Sky Gold Ltd (NSE: SKYGOLD) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Mangesh Chauhan — Managing Director and Chief Financial Officer
Analysts:
Parth Patel — Analyst
Palash Kawale — Analyst
Chintan Sheth — Analyst
Srinath Krishnan — Individual Investor
Jehan Bhadha — Analyst
Raj Saraf — Analyst
Manan Vandur — Analyst
Bharat Gianani — Analyst
Amit Agicha — Analyst
Nilesh Jain — Analyst
Shanmugam Selvanathan — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Sky Gold Limited Q3 FY ’25 Earnings Conference Call. [Operator Instructions] And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]
I now hand the conference over to Mr. Parth Patel from Orient Capital. Thank you, and over to you, sir.
Parth Patel — Analyst
Thank you, Sagar. On behalf of Orient Capital, I welcome you all to Sky Gold Limited’s Q3 FY ’25 and nine months FY ’25 earnings conference call. From the management side, we have Mr. Mangesh Chauhan, Managing Director and Chief Financial Officer; Mr. Jayesh Sanghavi from the finance team; and Ms. Nikita Jain, Company Secretary. I hope everyone had an opportunity to go through our investor deck and press release that we have uploaded on exchanges and the company’s website.
I would like to mention a short disclaimer before we begin the call. This call may contain some of the forward-looking statements, which are completely based upon our belief, opinion and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties.
With this, now I hand over the call to Mr. Mangesh Chauhan. Over to you, sir.
Mangesh Chauhan — Managing Director and Chief Financial Officer
Thank you thank you, Parth. Good morning, everyone. Thank you for joining us today as we discuss our Q3 FY ’25 quarterly performance. In Q3, the company maintained its strong growth momentum, achieving its highest-ever quarterly revenues and operating profits with year-on-year growth of 116% 0.7% and 217.% respectively. We continue to onboard new clients and expand our customer-base as part of our vision to become one of the largest B2B gold jewelry manufacturer in our segment.
This quarter, we successfully onboarded Aditya Birla Novel Indria brand marking a significant milestone that highlights our ability to cater large-scale premium projects. Additionally, we strengthened our presence among major jewelry retailers by partnering with Carat Lane and P& in the past quarter. The jewelry industry as a whole is witnessing aggressive expansion with leading brands rapidly — rapidly increasing their retail footprint to capture a larger share of organized market. Our existing clients has also expressed plans for aggressive expansion further enforcing growth opportunities. Demand for wedding jewelry remains strong despite fluctuation in gold prices with customer adapting to-market changes.
Sky Gold diversification into new jewelry segment has gained strong this quarter, further strengthening our market presence. The expansion includes 18, natural diamond and lab gold diamond jelly. Both exports and domestic market remain key focus areas and we in-force our distribution network in Singapore to drive export revenue growth. Additionally, we have announced plans to rebrand Sky Gold Limited as Sky Gold and Diamonds Limited. This rebranding reflects a strategic shift highlighting the company’s broader focus beyond to employe Diamond, Lab Gold diamond and other, offering a more comprehensive view of our operations.
We are pleased to announce an update on Sky Gold credit rating from India rating subsidiaries of Pitch globally, which has assigned an rating of A-minus table rating to the company bank loans. The fund-based working capital limit and proposed fund-based working capital limit have been rated A-minus table and A2 — and India plus. India’s rating has based its assessment on Sky significantly operational expansion driven by increased installed capacity, inorganic growth and along with effective working capital management. Rating is expected to reduce the company’s cost of fund.
Collateral requirements will — will the impact may not be immediate. These structural improvements will strengthen the company’s financial positions, leading to better negotiation terms and lower borrowing cost in the long-term and improving ROC and ROE. This quarter, our monthly production volume averaged 447 kg, up significantly from 270 kg per month last year, marking a robust 66% growth year-on-year growth. Exports continue to make healthy contributions with sales of reaching INR71 crores, marking a 12% growth as compared to previous quarter.
Now I will discuss our Q3 financial performance. The consolidated revenue for the quarter stood at INR998 crores versus INR460 crore in ’23 ’24, thus registering a growth of 160% on year-on-year basis. The gross margin was 7.3% as compared to 5.3% on Q3 ’24. EBITDA for the quarter was INR57.3 crores compared to INR18 crores, showing a growth of 217%. EBITDA margins of the quarter stood at 5.7% as to 3.9% in Q3 ’24, improved by 122 bps on a year-on-year basis. PAT for the quarter stood at INR36.5 crores as compared to IN 8.9 crores in Q3 ’24. PAT margins for the quarter stood at 3.7% as compared to 1.9% in Q3 ’24, hence improving 172 point basis on a year-on-year basis.
Moving to the Nine-Month FY ’25 financial performance, the consolidated revenue for nine months stood at INR2489 crore 2489.8 crores versus INR1,232 crores in nine months FY ’25, thus registering a growth of 102% on a year-on-year basis. The gross margin was 6.8% as compared to 5.6% on Nine-Month FY ’24. EBITDA for nine months FY ’24 was INR133 crores compared to INR151 crores, showing a growth of 156%. EBITDA margins for nine months stood at 5.4% as compared to 4.2% in FY ’24, improving at 115 basis on a year — year-on basis. PAT margin for FY 9 months FY ’25 stood at INR94 crores as compared to INR26.9 crores in FY ’24. PAT margins for nine months of FY ’25 stood at 3.8% as compared to 2.2% in Nine-Month FY ’24, hence improving by 161 bps on a year-on-year basis.
We have delivered a strong performance in first-nine months for the financial year and remain on-track to achieve our annual revenue target of INR3,300 crores driven by new client acquisition, operational efficiencies and enhanced management capability. To support our growth, we have the leadership team by bringing in industry veterans across key rows, including plant head, sales head designers to further the business forward.
I will now request — I now request the moderator to open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Palash Kawale from Nuvama Wealth. Please go ahead.
Palash Kawale
Hi, sir. Thank you for the opportunity and congratulations on a great set of results. Sir, my first question is on volumes. So what was the volume out of 447? What is the volume for the Sky Gold’s standalone entity?
Mangesh Chauhan
Standalone for the nine months it was 997 kgs and 134K sorry said 975 gigs and 181 KGs for sparkling channel 18 was Star. Totally we stood at 1339 for the nine months.
Palash Kawale
Okay. Okay. And sir, out of this, have you started delivering to Ajitha Birla as well in this quarter in Q3?
Mangesh Chauhan
Yeah, already we have started delivering Dan, we are delivering monthly 20 kgs and so Billa already got order of last quarter only of 20 kgs and this quarter we will be — already we have started delivering the products. So this quarter the numbers will come, how much we are delivering in this quarter.
Palash Kawale
So sir, in upcoming years like FY ’26 or FY ’27, how much do you expect to deliver to these two companies, which are and Birla.
Mangesh Chauhan
So we — now we are making monthly 450 KG per month with the subsidiaries. We are expecting 10%, 10% of revenue from — more growth from and Avita Villa. So we are expecting monthly 50-50 KG from both plan and this will add 100 kg extra production from our regular guidance. So in — I think it plane, we are on very tracks. Every month we are getting order. Aditya Villa first order has already dispatched. So this quarter will be a trial basis and then we will get a regular order. So we are expecting to add next — from April quarter 50-50 from both the companies.
Palash Kawale
Okay. So just to be clear, you said that 10%, 10% from both the companies you can deliver by FY ’26, ’27.
Mangesh Chauhan
Yeah.
Palash Kawale
Okay. And sir, you don’t have to take gold on your balance sheet, right? So it will be very capital work — a capital-efficient
Mangesh Chauhan
Business also in inventory also because they provide us their goal gold material to produce, we make them and we charge the making charge. So making charge will add all to the gross margins and sales. So we just make a bill of making charges, which will add directly to our gross margin.
Palash Kawale
Okay. So it will be like adding to your cash-flow as well.
Mangesh Chauhan
And yeah, that’s great to fund inventory also. So there is a good sign there if these all corporates are going — giving us more productions.
Palash Kawale
And sir, any change in guidance after adding this customer for FY ’26 or FY ’27, are you planning to like you have guided for 6,300. Would you be changing that guidance?
Mangesh Chauhan
Yeah, already we were at INR6,300 crore now we are guiding at INR7,300 crores as we have already — we are already reaching out of INR3,300 crores, we have already done INR25 crores. So we will be — we have changed our guidance to INR7,200 crores because these are clients we have not counted in our guidance of INR6,300 crores. So this new clients already we added and also was not. So we have revised our target to INR7,200 crores by FY ’27.
Palash Kawale
Okay. That’s great to know, sir. And sir, what would be your PAT margins on this INR7,300 crore business?
Mangesh Chauhan
So we are expecting from 3.5% to 4%, 3.5% to 4% in-between that.
Palash Kawale
Okay, okay. And sir, how is Q4 shaping up since two months are already done, if you could just give a directional guide — update that would you be crossing this 447 kg mark, would you be reaching 500 kg per month for Q4?
Mangesh Chauhan
100%, we are old, right? We will not talk about the number of the ongoing quarters, but this quarter is much better than the December quarter. Okay, sir, that’s great to know.
Palash Kawale
That’s it. That’s all from my side. Thank you for your answers and all the best for the future.
Mangesh Chauhan
Thank you.
Operator
Thank you. The next question comes from the line of Chintan Sheth from Girik Capital. Please go-ahead.
Chintan Sheth
Thank you for the opportunity. I missed your number on — on the standalone volume for 3Q and subsidiary volume from for the 3rd-quarter.
Mangesh Chauhan
So by number seven to INR730 crores we done from Sky Gold and subsidiary INR135 crores and INR34 crores. Together we are…
Chintan Sheth
INR998 crore. But no, I’m saying from 447 kg per month-in 3rd-quarter, how much came from standalone and how much from the subsidiary?
Mangesh Chauhan
Okay, volume-wise, 447 kgs. I can send you the — you can send me, I will send you the details. Yeah. Right now I’m not having a…
Chintan Sheth
Sure. Okay. Nobody. And second is on the gold loan GML side, where are we now? Last-time we were at, 20% 25% of our loan converted to GML. Any progress and what should we expect by the year end?
Mangesh Chauhan
So we are — yeah, we are expecting by March and 16%, 70% these are expecting by December, we are little bit slower by 1/4 because of some case Bank has closed their model. So we have to ship to ICICI Bank. SBI is also on the process. So we are like at 20% 25% right now also, but we are — I think we are sure that we’ll move by March quarter to at least 55%, 60%. So we are on-track. Bankers have the system to change this or they have to go to committees and, but little bit — we are a slow on this we were expecting by December quarter. But let’s see, we will be up at 55%, 50% by March quarter.
Chintan Sheth
Right, right. And if you can provide a split in terms of volumes, if you can provide our revenue, whichever is available, the split between 22 karat, 18 karat you know and studded one if you can provide?
Mangesh Chauhan
Yeah. So I think that we were at 3% last quarter and now we have done 8% — 5% of this revenue in 18 care. So the last quarter we sold diamond actual of 400 there is a 400 carats and this quarter we have done 800 carats. Sorry, I will give you the that. So last quarter we approximately sold 400 carats. This quarter we sold 883 carats of diamonds. Last quarter we were at 37 kgs of 18. This quarter we are at 49 kgs of 18 karat, which is a — we were at 3% of the production, now we are at 4%, 5% of the production. So 18 — as we told that we are concentrating on 18 rose gold and white gold, which is bringing us again margin to us. So we are more considering on care also. Natural lime also we doubled the in this quarter. So this both segment we are and one is that we already started level diamond and our first also shift to limelight jewelry, which has 25 stores. So diamond also we ship the first our production.
Chintan Sheth
Okay. Okay. Got it. And lastly, on the — on the guidance, you mentioned INR7,200 crore by FY ’27, that implies that you will be almost utilizing or exhausting your existing capacities, right? Any broad plans for a further expansion in capacity and how you will be funding it? Because so-far right now, given that our working capital, our operating cash generation is still negative and we were targeting somewhere the turning positive in the upcoming year. If you can highlight how far you going to explain your capacities for future growth beyond FY ’27 and how we will be funding them.
Mangesh Chauhan
So we have in mind that after FY ’24 March will be the new facility as new clients are onboarded, big clients are onboarded. But as and when Board will plan and we’ll inform the exchange and we’ll inform the action. So right now, we are in the comparable as and when required, so we will be on cost, we will be cost cash-flow positive in ’27 as you can see, the client onboarded are giving us the raw-material by their own. So we don’t have inventory. So we are adding those clients only. We are targeting reliance also for debt and already in pipeline. So we are targeting them also. So we are on those clients who are providing us raw materials. So blendedly, we will be earner — we will not requiring much capital to fund them and we’ll be cash-flow positive by 2027. After 21 March, we’ll need a huge facility we have in mind. So we are preferring for that, but as and when Board approves, we will inform the actions.
Chintan Sheth
Sure, sure. All the very best, sir. Thank you and all the best.
Operator
Thank you. The next question comes from the line of Srinath Krishnan, an Individual Investor. Please go-ahead.
Srinath Krishnan
Good morning, sir. The first question is on capacity expansion. This is a very large expansion that you’re undertaking. What gives you the confidence that we would be able to utilize this capacity maybe even in four, five years, is it like a 4x to 5x increase in capacity, right?
Mangesh Chauhan
Sure. So you can see that this lane now the lane now is planning for, I think 300 more stores as he has moved his subsidiary from to Tata. So earlier there was subsidiary, they were not able to keep all the inventory to the inventory because Tanish was keeping. So now itself the CEO from has came to where they are planning to open 300 stores, more stores in two years. So like that Kalyan, Malabar, Gold, Khazana, all are planning aggressively in two years, 24 months, they are aggressively opening 200 stores, some stores from which they have opened, they have taken seven to eight years to open 80 store. Now they are opening in one year. So they are doing aggressive plan and we are in the mindset that after two years, we’ll need a huge facility when we will have also and I think major clients are onboarded. We are in talks with Reliance also.
So the growth will come is from the organized market, which is unorganized market is shifting to organized very much drastically. Earlier they were expecting to shift it by 2035. Now they are expecting that in six year only much of the higher percentage of the market will shift to organized and it will come to 78%, which we were expecting in 10 years, it will happen in five years only because of the stable government and government and also policies they are taking. So we are expecting a huge growth in the stores opening. We have onboarded all the corporates right now in the Dubai, Singapore also we have a very distributor — we have a distributor. So export is also growing very much. We are expecting to grow very much in these two years.
We knew it a good space. Now we are a small space in only for, but we need a huge space for also and 18 care is accelerating very much for those white bone and yellow as the gold rates are going up, 18 care will — market-share will also best. Keep in mind that we are into all the segments. We have to plan a huge facility where this client will growing very aggressively and we have to cope with them. So we have in mind, let’s see, we will — when SNL, we plan is on-board, we will involve the.
Srinath Krishnan
Sure. So the next one is, sir, like is on the capital employed in the business. If you look at it, you — one effort you’re taking is gold metal, but the — and also importantly, the customers are going to give you reduce the capital employed. That’s okay. That is also a very large 50% of your capital employed. Yeah. So can you hear me now? Can you hear me now?
Mangesh Chauhan
If you can repeat the question?
Srinath Krishnan
Yeah. So 50% of your — you’re taking care of your gold bullion, right, like because the customers are going to give it to you, yes, large portion of your capital employed and the rest is receivable. So what is — because a reduction there will also significantly reduce the capital employed and improve the ROCEs and cash flows. So what is the effort that you’re taking there directionally, where can we move towards in terms of receivable cycle from the 25 days we are at?
Mangesh Chauhan
So 100% of inventory days or we are in 25 days, but later days we are in 25 days and we will come down blendedly because we nowadays, whichever we are exhibiting yearly four times and we are totally doing cash-and-carry business with them. So we are now targeting now our Vice-President, Akash joined us totally targeting the customers who are giving the volume advance or we are in the cash-and-carry business. So in two years span of time, we are expecting that this carried play in are reliance and if we are successful in also, so they will give only 50% of production of their and 60% out of 1,000 KGs we have a capacity, 500 KG will be from their out — their raw-material and 500 KG only we have to fund and fund the data. So blendedly, automatically, it will come down to 15 days or something. So already you can see we are concentrating on data and we — we are expecting it will come to 15 to 10 days because 50% business from right now is from here to FY ’27 March, we are targeting 30% business should come from there — their business, we don’t have to fund that raw-material basis also. So blendedly, it will come down.
Srinath Krishnan
From 130% of your business will come from people who are giving bullion, right? And also exports will also be another 20%, 30% where — what is the receivable cycle there?
Mangesh Chauhan
Exports is again 10 to 15 days is seven days, same day. So it’s much better than India. So their receivables is very fast from India. So blendedly exports also we are concentrating we are — we were at 1% or 2%, we are at now 8%, 9% and we are targeting to take it to 15%.
Srinath Krishnan
Okay. Both these put together will be nearly, you know, to something 30%, 40% of your revenue, which will have very low receivable cycle.
Mangesh Chauhan
Yeah, yeah. We are on-track with it.
Srinath Krishnan
Okay. Thank you, sir. Thanks.
Operator
Thank you. The next question comes from the line of Jehan Bhadha from Nirmal Bang. Please go-ahead.
Jehan Bhadha
Yeah. Sir, my question is on the borrowings front. So what are the current borrowings as on December?
Mangesh Chauhan
So it’s approximately INR380 crores to hold it approximately.
Jehan Bhadha
Okay, okay. And any of the funds that we raised recently of INR270 crores that are going to be used for working capital?
Mangesh Chauhan
Yeah. So already we use INR70 crore 70 crore in subsidiaries and INR140 crore in the subsidiary — the subsidiaries and 100 — out-of-the 130 crore 100 crore was using Sky and 30 crores for the general corporate expenses. So we have already infused here 18 and natural diamond and diamond, we have increased the new capital we increased and there we increased in the Star is sparkling sales. So all that division we have and invested. So we are seeing the growth in 18 carrot also. We have grown from 3% to 5%, then we have grown natural diamond also by 50% quarter-on-quarter.
Jehan Bhadha
Okay. And so sir, how should we look at debt for — by the end of this year and by end of next year, where should the debt figure be?
Mangesh Chauhan
So I think by end of this year we are at INR400 crore only. We are in a comfortable situation. And next year, we can increase some INR50 crore INR debt, not much than that because we are getting GML right now. So it will be not cost — and for our interest cost will be lower because of GML. So already ICICI Bank has granted a INR100 crore of GML. So we will be much of taking GML only, which will not impact our PAT margins.
Jehan Bhadha
So yeah, that I understood, sir. Yeah, but the gross debt will be how much?
Mangesh Chauhan
So gross debt will be approximately next year we are planning — this year is this call INR50 crores INR600 crores.
Jehan Bhadha
Okay, okay. Thank you.
Operator
Thank you. The next question comes from Raj Saraf from Finvestors. Please go-ahead.
Raj Saraf
Sir, congratulations on great sorts of numbers. Sir, how would be the margin outlook, sir on the EBITDA and gross margin sir, will it sustain this level or what could be could be the outlook for going-forward, FY ’26 and FY ’27.
Mangesh Chauhan
We have worked very hard to for the deli and we have improved our gross margin also and EBITDA also increased. So we maintain this EBITDA for 5.5% approximately and PAT margins were 3.5%. So we have improved and we maintain this in this two quarters also. So we are largely concentrating on the margin-based products, which are like 18 gig natural diamond also adding first shipment only gone from a small amount of INR15 lakh to 20 lakhs, but it’s going to grow by, I think out of our revenue, will have a place of 5% in next three, four-quarter or six-quarter. So I think blended margin will be at 7% and EBITDA at 5.5% is PAT at 3.5%.
Raj Saraf
And sir, you have given guidance for this year INR3,300 crores. So if we maintain the same run-rate for next quarter, it will be already crossing this number. So what could be the guidance for this year and FY ’26? Though you have already given the guidance for FY ’27, that is 72% to INR100 crores, sir.
Mangesh Chauhan
Yeah. So already we have guidance — given a guidance of INR5,700, we have revised the guidance to INR5,700 crores for the FY ’26 and INR7,200 for ’27.
Raj Saraf
So for 46 sir, can you repeat again?
Mangesh Chauhan
5,700 for FY ’26 and 7,200 for FY ’27.
Raj Saraf
Okay, sir. And this year we will maintain the guidance of INR3,300 crore.
Mangesh Chauhan
Yeah, 100%. So I think it will be better than that, but we will not talk in the numbers, but this quarter is much better than last year.
Raj Saraf
Okay, sir. Okay. Thank you very much, sir. That’s all from my side.
Operator
Thank you. Next question comes from the line of Manan Vandur from Wallfort PMS. Please go-ahead.
Manan Vandur
Yes. Thank you so much for the opportunity. Sir, I had a few questions. First one would be that for the past few quarters…
Mangesh Chauhan
Your voice is not coming properly. Can you repeat?
Operator
Manan, may we request to use handset, please?
Manan Vandur
Hello. Is it proper?
Mangesh Chauhan
Yeah, now it’s clear as me.
Manan Vandur
Sir, for the past few quarters, you are saying that we will onboard tonnish. So where are we on that front?
Mangesh Chauhan
Okay. So I think we are right now in a good position because — because we have supplied tons to the carrot plane and plan we have become a regular vendor to the. It’s not the first time we supply two, three times more we supply to via and orders are coming back-to-back. So it will get very good impact in the also because Board members meet every time and they discuss about the vendors and there is a very good — a very good review about our company’s product and selling time of our products. So it will help us to onboard also. We are regularly meeting them. Only our are targeting them. Already we meet twice in last week or so, but we are expecting, let’s see one a quarter we will be, but we are able to achieve novel Jaz Villa on-board then currently. Now is the only remaining part, so but we are very nearby.
Manan Vandur
Understood. Sir, second will be when did you say that we will be cash-flow positive?
Mangesh Chauhan
By FY ’27, we will be cash-flow positive.
Manan Vandur
Okay. Okay. Understood. By FY ’27. Okay. And sir, the next question was that when you spoke about the capex, I couldn’t get it. So how much KGs per month are we planning, the next capex and what will be the total capacity after that?
Mangesh Chauhan
So we are not anything on the plant, just in the mine, but we are planning for this. So we will go up to four ton capacity. Now we are at one ton capacity. We will go up to four ton capacity because by FY ’27 March after that, we’ll the facility and we’ll make — now our competitor, is at the capacity — he is making two tonne and he has a capacity of 2.5 to 3 ton. We want to make a capacity facility including all lab-grown natural credit and all. So let’s see we are planning for that and as and then all the strong approval by the goal and we have a mind that we should have a facility of than per month.
Manan Vandur
Four tonne per month. Okay. Understood. And sir, the last question would be that last quarter, you said that we might have other income in Q3 of about INR15 crores order, but we had around something INR7 crores. So will the balance INR8 crore come in Q4? How can we look at that?
Mangesh Chauhan
Which you — can you repeat?
Manan Vandur
Sir, last quarter con-call we asked. So you said that for the quarter three, we might get other income from sale of shares or something about INR15 crores. But this quarter we had around INR7 crores. So will the balance INR8 crores come in-quarter four.
Mangesh Chauhan
So you can see we have FDs against the bank limits for it. So we are getting every quarter the interest income also. This year — this year from sale of investment, we got INR3.4 crores. Some of our investments are with single bank or SBI the process. So I think if they get released in this quarter, we’ll get income of other income also in this quarter. So some INR35 crores of shares are lined with SBI, they are in the release process if they’ll get released, we will get also we will get we already got in this quarter also INR3.3 crores from the sales of investments and 2.4 crores from the interest income.
Manan Vandur
Okay, understood. And sir, last question will be, sir, I couldn’t understand the debt part of it. You said that next year our debt will be around INR550 crores to INR600 crores. So could you please explain a little that why will our debt increase? I couldn’t get it.
Mangesh Chauhan
So we are expanding in many segment like INR18 crores also large loan also large loan also into also 18% to fund the debt — so to fund the growth, we have to take the debt and we are now getting. So interest part will be only 3%, 4% yearly other than 9% from the CC limits. So we are getting good orders from all the segments. I think Labrone, we have started one lab-net jewelry, which has 25 students. Now in Diamonds, we are approaching over 20 stores. So has a huge potential in the next two, three, four quarters. So we’ll fund debt also — we’ll fund 18K also. As and when required, we’ll take the debt, but we are projecting 550 to and we have revised the number also of the growth. To fund the growth, we’ll take the debt here.
Manan Vandur
Okay, understood. And very last question would be, sir, you said that FY ’27 we will be cash-flow positive. So in terms of if I take cash-flow by EBITDA, so what would be the conversion like more than 50% or how would it be? For example, if there’s an example, EBITDA is, for example, INR500 crores. So will our cash-flow be more than INR250 crores or something like that?
Mangesh Chauhan
Yeah, yeah.
Manan Vandur
So it will be more than 50% you are seeing our cash-flow?
Mangesh Chauhan
INR100 crores.
Manan Vandur
Okay, okay, understood. Okay. Thank you so much. That’s it.
Operator
Thank you. Thank you. Next question comes from the line of Bharat Gianani from Moneycontrol Pro. Please go-ahead.
Bharat Gianani
Yes, sir. Thank you for the opportunity and congratulations for a great set of numbers. So sir, my first question is that on the natural diamond side and also on the — especially on the lab-done diamond side, we have seen the price of the lab-done diamond correct very significantly in the last two years or so. And the prices are now stable, but then again, as the technology evolves, there is a risk that you know we may see a further price correction. So as a lab-ground diamond manufacturer that you have started this segment, I know it is a very small portion right now. But then what is your risk in terms of if the price of the diamond continues to correct. So what risk do you have as a manufacturer of that? So if you can throw some light on that?
Mangesh Chauhan
Sure, sure. Thank you, Bharat ji. So I will throw a light on that because is a devaluating asset every time — every quarter rates are falling. Earlier it was falling. Now it’s falling limited. But as a manufacturer, all whole industry works on that model only. We also procure that only order to the labor growing companies that quantity only which we get the fixed order of that. So we didn’t keep in the stock of this inventory. As we got an order of 500, we order to the growing company, we do not grow inside because there is a big setup and now we are very small in that. So as in, we grow inside also in 2027. But we take the inventory as which order is fixed.
So retailers also working on the same model. If they are keeping a inventory of 300, 300 carat as this whole 50 carat in one-week, they order 50 carat — this 150, all industries working on that model because all of them know that these rates are falling and will fall much ahead also. So all industries working on the same model, which are always there, we already. Once other orders come, then we order — so in the same process, we do for the natural diamond also, because national diamonds also and the small diamond rates are fall 10%, 15%, but, we don’t keep solidar, but also fall-back to 20% 25%. But it’s the same order is that also natural diamonds, we can procure the diamonds as per the orders of the companies. So — and when new rates come, we cook the new rates to the corporates and then they approve for the new rates. So every quarter or six months, we change the rate as and when the rates fall. So we also pick-up on the same rate. So that’s why we keep a limited order for a limited reason, we don’t keep in the inventory as well.
Bharat Gianani
Okay, okay. So got it.
Mangesh Chauhan
So basically as now that you’re trying to say is that as the business model that you have now for the gold, once you receive the order, you fix the price and then you start manufacturing. So that model will apply to the also. Yeah, so as and when we are in a good position, we will grow inside also because are available to grow inside. So now quantity is very less, so we don’t have to do capex any for lack of any.
Bharat Gianani
Okay. And sir, one more question from my side is, I missed your point. So you said that new clients that you are onboarding are giving you the raw-material, for example, or. So you gave some percentage, but I missed that number. So what percentage of the — of the revenues that you have, the clients give you the raw-material and what that percentage will be going-in next two years.
Mangesh Chauhan
So in next two years, we are expecting 30% to 40% from this client will go — the 1,000 kg at least 300 to 350 KG should we get from this advance and 65 KG from our inventory. Now we are getting per month 15 to 20 kg from carriage and Aditya have just started here. In this month only, we get 5G — five to 10 kg per month. But coming six quarters, we are expecting after six quarters, we are expecting 30% to 35% business from this client. So out of 1,000 KG capacity, we are expecting 350 kg from this line and 650 KG from other.
Bharat Gianani
Okay. So on an overall basis, in the next two years, you’re saying that about 30% to 40% of the raw-material will be provided by the client?
Mangesh Chauhan
Yeah, we are expecting that.
Bharat Gianani
Okay. Okay, sir. Thanks and all the best.
Operator
Thank you. Next question comes from the line of Amit Agicha from HG Hawa. Please go ahead.
Amit Agicha
Good morning, sir. Am I audible?
Mangesh Chauhan
Yes.
Amit Agicha
Thank you for the opportunity and congratulations for excellent set of numbers. My question was connected to exports, like how much of the total revenues from exports and what is the company’s exports revenue target for FY ’26 and ’27 and how is the demand shaping up in Middle-East, UE, Singapore and Malaysia?
Mangesh Chauhan
So already we are at 8% this quarter, 8% — 37% this quarter, INR71 crores export we have done. And we are — we’ve added 1% year before and we match — in two years, we are expecting it to take it to 13% 14% or 15%. Majorly 85% we will rely on India only because India has good potential. So UAE demand is stable and good Singapore also we have a distributor. So he will be — he will be starting in delivery in this quarter. So UAE, Singapore and Malaysia, decent growth is there, but India is very strong growth we are seeing. India is very because unorganized market is shifting to organized. So we are relying 80% on India and this 8% to 9% we are taking — we are expecting to go to 13% 14% or 15% by FY ’27.
Amit Agicha
Thank you. Last question was connected to the employee, like what initiatives are being placed to retain scale and cargos in the competitive market?
Mangesh Chauhan
Pardon?
Amit Agicha
What initiatives are in-place to retain these skilled artisans and carriers in the competitive market like employees I’m talking about?
Mangesh Chauhan
Sure, we already we are we are giving many incentives only for their design clear how design they have made and how it’s working on the market to design also, we have bringing project type incentives to them how much production they are taking. So we are doing each other facility is also there. We have made here facility for them. So those are the basic facilities we are giving and incentives also we are giving to them.
Amit Agicha
So you’re going to increase the hiring for in the coming quarters.
Mangesh Chauhan
So already we were at 600 employees. Now we have together subsidiaries. We are at 900, 950 employees. So 950 employees are there together subsidiaries. We are at 950 employees. So we’ll be hiring as and when every quarter we are hiring is where the carriage level, not much designer because designer and merchandising team we have, we will increase 10% by 10%, but at a worker level, the polished department filing we have to increase every quarter. So I — for the doubling the production will now we not need a double employee. We need a — we need one-third employee lesser because technologies are coming, we have already increased a US electro machine than 3D printers have came to which is reducing our manpower. So in few years we are expecting that for doubling the production will not lead to double the employees. We have to just the one 5th of the employee we have to hire.
Amit Agicha
So that was helpful, sir and all the best for the future. Thank you.
Operator
Thank you. The next question comes from Nilesh Jain from Astute Investment Management. Please go-ahead.
Nilesh Jain
Hi, thanks for the opportunity and congratulations on great earnings. My first question was on the GML side. You would like you mentioned by end of FY ’25, you’re planning to target to bring it to 50% to 55%. So when — when I talk about for FY ’26, what percentage of overall debt you would like to convert to GML? And then how much of that savings would flow into your finance cost? S
Mangesh Chauhan
O we are — we want to go up to 80%, 75% to 80% and already it will help because we have already get a rating of A-minus from rating. These are stable. Now we are at A-minus. So there is a good sign, we have got a good rating, which will help us to reduce our finance costs in CCM is also in GML also and reduce our also. So we are — we want to go up to 70% to 80% GML, but by March, we are expecting 50 figure this year.
Nilesh Jain
Okay, okay. So how much would that flow into as a finance cost?
Mangesh Chauhan
Right now it’s around one between 1% to 1.3%. Yeah, it will help to improve by 5.5%. Half percent will be will be improved. So 1.23% we are there, so it will come down to 0.7% or 3.65%.
Nilesh Jain
Okay. Okay. My second question was like increase your guidance to INR70 crore to INR100 crores by FY ’27. So does it include any new clients which you plan to add or it does take into account only your existing clients and then your two which you added, which is and…
Mangesh Chauhan
So we are — we have existing of the existing client only because their showroom are increasing drastically. They have accelerated, is opening 100 stores in a year. So we have this — given — revising guidance on the base of the existing customers only. Whichever other commercial they will give their own bullion. So in that our revenue will not increase our gross margin will increase because we are making a making charge bill only will be made. They will give and we’ll make from them. So in that our gross margin will improve. And so we — our revenue guidance will increase on the base of the existing client only Kalyan Juras, Gold, Gold Shangha, then Jati, Delhi, Kazana, these all are growing drastically and show openings as. That’s why we have revised all revenue guidance.
Nilesh Jain
Okay, because I remember you mentioned that you were in a final agreement stages with — I mean, so say suppose you sign-up by FY ’26, can rely on both of them. So that would eventually increase your guidance like on upside, given right now you’ve not…
Mangesh Chauhan
In that KGs-wise percentage increase our KGs wise a volume-wise guidance will increase 100% because they will give their own volume, but that will help us to improve much in our gross margins.
Nilesh Jain
Okay. That is better not taken into consideration. Okay.
Mangesh Chauhan
No, I am not taking — we are not taking consideration in the guidance. Right now also, we have not taken much consideration of the also because they are in the initial stage. So after, we see an change or guidance of that also.
Nilesh Jain
Okay, okay. And my last question is, you know, because right now with the new clients which you’ve added, you are trying to take the inventory directly from them. I think are you in conversations with your existing client to plan to change the model which you have right now where you are taking inventory on your balance sheet or to changing the model to taking inventory from them with your existing clients.
Mangesh Chauhan
So we — right now, we are not planning because every corporate has their own model because some corporates work on this model, some corporates work on a to fund inventory from ourselves also. So all — they are large corporate they have their own models. When we come to 30% 40%, then we are in a position when we will talk to the existing corporate also to come to that model. But in this next two years, we’ll first bring these clients onboard and bring the volumes of 300, 400 cages from their bullet and then only we can negotiate with these clients also, but every corporates have their own models to work and so they — this goal or Kalia and, they don’t work on that model to give inventory to us and then they are in the mindset day why they will fund the inventory for 25 days and they can open more stores and keep the inventory on their stores. So in other mix of model cost — mix of their models are there for the other corporates. But when we are at 30%, we are getting the bullion from this big corporate, then we can change our strategy, I think.
Nilesh Jain
Right, right. Just last question any inorganic acquisition or any companies which you are looking to have in mind talk about that just like you had acquired Star, and Board.
Mangesh Chauhan
So nothing right now because as and when required — as and when there will be any strong from the move actually.
Nilesh Jain
Okay, sure. Thank you and all the best.
Operator
Thank you. [Operator Instructions] Our next follow-up question comes from Palash Kawale from Nuvama Wealth. Please go-ahead. Palash, sir, your line is unmuted. Please proceed with your question.
Palash Kawale
Yeah, am I audible now?
Mangesh Chauhan
Yes.
Palash Kawale
Yeah. So, sir, what was the inventory and debt position by the end of December?
Mangesh Chauhan
As of this…
Palash Kawale
By the end of Q3?
Mangesh Chauhan
Okay. So I think I’ll send you the numbers.
Palash Kawale
Okay, okay, no problem. Yeah, that’s it from my side, sir. Thank you.
Operator
Thank you. The next question comes from the line of Shanmugam Selvanathan, an Individual Investor. Please go-ahead
Shanmugam Selvanathan
Hello, sir. Congratulations on your excellent set of numbers in Q3.
Mangesh Chauhan
Thank you.
Shanmugam Selvanathan
Yeah. I have just one question. Because of the rise in gold prices, if currently we are facing the gold is at high, do you face any kind of impact in your demand from the current retail clients or how is the wedding season currently going on?
Mangesh Chauhan
So wedding season is good. We are — as a manufacturer, we are backed by orders every month because there is every wedding season, then Akshay comes in April and the March orders will come for, now we are making for season. At retail level, there is 10%, 15% of impact is there for a short-term of 10 to 15 days. But I think nowadays, as and when gold from youngsters want to buy the gold as they presume that gold will go to INR1 lakh or something there is a assumption in the market. So at the manufacturer level, because we are order back, so corporate has to give us orders — we have to prepare for other occasions coming forward. On retail level, there is impact of 10% to 12%, but I think it’s sure as we talk to the corporates, they are telling this impact of five to six days or seven days and back to normal in seven days.
Shanmugam Selvanathan
Okay. So do you feel any — because of this, any impact in revenues in the current quarter or in Q1?
Mangesh Chauhan
So nothing because we are getting a good orders of 18 also because of the rate 18 case, 18 are coming — coming order coming much because is a budgeted delivery and in that the rate impact is better because it comes in the budget of some there in 18-K, 18-K orders are coming much in this quarter also. So again, we have good orders in lined-up and we are backed-up orders. So there is no impact on our manufacturing level, but it’s natural that when rate goes up like one, three, four days impact come in the retail of 10% to 15%, these 15% normal.
Shanmugam Selvanathan
Okay. Thank you very much, sir. That’s it for.
Operator
Thank you. The next follow-up question comes from the line of Bharat Gianani from Moneycontrol Pro. Please go-ahead.
Bharat Gianani
Yes, sir. Thanks for the opportunity. I just wanted to check on the margin guidance for FY ’27 at gross EBITDA and net profit margin.
Mangesh Chauhan
So gross margins, we are expecting to be at 7%, EBITDA at 5.5% at 3.5% — 3.5% PAT. So Pat, how much you said? 3.5%, 3.5%.
Bharat Gianani
Okay, okay. Okay, sir. Thanks a lot. That’s all from my side.
Operator
Thank you. And the next follow-up question comes from Raj Saraf from Finvestors. Please go-ahead.
Raj Saraf
Sir, thank you, sir. Sir, is there any difference in gross margin of export and domestic.
Mangesh Chauhan
There is a difference of 0.5%, not much in UAE countries. It’s similar to India, which is up to Malaysia. So 0.5% is better there. But of course, Europe and US is different, gross margins other, but we don’t make products of US and Europe. Europe is totally different products. So our products match to UAE country and Singapore, Malaysia. So — but the — the business is much of cash-and-carry and less data. So that’s the advantage we can churn the inventory fast. But margins is a difference of half of the…
Raj Saraf
Okay. And sir, one request from my side, sir. Actually, the investor presentation, which has been posted of conclusion of Q3, we got now so many fresh updates on this conference call. So it will be helpful if you can please post a new investor presentation with so much updates, it will be helpful, sir. That’s it from my side.
Mangesh Chauhan
Plan it out and update in seven days.
Raj Saraf
Yeah. Okay, sir. And sir, one thing, sir, the volume guidance which we have given for FY ’26, that was from 550 to 600 KG. So what could be the volume guidance for now the updated volume guidance for FY ’26?
Mangesh Chauhan
So we are expecting to 650 kg approximately 650 to 700 KG. So as you told that we’ll update new PPD guidance also in this only seven days in our actions also. So I think we are expecting the 650 kg.
Raj Saraf
Okay. And for FY ’27, it will be beyond 1050 kg.
Mangesh Chauhan
Yeah.
Raj Saraf
Okay. Thank you, sir. Thank you, sir and congratulations and I wish all the best for the future.
Mangesh Chauhan
Thank you so much.
Operator
Thank you. Thank you. Ladies and gentlemen, in the interest of time, this will be your last question. And I now hand the conference over to the management for closing comments.
Mangesh Chauhan
Thank you everyone for joining us. I hope we have been able to answer all the queries. In case you have inquired any further details, you may please contact us of Orient Capital, our Investment Relations Partner. Thank you so much. Thank you for being a part of our Sky Gold journey. Thank you so much.
Operator
[Operator Closing Remarks]