Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Sportking India Ltd (BSE: 539221) Q4 2026 Earnings Call dated May. 19, 2026
Corporate Participants:
Darshi Jain — Investor Relations
Munish Avasth — Chairman and Managing Director
Analysts:
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sport King India Limited Q4NFY 26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions. And after the presentation concludes, should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Ms. Darshi Jain.
Thank you. And over to you ma’. Am.
Darshi Jain — Investor Relations
Thank you. Good afternoon everyone. Welcome to the Sport King India Limited Q4 and FY26 earnings conference call today on the call we have Mr. Munish Avasi, the Chairman and Managing Director. Mr. Sandeep Sachdeva, Chief Financial Officer and Mr. Lavalesh Verma, the company Secretary. I hope you have gone through our press release and the investor deck. A short disclaimer before we start this call. This call will contain some forward looking statements which may be based upon our belief, opinion and expectations of the company as of today.
These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. With that I would now like to hand over the conference call to Mr. Munish Avasti, the chairman and Managing Director for his remarks. Thank you. And over to you sir.
Munish Avasth — Chairman and Managing Director
Thank you so much. Good afternoon ladies and gentlemen. I hope you had an opportunity to go through a press lease and investor deck. We are pleased to share that the company delivered a resilient performance despite a challenging environment. Our everything broadly remained stable while profitability improved. This growth was supported by better yarn realization and better demand for cotton yarn during the quarter. Now let me take you through what happened since our last concord. There were many things happened.
First of all, the improved demand in almost all the geographies across the world and in all the segments that we make. With the resurgence of China as a large importer of cotton yarn, the share increased from 7 to 8% to almost 25 to 30% and they keep on buying. Renewed Bangladesh optimism After the elections in Bangladesh, local demand, though lagging for first few months is now leading the charge. Since March when the US tariff went away, the rupee depreciation is helping to make Indian spinning more competitive.
Indian cotton has finally regained its competitiveness after a rally in international prices and softening rupees. Consolidation which we have been talking since our last two years which happened in last three four years across the world is has now unlocked the real potential of spinning sector and we expect to see this accelerating going forward though there are some headwinds as well. The macro climate is still of huge uncertainty because of multiple wars going on. Inflation forecasts are of higher inflation which generally doesn’t bode well for growth.
Duty on cotton though right now not that relevant continues to be a detriment. Looking ahead we continue to see a robust demand after a long time from all the segments. Cotton spreads have reached almost three year highs and are expanding. We are expecting to expand our margins for next 2 3/4 with these increasing spreads and a good cotton capex. Now I would like to give you an update on our various capex programs. The 40 megawatt solar power supply will commence by the end of this end of May and expected to save around 14 to 15 crores next year annually.
We are also making strong progress on our greenfield expansion project of approximately 1000 crores which will enhance our spindle capacity by around 150,000 spindles. The land acquisition has been completed, advances for machinery have been released and and the construction activities are progressing as scheduled. This expansion will significantly strengthen our production capabilities, improve operational efficiency and position us to effectively cater to the growing demand. We expect the commercial operations of the project to commence in the third quarter of the current financial year as part of our strategic growth plans.
The Board has approved the acquisition of a majority stake in Marvel Dyes and Processes Private Limited to strengthen our processing capabilities and enhance our integrated operations. The Board has also improved the acquisition of the manufacturing facilities of Subagya Sales Private Limited on a plum sale basis in Nanon building on these basis subject to definitive agreements and customary approvals. Looking ahead, we are confident of improved overall performance and with EU and UK FTA in the horizon we will provide further stimulus next year when the new facilities come up.
Now we can go ahead with the question and Q and A.
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 Char and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Char and two Participants are 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 BHAVIKA Jain from Nivashay Investments, Please go ahead.
Unidentified Participant
Am I audible?
Munish Avasth
Yeah, please.
Unidentified Participant
Thank you for the opportunity. So first question on the new topics which we are coming up in Q3, I want to understand that how we can expect the ramp up of that capacity because looking at the current scenario there has been a very huge demand coming from the China and even globally for the yarn. So how we looking at the industry demand and what our plan to cater it and to be a part of this demand tailwind. And the second question I have on the spread side, as you said that we expect that the spread will continue for two to three quarters.
So I want to know the particular reason behind this spreads like increasing and how, how confident we are that it’s going to be sustainable going forward in two to three quarters. If you can give clarity on that.
Munish Avasth
Okay, so first of all I’ll go with the last question. So we are pretty confident about the spread because generally we have a exporting, we have a book for three 90 days for our sales. So we are already through this quarter, almost half of the quarter. And so this quarter our book is already there and the next half of a quarter is also sold. So and looking at the current demand scenario, we foresee that this demand is going to be there going forward and with the cotton we have already covered for these three to six months.
So that’s why we are so confident about the spreads to be there and maybe go a little higher from last quarter. And your first question was about the new capacity, right?
Unidentified Participant
Yes.
Munish Avasth
What did you want to know about the new capacity?
Unidentified Participant
I just want to understand that are we planning to ramp up quickly looking at the current demand scenario or like what’s our view how we are thinking of the upcoming strategies.
Munish Avasth
So we are actually doing the best we can. So being a greenfield project, I think we are exceeding our own internal expectations and we are of course looking at the current scenario. We are also trying our best to get it as soon as possible but you know, it takes a little time, construction and everything. So the timeline which we have given is the one we are sticking to right now.
Unidentified Participant
Okay. And just to follow up on the spread side, I want to understand that like, because maybe I, like you can correct me, the current demand scenario which we are seeing is majorly due to the China, like China is buying from India. So want to understand that are we exporting to China or. Because as per my understanding we export mainly to Bangladesh. So if you can give clarity what’s the scenario on ground and how we are seeing and Taking part of it.
Munish Avasth
So China, so see, India makes almost 400,000 tons million kgs of yarn every week, every month. China imports this 30, 35 million out of that. So it’s not that, you know, it is only China which is, which is, you know, which has caused this demand resurgence or spread resurgence. The only thing is they came and they pick up the incremental capacities and we, for us, China is not that big. Our share in China. So as a country, the India’s share is around, I think since last four, five months, around, you can say about 20, 23, 24%.
But at sport King. Yes, of course, we have also increased our exports to China from almost 2, 3% to maybe, you know, 10, 12% in last one quarter.
Unidentified Participant
Okay. And on Bangladesh side, Bangladesh continues
Munish Avasth
To be our major place where the export and it is, it is as it is as it was. A little bit of share has been taken up by China, but the demand is still there just because of lack of goods that, you know, lack of production that we cannot give, that we have to, you know, rearrange our priorities a little. But still Bangladesh continues to be our number one marketing export.
Unidentified Participant
Okay, that’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Ahmed Madha from Unified Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Same question from the previous participants. Want to understand that this little bit better your remarks on seeing China being a small portion of overall India’s production. That’s fair. But if I look at historical data of India’s exports to China there it has been fairly volatile. Right. I think the numbers pre covids were probably much higher and then 22 it was much lower. 23, it was higher. And last couple of years it was lower. In last few months we have been seeing the trend.
So what factors would you ascribe for this volatility in general, I’m asking and what are the factors to watch out for that may sustain this incremental demand from China? That was my first question.
Munish Avasth
Good question. So as far as you know, of course you’re right when you talk about China being a volatile partner. So that’s why, you know, our share is always, we are very circumspect in increasing our share to such a market. But what we are seeing, you know, different with China this time around is we see for last four, five years that Chinese domestic demand was faltering. And we see a resurgence in their domestic demand which is helping in increasing the demand for all kinds of yarns. And not only Cotton yarn, but all kinds of yarn.
And I think some thaw with the US Politically also is, you know, getting some share of business back to China. And another thing is, you know, China, I think cotton, raw cotton, I think they have peaked in their production. So now they need to import cotton. And for cotton they have a very high duty that is 40% or some quotas. And so as an arbitrage, they generally they buy cotton yarn. So yeah, you’re right. You can never be sure of Chinese demand because it’s not always there. But we see the things have changed.
Things are changing in China. For last four, five years it was grappling with its own economy, domestic economy, which I think has turned a corner. So that’s what giving us the confidence that this time they will be there all the time.
Unidentified Participant
Okay, sure, that helps. And on the spreads part you made comments that you have visibility of order book for a couple of quarters and you have inventory for maybe a couple of months. But say, say beyond Q2 and I’m trying to just crystal ball here, trying to improve my understanding beyond two quarters. And say India’s new crop comes in a bit slower and then cotton prices, your procurement cost goes up. In that case, how would you ascribe your margins? What range one can consider.
Munish Avasth
Okay, so see right now you forget the cotton coverage because that is, you know, every company has its own cotton policy and we are not talking about inventory losses or profits. But if you look at today’s cotton prices, even then the spreads are amongst the best which we have had in last three years and going forward, see generally in spinning April to September quarters and generally weak quarters. So and because there are many, you know, tailwinds in from October till March, your overall productivity goes up because of less heat.
You know, there is a festive season coming up, then spring season, orders from the Western world and the new harvest comes in which you know, where the cotton prices go down. So we don’t. We expect, you know, we expect maybe not, you know, we don’t have a crystal ball either. So we don’t know what it will be, but we see it better than what we have been doing in last two, three years.
Unidentified Participant
Sure, that helps. Last question. If I look at your international business breakup has been more or less somewhere around 50 percentage plus minus 5%. Do you see that share changing in upcoming years or this sort of a share is what one should continue to
Munish Avasth
Data in export and domestic.
Unidentified Participant
Yeah, yeah, yeah,
Munish Avasth
Yeah. It’s. I think we have been in this ballpark for a long time. So I think we stick to that because maybe, you know, with the new FTA is coming in and kicking in earnest next year, so maybe, you know, we see a much more bigger demand from India. So we are, we are pretty flexible either way. Wherever we see the opportunity, we pivot.
Unidentified Participant
Sure. Thank you so much.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press Char in one to ask a question. The next question is from the line of Saransh Gupta from Swan Investments. Please go ahead.
Munish Avasth
Yes,
Unidentified Participant
Thank you for the opportunity, sir. So I had few queries, so I just wanted to understand like if you can help us with what, how will the forward integration that we have just acquired through slum sale and majority stake in dyed yarn and environments like how will that pan up for, how will that stand up for us going ahead?
Munish Avasth
So that is something. So of course we will be formalizing it very soon and after that it’s a slow thing. So we are acquiring these businesses and we have some plans, but they are long term plans. So right now for next one year we just want to integrate and we want to see where, where all we can help each other and the bigger plans we will share when, once we go through the integration and maybe after six to nine months,
Unidentified Participant
That would be great. Also, sir, going ahead, like how do we see the business growing? Like we are adding around 40% of our current capacity in phase one and then there is another phase that will come up. So we’ll be at a good amount of capacity for spindles and we are also forward integrating. So do we see a shift towards value added products going ahead or like how will it be?
Munish Avasth
Yeah, see the ultimate goal is that that’s why we are integrating these facilities. But right now in next one, it’s 12 to 18 months, it’s this new capacity. The first phase which we are putting is of focus and integrating the existing, integrating these new two acquisitions and then I will take it forward. So we are working in all the fronts and we are looking at opportunities, how they present and how the dynamics shift. But now we are in all the segments and we are constantly exploring how we can expand in each segment.
Unidentified Participant
I basically wanted to understand like from a three to five years perspective, like how do we see the business growing ahead? Is it from the yarn segment or there will be a good amount of contribution from the value added products. If we call like fabric or probably diadean or garments.
Munish Avasth
See, that’s what I told you. That’s the plan. That’s why we are integrating. Because Ultimately the it is not to acquire these small, these small companies. We want to do, to scale it up. But again this is something which is in our plans. But how it rectifies is how we see it performing in next one year or 18 months and then we will go as we see how well they are being integrated with us.
Unidentified Participant
That’s very helpful also sir, if you can help us with the spreads. Like how did they, how did they move and like where are we right now?
Munish Avasth
How what moves? Sorry,
Unidentified Participant
Cotton yarn spread.
Munish Avasth
Cotton yarn spread today is I think around more than a dollar between the clean cost and the final yarn prices. So yeah, so they have, you know, for last couple of years they were at around $0.70, 65 to $0.70. So yes, they have improved significantly and we have today, I think if it remains at $1 with the rupee depreciating, I think middles are happy.
Unidentified Participant
All the best and thank you so much. Thank you.
Operator
Thank you. The next question is from the line of Anil Sharma. Please go ahead
Unidentified Participant
Sir. Good afternoon sir. And congrats for the good set of numbers. So my question is regarding inventory of the cotton, how much month’s inventory we are having, if you can share some guidelines on that. And number two as how, how, how we think that the, in the days to come how the EU and other FTAs will be affecting 4th year regarding the FTAs.
Munish Avasth
So EU and UK FTA of course have been announced and they are being, you know, debated in their respective parliaments and we hope, you know, UK at least to be active in next two to three months eu, which we believe, which we hear from the government sources might take another six months. So we expect both the FTAs to be effective from within this by the end of this financial year. And about our cotton coverage, we don’t really disclose our numbers. The thing is like all good mills, we tend to cover our season cotton by the end of March.
And this is not something we do like we do this every year because you cannot secure quality cotton otherwise. So I think that’s about it.
Unidentified Participant
Congrats and I hope for the long term future of this industry, our industry, good. As you see, I think the future, it means a medium term future is good for our yarn and apparel industries. Textile industry.
Munish Avasth
Yeah, it, I think the long term future, I’m more excited about the long term future with all these FTAs and the competitiveness of Indian spinning and apparel industry going forward.
Unidentified Participant
Right. Thank you sir. Congrats.
Operator
Thank you. The next question is from the line of Mahesh Akal from Deraya Investment. Please go ahead. Mr. Mahesh, your line has been unmuted. Please go ahead with your question. Mr. Mahesh, your line has been unmuted. Please go ahead with your question. As there is no response. The next question is from the line of Pavika Jain from Nevershare Investments. Please go ahead.
Unidentified Participant
Your line has been unmuted. Please go ahead with your question.
Operator
The next question is from the line of Ahmed Mada from Unified Capital. Please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Again two questions. Firstly, your answer in previous participant question on cotton. I didn’t get you gave some time frame. If you can repeat that please if possible, on your cotton coverage. On your cotton coverage you are answering question to previous participant and you give certain timeline of inventory. If you can extend that bit again please.
Munish Avasth
We generally don’t comment on our cotton coverage. The only thing I said was that like all good companies we tend to cover most of our cotton requirements for the year by the end of March. So that’s about it. That’s all I can say.
Unidentified Participant
Sure. And regarding your greenfield spindle capacity of 150k, in what time frame post commercialization it can achieve optimum utilization.
Munish Avasth
I think the day we start commissioning it should take six months. From there where we can, you know fully when we can expect 97, 98% utilization, it will come in phases like that’s how Spitig works. So from the day we commission, I think in two months we’ll start getting the first kilo out of there. And every month then we will be getting incrementally 15, 16% of production. Okay,
Unidentified Participant
Sure. And what will be your thinking on overall industry supply per se? There have been a lot of commentary around seeing the unorganized players have winded down and so on and so forth. How will you judge the industry supply per se? Because only few large companies are expanding capacity like you. So how will you judge overall Indian yarn competitive intensity and unorganized capacities?
Munish Avasth
I think we have been seeing this since last three, four years, since the last boom after Covid that, you know, a lot of capacities in India, not only in India, across the world have shut down because of different reasons, because of financial problems, because of being obsolete technology, not modernizing on time. So I think this process is still going on. So this. So we expect this process to go on and we expect more consolidations happening and we expect the good companies which are efficiently to keep on growing and we expect the people, the companies because there’s a lot of shift happening in Technology and anything which is older than 20 years cannot survive in today’s environment.
So either you modernize or you shut down. Otherwise if you very difficult to compete. So we expect either you modernize or you shut down. That is the motto which is happening for last few years because the margins though right now we are well placed. But overall we don’t see the long term margins are close to 15% and with all this new old machinery it’s very difficult to sustain at those levels.
Unidentified Participant
Sure. And for a first half will it be fair to assume we do 15% plus margins based on your current visibility?
Munish Avasth
We don’t give any guidance but yeah, I’ll be disappointed if we don’t.
Unidentified Participant
Thank you so much and all the best.
Operator
Thank you. The next question is from the line of Pramod from SRA Investments. Please go ahead.
Unidentified Participant
Yeah, hi, am I audible?
Munish Avasth
Yes please.
Unidentified Participant
Yeah. Thank you for the opportunity. So I’ve got few questions from my side. The first one was with regarding to the merger. So can you give us more color on the expected timeline for the completion of the acquisition and give us some perspective on how Sports King India limited margin is expected to grow after the acquisition.
Munish Avasth
So see the impact on. The immediate impact on the margins will not be a lot because they are very small. You know with our top line we are expecting around you know, 27, 2800 crores this financial year with the coming financial year and these two companies will give us close to 200 crores in our top line. So we don’t expect to really enhance our margins with these numbers. But yes, they are our roadmap for the future. They are our, you can say labs for future expansions which we need to do in downstream.
So we expect to close this within this quarter in this calendar year at the most.
Unidentified Participant
Got it. And is it fair to assume that the potential operational synergy integration benefits or cost efficiency can influence the margin going forward?
Munish Avasth
Yeah, of course, definitely. The margins for these companies will definitely increase once the synergies are there. But as I said the overall because these are 7 to 8% of our total turnover. So the impact on the total company will not be so huge within this year. Maybe once we start scaling those businesses up then things will change.
Unidentified Participant
Got it. So it was clear picture. My next question was with regards to the overall industry. So just wanted to understand the overall textile industry and beyond and the yarn demand. So could you help us understand how the management views the demand cycle of yarn and including the key factors that can influence this fluctuation across the different phases of cycle.
Munish Avasth
So the right now for last three, four months, three months, we are seeing a continuous growth demand for almost all kinds of yarns. And. We don’t have a crystal ball. But the feeling as a. As somebody who has been running these businesses for last 30 years is that we see some structural changes which have happened which are helping this time. Like the consolidations in have happened. So the demand, a little bit of extra demand just catapulted the spread. So that means that we have a lot of underlying potential in this business.
So any meaningful increase in demand can really jack up the spread. I think personally in India after all these FTAs and all the talks which are going on and we see a lot of potential. We see a lot of. We see India in the hub, if we act right as being the hub for garment manufacturing and fabric manufacturing going forward as a substitute for China and overall stable policies, stable power, stable everything. The interest rates are pretty moderate when we compare it to across our competitors. So we see a lot of potential.
It just adds that the downstream has to now pull up the stocks which they are doing. I think a lot of capacity is coming up in that participation of these FTAs and we see a good bright future for the whole chain going forward.
Unidentified Participant
Got it. So that was really helpful. Yeah. So that was all from my side. If I have any other question, I’ll join back the queue. Thank you.
Operator
Thank you. Participants who wish to ask questions may press star and one at this time. The next question is from the line of Pavika Jain from Nevershire Investments. Please go ahead.
Unidentified Participant
Thank you for the follow up opportunity. Basically I just want to clarity on the capacity utilization as in last call management mentioned that they are at a full utilization like at 95 utilization. So just want to achieve that till we are not coming up with the like because it will take three quarters. So how we are seeing our top line getting the top line growth going forward for two to three quarters. Is it the margins? This is the spread which is going to reflect or there will be a volume addition.
Second in this quarter we did a 13% of EBITDA margin. Just want to understand that what the. That what led this margin and are we expecting this to continue going forward?
Munish Avasth
Okay, so. So your question was first of all about so so we see that the yarn prices which were at around $2.70 let’s say in average for last quarter maybe $2.80. So they have gone up now to anywhere close to 330. So we would see of course as we Sell. You know, we always, when it’s going up, we always as a company get it with a lag because we have a policy of a long term sales book. So we expect you know, top line to increase by 7 to 10% in next three quarters because of the higher prices. Volume wise we don’t see any increase in volume because we are already working at full capacity, whatever is optimal capacity, 95, 96% and any new capacity will only reflect maybe in the last quarter or in the third quarter maybe a little bit and a little bit bit more substantially from fourth quarter and fully from the next financial year.
About the margins we expect how these margins came about. Of course, better spreads, these margins could have been higher but we had some small provisions. So we expect the margins to expand meaningfully next 2, 3/4. Looking at the spreads and our long Facebook,
Unidentified Participant
If you can give me the range in between we can expect the margins to be.
Munish Avasth
We don’t. They shall be, you know, we are looking at, you know, quarter and quarter spending by at least 15, 20%.
Operator
Thank you. The next question is from the line of Kunal Shah from INAM Group. Please go ahead.
Unidentified Participant
Yeah, hi, thanks for giving me the opportunity. So first is on is there any update sir from the government in terms of imported cotton and the duties on the same.
Munish Avasth
So that’s the big thorn in the flesh though right now it doesn’t mean a lot because Indian cotton is substantially cheaper than the international cotton. But of course for the long term health of this industry this is one fight which we have to win. And right now the communication is going on. We have been meeting different ministries periodically and they all understand, you know, the rationale behind it and we expect to see something coming up in next couple of months. So we are just waiting because with the government, you know you cannot, it’s a one way communication.
You can always tell, you tell them your problem but they will tell us when they are ready for this.
Unidentified Participant
Right, right. And what we were hearing is that you know, in even before the cotton price hike in March, CCI pricing was being calibrated in line with US cotton prices. Is this observation true, sir?
Munish Avasth
Yeah, you’re right on that. That CCI has been pretty efficient with you know and they very textile industry supportive in their pricing. But the problem lies in you know, when they are buying it says, you know, when they sell they are pretty good but when they are, when they are buying that time there’s a problem then that is the time when there’s a disconnect between the prices, international prices And Indian prices, that is from a period from October till, you know, February.
Unidentified Participant
Got it, got it. So in terms of buying, how much would CCI be out of, you know, buying from India’s total production of cotton?
Munish Avasth
So this year they have bought 106 lakh bales out of projected production of around 310. So it is almost 33, 34%.
Unidentified Participant
33%. So that they raise the price in the market and hence we also have to pay higher prices. That is the impact.
Munish Avasth
Exactly. So whatever. So the prices are pretty much, you know, close to MSP levels when the harvest comes. So the mills don’t have an option but to buy from the market, whatever the prices might be. So that is when the problem comes. Right now, whatever the international prices are. So we will be much higher than the msp. So right now it looks good, but you know, with international prices you never know.
Unidentified Participant
Right, right. Absolutely. Question. This was in this merger of group company that they’re planning. I was just seeing the financials that you reported in the press release. So group companies have seen a decline in revenue over the two year period from FY23 to FY25. What would be the reason for the same and what would be FY26 revenue numbers?
Munish Avasth
So we were, you know, in the process of, you know, modernizing and you know, basically we were re engineering those units. So they were like one of them was shut down for three, four months because of that. And there were a lot of capacities which we were re engineering. So yeah, there was a decline in the marginal decline in the total revenue. But going ahead we see a healthy increase in revenue by at least 20 to 25% in this financial year.
Unidentified Participant
So that you’re talking about, can you just share the FY26 revenue numbers for these companies?
Munish Avasth
26 number will be I think similar. It will be flattish.
Unidentified Participant
Okay. And 2025 was seen from FY27 onwards that that’s what the outlook is. FY27.
Munish Avasth
Now, you know, we expected both the companies to grow by 15 to 20%.
Unidentified Participant
Okay, got it. And so that business which is into dyeing of fabrics, that is only dying and not manufacturing the fabric. Right. Just, just clarifying for that.
Munish Avasth
So we manufacture a lot of fabric in our one company and it gets dyed in that company. So now they both the processes, we manufacture fabric also, but only for in house. So it is getting died in that company.
Unidentified Participant
Okay, got it, got it, got it.
Munish Avasth
Perfect.
Unidentified Participant
Okay, thank you so much.
Operator
Thank you. The next question is from the line of Anil Sharma, please go ahead
Unidentified Participant
Sir. For the opportunity second time. So my question is regarding a renewable under the investment that way because as you said we will be saving around 14 to 15 crore this year. Can how much we can increase? What is the any limit about that? Because it is very cheap going forward. Also due to uncertainty we are planning to invest more in this some color on this renewable energy and how how much it will save in years to come.
Munish Avasth
So this is right now under Punjab policy we this is the most we can put under solar. So this is for this, for our existing capacities. This is the highest we can go to. So this is 40 megawatt which will be giving us around 7 crore unit every year at a price of 3 rupees 70 pesos.
Operator
Right.
Unidentified Participant
And for that how much we will saving?
Munish Avasth
We’ll be saving around I think 2 rupees. 2 or 22 rupees. Around about 15 crores a year.
Unidentified Participant
Okay. And the next year also this will be the same. I think if we go for the expansion of the our new capacity when it is installed then we, I think it may be we can expand it. Is it so
Munish Avasth
So that in Odisha we are get anywhere getting solar at a very lower price. So it won’t be that beneficial to put a solar plant there. So we might put up a small one on our rooftop but not a ground solar. I think we won’t need to put that.
Unidentified Participant
Okay, thank you.
Operator
Thank you. The next question is from the line of Yash Mehta from SKP Capital. Please go ahead.
Unidentified Participant
So thank you so much for the opportunity. So I’ve got a few questions. So firstly the fourth quarter witnessed the noticeable improvement, improvement in profitability and margin performance. So kindly explain the key factors that contributed to this expansion. And it would be really helpful to understand the relative impact of elements such as better product mix, lower material cost, operating leverage or any one of benefits during the quarter.
Munish Avasth
So as we have, you know I’ve out in my previous callers and in my initial speech that it is the most important factor which has contributed and which is actually contributing. So demand has been robust for the last two, three months and it continues to be, that is the single most important factor which has helped the margins to expand.
Unidentified Participant
Okay. Okay, got it. And additionally, how should we view the sustainability of these margins going ahead?
Munish Avasth
So we as I told previously also that we have a visibility for next two quarters and then we you know, see macro, you know that the new folks is coming in and our new capacity is coming in. So we are pretty sure that you know we can maintain these margins and maybe expand, you know, long term.
Unidentified Participant
Okay. Okay. And there was a forex related mark to market impact during the quarter which affected the profitability also. So could you help me understand what’s the company’s hedging policy and whether forex volatility remains a material earnings risk going forward.
Munish Avasth
So we don’t, whatever we sell, we book the same day. So we don’t keep any, any, any risk in our books. So it is just that, you know, when March 31st closed, the dollar closed at the highest level, all time high levels. So anything which was, you know, yet to be shipped or yet to be received was mark to market. So that’s why you know, though, you know it is a notional entry but that is required to be made and the impact will be reversed in this quarter if the rupee, you know, doesn’t, you know, depreciate more, much more than this.
But it all depends upon, it’s a, it’s an entry which is adjusted as per the last. As the closing rate of dollars on last day of the quarter.
Unidentified Participant
Okay. Okay. Yeah, got it. Thank you so much.
Operator
Thank you. Participants who wish to ask questions may press char and one at this. Ladies and gentlemen. We’ll take that as the last question for the day and I now hand the conference over to the management for closing comments.
Munish Avasth
Thank you so much everyone. I always good to have a connect with all of you and see you in the next quarter. Thank you.
Operator
Thank you on behalf of Sport King India limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.