Mallcom (India) Ltd Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rushabh Shah - Buglerock PMS - Analyst : Yes. So what is the life cycle of our products? And how frequently do we need to replace them across all categories?

Question: Rushabh Shah - Buglerock PMS - Analyst : Okay. So my next question is, how many distributors we have in India? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Rushabh Shah - Buglerock PMS - Analyst : So are you planning to add more in domestic markets?

Question: Rushabh Shah - Buglerock PMS - Analyst : Okay. Because the follow-up question is, since Europe is an important market for us, but would we be ready to see a change of our focus and make India an important market over the years? See, India has seen investments in infrastructure and many other things. So just wanted a perspective on it.

Question: Rushabh Shah - Buglerock PMS - Analyst : Okay. And sir, my next question is except for the certification, what differentiates Mallcom from the other unorganized players, except the certification part of it?

Question: Priyank Agarwal - Equirus Wealth - Analyst : Sir, my question is with regards to the top line, like in terms of products, if you see safety shoes, garments, leather gloves, and nitrile gloves, all in terms of Q-on-Q have shown a decline. So are our products -- like what is the seasonality of the products? I wanted to know that. And my second question is with respect to the external demand environment, how do you see the demand environment in countries like Europe, South America, North America, where we have a major revenue share?

Question: Priyank Agarwal - Equirus Wealth - Analyst : My second question was related to the demand environment in countries like Europe, South America, North America. How do we see that? And for the full year, how is your guidance in terms of the mix as well in terms of Asia, Europe, South America? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Priyank Agarwal - Equirus Wealth - Analyst : Sir, my next question is with regards to the pricing strategy. Like in the domestic market and in the global market, how do we compete in terms of with our peers? And like how are we placed? Like are we discounting our products? Or like what is the pricing strategy we follow?

Question: Priyank Agarwal - Equirus Wealth - Analyst : Sir, I'm asking about the pricing strategy we followed in terms of the domestic market and in terms of the global market? And how are we competing against our competitors?

Question: Priyank Agarwal - Equirus Wealth - Analyst : And sir, one last question is that, sir, how is the private label sales mix like as of this quarter and like how do we see it forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : What are our present capacity utilizations currently?

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : Okay. And what will be our peak capacities after these two expansions, the West Bengal expansion and the Gujarat expansion? What will be the peak revenue potential after these expansions?

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : Got it. And what kind of revenue growth are we looking for the whole year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : Got it. Because the first quarter was a little slow on growth, so will we be able to --

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : Okay. Got it. And what is the current mix between domestic and exports, like India versus exports?

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : And we have a target of reaching INR1,000 crore for FY28, so will the mix look similar or will our domestic mix be much higher?

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : Okay. Got it. And one last question about our market share. I mean, what is like our market share in India currently? And how is the industry? Like how much of it is organized players, how much of it is unorganized players? How is the industry structure?

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : And how is the shift happening? Like what was this unorganized market like five years back? Like how is the trend looking? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Tushar Vasuja - Yogya Capital - Analyst : My first question is, can you talk a bit about your Protech workwear expansion in Sanand? Like what the product would be? Why are you foraying into it? What sort of market size is there? And how much of its market size would you be able to capture?

Question: Tushar Vasuja - Yogya Capital - Analyst : Sir, was there a delay for commercialization of Sanand-II in any capacity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Tushar Vasuja - Yogya Capital - Analyst : Okay, sir. And sir, who are your domestic competitors in terms of regulated, like those who have certifications? Who are your competitors over there?

Question: Tushar Vasuja - Yogya Capital - Analyst : Okay, sir. And sir, another question. You mentioned utilization rate for this quarter. Garments is around 90%, safety shoes around 90%, and gloves around 70%. If we compare this to the previous quarter, it has actually improved, but quarter-on-quarter, our revenue has actually decreased. So like I'm not able to understand that. Can you please talk a bit about it?

Question: Tushar Vasuja - Yogya Capital - Analyst : No, sir, that's what I'm trying to say. In this quarter, you actually had a de-growth quarter on quarter.

Question: Tushar Vasuja - Yogya Capital - Analyst : Okay. Fair enough, sir. And sir, last question. You mentioned about the pricing difference in exports and domestic. So is there a difference in margins also? Can you please explain that?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Sir, my first question is, are your products attracting any PLI benefits?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Okay. Sir, what kind of investment -- or what is the criteria to get that PLI benefit?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Okay. I got it. Sir, is there any impact of current container shortage and Red Sea crisis on your margin or in the export demand?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Yes, absolutely. Sir, I have one additional question related to this, like if you can quantify in terms of basis points, what was the impact in Q1 FY25?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Absolutely. Fair enough. Ajay, sir, I have one more question related to the competitive landscape in the international market. Sir, what is the competitive landscape in the international market now?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Sir, China Plus One is an old story. In last couple of years, like what kind of benefit you are deriving from the US market because of this China Plus One strategy?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : So sir, at this point in time, capacity is the biggest constraint for this transition from China to India?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : I got it. Sir, any timeline like you can achieve that level?

Question: Anik Mitra - Finnomics Solution Pvt. Ltd. - Analyst : Yes, sir. I visited your Ghatakpukur capacity as well.

Question: Rushabh Shah - Buglerock PMS - Analyst : What would be the trigger point of our company in the coming years? What would change the nature of Mallcom?

Question: Rushabh Shah - Buglerock PMS - Analyst : Yes, yes.

Question: Rushabh Shah - Buglerock PMS - Analyst : On the growth side.

Question: Shikhar Mundra - Vivog Commercial Ltd. - Analyst : So I get it, the Indian market is growing fast. But in order to achieve our target of INR1,000 crore by FY28, our export market also has to grow by 15%, 18% CAGR. And I believe the export markets are a bit saturated. So what is our strategy? Are we entering new geographies or how are we improving our global market share? Like what is our strategy?

Question: Aradhana Jain - Batlivala & Karani Securities India Private Limited - Analyst : I just have two bookkeeping questions. One, I see that your gross margins have increased by 300 bps year on year. So what is the reason for that? And secondly, the other expenses have also grown by [31%] year on year. So what are the reasons for that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call

Question: Aradhana Jain - Batlivala & Karani Securities India Private Limited - Analyst : The other expenses have also increased. So any --

Question: Aradhana Jain - Batlivala & Karani Securities India Private Limited - Analyst : And I also wanted to understand the seasonality related to the business. So if you could just tell us how it works. Like quarter on quarter, how does the seasonality move? If there's any particular quarter where you see more revenue? And what is the reason for that?

Question: Aradhana Jain - Batlivala & Karani Securities India Private Limited - Analyst : Yes, sir, that was helpful. The next question that I have is with respect to your current debt levels. If you could throw some light on that? And what we understand is your borrowings are primarily for meeting your working capital requirements. So I believe the incremental INR50 crore, INR60 crore of CapEx that we are talking of, that will be funded through internal accruals, and we don't plan to take any external borrowings for the same, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2024 / 5:30AM, MLCM.NS - Q1 2025 Mallcom (India) Ltd Earnings Call