SKY Gold & Diamonds Ltd

So we are at current 3.7% PAT and we are expecting to go to 4.5% conservatively by FY ’27 March. EBITDA, we are now 5.7% approximately, 5.67%, and we will go up to 6.2%, 6.3% of EBITDA, conservative 6.2%.

Okay, great. And sir, second, considering this GML part, so basically I guess GML rates were volatile, as you rightly pointed out, but now you gave the comment that we have started receiving favorable rates. So, can you elaborate like what is the GML rate that we are currently getting and what is the proportion of inventory that is funded by GML now and what is the target to take it up?

So already we were using 15%, approximately 15%, 20% earlier. We surrendered that GML before Trump tariff and all, because the availability was dried up and also the rate was gone up in the last quarter to 8%, 9% to 10% is also gone up. So we stopped using last quarter. And this quarter, we are seeing it has stabilized to 5% now today's rate was 4.75% and they are telling that in one months’ time it will go down to 3% or 3.5%. So availability is also in the normal phase now. Earlier quarter availability was not there for two to three, three days.

So, now we are planning, Siddharth Sipani also joined us who has good experience in GML, he has done a good meeting with all bankers and we are planning to use from July next quarter.

This quarter has already come to an end, with 30 days pending. But in 2nd Quarter we will start using it and rates will be approximately 3.5% to 3.7% as per my assumption. It will not come down to 3% as earlier in a short time, but in a longer time, in the 3rd Quarter or 4th Quarter it will come up to 3%. So we will be slowly starting using it in 2nd Quarter.

Page 10 of 18 Okay. Okay. And sir, what proportion of inventory do you plan to fund via GML? So earlier as you said like in quarter four it was 15%-20%. So what will be the proportion that you are now targeting for GML?

We have a plan to go up to 80%, because bank also gave up to 90%, there is a cap of 10% but we plan to go up to 80%-85% in three, four quarters from here. So 1st Quarter we are targeting is 20%. And again, 2nd Quarter, we are targeting 35%-40%.

Okay. Okay, great, sir. And congratulations, all the best. Thank you, Bharat ji. Thank you.

Thank you very much. The next question is from the line of Agastya Dave from CAO Capital.

Sir, thank you very much for the opportunity and providing such a extensive commentary at the start of the call. Many of the questions got addressed there. I had a question about the expansion and when it will get operational, but I guess I will have to wait till Q1.

We are planning to start the facility, making the facility by 2027 opening and to conclude it by 2028 opening. So, we are on it, already Siddharth joined last month only. We are preparing all these plans and all. In the next quarter, by the June quarter we will be with all this plan going to 4x from here. So we have a plan of turnover of Rs. 27,000 crores. So we will be giving this plan after June quarter surely.

Right. Sir, I will wait for that sir, and I will keep my questions till that point. Sir, my question was on the export order that you have gotten. That's a single very large order for you. What is the scope with the customer going forward? I mean, after you reach the 200 kg mark, like can that customer give you a bigger, I mean, can you have a bigger wallet share with that customer?

And also, what is the overall addressable market here? How much can you do in exports and how many such opportunities are there which you can easily touch going forward? And let's take probably over the next two to three years how many such opportunities can come your way?

Yes, sure. So this is just a strategic relationship with the customer in Malaysia, and he came to our facility and given a confirmation of order of 200 kg per month. So we have already delivered 60 kgs. So this is on the basis of the advanced USD he is providing to us and we are making it.

Again sales is created. This is not like job work. Gold cannot be sent by advanced gold, there is some process in that. So he is sending U.S. dollar advance and we are sending already one tranche of 60 kg has gone and they are into QC model and all. So this run rate will come by in three to four months from here. And he is a distributor, we have appointed him a distributor for Malaysia, totally Malaysia country, we have given a whole and sole distributor to him.

So again, exports, there is a huge opportunity because we are that's why opening office in Dubai, because the reason behind opening is that there is a difference of dollar rate here. When we get export metal in India from bank, we have to pay some $4-$5 premium here and we charge same to the customer. Again in Dubai, gold is cheaper by $10, approximately out of 365 days, 350 days, $10 cheaper because gold comes from every country in Dubai. So they want the rate what is going in Dubai. So we will be picking up gold in Dubai and sending it here for job work, and passing this rate to customer, this difference of the $15 rate which is very hurdle for going to more export if we want to do we have to give the comfort of this dollar to them.

So we will get the gold in Dubai and send it here for job work. And this will give a comfort to the customer. They are getting the same rate of gold as in Dubai. So this will scale our business.

Many customers will be added in this. So exports has good potential. We are targeting 20% from here in this year from Dubai, Singapore and Malaysia. Already said that in Malaysia we have pointed the distributors the whole time. And I think for exports, Darshan bhai, can also give a comment on this.

Yes. While looking the demand of Indian jewelry in the export market, it is going quite fantastic.

Last year also you can see it was very good performance in the export market for us. So going forward, Dubai market, GCC countries like Bahrain, Oman, Qatar, Saudi, all are growing at a large scale. So we are getting good demands from the clients over there. So specially we are going to start the office in Dubai for to serve them more better, to give them more better services, and to give the comfortability of logistics and everything. So Dubai, Malaysia and Singapore, these areas are pure core market for our jewellery wherein Indian Diaspora is main at purchasing our jewellery.

So we are focusing main on increasing our export share in this. Again, the corporates in this international market like how we are conducting business in Indian market with the corporates, the international corporates also we are planning to make a co-creation and tie up with them to give them the new, new designs and multiple Indian designs which are in very huge demand right now in the international market. Thank you very much.

Understood. Sir, so my understanding on this matter is slightly, I mean, non-existing basically.

But when you will import gold from Dubai and send like the manufactured piece from India, there will not be any duties, any taxation on you?

Already, duties are not here. We get without duty bullion from Indian banks also. But here there is a premium of $4, $5, it's very nominal. But in Dubai gold rates are discounted by $10. So we have opened a subsidiary and our funds will be there, they will purchase gold from Dubai and send to Sky Gold, Mumbai, for a job work, and we can deliver from there order.

So that will not attract any taxation from Indian government?

Page 12 of 18 No, no, no taxation. We are charging the making charge from here only. So we are paying tax here in India.

Yes. So that tax you will be paying here, but on gold itself -- Normally big company practices this type of model.

Understood. So then the market can be very large for you if you can do it the way you are saying.

Yes. Yes, because some big distributor there is hurdle of rate of Indian premium of $4, $5 and they are getting discount at $10 in Dubai for the gold rate. So we will be able to trust that customer also.

Understood, sir. Sir, one last question again on export, so what kind of marketing, you described that you are bringing in people to take care of the marketing and sales specifically, but on this export opportunity, what kind of presence do you have in terms of like your team members, how many people are like catering to export markets exclusively? And how are you going to build that team?

Yes. So I will elaborate on this. We are taking experience sales team from the Dubai market who are having experience of the Dubai market for last 30 years, last 20 years. So two persons we have selected for our office who are having collectively experience of selling 500 kgs to 600 kgs of gold. So one is experienced in the local GCC markets and the Dubai market and the local GCC countries. And the other one is having expertise in the international market like Far East Asian markets are there, African markets are there, Australia, Canada, everywhere. So we are having a mix of good sales people. They will give good marketing services to the international market and everywhere. And we are doing co-creation with them. And the local retailers there in Dubai, Saudi, Bahrain, they are looking for co-creation so we will provide them the design they are looking for their market.

Excellent, sir. Thank you very much for the opportunity, sir. And all the best. You have some wonderful plans, I hope you are successful. Best of luck, sir.

Yes. Thank you. Thank you for your blessing, sir. Thank you, sir.

Thank you very much. The next question is from the line of Palash Kavale from Nuvama Wealth.

Page 13 of 18 Hi, sir. Thank you for the opportunity and congratulations on the very good set of results. Sir, my first question is, is it safe to assume that in FY ‘26 you will be doing around 4% of PAT margins?

So again, yes, because of GML we will be saving 0.3-0.4 conservatively, so we can reach 4%. I think it's reachable in 2026.

And sir, any new customer additions for this quarter are planned or you have added in last quarter?

Already in March quarter we added Aditya Birla, and this quarter we added Reliance, added means we have already done the agreement phase, and they are going to order in one or two months, the processes of two, three months’ of onboarding and all. So we added this one. Again, PMJ jewelry, we added PMJ Jewelry who has 50 stores in Hyderabad, in Andhra. We are launching 24 carat jewelry with them. We have made a 24-carat exclusive jewelry which is made in China majorly, in India is very rare. So we have an expert in our production team, he has made it possible. So he we have made rings also, necklaces also, earings also, which is very difficult in 24 carat. So India has allowed 995 gold to hallmark as 24 carat jewelry. And he will be quoting this jewelry in all the 50 stores from August month. And he has done a tie up with us for 24 carat jewelry. So we have added PMJ jewelry, like Mari Jewellery in Hyderabad was 12 stories, he is planning to go to 30 stores.

So we have concept. In large corporate we have majorly all clients, CarateLane also, Tanishq we do not have. But again, we are concentrating right now on 10-15 store those who are concentrating in the region. Like Kerala those who have 10 to 15 stores we have onboarded them. Andhra those who have 10 to 15 stores, and they have an expansion plan seeing this corporate growing, they are also growing to 30 store, 40 store, 50 store. So we have concentrated this also in last quarter, mid corporate segment also we have concentrated much because seeing the opportunities they are also availing the bank loans and facilities and expanding the stores.

So again, large corporates, I have already told, CarateLane we have onboarded two quarters before, last quarter Aditya Birla, and this quarter Reliance. So mid corporate and small corporates are adding every quarter. Those who have two to three stores also we are adding because they are also going to have 7 to 10 store in two, three years or something. So all the blended business we are getting from them.

Okay, that's really helpful, sir. Sir, again, on your guidance of Rs. 7,600 crores by FY ‘27 with 4.5% margins, that comes out at Rs. 340 crores of PAT from your guidance of Rs. 250 crores which was there. So, does it also include the revenue and PAT numbers from the recently acquired entity?

Page 14 of 18 No, we have not given the guidance of this one. After June quarter acquisition will be over and we will add the guidance of this in this. This will add up to your gross margins also and EBITDA also will be improved, because this company operates on advanced gold business totally.

Okay, okay. And sir, you plan to be operating cash flow positive in FY‘27, right?

Yes, yes, we are. We will be cash flow positive in FY’27 March.

Yes. Okay. That's really helpful, sir. Thank you. That's it from my side. All the questions have been answered. Thank you.

Thank you very much. The next question is from the line of Vijay Chauhan from RH PMS.

Yes. Thanks for the opportunity and congrats on the excellent set of numbers and good execution. So looking at the commentary, it is wonderful. So, is it fair to assume like going ahead let's say we go for the expansion that we are already targeting, so exports will contribute significantly more than the domestic players in the incremental volume share, is it fair to assume?

No, we mostly rely on Indian market because it is a huge market, 140 crores of population, there's a huge potential in India. But export again has a different potential. So, it will not be like we are going for 60%, 70% export. But again, there can be a 70:30 ratio. So going ahead, India can be 70%-75%, and export can be 20%-25% or 30%. So India is a huge capacity and we are very small for it because we are at now Rs. 3,500 crores turnover and India has Rs. 5 lakh crores- Rs. 6 lakh crores of market in India available, organized market, again, unorganized market is Rs. 9 lakh crores. So there will be a ratio of 25:75. I think going ahead huge unorganized market is shifting to organized which is Rs. 9 lakh crores unorganized market is available. So, that will be the ratio.

This capacity expansion, our sales will come from India also, exports also. Again, from mid corporate we are expecting a good sales because many 10-12 stores which are not in the market, names are in the market but they are growing very fastly. And again, from organized manufacturers we can expect good advanced gold business which can help us to achieve this 4.5 tons, advanced gold business will help us to achieve this which will need a lesser working capital in this huge facility. So this facility will show our strength of manufacturing which will be standalone, one of the largest in India in Coimbatore.

It is one of the largest in India, it is 5 lakh square feet. And we will be standalone one of the largest in India if we build up this facility and go in this. So we have aim to become a 4.5 tons, at least in India you can see 800 tons of gold is imported and 600 tons of jewelry is made, 200

Page 15 of 18 tons of bullion and coins are made. So out of 600 tons we want to be somewhere about 7%-8%, 9% of the market share, somewhere in this market share. So this will drive from existing large corporate also and mid corporate also from export also advanced business also.

Excellent. And is it fair to assume, like this year's exit run rate per month will be more than 650 odd, FY ‘26?

Yes, 100%, April was very good quarter for us, Akshay Tritiya was there. And as we have given, we will be run rate of Rs. 1,200 crores, Rs. 1,300 crores per quarter.

Okay, okay. And FY ‘26 exit run rate can be, I am asking per month it will be like 600 plus, 650 kg per month when we complete FY ’26? Yes, 650 to 700 kgs per month, yes.

Okay. And then lastly when it comes to exports, so can you elaborate like the design differences or the preferences they have versus the domestic preference? And how we are building, like if there is a substantial difference in terms of designs on jewelry side, so are we building some differentiated design portfolio for export market or there is no much difference?

No, no I will elaborate on the design aspect of the international market. Moreover, we are specialized in the South Indian jewellery market, like we have a very good deep knowledge of the South Indian jewelry market. That jewelry is going on very good in the international market.

Apart from that, there are some concepts and some regional specific and country specific designs that or we are also building on with them, we are doing co-creation with them. We have developed a design studio in Andheri for specially developing the export oriented designs which are special and new in the international market. So yes, some of the designs from the existing portfolio and some of the new designs with co-creation from the international clients we are developing. So, as in all, we are a design based company, we are a co-creation company so we have to provide best designs to the customers.

Right. And those designs will be, let's say, whatever we create new designs, so those will be exclusive to export players or we will be also able to launch in Indian market?

No, no, I can add up to Darshan bhai. We have 150 designer team, every 10-15 batch of designer head and designer team works for a corporate or the segment. So, two verticals are working for Dubai and Singapore, Malaysia region. And we keep a lock-in for the design. Like one of the public listed company we started lighter jewelry segment for them and we made a special design for them 1,500 design and we keep a lock-in for them. So we do not use the design for Indian market, because there should be some specialty and monopoly should be given to them. So we specially designed for these countries and make for them and take the order from them only. So

Page 16 of 18 out of 10-15 vertical one or two vertical was for the exports, three, four, five verticals for the major corporate, then mid corporate and all mix.

Sounds very clear. So thank you for all the clarifications and good luck for the future. Thank. You. Thank you very much.

Thank you very much. The next question is from the line of Snehadeep H, an individual investor.

So recently gold prices hit its record high, so are you facing any decline in your client side and in the end customer side or any changes?

So there are inventory changes going on. You can see our inventory falls below, we are into lightweight jewelry segment where impact is very lesser. Heavy jewelry, Rs. 3 lakhs, Rs. 4 lakhs, Rs. 5 lakh, Rs. 10 lakhs impact is there 20%. So our lightweight jewelry falls below 1 lakh 80%, and 20% below Rs. 2 lakhs. So there is an inventory, the customer going for 10 grams are going for 9 grams. We have brought in eight to nine 3D printers last year only when we came into this capacity. So we are able to reduce our weight by 15%, 20% in the inventory. So inventory shift is there, ticket size shift is there, but number of pieces are gaining. So our average ticket size was Rs. 55,000, Rs. 60,000 earlier, it got up to Rs. 45,000 Rs. 50,000, and number of pieces are increasing. So lightweight jewelry is very lesser impact because of the rates and all. But again, 18 carat we are expanding very much. 18 carat we were at 3.7% last to last year. Now this year we at 6.6% this quarter we closed. So, 18 carat market share is going up with the gold rate, so again this is helping to accelerate our volumes and all.

So are you looking for 14 carat in your portfolio?

Already we have started a sample for two customer in lab grown diamond. We had added one customer in lab grown diamond last year. Again, two customers, I will not take the name because we have not done an agreement, already we are in the phase for it, but we have developed a 14 carat sample for them and they have approved for us. Both are in the gold diamond jewelry in the channel stores. So we have developed 14 carat for lab grown diamond jewelry. And I think some market share we will gain for 14 carat also in India because of the rate and coming modern youngsters like teenagers of 18 years, 20 years, 25 years nowadays, 15 years, 16 years boys and girls are wearing 18 carat cars and 14 carat. Earlier our parents not used to allow them to wear.

But nowadays, lightweight July and white gold and colors are there. So they are able to purchase, and they have purchasing power right now. And they are also shifting to 18 and 14 carat. So we see some market of 14 carat going here.

Okay. Thank you, that was from my side. Thank you so much.

Thank you very much. The next question is from the line of Bharat Gianani from Moneycontrol Pro. Please go ahead.

Yes, sir. Thanks for the opportunity once again. Just one clarification, we had about, I mean, current investments to the team of about Rs. 100 crores, I am not aware of the number in FY ’25. But then for GML I guess you have to keep that as a collateral if you want to increase the GML. So just wanted to get a sense that if we keep that GML thing for the new plant the CAPEX that we are going to do Rs. 100 crores, I mean, I just wanted to check if the security deposit we will be using for GML then how will we do the CAPEX on new plant? So that was just my question.

So already we have acquired land and building here which will be placed to the bank and we can take a Rs. 300 crores GML from them, which will be at 3% or 3.5%, it will be really beneficial for the company. Again, for the CAPEX part, already I mentioned we are in the planning and our total detail will come with the June PPT what will be the CAPEX and how much years we will do. From internal accruals mostly it will be done. And per year how much it will be done from the profit, assuming 2027 we are at Rs. 250 crores-Rs. 300 crores PAT, so we will be using from that also some internal accruals. But we have not strongly made the plan, we have already acquired and we will be making this facility 100%. But we will come up with all this CAPEX plan and the 2030 plan, in June quarter we will give the glance over 2030 how will we reach total capacity, a turnover of 4x from here, and what will be our profit margin, who will drive the sale, how we will achieve this after 2027, how will this go to 1.5 tons or 1.7 tons, and again 2.5 tons and 3 tons and 4 tons. So a plan is totally in process and we will be giving up in June quarter.

Okay, sure. We will wait for the same. Thanks and all the best, sir. Thank you.

Thank you very much. The next question is from the line of Palash Kavale from Nuvama Wealth.

Yes. Sir, thank you for the opportunity again. Sir, when can we expect this 200 kg per export order to like go to 200 kg per month, by which quarter?

Already we are at run rate of 60 kg every month we get the order, it will be gradually increasing.

This month also we are getting 60 kg advance USD from there. Gradually in 12 months we will be at 200 kg run rate. I think in one quarter we will be at 100 kg and 150 kg in July quarter, 100 kg run rate. And again, December quarter we will be at 150 kg run rate and March quarter will be 200 kg.

Page 18 of 18 And sir, any other player in India who does similar kind of exports to distributors? Like you mentioned one of the competitors who is very big compared to us, but do they also do such kind of orders or you are the -- Already, Emerald Jewelry who is very big than us, he is in exports also, in domestic also, and he is also exporting. And again, we are second largest in casting jewelry, we are also trying to achieve this export market and take a capture of this one.

Okay. Okay, that's it. Thank you so much. Thank you so much. Thank you all of you.

Thank you very much. Due to time constraint, that was the last question. On behalf of Sky Gold and Diamonds Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.