Sportking India Limited (SPORTKING) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Sportking India Limited Q1 F527 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 the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Prathamish Padabh from MUFG InTime India Private Limited. Thank you, and over to you, Mr. Prathamish.

Thank you. Good afternoon, everyone. Welcome to the Sportsking India Limited Q1 FY27 Earnings Conference Call. Today on the call, we have Mr. Munish Avasti, the Chairman and Director, Mr. Sandeep Saddeva, Chief Financial Officer, and Mr. Lavlish Verma, the Company Secretary. I hope you have gone through our press releases and the investor deck. As a short disclaimer, before we start with this call, the call will contain some forward-looking statements which may be based upon our beliefs, opinions, and expectations of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and unsettling. With that, I would now like to hand over the call to the management for their remarks. Thank you, and over to you, sir.

Thank you. Thank you so much. Good afternoon, ladies and gentlemen. I hope all of you had the opportunity to go through our investor presentation and earnings release. We are pleased with the strong start. We delivered healthy revenue growth, along with a significant improvement in profitability. The quarter was particularly encouraging as the growth in earnings was driven by a combination of better yarn realizations, strong export demand, and disciplined raw materials procurement. Despite some increases in raw material prices during this period, our strategic buying approach enabled us to effectively manage input costs and protect margins. Market conditions remain favourable during the quarter, which has better realisation across our portfolio, particularly in cotton yarns, which supported the strong improvement in margins. Demand from all the markets continued to remain healthy, and we are also encouraged by the outlook going into the second quarter. On the domestic front, we expect demand to remain supportive in the coming quarters, aided by the festive season and improving consumption trends. From an industry perspective, the global textile and capital sector is gradually recovering after a long period of demand modulation, and a lot of consolidation has happened in the last few years. Over the last few years, the industry experienced challenges arising from inflationary pressures, inventory corrections across large periods, and weaker discretionary production in key markets. However, with inventories largely novelized and demand conditions stabilizing, the business environment has become more constructive for textile and factories. We are also witnessing a continuing shift in global sourcing patterns, as India is emerging as a preferred sourcing destination for yarns. The country's strong cotton ecosystem, large manufacturing base, proven execution capabilities, and growing compliance is standard position. Favorably in the evolving global supply chain landscape. We believe companies with scale, quality, and reliability such as us are well-placed to benefit from this cultural opportunity. Development remains encouraging. The recently concluded India-UK free trade agreement and the progress towards a comprehensive India-UK trade agreement has the potential to significantly improve India's competitiveness going forward in key export markets over the medium term. We believe such initiatives will support growth, create new market opportunities, and stand on the long-term prospects of the Indian tech trade industry. Coming to Gautam, one of the... One of the positive developments for the industry has been the alignment of Indian cotton prices with international markets after a prolonged period, during which the domestic cotton traded at a meaningful premium. This has improved the competitiveness of Indian spinners and created a more balanced operating environment. While global cotton prices have shown some firmness in recent months, we remain focused on prudent procurement and efficient inventory management. Our outlook on the new crop It's getting better every day. There were initially some scares with the monsoon, but things have gotten better, and we expect... I'm pleased to share that our solar power project has successfully commenced commercial operations. This marks an important milestone in our journey towards sustainable and cost-efficient operations. The project is expected to reduce our annual power cost by approximately 12 to 15 percent, while simultaneously increasing the share of renewable energy in our overall power consumption. In addition to the cost benefits, this initiative reinforces our commitment to responsible and sustainable growth. The 150,000 spindle greenfield expansion project in Odisha is also progressing as planned. We are very excited with that. Construction activities are underway, and the first phase of production is expected to commence during the third quarter of the current financial year, and we intend to finish the whole project within this financial year. This expansion will provide the necessary headroom to support future growth, strengthen our market position. and cater to increasing customer demand and newer geographies. We expect the project to start contributing progressively as we move ahead. Looking ahead, we remain optimistic about the medium-to-long-term outlook for the Indian textile industry. Structural shifts in global sourcing, improving trade relationships, supporting quality environment, and growing opportunities for big Indian exporters provide a favorable backdrop for future growth. Supporting our focus remains to drive operational excellence, terminal customer relationships, invest in future-ready capabilities, and create sustainable long-term value for all our stakeholders. Thank you very much. With this, we would be happy to take your questions.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on your 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 comes from the line of Rehan Sayed with Renetra Asset Manager. Please go ahead.

Yeah, welcome to the team and thanks for giving me the opportunity. So, my first question is around your Europe side business. So, your Europe has shown now a growing demand while the India UFD is expected to do.

Your wife is echoing. I really can't hear you what you're saying.

Now it's clear, right?

Yeah, better, better. Can you just speak slowly?

Yeah, okay, sure, sure. So, sir, my first question is around your Europe design. Right now, Europe has shown improving demand while the India, India, UK, FDA is expected to benefit Indian digital exporters. So, have you already started receiving incremental inquiries or also from UK customers, or do you expect the benefits to materialize only after FF28 onwards?

Okay, I think you're talking about the incremental demand coming out of the UK FDA, right? No, I think these things take time to play out. I think it has just happened last month, and we have not received any orders, really, which has been coming out of this UK FDA right now. But we expect, because it's a long-term and medium-term phenomenon, I think once people start doing sampling and they start getting orders, it will take six to nine months for it to really show it on our order books.

Okay. So, my second question is around your Odisha Phase 1. So, Odisha Phase 1 is expected to commence production in Quarta 3 by 20,000. So, could you provide the expected spindle addiction in Phase 1 plus the utilization ramp-up timeline and the EBITDA margin profile once the plant receives optimal utilization?

So, we plan to start the plant somewhere in the next quarter, and we expect to ramp up the whole plant. It takes, you know, it's a long, it's a big plant. So, it will take us around five to six months to be ramp up, and I think by March end, we should be working, we should be at about 90% capacity utilization for the whole plant. So, around about EBITDA, accretion, this plant has, you know, many incentives which are embedded, so we expect the margins coming out of that plant to be at least 300 to 400 basis points or even more than what we do in our old plants.

Okay, sir. Okay. As a last one question from my side, I just wanted to understand regarding the export market scenario. So, has the competitive intensity from Bangladesh, Vietnam, and China changed in your key export markets over the last six months, and are you seeing any market share gain because of supply and diversification?

So, see, China has been the tipping point for, you know, for what has happened in the last eight, nine months. Chinese market was very subdued for the last four, five years, and we have seen an increased demand. So most of the incremental demand which has come into India for yarn export is from China. Bangladesh continues to be steady as they were. And China, we continue to see every month, you know, see them as a buyer, and we think that this is going to go on, because there the cotton crop is also getting a little smaller. Right now, the copper prices in China for the last six, seven months, and what is expected in the next six months also are going to be much higher than the international prices. But there's a lot of arbitrage they have to incentive to import yarn. So we feel this competitiveness is going to stay, and a lot of consolidation has also happened. So I think we can feel... This is supposed to be the worst quarter which we are going through, and we still see a lot of demand in these times, which is pretty extraordinary. So we expect whatever has happened in the last three, four years, all the consolidation which has happened, the spendage which has shut down across the world, I think this is what is propelling this cycle.

Okay, so let's keep on my side, and good luck with your coming quarter.

Thank you. Next question comes from the line of Abhishek Shankar with ICICI Direct. Please come in.

Yeah, thanks for taking my question. I hope I'm audible. I guess on the good side of results. So, I just had a question on the inventory part. See, we've seen some, you know, uptick in the cotton prices over the past, and I just want to find out. So, how are we going to inventory that? Mr. Shankar, sorry for interrupting. Your voice is breaking.

Your voice is breaking, Mr. Shankar. Can you please come in the range and talk?

Yeah, is it on?

Yes, please go ahead.

Yeah, so my question was regarding the inventory. So in the past three to four months, we've seen that cotton prices have moved up a bit. There has been some spikes. So I just wanted to ask that if I'm right, you know, you might be procuring cotton in the cycle of about, say, five to six months. So if you had procured a cotton, say, about October last time during the crop, so now there will be a new inventory that should come in, right? So will there be, you know, impact on the cost of materials?

So, yeah, see, the cotton, generally we procure cotton for the whole season by February, March. So that's our normal procurement cycle, and which we did this year as well. And prices, you know, generally go up in this period of time, almost every year because of the... Right now, we have covered for like four, five months, and we expect the new crop to come, you know, early this year because of less rain predicted. So we expect by October we shall start seeing a modulation in cotton prices, because right now these prices are just because there's not much crop left. So, I don't see much impact of cotton. I think the most important thing is how competitive we are to the world, which is actually, you know, prices can be higher or lower, and we see Indian prices being competitive going forward because there's a lot of tightness happening in Chinese balance sheets and in U.S. balance sheets, and while Indian, I think we will end up this year with formidable stocks, and we are expecting a good crop next year. I think this competitive pricing should stay. I think that is more important for us to maintain our margins.

Yeah, so just one more follow-up question to that. So, considering, you know, the cotton prices will be favorable ahead, and you also highlighted in your comments that demand continues to remain strong. So, we can expect the cotton and spreads, your spreads to, you know, further from here in Q2 and Q3?

See, again, you know, in this macro environment, we really can't comment too much going forward, but, yeah, the current quarter looks to be similar or even better than what we have delivered this last quarter.

Okay, sir. Thank you. I'll get back into the queue. Thank you. Next question comes from the line of Manoj Yadnapuri with Infinite Financial Services. Please go ahead. Am I audible?

Yes, sir. Good set of numbers, and I just have a few questions. So as of last quarter, you had roughly around 90 days of export and sales hooked, and two quarters of spread visibility, if I'm not wrong. So rolling that to today, so what does your current book visibility look like? And are you still seeing that auto strength or, you know, any early signs of bias causing? So now as of, you know, the stats are nearly around already three years or five.

So we continue to, see, this is generally our strategy. We have an order book ranging from 70 to 90 days in any year, whether it is this year or even the last year or whichever year, because this is our policy we work with to manage our risk of having higher inventory. And we continue to do that. We still have the similar kind of order book as we had at the end of the last quarter.

And the second question is on the solar power plant, which recently got commission. So, how much of the guided annual savings has actually, like, go to this quarter, if you could elaborate on that, on the operating expenditure side?

Sorry, what, I didn't get it about solar power, what do you want to know?

Yeah, basically, how much have you, you know, guided annual savings, right, previous quarter?

Serious quarter, the saving was very marginal because it was operational only for 10 days. So this quarter, it shall be much more, yes.

And one last question. So what's your visibility on the recent cotton import duty? Is it like, do you expect it to be a very long period or do you seem to, you know, already prized in with your S527 guidance? Like, what do you expect about it?

So, right now, this import duty is, you know, the exemption is still October, 31st October, and so we have planned accordingly, and we are talking to the government to extend it so that those talks are still going on, and the government is listening to us, and hopefully we will get a favorable solution to that.

So, could we, like, expect any fresh incremental upside from here?

Not in the medium term, because we already have the inventory for next two quarters. So, anything, so if this is, you know, we are telling the government to remove the import duty, because that solves this hanging sword all the time. So, anything, if government does that, it will help us in... Sourcing competitive cotton going forward, and we can choose from wherever we want to buy.

Yeah, absolutely. All right, that's it for my turn.

All the best.

Thank you. Next question comes from the line of Kuni. To be counter-cyclical PMS, please go ahead.

Hi, sir. Thank you for this opportunity. So, what was the cost of procurement of cotton in Q1 and the realizations that we had for our products?

We don't share the, you know, the cost and all these specific numbers. So, spreads were the overall... Thank you.

Got it. So we generally have around 90 days of inventory. So now that you mentioned that the cost of procurement is going up, can we expect the spreads to go down now? I mean, even though you mentioned that this quarter is even stronger than the last quarter, I mean, the coming quarter. So, I mean, how is, yeah.

So, the thing is, you know, we always have an order book of 90 days, and the prices have gone up in the last 90 days. So, even the raw material might have shifted up a little because we keep on, you know, most of our purchasing was done three months back. So, the spread, because the order book, what we had last quarter was at a lower price than what we have right now. So, that will increase the spread. The prices have gone up by, you know, 10 to 10, about 10-11% in the last quarter.

Got it. Sir, in terms of annual cost saving of the solar project, so can you quantify the number for an annual run rate?

It should be around 15 crores with this new, with this solar park, yeah.

Got it. And in terms of the new CAPEX, which we are guiding to add to our production in Q3, so if we can get a range of how much additional production can we expect from that project, that new Greenfield project in Q3 and onwards.

Right now, we are not considering anything for Q3, but whatever we get will be bonus. But in Q4, we expect almost 30% to 40% of the revenues of the total potential to kick in.

Got it. Got it, sir. And my last question would be in terms of our product mix. So, has there been any change in the product mix if we compare year-on-year, and what is the percentage of value-added products in our total volumes in Q1?

So, you know, the definition of value-added is very different for everyone. So, we are, you know... There has been a slight shift in, not in the product mix, but maybe, you know, different blends, we are running more blends, we are running different counts, so, but otherwise, there's not been much different in what we do, what we did last year, other than we are doing it more efficiently, that's it.

Got it. So, most of the delta is just because of higher price realizations than any change in product mix.

No, it's a little bit of product mix and a little bit of better conditions because last two, three years were pretty dismal from the demand point of view. So, yeah, most of it has to do with the spreads and better efficiencies. We have worked a lot on our efficiencies as the number of people we employ has come down making a similar model. With the same production, and better, you know, keep the power. The many things which have stimulated really helped in the...

Got it. And sir, do you believe that these higher realizations are sustainable for the coming year? And have we also added any new clients to our existing clients? And have we also started exporting to China, where you mentioned that we are witnessing higher prices?

So, China is not like, it's not that we are getting higher prices in China, it's just that China has, you know, come as a big buy for the country as a whole. So, it has made the whole complex go higher. The demand has been more, so the prices have moved up. Talking about the new additions of clients, which is ongoing, you know, we keep on adding and subtracting the clients. This is an everyday phenomenon. So, there's not much change to it. What was your other question?

So, basically, I mean, most of the higher prices is due to the better demand in China. So, tomorrow, say for some reason, the demand environment in China again depreciates. So, I mean, is it likely that the prices would fall back again to the normal levels, considering that is the only catalyst right now?

Well, it is not the only catalyst, it is just, you know, it is given an impetus to it, and, you know, out of, you know, we make almost 400,000 tons every month, and China is just buying 20,000 tons. So, it's not even, you know, it's a very small, miniscule portion of Indian textile basket. So we, you know, this, you know, China can be, so we don't expect China to go out of the system because there are some inherent advantages Chinese have to import in India. But we see a lot of other factors coming in, you know, that Bangladesh is struggling with the spinning lately because of gas prices and capital prices, and then we see, you know, from next couple of quarters, we see, you know, the traction coming out of these FTAs, and we expect Indian demand to go up significantly. So, you know, these things will keep on playing part. Some things will go bad and some things will do good. So, we can't really predict what's going to happen. But overall, things look good.

And now with the U.S. tariff thing past us, did we see a jump in our exports to U.S. in this quarter, and what is the outlook for the financial year?

So we don't export anything to U.S. directly, but we have seen a lot of our vendors who export to U.S. say they have been... Their listing has gone up in the last six months, so we see a clear trend of those customers who were not buying and should be buying very less quantity from us, almost double their uptake. So, yeah, I think that has, of course, helped in the last six months.

Great. Thank you very much. I'll join the queue.

Thank you. Next question comes from the line of Pratiksh Sivastava with Nivesh Wisdom. Please go by it.

Sir, again congratulations on a great set of numbers. So, my question is of this 18.8% EBITDA margin, what can be attributable to this temporary important import duty? And more importantly, is this margin sustainable in long run?

So, see, this specific import duty which has come right now is not actually, this will help us in the future, because this has just happened right now when we had already secured our raw material for this year. So, this is, there is no contradiction for this duty for these numbers. But, of course, this will help us in our power numbers. And about sustainability of the margins. So, we can, you know, it's a very difficult market to predict what's going to happen, you know, in the future. But in the median term, yes, I think for next two quarters, we shall be in and around these percentages. And going forward, we as a company think that we will get a lot of lift from our Lisa plant once it kicks in next year. And that will definitely give us a better margin than what are the margins, right? Like what are the normal margins? So these might be a little elevated margins, but if you see, you know, the turnover has also gone up. So if you see the absolute EBITDA numbers, I think they shall be higher. But in percentage terms, we can, you know, be a little bit up or down. After two quarters, but I think the absolute beta number should keep on trending higher next year also.

Quarters, sir. Sir, just continuing on this, sir, we saw that even in FY22, our margins were very high, right? I think it went somewhere around 23, 28 percent, somewhere around that. Then again, it went from 23 to 26 and went back again from 9 to 13 range. Now, again, we are seeing UT. So, we see that, of course, you know, the business is highly cyclical, commodity-driven business. Now, with Odisha, Capex also coming up. What is management taking action to make it more structural business and not this highly cyclical commodity business?

I think, see, that year was an aberration. Actually, if you ask me, you know, 28%, you know, there was a lot of, you know, issues of supply chain disruption, and there were many duplication of orders. So that year was an aberration, but otherwise, you know, we expect our margins to, you know, in the long-term margins to stay, you know, after our resupply, to stay around 15%. So, what we are doing for that is, like, of course, we are putting up a new Greenfield project, which makes us geographically more competitive. We have better government support from there, and we keep on, you know, making ourselves lean with automation, modernization on time, and a lot of investment in our energy. So all these things that have no evil making us... More efficient, which will help us in having more consistent margins, around 15% for the company, even in bad times, and so, you know, these 28% and here was an admiration, so I won't take it as a benchmark for the volatility of margins, otherwise they stay between 12% to 14%, which is where we are comfortable, actually.

Got it. Okay. Thank you. Thank you very much, sir, and all the best.

Thank you. Next question comes from the line of Prerna Junjunwala with Ilara Capital. Please go ahead. Mr. Ginger Mala, please go ahead with the question. Mr. Injunwala, please unmute yourself and go ahead with your question. Since there is no reply from the line of Mr. Injunwala, we will move to the next participant, that is Raman KB with Frequent Investments. Please go ahead.

Hello, sir. Can you hear me?

Yes, please.

So, you mentioned that the spread during the quarter was 133 per kg. And you also mentioned that the raw material, the cotton prices are on an increasing trend. So, after two quarters, when our low-cost inventory gets used up, when we buy, will we be able to pass on the high cotton inventory to the end-use customer? I just want to understand whether this 133 rupees per kg spread, is it sustainable for, let's say, one or two years down the line?

It's very difficult for me to predict right now, and, you know, we are expecting, first of all, we are expecting cotton prices to come down from where they are, once the new crop comes in, and that should help in, you know, we don't need to go up a lot. And then, you know, in our order book, we all, you know, right now, our order book or whatever we did last quarter, you know, we didn't capture the real, you know, highest prices. So it was, you know, the impact of stock, the inventory game was very minuscule. So overall, what we see is that in last six months, if you buy cotton today and you sell cotton today, those... Those margins, those threads have also significantly gone up than what it was last year. So it is, you know, the impact of inventory is a little bit there, and it will be most of it will be reflected in the next two quarters rather than what it was in the last quarter. Because last year, last quarter, the price of cotton was lower than even the average price of yarn was also lower because we keep a 90-day book.

Understood, sir. And so, from the, with respect to new capex, which will be in, like, you are investing 1,000 crore in phase 1, where we will have 40% capacity addition. So, from what I can see, this will increase our quarterly revenue run rate by 250 to 300 crores. So, for next year, let's say FI 20A, what utilization are you expecting? Can it reach 96% utilization?

Of course, that's our, you know, that's our target, that we want to reach 96-97% utilization by the start of the next financial year.

Thank you, sir. And, sir, my last question is on the export side. Exports have been around 50% of our business, and it grew at a... Slower pace when compared to the overall revenue. So, mainly because of the Middle East crisis. How are you seeing the demand from the export front for the coming quarter? And will there be any significant impact in Q2?

So first of all, you know, Middle East crisis didn't have any much impact on demand. So this was all, you know... I think it's, you know, every quarter, there's a couple of percentages that, you know, we keep the similar kind of target for our exports. Sometimes we export more and sometimes we export less. But overall, our focus is always to go at, you know, 55 to 45, you know, within this range. So this will stay and we see a lot of demand from exports. So this is not something which was... By design, it's just that maybe some domestic models were instituted first.

Understood, sir. Thank you so much.

Thank you. Next question comes from the line of Bhavika Singhvi with Nivesha. Please go ahead.

Yeah, thank you for the opportunity.

So, I have a follow-up question on the previous one. On the export side, apart from Bangladesh, are we seeing any demand from other regions? And how are we doing apart from Bangladesh to other regions, including China? If you can comment on that.

Yeah, so demand, see, China and Bangladesh are the most prominent importers from India. So out of a basket of 15,000 tons, I think what we are doing right now as a country, I think around 75,000 tons from these two countries. So, we have a similar kind of threat when we talk about our exports. So, 60 to 70 percent of our export is to these two countries, and rest is divided between many countries. So, we have a similar kind of exposure as our country has for exports.

Got it. So currently, as you said that there has been like a slowdown in the Bangladesh, like this quarter particularly, Bangladesh have been like a mutated one. So can you give us the understanding that how Bangladesh we expect in the coming quarters and going forward? Are we expecting a recovery from there or like the demand scenario?

Ma'am, I think you misunderstood me. What I was referring to was the spinning sector in Bangladesh is undergoing a crisis. The demand, and because of that, it is helping us in stimulating more demand out of Bangladesh. So, Bangladesh is going fantastically well right now and continues to do that, and we expect it to do even better going forward. With all the crises they are having there of energy crisis and all these crises among the spending mills there. So, there is no problem with Bangladesh.

Got it. And the second question is regarding the exhibition which we have planned. So, when you are expecting it to be reflecting in the books and how much addition we are expecting from those exhibitions, the fabric and the garment division?

And that is still under progress. Unfortunately, it's taking a little more time than what we just asked, but I think it will take another, maybe another one quarter, and we expect the full impact to come, start coming, which will be around 250 crores from next financial year.

And the greenfield expansion, which we are expecting to go live in this next quarter, are we expecting any contribution in this financial year from that capacity, or it will be fully, like, commercialized from the FY28, like, it will start contributing from the FY28?

No, I think we expect to get handsome revenue out of that unit from... Quarter 4 this year also. And we expect to start getting it fully in some next financial year.

Okay. Yeah, that's all. Thank you so much.

Thank you. Next question comes from the line of Abhishek Shankar with ICIC Redress. Please go ahead.

Yeah, thanks for taking my question again. So, this is regarding the merger only. So, just a follow-up to that. So, I think you mentioned last time that, you know, you'll be doing it in way of cash or by insurance of shares. So, is there any update or, like, is it going to be a preferential issue or, you know, how much cash is going to, you know, the same? And other thing is, what will be the, you know, peak debt post-emerger?

So, the merger will be predominantly potential shares. There will be a small outflow of cash. I think it will be less than maybe around 25-30 crores. Now, Pete said, you know, post, I think merger won't. We have a lot of debt involved, so I think there won't be any incremental increase in debt.

Okay, yeah, thank you.

Thank you. Next question comes on the line of Pushkar Jain with Millie Capital. Please go ahead.

Hi, sir. Congratulations on a great set of numbers. I just wanted to know about the incentives that we are going to receive as part of ORECA investment. So, this can give some light on that.

You know, so we are going to get our 2.50 pesos subsidy on the power, whatever we use, and then we have a capital subsidy of the deep sense, and then we have some land subsidy, which we are going to get after we attain a specific number of employment, and then there is an employment subsidy, which is about 7,000 rupees for employees. So, these are the major subsidies, and of course there are other geographical advantages, like we can cater to the eastern part of the world, which we are doing right now from north, which will help us in cutting down our transportation costs.

Right. 30% of capital subsidy, right?

30% of the capital subsidy on the plant, because of the plant emission.

So, right. So, any amount that will...

There is no cap to it. So, whatever we spend, we get 30% of it.

Okay. Thanks a lot.

Mr. Jain, are you done with the question?

Yeah, yeah. Thanks a lot.

Thank you. Next question comes to the line of D.A. Jain, Mr. Fair Capital. Please go ahead.

Hi, Fairna. I want to be here.

Yes, please.

So, how much are we investing in the Greenfield project, and also can you explain the KPIC that we are targeting for the next two to three years?

So, ma'am, right now what we have announced is about 975 crores, which will be completed by the end of this financial year. And beyond that, so we have got land for, we can, you know, go up to, we can triple our capacity at Odisha. We have that kind of land there. So, rest, what we spend in the future in the next two, three years will depend solely on our balance sheet. If our balance sheet will allow, we will go. We have a lot of plans, so we are just looking at our balance sheet and we know what kind of leverage we want to take. So we will take those decisions as we feel comfortable with our balance sheet.

Okay, so, and with the improved realizations, how much growth are we targeting for this year and FI28?

So, this year, you know, last year our top line was around 2,500 crores. So, this year we are expecting somewhere around 3,000 crores. Next year, we see this with the new plant, we see this going up to around more than 4,000 Okay, so I got it.

Thank you and all the rest.

Thank you. Next question comes from the line of Raj Patil with RK Investments. Please go ahead.

Yeah. Hi, sir. Am I already back? Yes, sir. Congratulations on the great set of numbers. I have, sorry, but missed the previous part. I have joined this call late. So just wanted to confirm that post after the proposed forward integration, what percentage of revenue do we expect to come from the value added product, such as fabrics and garments over the medium term, let's say five to five years?

Five years is too long a time for me to tell you, you know, give an answer to, because we have a lot of plans for our government and fabric division, which we are, you know, which we will announce once, you know, we are more comfortable and we have more visibility. But in the next one year, we would say around, you know, around 10 percent.

Ten percent. Got it, sir. And my next question was with regards to the SORA project. So, as we have now commenced the operation, so have we started seeing realization for the anticipated power cost savings, and how should we expect the full benefit from Q2 onwards?

Of course, you know, we got only ten days of power from that project in last quarter. But, of course, we expect the full 90 days to kick in from this month, and, of course, whatever power will be generated, depending on what kind of weather we have, we will get all that benefit, start getting this full benefit from this quarter.

Okay, sir. And, sir, any guidance for this solar project for the full year?

So, that we had shared that it should be around 15 quarts.

15 crores. Got it. That was really helpful. All the best for the future. Thank you.

Thank you. The last question comes from the line of Pahal Sharma with DD Capital. Please copy it.

Good evening, sir. Thanks for the opportunity. So I have some questions with me. First is that given that current yarn spreads have reached multi-year highs and also such spreads have historically attracted fresh capacity additions. So I just wanted to ask that what gives management confidence that spread will remain healthy for a longer period.

So, we, you know, give a long-term guidance of 1% or a new project comes in a guidance of 15% and we stick to that. So, that is a safe number to give. But we see, you know, upward bias towards it because of many reasons, you know. A lot of consolidation is happening, and the difference between the margins of small clear and big clear is, you know, increasing. So, you know, and we don't expect, you know, so this market has been pretty good for the last six to eight months, but we haven't seen any projects which have been announced. And we also announced this project much before the things got good, because we go by our balance sheet. So we don't see a lot of rush for people to put in spindles in this environment, and we don't see everybody doing similarly well because right now a lot of benefit is to the big players because of the compliances. The Europeans need all the compliances, which is not very easy for small players to spend a lot of money. We have spent almost 100 crores in the last two-three years for compliances. So, all these factors which are becoming more important lately are giving some edge to big players. So, I think we feel that this will... Help us in maintaining these margins in the next, in the cycle we are in now, and we might not, you know, the 18, 19 percent, 20 percent might not be sustainable in the long term, but we expect them to be healthier than where they were in last two, three years going forward next year.

Understood, sir. And my next question is regards to, like, could you elaborate on the strategic rationale behind the proposed acquisitions of Marvel Dyers and Subhagia Sales? And also, like, by when do you expect these businesses to start contributing meaningfully, like, to revenue and the profitability?

So, of course, the strategic initiative is just, you know, because these are the businesses we have been for the last 30, 35 years, but we have not scaled them up. And now, you know, looking at what is happening around the country with all these FTA signings being signed and everything, we see a huge opportunity in these businesses. And so, this acquisition will give us a foray into... These downstream businesses and our company, the financial strength of our company will give us a method to, you know, hire better talent, more talent, and to make a roadmap for future growth of these businesses. We are working on that, and I think by the next six to eight months, we shall share with you the vision for what we have for our downstream businesses. But in the short term, we expect these businesses to start contributing to the tune of 8 to 10 percent to our top line and, you know, anywhere close to the similar kind of what we have in our bottom line for next year.

That's a great place. Thank you so much.

Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question-and-answer session. I now hand the conference over to the management for closing comments.

Thank you so much. Thank you, ladies and gentlemen, for joining the call, and we appreciate your continued recognition of us, and we hope that we continue to deliver as we did this quarter going forward. Thank you.

Thank you. On behalf of Sportking India Limiter, that concludes this conference. Thank you for joining us. You may now disconnect your line.