SP APPARELS LTD (NSE: SPAL) Q1 2026 Earnings Call dated Aug. 18, 2025
Corporate Participants:
Unidentified Speaker
V. Balaji — Chief Financial Officer
Sundararajan Mudaliar — chairman and managing director
P.V. Jeeva — Chief Executive Officer
P. Sundararajan — Chairman and Managing Director
Analysts:
Unidentified Participant
Prema Jhunjhunwala — Analyst
Shubhankar Gupta — Analyst
Rehan Laljee — Analyst
Ashwin Reddy — Analyst
Chirag Shah — Analyst
Akash Boda — Analyst
Neera Sewalia — Analyst
Shradha Agrawal — Analyst
S. Chenduran — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Spa Apparel’s Q1 FY26 earnings conference call hosted by Alara Securities 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 Star then zero on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Prerna Jhunjanwala from Alara securities for her opening remarks. Thank you. And over to you Ma’.
operator
Am.
Prema Jhunjhunwala — Analyst
Thank you, Shruti. Good afternoon everyone. On behalf of Elara Securities Private Limited I would like to welcome you all to Q1 post result conference call and business update call of SP Apparels Limited. Today we have with us the senior management of the company including Mr. P. Sundara Rajan, Chairman and Managing Director, Mrs. S. Lata, Executive Director, Ms. S. Shanta, Joint Managing Director, Mr. S. Jenduran, Joint Managing Director, Mrs. P.B. jeeva, Chief Executive Officer and Mr. V. Balaji, Chief Financial Officer of the Company. I would now like to hand over the call to the management for opening remarks.
Thank you. And over to you Thomas.
P. Sundararajan — Chairman and Managing Director
Thank you. Good afternoon everyone for joining us to discuss the performance of Q1FY26. The first quarter of FY26 has been one of both transition and opportunity for SP apparel. Global trade dynamics are shifting particularly with the recent duty hikes in the us. However, our diversified market presence, strong customer relationships and grow acting capacity expansions have enabled us to to respond faster than many peers. The industry update is the textile export sector faces headwinds from the recent US tariff changes. Though it is still early to gauge the full impact at spal. US exposure keeps direct risk contained.
Our Sri Lanka facility adds another layer of operational flexibility and acts as a hedge against tariff related disruptions. The young brand apparel segment, being more US focused has seen softer demand. We are mitigating this by pursuing opportunities in the Euro with early disruptions already underway. The recent UK FTA has supported growth with stronger order volumes and deeper engagement from existing UK customers. This reinforces the strength of our diversified approach. Let me begin with the Garment division. Cotton and gold prices have remained stable providing a steady operating environment. Our dying unit is running at full capacity, underscoring our commitment to quality and efficiency.
And we plan to increase its capacity by about 6 tons per day. In addition, we are actively enhancing our printing and embroidery facilities to cater to the evolving requirements of our customers. As you know, the ES accounts for roughly 10% of our revenues. So while the recent import duty hikes will have some short term impact there, our exposure is limited and our portfolio is well hedged through strong European and UK demand. What we are seeing in the US is large retailers splitting their sourcing strategy, essentially keeping a separate supply chain for US bound products while pricing differently for other markets.
Over in the UK business remains very strong. Long standing customers continue to scale with us. Now we are keeping a close eye on the proposed India UK fta. While it could bring more competition into the market, our deep positioning in the babywear niche gives us a natural moat in Europe. The momentum is equally encouraging. Several brands are actively talking to us and there is a noticeable shift in sourcing away from Bangladesh that is opening more opportunities. With regard to the young brands, the duty hikes in the US are a headwind for certain categories, particularly where Bangladesh retains a cost advantage.
Our response has been to move faster in Europe and uk, widening our customer base so that revenue growth is not dependent on one region. Regarding SP UK businesses, we are in a sweet spot. This business is insulated from US duties and could be a beneficiary of the India UK FPA which we expect to come into effect by March next year. That could enhance margins and deepens already strong customer relationship. FTAL is similarly well shielded. US exposure here is only about 10% and the customer base is steady. We do have the flexibility to move some woven products to Sri Lanka while continuing to produce nature items In India.
Margins should hold steady unless there is an extraordinary cost situation in which case our customers have typically shared the load on retail. Trend angel and Rocket is right on track to bring even this year. Sorry to break even this year. The small pre operative loss in Q1 was fully expected. It’s just part of the investment phase as the brand grows and transitions. From a capacity standpoint, our Sri Lanka operations are progressing exactly as planned. This is not a reaction to any single market change. It’s part of our long term plan to create diversified the capacity for Europe and the UK while giving us the flexibility to balance production between India and Sri Lanka.
We are currently running about 650 machines in Sri Lanka and by March 2026 we are targeting 2000 machines. That includes acquisition and job work across the group including young brand. We should reach around 7,800 machines by FY26 yen. That capacity, including export incentives will keep us on track for our FY27 top line targeting of 2000 crores. On the investment side, we are adding 6 tonnes per day to our dying capacity and our expansion at Salem of 300 machines is progressing well. Lastly on customer acquisition and this is where the pipeline is looking very healthy, we have already added two customers from Germany, mainland Europe post the completion of our full factory acquisition in Sri Lanka by September October 2025.
We expect to onboard at least two more UK customers, another via a separate channel and the US Babyware customer through Sri Lanka by March 2026. All of this combined with the disciplined execution across every business line gives us confidence in delivering our growth and profitability targets for the year. Thank you and over to Mr. Balaji here.
V. Balaji — Chief Financial Officer
Thank you sir. Good afternoon everybody. I will just run you through the financial performance of the company on a stand alone basis for Q1 FY26 adjusted revenue stood at 287 crores as against 213 crores year on year which is a growth of 34.5%. Adjusted EBITDA stood at 43.7 crores against rupees 36.2 crores year on year basis with an adjusted EBITDA margins of 15.2% and the PAT for the current quarter stood at 19.9 crores with the PAT margin of 6.9 percentage. Our EPS stood at 7.9 per share for the current quarter on a standalone basis. On a consolidated basis our total revenue for the quarter stood at 405 crores against 248 crores year on year which is a growth of 63.3% and our EBITDA stood at 54.6 crores at an EBITDA margins of 13.5% and the PAT stood at 20.7 crores.
Our EPS for the current quarter stood at 8.2 rupees per share on a consolidated basis on segment wise performance in Garment division including aim brand, our Q1 adjusted revenue stood at 372.9 crores against 274.6 crores in Q1FY25 a growth of 35.8% year on year with an adjusted EBITDA of 54.3 crores growth of 14.6% year on year. On SPUK the revenue stood at 14.8 crores in Indian Rupee as against 11.7 crores year on year a growth of 26%. Our revenue for Q1FY22 stood at GBP 1.3 million with a current order book value of 3.97 million GBP and our garment division order book status is 404 crores as of today Our retail revenue stood at 14.9 crores during Q1 compared to 14.8 crores year on year.
During Q1.FY26, revenue from Crocodile stood at 13.88 crores while angel and Rocket stood at 1.9 million. On the current, our current debt position as on today on a consolidated basis is gross debt 382.4 crores. And net debt is 327 crores. All the other informations are available in the presentation and we will get into the question answer session over to the moderator.
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 answers 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 Shivankar Gupta from Equity Capital. Please proceed.
Shubhankar Gupta
Yeah, hi. Actually I have two questions. The first question is around the gross margins on a consolidated basis which are fallen by 840bs. So just want to understand what is happening there. And also the capacity utilization is standing at 82% versus a target of 90%. So how do we see that going.
P. Sundararajan
On the gross margin front? I think it’s purely on a mix. If you look at year on year gross margin which has dropped is purely because Eng Brand is getting consolidated for the first time here this quarter. Q1. So there is a change in terms of gross margins.
Shubhankar Gupta
Okay. Okay. And what about the capacity rule?
P. Sundararajan
Yeah. The capacity utilization stands 82 percentage is purely because we have added 700 missions during the current quarter. Q1 I’d say. But our utilization level is around increased by 10 waves. So my denominator increased by 700 machines. That’s why there is a dip in the utilization level.
Shubhankar Gupta
Okay sir. Got it. And another small question. Outlook for YBA. In previous calls you’ve mentioned that 1200 machines were active. And we have it. We were only targeting 1700 machines by year end on the bidder bit. So how is. How do you see that going forward?
V. Balaji
Yeah, see that is, you know, that is considering you know 1300 in the existing setup and adding another about 300 machines as a new, new setup. So with the current scenario because of the serious tariff issue we have to wait and move forward. If that tariff has not come down from 50% then probably we will be putting this project on hold until the picture is clear. The expansion project. But in the meantime anyway we are Going to entertain some of one or two more European customers into young brands in order to mitigate the geographic risk.
Shubhankar Gupta
Okay, sir, got it. That’s helpful. Thank you.
operator
Thank you. The next question is from the line of Rehan from Coheron Wealth. Please proceed.
Rehan Laljee
Hi, can you hear me?
operator
Yeah, yeah, hi.
Rehan Laljee
Congrats on great set of numbers. So I think management is doing extremely well integrating ybfl. So I would first like to congratulate you on that. My first question is primarily on your garmenting business. If I dissect the numbers, I just wanted to ask whether my understanding of 289 crores for purely the garmenting business, excluding YBAPL on a YOY basis, it’s about 30, 35% kind of growth, which is very good. I just wanted to understand where has that come from? Because you mentioned that we valued about 600 to 700 machines on the call. So in the quarter.
So can you help me understand the same a little better?
P. Sundararajan
Yeah, in fact, if you look at the year on year in terms of production also has gone up. So we have added a new capacity. Current quarter quantities have moved up and for the current quarter there is a significant increase in the garment production also.
V. Balaji
Yeah, see. Excuse me. Yeah, see Q125 and Q126. There are two reasons. One is Q125. There were. There were difficulty in the booking which we mentioned that, you know. And the second one is less machines. It was. So now we have increased to 700 machines now. So that is how the top line has come up.
V. Balaji
So these machines are in Sri Lanka or in India, the only India. Because Sri Lanka is still not reflected in these numbers strongly. Right. So Sri Lanka is not Contributed all the 700 machines in India at the moment.
V. Balaji
Yes, there is a utilization. There is a small challenge.
P. Sundararajan
Yeah, that is completely fine. That I think Balajita was very clear on. You mentioned that we are adding about 650 to 650 machines in Sri Lanka in this half. Is that my understanding Correct. And by the end of the year you’re looking at 2,000 machines. So just wanted to understand when can we see those numbers come on stream? Because this has been in the pipeline for almost, almost three quarters now.
V. Balaji
No, no, no, no, no. Sri Lanka has been in pipeline for two quarters. So you will find the quantities coming up from Sri Lanka from second quarter onwards, maybe small quantities in second quarter and fully from third quarter onwards. Because see, we have to get the clearance from the customer also for production. So it may take 2, 3. Even though it is all customer approved factories for producing their orders. In that factory we have to get clearance from the customers. So Q3 will be the right quarter where you will find Sri Lanka completely having.
V. Balaji
Production.
Rehan Laljee
Okay. And if I may, one last question considering. I mean I understand the management is very clear on the fact that you are trying to diversify YB APL to European entities or deepen the ties because you’ll have outstanding relations there. But let’s assume that you have your current business which is about almost 80, 90 crores of YB APL. How are you seeing the tariff? Like what. What kind of margin impact are you seeing on that business? Because we’re still hit with the 25% tariff over the last month and a half. So it would just like to understand what.
Because I’m sure the customers that you’re dealing with will also have will at least ask you to take some of the hit as well. So can you explain or quantify that amount? See.
Rehan Laljee
Chindur, are you there?
P. Sundararajan
No, see in terms of margin I. Guess. Every. Addition in terms of.
S. Chenduran
Can you hear me? Yes, this is Chandhuran from the management team. So to your question on Young Brand. Yes there have been conversations with the customers. They have definitely not considered the additional penalty which we all expect that to not stand beyond the end of this month. So let’s hope so. But for the other 25% there has been tariff increase with the other countries as well. Roughly an average of 20% for the competing countries. So though it is a disadvantage for India there is an impact of say 3% on the first quarter with young brand.
And going forward we expect that to be shared between the suppliers. So the raw material suppliers who the customers have nominated. The customers are also planning to increase their retail prices because it is the same for all the retailers. And definitely there is a part of it that we are expected to share as well. We don’t have specific numbers on how much we will be expected to share but let’s say roughly 1/4 would be what they expecting us to share.
S. Chenduran
The 1/4 of the tariffs. Right, 1/4 of the tariffs. 1/4 of the incremental tariffs.
P. Sundararajan
Okay. No, I just want to understand because you know, considering you are still trying to diversify but that will take some time. So that would just help analysts understand, you know, like to understand what kind of impact the tariffs can have because this business is scaling pretty well. So that’s why. Yes. And one bookkeeping question. Balaji sir, can you help me with the EBITDA for spinning for the quarter.
P. Sundararajan
Which ebitda.
P. Sundararajan
EBITDA of spinning for the quarter.
P. Sundararajan
For spinning, yeah. Spinning roughly around 405 crores for the current quarter.
Rehan Laljee
Okay, thank you so much.
Rehan Laljee
Good luck and thank you again.
operator
Thank you. Before we take the next question, we would like to remind participants that you will press star and one to ask a question. The next question is from the line of Ashwin from the. From the. The next question is from the line of Ashwin from Samalta Investment. Please proceed.
Akash Boda
Yeah, hi, good afternoon. So could you talk a bit more about the gross margin compression in the standalone business?
Akash Boda
On the standalone business, it’s purely. The. Margins which have come down, I mean is purely because of the increased wages. So the Tamil Nadu government has increased the wages as on 31st, 12th of March. So there is a increase in the minimum wages. So there is compression in the margins of.
Akash Boda
No, actually what I’m asking about is. So what I’m asking about is the gross margins, not gross margin came down from 70.7 to 64.8. What is the raw material component or what is the mixed change component?
P. Sundararajan
See, it’s purely on the product mix. It’s purely on the product mix. That’s the only thing which will have an impact on the gross margin.
P. Sundararajan
So is it more of the men’s and women’s wear which is a low margin business versus a children’s pair or could you talk a bit more about this and what should you expect going forward from here? This is a new baseline or how should we think about this in the times ahead.
P. Sundararajan
In terms of gross margin? It’s purely based on. Based on the amount of product that is completed in that quarter. For example, if we are doing more of the bodysuits and basic model, the material cost will always be on the higher side.
P. Sundararajan
It’s like this, you know, we are in the capacity growth mode. So naturally when the new capacities come, there could be kind of reduction in the efficiency. So that also will pull down the gross margin. And in order to fill and in order to get the customers approved, we need to bring in some of the customers who can quickly approve these factories in order for us to get the approval from our regular customers. So we have to take some orders at a very low margin in order to get start the kickstart the factories running so that in three to six months time our existing customers will come for the audit.
So that’s the general practice of our customers. They want the history of six months record for any new factory for approval. So we need to take some, you know. Yeah, some. Some Local order, you know, some stock order. All these things put together in addition to other things, you know, these are the reasons for the drop in gross margin. But the guidance is not going to be there. Slowly it will gradually improve.
Akash Boda
Got it, Got it. Thank you so much. This helpful.
P. Sundararajan
Thanks.
operator
Thank you. The next question is from the line of Chiraksha provide investment management. Please proceed.
Chirag Shah
Yeah, thanks for the opportunity sir. First, a very basic question or clarification or if you can just give a revenue mix today on considered basis between us, uk, Europe and maybe Asia.
P. Sundararajan
In terms of revenue mix for on a standalone basis we have around 10% on us. On a consolidated basis would be better. On a consolidated basis it would be on a consolidated basis.
P. Sundararajan
On a consolidated basis maybe US we are, we are around 35 percentage including N brand and rest will be US and Europe. We don’t do for anything for Asia.
P. Sundararajan
Yeah. UK and Europe.
Chirag Shah
UK and Europe.
P. Sundararajan
Sorry. So 65 UK and Europe and 35 into consolidated basis is US.
Chirag Shah
Okay. And so you indicated that on US side we are 5% differential duty, right. Versus the PS at the 25%. There’s a. There’s a 5% differential duty and that you are looking that you believe will be absorbed by the chain. Some by you, some by raw material guys and some by customer itself.
P. Sundararajan
Correct?
Chirag Shah
Correct.
Chirag Shah
So it is like. Yes, it’s like customer. The retailer takes 1/4, the customer takes 1:4, the producer takes 1:4, the supply chain management takes on 4. So it’s been split between all the four.
Chirag Shah
So the broad understanding has been achieved. Good. And when do you think so in the last quarter that gone by, is there anything of this that was. That is unabsorbed in our P and L which we have borne and which is yet to be passed on or accounted for or. It has already been accounted for.
P. Sundararajan
If you, if you recollect what Chandra Jndi spoke about, he has spoken about that we have taken a 2 and a 3% hit in the first quarter.
P. Sundararajan
Yeah, I missed that point. That’s why I was wanted that 2 1/2 3%. Okay. It’s almost 50%. You have bond, you are assuming it will be 1 4.
Chirag Shah
Great, this is helpful. Yeah.
Chirag Shah
Okay. The second question is the UK or on UK side is somebody speaking? I am not able to hear that gentleman.
operator
Sorry, can you come again?
P. Sundararajan
No, no, I thought somebody was speaking.
P. Sundararajan
And his voice was very low.
Chirag Shah
So I was just clarifying. Okay. The second question is UK FDA benefit. So how should we look at it and when do we expect it to flow? Actually.
P. Sundararajan
By the end of March because now our Indian Parliament has passed the bill but you know, waiting for the UK parliament to pass it. So they expect between three months to six months time. So once it is passed in the UK parliament then this will be effective hopefully from April 2026.
Chirag Shah
Would it be fair, would it be fair to assume already you have started by discussions negotiations with customer so when the appear happens you can start producing on ASAP basis?
P. Sundararajan
No, I don’t think we can. We can be premature in terms of discussions. It can happen only after the bill is being passed.
Chirag Shah
Okay. So after the bill is passed it would take another six months to for to finalize and then accordingly.
Chirag Shah
Yeah.
P. Sundararajan
Okay. And last question was on the retail business. So if I go back to few quarters, we were looking, we are given a hard stop with respect to the losses that the business is making or deciding to discontinue the business. So and Chandra was very clear at that point of time how he is looking at either of the scenarios. So any thought process on that? Because we are now very close to that, that initial target.
Chirag Shah
Yeah, can you hear me?
P. Sundararajan
Yeah, Hello?
P. Sundararajan
Yeah, so yeah, I agree. So we, I really said that we give a hard stop with 8/4 which was yeah, almost 1 1/2 years back, so. Q even Q4 last financial year we had predicted that Q1 would be qu poor in terms of. It wouldn’t be as much as what we expected where it’s a profitable situation. But whatever has been corrected in terms of the inventory receivables, if we get into those details, it’s come down considerably. So irrespective of all of that, it’s self sustained, the finance costs have gone higher at the EBITDA level. We are definitely breaking even.
All the earlier issues with the head brands, the royalties and clearing the old stock, it’s all been cleared by Q4 so there was some impact Q1 but it’s all done now. And the other fact is that we are still having conversations with raising equity. People have shown interest into retail. So that’s the other plan. And to be honest with you, we are internally having the conversations. We raise money, we don’t make any operational losses and then slowly the retail business comes back on its own self sustained. And maybe one more quarter Q3 we will either do this, we’ll break even consistently Q2 and Q3 or we will still be able to take that call by the end of Q4.
Chirag Shah
And just to follow up on this, is there a commitment from your side to Crocodile Brand? For how long? Bare minimum you need to carry the. The brand or the franchise and that is one of the reason. No, there is no such restriction.
P. Sundararajan
No, no, there’s nothing like that.
Chirag Shah
Yeah. Okay, great. Thank you. And all the best.
P. Sundararajan
Thank you.
operator
Thank you. The next question is from the line of Abash Boda from Ionois Alpha Investment Management. Please proceed.
Akash Boda
Yeah, hi, I hope I’m audible. So in Q1 we’ve done a 35% growth on the standalone side. I’m assuming there would be some employee productivity benefits also that we would have achieved given that in the previous quarters we said that there’s a labor challenge and even new workers. So just wanted to understand given this benefit that’s come in Q1, do you think the standalone business.
P. Sundararajan
Surpass the good.
Akash Boda
That you had earlier expected? I am asking this X of real banks. So earlier targets of say around 1600.
operator
Yeah, sorry to interrupt. Your line is breaking.
Akash Boda
Hi, am I audible now?
Akash Boda
Yes, sir.
Akash Boda
Yeah. So just wanted to understand. Your voice is very. Please be slow when you talk. Slow in expression, please speed. Okay, okay, okay. Hello? Yeah.
P. Sundararajan
Yeah, so I just wanted to.
P. Sundararajan
Understand int same growth.
P. Sundararajan
They’re not able to hear you properly. Your line is tracking.
Akash Boda
I’ll take it offline.
Akash Boda
Okay, thank you.
P. Sundararajan
Thank you.
operator
Thank you. The next question is from the line of . Please proceed.
Neera Sewalia
Thanks for the opportunity again, but just a clarification or other your understanding, not a clarification on this hypothetical incremental 25% that has been indicated as of now, assuming there is a delay which happens between the two government instead of 27th cancellation, it it goes on for some time before they conclude. Is there any discussion who bears it? Because it’s a big sum for the entire chain. So is there any indication or anything, any thoughts you have how to look at it? Because it can get postponed for some time.
P. Sundararajan
Yes, it is like.
V. Balaji
Can I answer this? So the customers have had conversations with us and they are also not willing to take into consideration the 25%. Definitely they will look at the worst case scenario to look at countries outside of India which will be viable long term. But at the same time we’ve had conversations with them that they want to take a lot of the stock which are being produced earlier by air so they can save before their deadline, I think which is September 23rd or something. I’m not sure about the date which they have to take the stocks in within us.
So they are trying to get the stocks into the country even by air at their own cost until then and Otherwise on the 25% they are not willing to have any conversation about. They discussed with us and that’s where it came up that that 1/4 would be the contribution is what we discussed initially on the 25%. The original 25, but the additional 25%, they don’t want to talk about it yet.
Neera Sewalia
And how can Sri Lanka help us?
V. Balaji
Yeah, so we had that conversation with them as well that Sri Lanka we’ve acquired factories were in the process of acquiring some more. So they had its own interests at Sri Lanka would be a good option in case it becomes a worse situation. So we are well protected between SP Apparels, Yang Brand and the Sri Lanka acquisitions that these US customers from Yen Brand utilize around 800 machines from young brands. And when chairman said that we have 2,000 machines in pipeline and there’s definitely more conversations as well. So customers were open to it, but they don’t want to comment anything today.
But definitely longer term, if things go worse, we are definitely covered as a group with the Sri Lanka plan.
Neera Sewalia
So you can ramp up at a faster pace. Sorry, sir. Sorry. Please go on, sir. You are saying.
V. Balaji
Two mitigation risks we are taking. One is to bring in European and UK customers into young brands as well as for mbal so that, you know, we are prepared for the change in the mediation of changing the customers, you know, moving from Yang Brand to another country. So another one is we are offering them Sri Lanka capacities so that we don’t lose the customers. We will take the orders and produce them out of Sri Lanka and ship it. So there are two risks. One is we don’t lose the customers because we are taking them into seal and current production.
And this will not be because we are bringing in European and the UK customers into the, I think capacity. So we are completely protected.
V. Balaji
So the question that arises is.
Neera Sewalia
August 27th only then the things will start moving, the changes.
V. Balaji
No, so my question is a bit different actually. My question is how fast you can ramp up Sri Lanka. In India you can ramp it up at a faster pace because you know things, you have been doing it since a very long time. While Sri Lanka is very close to the Tamil. Tamil as such, Tamil Nadu as such in that sense. But still it’s a new, new territory for you in terms of experience.
V. Balaji
That is a big challenge. You know, there’s a transition time. We have definitely undergo some difficulties and challenges. But we are, you know, we already started, you know, the offering them the factories to initiate the, the audit and other things. Until then, that factory in Sri Lanka we will get some Job of them so that the factory is not idle. And the care also you know the existing orders are will continue until whatever the orders in hand that will continue for another one or two, four months. So this, that in transition there is a challenge.
Unidentified Participant
You will answer it. Thank you very much. Thank you very much for this open frank answer.
P. Sundararajan
Thank you.
operator
Thank you. The next question is from the line of Neera Savai from Abacus. Please proceed.
Neera Sewalia
Hi sir. Thanks for the opportunity. My question is regarding the capacity breakup and the total number of machines is on the date is we over what? 8,700 machines.
P. Sundararajan
Sorry, hello. Say again please.
Neera Sewalia
Total machines across all capacity across all plants. The total is about 8,700 as on Q1 or what is the total? 7,800. That’s what we are expecting to be by end of March. In India.
P. Sundararajan
In India.
Neera Sewalia
Okay. So when we see the existing facilities.
Neera Sewalia
Have put your call on hold.
P. Sundararajan
Hello.
P. Sundararajan
Yes, so you may proceed.
P. Sundararajan
Yeah, so existing capacity, what we had was about 5100 and young brands is about 1400. Right.
P. Sundararajan
So that’s the existing one. And we will add another two dozen by end of March from Sri Lanka.
Neera Sewalia
Okay. So by end of March and It will be 2000. It is about 650 right now. Okay. And the new facility which we are planning at Shivakashi, what would be the capacity there? Or any number which you all can. Or is it started or it is going to take maybe some more time to start.
P. Sundararajan
We are just. It will take off in the. It reflects in the financials. Right. It will be starting from the third quarter.
Neera Sewalia
Yeah, we have already started. Small shipments are happening.
P. Sundararajan
Okay.
P. Sundararajan
But consolidated numbers will come only in the third quarter. It will have a good number in third quarter. Now it’s this quarter we have done 3 crores.
Neera Sewalia
Okay. And once all this expansion are done we would be looking at what about 10,000 machines by end of 27?
V. Balaji
Yes, yes, yes. 2,000 from Sri Lanka, 6,000 in India from N brand which will be consolidated to around close to 10,000. It will be 9,800. 9,700.
Neera Sewalia
Right. So also in the initial comments you all had said about exposure expansion in the printing side as well as some other knitting machines. So I just missed out that is there some expansion also which we are doing on the backward integration side?
P. Sundararajan
No, he was explaining that it is 100% utilized.
Neera Sewalia
And what kind of capex do we see for 26 and 27?
P. Sundararajan
26, 27. I think all the capex in India is getting completed and by 26 and we should also be complete in terms of what we buy out in Sri Lanka. Also 2627, 2728 will be more to do with utilization.
Neera Sewalia
Okay. So broadly any number if you can share about 40 to 50 crores will be the capex. Where we are looking at even higher capex for of fiscal 2627.
P. Sundararajan
Roughly around 2030 crores of maintenance capex.
P. Sundararajan
Okay. That is what the entire CAPEX will be for the entire year. Yes, 20 to 30 crores for both the years we see.
V. Balaji
Yeah.
V. Balaji
On the CAPEX side.
V. Balaji
And now the new project put together 50 crores here.
P. Sundararajan
Okay.
Neera Sewalia
Yeah.
Neera Sewalia
All right. Thank you. That’s it from my side.
operator
Thank you. Participants who wish to ask a question may please press star and one at this time. The next question is from the line of Prerna Janjanwala from LARA Securities. Please proceed.
Prema Jhunjhunwala
Hi sir, with just listening to this call. So 1/4 of the shares of 25% is also very high number to be shared by a garment supplier. Do you think will be sharing this 1/4 will with other suppliers as well to reduce the impact.
P. Sundararajan
Okay. The 25.1fourth of the 25% is only with the manufacturers. The discussion. So that split into four is also including the supply chain. So the other raw material manufacturers, trims and axilles and all those. So this 1/4 is only with the manufacturer.
Prema Jhunjhunwala
Okay. The supply, the raw material supplies are separate that they will be sharing.
P. Sundararajan
Yes, that’s separate. So the longer term will be for the retailers to increase it to the consumers. But they don’t want to risk everything with them. So they are having conversations where it can be passed on a little to them. They’ll have something. So it will be spread across all the four. But maybe six months later the correction will happen where all the retailers will have to increase their retail prices. So it’s not just for us as a factory in India or even the competition other countries, it’s for all the retailers in the US as well.
So they expect the prices to increase. Definitely. So. But at the moment they don’t do anything. Yeah.
P. Sundararajan
Some of our customers have already increased the prices. They’re selling prices. They’re changing the price tickets and everything. But based on the 25%, if it is 15. Either 15, you know it has to come back to 25% or we have to lose the business. The US okay.
Prema Jhunjhunwala
Is Sri Lanka an opportunity? Because Sri Lanka is a big hub for intimate web. So the, the machines that you’re adding there can be used for US business instead of UK that you thought you were Targeting or you can eventually increase business in Sri Lanka for us?
P. Sundararajan
Yes, I think that’s the plan. That’s the strategy we have with the expansion in Sri Lanka going forward. Sri Lanka can be driven for the US business from young brand and the UK business can be done from India with the India having the FTA advantage for the uk.
Neera Sewalia
Okay, so on an overall basis, the margins, how do we see the margins panning out for this, for this year, at least on the UK.
P. Sundararajan
For the time being, I think only Trump can talk.
P. Sundararajan
Only for the UK Europe business.
P. Sundararajan
There will be a challenge. But since our top line is going to increase considerably, that will, you know, help us in, you know, averaging the, I mean bringing down the fixed over its cost. So that has to be offset by the top line growth.
Prema Jhunjhunwala
Okay. Okay, understood, sir. Thank you. And all the best.
operator
Thank you. The next question is from the line of Shraddha Garwal from Asian Market Securities. Please proceed.
Shradha Agrawal
Yeah, hi sir, am I audible?
operator
Yeah, yeah, audible, yeah.
Shradha Agrawal
So on Sri Lanka operations, did we mention that we have 650 machines in Sri Lanka which we plan to scale up to 2,000 by March 26?
P. Sundararajan
Yes.
Shradha Agrawal
And for March, for FY27, you’re saying that there will be no further capex on the Sri Lankan side and it will be about taking the utilization up in the Sri Lanka business or are we planning to add machines?
P. Sundararajan
It’s too early to decide that because we have to settle down with the 2000 machine and because it’s a big jump in within 11 year time, 12 months time. So the operational things, you know, we have to set right. And the customer, customer approval, order, booking efficiency, all needs to be set right. So probably we’ll take a break for six months again, we’ll think of increasing. It’s too early to say anything now.
Shradha Agrawal
And what was the revenue we did from Sri Lanka in this quarter, if any?
P. Sundararajan
I just told you that it will be roughly around 3 crores for the current quarter.
Shradha Agrawal
Okay.
Shradha Agrawal
And earlier we had indicated that Sri Lanka margins are expected to be around 10%. So do we still work with similar margins in Sri Lanka? Okay. Okay.
Shradha Agrawal
Currently. Because. Yeah, we feel that 10 to 12 percentage will be the correct margin for Sri Lanka business.
Shradha Agrawal
So last quarter, if I remember right, you had done close to 5 crores from Sri Lanka. And this quarter we.
V. Balaji
Yeah, that was purely Shraddha. That was purely on a. See, we have not acquired the factory. What we have done last quarter was purely on a job work basis. 31st March was the date where we have Acquired the factory. So now the factory, once we have acquired there is a change in the management and now we have taken over. And 3 crores is a number for the first quarter.
Shradha Agrawal
Okay. And sir earlier you had indicated that you plan to do revenue of close to 200 crores in Sri Lanka in FY26. So are we broadly on track to do this number?
V. Balaji
Maybe it will be because clearance from the customer side is something which is not in our control. So the 200 crores what we have earlier said is only a pure assumption based on number of missions that could come up. Now I think there could be some stretch in taking over. Maybe we’ll end up with 150 crores on the top line by Martian.
Shradha Agrawal
Okay.
Shradha Agrawal
Okay.
Shradha Agrawal
And so for the SP UK business, I mean we had indicated to close to 12 to 14 million pound. Sorry 10 to 10 million pound of revenue from SPUK in FY26. But given that start to the year was low, was weak even for this business. So how do we now look at.
Shradha Agrawal
Guidance for spuk for 26sp UK?
P. Sundararajan
I guess we have out reached out to couple of new customers.
P. Sundararajan
Yeah, let me explain. You know we are going the right direction and we already got the business from our two new customers already. The orders are in place for the shipment by quarter three. So as we mentioned last time Q1, Q2 will be a challenge regard to the financial numbers. But Q3 onwards it will be completely taking off because all the customers we are, we are getting, you know two or three, three new customers coming in already been the inquiries started. So the placement will happen before end of this month or something. So shipments will stop from Q3 onwards.
So we are expecting, you know we are aiming, we are planning for 10 million pound to 12 million pounds. The is our plan target for this financial year which I am sure we will be able to achieve them. Once those numbers come then I think all fixed and expenses will be will be diluted and the margin will improve.
Shradha Agrawal
Got it? Got it. And so just last question from my side on Sivakasi. What is the capacity as of today and as of 1q end and what would be the operational capacity in Sivakasi? Sorry, I mean the installed capacity and operational capacity in Sivakasi.
P. Sundararajan
The install is about 400 machines. 450 machines. And in a staggered manner we are recruiting the fresh people, training them. So currently about 100 machines are running. And now we are waiting for the customers to get them audited. We are bringing in three new customers into that factory. So probably that process will take another about one month’s time. So actively we will be making the real export production. Although we are making some commercial production for domestic supply. The export commercial sales will happen from the third quarter onwards. To start.
Shradha Agrawal
Yeah. Then on a standalone business the 700 machines capex that we did. So that was on the existing facilities that we added 700 machines. Where was the capex done?
P. Sundararajan
The factories which we have created for the current quarter is around Paladam which is a new factory. We have bought one in Sidcot. We have bought one in Turayu. And the other other increase in the same same factor.
P. Sundararajan
There are three increase in the existing factories because we we are able to manage the workforce. So that increase is happening. And the acquired three factories. One is at the Banari factory and then another one is near Trichi and one other one is in Hipcort right there. The add on factory and Silgas is a new project. So all put together it is coming to close to around 5700. 700 machines.
Shradha Agrawal
Got it. And what was the capex that was that was incurred for these 700 machines?
P. Sundararajan
Roughly around 75 to 80 crores. You can find that in a part of the WIP in March and also WIP in to an extent WLP in June.
Shradha Agrawal
Got it? Sure sir. Thank you and all the best. Thank you.
P. Sundararajan
Thank you.
operator
Thank you. Due to time constraints, that was the last question. I now hand the conference over to the management for the closing comments. Over to you sir.
P. Sundararajan
Yes, thank you. Thank you for participating. I’m showing interest in investing in our company. The overall, you know, unexpectedly we have US tariff challenges are there where our plan was to increase the business in US market. But because of this tariff issue we have to completely re strategize the whole thing now. Like. Like you know, moving the US business of SP Al into Sri Lanka and bringing in new new customers to fill these capacities as well as in young brand. We have to bring in the big customers to fill this one. So lot of challenges are there.
But we already have a strategic plan. We know what we are going in the right direction. We know what to do. So it’s only a matter of time, you know, about two to three months of time to get these things settled down and we are going the right direction in terms of the big jump in the growth of capacities and the top line growth which in turn you know will definitely bring the bring down the overall bottom line will also be able to maintain. So we are very confident about it. And the spuk also we are very confident from the Q3 onwards and the retail also.
Definitely the break even is happening as we promised that this shouldn’t be a problem from Q3 onwards. Please rest assured and thanks for your continued support. Thank you.
operator
Thank you on behalf of spsrls. That concludes this conference. Thank you for joining us and you may now disconnect your lines.