Mallcom (India) Ltd (MALLCOM) Q3 FY23 Earnings Concall Transcript

Mallcom (India) Ltd (NSE:MALLCOM) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

Shyam Sundar Agrawal — Chief Financial Officer

Rohit Mall — General Manager

Analysts:

Purvangi Jain — Valorem Advisors — Analyst

Dhwanil Desai — Turtle Capital — Analyst

Ankit Gupta — Bamboo Capital — Analyst

Adityapal — Motilal Oswal Financial Services — Analyst

Alisha Mahawla — Envision Capital — Analyst

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Presentation:

Operator

Ladies and gentlemen, good morning, and welcome to the Mallcom India Limited Q3 FY23 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. [Operator Instructions] I now hand the conference over to Ms. Purvangi Jain Valorem Advisors. Thank you and over to you Ms. Jain.

Purvangi Jain — Valorem Advisors — Analyst

Good morning, everyone, and a warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Mallcom India Limited. On behalf of the company, I would like to thank you all for participating in the company’s earnings conference call for the third and nine month ended of the financial year 2023. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today’s con-call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ from those anticipated.

Such statements are based on management as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decision. The purpose of today’s earnings conference call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review. Now, I would like to introduce you to the management participating in today’s earnings conference call and give it over to them for their opening remarks.

We have with us Mr. Rohit Mall, General Manager, and Mr. Shyam Sundar Agrawal, Chief Financial Officer. Without any further delay, I request Mr. Rohit Mall to give his opening remarks. Thank you and over to you, sir.

Shyam Sundar Agrawal — Chief Financial Officer

Thank you, Purvangi. Good morning, everybody. It is a pleasure to welcome you to our Earnings Conference Call for the Third Quarter and Nine Months ended of the financial year 2023. In the interest of some of the people who are new to the company, let me first start by giving a brief overview of the company. Mallcom India Limited is a four-decade old company and India’s largest manufacturer and distributor of personal protective equipment. It provides a one-stop solution for manufacturing one of the widest range of head-to-toe PPE.

The company is also one of the largest exporters of PPE from India exporting to over 55 countries across six continents. We have an expansive manufacturing footprint with 13 more production facilities spread across India. Over the years, we have focused on backward integrating wherever possible, resulting in significant cost-savings and gradual margin expansion. Our integrated manufacturing facilities module assemble customized and packages the different head, body, hand, and feed protection products. Each of our facilities has in-house labs that perform safety testing and ensure compliance with international quality right through the production cycle.

Now, I will request Mr. Shyam Agrawal, our CFO to brief you on the company’s financial performance, after which I will brief you on the operational highlights. Thank you, Rohit. And good morning everyone. Let me first brief you on the consolidated financial performance of the third quarter of the financial year 2023. On a consolidated basis, operating [Indecipherable] was around INR100 crores, which grew by approximately 8% year-on-year. The third quarter is usually a lean season and it was also a result of the extended monsoon season and festive season in India as well as around the world. EBITDA improved and stood at around INR14 crores witnessing a growth of 13% year-on-year. EBITDA margin stood at around 14.43%. EBITDA margin improved in quarter 3 FY23 due to higher sales realization and cost optimization.

Net profit reported was about INR11 crores, which grew by approximately 40% year-on-year. Net margin stood at 10.82%. For the nine months under review, we reported consolidated operating revenue of around INR298 crores, which grew by roughly 90% year-on-year. EBITDA was reported at around INR42 crores, which grew by 17% year-on-year. EBITDA margin stood at 14.04%. Net profit was reported around INR27 crores witnessing a growth of 22% year-on-year. Net margin stood at 9.13%. Now, I would request Mr. Rohit Mall to explain the operational highlights for the quarter and nine months.

Rohit Mall — General Manager

I’m happy to announce that during the quarter, we were awarded status certificate of 3-star export house by the Director General of foreign trade Government of India, a significant over the earliest status of to start export house. We also received a statutory approval for amalgamation of the 100% subsidiary company best 50 Private Limited, which will result in better synergy and cost-efficiency in operations leading to better margins for the product segment. There has been a significant increase in productivity and shipment from subsidiary company, Mallcom safety Private Limited with operational efficiency, Now, almost 75%, which should result in higher volumes and earnings in the future. We have also been allotted land parcel of 40,000 square meters, my God Jarden Industrial Development Corporation at which we plan to utilize for our future expansion plans in due course. Lastly, the expansion project and contract WellChem goal is now nearing its first phase of completion with facilities ready-to-use and should be contributing more to the combined level of operation. Thank you. With this, we can now open the floor to question-and-answer session.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Ladies and gentlemen we will wait for a moment while the question queue assembles. Our first question is from the line of Dhwanil Desai from Turtle Capital. Please go ahead.

Dhwanil Desai — Turtle Capital — Analyst

Congratulations for the decent set of numbers. The first question I have is, so, I think you mentioned in your operational highlights that about facility is now operational and efficiency. It’s growing in and also could expansion is completed. So we grew this year our revenue by. I think 17 18 percent. So both these specialties kicking-in. How do you look at growth for FY 24. And second question is. On margin, so. I think we did very decently. On margins, also with scale coming in and operational efficiency going gaming. Subsidiary, do we expect. Margin to improve from here. Thanks.

Rohit Mall — General Manager

Thanks, Dhwanil. I’ll address the growth question and I’ll ask Mr. Shyam to address the margin question. So let me just clear, for the [Indecipherable] project that you also mentioned in our previous calls that it is not only an expansion, it is kind of a shifting of capacity from our existing facility to a newer facility. So we’ll not yet see the expansion, the expansion will come gradually from that facility. For the Ahmadabad facility, definitely the — that’s an expansion and we are looking and — and only that is only for workwear. So we are doing 19%, 20% right now and that’s something that we are expecting going ahead as well. Becuase the market also needs to react in a similar manner, which we see more or less that it’s doing. So, I think the growth will be on similar lines that we are exceeding right now.

Shyam Sundar Agrawal — Chief Financial Officer

Yeah, just to add on to the Rohit’s reply, in case of Ahmadabad facility, yes, the turnover we see it would be improving. We project to close this year by around INR20 crores for the year and next year target from this so between minimum INR30 crore. And in case some [Indecipherable], yes. We have — it needs all lifting of facility and adding to that capacity. So, this year hardly there would be increase but definitely in FY24, we should have additional turnover from this unit also. And talking about margins, yes, there is operational efficiency coming in with the increased volume also. And so the margins EBITDA is in the range of 14% to 14.50% and you will see that product mix also is changing, so more of [Indecipherable] garment which [Indecipherable] value added product which we are doing. So we expect to maintain this margin as minimum. And then we would like definitely to see that it improves.

Dhwanil Desai — Turtle Capital — Analyst

Okay. And if I can ask one more question. So Rohit, if you can talk about the demand environment, both on domestic and export side and also I think this Australian treaty is now operational. So any benefit that we see kind of first signs of that kind of helping us in terms of getting Australian markets? If you can talk about that?

Rohit Mall — General Manager

Okay, so for international demand to be of say last six months has been a little sluggish. We’ve seen the effects of Ukraine-Russia war. The effects of higher energy prices, and winter and festivities coming in. So there is talks of recession, all probably actual recession there. So that has been relatively sluggish, that we have seen. But we expect to — it to improve in the next FY. However, for the domestic market, the demand has been good and we have seen a [Indecipherable] manufacturing indexes also improved. So the demand has been strong and consistent, and that’s where our focus is also to increase our share from the domestic market. So that’s the international domestic demand. And with respect to Australia FDA, yes, that’s been signed and implemented, and now we are shipping most of our products duty-free to Australia. We are planning to increase our footprint in the Australia and New Zealand markets. And in fact, we are traveling in the coming days to get — to do some business development from that market and expect to give some more market share in that market.

Dhwanil Desai — Turtle Capital — Analyst

Sir, just one clarification. You said similar growth of 17%, 18% at the company-level is what we are targeting for FY24, right?

Rohit Mall — General Manager

Yeah. I think it’s similar growth level. That’s what we [Indecipherable].

Dhwanil Desai — Turtle Capital — Analyst

Great, thanks. I have more questions, but I’ll come back in the queue.

Operator

Thank you. Our next question comes from the line of Ankit Gupta from Bamboo Capital. Please go ahead.

Ankit Gupta — Bamboo Capital — Analyst

Yeah. Thanks for the opportunity and congratulations for a decent set of numbers. Rohit, just wanted to understand, we have [Indecipherable] segment, government segment, and hand-protection glove segment, largely three divisions that you focus on. With the kind of growth which was — with the kind of — the kind of orders we have in hand, how do you see this mix changing over the next two, three years? Will it remain the same or will it change? And in packing order, if you can talk about how is the margin differential between the three segments?

Rohit Mall — General Manager

So in terms of product mix, I don’t see it changing a lot. Only thing is we are trying to add the head protection segment also, which is almost negligible right now but we plan to increase some share from that mix. But I don’t see these — we are — that’s why we had a one-stop solution. So we are trying to have all of them issues be almost 30%, 33% and that’s what we’d had. So if the helmet comes into picture, maybe 5, 10 years we’ll see 25 from all of that — all of the four segments. That’s we are aiming at. Respect to margin, it’s — It’s more of a — it’s not just product segment-wise, what’s our margin, it’s also depends on — on the product segment has been sold in India or outside. So the brand could play the role [Indecipherable] margin. So leather we’ve, which is — a lot of it is commodity can be a very less margin product outside. But can be still decent margin product in India.

But overall, I think the margin, it’s more to what — the margins are higher towards workwear. Safety issues in natural gloves, which are more value-added products and more [Indecipherable] products. So let it the leather part will be a relatively margin — less margin product in our overall product basket is what we can say.

Ankit Gupta — Bamboo Capital — Analyst

All right. And how much will that be contributing overall to our sales or in hand protection segment?

Rohit Mall — General Manager

Shyam Ji, if you have that number?

Shyam Sundar Agrawal — Chief Financial Officer

Will you repeat the question?

Ankit Gupta — Bamboo Capital — Analyst

Yeah. How much is leather gloves contributing to our overall sales in terms?

Shyam Sundar Agrawal — Chief Financial Officer

Yeah, so — so I just wanted to clarify that in the hand segment what we see now that the state of leather gloves the percentage of this will be rising. So going forward so that is one — as of now, it is around 20% of our overall turnover, leather gloves, which should be shrinking going forward. Yeah.

Ankit Gupta — Bamboo Capital — Analyst

Sure, okay, okay. And Rohit said on earlier calls and as per our discussions we have seen that you have highlighted that in garments also there are certain products, fire retardant products and all in the garment, which are extremely high margins. So do you think the — how much is that proportion for relatively higher-margin product in the garment segments and what is our — and do we have plans to expand this capacity further and how do you see this segment growing for us over the next two, three years?

So, I would say as far as and all these specialized garment, it’s still 10%, 20% of the total garment turnover. But that’s some — an area where we are focusing on more so that we increase mix from these segments more and also China has been predominantly the market-leader in these segments. We are trying to get that market from there. But however, it requires a lot of raw-material being made in India, which still, you know, India is far behind China because a lot of fabrics not being consistently being made in India.

So we are regularly working with the mills to ensure that we have the fabric from India, and that’s when we can be more worthy in the international market. So it’s — it’s a long game, I would say, and we need to have the entire supply chain in India to be able to make a real dent in this particular segment. But we are trying nevertheless, some imported fabrics from local fabrics to ensure more value-added products in our workwear segment.

Sure. Sure. And In terms of expansion, I think Mallcom Safety also had some Phase-II expansion at the Ahmadabad facilities. So, if you can talk about how much will be the expansion and how much can be the revenue generated from the second phase? And Kharagpur also had second phase of expansion, if I’m not wrong. So what are our plans for that and how much will be the capital outlay on that and what can be the asset turns for both these projects?

Rohit Mall — General Manager

Yeah. Shyam, if you could answer?

Shyam Sundar Agrawal — Chief Financial Officer

Yeah. So in case of Mallcom Safety, as we mentioned that now the productivity level is around 25% and with the existing facility only with target at least INR30 crore turnover in next FY, next financial year and further expansion in this unit, yeah, that is possible. It’s for requirement, we can do because the infrastructure is ready and only we put to install the machineries which is — it can be done anytime. So as per requirement we will be doing that.

And [Indecipherable], first phase is over. So now we are building up the garmenting facilities there, some knitted club facility there, some helmets facilities there, and we plan to add on further capacity which will be happening in next year also. So there would be additional turnover coming from there. And for the expansion in Gujarat, as we mentioned, we have got allotment of land [Indecipherable] in tunnel two. And that is in Mallcom India Limited.

And there we plan to have factory manufacturing mainly synthetic gloves and other PP items which we target mostly for local markets. So that is something — something will be happening in Mallcom India Limited.

Ankit Gupta — Bamboo Capital — Analyst

So Kharagpur second phase expansion and Sanand expansion in our Mallcom India Limited will have — will be happening finally over next year, is what you’re saying?

Shyam Sundar Agrawal — Chief Financial Officer

The second phase Kharagpur is not yet planned. But Sanand too we have plans. Yeah. It starts from — we get the land by March and then next year we will be constructing the factory there also.

Ankit Gupta — Bamboo Capital — Analyst

Is it expected to be completed and how much capex are we putting in?

Shyam Sundar Agrawal — Chief Financial Officer

Yeah. It’s around the total project is — it’s in first phase we have total capex plan of INR60 crores. INR23 crores which was in for land right now. And then we will have building and MSME there installed over the next three to four years’ time.

Okay. INR60 crores is spread over three, four phases or in first phase itself we will be doing INR60 crores?

Yes. Yes.

Ankit Gupta — Bamboo Capital — Analyst

No, no INR60 crores will be spread across two, three phases or in first phase itself we will be doing INR60 crores?

Shyam Sundar Agrawal — Chief Financial Officer

Yeah. It’s within first phase only. First phase spreading over four to five years. Yes.

Ankit Gupta — Bamboo Capital — Analyst

Okay. And how much revenue can we generate from this Sanand facility?

Shyam Sundar Agrawal — Chief Financial Officer

Pardon?

Ankit Gupta — Bamboo Capital — Analyst

How much revenue can we generate from Sanand facility?

Shyam Sundar Agrawal — Chief Financial Officer

We target INR100 crore turnover from this unit.

Ankit Gupta — Bamboo Capital — Analyst

Sure, okay. Thank you, and wish you all the best.

Operator

Thank you. Our next question comes from the line of Aditya Pal from Motilal Oswal Financial Services. Please go ahead.

Adityapal — Motilal Oswal Financial Services — Analyst

Hello, sir. Congratulations on a strong set of numbers. So just wanted a picture on manufacturing and other operating expenses. It’s consistently falling down over the last four quarters. What are we doing right and where do we see this stabilizing at? When I say is falling down, I’m saying as a percentage of revenue.

Shyam Sundar Agrawal — Chief Financial Officer

Yes, so basically the — see, this segment included the freight also, selling expenses. So in the past, the freight had gone up almost four to five times of the normal freight. So this is — now, you’ll see that export price, freight price and — the prices are coming down and that is reflected there. So, a major saving on the cost of freight.

Adityapal — Motilal Oswal Financial Services — Analyst

And so — what do — as a portion of revenue, where do we see it being stabilized at 17%, 16%, if you can take just put some color on it?

Shyam Sundar Agrawal — Chief Financial Officer

On what?

Adityapal — Motilal Oswal Financial Services — Analyst

The manufacturing and other operating expenses, so that and it —

Shyam Sundar Agrawal — Chief Financial Officer

It should be in the range of 17% to 19%, yeah. So of now, I think it is 17%. So yes, so I think that is the range between which, because something which is flexible like selling expenses, which keep changing. Otherwise, that is the range we normally see.

Adityapal — Motilal Oswal Financial Services — Analyst

And also, the cost of material consumed is or has experienced a lot of volatility. It goes from right after 58% in December and lLast quarter, it was close to 49%. So, are we trying to get into long-term contracts with our vendors so that this stabilizes in the future?

Shyam Sundar Agrawal — Chief Financial Officer

That is not the case. You just look at the total cost including the [indecipherable] attending stock and it is coming to around 60%, 61% percent only. So, you need to look at the numbers, both taking together. May be there is more finished goods and less of raw material consumed. So that might be happening, but the overall cost to sales is in the range of 60% to 61% only.

Adityapal — Motilal Oswal Financial Services — Analyst

All right. Thank you.

Operator

Thank you. Our next question comes from the line of Alisha Mahawla from Envision Capital. Please go ahead.

Alisha Mahawla — Envision Capital — Analyst

Hi sir, good morning. Thank you for taking my question. I’m fairly new to the company, so some of these questions may probably have been answered. Firstly, just wanted to understand the West Bengal facility that has come on-stream, how much CapEx have we spent on it and you did mention that some of the existing capacity will there, for how much incremental revenue are we expecting? You did mention that you’re expecting some in ’24 or maybe what is the peak revenue we can do from this facility?

Shyam Sundar Agrawal — Chief Financial Officer

So, basically, we have invested here in infrastructure. So, we have almost two lakh of building constructed, which is ready-to-use, and in our type of. Garmenting activity, you need space. So, this is something which we have done. We have been invested almost INR30 crores in this project, and that building. construction is one thing and then we have a head-up some also. So, going-forward, we have see normal — age of now we are doing around deferral of government that turnover and we would like to double it. With the. Added capacity also. So immediately, we have shifted the district facility from. The existing plant to display and some added capacity also. But we need to add more there and it will be gradual and ultimate target is that we should have around the double turnover. What we are doing now. So 100 crore two point. So if. I have understood correctly, the spend per 10 crores, this is giving us of revenue we will do some kind of CapEx which would be Phase-II, which will help us to double this revenue. Yes, so for doing that, you know if you want to increase the turnover. Productivity, the message is, it’s something where you need at least capital. So in the garmenting at least you need to have basically infrastructure ready so that basic have infrastructure. and also you ready to increase the turnover. Now we need to put some additional synergies only which will be costing not much maybe five, 10 crores met so type approach, so that will be doing in due course of time. It’s for the. So definitely think that this will be the Phase two expansion that you were referring to earlier in this call. Yeah, it will be the page one only so Phase one, you’re talking about complete and we add-on some capacity, there is a requirement to double that amount and it will be hardly CapEx would be in the range of price, Maxim. Understood. And then you also mentioned that we had some capacity in, and the bulk of it has come on-stream. So, when does that come on-stream. And how much CapEx will be incurred over there and what is the revenue we can do there. Yes, so we have a total investment of around 25 CR in this unique and CapEx is around. MCN and we this year we target 20 CR turnover next year ’30 CR. Age of now and we’ll see how. so again same thing, there also we can expand the capacity in Chile and for requirement. So, we project a hedge on that. We project you from next year. I’m just and what is the split of revenues between domestic and exports. So basically, domestic, you know, we are selling under our own brand and the domestic is a local market and. Export is basically. OEM and it close to the. Comparable. So it is around there. For the quarter is 46. Domestic 60 exports, yes, yes. And in exports also in your opening would contribute bulk of it. Yes, yes, yes, sort of, almost 42% of our turnover is coming from Europe. And at the start of the call, we mentioned that there was some sluggishness in the international demand will this, specifically for Europe paralysis for all the markets that we’re taking to yeah, 0, and. Also sluggish. That’s only because of this quarter you, Ted. this quarter you will see that there are a lot of holidays overseas also the Christmas season. And so that’s why that doesn’t want for the quarter remains bit on the 4% to 5% on the lower side, other way, yes. In Europe, we see as Rohit mentioned that we will see some. Certainly. Sure, my last question is like, you mentioned that 42% revenue is coming from John OpEx at least in the near-term. There is some amount of slowdown. But we’re continuing to target high-double digit due to which market of pitch segment is going to continue to incremental growth to compensate for your, because that 42% of revenue. So if you can answer. South America is decently big market for us, and you know, there have been some. Embargoes on anti-dumping duties with China. In Peru, specifically. So that has opened up a. Big market for us. US, like, you know it has not been a really big market for us and we are trying to make a efforts to big. That said, and so-so US is a big market that we’re targeting and the FDA now Australia and England is also a big market, we already have customers and we are trying to drill it down further. So even in Europe. Those who want to move-out of China other Asian countries and move towards India to reduce the country risk, we are targeting those kind of. So it’s more about opening new accounts and development. From the market and opening new geographies. Great, thanks for the detailed answer this one for not so on. We expect the split to be 40, 60, only the incremental growth will come from the export market only. The split right now. Yes, near-term should be 60, 40, but eventually, our target is to make this split fifty-fifty. Great, thank you so much. Investor. Thank you. Our next question comes from the line of Pinaki Banerjee from Aurum Capital Private Limited. Please go-ahead. Yeah, good morning sir, and thanks for taking my question, sir, my first question is, so. What is the. Amount of debt and cash you have in your books right now and for further capacity expansion, are you going to undertake any further debt on your books. So we presently have around 70 CR in our the. In. Get and-or gas equivalents and. Almost on the debt, so. And. What does your next question, Sir. On FY fiber expansion plans are you planning to undertake any further depth. So what we are doing, you will see that whatever investment we are doing, we are planning it in a way that whatever cash we generate, it covers our requirement. So whatever we had been passed or doing now for future also we’re targeting. So I think if we are in one to two years yeah, I don’t see that moving a lot. Up to INR4 million [Indecipherable].

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Understood. Okay, so with the freed-up facility in Fun [Phonetic] City, what do we plan to do there?

Rohit Mall — General Manager

Sorry, can you repeat?

Ayush Agarwal — MAPL Value Investing Fund — Analyst

So we have some facility that would be freed up in Fun City facility, right? Because we have shifted machinery to Kharagpur. So what do we plan to do in the Fun City facility with the free space available now?

Rohit Mall — General Manager

So We don’t plan to do anything there. That’s — that facility is in the middle of the city. Difficult to operate there anyway because of the cargo movements and everything. So we don’t plan to do anything in that facility.

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Understood. Okay, fair enough. My next question internationally. We don’t see a significant expansion or expansion at all, which is a very profitable segment. And I — if I understand it correctly, it has been running at high utilization for the last one year. So what are our plans to expand in the [Indecipherable] area because we are highly, we have a — that’s a good business for us?

Rohit Mall — General Manager

So [Indecipherable], we are investing in newer types of designs and molds. That’s a big capex [Indecipherable]. That’s what we’re doing and we trying to gain more market share in the international market. We’ve been a relatively [Indecipherable] market. We plan to replicate that in the international markets. So the — you won’t see the capacity may be increasing. But more variety and more variation and addition to the product graph, it is what we are doing in [Indecipherable].

Shyam Sundar Agrawal — Chief Financial Officer

So Rohit for capacity also and safety, so yes, we are planning how to increase the productivity and that is possible within the infrastructure which we have. So it can be increased it’s for requirement by range of shift also sometimes and creating some effect. So for example, we have created some additional space for [Indecipherable] manufacturing in Kolkata where we have shifted our knitted operations — knitted gloves operations to Kharagpur facility. So these are the things we’re doing and whatever requirement is there in furniture we with the existing setup, we can do that, we can cover them.

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Understood. [Indecipherable] we’ll be expanding [Indecipherable] —

Rohit Mall — General Manager

Ayush, your voice again, could you repeat?

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Am I audible now?

Rohit Mall — General Manager

Yeah.

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Yeah, so I was saying that in the new Ahmedabad land where we plan to do a INR60 crore capex, you mentioned that you will be expanding into synthetic gloves and some other category as well. So if you can help us understand better, what kind of product categories on? Because our synthetic gloves are these are ones which are value-added, the high-margin products because we don’t see gloves has a very high margin product. So why are we thinking of expanding the low-margin product category in the new facilities? So something around that will be helpful.

Rohit Mall — General Manager

So basically, you know, as we mentioned that this unit will be primarily getting to local market and synthetic gloves is not — certainly not low margin business because you need investment, you need technology and what do we see that in a domestic market, at least they see now a change and market is accept — started accepting these type of products. And just like so this will be another segment where you will have the same volume and growth. So moving from feed safety to hand safety now and these are the products more suitable for the Indian market.

So this remains one of our product category, which we plan to invest. Then helmet also and some head protection items also we plan to do there. And so this is also we think that it is needed and to take care of my domestic requirement, we need to invest there.

Shyam Sundar Agrawal — Chief Financial Officer

Yeah, just to add on here. So we are adding in synthetic gloves, we are adding both value-added items there, as well as commodity items there because again if the objective is to become a one-stop-player for the domestic as well as international market, we need to have everything in our kitty and that helps us cross-sell our products and that also helps us retain our customers and that’s what we’re trying to achieve from this new unit and with the different synthetic gloves that we’ll be making out there.

Ayush Agarwal — MAPL Value Investing Fund — Analyst

Understood. That was helpful. Thank you for answering the question.

Operator

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I now hand the conference over to the management from Mallcom India Limited for closing comments.

Rohit Mall — General Manager

Thank you all for participating in this earnings con call. I hope we were able to answer your questions satisfactorily and at the same time offer insights into our business. If you have any further questions or would like to know more about the company, please reach out to our Investor Relation Managers at Valorem Advisors. Thank you. Stay safe and stay healthy.

Operator

Thank you, sir. On behalf of Mallcom India Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.