Mallcom (India) Ltd. (NSE: MALLCOM) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Rohit Mall — Associate Vice President
Shyam Sundar Agrawal — Chief Financial Officer
Analysts:
Aradhana Jain — Analyst
Rushabh Shah — Analyst
Rohit Singh — Analyst
CA Garvit Goyal — Analyst
Unidentified Participant
Bharat Sheth — Analyst
Aditya Khandelwal — Analyst
Amit Agicha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Malcolm India Limited Q4 and FY ’25 Earnings Conference Call hosted by Batlivala and Karani Securities India Private Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Aradna Jain. Thank you, and over to you, ma’am.
Aradhana Jain — Analyst
Thank you, Amishka. Good afternoon, everyone. On behalf of B&K Securities, I welcome you all to the 4Q FY ’25 conference call of Malcomm India Limited. Today on the call, we have Mr Rohit Mal, Associate Vice-President and Mr Shyam Sunder Agarwal, the Chief Financial Officer. Without taking much time, I would like to hand over the call to Mr Rohit Mal for his opening remarks, post which we can open the floor for Q&A session. Over to you, Rohit.
Rohit Mall — Associate Vice President
Thank you, Rana. Good afternoon, everyone. It’s a pleasure to welcome you all to our earnings conference call for the 4th-quarter and the financial year ended 2025. I’d like to begin by extending our sincere thanks to BNK Securities 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 Agarwal, who will take you through the detailed financial performance.
To begin with the capex updates, I’m pleased to inform you that our greenfield expansion at Sanand Gujarat is now complete and is currently undergoing trial runs for Prota’s range of gloves. The total project cost for this facility was INR95 crores. Further additions will be executed based on-market demand and feedback. Further, our greenfield project, Chandipur Phase-2 in West Bengal for the manufacturing of industrial safety shoes, a DIPP approved design studio has been completed and is currently undergoing trial runs. The project cost for this unit is INR25 crores against which the company is eligible for a total subsidy of INR7.2 crores. Out of this subsidy, INR5.1 crore has already been received in the current financial year.
During the financial year 2025, the company made a consolidated investments of INR78.67 crores in fixed assets on a cash basis. I’m pleased to share that this entire investment was funded entirely through internal accruals, reflecting on our strong operational cash flows and disciplined capital allocation strategy. In FY ’25, we launched a wider tow safety shoe featuring our ergonomically designed single density along with a new premium range of leather gloves called the. Both products specifically targeting the Indian market and have received positive feedback.
With a view to increasing brand visibility and market penetration in India, we also revamped our e-commerce platform, enhancing it to offer comprehensive head-to-toe PP solutions. The new platform has been well appreciated by our users. On the marketing front, we entered into an IPR agreement that grants us exclusive rights to use the iconic characters of Chaudhury and Sabu. This initiative has not only boosted our marketing efforts, but has also served as a powerful tool in raising social awareness about workplace safety and the importance of using proper protective gear.
We were also honored to receive the Great Place to Work certification on our very first attempt as well as the Safety Leadership Award at the Outlook Business Spotlight Achievers Award 2024. Additionally, we continue to enjoy the status of a three-star export house from the Ministry of Commerce and Industry and hold the AEO T1 status awarded by CBIC under the Ministry of Finance. Our long-term credit rating was reaffirmed by, which continues to rate us as A, with a stable outlook. And finally, in-line with our ongoing commitment to corporate social responsibility, we had the privilege of sponsoring Para Badminton star, Ms Mansi Joshi, supporting her journey to represent India at our maiden Paralympics in August 2024.
With that, I’ll now hand over to Mr Shyam Agarwal, 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 for the 4th-quarter and the fiscal year ended 2025. On a consolid basis for the 4th-quarter, the operating revenue stood at INR137.58 crores, reflecting a 12.43% year-on-year growth. EBITDA for the quarter was INR15.67 crores, a decline of 7% year-on-year with EBITDA margin standing at 11.39%. The net profit was reported at INR30 crores with PAT margin net 21.81% — 84%. For the full financial year under review, the company’s operating revenue grew by 16%, reaching INR487 crores. EBITDA increased by 6% year-on-year, reaching INR61 crores with the EBITDA margin stood at 12.56%.
The net profit for the year grew by 59% year-on-year, reaching INR57.71 crores and margin was reported at 11.86%. During FY ’25, our EBITDA margin saw a decline primarily due to increased investment in marketing, branding and consultancy charges. These expenses were in-line with our strategic focus on improving operational efficiency and strengthening our market position. On the bottom-line, the increase in net profit was largely attributed to our higher other income in-quarter four to FY ’25 amounted to INR25.4 crores. This gain resulted from the of land building pertaining to our East Wild car maturity in Kolkata.
Thank you. With this, we can now begin the question-and-answer session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone 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 Rushab Shah from Rock PMS. Please proceed.
Rushabh Shah
Yeah. Hi, thanks for the opportunity. Am I audible?
Rohit Mall
Yes. Yeah.
Rushabh Shah
Sir, I have two questions. What is your thought process on export-related markets? How are you going to grow this market and what percentage could exports contribute to your revenue in the coming future?
Shyam Sundar Agrawal
I can take that. So we are currently also doing a lot of activities for the — for our export marketing. We regularly participate in exhibitions. We have a sales team who travels frequently because these are more customized products that we do. So it is important to know the market, what the customer wants and then sell it. So we develop products as per the requirement. And whatever new launches we have, we go and market it to them. So it’s more of a personal one-to-one relationship building that we — that we focus on.
Currently, I think exports or contribute to almost, I think, 65% 60% growth 60% of the revenue. I think going ahead, it will be same or maybe reduce the percentage contribution to revenue because we are expecting the domestic market to increase at a faster rate. But yeah, I think in the short-term, it will be around I think, 60 55, something like that.
Rushabh Shah
Yeah. Okay. And sir, my second question is, are you looking for any inorganic acquisitions in Europe since we are seeing a slowdown out there, so we can get many brands that are cheaper price because when we see other big MNCs, they have multiple brands. So just wanted to have your thoughts on this one.
Shyam Sundar Agrawal
So I — if I understand it correctly, you are talking about M&A in a foreign country like land we buy outside or are you talking about M&A within in Europe for those are — Outside-in Europe. Okay, understood. See, currently, 60% of my revenue comes out of exports and that will be based on the large markets that we have. But right now, we are not in a position where we would like to cannibalize our market because five buy a brand there and some of my customers’ competitors. So we are not in this position right now. On the brand-building side, we are largely focusing on the Asia and Middle-East that will be after the market. Going ahead also, we feel that this is the new emerging market and this is where more of our PP will be required rather than a year out of Western world where more-and-more automation is getting focused in fact, plants are shutting down and that’s one of the reason for those slowdown. So I think if we have to build a brand, we’ll focus our energies on the emerging markets rather than doing it, you know, compared that already established brands on there, which and this is very difficult for us to complete in that market.
Rushabh Shah
Okay, fine. Thank you. You.
Operator
Thank you. The next question is from the line of Rohit Singh from Invest Analytics Advisory LLP. Please proceed.
Rohit Singh
Hello, am I audible? Hello? Yes, sir. Good afternoon, sir for the execution that we are doing over the years. So we have been allocating capital efficiently if I look at the past years in terms of ROCE, but growth seems to be a for us. Right now, we are doing a decent capex and looking at the geopolitical tensions and prevailable FTAs with Europe and other countries, coupled with the recent announcement from the Indian government to curb the low-quality imports of safety leather shoes. So do you think we will be able to grow at a higher double-digit in the range of 20% to 25% in FY ’26 or onwards? And can we expect a bit improvement in the margins from here on? Because you also mentioned domestic market is going to grow at a faster pace. So how do you look at the growth trajectory from here onwards? So that is my first question, sir.
Rohit Mall
Right. So the whole idea of doing a lot of investments into fixed asset in the last three years was because we were looking at something like this where you know more-and-more.
Rohit Singh
Your voice is not clear, sir pardon me, but your voice is not allowed.
Rohit Mall
Hello, is it clear?
Rohit Singh
Yes.
Rohit Mall
Okay yeah, so the whole idea of doing the investments in the last four years or so was that we were envisaging something like this to happen where loan demand will be resen for India and Indian made goods and that’s why we went on this journey obviously the plant machinery takes time development that takes time. And now we are at a stage. So, for example, Phase-1 is already, we are already doing manufacturing there. So we are seeing growth in that segment.
And the idea is, yes, in the future, we’ll see a lot of growth coming from the Indian and maybe export market as well. And yes, we are targeting higher than what we have already achieved in terms of growth. But profitability we have to see maybe not in the near-term because the products just won’t sell itself, right. We have to put an effort, we have to do a lot of marketing activity to ensure that the product able to do product development, which cost. So I don’t think right away it will affect profitability. It will be our efforts to improve profitability, but I don’t think it’s just going to happen just with the increase in growth from the domestic market.
Rohit Singh
So this growth that you are talking about based on the capex that we are doing, is it going to be there in FY ’26, like we will be able to do a kind of 15% or 20% kind of growth in FY ’26 in top-line?
Rohit Mall
Yes, yes.
Shyam Sundar Agrawal
Yeah, we are targeting that. We are targeting that and our plans remain in that manner. So let’s hope that we will able to achieve it.
Rohit Singh
Got it, sir thank you, sir. I’ll jump back the queue. Thank you.
Operator
Thank you. The next question is from the line of CA Garvit Goyal from Invest Analytics Advisory LLP. Please proceed.
CA Garvit Goyal
My question is answered.
Operator
Okay. Thank you. The next question is from the line of Rohit from Mittal Analytics. Please proceed.
Unidentified Participant
I thank you for the opportunity. Am I audible?
Rohit Mall
Yes, yes.
Unidentified Participant
Sir, I want to ask till when we can expect these lines to start commercial production, the PU Gloves facility in Saland and industrial safety shoe facility in Chandigur.
Rohit Mall
Yeah, both will be starting from 1st June. So commercially we will be starting from 1st June.
Unidentified Participant
Okay. Yeah. In fact —
Rohit Mall
Just to add here, the first shipment for shoes goes out this. I feel like this one we are, you know really out for the shoes. It’s already on process., yes, first you know, but shoes are already starting.
Unidentified Participant
So your voice was not clear. Can you please repeat?
Rohit Mall
I’m saying shoes has already started, so we will start shipping out this month onwards within the next few days.
Unidentified Participant
Okay, okay. Okay. And sir, number of distributors that we have as on-date?
Rohit Mall
Around 80 80.
Unidentified Participant
80 Distribution right?
Rohit Mall
Yeah, yeah.
Unidentified Participant
And sir, are we also planning to — for any new product launches this year?
Rohit Mall
See, new glove is going to be a new product launch for us and then we will also be coming out with the PVC. These are even two new product expansion and then definitely within the product range, we keep launching new products, new articles.
Unidentified Participant
Okay. And sir, the last question would be like you — the management gave previous target of INR1,000 crore revenues by FY ’27. So is this — is that target remains intact?
Shyam Sundar Agrawal
Yeah, I think that’s for FY ’28, not ’27, if I’m not wrong. Yeah,, it we would like not to change it. We would like to keep the target same and consistent. So yeah, right now, we would not like to revise it.
Unidentified Participant
So INR1,000 crore target by FY ’28.
Shyam Sundar Agrawal
Yes, yes.
Unidentified Participant
And sir, what is the other income component in this quarter for FY ’25?
Shyam Sundar Agrawal
Yeah. So basically, this is — let me answer, Rohit, this is you know the edge we had reported earlier, we sold our — one of the garment unit which has been in the city and the income is out of asset sale, basically land building which we sold.
Unidentified Participant
Got it, sir. Thank you so much for answering thank you for answering your back to me.
Operator
Thank you. The next question is from the line of Rish Shah from RSPL. Please proceed.
Unidentified Participant
Yeah, hello. Good afternoon, sir. This is Abdul Kather Raja here. Thank you for the opportunity. Sir, just a couple of questions. Sir, if you could just please give us some light on like what could be the revenue from this new Sonand plant Phase-2. So on an annual basis, how much can we expect the revenues from this plant? And the second would be, sir, like as we see like the gross margins have been falling from the start of this financial year. So roughly it is down almost 200 bps. So if you could just please give us some more or light or light on this like why is this happening? Thank you so much.
Shyam Sundar Agrawal
So Rohit, let me answer this. So for the sand and project you know, we are starting with only 25% capacity. So age of now, we have around 6 lakh dozen pair of deep which we have facil — the capacity which we have installed. And with this capacity, we target around this year maybe 25 to in-between INR20 crore to INR25 crore turnover. But with the full capacity, which we will be building up, maybe it can be built-up within one year, within two years looking at-the-market. At the full capacity which will be almost four times of what we have done, the turnover should be in excess of INR100 crores coming out of and the unit. And the second one, what was your question?
Unidentified Participant
So it was about the gross margin sir.
Shyam Sundar Agrawal
Margin remains almost similar. There is no change we have mentioned that the dip in margin, little bit margin has been EBITDA because of additional expenditure we incurred this year-on, you know some branding, marketing and you know this consolidancy charges. So over the period, it should be coming down and then the margin should be the — overall operating margin is in the range of, 13% 14%. So it should remain in that level only.
Unidentified Participant
Okay. So what I wanted to understand and like get a clarity is it because of the change in some mix that our margins operating — the gross margins have come down?
Shyam Sundar Agrawal
No, no, no. As I mentioned that the margin has come down only because of one-off expenditure, which we have incurred this year. This is additional to regular expenditure. So the margin remains same and we — it is likely to be same in the future also. Only thing is that for this year, we have 100 basis-point dip because of this additional expenditure, which we don’t see going-forward, it should not be that much.
Unidentified Participant
Okay. Understood, sir. Thank you so much.
Operator
Thank you. The next question is from the line of Zaki Nasir, an Individual investor. Please proceed.
Unidentified Participant
Sir, congratulations on a strong Q4. Kicking off from the last question, sir, what would the quantum of this one-off expenditure be and would this — would this have been incurred in the last quarter sir?
Shyam Sundar Agrawal
Not the expenditure is spread over the year and the 100 to 125 basis-points almost are being curred additionally during this year. Yeah.
Unidentified Participant
Okay. And sir, how is our export markets looking, which part of the export market is looking better? And a bit of light on your white-label versus your own branded products.
Shyam Sundar Agrawal
Rohit, you can answer this.
Rohit Mall
Yeah. So on the export marketing side, like we have mentioned in the past also, lot of effort has gone into the US.
Operator
Hello? Yeah, your voice is breaking. Do you want me to reach on you?
Rohit Mall
Yeah, if you think that helps.
Operator
Okay, sure give me a moment. I’ll rejoin the management till then. Thank you for waiting patiently. We have connected Rohit line with us.
Rohit Mall
Hi, is this audible now? Better?
Unidentified Participant
Yeah. Yes.
Rohit Mall
Okay. Okay. Yeah, sorry. So yeah, on the export marketing front, like we’ve mentioned, we are focusing a lot on the North American market, particularly the US and that’s where our efforts are going and that’s showing good positive results as well now with the sudden, you know tariff news little people are little scared, shocked you know, wait-and-watch strategy is being deployed but I think it should be good for India-US ties but we’ll see how quickly we are able to get a trade deal with the US that will you know directly affect us that market has been performing well. South America has also been a decently performing market for us. We started some developments in the Russian market. So it’s a large market and it’s not an easy market to crack.
So our efforts are going there. We have — but we have already been able to get some entry into it. Our Europe market is on a slowdown a little bit because especially the industries here, auto industry and a lot of manufacturing industry are shutting shops, they’re not able to run. So the demand is weak, there’s inflation and interest rates are also not so great. So we’ll have to see how Europe performs this year, but I think we will be more focused on the other side of Atlantic this year and that should perform well.
And also with our brand in the Middle-East market, now we have opened up an office in UAE. So that should help us be more closer to the market and grow that market faster. So, yeah, very insignificant numbers right now, but I’m hoping big developments in Middle-East and Africa this year with our brand.
Unidentified Participant
And what percentage of exports are under your own brand, sir? I mean, if I may — I mean you said it is small now, but how has the brand been accepted in Middle-East? And going-forward, what do you feel of it?
Shyam Sundar Agrawal
As of now, maybe I would let me give you the numbers for under brand, we are maybe up to 2% of my turnover export turnover is going under our own brand basically. Yeah. Rohit, you can just say.
Rohit Mall
So the brand, so a lot of effort needs to do it needs to be done on-brand building in the Middle-East and Africa market. Initially, what we have seen is a good reception because those markets are largely dominated. Earlier were dominated by big American or European brands and then were the Chinese low-cost brands which got in. So there is according to us a some gap in the market where a good price point brand can enter and us being the manufacturer, we can we can position pretty well there.
So the brand acceptance is there. A lot of effort needs to go in. And now with our office opening there, I think we should be able to capitalize on that market. So, I would say it’s positive and we are very hopeful from the Middle-East and Africa market, particularly.
Unidentified Participant
Thank you. Thank you so much, sir and best wishes for the year.
Rohit Mall
Thank you.
Operator
Thank you. The next question is from the line of Bharat Sheth from Quest Investments Advisors Private Limited. Please proceed.
Bharat Sheth
Sir, I — earlier your voice was not edible, so I missed some of the question. So if I have to compare like say export vis-a-vis other parties are large players. So how competitive we are and what is our right to win against those large players? So if you can give some color, not immediately, but the way we are spending on the development and marketing expenses.
Rohit Mall
Right. So if you are talking particularly about our white-label business in Western countries. So see all these large brands, they are moving away from manufacturing as much as possible. So they don’t manufacture goods, they want somebody else to do it for them. So — and a player like us who has a long history in the industry and the fact that we offer a wide range of products this helps us win in the market. Now these large brands look for stability, they also are looking at India as a more stable country than other Asian counterparts. With the recent tariffs and COVID and all of that happening, I think it’s worked largely in India’s favor.
So that part is also helping and people are trying to derisk their supply-chain or have dual supply chains. So that’s where they’re looking at options. And also the fact that now we have built-up capacities, a lot of players are interested in you know working with us. So these are some of the things that have helped us establish ourselves in the market and that I would say has becoming our right to win in those markets. Hello. Is that does that answer your question?
Bharat Sheth
Yeah. Thank you, sir. I have one more question. When we are expecting to double the revenue in three-year time, so what kind of additional resources will require in terms of, say, capex, working capital and how do we are going to fund terms?
Rohit Mall
See, largely the capex? Yeah,, please go-ahead.
Shyam Sundar Agrawal
Yeah, yeah, yes. So in that case, you see we already mentioned for the last year, we have been planning for these when we stated that we would like to double our turnover by FY ’28. So there was a plan behind this. And we have already — majorly we have done capex and now almost INR200 CR, we have requested. And we are ready with the capacities are now planned that you know as per the requirement, we have at least we have the infrastructure and we will be putting up some additional machinery as per the requirement. So it is already geared up.
Bharat Sheth
So if you can put some number, I mean what kind of machinery will require? And how much is the main power?
Shyam Sundar Agrawal
So I just give — I just give you one example like in Sanand, as I mentioned that we target more than INR100 crore turnover from here. So with the current capacities, we should be getting around 25 CR to 30c. But definitely on sort notice and as per the need and as per the requirement of the market, we can put up additional there and you know these can come within one to two months’ time. So you know, then easily it can — we have this facility where we can have more number of and the target to have INR100 crore turnover — more than INR100 crore turnover from this unit only. So similarly, in case of Sux unit, which we have set-up here, again, the turnover can be up to INR50 we can get from there. So these will be additional turnover coming.
And then we have existing units where again we can have increase in safety and some news we can install and increase the capacity. So basic infrastructure is ready and we — the capacity which we will need for INR1,000 crore turnover is also planned. And over the next three years, we as per requirement, we will be adding up capacity as and when it is needed.
Bharat Sheth
Okay. Thanks, sir. And sir, last question, bookkeeping question. If I have to understand like say our major contribution from the turnover is coming from then garment and the leather loans and the needed nitride blows. So if I have to understand value-wise as well as EBITDA wise, if you can give some packing order, which is the highest profitable and which is a more valuable because since we just shared the SKU unit number, but not value-wise.
Shyam Sundar Agrawal
Okay. So see, basically broadly the market is like one-third each for body production, head production and fit protection. So in our case also it is 40%, 30% and 30%. So a little bit higher on the side, but this is what fairly the distribution should be one-third each and this is what we target. And profitability-wise, see basically if you know the more value-added product you produce and the technology-driven product you produce, you will have the better margins. So in our case also like you know the — it is range-bound basically, I would say not a much big difference, but in-between 10% to 15%.
So 15% for the garments or safety sewage or deepped gloves and 10% for the leather gloves category, which is a commodite product. So that way. So on average, we will have this 14% margin, but the range is like this.
Bharat Sheth
And if I have to sort of look at, I mean, competitive scenario, so in which SKU, the competition like garment where there are several unorganized players. So if I have to understand from that perspective, how really we can — if you can give a little more color.
Shyam Sundar Agrawal
See, we are not competing in garments with player. So unorganized players are there mainly catering to the domestic market. In case of export market and all these export market is only for certified products, you said have certified facilities, bigger facilities and with all the systems in-place and audit and everything and certification, so we are catering to that market and yeah.
Bharat Sheth
Okay. Thank you and all the best, sir. Thank you.
Operator
Thank you. The next question is from the line of Aditya from Securities Investment Management. Please proceed.
Aditya Khandelwal
Yeah, hi, sir. Thanks for the opportunity. Sir, my question is on inventory days. So our inventory days have been pretty high for the last three years if I compare it to our historical average. So why is that and what should be the inventories we should assume going-forward?
Shyam Sundar Agrawal
Yes. So see in our case we are into private level thing and you know and we need to have different type of — we have different range of products and different type of inventory, few of which we also import, almost 15% of our consumption is being imported. So the — we have analyzed these things and need to have these primarily raw-material and accessories, we need to hold-up to 30 to 90 days to 120 days. And then you will have some finished good center of IP, which is within the acceptable range of 15 to 10 days. So yeah, we need to — recently what we have decided that because of — to increase the productivity also and to take care of supply-chain risk and with the advice, we had to build-up some inventory to take care of productivity.
So inventory has gone up little bit maybe up to 30 days last year. But you know that we are trying to again regularize. But within that range, up to, I would say to four to five months of inventory we need to keep per our type of business — requirement of the business. We need to keep that.
Aditya Khandelwal
Yeah. So one assume this 180 days to continue because if I look at the cash-flow from operations, last two years, the cash-flow from operations have been pretty low.
Shyam Sundar Agrawal
Yes. So this is what I told you that we — should be in the range of 120 to 150 days, not 180 days. So we are targeting to bring it down to 150 days up to — but that this much we need to keep — to keep — to take care of all the supply-chain risk and as well as to ensure that productivity is maintained.
Aditya Khandelwal
Understood, sir. And sir, secondly, this capital working through INR74 crores. So is it related to Saland and only? Because I think we have been — we should have been capitalized in Q4.
Shyam Sundar Agrawal
No, no, it was relate to Sanand and, as I mentioned that the unit commercial production is yet to start. So this is capitalized in current year only.
Aditya Khandelwal
Yeah. Okay. And what would be our capex plan for next year?
Shyam Sundar Agrawal
Yeah. So routine, we do around 10 minimum we do on an average basis, which is routine capex, but looking at the new facilities and definitely we’ll be building up more capacities there. So maybe 20 cc to 25cs this CRV plan.
Aditya Khandelwal
Understood. Understood, sir. And also secondly, this new facilities which we have added, so how should one look at the ramp-up of these new facilities? Is it that we have confirmed orders on-hand and the ramp-up should be pretty fast and we should be able to utilize the capacities, 70% to 80% of the capacities can be utilized or is it going to be a slow ramp-up where we have added the capacities, now you have to approach the customers and to get the orders.
Shyam Sundar Agrawal
So yeah, it would be slow ramp-up in the — see, as we mentioned that we have started with two injection plants and this is what we we see that we can cater to the dairy market we have, but definitely we need to go to the market with the newer product also and see the market, how it responds and then we will be adding up capacity.
Aditya Khandelwal
Understood, sir. Understood. And sir, on this margins, so now the capacity utilization is going to be low initially. So margins ideally then should be lower next year as well because the capacity utilization would be lower. So how are you looking at the margin piece? Should one assume that next year also the margins should be in the range of, 11%, 12% and as the capacity utilization improves, then it will increase to, 13%, 13% 14%.
Shyam Sundar Agrawal
See at all our units, we are working at almost you know full capacity, so 30%, 80%. Talking of only Sarnand, it is we have started with the plant 25% of the plant capacity. So again, you will say as you will know that the entire investment is through our — this thing, internal accruals and hardly there is any fixed-cost there. So very minimum. So we don’t say there would be much effect on the profitability there also.
Aditya Khandelwal
Understood. And this INR5 crores one-time expense which you mentioned, sir, but wouldn’t — wouldn’t it be a regular feature because for now even for now — for you to increase sales, you have to keep on investing in marketing and consultancy. So just wanted to understand please.
Shyam Sundar Agrawal
I know you are not clearly audible. Can you please repeat the question?
Aditya Khandelwal
Yes. Yes, sure, sir. Sir, just INR5 crores of one-time expense which you mentioned for marketing, sir, why is it one-time? Because shouldn’t it be a regular future going-forward as well as you — as you try to ramp-up your capacities, you’ll have to keep on incurring these expenses. So why are you considering this as a onetime expense?
Shyam Sundar Agrawal
No, I tell you why it is because it is not only marketing, but as well as consultancy also. So as we had mentioned that consultancy was almost more than 50% cost, which we incurred this year to set-up some systems there. And the other part marketing, definitely the budget would be there, but you know then you have 20% growth in your turnover also. Certainly, the budget not be 20% in-line with the growth. So what we target that, okay, this year we had this additional expenditure, but otherwise it should be absorbed within the total growth.
Aditya Khandelwal
Understood, sir. Sir. Understood. And sir, just last one question on tariffs. So how do you view this tariffs? So is it beneficial or is it adverse for our business? Because we were looking to grow our North-America part of the business. So wouldn’t it be beneficial for us to get more customers over there?
Shyam Sundar Agrawal
You can answer this.
Rohit Mall
Yeah. Yeah, am I audible?
Aditya Khandelwal
Yes, sir.
Rohit Mall
Okay. Yeah. So see tariffs depends on, you know if it’s favourable for our other category for India or another. So we have to look at the minor details of the tariffs to know if it’s better for us or not. So India has some free-trade agreements with some of the nations, which has worked well for us for some of the markets, large markets, even Europe, that does not allow us to grow faster and does not keep it in the same level-playing field. So let’s see what comes out-of-the tariffs. It depends on what kind of an agreement India that will do with the US market. It’s favorable, which I think should be because our industries like textile and leather are India and that’s what usually they focus on when they go into negotiations with other countries on the trade.
So I think it should be beneficial for a company like us, but we have to wait-and-see, but in any case, like we had started on this journey a couple of years ago. So we are anyway going ahead as the market response has been good. So time-out as our focus will still be in all country like US because we are underly presented there and we’ll push for it.
Aditya Khandelwal
Understood. Sir, just one follow-up. But currently, there would be a tariff differential between China and India for the US, right? For our kind of products?
Shyam Sundar Agrawal
Yes, yes, yes.
Aditya Khandelwal
Between India and China, right?
Shyam Sundar Agrawal
Yeah, it is 10% and 30%. Yes, there is a difference. So yeah, but it is just short-term. It has just — and it has been changing also. So the buyer will not decide according to these rapid changes. Definitely, there is a policy change. They are looking for China plus one supplier alternative thing. But tariff we need to wait-and-see how it settles with — you know now until unless the things are settled with you know what China will have finally and what India will have, the buyer would be a little bit hesitant. It’s not going to overnight ship to you. So they are also waiting and watching and we are also in the same mode. So let us see how it progresses.
Rohit Mall
Yeah. So please note these 10% and 20% right now are our reciprocal tariffs. So India already had tariffs to some of our products going into the US. So this 10% is on-top of those already installed duties flat 10%. So whatever we are selling, we just got 10% more expensive for the wires. So there — and there is usually a lag between when the tariffs happen and when the customer agrees and then customer agrees because eventually somebody has to pay for it. So you have to look at how important essential the item is and then accordingly decided, okay, where to put the budget which has just inflated. So we have to see — and even if there is a distance of 10%, 15%, some of the products, China is cheaper near by 30%. So even if there is price difference of 20%, I don’t know-how much or if it makes us same price level as China, some people don’t want to China shift because of the same cost being through the existing supplier renewable system. So they don’t want to change their suppliers mix. It does not happen overnight. It takes a lot of building and long period before the shift happens.
Aditya Khandelwal
And that’s, sir. Thanks for answering your question, sir. I’ll jump back-in the queue.
Operator
Thank you. Thank you. The next question is from the line of Amit Agicha from H.G. Hawa. Please proceed.
Amit Agicha
Namasthe, sir, good afternoon. This is Amit Agi Cha here. How are you, sir?
Shyam Sundar Agrawal
Good.
Rohit Mall
Good afternoon.
Amit Agicha
Yeah, okay. Yeah. Sir, my question was connected to the product response about Kala Pila and Garud and like also your broad broader brand-building plans leveraging IPs like, how has the response been? And second question was connected with the debt-equity ratio, like what are your plans regarding the debt?
Shyam Sundar Agrawal
So you can answer the first part about this.
Rohit Mall
So the first the response has been pretty good so we did not have issue for the Indian market and that’s why you know, whenever the workers have larger seats and larger, you know tolls hires, you know we were missing all markets and now we will be able to capture those markets as well. So we think the response has been good and still the effort is going on. It’s just like about six, eight months ago. So effort has to go into it. And also the in the other do not have a brand for other, it’s still highly, highly unorganized like the. So we’re trying to take into that market and you know and taking our experience from the market.
So it’s been good. We’ve seen okay for both the product lines and also with regards to the awareness program regarding with. That program is still ongoing and we are still doing a lot of campaigns wherever you know this character is known, which is largely about East and West of India so it’s a good way to increase awareness and people are responding well to it. And so we will continue visit on the timing and put more marketing.
Shyam Sundar Agrawal
What was the second question?
Amit Agicha
So about the debt-equity ratio.
Shyam Sundar Agrawal
Yes. So see, we are — I would say that we have been fairly debt-free company and this debt which you see at the books is again working capital loan-only. And this also we have started borrowing, it is not as per the full eligibility. Still it is you will see that it is part of the working capital total working capital. So we borrowed this year-on the higher side because we have been investing very heavily. So looking-forward — going-forward, we see that the percentage of this debt should also be coming down and we plan to have only working capital loans in future also.
So we will be generating enough cash to take care of both capex and working capital requirement in the future also.
Amit Agicha
And sir, the question was connected to the e-commerce platform like the revamp e-platform, like how has the response been there, sir?
Shyam Sundar Agrawal
Yeah. So it’s — this also happened, I think five, six months ago. So the earlier response has been good and you know it was so that we could try the market also, see how people respond to it. So it’s been interesting. We are doing adding a lot of features still on to it. I think this year is when we’ll have — we’ll have promoted it properly and start seeing what is the response. Definitely, third-party e-com platforms, we have been there for a long-time. So that response is has definitely been there and more of a brand-building exercise for us and to avoid people from buying counterfeits. So we’ll focus on e-commerce with that strategy that you know if people have to at least buy online, then they come directly to us rather than some 3rd party.
So with that objective, we’ll go-ahead and yeah, we’re hoping for a good building exercise from it.
Amit Agicha
Thank you for answering my question. All the best for the future.
Operator
Thanks. Thank you. The next question is from the line of CA Goyal from Invest Analytics Advisory LLP. Please proceed.
CA Garvit Goyal
Hi, thanks for the follow-up. Sir, just want to ask on the guidance part again. We are targeting 1,000 by FY ’28. And I just want to ask what changes because at the same time, we are speaking about some slowdown in the European side, specifically the industrial manufacturing and all. So what is going to be driver towards this target? Because looking at the target, we have to grow at a pace exceeding 25% CAGR, right? So how do you look upon it? Like what will be the factors which will help us to ramp-up the thing. And right now, please also tell us what is the peak revenue that can be done on the existing capacity, sir.
Shyam Sundar Agrawal
Okay. So let me — Rohit, let me answer this. So see how it is happening that you know, we are working at very low-base. It is not like you know the market is too big, almost $68 billion market worldwide, the Indian market is almost $2 billion to $3 billion. So we have to do what, 20% to 25% growth and definitely you will see talking about domestic market, there is lot of changes happening, lot of MNCs, lot of product awareness, lot of productability, import substitution and you know category-wise also like from manufacturing to services and agriculture, then you know lifestyle also, things like you know, then we are et-cetera.
So lot of products to be launched and the market is growing very fast from — moving from unorganized to organized market in India. So there we see more than 30% growth coming at the very low-base, it is very, very reasonable to expect that we should be targeting more than 20% growth here. And also we are trying to do a lot of brand-building and trying to reach to the new markets within India also outside India also, within India like from industrial hubs to from Tire one city to tire Tire 2 and Tire three city also. So lot of marketing plan there. There and with the support of capacity buildup which we have done.
Talking of exports also, very briefly, I would say that the market is very weak. Yes, there are the challenges in the market. But talking of like if we try to go to the US or looking for China China plus one advantage. So you know-how much target we see, INR100 crore in a year to achieve 25% growth. So very workable, you know, because market is very large and with all these challenges and with the efforts, we should be reaching there. So that is our analysis and assumption. Rohit, you can add-on this.
Rohit Mall
Yeah, largely, you know the idea is to grow even in the export market through product additions, through market expansion. And if some geopolitical reasons and macro reasons come into play, so we would be ready to capitalize that also like there were any sort of agreements or agreements which are in our favor. So, yes, definitely Indian market and the domestic and the banded market is what we are focusing on India, Middle-East Africa. So the market like Jee said is definitely there and is doable the Europe situation, it comes in cycles. It’s not the first time that we are seeing this. You know, it’s a cyclical economy, so it keeps on happening. I’m sure you know, there will be a cycle when there is an uptick in Europe also.
CA Garvit Goyal
Got it, sir. And coming specifically on the domestic market, you mentioned it is 2 billion to 3 billion market, right, approximate 2,300 CR market you are seeing. So how much of it is organized and how much of it is unorganized, okay.
Shyam Sundar Agrawal
So roughly it would be 50%, I would say, 50% organized, 50% unorganized. And also talking of domestic market, one thing I would like to mention is this labor code, which is also now due for implementation and I think almost 25 states has already added to this. So now it parliament has to just pass this act. So it was pending for long. And with this enactment, you will see a lot of changes happening and lot of compliances and safety issues because there is a separate provision for worker safety there. So with this, we see a see big boost in our product demand also in India.
CA Garvit Goyal
Understood. And by then do we expect this to come in Q4?
Shyam Sundar Agrawal
Yeah. So the good thing is that the majority of the states have agreed to the provisions of this, you know. So that why it was pending mainly for the estate’s approval and what we know that it is almost done now. So maybe in the next parliamentary session, they are going to put up this for the enactment most probably.
CA Garvit Goyal
Understood. And for this year, we are pretty much confident of crossing INR600 revenue going by the word that you are giving, right?
Shyam Sundar Agrawal
So that is the target we have kept. Let us see what — how we — we are able to look. We have to wait-and-see. So definitely we keep the target in-line with our stated target already.
CA Garvit Goyal
Got it. And sir, lastly on the semiconductor side, so like expansion is on the way, government is pretty much focused on this particular area and we need very clean facilities. So can you spend a few minutes on explaining your role in establishment of these clean facility rooms like what kind of equipment are we currently negotiating with the end of customers or are we — will we be able to get a huge chunk of it going ahead.?
Shyam Sundar Agrawal
Rohit?
Rohit Mall
Yeah, I can. So we have some products already which can go into such facilities. So we have the footwear for it, you know where you need clean room you know footwear we can also provide with the garments, which is the disposables and even the regular garments which are required for clean room some knit gloves are also needed which we can give. Eyewear is not something they require eyewear also, eyewear is not something that we manufacture at the movement but we are trading it under our brand in India so we can provide that as well, but once we put out the facility for it, I think we’ll be better-positioned for it.
So a large part of it we have definitely it now depends on what kind of specifications they ask for, do our products match the specification. But please note we are a manufacturer and we are used to customizing a lot of products. So if there is a need and the demand for customizing a product, we would be happy to do that. But till now, we haven’t received a lot of inquiries specifically regarding this. So we have to see — wait-and-see what is the demand coming like?
CA Garvit Goyal
Understood. And sir, any — I mean, apart from these tailwinds that we are speaking about. Any near-term or mid-term headwinds that can that can stop us from achieving the target basically that we are setting for the organization as a whole year.
Shyam Sundar Agrawal
So we are see, that keeps on happening. So when we say we open some markets, some markets are doing well, some markets close also like market like Turkey used to be good market. I don’t know what will happen to it now with the current geopolitical issue. So that we need to wait-and-watch, we’ll see what happens. Any market which like I said about Europe, any market which goes through an economical or political crisis that market and where we are not present in our own brands that becomes an issue for us.
Our supply-chain is definitely a risk that we live with last year in last financial year, we had to face it and that’s why we are trying to protect ourselves from it. And these are some of the issues that we — challenges that we, you know, foresee and that can come any time. Other than that, any trade-related issues happening between countries that we have no control over. So we have to always be prepared for it. But these are some other headwinds I would think at this point.
CA Garvit Goyal
Got it, sir. Thank you very much, sir. I think my questions are answered. All the best for the future. Thank you.
Shyam Sundar Agrawal
Thank you.
Rohit Mall
Thank you.
Operator
Thank you. Ladies and gentlemen, we take that as the last question. I would now like to hand the conference over to the management for closing comments.
Rohit Mall
Yeah. Thank you all for participating in this earnings conference 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 Relations Managers at Valaram Advisors. Thank you and wishing you all a great day-ahead.
Operator
On behalf of Badlivala and Karani Securities India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.