Sportking India (NSE:SPORTKING) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to SPORTKING India 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. Please note that this conference is being recorded. I now hand the conference over to mister from MUFG. Thank you, and over to you, sir. Thank you. Good afternoon, everyone. Welcome to the SPORTKING India Limited q two and h one FY twenty seven earnings conference call. Today on the call, we have mister Muni Shavarti, chairman and director, mister Sandeep Sachdeva, chief financial Officer and Mr. Lalish Verma, the Company Secretary.

0:58 I hope you have gone through our press release and investor deck. As a short disclaimer, before we start with this call, the call will contain some forward looking statements, which may be based upon our beliefs, opinions and expectations of the company as of today. These statements are not a guarantee of future performance and will involve unforeseen risks and uncertainties. With that, I would now like to hand over the call to the management for their remarks. Thank you, and over to you, sir. Thank you, sir. Good afternoon, ladies and gentlemen. I hope all of you have the opportunity to go through our investor presentation and earnings release. We are pleased to report a strong performance for both the second quarter and first half in financial year 'twenty seven. Our performance during the period was supported by healthy demand across key markets, improved realizations and continued operational discipline.

1:50 We also benefited from a more stable raw material environment, which enable us to manage cost effectively while continuing to focus on profitability and customer commitments. Market conditions remained encouraging during the quarter. Demand from our export market continued to be healthy, supported by improving business conditions across the global fixed and energy. On the domestic front as well, consumption trends remain supportive, providing us with good visibility across our customers. From an industry standpoint, a number of long term trends continue to strengthen India's position within the global textile value chain. Global brands and dealers are continuing to diversify their sourcing strategies and are placing greater emphasis on supply chain resilience, reliability and sustainability.

2:38 India is well positioned to benefit from these evolving sourcing preferences given its integrated sector ecosystem, strong and packaging capabilities and growing focus on responsible production practices. Your company is most benefited by that. In addition, India's cost competitiveness has strengthened over time supported by ongoing investments in operational efficiency and renewable energy adoption across the Flex type and region. Further, the India UK free trade agreement and the ongoing momentum towards the broader India EU trade have the potential to further strengthen India's competitive plans in important extent markets. Over time, these developments could create incremental opportunities for Indian exporters, improve market access and support the long term growth prospects of this sector.

3:27 Sustainability is also becoming an increasingly important concentration in global sourcing decisions. Over the years, we have continued to strengthen our sustainability initiative while investing in efficient environmentally responsible operations. The successful commissioning of our solar power project is an important step in this direction. Beyond supporting IMO environmental goals, the project is expected to reduce annual power cost by approximately 15%, thereby enhancing our overall cost competitiveness. We believe such initiatives strengthen our positioning with customers increasingly value sustainability, reliability and long term partnerships as part of their sourcing decisions. On the strategic front, our Sanand 50,000 spindle greenfield expansion project in Odisha continues to progress on schedule.

4:20 Having secured all necessary regulatory approvals, the building construction is now almost complete. The entire machinery package has been ordered and has started arriving on the site in a staggered manner. Reduction of the initial machinery shipments is currently underway and we expect commissioning in the coming months. This expansion is strategically positioned to support our long term growth and meet rising customer demand as the company is already cranking up at 99% this quarter. Odisha provides compelling structural advantages, including close growth proximity to the Eastern Kotlin Gold Bank, robust industrial infrastructure and a highly competitive operating ecosystem. With our existing facilities operating at near term capacity and market demand growing stronger with new capacity, to provide the necessary headroom to scale our operations, secure the company's next phase of growth and better serve our global customer base.

5:16 Looking ahead, we remain optimistic about the medium to long term outlook for both the industry and especially sports game. A more supportive cotton environment, improving global demand, evolving sourcing patterns, increasing emphasis on sustainability, favorable trade developments and our ongoing capacity expansion initiatives together create a strong foundation for future growth. We believe Sportking is well positioned to capitalize on the next phase of growth in the textile industry. Our continued investment in capacity sourcing capabilities and operational efficiencies has strengthened our ability to serve customers effectively and pursue emerging opportunities across all markets. With a scalable manufacturing platform, strengthened cost competitiveness, robust sourcing capabilities and the resources to invest in long term opportunities, we remain focused on creating sustainable value for all stakeholders.

6:11 Thank you very much. With this, we will now be happy to take your questions. 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, we will wait for a moment while the question queue assembles. The first question is from the line of Santosh Shetty from LGC Capital. Please proceed. Hello? Hello?

6:57 Yes, sir. So a couple of questions. The company reported a significant improvement in EBITDA margin to 19.8 in Q2 FY 'twenty seven compared to 10.4% in Q2 FY 'twenty six. So what were the key factors driving this improvement? And how sustainable are these margins going forward? So the key factors are, of course, deliveries last year is the improved demand. The demand for and blended yarn has been going up for last two to three quarters. And another thing which has contributed to this is our operational efficiencies, which have caused the work we have been doing on our costs has is paying dividends now. And all the efforts we've put in last two, three years in being more cost efficient is now here to see.

7:57 And thirdly, stable cotton prices, which has been there for last one year and continue to do so, have also helped. Going forward, we see the same similar kind of environment in this coming quarter and going ahead. So we are pretty bullish on the future. So the company has announced a 1,000 crore greenfield expansion in Odisha involving INR 1.5 lakh spindles. Could you share the current progress of the project and whether it remains on track for the planned commencement in Q2 Q3 FY 'twenty seven? Yes. As I stated in my opening remarks that exit of the machinery is going on and we have completed the construction in our record time, like greenfield projects to come in eight months is a big achievement for us. And we intend to start commercial production within next thirty, forty days.

9:10 Sir, just the last question. The company has a presence across 39 countries. So are you looking to enter new export markets like and deepen your presence in other markets too? Sorry, I couldn't get your question. I'm asking, sir, the company has a presence across 39 countries. Are you looking to enter new export markets or deepen your presence in the existing markets? Yes, of course, that we keep on adding new customers and new markets every day, every quarter. So that effort is ongoing. And of course, with the new capacity, we have identified new markets which we'll be targeting.

9:56 So yes, that will happen. Okay, sir. Thank you so much for answering my questions. All the best for the future. Thank you. The next question is from the line of Harsh Shah from Seven Rivers Holdings. Please proceed. Hi, sir. Good evening. So my first question is on the device side. Can you break up breakdown the Q2 FY 'twenty seven sales in terms of domestic and export? And how is the demand standing, if I look at from China and my relationship point of view? I could get the first part of your question. That is about the percentage of exports. So it is about 52% of our total revenue the last quarter has been through exports. I couldn't get your second question.

10:52 My second question is how is demand in the region of how is demand from China and Bangladesh, I believe in last couple of quarters demand has been steadily driven by exports to China and Bangladesh. So what is the outlook out there? So the demand from China and Bangladesh continue to be robust. And the Indian market was a little bit slow in last two, three months. But with the festival season approaching and the spring production commencing after Diwali, it's traditionally peak season for the domestic market. We expect even the Indian market to join in good demand.

11:43 And sir, compared to Q2 FY 'twenty seven, as we stand today, what would be the spread for us at prevailing prices? So the spread the spread in first half, whatever we have achieved in the first half of this year and the spreads right now are pretty similar. So right now, we are it's a pretty similar rate as what we have done in last six months. Okay. And sir, what would be the cost per kg from quarter to two? Sorry? I just you're not very clear, actually. No, I'm asking what would be the average cost of our cotton per kg or per kg, whatever measure, if you can provide that?

12:35 So that is something we don't disclose. So I would skip that question, please. Sure, sure. No worries. Thank you so much, sir. Thank you. The next question is from the line of Mahesh Adal from Dharia Investment. Please proceed. Yeah. Hi, sir. Am I audible? Yes. Yes, sir. Yes. So sir, my question would be on your previous quarter. You have told us that there would be a demand and most of the yarn manufacturers that have been sold for the next six months.

13:28 So how is the market for the next six months from current day looking like? Are you selling in spot or also doing it for the future contracts? How exactly is the market currently? The market looks good. I think what we said in the last quarter that we have visibility for another quarter. So right now we have visibility for the base through Feb March and it is pretty good. The demand is the same or even better than what it was. The demand outlook continues to be strong. And sir, we see that new crop must have arrived on the cotton side. So do you see that now the prices in India and the international prices matching to the same level? So the cost benefit that we had earlier wouldn't be there for the next part of the years?

14:29 How do you see this? I mean, the imported cotton being cheaper now and the domestic cotton getting more pricing, this be the approach? So this is a very dynamic thing right now because we are in October. And generally, the peak arrival in India starts after Diwali. So the prices have moderated from the peak, of course. They have come down from INR 70,000 per carry to around 65,500 per carry right now. And we expect and spread between the Indian cotton and the international cotton has also been narrowing in last quarter, but it's been very volatile. Sometimes it has gone too low and sometimes too high. But right now, we expect in next three months, we expect the Indian RINs to go higher and we expect the prices, the gap between the Indian prices and the international prices to narrow going forward.

15:31 So you feel that the strategy would be to buy more Indian cotton going ahead? We don't take we buy cotton every day, and we take that decision on that particular day. So it's something whenever we can get a better deal for our company, we do that. So it's a very dynamic situation, and we act accordingly. And sir, is this a scenario across the yarn manufacturers? Or is this only with us? How do you take this time? Like industry altogether has the demand from China? Yes. See, how people plan that, what will, I don't know. But of course, demand is pretty common and consistent for throughout the industry.

16:28 And sir, you irrespective of the cotton prices, you feel that these margins are sustainable for the rest of this year? Yes, I definitely think that what margins we have made in the first half are sustainable. And I'm talking about our old capacities with the So whatever we are doing with our old capacity, we expect to be there or thereabout in the second half also. And with of course with the addition of new capacity, the revenue and the profitability of gasoline will come incrementally. So sir, at what capacity you seem to end this year for the new capacity that you are adding?

17:19 So we expect to by the end of this year because our commissioning will start, it's a big project, it takes time and we expect to finish to start the whole project by the year end, financial year end. We expect a contribution of around INR 150 crores to INR 200 crores is coming of the new capacity in the time that it is financially. I'm sorry, what capacity generally this kind of project becomes EBITDA positive? So it will be EBITDA positive from day one, right, from once we get it up to so it will be EBITDA positive from day one.

18:09 Alright, sir. Okay. Alright. That's it from my side. Thank you for answering my questions. Thanks. Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and 1. The next question is from the line of Adi Shaikh Sankar from ICICI Direct. Please proceed. Yeah. Thanks for taking my question, and congrats on the good set of results. Sir, my question is again on the cotton prices inventory and the yarn spreads. So first, I'll just go with cotton prices. We see that cotton prices has spiked a bit over the last, I think, say, about one or two months. But you mentioned that it has come off its highs.

18:54 But I just wanted to know your inventory levels, whether you still have a low cost inventory in your books and till what time will it be there? But... And considering that the monsoon has been, you know, disappointing this year, and I read in news reports that, you know, production is going to go down. So do we see that substantial rise in cotton prices coming? And and my concern is that if cotton prices rise rise faster than the yarn realizations, would we see some bit of tapering in the yarn spreads, you know, sequentially? You know, on y and y basis, I agree that it might be up, but sequentially, will we see that tapering in January spreads coming in?

19:40 Okay. Abhishek, thank you so much for the question. And yes, right now, it's something which happened every year that Indian crop is still much before it starts arriving. So we still hold cotton. We think that cotton crop is not going to be as bad as people are portraying it to be. But yes, the current spread what we have and even what we are buying right now, it gives us a pretty reasonable threat of what we have done last year. It should be close to that in last half. So it's not that it's way off the mark. So we have a good blend of imports as well as cotton buying.

20:33 So we expect the margins going at least for next six months, which we have the visibility for. We expect the margins to stay as almost where we were in the first half. About the cotton prices, Indian cotton prices going up going ahead, I don't think so. I think they are going to come down. The government of India has had extended the import duty waiver till October 31 and we expect the notification for extension till December to come very soon. And there have been extensive lobbying with the government to remove it altogether because looking at the forward landscape of Indian textile industries with EU and UK demand expected to come forward come ahead. So we are we think that demand is going to outstrip supply in a big way.

21:31 So I think right now, the demand of yarn is pretty solid and we think any incremental increase in cotton is going to increase the yard prices as well. So we don't believe that these trends will be very day off the mark from where they have been in last six months. There can be a deviation of 2% plus or 2% minus going forward, but I don't see it just slumping in a big way. And I expect that the Indian market, Indian demand in the future, this next six months is traditionally a peak season for India. And with the tailwind of all the FCAs, we believe that these spreads here can strengthen rather than going down from here.

22:26 Yes. Yes. So just one more bit of question. It's more of a bookkeeping question that I wanted to understand. So I see the depreciation, if I'm right, is there any change in the depreciation method? It's a bit lower, right? Yes. So there was a there was a small change in the depreciation method and there was a difference of about 7 crores, 8 crores because of that. And from next quarter, the old plant and depreciation and there was some machinery which was fully depreciated and there was no change and there was some change because of the number of years, which we have increased. So from next quarter, we expect the run rate to be around INR 17 crores for the whether it's INR 24 crores in last quarter and INR 14 crores in this quarter.

23:20 Okay, sir. Thank you so much. I'll get back into the queue. Yes. Yes. Thank you. The next question is from the line of Mahesh Adal from Dheera Investment. Please proceed. Thanks for the follow-up, sir. My question would be, when you say that now the prices in Indian market have come down from 70,000 to 65,000 like Kandi, what would be the imported landing price for the imported quarter? So imported quarter right now, shall we should be So it should be around 67,000.

24:31 Okay. So there is almost a gap of 10%? Not 10%. Indian is at 65,000 and this is at the 60,000, 65,000. This is a difference of two, three steps. Okay. All right. And sir, do you see this gap closing down in next six months or something like that? We expect this gap to actually widen. We expect the Indian prices to become lower going forward and the international prices might be trending. So I don't know, it's very it's a very dynamic thing, and we don't make up our mind. We buy every day according to different market conditions and with the new information we are getting every day.

25:19 Okay. And sir, do you still feel that this demand that you feel get from China and from Bangladesh, it is sustainable demand and you have forward contract or you see the visibility from those countries for the rest of the year? Yes, of course. See, we already we generally work on a window of eighty to ninety days. So we are sold till January and many days. So we have the visibility because that is already in the books. And but we see a continuous demand from these countries. And see Bangladesh has been our partner for so many years. And India is the only destination which serves them. It's like an extended part of our market.

26:10 So and the demand there has been even in these difficult times they have had because the energy crisis has been very consistent at about 45,000 to 50,000 tons. And China also for last twelve months, they have been buying at about 30,000 because their poultry prices are much higher. The local prices are much higher than ours. And there is an import duty of 40% on any cotton they import and there is 3% duty on any cotton yarn they import. So they have been importing quite a bit, not only from India, but also from Vietnam and Pakistan. So we see this trend going on. And another thing which we have seen is that there is a small shift from not a very big, but a very small shift from polyester to more cotton friendly blends and cotton.

27:07 So that is also contributing to a better demand. Sir, what is the spread in dollar terms today? Sorry? In dollar percentage of dollar like cents, how many cents would be the spread between the yarn and the cotton? So raw cotton is around right now our blended cost right now is I can tell you in rupees, so you can make it right. It's about INR155. Okay. All right. And it has gone up considerably because I think last quarter it was somewhere around INR130, if I am correct?

27:58 So last quarter it was INR150 million and this quarter it was around INR160 million. So it keeps on it's still sitting somewhere. Last year, that's I'm talking about only 14, because we have other good price. Our overall spread was 130. Yes, yes, yes. All right, That's it from my side. That's it from my side. Thank you. Thank you so much. Thank you. The next question is from the line of Saranj Gupta from SPAN Investments. Please proceed. Yeah. Thank you for the opportunity, and congratulations, sir, on a very great set of numbers. Sir, I just had one question as other was answered. So I just wanted to understand what kind of benefits are we getting from the recent government for the CapEx that we are doing there?

28:50 So the the reach of the project, have many incentives. First is the capital subsidy, which we are going to get for 30% capital subsidy, which will be paid to us in five equal installments. So on INR 1,000 crore investment, we are looking at about INR 200 crores to INR $2.20 crores coming back to us in five years. And then we have a power subsidy, which is from a blended cost of around INR 6 crores in Punjab right now. We are going to get power at INR 4 crores for ten years in Odisha. And then there is an employment guarantee scheme, which gives us around INR 7,000 to INR 8,000 per labor per month to us for five years.

29:36 And there are other small benefits like contribution and stamp duty and land some we're going to get some half of our land price back once we achieve an employment of 1,000 people. Yes. So these are the main incentives. Other than about the gradual advantage we get from putting up our plants there. Understood. And sir, one last thing, if I can squeeze in. Sir, I understand that the cotton season is going to come in post as you said, and currently, the cotton price is trailing around 65,000 to 68,000. So it... Will it be fair to assume that post the season, post the crops... Crop that comes in, prices might go down and that might impact the spread?

30:28 It might what? Sorry. I didn't get this question. Basically, I wanted to understand what what are the spreads in the current month? Like have they improved? Or are they at par with what they were earlier? So that's what I shared earlier that spreads are pretty much similar to what we have achieved in last six months. So and about the spread going forward, we see a lot of traction in the Random one. And we think if at all so we expect the prices Indian cotton prices to go down in like after Diwali. But even if it is otherwise, we expect strong demand to absorb those increases if at all. But we are of the view that these prices have more chances to come down and go up.

31:24 And sir, incremental demand, are we seeing it from the export market or there is some space left in the domestic market itself? Because as you said in your opening remarks that domestic market demand was not that good. So, yes. So exactly. We have seen a lot of demand from exports and the domestic has been a little moderated as compared to the demand from exports. But that is very seasonal in nature. And we expect and the preseason is from Diwali to whole lease. So we expect the demand to catch up after Diwali. And we have seen some green shoots and we have seen some demand coming in. But I think in Armenia it picks up always after Diwali.

32:14 So we see that adding up to the existing robust demand in current times. That was all and I'll get back in the queue. Thank you so much and all the best for your team. Thank you. The next question is from the line of Harsh Shah from Seven Rivers Holdings. Please proceed. Yes, please. As there is no response from Harsh, I'm taking the next question from the line of Abhishek Shankar from ICICI Direct. Please proceed. Yeah. Thanks again for the opportunity. Sorry if I missed out on the spreads that you mentioned, sir. So just just for clarification, as per my calculation of calculation, your spread during q two should have been roughly around $1.30 to $1.32 rupees per kg, and that is what was there in Q1 FY 'twenty seven as well, right?

33:22 No. Q1 was around 133, and Q2 has been around 141. 140. Okay. And you see the similar trend going ahead, right, if I understood it correctly? Yes. We see the spreads in between one hundred thirty and one hundred forty five going ahead. Yes. We see it somewhere here. At least for the three to four months. Yes. Okay, sir. Okay. Thank you so much, sir. Yeah. Thank you. The next question is from the line of from Vexora. Please proceed. Good afternoon, sir. Am I audible? Yeah. Please, sir. Please, sir. Sir, I had a few set of questions.

34:07 The first one was given the textile industry exposure to cotton and publisher price volatility, how is the company managing raw material procurement and inventory to protect the margins? So we have a very robust we have a very good team doing this for us. And we have so it's a very dynamic thing, which we do every day. So for me to explain how we do it is not very easy because it's something very complex. So I don't know what exactly you want to know. And it's really something we watch every day and we source our raw material from 10 countries and we look for the best deal available across the continents.

35:02 And then we yes, that's how we work. And to mitigate the risk of the copper, we keep a healthy order book for our yarn sales. So if we have cotton for five, six months, we always so we have an order book for three months. Okay. Got it, sir. So the second question would be the company has announced INR 1,000 crore greenfield expansion in Odessa involving INR 1.5 lakh spindles. Could you share the current progress of the project and whether it remains on track to commence in Q3 FY twenty twenty seven? Yes. I have shared it actually couple of times before in this conference, but I'll do it again for somebody who's not there that project is right now the construction is of the first phase is complete and the election of machines is going on.

36:03 So we expect to start the commercial production in next thirty to forty days. And we intend to complete the project by March thirty seven. And we expect revenue of around INR 12 crores to INR 1,300 crores in next financial year and about INR 150 crores to INR 200 crores in this financial Okay. And sir, my last question would be trade receivables increased from INR 396.2 crores in March 2026 to INR 473.5 crores in September. What is driving the increase? Sorry, what item are you talking about? Trade receivables. Sorry? Trade receivables. Receivables.

36:50 Okay. Receivables have gone up from INR $396.06 crores in March 26 to INR $4.73 crores in September. Yes, because if you see our turnover in March 26, it was lower and with the increase in total billing and total sales has gone up. So you're talking about total debtors, right? Correct. So total debtors have gone up from three ninety six million in March to $473,000,000 right now, right? Right. So this is I think mainly I think if you see the number of days, there won't be much effect.

37:40 I think it's just because our total turnover has gone up and most of our sales are at one hundred twenty days credit covered by LC, one hundred twenty days LC. So this is because of that. This is all secured by LC. And I think most of it, if you see it in number of days, it is the same actually. It is fifty eight days now and it costs fifty eight days as of thirty one thousand three twenty six. Okay. Got it, sir. Thanks a lot for answering the questions. Thank you. The next question is from the line of from Enam Holdings. Please proceed.

38:28 Hi. This is from Enam Investments. And so my question is regarding the two companies that the fabric company and the government company that is supposed to be merged. Could you help me understand what the financial performance for the half year for these businesses? So we have not yet merged both companies. Are still we are working on to make them compliant and we merge with us. So I think within the next couple of months, we intend to, I think this will happen. And you're talking about the financials of those companies for first six months? Yes, yes. So I think I can give you a ballpark figure because I don't have it right now. It should be around both of the companies put together about INR70 crores, INR80 crores at about 15% or 80%.

39:25 Around and one company which should be more I think about 20% EBITDA. Okay. So INR 70 crores, 80 crores each or combined INR 70 crores, INR crores sir? It's a combined entity. Combined entity should be about 80 crores. Actually, some of those because of we have taken a lot of restructuring and reengineering on those units. So they have not been working at full capacity because before merger, we wanted to make them compliant and suitable for the supply because we have a lot of nominations and there's a lot of compliance issues. So before merging, so there was a lot of stoppages and all. So I think from a potential of about INR 100 crores, it was down by about INR 20 crores because of those stoppages.

40:16 Okay. Got it. Sir, and also in terms of the competitive intensity, so we feel that the industry spindle addition has was very low before and a lot of spindles were shut. Have you seen with the spread rising, competitors entertaining expansion plans or thinking about adding more spindles in the market in India? So it's actually there's lot of consolidations is happening because right now if you see around the market, then the margins are very different from different companies. They are larger companies who work with closely with the brands and their compliance and especially in large and PHD is a big issue.

41:08 And then we don't have a lot of competition because it's very it's not very easy to comply. It's a very expensive process. So we see a lot of divergence between different pillars in different parts of the country with the different sizes. And we also see a lot of shutdown of windows in other countries also. So we haven't you ask me, there is a lot of modernization happening, but we haven't seen many people raising up their hands and putting up new spindles, announcing new spindles as of now. But I'm sure it shall come and it will come because India and the world needs more spindles going forward. Right. Got it. Okay, sir. And sir, in terms of our expansion, so we our capacity of 150,000 will be ready by the end of this financial year and probably utilize 100% next year. What about FY 'twenty nine and 'thirty? Do we what is the Phase II plan for this Odisha capacity?

42:11 So we have many plans. So first of all, as you know, in Odisha only, we have a lag to scale it up by another 3 lakhs build it after this 150,000,000 And looking at our balance sheet and the leverage, we are ready to accept. We shall be doing those projects going forward. And then of course, future growth, which we have planned in government sector is also something to look forward for us, maybe not in next six months, maybe second half of next year, we will be fully announcing something on that step also. Okay. Got it. Got it. And sir, one last question. I just did you did you mention that the import duty exemption has been exempted till December? I just couldn't hear it properly, sir. Just wanted to clarify that.

43:05 So yes, there have been a lot of we don't know that yet. Right now, it's till till tomorrow. But there's been lot of discussion with the government and they have assured us that will be extended. And rather they we have been assured that it might be extended even more after that because the need for cotton for Indian companies in India market has increased because of all these FTAs and Indian positioning right now because of the cost structure in global spending scenario. So we expect we are we were always pushing for the government to make it go away, then coal duty should not be there.

43:55 But I think the government is still there is no time and we expect the to be extended for like two to three months immediately. And we expect not in a very distant future, it might be exempted altogether. Got it. Thank you, sir. Thanks so much. Thank you. The next question is from the line of Madhur Rathi from Counter Cyclical Investment. Please proceed. Sir, I missed your margin guidance, sir. Previously, we used to guide for 15% EBITDA margin, sir. So can we sustain this 20% margin that we did in q two? So, Navedly, I just reiterated and I will tell you again that we expect the margins in the first half to be the margins to sustain or we expect to do similar on similar lines going forward in the next first half next second half, there and thereabout. And so I cannot tell you whether it be 2019, 2018 or 2021, but it should not it should be more than it should be in close to where we are for past six months.

45:13 Sir, also sir, now that promoter holding is already 75% for the merger of the garment and the fabric entity, sir, so will the preferential be issued to the promoter? Because, sir, the holding cannot go above 75%. So then is there any other alternative? Or or or as a or or as a basically gesture of goodwill, promoters are thinking of like for no consideration. Let me answer this question. So I think this has been all because that we are the mode of payment is going to be the differential share allotment, which will be non convertible. Yes. So there will be some differential share and very minor cash transaction, not exceeding INR 25 crores to INR 30 crores.

46:07 So yes, so that holding because it is already at 75%, so we cannot issue shares and we don't intend to dilute our holdings. And our synergy holding in the market. So the only option for us was to go for the potential share and that's exactly what we do. It. Sir, just one final question. So the INR1000 crores CapEx in Odisha that is coming live. So that revenue of INR12000 INR1300 crores should come at 4%, 5% incremental margins over what we are doing right now. Is that understanding correct? So our margins in OIBDA unit will be at least 4% to 5% or maybe 6% more than whatever we achieve once this will be operational.

46:59 We stick to that guidance, yes. The next question is from the line of from ICICI. Please proceed. Yeah. Hi. Good evening, sir, and congratulations for a great set of numbers. Most of my questions have been answered. I just wanted clarification post the commissioning of the new CapEx. What would be our peak debt on the balance sheet by March 27? So we by March 27, we expect our peak debt to be the long term debt to be around, you can say around INR750 crores and maybe more or less about INR700 crores. And working capital is we don't expect to be spending more than INR200 crores. So, below INR1000 crores.

48:00 Okay, okay. And sir, I know it's too early to ask upon, but you might have contemplated that once your new CapEx comes to a reasonable level of capacity utilization, when will you start to think about the second phase of the CapEx? Maybe by March or it will take some more time? I mean, we are already thinking about it. So it's just that we have all the drawing boards and projects, which we want to put on our the only thing is, of course, we need to stabilize the this class and then hopefully by the next six to eight months and looking at the cash generation, which is happening, that seems like we can pull that figure whenever we feel comfortable about our debt levels.

48:58 We don't want to exceed our debt level from where we are for a very long time. Okay. And sir, whenever you plan to go into the second phase, I believe you the execution time line for that CapEx will be lesser than the time which is used for the first phase. Is that assumption right? Yes, it is. It is. I think it will shave up shave almost two to three months of the time which is required for a greenfield project because many approvals and we have already we will be having team and established operations there. So I believe it should take at least two to three months lesser than what we but we did this project in a very fast time. So I think to do it in less time is very challenging, but we expect to do it in that model.

49:55 So we started this project in, I think, January or February, February 15, when we started the construction. And I think we'll be finishing the new project in almost one the whole project in one year, which we are pretty proud of. And we expect the brownfield, the next phase will be done in definitely less a period of time. And sir, my final question on your FY 'twenty eight numbers. Last call, you mentioned that we will be somewhere around INR 4,000 crore mark in terms of revenues and margins will be around 15 to 16%. But given the kind of community that you are talking about with sustaining the margins and 400 basis points higher margin on the new phase, and probably you can do 18%, 19% maybe some 17%, 18% kind of margins in FY 2028 as well with the new CapEx coming in?

50:52 Yes. It looks like with because we have been we came out of a deep slump from '22 to '25. And so we can't be too aggressive in giving our guidance. But things look good. And if you stay with all the tailwinds there are, so there's only one room for the margins just to go up. So it's from our old guidance. So the indications are it should be better than that. But we would like to restrict ourselves to that. So I think we can assure 15% that anything more than that is likely but not guaranteed.

51:39 Sure, sir. Sure. So that's all from my side, and all the best for the future. Thank you. Thank you. Thank you. The next question is from the line of Pahal Sharma from DD Capital. Please proceed. As there is no response, I'm taking the next question from the line of... There are no questions as of now. A reminder to all participants, anyone who wishes to ask a question may press star and 1. The next question is from the line of Mahesh Atal from the investment. Please proceed. Sir, just wanted to understand from your lens about the avail... Availability and the pricing of cotton in the imported market.

52:29 If you could throw some light from your lens, how do you see that maybe for the rest of this year and for the balance till the next crop comes in? How do you see that? Do you still feel that the 55,000, 56,000 can be sustainable in the international market? See, right now, this is a harvest time. Now when Brazilian, U. S, Indian, Pakistan, all these crops are coming. So we expect this pressure to continue for next two to three months. And then usually what happens is that the crop is cornered by some traders and all that stuff.

53:14 So it starts this is something which happens every year. But so we expect the prices to strengthen to start strengthening in the later part of the year. But we expect the prices to again because farmers are increasing good prices this year because the prices have gone up by 15% to 20% from where they were last year. And so there's a lot of interest in growing more cotton next year. So this year was also plagued by some droughts in India, USA and Pakistan. And luckily, we had a good dropout of Brazil, which has been stabilizing the prices and not making a runaway too much. So we expect Brazil to keep on expanding their production because it's very profitable for them to grow more cotton.

54:06 And we expect The USA also to grow more cotton next year. So we expect the prices to stay here and maybe come down a bit more in like 3.1 and then tighter a little bit and then again start coming down as we enter the next year, that's cotton. So my question was more around, let's say, want 70% of my procurement to be done from the international market, will I be able to do that? I mean, will the availability be there? I can put up 700% of my cotton if I want. So that's not a problem because see India imports about 70 a year and there is lot of copying which is traded on foreign rupee tax credit. So China, Brazil alone exports around we can say around one hundred and fifty lakh days and then USA does export more than one hundred and fifty lakh days. So there are lot of days to be had when there is that capital to only then there is Turkish.

55:25 So there is no doubt of to get Scotland, if you want it from international markets. Great, great. Thanks a lot, sir. All the best. Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Thank you so much. Thank you, everyone, for to participate in this conference. And I wish all of you a very happy Diwali, and see you next week. Thank you. On behalf of SPORTKING India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.