Thank you very much. We will now begin the question -and-answer session The first question is from the line of Varun from Equitree Capital.

Hi, sir. Sir, a couple of questions. Firstly, if you could help us understand why the capacity utilization was lower. This was the 14% drop in capacity year -on-year, and which led to the overall revenue de-growth also? And secondly, also wanted to know how much the additional air freight cost during this quarter? And why were the shipment delays happening? And will this continue in Q2 also?

So, point one, on question one, on the capacity utilization. Capacity utilization comparing last year, we have added additional 1,000 machines for this -- sorry, 750 machines for the current financial year. And utilization levels have come down purely because of the order slowness because of U.S. tariff issue during the month of March, April and May. So that is why there is a decrease in the capacity utilization. On question number 2, on the air freight, the cost of air freight was around 50,000 GBP in SPUK. That was the cost in the air freight in SPUK. And what was your third question?

So, will this continue in Q2? Are you seeing any further delays in shipments?

No. We are not looking for any spillover with respect to shipments.

Yes. So, the delay in shipments was because of container or because of the order.

No, no, it is because of the customer's request.

Understood. Okay, sir. Thank you.

Thank you. The next question is from the line of Prerna Jhunjhunwala from Elara Securities India Private Limited. Please go ahead.

No. - We are not in a position until the first shipment goes, we will not be in a position to share it. But 2 from U.K., 1 from EU. So, these are all in U.K. is mainly because of the FTA thing because those retailers already well planned to take the FTA benefits out of India. So, they well in advance, they planned and blocked all the capacities and done all the cost things. And now they are going to place the orders. And also, in SPUK, we are in the process of adding 3 more strong customers because of FTA and our product development design support because nowadays, the brands are looking for additional service like the product development designs and the proximity to their offices. So that is an additional advantage. So their SPUK is in a position to take another 3 more customers, which means they are all big customers, they are very strong now. I can mention one among them is Marks & Spencer.

All right. Okay. So sir, SPUK is going to source for Marks & Spencer. So how big can we believe that this SPUK business can reach in the next 2-3 years’ time?

Yes. Our guidance is in the next 3 years of time, I think we are planning for GBP 13 million plus.

Okay. And at that level...

In 5 years' time, we are aiming for GBP 50 million.

Okay. 50 million GBP. And at that level, we will be profitable? And what kind of margins can be?

Already we are, but for the deferred shipment, this would have been EBITDA positive. But now the EBITDA is sustainable, that's for sure. And since it's a trading model, as the top line grows with the fixed expenses only, so definitely, there is a good opportunity for improvement in the margin.

Understood. Second question is on Sri Lanka. What kind of traction we are seeing now? What is the capacity utilization there? And what kind of revenues we are doing? And how has been our experience in terms of operation management and what kind of margins we are doing there?

See, since we acquired all the factories are already fully running factory. So, the capacity is fully running, except one factory where it is 85% to 90% running, which is almost to the maximum capacity, these factories are running. And we are continuously receiving the base orders from India with the raw materials everything. And their shipment performance is perfect on time, everything. So only the initial pre-operative losses something. So that will be over a period of time will be back on track. I think by end of March, those factories will be able to manage themselves. Our software system is already implemented completely with regard to HR , accounts and finance and then for the operations. And these payments, everything is controlled from India only.

Okay. And who is managing like you are only managing the facilities?

There is one country manager and one CFO there.

Okay. Understood. And what will be the revenue by the end of March from Sri Lanka?

Roughly anywhere between INR 150 crores to INR 200 crores of revenue, which will sit in the books of S.P. Apparels only.

Okay. Understood, sir. And you mentioned about one new product line to be added in Young Brand. Could you give some color on what kind of is it in the intimate wear category only or any new...

As I mentioned to you, it is Apparels ladies bra. It's a luxury product, which is completely a different product line, but we are going to put up. Chenduran, can you expand on it, Chenduran?

Yes. Can you hear me?

Yes. Audible sir.

So yeah. So Young Brand being in intimate wear, we do a lot of underwear, which is the bottoms for the existing customers. And it's a value add in terms of doing the luxury products. And all the customers have been encouraging and pushing Young Brand for a while to do those value- add products. So currently, we are in the process of partly acquiring and investing into machinery to be able to manufacture those products. So it's purely molded value-added bras.

Understood. What is the kind of investment you're doing? And initially, what kind of revenue are you looking at from this investment?

So in terms of revenue, it's a little too soon to talk about that. So, we have orders which can fulfill 200 machines capacity at the moment, but the investment will only start from September, October. So by the time it comes to a full-fledged production in terms of generating revenue, it will be next financial year. In terms of investment, we already have the building within the entity. So it will only be acquiring machineries from an existing setup from an existing factory who are leaders, pioneers in these products. Acquisition in terms of the machinery and the team partly. Investment, I think it shouldn't be more than INR 10 crores kind of investment. That's the maximum.

Understood. Thank you.

Thank you.

Thank you. The next question is from the line of Rehan from Coheron Wealth. Please go ahead.

Hi. Am I audible?

Hi, sir. Good afternoon, Balaji sir. I had just a couple of questions on the business and how it's shaping up. Considering now that the tariffs have also rolled back and we're getting some benefit on the same, you had mentioned it was a 90- to 120-day lag. So do we see Q2 onwards margins to come a little better than what they are at the moment? Or how will it be for Q2, Q3 going forward?

See, with respect to margins, we have already guided for a consolidated like garment division that is between Young Brand and S.P. Apparels put together, we will be anywhere above 15% for the whole year. Even including Sri Lanka business, we should be 15% EBITDA margin. And with respect to Q2 performance, we feel that Q2 will be better than Q1 on the top line.

Noted. And there were some hindrance that considering tariffs were uncertain and the geopolitical reasons, we had slowed down the capex across Salem and other entities in India. Are we back on track to complete Salem and India for the machinery for the base business?

So yes, we are back on track on that front. We've restarted the work on the projects on the Young Brand side since April and the Salem facility has started since last month. It's doing the trial production, but at some point in the next three months, post Diwali, it should be running to the full capacity what we planned for the Phase 1.

So, this is with regard to Young Brand Apparels, we have Palladum approved factories, which, as we said, it is yet to be commenced, there is so. But with regard to the SPAL division, yes, we have already started the Sivakasi factory and slowly, it will reach a saturation, then we have a plan to increase to another about 400 machines over a period of next two years' time. And with regard to Sri Lanka, at the moment, we have taken silent period for everything to settle down for another one year. But however, in the meantime, in Sri Lanka, the advantages we can go for job work with the customer approved factories without any investments and without any risk on the operations. So that is one more opportunity we are getting. So probably within 1 year time, we will be able to increase another about 500 to 600 extra machines as a job work flow. So, this will add additional sales in the top line.

Understood. Thank you for the clarification. So, the 750 machines that Balaji sir mentioned in the beginning was split across India and Sri Lanka? Or was it only India?

No, it's only India.

Okay. And what's the current machines in Sri Lanka at the moment?

Current machinery in Sri Lanka is around 1,650 machines.

Out of which 1,300 is use for exports.

1,300. And at the moment for the quarter, how much was contributed from Sri Lanka?

Top line. Sales.

Top line, we have a revenue of INR 25 crores on the top line from Sri Lanka.

Okay. And for this year, is it fair to estimate that you had mentioned that INR2,000 crores guidance for FY27. In Q1, we've done about INR 400-odd crores of revenue. So that takes the trajectory on an average of INR500 plus for the next 3 quarters consecutively around INR 530 crores, INR 550 crores range. I know it's not linear, but I'm just saying that that's how it optically looks on the numbers. Are we confident of achieving that numbe r? Or would you like to, you know, give us a little more clarity on the same, please?

No. You see, on a consolidated basis, we have given a guidance of INR2,000 crores and what we have achieved for the first quarter is only INR400 crores. But we still feel that second half will be the time where we will achieve better results. What we lost in first quarter, we will be able to achieve in the second half. That is what we are aiming to. And we still feel that we will be in a position to complete our guidance by end of March '27, we will have a top line of INR 2,000 crores. That is what we still believe.

Thank you, sir. That's very encouraging. And if I can just ask one last question, what would be the EBITDA from the Yarn division for the quarter?

Yarn division for the current quarter, it was around INR 7.5 crores for Q1FY27 .

Sorry, sir, I couldn't hear you. INR7 crores?

INR 7.5 crores.

Okay. Okay. So, you have not mentioned the order books of each of the businesses in the opening remarks. Could you give the order book?

Yeah. Close to around INR 430 crores.

Okay. For SPAL, right?

Yes, SPAL. And for Young Brand, Chenduran, do you have any idea?

Currently we have order book of around INR100 crores.

Yes, INR100 crores. And SPUK, the order book is about –INR 60 crores

Okay, sir. Thank you so much.

INR 70 crores. So total order book is about say INR 570 crores.

Thank you. The next question is from the line of Raman KV from Sequent Investments. Please go ahead.

Hi, sir. Can you hear me?

Yes.

So, one of the things which I have noted during the quarter is that our Young Apparels Brand sales volume has declined sequentially. Hello, can you hear me?

Yes.

Yes. So on a sequential quarter basis, our Young Apparels Brand volume has declined.

Young Brand Apparels, YBA. Go on.

Yes, Young Brand Apparels – yeah, the sales volume has declined. Is this attributed to anything? Can you be specific with respect to that.

Over to Chenduran.

So, you're comparing year-on-year number? Year-on-year...

No, no. I'm talking about sequentially.

Sequential, you're looking at 5.2 million versus 5 million pieces.

Yes, yes.

We did have issues with the U.S. tariff during the month of January and February. That's why the orders were a little low during the month of January.

YBA is 100% American market.

Yes. So customers were holding back in terms of what's the situation is they all knew that there's going to be improvement on the tariff situation with the reversal. So they held back for 1 month, 2 months on placing the orders. So that effectively fell in March, April, partly in May. That's the reason, but there's a lot of fact to which they held up, which is happening in Q2 and Q3. So they were just holding the orders because of expectation of the tariff reversal for 2 months. They weren't able to release purchase orders. And that's the impact we had in March, April and May. So it's half of May, which is 1.5 months of Q1. Yes.

Understood. And sir, my following question is with respect to our Garmenting division margins. Despite our lower utilization and lower revenue, our margins were 17.6%. So can we expect this to be a normalized margin? Or is this a one-off?

Yes. So I just want to understand was there any one-off during this quarter due to which we had increase in the margins?

No, there's nothing to do with one -off things, but the margins is purely with respect to the improved efficiency because there is a change in the product mix.

Understood. And can we expect the net sales realization to be around INR 150 per piece?

That is purely product driven. It cannot be looked at the average rate because if I'm doing more adult, then the realization will be on the higher side.

Understood, sir. Thank you.

Thank you. The next question is from the line of Amish Kanani from Knowise Investment Managers. Please go ahead.

Yeah. Hi, sir. Congrats on margin improvement for the quarter, sir. Sir, last quarter, you did mention about encouraging inquiries starting even from Europe as a long -term sourcing given that we are based both in India and Sri Lanka. So one given that there is already a traction from U.K., which is a very small market. H ow do we see this pipeline of inquiries and, you know, probably a long-term order sourcing? How are we preparing for that eventual EU treaty, which you said may be expected by end of this fiscal year, maybe a quarter here and there. But one, how is the current scene? How are we preparing for the growth that may happen in the next fiscal? And a related question, sir, is, given that we have a base in U.K., but it looks small in size, does it help, you know, one, that base to be used for eventual much bigger outsourcing emerging from Europe? Or are we thinking about setting up newer basis beyond U.K. for these , kind of, export inquiries?

So, with respect to your last question, yes, SPUK is today looking small. But see, SPUK division doesn't contribute only towards the trading business. It helps us support with respect to design support because they work on the design side also. So, it's not about only trading business, but it is also a support which we take with SPUK's help on the design side for our existing customers for India operation.

SPUK has got a great potential, post-COVID, only now it is slowly picking up, so the sourcing strategy of all the retailers are changing. For example, Marks & Spencer has clearly said that now they are looking for three things from any new supplier or existing suppliers. One is the track record. And the second thing is the financial strength and third one is product development and design support. And the fourth one is they are locally available for them. So that is the ir strategy. So we fit into all the requirements. So this is one example. Same way everyone is however changing their mind to not to source more through the local offices rather than direct manufacturing. So the things are changing. And as I told you , now SPUK has got about four customers and now another three are adding up.

So, seven customers and these volumes are unlimited because there is no capacity limitation since they are placing the orders to so many factories in India and Sri Lanka. So the capacity is unlimited. And so it has got a great potential. As I told you in the next 3-5 years' time, we will easily cross GBP 50-60 million.

Correct sir. And sir, about the potential EU pipeline on the ground situation currently? And how are we preparing for it?

So firstly, already in the beginning, we have clearly indicated that we have put up capacities in India to an extent of 6,000, maybe 5,750 something. And we have added machines in Sri Lanka to an extent of 1,650. We can go up to 2,000 there. And India, we can add another 10 machines every factory, we can add another 300. So, roughly 6,000 in India, 2,000 in Sri Lanka, 1,750 in Young Brand Apparels. So, we have a potential and have invested into for a 10,000-sewing machine capacity. So, we are set for next 2-3 years, and we are ready to absorb whatever comes in our way.

Sure. That's very encouraging. And sir, last question before I move back in the queue. On the uncertainty on the U.S. side, you did mention a little bit less. There was some in month of January and February, but some exporters in India have started to actu ally get a refund also if they have exported in U.S. The question to you is how are we kind of -- how are we facing the situation on the ground as far as the exports to U.S. is concerned, sir?

Chenduran?

Sorry, can you repeat the question again? Sorry.

The uncertainty on the U.S. side was there more so in the first two, three quarters. And there are these reports about another set of uncertainty, which might come because of the bill that they have passed, which might affect us. So, the question is, one, on the ground, how is it happening? And what is the outlook for, say, next six months based on the current situation, sir -- exports to U.S.?

Yes. At the moment, whatever interactions we've had with the customers, they are not expecting that to happen. But also, they are cautious in telling us that it's very unknown in terms of uncertain in terms of how the Congress or the President, they take decisions and if the bill gets passed. So at the moment, they are not seeing it as a problem, but they're also clear that they can't be 100% certain what will happen three months or four months down the line. So as it stands, the order book is safe. We've got orders until January, which is booked, but we have to wait and watch. There's nothing on the ground level that the customers can say.

Sure. So it's cautiously optimistic kind of scenario. Okay. Thanks a lot.

It is, yes. Correct.

Thank you, sir.

Yes. Good afternoon, sir. Overall, good recovery in margins and the traction you're seeing in the other businesses and also strong guidance for FY27. Sir, regarding your top line guidance of INR 2,000 crores, what kind of infant export volume and Young Brand volumes you are looking in FY25?

Sorry, in FY27, what kind of volumes you are looking, infant export volumes and Young Brand volumes in number of pieces?

See, since Young Brand is more underwear, we can't give you the exact volume with respect to the growth year-on-year. What we are looking at is that last year, we have performed that INR 300 crores of revenue. We should reach anywhere between INR 340 crores to INR 350 crores of top line.

Okay. And infant export value, I think l ast year was roughly around INR 955 crores, that any guidance there?

INR 1,100 crores was last year number. And we are expecting to reach INR 1,300 crores to INR 1,400 crores this year.

Okay. Regarding the interest cost was slig htly higher this quarter at INR 15 crores. So anything...

It was on a consolidated basis where we have taken a hit because of exchange volatility. So my packing credit, which is in INR, when I'm restating it, I'm taking a hit of around INR 1.75 crores.

So quarterly run rate of INR 9-10 crores interest will be back from quarter two?

Yes. On a consolidated basis, we should be anywhere between INR30 crores to INR35 crores.

For the full year?

Yes, for the full year. Yes, correct. Without the exchange loss.

Okay. Thank you, sir. Yes.

Thank you. The last question is from the line of Ayush Goyal from CAVI Capital. Please go ahead.

Hi, thanks for taking my line. So, since you're projecting the growth to pick up from H2, is this growth already backed by orders? Or are we in preliminary discussions with the clients?

Yes. I think we are already backed by orders for next four, five months. Like we said, the order book currently is about close to putting all together is about INR550 crores. So that itself is an indication of the level of top line expected. And the second half is generally after the -- this is a situation after effect of the U.S. tariff thing and then FTA introduction. So all these things are going to be effective from second quarter onwards. So we are already booked until October. We

are fully booked, and we are open for November onwards. And I think even if we fill the capacity, automatically the top line has to come. And we don't see any issues with regard to the order booking.

Okay. And I think I missed the order breakup that you stated earlier on the call. Like what's the order breakup between standalone and Young Brands?

So, Young Brand has an order book of INR 72 crores and S.P. Apparels India has got an order book of INR 430 crores.

Yes, that is SPU.K. is about INR70 crores and YBA is about INR 100 crores.

Okay. That’s it. Thank you, sir.

It's about INR 600 crores.

Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for the closing comments.

Thank you. I would like to thank everyone who has participated and showing interest in your company, and we look forward to support us, and we are very confident that our forecast is looking very bright and achievable. So with this, I would like to conclude the con call. Thank you.

On behalf of Elara Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.