SP APPARELS LTD (NSE: SPAL) Q4 2025 Earnings Call dated May. 29, 2025
Corporate Participants:
Sundararajan Mudaliar — chairman and managing director
V. Balaji — Chief Financial Officer
Unidentified Speaker
Analysts:
Prerna Jhunjhunwala — Analyst
Rehan — Analyst
Jain — Analyst
Jhaveri — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to SP Apparels Limited Q4 FY ’25 Results and Busines Update hosted by Elara 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 it need assessions during the conference call, please signal an operator by pressing Star zero on a Trustone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Thank you, and over to you, ma’am.
Prerna Jhunjhunwala — Analyst
Thank you, Abhirak. Good afternoon, everyone. On behalf of Elara Securities Private Limited, I would like to welcome you all to Q4 and full-year FY ’25 post-results conference call and business update call of Apparels Limited. Today, we have with us the senior management of the company, including Mr Pee Rajan, Chairman and Managing Director; Mr S., Joint Managing Director; Ms S. Shantha, Joint Managing Director; Mrs S., Executive Director; Mr Jiva, Chief Executive Officer; and Mr Vi 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, sir.
Sundararajan Mudaliar — chairman and managing director
Thank you. Good afternoon, everyone. I welcome you all to the post-earning conference call for Q4 and FY ’25 of SPI Limited. Before I take you all through the performance and updates on the company’s various segments. Firstly, we will take you through the industry updates followed by our business performance. The UK-India Free Trade Agreement establishes India as an important player in global sourcing strategies, prevailing at 10% duty advantage over China and then enhancing its appeal as a sourcing destination amid political uncertainties in Bangladesh.
This agreement eliminates tariffs on nearly all Indian textile and apparel exports to the UK, allowing for expanded exports and increasing trade going ahead. With government support, rising global demand and low labor costs, India is sufficient to gain a larger share in the global apparel market.
The FDA is expected to bring more business and orders to India, benefiting textile industry by creating opportunities for manufacturing and sources. We at SKFLs are focused on exploring partnerships with the UK retailers to take advantage of the opportunities and get placed towards growth. With regard to our business performance, I’m pleased to share that FY ’25 has been a significant year for apparel. This year marks our first full-year consolidation following the acquisition of apparel and we continue to focus on expanding our presence in Sri Lanka due to its geographical proximity, favorable labor availability and production flexibility.
Our strategy centers on aspiring customer approval factories in Sri Lanka, allowing them to quickly ramp-up production and significantly reduce our gas chasing PEA this approach provides a distinct advantage over establishing new factories in India which typically requires about a year to set-up and stabilize. Now I would like to move forward to business update segment-wise. A spinning and dying division. After navigating challenges in the past-due to fluctuation in the cotton price, we are now experiencing stability with both cotton and beyond prices remaining steady.
Our dying unit is operating at full capacity, reflecting our commitment to quality and efficiency. Moreover, we are actively expanding our printing and employee capacities to meet the evolving needs of our customers. In addition, by increasing our capacities by acquiring factories in Sri Lanka, this will help us to save the entire facilities like spinning and dying with 100% utilization of the capacity. Commenting on the, during FY ’25, we aim to improve our utilization levels and we have successfully achieved the same as reflected in our results. We reached a utilization rate of 89% in FY ’25 compared to 76% in FY ’24.
I’m pleased to report that in the past three months, there has been a good growth in terms of capacity. Our new project in is operational. Last year, our capacity utilization was 85. We have added three factories this financial year and have added 700 machines to the overall capacity. We are expecting to increase another 300 sewing machines to the current capacity by March 2025, 26 2026. Then this will enable us for significant growth in capacity in the company. The current order book basis is INR442 crores. Another growth driver for the division is our geographical expansion in Sri Lanka.
We see significant potential in this market given the availability of operation factories and skilled workforces. This expansion also offers with operational flexibility between and Sri Lanka to execute orders. Our strategy is to acquire customer approved factories, which will enable us to secure orders quickly and scale-up production flexibility. Building on this momentum, we have already acquired the factory, shipments are underway.
Going ahead, we plan to expand our capacity to around 2,000 machines in the next one month time and achieve a top rail of INR400 crores by FY ’27 from Sri operations. With regard to Yen Brand apparels, FY ’25 marks the first full-year of consolidation post-acquisition and I am happy to report impressive results and the rewards towards ship. We are planning to lease-out a facility near Salem with a 300 sewing machines capacity. This is an asset-light model, which involves leasing the building while utilizing the existing machines.
This will increase the installed capacity to 1,700 missions, of which next year-by now we will be able to offer 1,500 missions. With regard to SP UK, our revenue for Q4 FY ’25 was GBP1.66 million and GBP5.22 million in the FY ’25. Our current order book is valued at GBP4.5 million, while we experienced a temporary decrease in revenue — revenue due to customers holding excessive inventory, which led them to push orders deliveries to the subsequent quarters. However, we Anticipate that this will positively reflect in the coming quarters. After a year of transition that included relocating our office steel, restructuring and addition of new customers, we are optimistic about making HPUK a profitable venture. Additionally, I am pleased to share that we have successfully established partnership with factories in Sri Lanka for SPUK business on an basis. With this positive momentum, we are on-track for improved performance starting from Q1 FY ’26 and we anticipate FY ’26 to be a robust year for SP UK. Regarding the retail division, SB Retail Ventures reported revenue of INR23.3 crores during the quarter compared to INR25.4 crores Q4 FY ’24. FY ’25 revenue stood at INR79.4 crores compared to INR82.9 crores. The incurred continuous losses are primarily due to unfunded cash losses. We are in the process of expanding Angel and the UK-based back consistent with our previous communications, we are exploring equity fundraising options to fuel growth within our retail business. We expect this process to be completed by Q2 and post completion, we anticipate the retail segment to turn profitable. During Q4 FY ’24 ’25, the brokerage saw a revenue of INR17 crores, aimed at stood at INR5 crores.The outlook is in summary, as we move forward, our strategic capacity expansions through applications of well-established and operational factory position us well for significant growth by end of FY ’26, we anticipate to operate approximately 7,500 machines, which includes the Yen brand. With this, we aim to achieve a top-line of INR2,000 crores by FY ’27. Thank you, Mr, thank you, sir.
V. Balaji — Chief Financial Officer
Good afternoon, everybody, and turn through the financial performance of the company. On a standalone basis for Q4 FY ’25, adjusted revenue stood at INR279 crores, which is at a growth of 10% year-on-year. Adjusted EBITDA margin stood at 16.2% and PAT for the current quarter stood at INR24.7 crores with a PAT margin of 8.8 percentage. Our EPS stood at 9.9% for the current quarter on a standalone basis.
On a standalone basis, for the whole year FY ’25, we have done an adjusted total revenue of INR984 crores and an adjusted EBITDA of INR164 crores with an EBITDA margin of 16.7 percentage and with a PAT of INR83.5 crores with a PAT margin of 8.5 percentage. Our EPS stood at 33.3 per share for the whole year. On a consolidated basis, our total revenue for the quarter stood at INR403 crores, which is at a growth of 35.9 year-on-year and our EBITDA stood at INR58.5 crores at an EBITDA margin of 14.5% and the PAT stood at INR30.4 crores.
Our EPS for the current quarter stood at INR12.1 on a consolidated basis. For FY ’25, our total revenue stood at — for the whole year, total revenue stood at INR1,407 crores, which is at a growth of 27.5 year-on-year and the EBITDA margin of INR200 crores with a growth of 14.9% year-on-year. PAT stood at INR95.1 crores, which is at a growth of 6.1 percentage year-on-year. Our EPS for the whole year stood at INR37.9 per share.
On segment-wide performance, in government division and end-brand approval — including end-brand apparels, our FY ’25 adjusted revenue stood at 1,308, a growth rate of 39.4 percentage year-on-year with an adjusted EBITDA of INR212 crores with a growth of 28.2% year-on-year. Our SPUK FY ’25 revenue stood at INR75 crores at a growth of 31.3 percentage year-on-year. And our retail revenue stood at INR79.4 crores for — during the financial year FY ’25. On the debt position, our gross debt on a standalone basis stood at INR235 crores and on a net-debt basis, our net-debt is INR205 crores on a standalone basis.
On a consolidated basis, our net-debt is INR35 crores. All other information is available in the presentation. Now I would request to the team to take-up 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 R&1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press char and two. Participants have requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Rehan from Equitree Capital. Please go-ahead.
Rehan
Hi, good afternoon. Am I audible? Yeah, very much. Hi, thank you. So I just had a couple of questions if you can help me understand. So right now, as per my understanding, we are at about 5,200 machines, including ID APM. Is that correct? 5,200 to 5,300?
V. Balaji
No, currently what as on 31st March, we are at 4,950 capacity, okay. And what would be the split between both, if you can help us understand so both means I don’t understand. Like between including and garmenting together is. If you include YBA, then our total capacity will be around 1,500 to 6,300 machines.
Rehan
Okay. This is as on 31st March, right?
V. Balaji
Yes, correct, correct.
Rehan
Okay. And how much will be — how many machines are we adding in Sri Lanka?
V. Balaji
We are looking to add 2,000 by end of March 2026.
Rehan
So this is count to how much from here 8,300?
V. Balaji
Yeah, correct, correct, correct. And we are also adding another 1,000 missions in India for FY ’23. Sorry if I couldn’t hear you another 1,000 machines in India we will be adding another machines right so that total count becomes 3,000 and we are adding I think 300 more in YB APM as well. Correct, correct,
Rehan
Right. So that takes account over 9,000 odd machines by in the next — over the next two years, one and a half to two years. Yes, yes. Right. Thank you, sir. That’s the answer question. And coming back to your — or your Sri Lankan NTV, I think the subsidiary was incorporated in late of 2023, 16th October, if I’m not wrong. Since then, do we have any form of revenue from Sri Lanka? Any business from
V. Balaji
— no, no, no. Even though the subsidiary was incorporated, we have commenced business only during January 2025..
Rehan
Understood. So — but from January 2025 till now after the stage where the suppliers come and give approvals of the production facility, have we sent out any stamples of shipments yet?
V. Balaji
Yeah, we have done shipments. Yeah, we have done the shipment of INR5 crores from — since January to March.
Rehan
Understood. And from this year alone, which is FY ’26, how do we look at it, ma’am?
V. Balaji
I mean, how much of revenue do we expect from Sri Lanka?
Unidentified Speaker
And Sri Lanka, we are expecting 1,000 machines. It is about INR200 crores. In 2026.
Rehan
Yeah, in ’26. Got it. And how much can we expect from Siri, about INR50 crores in the second-half is achievable for us.
Unidentified Speaker
Actually, it’s up and running, it’s only 85 machines at the moment. So by end of this year, we can run about another 100 will be 200 where we can expect INR35 crores to INR40 crores from
Rehan
For the full-year, right?
Unidentified Speaker
Yeah, full-year, yeah.
Rehan
So and for year, are we having any capacity expansion in this year or are we going to be around 350 mark? Can you answer this question?
Unidentified Speaker
I think it’s not hello. Again, answer this question.
Rehan
Yeah am I audible now?
Unidentified Speaker
Yeah.
Sundararajan Mudaliar
Okay. Yeah. So young brand , I think this year we are at INR325 crores. So next year, there will be a slight improvement. So we will be closer to 350 CR because of the expansion in the Salem plant where there’s going to be 300 additional machines, but that will be fully operational only from the second-half of the year. So there will be some — definitely some growth, but the majority of the impact will be next financial year where we will be closer of higher than the 350. Yeah. As on-date, what is the amount of machines we have in the young van, thousands, 1,500. Installed missions is 1,400 and the utilized missions is around 1,150. Okay. And that will increase to about 1,700 in total capacity, right, and proportionately a proportionately Indian? Yes. Correct. Sorry, you were saying something? No, no. Sorry,., sir, I just had a question on bookkeeping question. What would be the contribution from spinning for the quarter from quarterly, the yarn business, what would be the contributor for the quarter? So for spinning, it should be around INR76 crores for this quarter. So this quarter alone, yes, EBITDA from the INR6 crores. Yeah, yeah, yeah. And how much be for the full-year? So could we have large this year, full-year it yeah,
Rehan
Okay. Thank you. I’ll get back-in the queue. Thank you.
Sundararajan Mudaliar
Thank you.
Operator
Thank you. Ladies and gentlemen, to ask a question, you may press chart and one now. The next question is from the line of Jain from DSP Asset Managers. Please go-ahead.
Jain
Yeah. Hi, good afternoon, sir. First of all, congratulation on very good integration and execution of young brands. And as guided, 15% margin is what you have achieved. So a good achievement. So sir, I have three questions. First is with respect to the overall capacity because you are adding machines at various levels. So if you can just help with the total revenue potential from existing capacity which you have, which is underutilized and the expanded capacity, whatever you are planning across Sri Lanka, young branch in Salem and all, what will be the total revenue potential, let’s say, by FY ’27, by then all the capacity will have completely ramped-up. So if you can help with that number, approximate
V. Balaji
So in terms of seed in terms of location, if you look at what we have in India for the government division. We have 4,800 emissions as of today and we are looking to go to 6,000 by March 2023. And capable number could be around INR1,200 crores of absolute exports alone for 6,000 sewing missions. For the Sri Lankan operation, we are planning for again 1,750 to 2,000 missions by March 2026, which could be — which could yield around another say INR400 crores for FY ’27. On the — on the end brand, I guess we will be at 1,700 sewing missions by March ’26 and it should yield at INR400 crores of revenue for FY ’27. Hope I have given clear numbers.
Jain
Okay. So basically, INR2,000 crore closing run-rate of FY ’27. Is that the right understanding? Because it will ramp-up gradually.
V. Balaji
Yeah, correct.
Jain
I understood. Got it, sir.
V. Balaji
Sir, so all this expansion mostly either will be happening at a very low capex is what I understand, because Sri Lanka also is more or less asset-light for you. So let’s say over the next two years beyond FY ’27 and given that generally there is a good sentiment and inquiry pipeline in the industry, are you looking at a more capex beyond what you have already kind of plant fall because it will take — if you have to put up a large capacity with dormitry and hostels and all, it will take one and a half years time. So are you planning anything beyond FY ’27 right now.
So like today, we have spoken about 50% capacity addition for next one year, right? At least for next two, three years, we would like to consolidate on the capacity, grow, optimize, sweat the assets and then try to move to the next level. So today we have addressed the capacity growth and scaling up also. Yeah, I think in the near-future, we don’t see — definitely we don’t see any major capex in terms of increasing the capacities excepting for minor the maintenance and other things.
And there is no need for the investment into the hospital also because we already have enough hospital capacity. So whatever we are increasing, for example,, no need for the hospital and which is actually we don’t need for hospital. So the existing — so also we plan for 700 missions to grow in this year, we are not going to have any additional capex. All capex are being done, the major capex. With regards to Sri Lanka also, there will be some minor capex will be required. Otherwise, this year, whatever the four factories we acquired, that is it. So for the next near-future, we don’t see any capex investment.
Jain
Understood. Okay. And sir, lastly, on the young brand, you’ve already achieved 15-odd percent margins. I think at the standalone level, you make close to, 17%, 18% margin. I presume that will be including the integration of processing and spinning that will also be a part of it. So should one understand that this is the optimal margin at Young or given the product mix at Young, margin can further see an improvement?
Sundararajan Mudaliar
In general, we’ll answer this. Yeah. I mean it can see an improvement. It will most likely touch what the standalone company’s EBITDA will be. So there is scope of improvement even though it’s not fully captive. I think there could be improvements on the efficiency front definitely for — because of the category of products that you’re going to doing
Jain
Okay, understood, sir. Thank you so much and all the best. Thank you.
Operator
Thank you. The next question is from the line of Javeri from Crown Capital. Please go-ahead
Jhaveri
Hello. Good afternoon, sir. Firstly, congratulations on a great set of results, sir. Hopefully I’m audible.
Sundararajan Mudaliar
Hi, hi, sir.
Jhaveri
Yeah. So sir, just wanted to know, so basically like if to summarize, we are currently at around 49, 50 machines and we are basically doubling our capacity by the end by the start of FY ’27. So wanted to know like in this year itself, we are, I think adding around INR200 crores of Sri Lankan operations. So what kind of revenue can we achieve in the current year, sir?
V. Balaji
Yes. So your number in terms of INR4,950 is only the standalone number where we are to include the already, which is to be added. And with INR200 in terms of revenue, what we are trying to improve for the current financial year comes from the new capacities that are added in Sri Lanka.
Jhaveri
Yeah. Correct, correct, sir. So just for FY ’26, what kind of — because we already had around INR1,400 crores revenue and I think we are speaking about FY ’27 reaching INR2,000 crores. So what kind of like numbers can we do in FY ’26 in terms of revenue?
Sundararajan Mudaliar
FY ’26 revenue, I would say that anywhere in-between INR1,400 crore what we have achieved on and 2,000 what we have given as guidance in terms for FY ’27, because we are not sure about the timeline in terms of how these engine factories are completed in terms of the acquisition and we need to get the customer clearance also. So there could be some, say, INR200 crores of additional revenue , we can end-up INR1,600,650 crores of revenue for FY ’23, between INR600 crores 2,800, including the standalone and companies additional capacity of and other things. So put all together, I think we expect as a consolidation number of between INR1,600 crores to INR1,800 crores.
Jhaveri
Okay, okay. Fair enough, sir, that helps a lot, sir.
Sundararajan Mudaliar
And in terms of margin, like we’ve been increasing our margin quarter-on-quarter. So just to — so we — our Q4 margins can be our new base, right, because I think we’ll have higher revenue and operating leverage. So FY ’26, we can see higher margins than current year. But still we grow with the same statement of about say average of 18% EBITDA as a consolidation. So on a consolidated not on consolidated.
On standalone basis, we are guiding for an 18% EBITDA. And yes, overall, we expect to improve from 15% to maybe 16% or 17%, which we are able to see. So just one last question from my end. So sir, I think this year would be maybe like a capacity addition year and we’ve already maybe seeing somewhere between INR160 crores to INR1,800 crores of revenue we are planning to get, maybe FY ’27, if all goes well, we could have a very big bumper year, will that be fair? Because I think somewhere I feel INR2,000 crores is a slightly conservative number, if I may so because we don’t know. Because this is very dynamic industry, anything can happen in all the Trump has in some of these policies and it can — can anything can happen not from comes from tariff issues, there can be something that comes with you political thing is today something which is unpredictable. Unpredictable.
So when you always aim for more than INR2,000. Let’s see. Okay, okay, fair enough, sir. Yeah, that’s it from my side, sir. Thank you so much, sir. All the best. Thank you. The next question is from the line of Rupesh Tataya from Managers PMS. Please go-ahead. Hello, sir, thank you for the opportunity and congratulations on good set of numbers. I am a little bit new to the company.
My first question, sir is there is another manufacturer in India who is putting a very large capex in Andhra Pradesh,, it’s really massive. And I mean it’s going to come online slowly over next two years. So how do you see the pricing pressure or margin pressure because of that? And the reason I ask you that is, it’s a very debt-funded capex. So then the — once you have debt, the focus really is on the revenue rather than margins from the other players point-of-view. So that is my question number-one.
See, we don’t — we don’t generally comment on somebody’s numbers, but for us, we feel that we will be able to achieve the direct EBITDA margins of 18% for next one or two years. Given the geographical position, there could be some big — this year we have done last year, we have done 17 this year, we have done 16.6% is purely because of the inefficiency, the capacity, that we intend to move to 18 going-forward. So we don’t want to comment on our growth. But what gives this confidence?
I mean, if the other player or the industry drops prices, you will have to match, right? So what is the one or two factors that is giving you this confidence? See, it’s about — about — it’s about the customer relationship. So any customer which we are working with and have been working with us for four decades. So — and moreover, all the demand is now today, the China plus factor, the Bangladesh issues and the FTA, which has come, everything is pro-India.
So I guess at least for next two, three years’ time, textile will be the — but to textile in India will be a most preferred industry is the confidence.
Jhaveri
Okay, okay. So demand — significant demand drop, okay. So the second question, sir is SPUK, can you give some idea about how will FY ’26 and FY ’27 look like? Joel is there. And Joel, are you there? Okay. Okay. Can you come again?
Sundararajan Mudaliar
Yeah. We are working all the way out. Now the shifting of the offices from, from let’s say to London, all settle, the team settle designers and the merchandisers, sales team and customers, all sets now. Now we have started running. That’s the kind of a situation like we expect Q1 to do a close to 2 million pounds for Q1 and Q2 will be close to 2.5 million.
And we have budgeted for the whole year to be close to about 9.5 million to 10 million, which is more than enough to turn-around to be profitable one will be on-track okay in FY ’27.
Yeah, FY ’27, what I’m talking about is for ’26, the current year. Currently, our order book is about we have the order book on million already. So we will be able to between INR9 million to 10 million for FY ’26. Yes, that I understood, sir. GBP10 million for FY ’26. I’m asking how — what would — I mean, there will be a significant ramp-up in profitability jump-in FY ’27. The customers are saying — so what happened all these years through the last few years, we have been settling down with the customers with so many, Sri Lanka and India.
The whole of UK has been completely restrategized so to bringing new customers and bringing in new sorts of countries for manufacturing, all put together and relocating from let’s say, to London. All these things are now done and we have about the of about five, six customers. Each customer can easily do at least about 2 million to 3 million per year easily. So every year there will be a growth from each customer to minimum of 10% growth. So 27 should be at least about INR1 million to INR14 million.
Jhaveri
Okay. Okay. That’s very clear sir. And then final question is, if you can give an update on the retail, I think one brand we closed and then I think signing-up one new brand, then capital raise, so all aspects if you can address. And is demerging retail missing it separately? Is that in the realm of the possibilities over next two, three years?
Sundararajan Mudaliar
Yes. So I think in terms of the retail, to your first question, we have exited from the agreement with head brand, which was a license agreement for five years and that ended by December. And whatever inventory and whatever stock we had, we had to clear it and the losses with the brand, we acted on it in three years, but then it still took 1.5 years to two years to completely come out of it. And now that’s done. And the brands that we currently operate, one is Crocodile, which is a licensed brand.
We’ve been running it for 17 years now. And the other is a brand called Angel and and we have — I think the concentration is 80% is versus 20% is Angel and Rocket and Angel and Rocket is still making some losses because of investment towards marketing, specifically digital marketing, whereas crocodile in Q4 has touched EBITDA breakeven, which is what we wanted to do before the end-of-the financial year.
And going-forward, there is, as CFO said during the introduction that we are planning to raise equity initially, which should be done by end of Q2 and the demerging will happen. And there are plans to get it listed separately in a few years’ time. So probably will take three years from the equity coming in.
Jhaveri
Thanks for that answer. Just one final quickly. Sri Lanka business, can you give some idea about the margins because the model is a little bit different, their outsourcing model. So if you can give some idea about the margin assumption come. It is as far as Sri Lanka operation is concerned, we look at it as an of one of the factories
Unidentified Speaker
Factories what we are doing here about 20 factories in India and add another about five factories in Sri Lanka. And we look at it as a job also for our main office — back-office in India, is Limited. So it’s only a job making and shift from there. That is how we operate it. And that conversion cost will be, the profit will be taken enough.
Yeah, things can continue this. See, we are now just in the process of setting up the factories. We will not know-how the factories will turn up. So we currently feel that it is an extended arm of SB Apparels India. Whatever business comes from Sri Lanka will be — will be part of the standalone business, say. So currently, when we give guidance, it is including Sri Lanka business also.
But however, we need to look at how things land and then give you guidance on the EBITDA margins for Sri Lanka business separately. Maybe by March ’26, we will give you a guidance. But the sales also will be booked in India, SC apparel. Okay. So — but logically, is it a fair assumption that margins might be 2%, 3% lower, but the capital efficiency will be higher. Is that a fair assumption? ROCE will be better, the margins will be lower. Okay. Okay. Yeah. Thank you.
Jhaveri
Thank you for answering my questions, sir.
Operator
Thank you. Thank you. Ladies and gentlemen, to ask a question, you may press char and one. The next question is from the line of Aminash from Financial Services. Please go-ahead.
Unidentified Speaker
Yeah. Thank you for the opportunity. So my question pertains to the revenue numbers which we are speaking based on 9,000 odd machines and all. So are we talking this on a single shift basis across our 25 plants, 20 in India and five in Sri Lanka? Sorry, can you come up on that? Are we planning for a single shift? Yes, yes, I’m saying whatever calculations we are doing, is it all on a single shift basis? Yes, yes, accepting one factor. No, no, all audi shift. Sorry, you guys are not audible. Can you come again? Single shift only.
Unidentified Participant
Okay. So is there a possibility, have you attempted two shifts in any of our factories or it is not possible as of now?, not practically, but a lot of difficulties. So we are not it out for-sale at our place. So we will wait-and-see. Yeah, we have tried to owner two factories, but that was not successful. So we closed it out. So we are planning for only single shift even this year or next year too. What — if you can just spare one minute, what are the practical difficulties you face when you’re trying to do it? Now getting the band for now for nice shifts because here most of them are ladies.
So the ladies, they don’t want to travel in nighttime and the closing hours also in the midnight of two o’clock at 3 o’clock like that. So they’re — at their home, their parents or husband, they’re not allow to work-in the night so the attrition is also a biggest issue in the so considering all these points we have we said we thought okay better to drop night okay thanks a lot. Thank you. Thank you.
Operator
The next question is from the line of Abhash Godar from Alpha Investment Management. Please go-ahead.
Unidentified Participant
Yeah, hi. Thanks for the opportunity. I hope I’m audible. So I just wanted some call. So some understanding on young brands would be helpful because we are growing from INR1,400 crores to INR2,000 crores in the next couple of years, but the contribution from young brands seems pretty less, particularly for FY ’26 as well. I would have thought you would be able to get more customers from UK as well from young brands. So just some context on growth there, how do you see it by end of ’27? And do you think there is more potential year for growth, at least in terms of top-line? So that’s question number-one.
And just attached to that a smaller question. Are you seeing any impact because of tariffs in the near-term? So is there a hit on the margins in the next one or two quarters just because of the way the tariffs uncertainty is sort of playing out? So if you just talk about these two countries? Till?
V. Balaji
Hello. Yeah. So I think in terms of Yang, the first question was about the growth and the contribution to the overall revenue in the next couple of years. As it stands, as I said, when we took over-the-top line was last nation was just below or around INR300 crores and now we are at INR325. And this year we’re projecting to be at 350 cr. And probably in the next couple of years, the contribution of maximum that can come from Young Brand with existing setup, better utilization efficiency would be 400 to 420 CRs and that’s still, I think roughly is around 25% contribution on the overall revenue.
And on the second question, in the short-term, there is very, very minimal impact on the tariffs. To be very honest, a couple of customers have been talking about it, but it’s been passed on to the raw-material suppliers who are nominated by the customers and there’s only one customer where there is a very small impact. So it won’t be significant that it will impact the bottom-line, very minimal, negligible.
Sundararajan Mudaliar
Okay, okay. So basically, you would be pretty happy with the way young brands is going as of now and with the growth as well, as a management, you guys are really satisfied with the progress that you see there.
Yes. Yes, at the moment, we are very happy with what we’ve seen because we barely had 3/4 and we’ve done quite well compared to how young brands have done even before us, but we don’t want to quickly jump into expansion mode or give higher commitments. So we would want to take at least two full years and then decide on how quickly we can grow.
And as we said earlier, there is plans to expand within the capacity in Salem where we already have the machines and the building. So we will try that as a pilot this year and if the three emissions runs well, then we can possibly look at increasing further. But yeah, we don’t want to really push that since we’ve not even completed one full-year.
Unidentified Participant
Okay. Perfect, perfect. Thank you. And second is the more of a bookkeeping question. If you could just talk about what particularly transpired in working capital this year and because it seems a bit stretched at the end-of-the year. So is there anything you would need to call-out? Does this sustain or go back? If you could just talk a bit on the working capital? And attached to that, if you could just talk about the debt numbers if we look at the net-debt number, you highlighted at INR35 crores. In the — by the end of two years, where do you think this number can be approximately?
Sundararajan Mudaliar
Just your thoughts on this line-item. So in terms of the debt, I guess, you are looking at 335, which is including the long-term and the short-term. So short-term is the debt which is — which is in significantly higher now. That is purely because of the acquisition that we have done in terms of the end-brand apparels and the factories that what we have — we have done in India and also we are — we are in the process of supporting the acquisition in Sri Lanka also.
So by March ’26, I guess we should stay at the same number in terms of overall numbers because we are looking at adding more missions for the current year. And maybe by two, three years term alone, we should see significant reduction, maybe we will stabilize around INR200 crores of working capital limit for a top-line of INR200 crores for the whole year.
So I guess March ’26, we will be at the same level. And going-forward, we would like to bring down because once we complete our expansion cycle, then we can consolidate to reduce the debt yeah, I’m sorry on the working capital, please. So a significant amount is only working capital. I guess of the INR335, working capital will be around INR29 crores. Sorry. I meant this year we have seen at the end-of-the year, there is an increase in the working capital.
So any particular reason for that and is this any normalized cash benefit? I told you in the beginning that there is an increase in the working capital is purely because of the acquisition what we have done with end-brand apparels. So we have used all the money, which we have kept on liquid funds for acquisition of end brand apparels during the current financial year.
Unidentified Participant
Got it, thank you. Thank you.
Prerna Jhunjhunwala
Thank you so much and all the best.
Operator
Thank you. The next question is from the line of from Elara Securities. Please go-ahead.
Unidentified Participant
Just
Unidentified Participant
Wanted to understand the US demand from young brand apparents point-of-view, how are the customers reacting? Who are your major customers there? And how do we see that business in the near-term given the tariff situation?
Sundararajan Mudaliar
Okay. So on the US customers, as you know, I mean predominantly is US customer-based and initial feedback from the customers that there is definitely a bit of panic on the tariff, especially with the current orders. But longer-term, they’re all confident that the retailers will have to increase the retail prices and it’s a uniform call that all the retailers will have to take if it fully goes through.
And — but the positive which we’ve seen from India side is that a lot of other countries which are competitive — competition for India, the tariffs have been much higher, proposed have been much higher than working. India is probably the least among the competition. So that is an advantage, but we’ve not had conversations with customers about how that can impact more business into India.
But we feel there is a lot of potential for those orders from neighboring countries could come into India as well based on the state as it is one more point here. We if you look at the multiples what the retailers are looking at, so 4, 5x is the multiples in terms of what they sell. And if this 10% or 15% increase which is happening because of the tariff on the 1X, I think moving to the customers will be better easier than pushing it to the suppliers.
And obviously that will be the end goal for most of the retailers. But in near-term can — will the margins be impacted in the first-half or in first-quarter that you would like to call-out and how much is what I wanted to understand as well. I guess every day there is a new tariff message that is coming up. So let us wait for it to get implemented and then let us look how is this reacting because today there is a message from people saying that it has been kept on-hold by the court. So let’s just let us wait. Okay, no problem, sir. And in-between like till the time you don’t have any clarity, but the shipments are happening. So what is happening to those orders? How should we look at — I mean, how are you booking then, currently it’s all like on the FOB basis and the are released and we are — we are making sales. So currently there is no tariff impact at all.
Unidentified Speaker
Okay. And they’ve been given 90 days. Yeah. So they’ve given a window of 90 days. So there is a lot of shipments that the customers will also want to get-in within that period. But there were a couple of conversations on the sharing, as I told earlier to one of the questions that they really want to pass this between the entire supply-chain with the raw-material suppliers, nominated suppliers. So there is a bit of sharing between everyone, but it is not a lot. It’s not very significant that it will affect the numbers.
So that’s really helpful. Thank you. And sir, in terms of you on UK FDA, you are one of the major beneficiaries given that you have a good exposure to UK. Are clients talking about increasing the exposure materially or you would be wanting to add-on new customers given that the geography opens up with zero tariffs maybe in next calendar year when the FDA is ratified because of FTA, any increase in customers. Yeah, customers — actually the existing customers, they want to increase the capacity and they are looking for more capacity from the existing suppliers. So we have no chance of going for new customers.
So for next one year, we are going to stick on with the existing customers, but already we are doing one or two American customers. So we are not doing not increasing the capacity of American customers. So the FTA is definitely a benefit to the importing customers only the brands, the retailers. So because they get the benefits and as far as we are concerned, we get more orders. We are at far with Sri Lanka and Bangladesh. So that is. And subject to we have to increase the capacity because already the most of the factories are running full with the FPA that there are more orders coming in.
So everybody is working on increasing the capacity. It will take-over a period of time. So we are trying our best to add more customers because the Sri Lanka opening is there for us. So we will be able to accommodate some more customers, including 3 lakhar capacity. Okay. Thank you, sir. That’s very helpful. All the best. Thank you. Thank you. The next question is from the line of Anal Charasia from Limited. Please go-ahead. Thank you for the opportunity. Hope I’m audible.
Yeah, yeah. Sir, only two questions. One, in the cash-flow statement, there is one-item, investment in subsidiaries, which is to the change of INR137.3 crore. So what exactly is this amount, sir, in which subsidiary and what it is leading to for what purpose? You are talking about the subsidiary company called Apparels, where I have invested money in shares and that is a reflection of that money. Okay. Fine. And secondly, sir, can you provide us the geography or is breakup of possible on consol basis? Sorry,. I guess 25% will be US, 25 will be Europe, 43 will be Europe and 45 will be thank you so much and all the best for FY ’26. Thank you.
Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go-ahead. Yeah. Hi, sir. So thanks for taking my question again. So just two clarification. One is what is the capex you have planned for FY ’26 in India, in overall consolidated consol capex should be around INR60 crores in terms of capex. For, INR6 million loan transferred to the subsidiary company. Okay. So from a cash outflow perspective, INR60 odd crores aggregate. 60 plus $6 million. But that is transfer of machines only, right? You mentioned? No transfer to the subsidiary company by way of unsecured loans.
Okay. Okay. So INR60 crore in India, INR60 crore is India plus young brand and INR60 crore is in Sri Lanka, 120 crores. Understood. Understood. Clear. And secondly, sir, this young brand overall acquisition, what amount we paid is close to INR150 crore INR160 crore, right? Is that correct understanding? 167. And now we are doing cash generation of close to INR40 crore INR50 crores on an average, so three odd years of payback period. Okay, perfect. Just wanted to clarify that. Thanks. 4.15 years.
Okay. Perfect. Thank you, sir. Thank you. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you. I press that we have addressed all of your queries with clear responses. I would like to express my gratitude for your active participation in this conference call and for your keen interest in the company’s progress. I just want to reiterate our commitment to excellence and our focus on delivering long-term value to all our stakeholders. We are optimistic about the potential for growth in the garment industry. With this in mind, we remain confident that our narrative of revenue growth is robust and that we will see margin improvement going-forward. We are confident that the strategic decisions we are making will yield positive results in the upcoming quarters and the year
Sundararajan Mudaliar
Year ahead. Thank you.
Operator
Thank you. On behalf of Elara Securities Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines