Pearl Global Industries (NSE:PGIL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Pearl Global Industries Limited q one FY twenty seven earnings conference call. As a reminder, all participant lines will be in listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Sishir Kahoy, Head of Investor Relations of Pearl Global Industries Limited. Thank you, and over to you, sir. Thank you very much. Good afternoon, everyone, and I am delighted to welcome you all to our earnings call for Q1 FY 'twenty seven.

0:47 I hope you all had an opportunity to review our press release and the investor presentation, which are available under the Investors section of our website, and the same are also uploaded on BSE and WFC websites. To discuss our results, we have with us our Managing Director, Mr. Pallup Energy and our Group CFO, Mr. Sanjay Gandhi. They will take you through our results and business performance, after which we will proceed for question and answer session. Before we start, I just want to highlight that this call may include forward looking statements based on the company's current views and expectations. Actual results could be different as future performance is uncertain and involve risks that are hard to predict. I will now hand over the call to RMD, Mr. Pallab Banerjee. Over to you, Pallabji.

1:37 Thank you, Sushir. Good afternoon, everyone. I welcome you all to our Q1 FY 'twenty seven earnings call. We continue to deliver a strong top line and bottom line by our focused execution and multi location presence. During this quarter, we achieved a revenue of INR1528 crore and our EBITDA stood at INR164 crore, which is 10.7 and a PAT of INR99 crore. We shipped 20,800,000 pieces this quarter. Some important updates on the key developments that's affecting our industry. USA, our biggest market, is... Has now an MFN plus section three zero one tariff on our.

2:31 As you know, after supreme court judge IEEPA tariff as not legal in February, US had implemented a 10% additional tariff under section one twenty two. And this got over on July twenty fourth this year. Now we have an additional 10% and... 10% for India, Bangladesh, Indonesia, and a 12.5 on top of the MFN tariff for Vietnam. Now following the Supreme Court's decision on February 28, which strike down the IEPA tariffs, approximately 166,000,000,000 was collected as duties, which became refundable to about three thousand three hundred thousand three hundred thirty thousand importers across 53,000,000 entities...

3:28 Entries. US Customs and Border Protection is processing these refunds through the Cape system, which went live on April twentieth this year. US government is in progress... In process of providing a refund to these importers. Now very few or very small sized customers that we have passed on these benefits back to their suppliers. In general, we haven't seen any of these refunds coming to us from our customers. Energy volatility continues as Iran and Iran War and state of Hormuz remain sensitive. Last quarter, we saw almost all Asian countries face the pressure affecting the raw material prices and the timelines. We had to maneuver through these challenges, and I would say that we're still going through it.

4:22 And on addition, like even before the peak shipping season, we are seeing a shortage of containers and the shipping lines capacity shortages, resulting in delays and high spot prices of freights. On other hand, the bubble Monday is back in news as it affects with one of the choke points of critical shipping lanes. This will also continue to put an additional pressure both in terms of cost and timeline of transit. Mostly the customers, our customers are paying these rates and we have FOB terms, but it does put a pressure to our industry. On the brighter side, what we find is that despite all these war and inflation, The U. S. Consumer behavior remained healthy.

5:12 We observed similar trends in other major Western markets as well, like European Union and UK. If I talk of now, the retailers and the brands in US are feeling better because they are getting back the... You know, once that they have the confidence of of the customer they are buying, and also they have the refunds that is coming to them, which will make their position much more healthier and they can pass on more aggressively, let's say, pricing or their selling strategies. This should have positive impacts on the order books what we feel. Talking of another different market like Japan, what we are seeing, it continues to raise security concern on the China, Russia and North Korea, this whatever is happening there geopolitically.

6:02 Clothing import from China to Japan, which used to be around 65% plus has now fallen down to 50%. So it's a 15% drop that has happened, and this is the first time in thirty one years. Vietnam is now almost 17.4% of the market of Japan imports into Japan. And Bangladesh also has gained it has come to a 4.3%. So this is something the positive news, again, because Japan is one of the bigger market after U. S. And European Union. Talking about the country of our manufacturing, if we talk of India, the implementation of India UK free trade agreement, which went effective 07/15/2026, is a significant positive development for Indian exports.

6:54 Now the focus will be on the implementation of European Union FDA by the beginning of 2027. Such FTAs are normally a major boost to the raw material investments in India as well. What we are seeing is coupled by the other various schemes from Indian government like the PLI schemes, the PM Mitra parks, and the competitiveness amongst the states to draw investment. What we feel is that textile and apple continues to be a focus area in India. Pearl Global already serves several of these markets in European Union and UK and have many customers because we are servicing them through other geographies and we believe that this FTA will further strengthen these relationships as we create more additional sourcing advantage for them.

7:47 We are proactively positioning ourselves to capitalize on these opportunities by enhancing our factory readiness in India, strengthening the compliance standards to meet some of the different standards of European Union and UK, expanding the capabilities and also working closely with our customers on their future sourcing plans. In terms of challenges, in India, we did face the challenge of worker availability during the Q1, mainly because of the a harvest season, school holiday. And this time also, we had the waste in all directions. We saw a lot of labors going missing or absent. Haryana and Noida both raised the minimum wage significantly, 3821% respectively, which caused another ripple into our cost structure.

8:41 At Pearl, we are having a healthy order book and have better utilization of capacity in India as compared to last year when we had the backdrop of the tariff pressure, which has started around this time. Moving on to Bangladesh. Here, our business continues to grow. Again, we witnessed a healthy traction both from the existing as well as the recently added customers. Our ongoing capacity expansion projects in Bangladesh along with the sustainable laundry operations that we are starting in September. And we should be becoming operational and execute orders in the second half of this year.

9:29 These projects is expected to give us almost about 6,000,000 to 7,000,000 pieces of additional capacity in Bangladesh, and that will take our total group installed capacity to almost 108,000,000 pieces. And this eco friendly washing unit that we are adding that also will help us in terms of value addition that we are doing to our garments. In Indonesia, the business momentum remains healthy with encouraging demand trends and strong growth from relatively lower base, which is supported by our continued customer traction and the focus on the premium clients remains in this country. We remain confident of delivering both top line and bottom line from this geography.

10:16 In Vietnam, it continues to be one of the world's largest capital exporting countries after China and is playing a strategic role in serving the high value and fashion oriented segments for us. The country benefits from favorable trade agreements, including the European Union, Vietnam, FDA, and we have benefited the most from ongoing sourcing diversification that has been happening under China Plus One strategy, as Vietnam also got the maximum benefit. It remains an important manufacturing hub for U. S. Encouraged by the strong customer traction, we continue to evaluate opportunities for additional capacity expansion in Vietnam.

11:04 In Guatemala, we have reworked our operating strategy and seen encouraging progress. We remain confident of achieving our breakeven during this financial year of 2027. Overall, we believe our diversified manufacturing footprint, diversified market and the client base, ongoing capacity additions and our ever strengthening customer relationships will help us in these geopolitical challenges as we manage through these geopolitical challenges to trade the environment that the trade environment is facing, I feel that Pearl Global is positioned for sustainable growth over the medium term.

11:51 With that, I would hand over to Sanjay Gandhi, our Group CFO, to share the financial highlights. Sanjay, over to you. Thank you, Pallav. Welcome all to our quarter one FY 'twenty seven earnings call. I will now take you through our financial and operational performance. Quarter one FY 'twenty seven consolidated performance. Quarter one FY 'twenty seven is a great start of the year for us. We registered our highest ever consolidated revenue, EBITDA and profit after tax for the quarter. Consolidated revenue grew to INR $15.28 crore, up 24.5% year on year. This strong growth was driven by a strong volume growth across our manufacturing locations.

12:39 Adjusted EBITDA, excluding ESOP expenses, stood at INR 164 crore, up by 44.1% compared to quarter one FY 'twenty six. This is driven by improvement in product mix and the operating leverage, which we witnessed in a couple of our geographies location manufacturing location. Adjusted EBITDA margin stood at 10.7%, up by 140 bps year on year. It is pertinent to note that given the current customer mix, product mix and geographical contribution to revenue and margin in quarter one of FY 'twenty seven, we are confident of sustaining this margin in Q1 series of subsequent year as well.

13:26 PAT in quarter one FY 'twenty seven stands at INR 99 crore, a strong growth of 51.4% on year on year basis. Now talking about stand alone financial performance. Total revenue stood at INR $3.40 crore grew by 27.4% year on year. Adjusted EBITDA, excluding HESOP expenses, stand at INR 22 crore, EBITDA margin at 6.6% versus 7.3% in Q1 FY 'twenty six. The drop in EBITDA margin despite the drop in EBITDA margin despite revenue growth is because of higher wage costs in all factories in Haryana post provision by state government.

14:14 Other highlights. During the quarter, we received a total dividend of INR 5 crore from Pearl Global Hong Kong, Hong Kong subsidiary company or PGIL. This is in line with the fungibility of cash across group entities. The company shipped 20,800,000 pieces in quarter one FY 'twenty seven, highest ever in Q1 series, up from 17,200,000 pieces in quarter one FY 'twenty six. The Board of Directors have approved subject to shareholder approval, the issue of one fully paid up bonus equity share for every one fully paid up equity share. CapEx update. We continue to build capacity and capability across our group.

15:05 We have already updated on Bangladesh CapEx. Construction in India, construction for the second shed manufacturing shed in Bihar has already commenced. We are expecting completion in next couple of months. The land acquisition in Vietnam is also completed in line with what we have communicated earlier. Further, we are in the process of outlining CapEx commitment of approximately INR 200 to 50 crore for FY 'twenty seven across geographies. We'll update you on the detailed CapEx plan in coming months. In summary, we have delivered another strong revenue growth and encouraging improvement in profitability. Quarter one FY 'twenty seven performance testament to the strength of our global diversified business model, strong customer relationship and enhanced capacity and capability, which has enabled us to carry the momentum built over past several years.

16:02 We remain confident of sustaining the double digit EBITDA margin on a full year basis as well. With this, I now hand over to the moderator to open the floor for questions and answers. Thank you very much. We will now begin with the question and answer session. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assemble. First question comes from the line of Kishore Kumar from Unifi Capital. Please go ahead.

16:51 Yes. Good evening, team, and congrats to the entire team for the great set of numbers. So my first question is related to The UK. Sorry to interrupt, Kishore, sir. As there's a lot of disturbance, can you please use the handset? That's your question. Yes. So my my first question is related to The UK and EU FDA. So last call also, mentioned about rising customer interest and customers visiting our facility in India. With U. K. FDA already in force and you possibly by next year, can you share us an update on how it's progressing? And if you can quantify the incremental order that you are adding or the incremental volume that we can actually get from our existing customers as well as new customers based out of these geographies? And are we going to carve out some portion of our existing facility in India to these customers? Or the incremental ones will be enough for now?

17:58 Thank you, Shugma. See, what I said earlier also, like we have been seeing when this treaty is getting finalized and was coming for fruition for implementation, we saw that interest generating in most of these customers, and they have been talking to us much more intently in terms of more capacity, not only in India, but for other places as well because, see, it gives them that kind of security that if something happens to Bangladesh or Vietnam and all, that diversification is there for global that immediately the business can shift to the other location. And also the kind of product which is a unique handwriting for India, let's say those kind of products also are available, which earlier the price was becoming a challenge because if they place it in India, then they have to pay higher tariffs. So both these things that we have been seeing is a positive traction.

18:51 In terms of UK business, yes, you will end of by end of this year, we can we will see a significant jump in The UK business that we do as a group. Now whether this tariff will... This free trade agreement will, you know, result into only India growth because when the customer talks to us much more intently and much more strategically, it encompasses all the locations. So that's that's one of the huge benefit that we are getting from this FTAs. Yes. We are getting attraction in India also and and other places as well. And I think second part of the question was... Sorry. I missed out. Did I miss out? No. No. The second part is The capacity.

19:36 Are we gonna... Yes. Yes. Yes. Yes. Yes. So no no separate factories for European markets. Basically, what we do is that our factories, existing factories, have wherever, like, you know, certain requirements are there from some of these customers, which was in addition to what we already had there. So those fulfillments we have done. So we are ready to execute the business from these places as well. So that way, the readiness is coming across all our factories. Got it, sir. Got it. So my second question is related to the revenues. So similar to the EBITDA margin jump, we we did see the revenue growth also much higher than our guidance. And is there any one off delivery that took place in Q1 which led to this growth?

20:22 And given both move in our favor, is there any revision to our full year guidance for the revenue? You did mention about the EBITDA sustainance, but on the revenue See, last year, there was a challenge as U. S. Market faced the tariff challenges. So, there were a lot of conversation and most of the retailers are also going defensive because the prices are going up, how the customer would react, what would happen to the economy. So there are lot of question marks. So as that overhang went out, we saw a good traction from the customer. The confidence of the customers and the consumers is definitely resulted into a better order book. So it is not a one off thing that has happened. Yes. If there is a change in the consumer sentiment of the market sentiments in the western market, that might fluctuate.

21:17 But otherwise, I think that the, you know, the pressure that was there because of tariffs, that I think got released quite a lot. And as I said, like, you know, the other geopolitical development that is going on, whether it is Japan, whether it is the European Union, like, you know, most of these countries, what we've earlier faced that, you know, the war when the first Middle East war that was happening in Palestine or before that in Ukraine, were basically creating some kind of, you know, negative consumer sentiment. That fortunately what we saw in the last six, seven months or even after this war started in Iran in March, we didn't see that. So that I think is a big differentiator this time that we see.

22:05 Got it, sir. Understood. Understood. Sir, there is a proposal under Section three zero one to provide a tariff quota for textile and apparels. So I think specific countries, which includes Bangladesh and Indonesia for us. So that a real benefit like benefit to prospect given we have to import U. Cotton? And there will be cost related to freight, insurance, all those things. No. No. See, The US cotton part is that if you import... If any country import US cotton and then make the government from there, then they get that kind of subsidy, that that kind of tariff benefit. So that's that's how The US release. That's for every country. There's nothing specific for Bangladesh or for India. Even Indian, our minister also has clarified that.

22:56 So that exists. That is, you know, use of US cotton specifically just to, like, you know, promote US exports. Otherwise, I think every country has got under three zero one, a 10% tariff... Additional tariff over MFN. Vietnam and China, those kind of countries have got 12.5%, and it is definitely stacked on the existing penalty tariff that China already has for US. So, yeah, less... A little, but, yeah, there's some different... Some advantage definitely there for India. Okay. Okay. Got it, sir. Got it. Sir, other extended ones Sorry to interrupt. Please. Sorry to interrupt. May I request you to please rejoin the queue for follow-up questions? Thank you.

23:46 The next question comes from the line of Bhavya Gandhi from Bajaj Alternate Investment Management Limited. Go ahead. Yes. Hi. Thanks for this opportunity. Couple of questions from my end. And first of all, congratulations on a very good set of numbers. First question is regarding the average realization per unit. Historically, we've been doing around 600 to six fifty, but this quarter, we've done closer to seven thirty five. So can we assume that 700 to seven fifty would be the normalized range average realization per unit? That is number one. And second is regarding the earlier guidance that you had given. We have already achieved on a current run rate.

24:34 1,500 is the first quarter revenue, and we had alluded earlier regarding 6,000 plus crores of top line for FY twenty eight, but we've achieved in the first first FY twenty seven itself. This is the current run rate. So would you like to revise revenue guidance going forward? Thank you, Abhya. See the average realization part, this particular season, a lot of outerwear definitely gets shipped out. So I don't think, like, you know, we should be focused on the evaluation so specifically. But, yes, it will definitely... Our endeavor is to grow it from 600 to higher. Like, as we get better customer, like, you know, more upmarket customer, then this will go up. If I get a more volume customer, then it will go down.

25:21 But yes, like for this particular quarter, definitely there is a lot of this value added out of our shipment scores. In terms of the top line guidance, yes, like our goal was to cross INR 6,000 crore by 2028. And as we said, like, we have been like, you know, our capacities and all have been made, so we can definitely achieve that. But depends on how the macro factors are, the macroeconomic situation is. So if it remains favorable like what we saw in the first quarter, if the rest of the year remains like that, then definitely we should be very close to our target with this kind of numbers that we are trending.

26:09 But that's something like, you know, it's more of a statement... Future statement, I would say. Yes. We are ready. We are, in fact, capability wise, capacity wise, we are ready. Let's see how it goes. Sanjay, if you want to add anything further to this? Yes, sure. So Bhavya, on the realization part, if you compare quarter one last year also, our average realization was around INR $7.15. And this year, it's $7.35. So typically, as Pallav had mentioned about the product mix in this particular quarter, our realization is always on the higher side. Last year, we closed an average utilization of INR $6.43 crore INR $6.43 per piece.

26:57 And so we're comparing an average of full year with quarter one, that may be not the right comparison. I think if you look at quarter one of last year to this year, we have improvement of INR 20, which is there. And yes, and then it depends on the product mix, how it continues for the rest of the year to really determine our average realization price. Got it. So just one follow-up if I can squeeze in. Yes. And on the revenue side, we have been mentioning that our endeavor is to accelerate the milestone revenue, which is specified for FY 'twenty eight, and we keep working towards that. Right. Sir, assuming that the 7,000,000 pieces will come on stream, so you'll have closer to 108 capacity, right?

27:50 Our initial guidance for FY twenty eight capacity was closer to 130 to 140. So can we expect further CapEx also after $1.00 8,000,000 pieces? We we had said by 2028, we should be having installed capacity of around 125 to 130. That's because we want to grow. Definitely, thousand is is a point of time, INR 6,000 crores that we expected that we should cross by '28 or before. As of now, it looks like. Now that doesn't mean that that's my end goal. Like, end goal will definitely be higher. Yes, you asked the question of, are we coming with next what is our next three year vision or something, but we'll definitely come out and communicate with all of you on that. But yes, we want to grow.

28:39 Like as we said, like our main competition have been with these big giants from South Korea and Taiwan and all, who are in multibillion dollars. So first goal was INR 6,000 crores. Definitely after that, we would be we have to touch that $1,000,000,000 mark and then move on from there. So the capacity will continue to grow. By 2028, we had forecasted that we should be having around 125,000,000 to 130,000,000 pieces capacity. Yes, by this year, you will see that 108,000,000 number will be crossed in September, October itself, and then we'll continue to go. Got it. Fair enough, sir. Thank you so much. I'll get back in the queue. Thank you so much. Yeah. Thank you. Ladies and gentlemen, you are requested to restrict your questions to two question per participant.

29:29 Thank you. The next question comes from the line of Bharat Kulati from Dalal and Brocha. Please go ahead. Yeah. Hi. Thank you for the opportunity. Congrats on the great set of numbers. Just regarding your stand alone margins, they've seen a dip of about 70 basis points Y o Y, even though we've clocked all time high gross margins. So I'm just trying to understand that do we expect to enter that eight and a half to 9% sort of EBITDA margin range in a stand alone business, or will we continue to hover in that seven and a half to 8% range? Because that's the only real drag on our consolidated margins. And just to add to that, have we peaked out on EBITDA margins in the remaining geographies, or do we still expect some operating leverage to further push up for margins from that side? Yeah.

30:22 Sanjay, you take this? Sure, Punav. Yes. So first, on the stand alone EBITDA margin decline of which you mentioned, see, we I mentioned in the commentary as well, there has been a revision in wages in Haryana, state of Haryana, where we have four factories operating here. And that incremental wage impact has hit the P and L in this quarter and which have really impacted the EBITDA margin for this particular quarter. Despite the increase in the margin, as I mentioned, we have a decline. If I just have to for the sake of exercise and I have to add that number, we should be looking at a 9% plus kind of an EBITDA.

31:11 Having said that, of course, going forward in the subsequent quarter, we have to keep working on the efficiency and the cost optimization measure to stay competitive and also while working on the EBITDA improvement. So yes, the target is to really have high single digit and double digit EBITDA in Indian operations as well. And that's where we should be looking at as we move in the subsequent quarter. But if that's the journey, which is there. On your second question about the overseas location, overseas location have both potential of leverage because the new capacities are also getting added in especially in Bangladesh. And also Vietnam, we mentioned that we have done a land acquisition.

31:58 So the complete project implementation plan will be shared in the coming months. And so there is a potential for improvement there as well. Indonesia also has a scope of operating leverage. So these are the opportunity in overseas location. As we have guided earlier, our first aim is to really target between 10% to 12% by FY 'twenty eight, and we are heading very much in that direction. And of course, as and when there is more opportunity coming up for improvement, which will be in line with our CapEx plan, we'll keep intermittently. Got it. Got it. And just on realizations from the previous participants, have we seen a realization improvement in our India geography as well? Or is this more of utilization improving in Indonesia and Vietnam, which has caused the realization to spike? Just understanding that has overall group realizations improved on a broader base, or is this just more of a seasonality we've seen of seven thirty five picking?

32:58 I think it's more of seasonality because a lot of this heavy outerwear, heavyweight outerwear and winter goods sold at this point of time. So that has got a higher FOB. That's what we're experiencing. Majority of these outerwear goes from Vietnam and Indonesia, some from India and Bangladesh as well. But that's how the nature of this business in this quarter is. Got it. Got it. And just lastly, on our consolidated EBITDAs, would we be able to quantify how much is the tariff impact? Or is this 10.7% without any tariff impact? I mean, I'm just trying to get a like to like comparison because last year, same quarter, our EBITDA margins on an adjusted ex of tariff impact basis were at 7.7%.

33:47 So just trying to understand, have we improved from that 10.7, or has it sort of been flattish? Yes. So this quarter, there is no tariff impact. This entire EBITDA is operational improvement and was driven by the volume growth and operational efficiency, which we have already mentioned in our commentary and answer to the question. So we are pretty confident with the consumer with the customer mix, product mix and the geographical contribution given in the quarter one. In the Q1 series for the subsequent quarter as well, we should be able to maintain that and continue working towards improving it to our objective of reaching to the 12% kind of EBITDA margin.

34:38 Got it, sir. Got it. Thank you. That's it from my side. Thanks a lot, sir. Thank you. Thank you. The next question comes from the line of Sunny Vishay from PL Capital. The first part was obviously on the realization, I think, which is already touched upon. But I just wanted to confirm, so we have been conservative in terms of the revenue guidance, and we have also been conservative in terms of forecasting the realization growth. So anything changes on that because we have been considering stable realizations for FY 'twenty seven. So do you mean that it is still in line with what we were expecting earlier? In terms of top line, we have been always saying that our CAGR would be in the range of 12% to 14.

35:35 But if you look at better years, we have done more than that. So this year, if it if it continues to be more than that, definitely, I think, as of now, it looks like it should be better than that number. To really give a forecast, I think we will create another platform in which we'll talk about... We're analyzing, and we are making preparation for what should be our numbers and goals. We'll share that with you. But, yeah, as of now, the traction that we are getting is seems to be very much better than 12 to 14%. In terms of bottom line, I think Sanjay had repeatedly said that we are more confident because as these numbers goes up, get the leverage. Sanjay, you can add further to this.

36:23 Sure. So yes, I mean, as we mentioned that we are pretty confident of accelerating our steady target of FY 'twenty eight, INR 6,000 crore, and we should be able to achieve it earlier than that. And quarter one demonstrates very clearly in that line. We remain confident for the rest of the year as well. And as far as the bottom line is concerned, I think that will continue to improve and double digit margin is here in the business inherently as well. We stated in our last earnings call as well, business has reached a stage where inherently it can generate an EBITDA margin between 10% to 12%. Now we mentioned four or five levers for it to reach 12%.

37:08 Now the convergence of all this lever will be, of course, at a different point in time. But definitely, with all this lever kicking in, I think we our business should generate EBITDA between 11% to 12. Okay. And on the realization front, we these realization that has happened is in line with what we are expecting at end of Q4. Is that correct? Yes, yes. Realization is as mentioned that if you look at quarter one of last year, which is FY 2026, our realization average has been INR $7.15, vis a vis we are at INR $7.35. So there is a 32.5%, 3% improvement. We it is a function of product mix realization per piece, and we always like to have better product and mix in while we do the actual execution.

38:00 But it's also a function of the demand and everything. So while we discussed the number with you, we have taken a little bit conservative view because our focus is to bring the volume growth more in our in all our model compared to the realization, which is a function of multiple things, which is some of the factors under our control, some are not in our control. But yes, we also look forward to improvement in realization as we go in rest of the year. Yes. Because last year, Q2, Q3, Q4 were also impacted because of the price that we have taken due to U. S. Tariffs. So is it fair to assume that realization growth Ideally, it should be much better in q two, q three, q four compared to q one?

38:45 So last year, like, you know, from India, we had some discounts that was going on. A double digit discount was going on to compensate that 50%. Yes. That difference definitely should come through. And for the other markets, it was hardly about 2% or 3%. So yes, like from the tariff point of what you're seeing, the tariff discount that we have been giving, so hopefully, like that should fade away now or be much lesser. I don't like customers are not talking of compensating the 10% tariff by giving additional discount at this point of time. So I think that should help. But in general, you see like we are a growing organization. So like if we get a customer, which is a mass volume customer, so then definitely the realization prices will be lesser. Whereas more business comes from the premium segment of the customer base, then the realization would be higher. So as of now, I think we are more focused on the top line and the bottom line compared to purely on the on the realization copies.

39:43 So, yeah, in general, like, you know, we would love to track, we'd love to grow that. Yeah. Yeah. Fair enough. And finally, would you be able to raise some idea? May I request you speak to the Thank you. This is only your second question, and it's a short one. So would you be able to give some idea on how the volumes are fair geographic wise, if not number, at least some utilization numbers? So Bangladesh continues to be the biggest, followed by Vietnam, India, Indonesia, and then Guatemala. So Bangladesh is tracking close to about, I would say, 45% plus of the group. And then Vietnam and India are very similar in the range of about maybe about 27, 22%.

40:33 20 to 27% to both of these and then followed by the other locations. I hope that helps you. Okay. Yeah. Thank you. Thank you. Ladies and gentlemen, you are requested to restrict your questions to two question per participant. I repeat, you are requested to restrict your questions to two question per participant. The next question comes from the line of Sharda Agarwal from Asian Market Securities. Please go ahead. Yes. Hi. Congratulations to the management team on a very strong quarter. Two questions. First is, what is that capacity in the second unit that we are looking at? And by when do we expect this to get operational?

41:19 And on the current capacity in India, what is the utilization that we opted at in 1Q? Bihar, we have two shares that we are starting with, out of which one share was functional of 450 machines at the full capacity. And the second share would be also similar, four fifty. What we intend to divide is one of them would be more of the woven garments and the other one would be knit garments. So that's the woven part is already operational at this point of time, and it is should be ready by picking up to one of them where we should see start seeing production there. And in terms of million pieces sorry, Palam. In terms of million pieces of garments, what is the capacity we are looking at, including Buda, Units, India?

42:15 So at its full capacity, we should be able to ship about, you know, four to five lakh pieces every month. But that is like once it's fully ramped up. At this point of time, is doing about close to 120,000,130,000 pieces a month. It should be over the period of next couple of quarters, it should move towards that full capacity. Right. And in India, overall, what is the utilization that we operated at in 1Q? That number, we have not specifically ready at this point of time. We can come back to you. And then we have India? Yes. So I'll just add, India, we are looking at this quarter capacity of out of the total number of PCs, which are available at around 70% of that have been there. In terms of the efficiency, we are looking at somewhere around 58% of efficiency.

43:24 So in terms of the total capacity when you compare, we are looking at 65% to 70% kind of utilization. So, Sadhguru, for example, the Bihar, as I said, like it is ramping up. So when we calculate the capacity, we calculate it at the full capacity of four fifty machines because the state was operational. But then we were ramping up line by line. So, yes, in India, I think we are still averaging between 70, 75%. I think we will be... You'll see that. And Indian efficiency, because we have been doing a lot of fashion garments and all, we are still between 50%, 55%, 58% in that range is our efficiency that comes through India. But I'm just looking at it from a point of view that where will the next level of growth come from, assuming that the Bangladesh CapEx takes some time to get commercialized.

44:12 So incrementally, the headroom to improve utilization is only in Bihar because Vietnam and Indonesia have done quite well from the segmenting numbers, if I'm right. So in India also, you'll see that if as these FTEs are coming through, so India will trend towards more core products as well. Earlier in India, we were more focused on the fashion products, and that was the seasonality was there because of which the utilization on certain season was much higher than the other seasons. Now our goal would be to have more uniformity across all the four quarters. So if that we are able to achieve, then you will see this number inching up in India because we have a a substantial capacity already built up in India.

44:59 And first quarter, definitely, you saw that year on year, we have a growth of almost 27%. So that's a positive sign. And our endeavor is to continue to do that, get more core products in India as well and get it done. So core products normally the margins are sharper, but yes, as the efficiency goes up again, the margin then becomes better. So that's the second and next story that we are going through. But overall, I think we're in a positive direction. The next question comes from the line of Abhishek Shankar from ICICI Direct. Congrats on a good set of results. So just continuing on the bit of utilization, right? So if I heard it right, you would mention 65% to 70% utilization in India.

45:57 So can you help me with the utilization rate across, you know, Vietnam, Bangladesh and Indonesia as well? So inflation in India, we just said, you know, is just 70% plus as of now. So there's definitely a a room as we do more and more. We can we can execute more in India. And with this, the positive direction that India is taking in terms of FTAs and in terms of other promotion of India that is happening, I think we're in the right direction. Other locations like, you know, Bangladesh and Vietnam, we do have the flexibility of partner factories as well. So that way, like, you know, the... If we get more business, we can quickly ramp it up because we have the...

46:45 You know, can negotiate additional capacity from our partner factories. So that way, these two countries are... You know, inherently, the numbers would always look better in terms of utilization. Sandeep, you want to add anything to this? Yes. I just want to mention that in terms of the utilization overall at a group level, we are looking at 75% to 80% in overseas locations, if we have to look at it quarterly available capacity. But as Pallav rightly mentioned, the partnership facility keep adding in location in countries like Bangladesh and Vietnam.

47:30 So there is always a increase in the capacity, which is being available for that particular season and quarterly basis also and on a full year basis. So that's the add on. In line with what there was one question by one participant about 120,000,000,125,000,000 pieces. So that target will still remain with us through in the interim period because there is a lot of opportunity, which is there in terms of without incurring the greenfield CapEx, we can have those capacity also getting added. So that's how it will span out. As far as specific to India, I mean, our annual if we add the second shed, which is under construction, which should be ready by September, October, the revenue wise run rate should be close to INR 1,700 crores to INR 1,800 crores, given the full utilization reaching there.

48:21 So we still have a lot of room to grow in India. And in Bangladesh as well, there is a good potential to add on the revenue, both on the volume side and accordingly in the sales revenue side as well. So the two and Indonesia, as we mentioned that is not really fully utilized. So the three origin right now have a good opportunity. And Vietnam also have the partnership facility being available as the demand really keeps going up. Those options are always under exploration. In addition to the land, which will be on which we do the greenfield project, which will come up in some time, that detailing also we'll share in the coming months with you on the capacity front. So capacity is not a challenge for us to grow even beyond INR 6,000 crore or even INR 6,000 crore in this financial year should this momentum continue, which we'll see in the coming quarters.

49:16 Okay. Thank you. Thank you. The next question comes from the line of Soham Samanta from Motilal Oswal Financial Services. Please go ahead. Yeah. Thank you so much for the opportunity, and congrats on the good set of numbers. So just a couple of questions from my side. So looking at Q1 numbers, so is it fair to assume that we expect high things kind of growth in April 27? High teen percentage of growth in FY 'twenty seven. That's the question you asked? Yes. Yes. With the current run rate, it looks feasible. Of course, the second half of the year, we have to see what happens in U.

50:02 S. We are seeing the Fed is talking about high interest rates. We might hike further. Let's see what happens to the war. So all these kind of things are there. But otherwise, as of now, what we have seen in the market, the trend that is there in the market currently, like, if it doesn't change, then that should be feasible. And the second question is the India, UK, HTA. So after the HTA, it's been almost more than a month. We have been... So on a quantitative number, like, how numbers will look like? I mean, is there any incremental order book will come in our plate? Or how will it look like on a sector or what are the industry? So overall, industry, if you talk about specifically in India, I think our export to UK is in the range of, I think, about one point some 2 or $1,300,000,000.

50:54 I personally feel that that should definitely grow up significantly. At least it should double within the next two years. Two to three years. Any visibility there as of now? Looking the current scenario? Anything visible, you mean? Yeah. Yeah. So, basically So, basically, the customers are coming here. Customers have been coming here, and more queries are coming definitely for India. Because earlier, like, you know, if they knew that, okay, this kind of product if India or Bangladesh is giving the same price, then it is play... Better to place in Bangladesh rather than in India. If if the price is advantageous in Bangladesh, then definitely those orders go to India. But there are certain group of products where the pricing would be similar both in India and Bangladesh, but it was landing 10% cheaper if you'd source it out of Bangladesh.

51:42 So there... Those kind of businesses start coming into India immediately. Because if it's typically India handwriting, the product execution, the product business becomes better if it goes out of India. So that particular segment of business, I think, should come to India immediately. And if you talk about us, like, you know, we have been doing certain customers, like, you know, UK, some major retailers. We are definitely seeing a significant growth in those... With those customers. Because as I just explained earlier also, that, you know, it gives them also confidence. There's another... Like, we as a as a supplier are bringing now multiple locations where we are maintaining the cost, and we are able to give this similar kind of service. So that's a huge confidence building for them from a supplier point of view. So that benefit, we are definitely tracking.

52:31 Okay. And for the growth, 34% is mainly coming from a... It's it's some old customer or new customer, or it's it's... How is it, like, prices for these products? So see, from the older customer also, we are growing our strategy as Pearl Global. We are doing almost about seven seven different category of product. So that means you can see, like, you know, almost about 70, 75% of our apparel store, all the product that is selling, Pearl can give them that. We are not able to provide sweaters, and we're not able to provide undergarments as of now. So so that... Keeping that aside, I think we almost have the rest of all the products that is there in April. So that... If if I was in an... With an existing customer, if I was supplying two or three different category of product, so we are trying to get into the balance four and, thus, like, increasing the wallet share of the same... With the same customer. So that's the kind of strategy that plays in Pearl, and that's how, like, we have been trying to grow and give them those services, additional services.

53:35 Like we have on-site location in terms of our product development creations and all, have the showrooms in those markets, working like full time with the customer in real time also, not depending on these time zones. So, those are going have additional services we provide so that we can get this extra wallet share by providing the seven different categories to them. So I think that strategy will continue and that's how like we get, once we get a new customer and then we continue to grow with that customer by giving them one after the other, the other categories of products. Got it. Got it. Thank you very much, sir. Thank you. Thank you. The next question comes from the line of Pulkit Singhal from Dalmas Capital Management.

54:20 Please go ahead. Congrats on a great set of numbers. My questions are largely very financial related. First is that when we see the gross margin, there's a significant Y o Y increase from 46% to 51.5. At the same time, other expenses is up by 51% Y o Y. So just trying to understand this nuance, is this a very onetime aspect? Is this going to continue? And what is the reason for this more importantly? Yes, Preeti. Thank you. So the gross margin and other expenses, yes, there's improvement in gross margin. See, there is a combination of outsourcing production and in house production.

55:12 So the manufacturing expenses and other expenses has gone high, which means the goods have been manufactured in partnership factory, resulting into higher other expenses. Whereas when we go to the gross profit, there is actual improvement in terms of the volume growth led by the high value added margin product, which we had in overseas location, which has led to improvement in the gross profit. As I mentioned that if this customer given the customer mix, product mix and the geographical contribution remaining in this quarter, which should continue for the quarter one of the next year and the year after, I think this kind of a gross margin is very much sustainable. And therefore, the EBITDA margin and other things will also go. Other expenses, as I mentioned, are higher because there is a lot of job work and other outsourcing, manufacturing expenses have gone slightly higher, in line with the volume of production volume going higher. So that's the brief answer in that.

56:11 So therefore, when you do higher job work, should one read it as that's because our own in house manufacturing facility capacities were not there for this kind of growth, and therefore, you had to do it? Or it was a process More of the accounting practice because these are two ways. Even in our own facility, there there could be something, you know, which is done under, I would say, more of a job or or, let's say, contract workers or all. So that also And happens. So it's like... It is a combination of all these. It's just accounting that you are seeing your rates where we are paying our own salaries and all that comes under our expenses and and then comes... Everything else comes under the others. Got it. Got it. Second question is finance cost.

56:58 I mean, so far, we've been doing receivable financing, and therefore, this cost item usually grows in... You know, a certain part of this cost item grows in line with the revenues. But now we have been seeing that to be tapered off. Should I be reading it as receivable days will therefore go up? Or how should I think of it going ahead, this finance cost side? Yes. Sure, sure. So yes, the first of all, our net working capital days remain same what it was as on 03/31/2026, around forty three, forty four days. The finance costs, the absolute amount remains stagnant as a percentage wise, it has come down to 1.7. Our receivable financing program continues. It is just that we are using more of internal resources, which is the cash generation or working capital requirement.

57:46 Wherever the opportunity is there, where we feel that there is a scope for optimization of finance cost and utilization of the proceeds, that's how the cost has come down in that way. So how should this line item grow going ahead? Like how should we think about it? So the receivable factoring is already a part of it. And trust will lead amortization, which is a part of this portfolio, it will continue to be there. We mentioned that finance growth as a percentage of sales would remain at 1.7% to 2%. As the scale goes high and the realization keeps coming up, maybe it is to the level of 1.7% to 1.8. So our endeavor is to have it any percent in terms of the percentage of sales to 1.7% to 1.8%. And that's what we are targeting for this year.

58:33 The next question comes from the line of Roshan from Antique Stock Broking Limited. Yeah. Thanks for the opportunity, and congratulations on. So I just wanted to understand expansion schedule for September. What utilization and how quickly the new capacity can achieve margins compared to the existing customers? Normally, the scaling up in Bangladesh is faster compared to India. You see, the industry is very focused.

59:22 It's one city and it's outskirts, Dhaka. So the labor pool is already experienced, and so is the lower management and the middle management and all. So that's why, like, you know, an investment in Bangladesh to capitalize and and really utilize the capacity or scaling up of the capacity is... We have experience in past as much faster. So we do definitely... We'll try to do that. Within the next one year, we should be able to... Our goal would be to capitalize what we what we have... What will be starting. So that's that's the objective. Let's see how how it progresses. Understood. And the the same question is despite global disruptions happening, we indicated that there is plenty of business momentum.

1:00:14 So are you seeing customers increasing their order book or shifting from seasonal ordering to wrong booking cycles as they diversify the supply chain? What's your qualitative comment? I'm not sure I could hear your question properly. What I understand is that you mean to say that whether the customers would be placing more longer term orders or not with the Yes. That's right. Yeah. Yeah. On the contrary, like, you know, we are seeing that with so much of forecasting of, you know, potential problems, high inflation, negative consumer sentiments and all, which always surveys and economists have been forecasting about. So most of the retailers have been a little conservative in terms of going long term. So they are more in terms of what is selling and read the sales and then take the business.

1:01:09 That's the kind of trend that we see. How do you bring down the the lead time from order to have goods in in in store? And this repeated disruption that we are seeing in terms of the logistics, like, now it has become... Most of a regular feature, like, you know, every year we are seeing the peak period, the rates are... Rates and timelines are getting disturbed. Availability of containers are getting disturbed. So those are the kind of things are definitely disrupting the retail planning. So, yes, it's it's basically more... It's a con... Continuous push and pull that is going on. I am not seeing the trend of ordering early as of now. So they are putting more and more pressure on the supply chain, how we can be much more reactive and how we can bring down the lead times so that they can compensate this logistical issues.

1:02:13 We have the last question from the line of Manju Bashini A from Ask Wealth Advisors Limited. Please go ahead. Hi, greetings to the management. Congratulations on the numbers. I have two questions from my end. One is on the gross margin part. To an earlier question, you did mention that because of improved product mix, etcetera. The margins which we did at the gross level in this quarter is representative and there is no reason to believe that it may not continue. The trend will be similar to what it was in the previous year. Is that the right inference? Yeah. Send me the quarterly. Yeah. Send me.

1:02:59 Good. Hello? Sanjay, you're Yes, Palam, you're audible. Yes, Palam, you're audible. Please go ahead, Sanjay. Go ahead. Said to you, go ahead. Sorry, I the voice was not clear. So yes, I mean, this quarter one, as we mentioned that subsequent quarter also, quarter one series should be able to generate this kind of a gross EBITDA margin, which we just achieved in this quarter, 10.7%. Rather, we should we'll make an effort to improve as we go step into FY 'twenty eight, 'twenty nine onwards, yes.

1:03:51 So the reason I'm pressing on this is because if I see in F twenty six, your Q1 versus Q3 gross margins itself, there is a significant jump. Like for example, Q1 of F twenty six, you get 46% gross margin. And Q3, despite all the tariff news, noise, etcetera, the gross margins were 51%. So roughly 600, six ten basis points and 2,000,000 from Q1 to Q3 at the gross level, you were able to deliver in F 'twenty six. So I'm only trying to understand. Now in Q1 itself, our gross margins are 51.5. So now on this level also, Q3 should be following the same trend as it did in F 'twenty six. That's what I was trying to get to, sir. Yeah. I will I will let Sanjay explain, but I can tell you one thing in terms of product wise.

1:04:41 This q q four and q one, these are the two seasons where a lot of outerwear starts shipping. So that's the time... I know that the difference of product definitely happens from season to season. Yes, Sanjay, go ahead with your details. Yes, well, look, I was about to say the same thing. It's a product mix, which has driven this gross margin improvement. And if we are purely looking from a gross margin point of view, yes, I think season to season, this should be the trend. As we mentioned that on a full year basis, we are confident of achieving a bit double digit EBITDA in FY 'twenty seven, which means the improvement in quarter three as well.

1:05:30 So yes, to some extent, the trend should continue for improvement in margins. Correct. Yes, that answers. And the other question is, Mr. Palak, the initial part of the conversation, you had mentioned about the closing inventory levels countrywide, China, Vietnam, Japan, Bangladesh, etcetera. If you... I missed those numbers. If you may please help me understand that one more time, please. I I was talking about Japan. Like, you know, the biggest market is US. The other important market is European Union, UK, and Japan for us. So in Japan, their dependence on China was very high. Historically, like 65% of the total Japan imports was coming from China. So what we saw this year or last year, like a significant diversion in that, the number came down from 65 to 49.

1:06:27 So that means 16% of of Japan imports actually moved out of China sourcing, And that went to markets like Vietnam, to a certain extent to Bangladesh. India so far has not been able to capture it. We have been growing in India also in terms of Japan exposure. But yes, So that's another significant development that is happening in our industry. So I was mentioning that. So I mentioned that, you know, Vietnam now is about almost 17% plus of the Japan share, Japan's total import, And Bangladesh has reached almost about 4.3%. So that's that's the number that I was showing. Okay. And we also have a very significant... One of the top five accounts and masters is also Japan based, I guess.

1:07:17 So any color incrementally that you won't want to share on that particular client? Sorry. Repeat your question, please. So I said for Pearl Global as well, I believe one of the top five accounts is from Japan as we speak. Any incremental data points you would like to share with us in terms of ramp up of that particular Japanese clients or where is it currently, and what are your target expectations, etcetera, over there? So Japan is an interesting market. I feel that, you know, Japanese brands like Humiqlo or Muji and all have really become... Now even GU are becoming international brands. Like, if you see the number of big US retailers who have gone international and then I'm seeing a lot of, you know, Japan also has gone international. Like, you know, what happens between UK and European Union also. So if you look if you look at that, then that should be an interesting market, and I should have more clients from that market.

1:08:14 So, yes, we are focused on, you know, understanding that market more and more and diversify. So, yes, currently, we are supplying to one of the clients, which is Muji. We would like to diversify and have more clients there. Not the big ones, like, you know, Uniqlo and Muji are, like, names that everybody knows, but there are many other names, many other significant retailers out there. So we are trying to get into them as well, like in the market, definitely it's an interesting market for us. Thank you very much. Wish you all the best. Thank you. Thank you. Ladies and gentlemen, we take that as our last question for today. I now hand the conference over to the management for closing comments. Thank you to all the participants for joining us today. We are pleased with our strong start to FY 'twenty seven and remain focused on disciplined execution and sustainable profitable growth.

1:09:10 We believe Pearl Global is well positioned to capitalize on emerging opportunity and create long term value for all our stakeholders. Thank you once again for your continued support and confidence in Pearl Global. I hope we have been able to address all your queries. For any further information, kindly get in touch with Sushee, our Head of Investor Relations or Strategic Growth Adviser, our Investor Relations Adviser. Thank you. Thank you. On behalf of Pearl Global Industries Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines. Thank you.