Sky Gold and Diamonds (NSE:SKYGOLD) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to SKYGOLD AND DIAMONDS LIMITED Q two and H one FY twenty seven 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 after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to miss from MUFG InTime. Thank you, and over to you, ma'am. Thank you,. On behalf of MUFG in time, I welcome you all to SKYGOLD AND DIAMONDS LIMITED Q two and H one FY twenty seven earnings conference call. On the management side, we have mister Mangesh Shahan, managing director mister Dasan Shahan, whole time director mister Mahindra Shahan, whole time director and mister Sadash Shapani, chief financial officer. I hope everybody had an opportunity to go through our investor deck that we have uploaded on Exchange and the company's website.

1:11 I would like to mention a short disclaimer before we begin the call. This call may contain some of the forward looking statements, which are completely based upon our belief, opinion, and expectations as of today. These statements are not a guarantee of our future performance and involve unforeseen risks and uncertainties. With this, now I hand over the call to mister Mangesh Chaut. Over to you, sir. Good morning, everybody. I would like to start this conference call with doctor John, director of... Full time director of SKYGOLD AND DIAMONDS. Thank you,. Good morning, everyone. Let me begin by thanking my team. Today, I want to go beyond the quarter. I want to tell you how SKYGOLD was built, where we started, why India's reputed retailers choose to work with us, and how we have used every rupee of capital you have trusted us with.

2:08 I also want to explain why we believe this is one of the most capital efficient businesses in our industry. One note before I begin, under the guidelines, we are not supposed to give forward looking guidance. That is one of the reasons you have not seen future guidance in our later... Latest quarter presentation. So today, I will speak only about what we have built and what we have delivered. SKYGOLD started with a simple goal, built a solid product portfolio and on the terms of our customers. We saw early that jewelry retail was moving from unorganized to organized, and that that paid off.

2:54 Today, the same shift is happening in jewelry. Our groups are in South Indian design, where we have built expertise over two decades. When we listed in 2018, we were a small company with a design team of 15 to 20 CAD designers. But even then, we, promoters, had one ambition to become India's number one jewelry manufacturer. The ambition has grown since. Our vision is to build a global design led jewelry manufacturing business that is. Why retailers come to SKYGOLD? Why do the highly reputed retailers choose us? There are four reasons.

3:39 Firstly, specialized in lightweight jewelry. As gold prices rise, customer wants lighter pieces. We adopted three d printing with paper casting as of the year 2020 and now run 40 shirts machines. Together with direct casting, laser cutting, holo stamping, this makes our jewelry 20 to 30% lighter. We have also cut gold loss from 1.5% to point 5%. Second, we don't just make jewelry, we co created. Our design team of around one eighty people studies each retailer's portfolio and its competitors. We study what each state and each community wants.

4:24 Our team brings sketches, prototypes, and samples before anything goes into production. That approach gives us one of the best selection rates in the industry and keeps unsold inventory low for our customers. It is also why value added products now make up over half our revenue from insignificant percentage three years ago. Third, we will execute in our industry. Execution means two things, timely delivery and sharper delivery with strict quality control. We will deliver in less than thirty days significantly faster delivery time line for the complex product that we are selling. Then our products arrive on time and sell well in the store, the repeat orders come quickly.

5:13 Fourth, we are one stop shop. A retailer who buys gold jewelry from us can now buy diamond jewelry, monk, chains, bangles, diamond shredded jewelry, and jewelry from the same partner. Behind that, sits a large back office team that handles customization, custom orders, and after sales service. Our customers can focus on retail. We take care of the rest. We are always one call away. Over the last eight years, we have invested in three things at once, design, technology, and people. On design, we grew from 15 to 25 designers to a team of around one twenty... One eighty. We hired talent that understood the gaps in the market and needs of each region.

6:05 On technology, we have adopted first time technology, but the machine is only as good as the person running it. Adapted in material science with our three decades of experience overseas with operations. On people, we built a marketing team to take us from South Indian business to plan India one. We hired professionals with twenty years of experience and deep relationships in the trade. In the past, we had highlighted about the expansion in management bandwidth. After appointing a professional CEO, business head, and CFO, also the presence of Tiru, who has three decades of manufacturing experience. In addition, he has spent close to a decade as one of the most reputed jewelry conglomerate.

6:51 To keep this talent, we made ETOPS a part of how we reward performance. We recently honored employees who have been with us for more than five years as they were the backbone of our growth journey. Now let me take you through on how we have used your capital. Our capital raising history tells a simple story. Each time we have raised capital, we have deployed it with discipline and converted it into a step change in scale. We listed on BAC SME platform in October 2018, raising 25.56 crores at $1.80 per share. At the time, we had just crossed 500 crores in turnover.

7:37 The IPO gave us the platform, governance standard, and visibility of the listed company, and the capital to strengthen working capital. We use that platform to build our design team and expand India marketing team. Over the following years, we compounded steadily, growing turnover from more than $3.04 to $1,007.45 crore by FY twenty four. In 2023, we moved to the main board of NSE and BSC. In late two thousand twenty three, we raised $1.28 crore through a preferential issue of shares and warrants. Notably, promoters participated through warrants alongside notable investors, a clear signal of conviction from within.

8:26 The capital allowed us to bring in senior professionals, launch our ESOP program, scale our diamond division, and build exports. Its impact was immediate. Revenue doubled in a single year from $1,007.45 crore in f y twenty five... Twenty four to 3,548 crore in f y twenty five. In October 2024, we completed a QIP of $2.70 crore, then our revenues stood at 3,548 crore for FY twenty five. During q two FY twenty six, we opened our international office in Dubai. We have also added new categories through acquisitions.

9:14 Today, we are running at an annualized revenue of 9,000 crore plus. Put simply across these two funds, raise it post our IPO. We have taken in about $3.98 crore of equity over the same period. Revenue has grown from 500 crore to 9,000 crore plus roughly 18 times. For most of our early history, we were a South India business. Our vision to be India's number one manufacturer meant we had to solve every region. So we built dedicated teams for North, East, and West, and studied what each market and culture wants to win. We also chose our partners then.

10:08 Our customers include several of India's large listed and unlisted jewelry retailers. All of our customers, Kalyan, and PN Guardian, listed on stock exchanges in recent years and opened showrooms rapidly. Because we were already trusted in their existing stores, we agree with them as well. That is the organized retail that paying us. As the leading retailers grew, the manufacturer who executes best for them grows with them. Now let me take you through our export story. In FY twenty three, our annual exports were only about 35 crores.

10:53 In q two FY twenty seven, we have reached exports of rupees $4.35 crores. I repeat it. FY twenty three as a whole, we did 35 crores of exports, while in current quarter alone, we have achieved $4.35 crores. Today, exports are roughly 18 percent of our business, around 1,600 crore plus on annualized basis. This growth of 45 x came in three steps. Step number one, our Indian customers took us abroad. After COVID, the same corporate we served in India asked us to supply their international stores. Our products had already proven themselves in India, so they performed well abroad too.

11:40 Step number two, we went there, tested Indian microarray news. In Singapore and Malaysia, have large South Indian communities, and South Indian design is our core strength. We began supplying reputed retailers in Singapore and in Malaysia. Within about a year, we were working with majority of reputed corporates across GCC. Step number three, we planted a flag in Dubai. In September 2025, we started operations of our international office in Dubai led by mister Gilalal, who brings thirty plus years of experience in Dubai and GCC. Almost every major retailer we work with came in the opening of our Dubai office.

12:26 From Dubai, we now serve wholesalers and corporates across GCC region. Onboarding into Middle East, most reflected jewelry retailer shows how we win. We are amongst jewelry manufacturers who designed for other as well. Our merchandising team studied the look and feel that market wants, And we co created a gold line with our customer. It was accepted first time right, and the orders followed. We then did the same with other regional international players as well. Hence, reputed regional dealers teams of UAE each with 15 to 20 showrooms in Dubai are now our customers.

13:12 What each of our customers are our services. Our Dubai office acts as a one stop shop available around the clock. Behind it sits a dedicated back office team in India, supporting each customer from design to dispatch, and these relationships are personal. I travel to Dubai regularly in the early days, and I still sit with the owners to understand their customer and their timelines. Trade shows have helped widen our reach. Dubai and around our office innovation introduced us to buyers from Bahrain, Sri Lanka, Malaysia, and Singapore. Saudi Arabia, where we built a 21 karat line, especially for that market before the show. United Kingdom, our first show there, gave us a good response.

14:00 One new client started with an initial order of 30 k g. Malaysia, where we have the largest booth and where the only exhibitor showing gold, diamond, and other categories together. Singapore, which brought a strong response for our diamond jewelry. We have also begun working with the customer in Japan whose distribution reaches Hong Kong and The US. Now let me get into categories. Every new category we add follows the same logic. Sell more to customers who already trust us. Diamond. We started our diamond business two years ago, small and still learning.

14:45 We then built a platform around Experian merchandisers led by Atash, who has more than twenty two years in diamond jewelry for India and export market. Our edge in diamond comes from being a gold company first. Gold manufacturers lead on technology such as laser cutting, electroforming. We brought that technology into diamond jewelry to make lightweight pieces with right balance of gold and diamond, which matters more as gold prices rise. We began with lightweight everyday wear and then moved into bridal Because camper jewelry is our strength of ours, we now make it in diamond in open, close, and combined settings. Close setting is in high demand in South, yet only limited manufacturers have the skill. We built our capabilities by hiring setting experts from the South.

15:39 We also use many materials such as ceramic and Italian panels and launched 30 to 40 team based diamond collections every quarter. Diamond carries a higher margin than the company average, and, sequentially, we have doubled its contribution. Bangladeshutra and ANCA Diamond. We have added these two acquisitions, which I will come to next. The result is the blend we set out to build. An advanced metal business where ROIC is effectively infinite, a diamond business with high margins, and the value added gold business that now makes up significant part of our revenues. Acquisitions. Our acquisitions follow one rule.

16:27 We do not buy a company alone. We buy its management, its expertise, its designs, and its customer relationship. In every case, the founders have joined our top management because their long standing jewelry experience is what we are really acquiring. Each acquisition does two jobs. It adds a category. We can sell to our existing top customers, and it gives the acquired business access to our design library, our technology, and our customer base. STAR Mangal Sutra and Rishabhur. Mangal Sutra is largely handmade and needs real precision.

17:15 Through STAR Mangal Sutra, we already sold Mangal Sutra to major corporates. Sriri Nishapur bought one of the robust Mangasutra manufacturing teams in the country and jewelry conglomerate as their customers. The partnership was both ways. As a casting company, our cast elements and design library led them diversified their Mangal Sutra range. Their monthly volumes have grown from about 20 to 25 kg to one fifty kg. One of the trusted Congo Murali alone now takes 70 to 80 kg of Mangal Sutra, and the relationship have opened doors for our other jewelry categories as well. Together, we are today one of the India's most trusted Mangal Sutra manufacturers.

18:14 Uncut diamonds. Uncut diamond jewelry is in strong demand and carries high margins. There are only few Indian manufacturers have the expertise of this product segment. We saw that demand from our customers constantly. But we were already supplying to reputed retailers, and its management has around twenty years of experience in this category. Based on our design strength and wider customer relationship, Adding this category was a new... A natural step. Every acquisitions moved us closer to one goal. We have created the perfect ecosystem to make our company as a one stop shop for all the jewelry requirements. Our design work is now recognized beyond our customers.

19:04 The World World Council selected many of our products for these campaigns, including last year's major push on 24 karat jewelry. Today, when the retailer asked the world world council for certain product lines, SKYGOLD is often the preferred name it suggests. With DBS, we have co created collections and are giving dedicated space to showcase our products at their exhibitions. Capital efficiency and returns. Everything we have described has been guided by a focus on improving capital efficiency and return from capital employed. Our advanced gold model is an important part of this strategy. Under this model, customers procure and provide the gold.

19:54 While our revenue reflects the manufacturing work performed by us. This reduces our requirement for capital investment and eliminates the need to hold inventory or manage receivables in respect of the gold supplied by customers. Exports are another important contributor to capital efficiency. Given the shorter receivable cycles, our earlier disclosures have noted that export receivable days are much less than domestic receivables. In h one f y twenty seven, exports contributed to 811 crore of our revenues. The increasing contribution from advanced gold and export is expected to moderate the working capital intensity of our business.

20:43 We are also focused on improving manufacturing efficiency through technology and process improvements. The adoption of direct casting, three d printing, laser technology, all of stamping has enabled us to improve the finish of our jewelry and reduce its weight by approximately 20 to 30%. In addition, our efforts to improve manufacturing efficiency have reduced GOLDLOG significantly. Our co creation and merchandising capabilities also help improve inventory productivity by working closely with retailers to develop designs based on consumer preferences. We have helped reduce unsold inventory and improve inventory productivity for our retail partners.

21:34 Going forward, our focus remains on increasing the contribution of advanced gold, exports and higher margin value added products, including studded and diamond jewelry. While advanced gold and exports support capital efficiency through lower working capital requirements. Value added and diamond jewelry provide opportunities to improve margin and returns on capital. The proof is in the numbers. Roughly $3.98 total of equity raised over eight years now supports an annualized revenue base of 9,000 plus total. In past, we have said that SKYGOLD growth would be funded entirely by internal cash generation.

22:24 We welcome the scrutiny of our business phase on operating cash flow. We had earlier guided for 18,000 crores revenue by FY two thousand thirty, $9.45 crore of tax, 20 to 25% of tax converted into operating cash flow, and a net debt free balance sheet by 2030. In q two FY twenty seven, we exited with an annualized revenue of 9,000 crore plus and annualized spread of more than 500 crore. We converted 33% of TTM fact into operating cash flow. In fact, if we factor in the land sale, we guided for earlier, net debt in first half FY twenty seven is down 20% from FY twenty six level.

23:18 We have a consistent record of setting clear targets and meeting them. Our original growth roadmap reflected our confidence in business long term potential. And quarter after quarter, we have delivered ahead of plan. Most tellingly, we have raised our long term targets several times while continue to outperform them. That is the result of rigorous planning and disciplined execution. I know many of you have questions about the fund rate we announced recently. In line with the regulatory guidelines, I'm not be allowed to speak about this specific purpose or the use of process.

24:08 What I can do is tell you how we, as a management team, think about the growth and capital. As a management, we believe we should grow along with our customers and not give up market share. Importantly, our customers are working to consolidate their supplier base. They want to work with fewer, larger, established, well capitalized, professionally ramped, and compliant jewelry manufacturers. It was our customer requirement that gave us the confidence in 2024 to grow organically and expand our capacity. In the past, our customers have also played an important role in guiding our inorganic growth.

24:56 Our industry has a number of jewelry manufacturer with strong vintage and strength in certain product categories. Many of them are struggling with working capital, the compliance burden, and succession. Several of our historic acquisitions were guided by customers who believe we are the logical and preferred acquirer of this company. We have tried to offer a good acquisition, and we have handled post merger integration well in every acquisition so far. We have a cultural familiarity with the company we acquired, but we succeed largely because we have close relationships with the end customer, the jewelry retailer.

25:43 Let me give you some historic examples of companies we have acquired at attracting valuations and how we have grown their revenue and profit after acquisition. Sri Lishabh GOLD, Mangal Sutra, acquired at less than rupees 10 crore. Monthly volumes have grown from about 20 to twenty five eighty to around $1.50 k d, and revenue from 49 karat to $1.75 karat with the profit from 1.6 to 18.8 karat. We are now one of the India's reputed manufacturer. GOLD AND DIAMONDS, acquired at rupees 9 crore versus book value of rupees 6 crore. We can use size design team and wider customer relationship as well.

26:34 Following our customers have never let us down. At Homeland,, and SKYGOLD listed and expanded rapidly. We grew with them into every new store. When Sri Gishapur joined us, largest become our major customer, and that relationship is now opening doors for our other categories. Abroad, the story is the same. Our exports began because Indian large jewelry retailer have asked us to supply to the stores overseas. That gave us credibility in Singapore and Malaysia. Then the confidence to open our Dubai office, and then we added reputed regional players in UAE.

27:19 Exports have grown from about 35 crore plus a year in FY twenty three to roughly 18% of our business today. I repeat, FY twenty three as a whole, we did 35 crore of export, while in current quarter alone, we have achieved $4.35 crore. This is around 1,600 crore on annualized basis. In each case, we invested ahead of the order because our customer told us where they were going. And in each case, the returns follow. This is a high return business model, and our quarterly results show this. Nearly 16% of our volume comes from advanced metal, which employs no capital of ours.

28:06 Together with exports, which carry short receivable cycles, this segment makes up more than 35% of our volume. In first half FY twenty seven, we delivered an annualized Fed run rate of more than 500 through, And our net debt is also down versus FY twenty six levels. The right test for any growth investment is simple. Thus, each rupee we invest on more than its cost of capital. If it does, investing is clear value. Even if free cash flow is lower in the near term, what matters is the spread between ROIC and cost of capital, and how long we can sustain it.

29:01 Consider Walmart. Between 1973 and 1986, the years it was building out its store network, it had negative free cash flow in every one of those fourteen years. Yet, its ROC averaged 18%. Then about its cost of capital. And its stock return 33% a year, about three times the S and P 500. Walmart was not burning cash. It was booking every dollar it could to work at high returns while the opportunity was in front of it. We see the other parallel with SKYGOLD. Like Walmart then.

29:46 We are early in our case from unorganized to organized jewelry manufacturing like Walmart. Our growth follows a clear demand signal. Our customer are consolidating their suppliers and asking us to grow with them. And like Walmart, we are written well above our cost of capital. Hence, by advanced metal, which needs no capital of our and exports, which pay to you clean. So the real question is not whether cash flow dips while we invest. It is whether every rupee we put to work unwell above its cost of capital and depends our relationship with customers. Our record is it does. From two thousand twenty eighteen IPO to the 2024 tier... QIP, each round of capital was followed by a step change in scale.

30:41 A business that can reinvest at this returns should do so. Even if we... If it means giving up some cash flow today, the benefits play out over the long term. Why the cash flow will come? Our fundamental users, every reason for confidence, our founders are in the mid forties with the decades of building ahead of them. Our market is expanding as a manufacturing shift from organized to organized, and our unit economics are extremely solid. When growth runs in line with returns on capital, a business like ours will generate strong cash flow. We remain focused on one measure above all, earning well above our cost of capital of every rupee we invest.

31:32 Let me bring it together. We started as a South Indian gold jewelry manufacturer with a small design team and one big ambition. Today, we sell India's reputed retailers in every region, supply the girls and the party from our own Dubai office, and offer gold, diamond, and jewelry all under one roof. We got here by investing in design, technology, and people. By growing with our customers and by putting every rupee of capital to work. That is in billing is not going to change. As I said at the start, in line with the KB guidelines, we are no longer give forward guidance, and you will not find it in our presentation.

32:19 We would rather rate our record speech. We set clear targets. We beat them, and we rate them several times over. Thank you. Before we take your questions, may I provide the eldest of our brothers who like to say a few words? Thank you very much. Hello, everyone. This is Mahindra Sawan. I am the eldest of the brothers. As most of you know, I rarely join this call, but this is an important occasion, and I would like to say a few words. The coming years are an important phase in our company journey. All three founders are in their mid forties with tremendous energy, passion, and a deep personal commitment to the business. For us, this is not just a business we have built. It is something we have nurtured with the art of Harvard, sacrifice, and convention.

33:13 As you heard earlier, acquisitions have been an important part of our growth. They help us strengthen our product portfolio and expand our presence in a jewelry market where consumer preference are deeply local. Understanding changes in the industry, respecting local market, and building on our trend has always been central to our approach. Thank you for your trust and support,. Now let me hand over to mister. Thank you,. Bye so much, and good morning, everyone. I know that some investors are questioning 1,800 core capital base. As we have mentioned in the past about internally funded growth. Due to savvy norms, we are not allowed to quantify the breakdown of proceeds and inflation.

34:05 In fact, there were suggestions from the internal team to avoid a conference call due to compliance norms. However, there are thousands of shareholders, and I felt that I needed to maintain transparency. So I insisted on having the call. As mentioned, we follow customers closely and their demands, and we want to think long term. We are thinking more about long term cash generation potential. Has also given examples, scheduling and improving ROIC in our motto. We don't grow revenues blindly. With r o... High ROC, we can reinvest faster. Russell spoke about our growth... Past growth in the domestic export market and in aggregate growth.

34:54 I can only comment on my promise now. Promoters will only take when there is operating cash flows. Before we go into q and a, I want to spend a few minutes on what sits behind this number. Because this quarter, the story is as much about how we run the company as about with... What we delivered. First, the headline. Q two f y twenty seven consolidated revenue was 2,391 crore, up 61% year on year and 18.8% over q one. Gross profit was $2.29 crores, up 87%. Gross margin expanded one thirty three point basis points to 9.6% versus q two FY twenty six. EBITDA was $1.89 crore and a 7.9% margin, up 99... 90%.

35:51 Reported back was $1.29 crore, up 93%. This is after an exceptional charge of $77.35 lakh crore for the fraud incident at our subsidiary, STARMUNDS LIMITED, sir, disclosed in July. Of the $10.70 lakhs involved, $3.35 lakhs crore was being recovered, and the balance is fully provided this quarter. Excluding it, operational plan was $1.35 crore, a 5.6% margin, up 101% year on year. For the first half, revenue was 4,403 crore, up 68% with EBITDA of $3.46 crore and PAT of $2.34 crore, up 112%.

36:37 Most importantly, we generated $1.36 crore of operating cash flow in h one against an outflow of 101 crore in h one last year. Every one of these outcomes, margin, working capital, cash flow came from work we deal on processes and controls over the last eighteen to twenty four months. Let me walk walk you through that. Processes built at every level of the business. A year ago, many of our controls lived in people. Today, they're living systems. We have implemented processes at ground level. Over the last few years, we have focused on strengthening the systems and processes that support our manufacturing and business operations.

37:23 We have also been implementing a modern ERP system to enable closer monitoring of employee productivity, gold loss, inventory positions, and customer receivables. This is com... Complemented by enhanced inventory control and more disciplined approach to receivable collection with the objective of improving our working capital cycle. At the financial and the risk management level, we follow a strict back to back hedging policy and do not undertake speculative positioning in gold. Accordingly, our profitability is not dependent on moments in gold prices. Despite the heightened volatility in gold prices in recent quarters, we have maintained our margin profile, reflecting the strength of our operating model and the system and the processes we have built over the years.

38:11 Auditors, a new internal and statutory auditor framework. This is the first first half year where both our statutory and internal auditors sit in institutional forms. Our statutory auditor is now MSK and associate LLP, a firm of BINO International. And this quarter results have been reviewed by them. An auditor change is not a signature change, but it was a several months of preparative work. As documented, our key processes, procurement, production, sales, treasury, and the controls within each. We built a risk and control metrics to the internal auditors test what matters most and not what is easiest to test. We align align appointing policy across the parent and all subsidiaries, including the acquired entities, so consolidation follows one rule book.

39:05 The professional form of internal internal auditor now reports to the audit committee every quarter. The statutory auditor reviews what the internal auditor has tested. That that two layer assurance is what investor of our size should expect, and we want it increased before the... We scale further. Margins. 9.6% gross margin for the quarter. Gross margin is 9.6% this quarter, up 27 basis points over q one. Overall, our gross margin has improved on account of improvement in advanced gold mix and solid business mix. We have in the past guided for 5% to 5.25% of PAT margins. Due to compliance restrictions, we cannot comment on future guidance, but our past margin percentage guidance remains on track. Further, any improvement on gross margin will be deployed back into the business.

40:01 Two things grow here. First, advanced goal was 16% of our business in q two twenty seven, ahead of our '27 target of 15%. Because we bid only making charges, it added 125 basis points to gross margin while leaving almost no working capital. Second, the debt jewelry continued to gain share with natural and lab grown diamond jewelry now about 2.5%... 2.6% of revenue for q two FY twenty seven. Operating cash cost rose to 1.6% of sales as we invested in people, a CEO, a larger design team, and stronger audit and finance functions.

40:46 This is a cost of building an institution, and it is more than covered by the margin base. Inventory are deliberately mixed effect and controlled internally. Networking capital is now fifty five days, down from fifty nine days in March 26, sixty three days in September 25, seventy one days in March 25. Inventory does shoot at thirty nine days as of September 26 compared to thirty seven days as of March 26. Increase... This increase needs to be viewed in constraints of our evolving product mix and working capital strategy. As we increase our focus on higher margin products, particularly, we are deploying a portion of the cash generated by our gold business towards studded jewelry segment, which has higher margin and better return on capital employed, but also requires relatively higher working capital.

41:46 At the same time, the increasing contribution of advanced gold supports working capital efficiency. As this business does not require capital employed, accordingly, our focus remain on balancing growth in higher margin products with disciplined working capital management while deploying the cash generated from GOLD business to improve overall margins and profitability of the business. Favorable. Payable. Using the credit, our scale now aren't... Sorry. Payable. Using the credit, our scale our scale now aren't... They will rose... They rose from 17 from March 4 in... Rose from... I guess, from 17 to from four in March. Trade papers were $4.37 crore. It's at September 26. Against 92 crore at March 26.

42:40 This is structural, and it comes from these three sources. Diamond and credit inputs. In diamond, credit of one ninety to one twenty days is market practice, which aggregate to $2.25 crore as the rate grows, so does the credit we receive on it. William Thompson. William, we have negotiated the credit of around two days due to our scale, which has impact of 100 crore. Our scale with vendors, we are now a significant large buyer of other raw material, consolidating volumes and scale has under better... Us better terms. In effect, the select business is partially financed by its own supply chain. Which is why we can grow it without growing our debt in the same proportion.

43:31 Receivables, structurally low, seasonally higher at September. Receivable days were thirty three as September end, down from thirty nine days in September 2... 25. Against March 26 at twenty six days, they are higher, and I want to explain why. September end, it is a peak season of festive dispatches. A large share of and orders were within the last week of the quarter. They show up as receivable on the closing day, disconnect in October and November. The structural deductions come... Comes increasing the share of advanced gold and exports having shorter payment terms. Interest cost, debt and cash flow.

44:18 Net interest of 11 crore 70 lakhs of interest income for FY '27. Our s one interest cost was 0.89 of sales against point 96 of s one last year, and this is structural. Net debt was $5.31 crore at September end and versus $5.50 crore in March 26. S one operating cash flow was $1.36 crore against the outflow of outflow of 100 crore in s one last year. This is 58% of s one pack, well ahead of the 24... 20% OCF to pack conversion station we guided earlier. To sum up, processes gave us control. New auditor gave us assurance Together with a better mix led by advanced gold at 16% of h one, they delivered higher margins.

45:10 Fifty five days working capital, lower interest cost, and positive operating cash flow in same half year... In the same half year at 68% revenue growth. With that, I open the floor for q and a. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset while asking a question. Ladies and gentlemen, please wait for a moment while the question queue attenders. The first question is from the line of from.

46:01 Please proceed. Yeah. Hi there. First of all, congratulations. Exceptional execution again in the first half. So I just wanted to check with you on couple of points. So we are going for a very large fund rate, and historically, what we have seen is that we have been able to execute each time each time as you have mentioned. So can we assume that whatever fund rate we are trying to do, we can have over the long term five to six sets asset or invented plan on on those numbers? Hi. I think in the speech of mister as well as in speech, We have explained that that majority of our customers are on funded, and they have a... And and with them, the store count overall is is also expected to go up in India. Further, our export business is also doing well.

47:19 In addition to the b two c segment, our b two b business is also growing very fast, and there is a significant shift from unorganized to organized sector, which is happening on the b two b space as well. Further, if you look at our investor presentation, in one of these slides, we have given the playbook of our existing... Of acquisitions that we have done in the historical past, and all of them have proved successful. And they are adding significantly to the top line and to the back of the company. And the execution and the history that we have created, we would like to continue that execution going forward as well. Historically, our working capital days have been...

48:19 Or our capital turn has been close to six days. And all the historical numbers and execution that we have done, we would like to continue in future and going forward as well. I hope I have answered you because I regret I will not be able to provide any forward guidance on the numbers concerning the CD related restrictions that are there for free. Okay. So thank you, sir. So you mentioned in the speech about how how Walmart was able to execute for almost fifteen, sixteen years. So do we see... Have such large opportunity for us also because we are still quite young and the opportunity size is big.

49:11 And in that, do we see a lot of smaller, say, inorganic kind of growth opportunity in the market? Yes. The the acquisition that we have done in past and and considering the gold prices which are now versus historical gold prices, we are we are seeing that a lot of consolidation happening in the sector, especially on the b two b side of it. Like, when started the business, gold was 5 lakh rupees per kg, and now gold is 1.45 crore of kg.

49:58 So the... And in our business, the gold or the working capital is the major requirement for the business or to achieve sales because our business is a capital turn business. So considering the playbook of acquisition that we have created and the and the overall brand that that SKYGOLD has created in the b to b market, we are very positive and optimistic of of the of of the future that that all the good work that we have done in the history will also continue going forward as well.

50:48 Understood. Understood. So just one client on this on this working capital thing, which has been reported. So the tables are almost at 400 crores. Is it sustainable over over the next six months to long term? Yes. So if we look at our overall working capital cycle, our working capital cycle has improved from sixty three days as of September 25 versus fifty five days as of September 26. We generally track our overall fund deployment in the business through the net working capital cycle And and your specific question on on the payables increase per se, in the... In language by speech, you have specifically explained that the increase in payables is mainly on account of three major factors.

51:46 First factor is that our started business is... Which is a high margin business and also a management focused business to increase the wallet share of the value added business because it has better margins than the the the traditional gold business. So because of the increase in that business, our our diamond payments are increasing. And for diamond, we are getting ninety to one twenty days of credit in... Which is a standard market practice. So that amount to close to 225 across. Secondly, in terms of bullion, since we had become a respectable size, And now on... Considering the higher volume and the quantum of bullion that we are buying and processing on a daily basis, the total pay was just close to 100 crosses of September 26, as of September end.

52:51 While 100 cross odd is the balance creditor on on account of other raw materials and and and the... And since we cannot comment on the future sustainability, but but we see that that this is a strategic shift which is happening in the business because of the overall change in the product mix of the business. Fantastic. So I just want to, again, congratulate you guys, and all the best for your upcoming. Thank you. Thank you.

53:39 The next question is from the line of from Nirva Securities. Please proceed. Good morning, sir. Thank you so much for the opportunity. I just had one question from my end. Could you provide an update on the proposed land monetization announced earlier this year, including the current status of transaction promoters, commitment to acquire the land, and expected timeline for completion? So we were very close to purchase of this land ourselves last month, but there was buyer who has thrown a strong interest and the process is at advanced stage of due residence. If we don't get a final commitment in this next twenty or thirty days, the promoters will purchase, but we we we intend to do not to be in immediate party transition. That's why we have stressed one or two months. We have committed for request month. We have tested for two months to let the brand go to other party, and there's a strong conversation going on. And we...

54:43 In twenty, thirty days, if there is nobody interested, the promoter will take it the land. So there's a reason for extension of two months. So if we get the other party, we don't want to be able to take party transition. Okay, sir. Alright. That's it from my end, sir. All the best. Thank you. The next question is from the line of Sagar from SILIITED Capital. Please proceed. Yeah. Thanks for the opportunity, and, you know, congratulations on the good q two. Also, thanks for the detailed opening remarks. So, you know, I have... The first question is on, you know, the gold price correction, which we have seen recently. Do you see any product mix change that is looking like in terms of the, you know, down trading that is happening from 22 carats to 18 carats and 14 carats now?

55:36 As the now trading purchases from 22 to 14... From 18 to 14 has seen some moderation, how is the consumer behavior that you're witnessing? So, again, last year, you can see gold prices has jumped up approximately 80% from their base price in one and a half year. So there's a shift from last two years. We can... You can see historically, we were at 22 parent company, and now from last year, it's technically, we are at 22, 18, 14, and nine kids. So every quarter, we are seeing that this is the fixed change in the character shift from twenty two one... Character shifting from eighteen eighteen, that shifting to fourteen and nine. So 100%, there is a shift and a generation out chain also because youngsters want to buy a lower candidate at a very decent budget.

56:23 So I can comment... Limited comment on this as well as to the guidance here. Okay. So, you know, while while I don't have any questions on the fundraise, you know, considering the semi guidelines, but, you know, once we go to the fundraise period, I mean, is there any possibility for revising the growth guidance upward for FY '20? I mean, I'm not asking for any guidance per se or any number to it, but just, you know, excluding if there is any opportunity for revising the growth guidance. Hi. Yes. Since we have taken a enabling provision for the the two IP fund date, So so once this this mandate is closed and considering our business is a turn based business that we have highlighted in our speech, we will we will again revisit our numbers and and and at that point of time, we will... We can come back to this state with the updated setup guidance on conclusion of this fund rate. I hope I... We have answered your question.

57:47 Sure, sir. And on this rate cycle, you know, just the rate high cycle that has started, do we expect some upward momentum going as well based on the past cycle? So in terms of the gold metal loans is linked to the software or the US treasury is as well. For us, since our inventory cycle is very short, so so the gold metal loan which is available to us from from banks as per the the RBI lending norms, they are available to us at around thirty to forty five days only. We have currently sanctioned that if you have to... Of GMO of close to 170 crore.

58:36 But still, we do not find gold metal loan to be tax accretive. And considering that, we are currently not availing the gold metal loan. But you... But your point that you are asking is is in the right direction that the the the upward pressure on The US interest rate will also have an impact on the lending rates as well and especially on the GML borrowing rates. Understood. And, you know, on the margin side, you are seeing continuous expansion in the margins given a strong execution from your side. I mean, again, I'm not asking for any guidance here, but just, you know, I'm trying to understand, are we nearing the saturation on the margin expansion?

59:29 Because considering the fact that we are also a b to b business. So some thoughts on that should be helpful. Yeah. Surely. Our margin is because we are a one stop shop for the jewelry manufacturing. So we have a very wide range of products, right, from 24 k t to nine k t gold jewelry, plus plus around 16% of our volume is on the advanced gold mode in which only the job of charges gets recorded as revenue. And our credit mix is also at 3%. Considering the entire business and the structure that we have, the the structural shifts or the improvement in the advanced gold model of sales and the increase in the studied business will structurally lead to...

1:00:33 Has led to better margins. But if we look at from last quarter to this quarter, there has been close to 25 basis points improvement, which has been mainly on account of these two factors, the advanced gold volumes and secondly, is on account of the studied business mix improvement. So when you add historically five years back, we also had a lower margin in last year 2000 to twenty twenty two, twenty five, twenty six. We launched we are into two, three verticals. We launched 20 to 25 verticals in 22 carat. In 18 carat, we launched 10 vertical, rose gold, white gold jewelry. We launched 14 carat red diamonds, without diamonds. We launched nine carat with natural diamond without diamond. In five years, we've done a 200, and we've done so much of vertical resulting to that. This advanced gold mix of products, mix of carat, and so that we have achieved this.

1:01:30 And, conservatively, we guide for. Historically, we have guided 8%. Okay. Then just say I want to to add that we have guided for a five to 5.25% of past margins, and we are in line to our historical guidance that we have provided to the streets. Any improvement, any better margins in terms of the gross margin, we are planning to redeploy back in the business. And this is the reason that our working capital days has also gone down, and overall, our OCF has become positive. So it's a mix of all the levers of business that are playing out well, and by God's grace, the execution has been as per as per target that we have given to the street in... Through the investor presentation. So to add, this is a twenty year journey we are traveling to achieve this margin. So starting with the lower margins, lower...

1:02:38 Lesser verticals, the... Now to the higher verticals and higher margins. So journey of 20, we have achieved here. Thanks so much. Yeah. That's that's helpful. Lastly, can you share a general outlook on the festive wedding season? Like, how is it trending out so far? So, again, our future guidance, we are not able to disclose any guidance. Sorry for that on this call. Oh, yes. Yeah. Yeah. Sure. Sure. Thank you. Thank you so much. And all the best. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you. Before I conclude, I would like to share something very personal and special to our family.

1:03:28 Recently, my mother completed thirty consecutive days of fasting for our family. This was deeply emotional and spiritually significant occasion. Such a commitment requires extraordinary faith, strength, and devotion. We firmly believe it would not be possible without the blessing of our guru and the good wishes and support of our well wishes. We are deeply grateful to everyone who has been part of our... This future journey. I said this because for our family, faith, discipline, gratitude, and keeping our words not just things we just speak about. They are values we try to live by every day. Thank you all for your trust and support. Thank you.

1:04:14 On behalf of SKYGOLD AND DIAMONDS LIMITED, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.