Mallcom (India) Ltd. (NSE: MALLCOM) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
Rohit Mall — Associate Vice President
Shyam Sundar Agrawal — Chief Financial Officer
Shyam Agarwal — Chief Financial Officer
Analysts:
Unidentified Participant
Aditya — Analyst
Rishabh Shah — Analyst
Sucrit Patil — Analyst
Ritwik Sheth — Analyst
Nikhil Upadhyay — Analyst
Vikram Suryavanshi — Analyst
Dhwanil Desai — Analyst
Varennya Agrawal — Analyst
Presentation:
operator
SA.
operator
Ladies and gentlemen, good day and welcome to Malcolm India Limited Earnings conference call hosted by Philip Capital India Private Limited. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involves risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchtone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Vikram Suryawanshi from Philip Capital. Thank you. And over to you sir.
Vikram Suryavanshi — Analyst
Thank you Arshin.
Vikram Suryavanshi — Analyst
Good afternoon and very warm welcome to everyone. On behalf of Philip Capital I am pleased to welcome you all on the earnings call of Malcolm India. We. We are happy to have the management with us here today for question and answer session with investment community. The management is represented by Mr. Rohit Maal, Associate Vice President and Shyam Sundar Agarwal, Chief Financial Officer. Before we start the call we will have opening comments from the management and I now hand over call to Mr. Rohit O to you sir.
Rohit Mall — Associate Vice President
Thank you Vikram. Good afternoon everyone. It’s a pleasure to welcome you all to our earnings conference call for the first quarter of financial year 2526. I’d like to begin by extending a sincere thanks to Philip Capital for hosting today’s call. Let me start by sharing a few operational highlights for the quarter under review before handing it over to our CFO Mr. Shyam Agrawal who will take you through the detailed financial performance. Let me begin with the CAPEX update. The trial runs at our newly set up Protech unit at Sanand, Gujarat has been successfully completed and the unit commenced commercial operations effective for July 2025.
We have spent 95 crores for phase one of the project and we expect a turnover of around 10 to 15 crore from this unit in the current financial year. We also plan to slowly increase the production capacity of synthetic gloves and helmets at this unit. For that we have planned an additional capex of up to 10cr this year mainly towards importing more lines and machines. The second phase of expansion of our Chandipur unit is largely complete. This phase involves setting up a new facility for designing and manufacturing of industrial safety shoes. With a built up area of almost 70,000 square feet and a capex of 25 crores, the unit is now operational and we Expect it to generate a turnover of about 25 to 30 crores in the current financial year.
Further consolidation work is planned during the current quarter. I’m also happy to share that Malcolm received the silver category award in the eastern region among two star export houses from FIO for the financial year 2021. This recognition reflects our continued commitment to export excellence. We have also established an office in the UAE to strengthen our presence in the Middle east and Africa region which we see as a high potential branded export market. With that I’ll now hand over to Mr. Shyam Agrawal, our CFO who will walk us through the detailed financial performance of the company.
Shyam Sundar Agrawal — Chief Financial Officer
Thank you, Rohit. And good afternoon everyone. I would like to provide an overview of the financial performance of the first quarter of the financial year 2526 on a consolidated basis. For the first quarter the operating revenue stood at rupees 122cr. Reflecting a growth of 19.5% year on year. EBITDA for the quarter was 18 crores up by 23.1% year on year with EBITDA margins at 14.38%. The net profit was reported at rupees 10cr with PET margin at 8.09%. The increase in EBITDA margin on a year on year basis from 13.96% to 14.3% was mainly attributable to a reduction in our manufacturing operation and other expenses.
Thank you. With this we can now begin the question answer session.
Questions and Answers:
operator
Thank you, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touch tone telephone. If you wish to remove yourself from the question queue you may press Star and two 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 is from the line of Mr. Aditya from securities Investment Management. Please go ahead. Sir.
Aditya
Yeah. Hi sir. Thanks for the opportunity. So firstly just wanted to understand. We did a revenue of around 190 to 195 karos in shoes last year. So was it primarily for domestic markets?
Shyam Sundar Agrawal
Yeah, that is. That’s correct. Largely for domestic market. Major share is going to the domestic market and then. But we are also exporting. You know. Lesser percentage. But yes, we are also exporting.
Aditya
So sir, then I looked at a total domestic revenue which was around 200 crores. So are we primarily a shoe brand in India and we are not able to supply other products in the domestic markets?
Rohit Mall
Large contribution of the domestic revenue Is contributed from shoe. I wouldn’t say that we are not able to supply other products. We are supplying other products. But you have to also realize that shoe as a category has a higher average revenue per unit than other categories as well. So volume wise, maybe a mix may be a little different. But revenue wise, yes, large contribution to the branded or domestic revenue is contributed through shoes. But we are also supplying other categories like head protection, gloves, workwear in the domestic market.
Shyam Sundar Agrawal
So, Rohit, just to clarify, I would like to mention that Indian market traditionally has been, you know, the first in the category of safety products, industrial safety products. It picked up the safety shoes as the most preferred product. And so this was the segment which grew faster. And now the market has started accepting the other category. Helmet was always there where we are not earlier present. But now we are trying hard and we are capturing some market share there. But the hand safety and body safety is something which still needs to be developed. But it has started developing and.
And we are there. So this segment of, you know, this segment is also started growing now. Yeah, and we are there.
Aditya
Understood. I think in the previous con calls you mentioned that domestic would be a one of the major drivers for our growth in the next three to four years. We just, you know, wanted to understand the reasons for the same. So is it, you know, better distribution reach for us or supplying different products other than shoes? If you just elaborate what would lead to higher growth in domestic markets going forward?
Shyam Sundar Agrawal
So there are some internal reasons and some external reasons. So external reasons. There are a lot of tailwinds in this industry. You have more, you know, better policies from the government for occupational safety and health. You have companies who are becoming more stringent about their requirement. You have MNCs who are asking for such products. And then internally we are expanding into different product categories. In the same product categories, we are launching different products. We are emphasizing more on our supply chain and ensuring deliveries are happening within time and to all places within the country. And now also exporting to Middle East, Africa.
We are strengthening our distribution channel as well as our sales channel to ensure, you know, that we are keeping up and increasing the rate of growth of the revenue from this market. So these are some of the reasons which is helping us keep up with the growth.
Aditya
So could you come again? There was a static disturbance. Hello? Yes sir, there’s still disturbance at your end.
operator
You are not audible, sir. Maybe sir, you could rejoin the queue because we do have participants in the line. All right, we’ll move on to the next participant. The next question is from the line of Mr. Rishabh Shah from Buggle Rock PMS. Please go ahead, sir.
Rishabh Shah
Yeah, thanks for the opportunity. I had two questions. Since you said you are expanding your distribution reach and our business is based on completely on distributors. So how many distributors have we added in the past two to three years? And sir, when times are tough, how do you take care of the distributors?
Rohit Mall
The exact numbers, I will not have it ready at this moment. But I’m sure we’ve added at least eight to ten or maybe more distributors in the last, you know, two years. So far. There might be.
Shyam Sundar Agrawal
Sorry to interrupt. The distributor you added in domestic market.
Rohit Mall
Yes, domestic as well as international markets. So you know, Middle East, Southeast Asia, Africa, all these places we’ve added. And so these are the registered distributors. But then there are also a lot of, you know, people who we are distributing to but they’re not registered because we have a criteria to making them a distributor. We just don’t make distributor at the first go. So unless the criteria is met, we don’t make the distributor. And secondly, if your question is when the markets are not good and how we managing our distributors and how we’re doing it.
So see, we have been in this business for a long time. Our distributors know what kind of products we deal in. What are our payment terms, what is the quality of the product. So the brand is being built in the industry because of whatever we have been doing in the past. So we do support them when time comes and when the market is not so good. But as of now, what we are looking as of right now in the last couple of years or going ahead, we see there’s a lot of opportunity in the market.
We don’t see a slow, at least for our products because it is going into various industries. But when time comes, we do support our distributors. And that’s where some of our distributors have been associated with us for more than 10 or 12 years.
Rishabh Shah
I was not asking about a market slowdown. I’m asking how, like you said, you support your distributor. So you know, what, what do you do to support your distributor?
Rohit Mall
You have to be more specific. I did not then understand the question.
Rishabh Shah
Completely in terms of let’s say distributors having some problems like how do you help them out?
Rishabh Shah
No, there is, Rohit. There is a marketing support which we provide to them. And maybe some kit also we provide sometimes. So depends. So Rohit, you can explain on this?
Rohit Mall
Yeah, so we have a sales team, you know, which is there on ground near the distributors also who’s visiting them, interacting with them on a regular basis. There’s a customer support team which is assisting them. There’s a finance team which is assisting them for payments or credits. There’s escalation matrix which we have in place which they can reach out to if they want redressal of some problems or any support from us. If they want us to visit to a customer together, we shall be available with them. We support them with marketing materials, branding materials with, you know, passing on the leads.
So these are the various kinds of support we provide to our distributors.
Rishabh Shah
Fine. My second question is I wanted to know sir, how difficult is it to get approval for our safety products in Europe and especially which country is it most difficult to get?
Rohit Mall
So European Union works as a whole, it’s not country specific. There are EN standards which you have to get your products approved by and for you to sell into Europe. And the EN standards also depends. Some are, you know, some standards can be met easily and there are various levels in the standard also. Level one, level two, level three, things like that. So depends on which testing you’re talking about, which product category, how, what is the kind of risk or hazard associated with it that will define the complexity of getting the certification for it. And since we’ve been in the business for a long time, so we have a lot of certification across our product categories and some have basic certification, some have more, you know, complicated certifications.
Rishabh Shah
Let’s say.
Rishabh Shah
My last question on the TAS part for how, how a product would be affected.
Shyam Sundar Agrawal
Tariffs into the US as we all know, it’s very fresh. So even our products are in the, you know, something that will be affected, impacted. But we’ll have to wait and watch. Our exposure to the US is not as high as maybe some of our other, you know, competitors. We are more exposed in the European market than the American market. But largely all these products are produced in Asia. So we have to see how we place against our competition from Asia. But yeah, all our products have been impacted by the tariffs. So we’ll have to wait and watch if both the countries sign some sort of a trade deal.
Rishabh Shah
Thank you.
operator
Thank you. The next question is from the line of Mr. Sukrit Patil from Eyesight Fin Trade Private Limited. Please go ahead sir.
Sucrit Patil
Good afternoon to the Malcolm team. And I would have to congratulate you that on the past two years you have made well good wealth on the shareholders behalf also. So my question is, I have a long term question is that with Malcolm’s global footprint across 50 countries and rising demand for ESG compliant PPE how is Malcolm integrating sustainability, circular design or material innovation into your product roadmap? And could this become a differentiator for premium global contracts for the Fi20, 2930. Would you. I would like to hear your thoughts and can you please share a view on this?
Sucrit Patil
Thank.
Rohit Mall
Thank you very much. Yeah, that’s a great question and something that we are dealing with right now. So we are already on the path for this. So there are various aspects to, you know, becoming ESG compliant. So one is you have the ESG compliant facilities and then in the products, what are you doing in the final product sustainable? So some of our facilities and the endeavor is all of our facilities at some point become ESG compliant, which is in terms of having renewable energy. We do have solar panels for our leather production. The entire heat generated currently for our dipping gloves facility is through biomass.
And that is where we take care of circular economy. Also because this biomask is generated from rice husk, which is abundantly available in West Bengal. And then the ash that is created that is also converted into fly bricks. So it is completely circular and completely renewable energy that we are creating. And we save a lot of CO2 and SO2 emissions because of that. In terms of the product itself, we are using a lot of recycled materials, be it polymers, be it polyesters. We are using recycled materials in all these places. We are even trying with chemicals.
How can we put more and more recycled materials without losing the sanctity of the material and without failing the test that is required? So the efforts are going towards that as well. Now, you know, in Europe, a lot of people have started using digital passports for products where they’re measuring, okay, each product contributes how much to the carbon emission. So we are being asked a lot of these questions where we are also trying to find solutions for. And a lot of our customers have been happy with our product and earlier where they were manufacturing. Now when they shifted to us, they have been able to improve the carbon footprint per product.
And that’s the data they give us. And they also evaluate us on a regular basis based on how much energy we are emitting, what kind of work we are doing for our compliance, how we are taking care of our people and the environment nearby. So going ahead, definitely it will be a big advantage for companies who can do it, because the market, especially the European market and the Australian market, some more advanced markets, are heading towards such practices. And this will become very much like a mandatory thing in by maybe FY 29, 30. And we are geared up for that.
And as A company as our values stand. Also, we want to head towards that direction. Be it with the product, be it with the facility, be it even with packaging solutions or logistics solution, we want to head in that direction. Yeah, I think that pretty much answers my question. Thank you very much and best of.
Sucrit Patil
Luck for all your future endeavors.
operator
Thank you. The next question is from the line of Mr. Ritvik Sheth from OneUp Financial Consultants Private Limited. Please go ahead, sir.
Ritwik Sheth
Yeah, hi, good afternoon sir. Couple of questions from my end. So firstly, what kind of growth do you expect for FY26 and 27?
Rohit Mall
So going ahead, we would like to maintain similar or higher growth rate in the range of 20, 25%. That is what we have been targeting and trying to target if we want to meet our overall growth. So that’s a number we are still going to stick by and let’s see how well we are able to perform.
Ritwik Sheth
Sure. And this will be despite the US tariffs because assuming that it goes on for some time, the sales would be lower. So this would be despite the US tariffs.
Rohit Mall
Yes, couple of points on that. One is our exposure to the US is limited. It’s not a major market for us. We were definitely planning to make it a major market. There was a lot of push and expectations on the market. But right now it’s still not a major market. We will continue to put our efforts because we feel that this is temporary and you never know what’s going to happen. Secondly, when one market closes, there are other market which opens up. So now we have a free trade with uk. Hopefully we’ll have some deal with Europe.
Also signed up the domestic market, the Middle east market. These markets are still growing. So there are other avenues also. And we feel Even with the U.S. you know, this is not something which they can sustain because a lot of products, what we make, nobody in the US is making it. It’s all being done in Asia and we’ve seen after Covid, everybody wants double supply chain at least. So I don’t expect the entire business to get disrupted because of this. There might be some hindrances to it, but I think if we are able to stay in the business for long enough, we’ll be able to see positives from it.
So whatever the situation is, I think it is temporary and it does not change our growth plans.
Ritwik Sheth
That is encouraging, sir. So secondly, on the margins, Q1 margins were very good, around 14.5%. So could this be a new normal going forward?
Ritwik Sheth
Shamji?
Shyam Sundar Agrawal
Yes, we have been mentioning this. You know, the ramp, the margin should be in the range of this 14% around this figure only. And in the quarter we have definitely saved on. You know some few expenditures we are doing in the past. Like last year we did some consultancy expenditure which has measurement for us almost 1% of the turnover. So that we have started saving this year. And then you know some other expenses also are there which we are trying to save. So going forward we see that this. You know margins should be maintained in the range only.
Right.
Ritwik Sheth
And just one last question. So the Sanan facility you mentioned that 15 crores would be bill from this unit in FY26. So we. We are. I think we are under the understanding that we can do approximately 100 crores from this unit with current capacity. So why is that a lower guidance given by you or 15% utilization will be there for nine months for this year. And then it will ramp up next year.
Shyam Sundar Agrawal
No.
Shyam Sundar Agrawal
No.
Shyam Sundar Agrawal
So Rohit, let me answer this.
Rohit Mall
So. No, no, no. It is not like this. So what we have done that. You know the aj we mentioned in the past calls also that this was mode of infrastructure creation where we have invested into land and building. And we have set up. Set up the minimum basic. You know line of machinery. So now we have planned. Rohit mentioned in his address that now we have planned to set up more line of machineries. So till now it was. You know infatuation with basic machinery setup is there. We have done trial run.
We have started commercial production. But again we have to increase the machinery. So that’s why with the current setup we have project given this projection of 15cr around. You know in the range of 15cr we will be doing during the next half year. But in the process we will in the process of setting up new machineries also. And once this setup is there the then we should be reaching targeted turnover. 100 crore. So at full capacity. Not this year. Next year. You know FY27 definitely we should have better turnover. Not. If not it is 100cr near to 100cr.
Maybe around that figure only.
Shyam Sundar Agrawal
Okay. So we have spent close to 90 crores. And another 10 crores we will spend in this year. And then our total revenue can be 100 crore. Around 100 crores at peak. That. That.
Ritwik Sheth
Yes. Yes. With. With. With. With that investment. Because age of now it is more of infrastructure and basic machinery set up there. Yeah.
Ritwik Sheth
Okay.
Ritwik Sheth
Okay sir.
Sucrit Patil
All the best and thank you.
operator
Thank you participants. If you wish to ask a question you may press star and one on your touch tone telephone. The next question is from the line of Mr. Aditya from securities Investment Management. Please go ahead, sir.
Aditya
Yeah, I hope I’m audible. In the domestic markets generally, what kind of customers and products would MNCs like 3M and Honeywell would be having and what kind of customer base would we be having?
Rohit Mall
So in terms of the product category, 3M and Honeywell operate in a little different product category. For example, 3M is largely above the neck which is head protection, ear protection, eye protection, face protection, they do largely that and that’s a very small category for us at this moment. And Honeywell does overall accept garments and largely they do a global operation, not something specific for India, for both these companies. And they’re fairly highly priced for the Indian market because they have those kind of cost structures and those kind of brand. So wherever you will see a global RFQ or a global tender, you will see maybe Honeywell or a 3M or wherever it is a very specialized kind of work which somebody like a 3M will only provide and you’ll hardly have one or two competitors in India.
Then you’ll see 3M and in other cases where if there is unavailability of product then you will see Honeywell in 3M. For example, we compete with Honeywell in synthetic gloves also, we’ll compete with them in head protection also, etc. So in Indian market they’re fairly highly priced and largely concentrating on bigger MNCs and brands. And for us we cater to the mass market as well as the premium also. And largely we are into foot and hand and body protection which they don’t operate largely into.
Rohit Mall
You know, wanted to get a better understanding. So in the domestic market, why would a customer prefer a Malcolm product over Liberty or a Bata kind of a product. So just wanted to understand what is the customer looking for, what are the factors he’s looking at before deciding on which brand to go first.
Shyam Sundar Agrawal
So various factors. They look into. A, they look into the product quality and if it meets the, the basic requirement, the BIS standards for example, or if they have some additional requirements, they look into it. B, they look into the pricing of the product. C they look into the delivery can they get their product. Then they look into the service levels, you know, what is the after sale service, if the final seller to them provides some credit or not. Those kind of financial considerations they’ll also have largely these are the three, four things that they look for.
And finally depends on the size of the company. They would not like to have a lot of vendors for these kind of products. They would like to have one vendor for all their MRO items. So they’ll also like to see what all do their vendors carry what all kind of products. And if they can have one vendor providing all the solution, they would like to stick to that vendor because they are already registered and empanelled with them. So these are some of the factors which help them take the decision.
Aditya
And also last year we had hired a consulting company, so just wanted to understand what were the key learnings from it and how are we going to implement the learnings. So if we just talk about a little bit more, that would be helpful.
Shyam Sundar Agrawal
Yeah, so the company that we had hired was not just giving us the, let’s say, the solution, they were part of the implementation also. So whatever was to be done was already implemented last year. They had come largely for increasing our operational efficiencies in our factory. So setting up processes, creating more, you know, being able to do more from the same resources, how to channel it properly, how to deliver faster, how to be more sure of the lead times. So it was essentially to solidify our supply chain of our products from our vendors to our customers.
And how can we, you know, do it faster, better, more efficiently. And that is what they were able to deliver, which gave us some positive results and you know, which the results are already reflected in, you know, the financials as well as, you know, going to the going to market strategy that we are having.
Aditya
Understood.
Aditya
So just wanted to understand so its impact on financials. So should one see a lower working capital or a higher margin or a higher growth, how should one interpret whatever we are implementing, how should that be getting reflected in the financials?
Shyam Sundar Agrawal
Right, so they did for couple of units, not the entire organization. So you will not see as an organization as a whole, you know, what will be the impact. But for that particular category, for that particular, those particular units, we have seen improvements in, you know, our revenue, our capacity utilization, our efficiencies, our, you know, lead times and the delays that we had that some customers are experiencing. So that is where we have been seeing improvements. So on a global company level, that would not mean a humongous change. But on unit level, on the product category level, we have definitely seen benefits.
Aditya
Now if I exclude this new facilities which we have commissioned In Sanandan Phase 2, the existing facilities, what kind of revenue potential can we reach over there?
Shyam Sundar Agrawal
Shamji, if you can.
Shyam Sundar Agrawal
Yeah.
Shyam Sundar Agrawal
So as we mentioned from the sun.
Shyam Sundar Agrawal
And we expect with the full, you know, we install the sun of the all the machinery which we have planned, we should be getting our during this FY26 we should be having additional turnover down 100 crore. And from this phase one which we have set up in Sanand and the second phase Katak Bukod unit in West Bengal for SU we are projecting around 50 crores 50 cr turnover on full year basis from SU unit.
Aditya
No, no.
Aditya
So my question was.
Shyam Sundar Agrawal
No.
Aditya
So my question was excluding both these units, the existing facilities, what kind of.
Aditya
Revenue can we reach over there from the existing units?
Shyam Sundar Agrawal
Yes, so this is what we are doing.
Shyam Sundar Agrawal
So we are in the range of around, you know, 500 cr. We are, we have already done so, you know that is always there and there also we can have additional turnover from the existing setup by going for additional shift, maybe some job working we can get done from the associate or you know, satellite units. So that is also possible. So 500cr we are already doing and maybe more 100, 200cr is additional is possible from the existing facility only we keep adding, you know, additional machinery there like knitting stitching machines. If we need at our garment facility so we have enough floor area and need based we can set up it on very short notice.
Same with the swap or maybe the leather gloves units also. So it is scalable. So anything in the range of 500cr to 700cr we can do from the existing facility with some further, you know, small capex that and this apart from this new setup which we have done.
Aditya
And also this hundred crores which you are expecting from Sanon Phase 1. So this is only going to come from protect, not the helmets and the synthetic, right?
Shyam Sundar Agrawal
No, no, both the entire thing the there would be protech as well as helmets also.
Aditya
Okay, understood.
Aditya
And next was on exports. So generally you know, what kind of visibility do we have? So in terms whether the customer gives us an order book, you know, of two, three months. So how does the export revenue generally work?
Shyam Sundar Agrawal
So you. It depends from product to product, customer to customer. Some customers we have, you know, annual projections or you know, rolling forecasts from them and then you know they give us orders based on our deliveries. And with some customers it’s order to order. We know the cycles when they’ll place orders or we know the volumes that they’ll have. And for some of them it is some one off that we are selling to them. So it depends. Usually we try to keep an order book of at least 2 and a half to 3 and a half months and we work on that basis.
Shyam Sundar Agrawal
And generally how much of our revenues would be contracted versus spot.
operator
I’m really sorry to interrupt. We do have other participants in line too. Could you please rejoin the queue please?
Aditya
Sure.
operator
Thank you. The next question is from the line of Mr. Nikhil Upadhyay from Simple. Please go ahead sir.
Nikhil Upadhyay
Yeah, hi, good afternoon. Congrats on good numbers. Just continuing with what the previous participant was asking. How would the revenue mix be between contracted versus like spot kind of orders for us?
Shyam Sundar Agrawal
No. So everything that we manufacture we do on our own contracting will only be some stitching operations. Even in that we are usually, you know, giving the cut components, the fabric and everything and the finishing is happening in house. That will be a very small proportion of the entire.
Nikhil Upadhyay
Sorry sir, I was not asking from what we contract out. I was trying to understand in terms of our order visibility how much of our orders would be contracted orders for a year on how much would be spent spot for exports.
Shyam Sundar Agrawal
Okay, so largely I would say almost exports, 60% will be contracted and 40% will be spot orders. But this is average. It depends on category two category.
Nikhil Upadhyay
And in the starting of the call you mentioned and one of the questions was that what is giving you the confidence on the domestic market and you highlighted few points in terms of increased like protection becoming an important part of manufacturing and all. If we have to look at your customer addition, are these customers who are first time buyers or are these converters who were earlier buying from some like run of the mill kind of products and are now moving towards a brand like Malcolm, how would you say the new customers are?
Shyam Sundar Agrawal
I would say all both kinds. We haven’t done a deep dive analysis on this but I would say all two kinds plus one in the sense there are new customers getting added. So you know, people who are having, you know, very small units, 5, 10, 20, 50 people. They are also placing orders with us and you know, sometimes for dealers, sometimes even through e commerce marketplaces, etc. And then there are some which are because they don’t want to get into the hassle of, you know, not meeting the specification or you know, some injuries happening and them facing some penalties.
So they would like to have a proper BIS certified product. So those kind of people are also converting and in some cases even the workers or the employees are getting more vigilant. They are more aware about the products and the certification and they would like to demand something which is suitable for their risk and hazard. And then there are other kinds where they are already buying from a different brand and they would like to switch to a brand because of various reasons which I mentioned in the past. So I would say all three kinds are there who we are adding to a kiti because in general the market is growing.
Right. We are adding a lot of new workforce, a lot of new manufacturing is coming into the country. So the pie is becoming larger. So I think we are adding all three kinds of customers.
Nikhil Upadhyay
Okay, just last two questions. One is on this custom as you said now companies even smaller units have become vigilant on the kind of products. So has the market moved away from pure pricing based decision like because there are many smaller unorganized players also who are providing these protective products. So have the units or the manufacturers moving away from only pricing based decisions and more on product quality based decisions?
Shyam Sundar Agrawal
Yeah, a lot of that shift is happening. It’s not entirely price. It is definitely a factor but not the only factor in in a lot of cases. So the market is evolving with time. Correct.
Nikhil Upadhyay
Okay, and last question. See we added these two capacities in Sanand and Ghatatpur and as we said they, they are in a ramping up phase. If you have to understand what would be the SO one is are they breaking even at current utilization and if not what is the kind of drag they are having on our profitability.
Shyam Sundar Agrawal
So Rohit, let me answer this.
Rohit Mall
So see this Ghatakukur unit which we have set up in West Bengal. It is you know the, the capacity to utilize here would be almost. So as I said that with this unit we expect 50cr turnover and so we have started with this now. So current year projection is around 25 cr for next six, you know six months and full year basis would be 50 crores. So with the 25 cr capex 50 crore turnover we are doing which is quite reasonable in case of Sanand. As we mentioned in the past also that this is more of you know know infrastructure creation.
Lot of things are possible there which we are planning to do. We started with this you know protect we are enhancement project and we are in the process of ramping up the capacities and the full project is yet to come that it is a big space and we should still can build up an additional you know building of around 1 to 1 lakh to 1 lakh 50,000 square feet. So second phase is yet to come. So we have to look at this project as a you know the one complete project maybe will be over it need based and you know in the time to come.
But with the hundred CR definitely we would be you know not immediately we are there is no chance of breaking even with the 15 crores turnover. But we’ll try to do this from next year onwards by FY27.
Nikhil Upadhyay
Okay, so there is some drag because of Sanan. But Gatakpur is already contributing.
Shyam Sundar Agrawal
But again, just to clarify that Sanand is definitely fully invested by us. Internal requirements only. We have not borrowed anything. So. And the fixed cost there also is not very high. So it would be not that big trick. Minor only. Okay, fine.
Nikhil Upadhyay
Thanks. Thanks a lot. I’ll come back.
operator
Thank you. The next question is from the line of Mr. Dhuanil Desai from Turtle Capital. Please go ahead.
Dhwanil Desai
Hi, good afternoon. So sir, my first question is, you know, for talent facility, you know we sounded quite optimistic about, you know, going to 100 crore and beyond next year in FY27. So that’s a sharp increase from 15 crore number. And even at a company scale of 500 odd crore, that’s a very significant number. So what gives us that confidence? Is it that, you know, we have soft commitment from our clients or is it the overall market buoyancy or the new product introduction? What is driving your confidence that next year will be close to 100 crore in Sanam?
Shyam Sundar Agrawal
So first part, Rohit, let me explain how we are going to achieve that. So suppose we have started with one set of machines. So it will be triple or four. So maybe four more lines we set up with the additional 10cr investment. So that makes us ready for the 100 crore targeted turnover. The second thing is marketing which Rohit can explain how we are going to achieve that.
Rohit Mall
Yeah, so it’s a combination of different things. So one is we are adding a new product category and two is we are substituting imports also something that we are for the local market. We are trading right now. But we plan to manufacture that. So we know the market, we know the potential of the market. And we know that once we are able to manufacture we will be able to control more costs in it. So we’ll be able. And we’ll be able to increase our offerings to the market also that there we are planning to do helmets there also which as you know is a relatively new category for us.
And we see a lot of potential in that category also. So increasing capacity, adding new products and outside India and within India is, you know, making us believe that it can be done faster. And even the supply chain and the faster access to the market. So largely the western India, the southern India and even Middle east and Africa can be much faster catered from a facility in the west than a facility in the east. So I think all of these reasons combined give us that kind of confidence.
Shyam Sundar Agrawal
Another thing, Rohit, you mentioned that Typically large companies would want vendors who have a complete product suit. And you know, in terms of, you know, product suite, I think one white space we had was the head protection which we are now filling. So do you think that any point in time, either for domestic or export market that was acting as a constraint for us which, you know, now will get solved and hence probably will, you know, we can do much better in terms of penetrating client and getting higher wallet shares.
Shyam Sundar Agrawal
Yeah. In some industries, with some companies we definitely felt that, you know, something like a construction or mining, where helmet is almost a mandatory thing. So we were definitely losing out on those industries because we didn’t have the right product. And now that we have, we will able to give them an entire solution. So definitely that that will play a factor. And that has been playing a factor for some time now.
Dhwanil Desai
Last question, Shamji. You know, generally what we have seen in most of the companies is that as scale increases, revenue increases, you know, operating leverage plays through. But we are saying that our margin will remain largely 14, 15% range. So not able to understand whether we will keep on investing through P and L to grow revenue. That is how we should look at it or are we saying that for scale we will probably work at slightly lower margin at a gross margin level and hence the margin will remain same. If you can decipher this thing for.
Shyam Sundar Agrawal
Us, see I tell you in out of type of industry and you will see that, you know, the PPE industries receptive product which we are manufacturing, the fixed cost has always been on the lower side, you know, so it is most of, you know, raw material cost and the other operating cost. So that this is what, you know, makes us believe that going forward also a scale of, you know, economy, you know, that might be there but not that, you know, I would say not that important because we know that yes, we have invested and there are, these are all bigger facilities now.
But we are keeping control on fixed cost there. And therefore the, you know, margin should be in the range only.
Dhwanil Desai
Thank you. That’s it from my side. Wish you all the best.
operator
Thank you. The next question is from the line of Mr. Varennya Agarwal. Before we take this question, participants, if you may. If you want to ask any questions, you may press star and one on your touch tone telephone. All right, the next question is from the line of Mr. Varanya Garwal from Inflow Assistance Associates LLP. Please go ahead.
Varennya Agrawal
Hello.
operator
Yes sir, please go.
Varennya Agrawal
Hello?
Varennya Agrawal
Hello, can you hear me?
operator
Hi.
operator
Yes. Yes, sir.
Varennya Agrawal
Hi.
Varennya Agrawal
Yeah, thank you for taking my question. I had one question. I was checking out your cash flow statements across the years and I see that, you know, our cash conversion cycle used to be around 100 days, maybe 10 years back, 190s, 100, around that. And now it has suddenly in the past few years, I see it has gone up to 150, 170, stuff like that. So can you please comment on what has changed both in terms of receivables, how we are handling it, what, what has gone bad?
Shyam Sundar Agrawal
See, basically it is a need of the industry. So, you know, with the growth in turnover and going to the, you know, the newer markets, like we started selling into South American countries or going to America also. So Europe was always neither. And we used to had some, you know, maybe CAD or maybe, you know, short term payment terms. But now with going to North South American market, they would like to pay only once the cargo reaches there. So maybe 60 to 90 days they are looking for so in certain, certain increase in debtors also.
And apart from that, you know, the inventory, also the type of inventory which we need, some of these are also, you know, imported from overseas. So you need to keep the inventory to ensure that you are able to make the goods in timely manner and supply to the customers all the time. So that is very important for our type of business. You know, these are customers are more looking for timely supply and until unless you keep the stock ready for them and based on their, you know, requirement, you are able to supply. So that is very important.
Recently we had, as we mentioned that we had a point and concerns. They also recommended that, you know, you need to keep some inventory. So as you will see that it is mostly consistent of raw material. So hardly anything with the WIP or finished goods. So that is, you know, but again, we are aware of this and we are trying to reduce some of the inventory which, which is target for the year. So let us see how it goes.
Varennya Agrawal
So sir, going forward, will we. Should we expect a similar kind of working capital cycle or do you plan on reducing it?
Shyam Sundar Agrawal
See, with the growth target in the mind, we have to keep the inventory. So it should be in the similar range, maybe a little bit on the lower side, but that would be our effort. But otherwise we need, that is, you know, the primary target is that we should have growth and targeted turnover. And for that if we need to keep some additional annuity, we will keep continuing that.
Varennya Agrawal
Okay, and one last question. Except for 3M and Honeywell, who do you consider to you to be your biggest competitor, maybe domestically or even outside India?
Shyam Sundar Agrawal
Right.
Shyam Sundar Agrawal
So it depends on the product category. So for example, for shoes, you know, even Bata and Liberty are good competition. And you know, for gloves there’s Ansel. Also, you know, for helmets, you know, there’s Karam. So it depends on the product category. Internationally, a lot of competition comes from China, Pakistan and other places also. Not necessarily there are, they are large names. There might be Midas and you know, even Ansel and even Honeywell in international markets become sometimes our competition, but a lot of it is coming from China and we wouldn’t know proper names. Also who are those who are competition in the international markets?
Varennya Agrawal
So in terms of pricing, would you say that you are equivalent to these guys or they are like you’re cheaper or more expensive than them?
Shyam Sundar Agrawal
In India we are competitive when it comes to pricing with these kind of brands and obviously because a large portion of the market is still unorganized. So with that we are not in that price range internationally. Depends on the product category. Some product categories from China or Vietnam, Pakistan are much cheaper than what we can offer. And in some of the categories in which we operate, we are price competitive. But then there is a question of the quality also, which comes to play largely in the categories we operate. We are competitive and that is why we have been able to stay in the market.
But yeah, there are definitely some categories that are completely off the money and some qualities that we don’t produce and the prices we can’t offer.
Varennya Agrawal
Would you say this is a price sensitive market outside India? I mean, assuming that it is organized outside India.
Shyam Sundar Agrawal
Yes. Some of the categories are very price sensitive. Basic leather gloves are very price sensitive. Very basic level of garments, price sensitive. So some of these products are price sensitive. Okay. Okay.
Varennya Agrawal
Thank you so much.
operator
Thank you. As there are no further questions from the participants, I would now like to hand over the conference to the management for the closing comments.
Rohit Mall
Thank you all for participating in the earnings conference call. I hope we were able to answer your questions satisfactorily and at the same time offer insight into our business. If you have any further questions or would like to know more about the company, please reach out to our investor relations managers at Valorum Advisors. Thank you and wishing you all a great day ahead.
operator
Thank you, sir. On behalf of Philip Capital India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.