than just a B2B company manufacturer. Our focus at Sank extends beyond manufacturing excellence to create compelling master-relevant jewelry concepts that help our retail partners differentiate themselves in an increasingly competitive environment. Our combining advanced manufacturing capabilities with strong design, merchandising, and our product development expertise, we are able to deliver innovative collections that drive faster selling through Improve inventory productivity and clear value for both our customer and end consumer. This evolution has fundamentally transformed the way we engage our customers. Unlike traditional manufacturing partners who primarily offer standard catalogs, Skype was increasingly worth alongside retailers as a product development partner. We study the product mix, understand the competitive environment, analyze consumer presence, create teams, develop prototypes, and collaborate closely until products are finally finalized for launch. Ultimately, our success is measured not simply by the number of designs we showcase. But by the number of designs selected by our customer, and more importantly, how quickly those products sell through the consumers. This collaborative model has generated significant benefits for our retail partners. It has helped reduce unsold inventory, improve inventory, productivity, and strengthened consumer confidence, leading to increase our share of high-value-added business. Also, what makes me proud of our team is not merely about ability to achieve revenue targets, but the quality of the growth we have delivered. You will recall that our last few quarters have consistently emphasized our focus on building a stronger and more efficient business rather than pursuing growth at any cost. I am pleased to share that we have achieved 70% change on advanced gold model, significantly ahead of our expectation of 15% of advanced gold model for FY27. In addition, majority of our new orders are being booked today carry considerably shorter receivable cycle, reflecting improving our quality of our customer mix and order book. As a result, we are closing this quarter approximately 60 days of our net working capital cycle. At that time, many questions whether releasing working capital below 60 days was achievable. Today, we are demonstrating that it is not only achievable, but also sustainable, sustainable discipline, execution, and strong occupational book club. First, the natural diamonds currently contribute approximately 2% of our overall business presenting significant bedroom for future growth. The company aims to increase this contribution over the coming years, while financially expanding its presence in the rapidly growing lab-grown diamond segment. Backed by strong long-term demand trends and continued focus on both natural and labral diamonds is expected to strengthen the company's position in the diamond jewelry market and guide sustainable revenue growth and margins. The increased share of natural and labral diamonds today jewelry is expected to enhance the premium product mix, thereby supporting higher gross margin. In parallel, the company is reinforcing its advance board business as a strategic growth pillar, leveraging its asset-life and capital-efficient operating model. The approach is expected to improve returns on capital employed and while enabling scalable profitability and long-term business growth. The continued expansion of our premium product portfolio Rappled with our capital-efficient growth strategy, reinforce our confidence in delivering sustainable and profitable growth, with strong pavement across natural diamonds, lagoon diamonds, and advanced growth. We remain firmly on track to achieve our aspiration of Ayanat for 8,100 gold by F527 and 18,000 to 19,000 gold by F530. Returning to profitability. Over the past few chapters, I have spoken of factors driving our gross margin increments. At that time, I have also emphasized that our profitability is not dependent on movements in gold prices because we follow strict back-to-back hedging policy. In recent quarters, heightened volatility and growth prices have created margin prospects across various retailers and manufacturers within the jewelry industries. Despite these challenges, Sky Gold has successfully maintained its margin profile, demonstrating the end of our operating model. This performance validates our disciplined approach to risk management. We are not into the business of speculating on gold prices. Now we depend on gold price appreciation to drive profitability. Instead, our focus remains on factors that are within our control and enhancing professional efficiency. Expanding our portfolio of value-added products, driving product innovation, transitioning manufacturing excellence, and delivering great value to our customers. The consistency of our margin developed during the period of significant commodity price volatility reinforces our confidence in the sustainability of our business model and the effectiveness of the systems and processes we have built over the years. Another important commitment we made to investors was the future growth would be funded predominantly through internal generated cash flows. At the time we have guided Q4 FY26, we would be close to cash flow neutral. That we have expected to begin generating cash flow operating, positive cash flow operating flows towards last quarter of FY27. I am pleased to report that the building quarter of the company has generated approximately 30 crore of operating cash flow, making an important milestone in our journey towards building a stronger and more self-sufficient business model. I would also like to reiterate a commitment that I have previously made to our investors. If the sales process were not completed within the simulated time framework, the promoter themselves would purchase this property. That commitment remains fully intact. A notable highlight during the quarter was the continued trendy of our international business, reflecting the success of our efforts to diversity by revenue streams and expand our global footprint. As a part of this strategic focus, we participated in the Asiana-UK-India-Journey Expo in London, where we focused our diversified product portfolio to the broad base of international buyers. The response was highly encouraging, resulting in strong initial interest, and helping us to build a prospective order pipeline of approximately 50 to 45 crore across the UK and European markets. While these opportunities are currently at different stages of conversion, they provide meaningful validation of our product of use, manufacturing capability, and growing acceptance in international geographics. The momentum weakness in our export business reinforces our confidence in the long-term potential of international markets as a key growth driver for the company. Building on this target action, we remain focused on trending, strategic partnerships, enhancing market penetration, and expanding our distribution channel across the IT regions. This initiative supported our differentiated product portfolio and operational capabilities. Our structure to further accelerate export growth and diversify our revenue mix. We believe that our international expansion strategy will progressively become a significant contributor to structural growth and value creation over the coming years. Equally important is our continued commitment to the highest standard of corporate governance and strong alignment with territorial interests. Beginning with financial work, the company's financial statements are being audited by MSK Associate LLP, which is BDO in India, being one of the largest global accounting firms. This represents a significant milestone in our ongoing journey to further central governance, transparency, and financial oversight across the organization. The appointment underscores our commitment to adopting global best practices in financial reporting, compliance and risk management, and corporate governance. As we continue to scale the business, we remain focused on building a robust institutional framework that enhance accountabilities and takeover countries and supports sustainable long-term value creation. As promoters, we are also taking a significant step to further strengthen the alignment between management and stakeholder interests. Beginning FY27, we will adopt a zero salary promoter compensation model. Going forward, promoter remuneration will be linked entirely to dividends and dividends will be declared only from operating cash flow generated by your business. This reflects a simple philosophy. Promoter rewards should grow only when shareholder value is created. At the same time, we remain committed to prudent capital allocation of our priorities. As a matter of fact, we remain committed to our prudent capital allocation. Our first priority will always be debt reduction and financing transitioning. Dividend distribution will follow only after this objective will be appropriately addressed. Now, as we look ahead, I would like to briefly discuss our long-term strategic roadmap, which we refer to as Vision 2030, our cycle 3.0. This vision is not about aggressively changing large numbers. Rather, it is about building a business that is fundamentally stronger and more disciplined. By 2030, our aspiration is to be a company that is near-death-free. Operations with a highly efficient balance sheet maintains industry-leading working capital matrix and consistently converts a significant portion of his earning into sustainable operating cash flows. Further, we would like to Implement world-class ERP platforms and digital systems across both front-end and back-end operations. This initiative will strengthen operational controls, improve visibility, enhance scalability, and support the next phase of complete growth journey. Moving to the financial of Q1 FY27, I will ask our CFO Mr. Siddharth Subhani to run down through the financial for the quarter. Over to Siddharth.

Thank you. I would

like to begin by highlighting that Suwan FY27 has been a very strong quarter for Cygold, with healthy growth across both our top line and profitability. Importantly, this growth has been accomplished by a meaningful improvement in margin. Driven by the continued shift towards advanced gold and a higher contribution from value added products. Before discussing the detailed financial performance, I would like to highlight three key takeaways for the quarter. First, our consolidated revenue for Q1 FY27 stood at 2013 growth, registering a strong 78% year-on-year growth. On an annualized basis, this translates into a revenue run rate of approximately 8,050 crores, which is already very close to our FY27 revenue guidance of 8,100 crores. Second, we are seeing a clear improvement in the quality of our revenue and profitability. Our consolidated gross margin increased to 9.3% in Q1FY27 versus 9.1% in Q4FY26 and improvement of 27 basis points. This improvement has been primarily driven on account of two major factors. Hello. Share of non-22 KT jewelry has increased from 10.5% to 14% in Q1FY27 due to structural shift in customer presence towards lower KT jewelry. Share of studied jewelry has also increased from 1.65% in Q4-26 to 2.1% in Q1-27 on account of management's focus on better margin products. This gross margin expansion is translating strongly into the bottom line. EBITDA increased to 157 crore to 7.8% for the quarter. Operating pass for the quarter crossed 100 crore mark for the first time. We are getting a locus Q&A on the gross margin. So I would like to spend some time giving up the breakup of our 9.3% gross margin. First, the advanced gold contributes to close to 90 to 100 bps in revenue and gross margin since the advanced gold revenue flows into the gross profit. Secondly, non-22KT products. Lower KT products like 18KT, 14KT, 9KT has been gained, gaining market share due to gold price appreciation. They now contribute to 14% of volume and has gross margin contribution of close to 1.4 to 1.5%. Third, studied jewelry. Natural and lab-grown studied jewelry is currently at 2% of revenues and it contributes to close to 0.3% in gross margins. Finally, if we look at 22 KT gross margins, it comes to close to 6.5%. Even here, we have 70% of our products being CV-studded jewelry, while the balance close to 30% is the plain gold jewelry products having a gross margin of 5-5.5%. Due to above, we are confident that the margin improvement seen in keyword is not a one-off but a reflection of the underlying transformation in our business mix. At the same time, we are seeing a meaningful improvement in our cash flow generation. Our cash flows from operations turned positive at close to 30% in Q1 every 27 compared to negative operating cash flows till end of 26. This improvement is particularly encouraging given the strong growth in our business during the quarter. As the contribution from advanced goals continues to increase, we expect working capital intensity of our business to moderate further, supporting stronger operating capital generation. Together with the significant improvement in profitability, this gives us greater confidence in our ability to progressively reduce debt and interest costs. Our objective of moving towards a net debt-free balance sheet remains firmly on track, which should provide an additional structural tailwind to our past margins going forward. Importantly, we remain focused on ensuring that our growth is supported by disciplined working capital management, continued de-leveraging, and a higher contribution from advanced gold and value-added products. With our Q1 performance already putting us close to our FY27 revenue guidance on an annualized basis, we remain confident in our ability to deliver sustainable growth while continuing to improve the quality and profitability of our business. Now I request the moderator to open the floor for Q&A. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may press star and word on their touch screen. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands-on while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue ascends. The first question is from the line of D. Shah from Equator Securities. Please go ahead.

Thank you sir. Congratulations on good set of numbers and really good to see the positive operating cash flows. So, great work. Thank you sir. So, just couple of things from my side. So, suppose that on the guidance side, we have been guiding 8100 of top line this year along with some 7.5% of EBITDA margin. But when I see the first quarter run rate, I think I easily see sky goals surpassing that number. So, don't you think there is a significant upside risk and don't you think it is good to say revise the guidance or any colour on this one?

So, we will revive our target after Diwali. We will advise one more quarter and we will give our new guidance post Diwali. Yes, our plan.

Okay. Okay. Secondly, sir, just wanted to check inventory days have increased compared to the fourth quarter. Anything over here, anything specific reason over here?

So, on the working capital days, this was 50. Nine days as of March is at 60 days as of June. So from our overall strategy side, we are focusing on increased advanced gold plus the export business has also increased if you look at from a quarter round quarter perspective. So in the previous quarter, the export was close to 14.5% which now is at close to 18% more. Plus, our focus is now on focusing on the higher margin products, which is mainly on the studied side. So, the cash flow relation which the business is having, we are deploying some part of it into the studied business as well, which has a higher margin. So, so that our margins and profitability could improve on us. Long-term basis. Further, as we have told in the Skyworld 3.0 vision, that we are trying to balance all three. Sales growth, profitability growth, as well as positive operational cash flow, and we are working with this in our mind. Thank you.

I need to add that we will update our revenue progress only if we get a greater share of study than Erwal Kool business.

Ok. So, I am back on the working capital side. I just wanted to check on the inventory because when I see that on a sequential basis inventory days have gone up. Is it for the festive season? I just wanted to check any specific reason over here or not.

So basically, as I informed that we are going from a negative cash flow, operating cash flow zone to a positive cash flow zone. Further, our free cash flow, even after we exclude the cash flow, Okay, thanks. That is also at a plus. So, so we are utilizing the funds which the gold business is. So, the current strategy is to put some funds generated from the gold business into the studied business and have a better overall margin per se.

Okay, got it. So one last thing from my side, if you can just highlight the volume performance for this quarter, and also the capex plans for the for the years to come. Because last quarter I think we are sitting with some 50-55% sort of a utilization. What will be the capex plan, what will be the capex outlaw for the for the coming years.

So, as we have informed in our speech that we continue to be on the asset life model. Currently, the capacity utilization is close to 55-57 odd percent. And so, we have looking at the current production numbers, we are good till 2028. We have already built the world-class facility, and we have already invested in it, and we have already built the world-class facility, and we have already invested in it. In the capacity and infrastructure, now the major focus is that how to balance all three levers for us in the SkyGold 3.0 version.

So, again, as we are at 60% utilization right now, and we have a room of 40% units.

Okay. Got it, sir. Done. Thank you so much, and all the best for the future projects.

Thank you. Ladies and gentlemen, to ensure that every participant gets an opportunity, please speak your questions to two per participant. The next question is from the line of Pallesh Kavale from Novavangale. Please go ahead.

Yeah, thank you for the opportunity, sir, and congratulations for a very good set of results. First question is on, sir, is there any reason for rising payable debt, and is it sustainable going forward?

Okay, but since, yeah, so from the last quarter onwards, we have started to give the breakup of the working capital table. So, but from our overall business, what you are asking is right, from our overall business, we look at the total working capital which has been. We are deployed in the business, but since a lot of analysts and investors look at our business from a net working capital days, that's why we have given the breakup of the working capital cycle as well as the net working capital days that we have for the respective period. So, what can really be sustainable going

forward, the payable days that they rise in?

Yeah, since we are looking at increasing our higher margin product, so in gold, the credit available is virtually new, while in the diamond segment and all, we are getting or it is a market practice to get the credit. And that's why the number that you are seeing on the credit processor is a sustainable number. But overall, in terms of the working capital days, we are at close to 60 days. And in terms of strategy, we are looking at producing or improving on the working capital days by two days a year on. Year per se with an overall target to reach to 52 days by 2030 in the Sky Gold Vision 2030 that we are looking at.

Okay, sir. Okay, thank you for that. What is the potential for UK from UK markets and I mean how big can it be for us?

So, we have just entered into the market. We have done a first exhibition and we have got a first initial order of 25 to 30 kg. So, UK is about total studied and more of a margin-based business. So, we are looking forward and we have got good response integration for our products. So, we are experiencing good sales for the export as we are going to go to 20% exports in coming years. So, we are in the tight end. We want to diversify the export. Right now, 6% is coming from UAE, 2% from Singapore, 2% from Malaysia. So, we are expecting 3% to 4% sales coming from Europe market. And we have already started getting the orders. Let's see how it is convertible, and it's more about a mix of gold and chelit.

Yeah. Perfect. And one thing that I would just like to highlight or just put across or explain it to you that even one-day improvement in our operating cycle leads to close to

92.

95 crore of impact in the operating cash flow cycle. So, that is why our vision and our approach is balancing both, balancing growth, the working capital days, as well as being in the positive zone in the operating cash flow cycle.

Okay, sir. Thank you for that. Thank you so much. Just last question. What is the gross debt level after the end of quarter?

Gross debt level for this water is 540 crore.

Okay, sir. Thank you. Thank you so much. That's it from Mancet. And all the best for the upcoming quarter. See you soon.

Thank you. The next question is from the line of Minitabarman. Now, Baja Jaltahe. Please go ahead.

Thank you, sir, for the opportunity, and congratulations on great numbers. So, just a couple of questions from my side.

One is, like, quarter one typically benefits from Akshay 3Ti and also wedding season. So, how much of this quarter strength is seasonal, with a structural step-up in demand?

And what should we expect for the seasonally software Q2? Second is, with the appointment of Mr. Akash as CEO, what specific priorities have you set for him where he will be focusing on and drive over the next 12-18 months?

So, again, you can see in Q1, if you see, there is a major season of the Yogi industry, but half a portion goes in March month also, the delivery is in April month also, the hospitality delivery is going in March and April also. So, you can see from Q1, Q2 is better because Navakri, Diwali orders are in Q2, and Q3 is better than that because from marriage season fall is Q3. So, we followed by Q1, Q2 is better than Q1, then Q3 is better, and again, the fourth quarter, March, is better than that, because Shethethi's major delivery goes in March, and Shethethi's first, approximately 20, April to 15, March. So, that's a, again, question of Akash Selesha, we have such a new target to develop the market, advanceable business, much from the four large quarter we have onboarded. We have achieved 18% Erdogan Gold business, and we have given him the target of this year to be average of 15%, next year 20%, and third year of 25%, and 2030, we will achieve 30% of Erdogan Gold business, which we have given him the target. Thank you.

Understood. Thank you so much and all the best for people for this. Thank you.

Thank you. The next question is from the line of Neetra Deshwande from Miller S.H. Shere Khan. Please go ahead.

Yes, thank you for the opportunity and congratulations, sir, for the solid set of numbers and signing numbers, especially the Expo-driven and the cash flow. To start with the first question, I just would like to understand about, as you said, there would be a remaining nine months or there would be a target rate of almost more than 8,100 growth would be the guidance that's already about so far, where 25% of growth guidance you achieved earlier. So, if possible, can you give me the guidance or at least give us a guidance for FY28, if possible? So, because this Q1 have given a very formal thing and almost met the estimates more that earlier expected around 5,000 to 8,100. So, is it possible if you can give a growth guidance of FY28, if possible?

So basically, in the Skygold 3.0 vision, our strategy is to balance all three, the sales, the profitability, and being a positive OCS. Considering these and my ROC is close to 35-36%, we expect that we will go to 30-35% in terms of the sales increase. And we will continue to monitor our sales performance, and post-September, we plan to give an estimate that what we would expect by FY27 and FY28 further. But our plan is that overall we are now targeting to have an operating cash flow to PAC. The conversion of close to 20% that we have also provided in our IP as well, and our overall PAT margin will be close to 5% approximately.

Okay. Okay, sir. Got it. So, okay. And, sir, about, as you said, human growth is the volume rate, not the goal prices are not linked with this, as we are already being positioned. So, can you share a family to volume growth, if possible, for the, separately to identify and understand about the, so specifically about that?

Yeah, I can understand your question, but previously, Sky Gold was predominantly a 22 KT company, but now with the market trend and the customer preference and gold prices going up, the 18 KT, 14 KT, 9 KT started and all health is also increasing. That's why in the last quarter of 26th March, we have indicated that the volume The guidance that we used to give will not be the right number to be provided, but overall, I can say that we have grown by 7 to 9% in the volumes in this quarter.

Okay.

Okay, so very soon, I mean, we can expect there will be a candidate and the volume can be decided into the numbers and the units for the first, specifically with every carrot that we can get this aggregation, if possible.

Sure, we will update and we will try to look up.

Okay, sir.

Sir, and the last question is about the current utilization rate for Q1 at part 27. Can you also brief us the realization, what is the code unit that you consider for Q1?

If the, since the volume number is not being provided, so I think from a shorter resultant, Realization number will also not be available, na?

Okay, okay. So what current utilization rate for Q1 which must be around any guidance for the Q2 if you can share about?

Okay, okay, you are saying okay, okay, from the capacity utilization, okay, okay, sorry, I understood something, okay, so the current capacity utilization is close to 60 odd percent per se, and we expect that the capacity utilization should improve by 70 to 80 percent, we want to per se, every time. As the volume will increase, that's right, the overall capacity utilization will also increase.

So, 1.2% is our capacity to produce, and we are at 60% across utilization in this quarter, in the last quarter.

In the last quarter. Perfect. Thank you, sir. Okay. Thank you so much, sir, and all the rest for the coming quarter. Thank you so much.

Thank you so much, man.

Thank you. The next question is from the line of Chintan from Girik Capital. Please go ahead.

Hi, thank you for the opportunity and congrats for a very good set of numbers. Sir, I think when we spoke about, you know, the revenue guidance was kept, given the volatility in gold prices, the revenue guidance was kept as a moving part because underlying gold prices also determined how the value will pan out over the course of the period, right? So, our focus largely was on delivering on the volume while keeping a target of improving profitability, given that the mix and whatever efficiency you guys are working on, right, projects we are working on. So, we like to understand, 60% is what you mentioned, the utilization level. If you can split that between your standalone and the consolidated, how is the volume performance has been for the quarter, that would be, I think, the right judgment for a B2B player like yours, given that the volatility of goal prices is not in our hands, and we don't play around goal price, right?

Yeah, perfect. A couple of points into it. First is, I have what we have been indicating that in this Kygold 3.0 version, we are balancing all three of them, the sales growth, the profitability growth, as well as achieving the net debt free position by 2030. So, considering that we are balancing this and we again stand at this point of time with the numbers that we have given for 2030, but since our ROC is more than 30%, so you can safely presume that the overall sales growth will be at least closer to that number because if you try and do a higher sales growth, Again, the operating cash flow will go into the negative zone. This, we have worked very, very hard, and we have come to the level of the operating cash flow per se. So, in terms of the revenue projection number, the 18,000 to 19,000 crore is what we are targeting. We are targeting how... How sooner can we reach the target of 1000 crores of packs? Because this is the first time we have reached 100 crores of packs in 3 months. This is the first time. But our ultimate goal or target is to cross 1000 crore in fact and with these two goals in mind and having the vision of operating cash flow and becoming the net debt free company by 2030, we are executing this entire strategy.

Because I believe our standalone unit was operating at a higher utilization, right? Versus the subsidiary Sparkling, Star and Ganna, were operating at 50% utilization. So is there any change or should we assume both were operating at 60% level or there is a marked improvement in standalone utilization while subsidiary We also have seen an improvement this quarter.

So broadly, the standalone utilisation So, across, it is closer to 55 to 65% is the overall utilization. Somewhere it can be 55, somewhere it can be 62, 63, but at a blended rate, we are close to 60% of utilization.

Okay, and second question was on the disclosure which you have rightly given to exchanges in the month of July, 16th to July. That incident will have any TNL impact in our Q2 numbers, given that we have disclosed the amount?

Yeah, so out of that, since 10.7 crore was the total amount involved, but such incidents have unfortunately become increasingly prevalent across many organizations which are... Listed on the DSE and NSE and including CBE has come up with a circular warning the companies to take a note of this issue which has happened. We have acted promptly, we have initiated the legal proceedings and they have also got available order as well and close to 3.5 crore has already came back to our bank accounts per se and for the The balance also, the work is, the efforts are underway to maximize the money that has gone out, that how maximum we can get the same. While this is the update, while I would also like to just inform that as of the matter is currently under legal and investigative process, we will not. Okay. Comment specifically on this matter person. Got it.

And last question was on the advanced loan, I think. CoQ is closed at 20%, and this quarter is at 17%, right? Yeah. That is correct? Okay. So, reduction sequentially?

No, no, so it's not a reduction. Overall, in terms of volumes, it is the same. But since my overall volumes has increased, so as a percentage, you are seeing a downward trend.

Okay, got it, got it. Thank you, Farhan.

I want to close this. Expanding the facility is not an issue for us. We are not a factory which has long lead ties. So, our key competitive advantage is design. So, our main focus on design and we can make a facility in 90 to 120 days with easier to rent them through here. After 2020, it will be needed.

Right. Continuing on that design aspect, I had one question on the, you know, merchandising. Given the prices of gold is rising, you know, the entry-level pricing of your products, typically we started off as our U.S. field in entry-level dwelleries, right, given the lightweight and designs we have. Do we feel because of the increased gold prices, it becomes a little difficult in terms of meeting that entry-level price point or the lowering of grammage or lowering of the caretage is the only way to meet that entry-level price point?

So again, we have largest 3D printer in our society, and we have the expertise from last 20 years to heat the market, and what are the changes in the market, how growth prices are changing, how should be the inventory rate, and what should be the entry point on the customer, which will be our average ticket price. So we have the merchandise in designer team, keep on inventing new products, keep on lighting of the inventory, bringing up the new products to all the sectors, all the different customers. So you can see we are uploading our customer feedback on our YouTube channel also about our lighter inventory, managing the ticket size of the customer, managing the flow of the design, look of the design. It's not about managing the ticket size, it's about the look should be the same, flow should be the same, our feedback is larger or for a larger store. So, it's about teamwork and we just saw our expertise coming. We are a design-led company and managing the inventory ticket size, about the flow, design, characteristics, we keep on working on that and come up with the proper design and the, and the, and the, and the, and the, and the, and the, so everything is available on the YouTube channel. Also, you can see our personal feedback, how we have come up with the designs, and as per the goal that has gone up, we have come up with the design, and come up with the sales in this goal tag also.

Thank you. Thank you for answering the question. Thank you.

The next question is from the line of your show with another one from IISF Capital Asset Management Limited. Please go ahead first.

I think, I think, I'm going to go on in the paper from work. So, I have two questions. First one is in the market. But if I look at the pack market, that was somewhere around 5.2% in this first quarter. And the long-term vision that he had shared is around 5.25% in time. But the initiative that he had found about earlier, he increased the advanced goal business, increased the federal business, as well as moving towards net debt. Okay. Sir, all these initiatives are indicating towards increasing margin, right? So, sir, what is the ratio for us? We are going to publish 5.25% margin. How should we look at it?

So again, you are right that advance goal will increase our gross margins also, and again the spread mix will also increase, and it's about blendedly we have been on a mix of a range of 8 to 9% of gross margin, variance of 8.5% to 9% gross margin we are doing, because in the journey of business, you can see if 22 cents somebody is taking volume, we have to pass on some 0.25, 0.5 discount also to the customers whenever they are taking, we will lose volume. So, it will get diluted between this high-margin products diamond and labrol, and again advanced gold, that's why we are guiding our guidance of 8.5 to 9 percent, again, we are focusing on diamond to expand to 10 percent, advanced gold 100 percent will include on the margin, but our guidance remains the same form between 8.5 to 9 percent.

Yeah, perfect. Just to take a step back, this entire guidance or the projection was prepared somewhere at the end of 2025. And since we are projecting five years forward, so that is why we have tried to put in a number which we see is we are confident of achieving it. Apart from giving the guidance to the street, we continuously work and endeavor on how to improve our margins, and that's why the positive fund flow which is happening from our gold business, we are trying to deploy it in a smart way into the studied business which has a better future. So, yes, from the overall guidance to the street, 5.25% of the FAT margin still holds, while we plan and aim that how can we reach the magical number of 1,000 crore of FAT going forward, and that's why whatever steps we are taking, we are proactively telling to the investors as well. So that you can understand the implication of the same in your respective financial models.

Got it sir. Just to conclude this point, these dragons are on the paper text, there are a probability of that being improved. Is that correct?

You can take on, you can take it on that model.

Okay. And the second question is on the KPX side. You see that we are building up, our capacity is building up by a second day, and around 80 to 100% of KPX will be required, right? So what is the lead time for the capacity to come? That is 50. And second, I think you mentioned earlier that that means around 15 to 20% of the power price. So there's no clarity on that, on this one. Correct.

So, it will take 120 days. Lastly, we made the surgery in 90 days. So, it will be RGMR. And it will take 120 days to develop the surgery to go to 1.10 to 2.4 thousand. And 100 percent, it will take 80 to 100 crores of the effects. Then we will be at a path, I think, 60 crores to 60 crores, whatever the number it comes. And it will approximately 10, 15 percent or 40 percent of the path. So, we made it in after 2028, and we take 120 days to make. So, approximately 2,500 core of capex of machinery, additional machinery, then 20-foot mixture will be, so there will be no unique capex, because we are not going for making our own construction factory, we are on a supplied model, we go in a metal model, and normally we get 20-20 days of income, we create all the parties who go given that, and it will be approximately 12-15% of the pad off, Thank you very much.

Perfect, perfect. Thank you so much, and let's meet you for the future. Thank you.

Thank you. The next question is from the line of Zahra Dushwani from Philip Capitan, DMS. Please go ahead.

Yeah, team, congratulations on the robust Q1. So, first question is on the client edition. We have, you know, added a few clients in last 15 to 18 months, like of Plane, Gargis, and Carrot Lane. So, how is the ramp up happening with those certain new clients that we have added? And second is, you know, how many new clients that are in pipeline whom we have not served in past? So, that is my question one.

So, let's just step back into this. Basically, we have onboarded Aakash, who is currently designated as CEO. So, he was onboarded at a fixed salary plus an ESOP model, and the target that was given to him was to onboard all the large customers that were not in our client list. And he has successfully done it and that too at a much faster pace than he had actually anticipated that he would have done it in close to 24 to 36 months, which he has done 15 to 18 months per se. So now, and our forte is the gold. So, now with all of these customers being onboarded and our gold jewelry being sent to them on a regular basis, now we are trying to crop sell and upsell both. And that is the current strategy that we are working on because I would say that there are few countries, a few companies in the world who service to its top 15 large customers of its sector. So, in terms of customer acquisition, we are broadly there. The strategy is now how we can increase the wallet share with them, how we can do the cross-selling, and how we can do the up-selling. That is through the studied business. That's the current study that we are working on.

So, when you can see to the addition, we were into mass jewelry brands like Kalyan, Joylucas, Madbar, Thangamail, Joylucas, JRT, Senko, Khazana, Lalika, all that stuff. We are into the Genji brand also, that Kerri and Kendri. We have added recently, Jeeva also, which is growing in Labron Diamond jewelry. So, we are getting a good sale from this Genji brand. Earlier, two years back, this Genji brand was slowly moving, and now from last two years, we have seen a Drastic sales in this Genji Brand store, Zeeva, Keriklane, Kenjay, many youngsters have come in this exhibition also, coming up with 9-Kerikstore, online B2C sales, Laval Diamond Challenge stores, somebody is opening the National Diamond Challenge stores. So we are seeing good sales coming from these Genji Brand stores also, which we were not counting it 2 years back. Again, we are increasing the volatility in P&G, we have a good increase of volatility in P&G also, so again, we have on-boarded all the customers, and we are expecting to come up with a new venture branch coming with startup funds and all, let's see, and we are on-boarding them also.

Yeah, I have one more question. Are you witnessing any further shift from, you know, organized to organized given the, you know, the gold volatility that we have seen in recent past that might be potentially benefiting you? Any thoughts on that?

Yeah, so from the unorganized to organized, that is that current theme is playing out in the sector in a big way. Currently, only 40% of the sector is organized and 60% sector is unorganized on the B2C side. While on the B2C side, only 20% is organized and 80% is unorganized. So, it gives a very big runway for any B2B. Design led manufacturer to progress further, and we are in the sweet spot of that growth at this point of time, which we expect that it should continue at least for the next 4-5 years going forward as well.

So as per export, the respective by 2030, 75% market will be organized and 25% will be unorganized.

Oh, okay. And this 19,000 crores of revenue target by F530, does this include any potential acquisition?

So, I think we have done with the product acquisition and the client acquisition. So, I think we are on a sweet spot and having all the, we have to just utilize our facilities. We are, we have four facilities to utilize and we are focusing on the product. So, as such, there is no such, anything on the table for acquisition.

Yeah, and one last question. Since the advanced gold share is rising, and, you know, under this model, we'll be booking just the making charges in the revenue, and thus the full gold sales won't be into the, you know, into the sales, into the revenue. So, due to this continuing shift, is that one of the reasons why you are not upgrading the revenue target?

So, again, we have not added that advance gold business revenue in that 18,000 crore mark. If you calculate, if we are a 30% advance gold business, it will be 27,000 crore business, but that long sales of crore cannot be counted in the business because it does not come in the revenue. So, excluding advance gold business, we have given us guidance of 18,000 crore which we make on a very small message.

Yeah, just one thing to add, I have just explained on this speech as well, That advanced gold model has an infinite ROC. The revenue percolates down till the gross margin level, and since it has a significant infinite ROC, it adds to our overall objective of cash flow positive, and it also helps in our fact. That is why we are focusing on it. The overall, in terms of the absolute number, it is very less. It is less than 1% of the sales in terms of the absolute number per se. So, it will not be so significant in the overall scheme of things, especially in terms of the projection that we have given for 2030.

Understood. Thank you so much.

Thank you. Ladies and gentlemen, due to time concern, that was the last question. I would like to hand the comments over to the management for closing comments.

Thank you so much. Before I conclude, I would like to sincerely thank everyone for joining us today and taking time to participate in our Q1 FY27 earning course. I would like to thank all our investors, customers, employees, business partners, and stakeholders for their continued trust and support. We have listened carefully to the feedback we have received from the investment community over the last several quarters. Many of the improvements you see today across operations, working capital management, governance, profitability, and cash flow generation have been influenced by that constructive feedback. We value this engagement immensely. While we are proud of the progress we have made, we recognize that our journey is far from complete. We remain open to suggestions and committed to continuous improvement as we build Skygon into one of the India's most admired jewelry manufacturing companies. Thank you for your continued confidence in Skygon and Diamonds Limited. We look forward to create sustainable value for all stakeholders in the years ahead. Thank you so much.

Thank you. On behalf of Sky Golds and Diamonds Limited, that concludes this content, thank you for joining us, and you may now disconnect your lines.