Mallcom (India) Ltd Q3 2025 Earnings Call Transcript

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

Question: Rushabh Shah - BugleRock PMS - Analyst : Yeah. Thanks for the opportunity. I have three questions. So our vision of INR1,000 crores topline by FY27, you said that the group will mostly be denominated by the domestic market. But historically, we have mentioned that in exports, we have great marginal growth opportunity exports also. So could you please explain me how we reach to that vision?

Question: Rushabh Shah - BugleRock PMS - Analyst : Okay, fine. Sir, my next question is in the past two to three years, how many new products have been invented? And how are they being readily accepted by the market?

Question: Rushabh Shah - BugleRock PMS - Analyst : Okay. And, sir, my next question was the company had introduced this new Nitrile glove range, which was launched a few years back. Does any other player make these kind of gloves? And how cost-efficient are you in making these gloves as compared to others?

Question: Rushabh Shah - BugleRock PMS - Analyst : Also just leaving aside China, the other players in the domestic market. So the quality which Mallcom produces, how cost-efficient are you than those two to three player?

Question: Rushabh Shah - BugleRock PMS - Analyst : Fine. Thank you, sir. I'll get back in queue.

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : Hi. Thank you for the opportunity, and congratulations to the company for the good set of number. I have a couple of questions. The first is if you could just highlight what were the drivers for the 23% top line growth. That would be my first question.

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : (technical difficulty) Yeah, so my second question is on the contraction in the gross margin that has happened. When I was comparing your product mix as on 3Q versus the last year, I witnessed that the safety shoes contribution has reduced from 61% to close to 40% this year, while the government contribution has increased from, say, 13% to 30%. So could you throw some light on how your product, category-wise, gross margin stands?

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : So, but I mean, 400 bits of compression would be because of inferior product mix for this quarter or nine months? Or like the marketing cost that you're seeing that would be having an impact on the EBITDA margin, right? And I'm going to -- (multiple speakers)

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : I'm comparing 3Q FY24. The gross margin for 3Q FY24 was around 43.4% which this year is 39.4%. So that comparison I'm doing.

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : Sure. The last question from my end is on the export market. So if you could just throw some light on how the export market trends have been during the quarter and what is the outlook given that now Trump has come in? So any change in your export market contribution or anything, any thoughts on that?

Question: Aradhana Jain - Batlivala & Karani Securities India Pvt Ltd. - Analyst : That is helpful. Thank you, and all the best. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Yeah. So thanks for the opportunity, and congratulations on good numbers. Sir, I need to -- this company just wanted to understand how large is this market, sir? And who are the key players?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And in India can you tell me which are the other players?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. So how do we do our sales? Do we do it directly to distributor or we have our own salespeople? Because I will (inaudible) to corporate -- (multiple speakers)

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay? And how many distributor do you have in India?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And, sir, this export business is all white label?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. What is the breakup, sir? How much would be white label out of INR100 crore revenue which we (inaudible) to exports?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And sir do you -- are you seeing any traction of growth in export because of China Plus One that people are giving you more order or there are more inquiries?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And what would be the price point difference between your product pricing and Chinese product pricing provide level export?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : For example, we are not able to compete with Chinese because of the price point of the Chinese players are supplying? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And as an Indian company, do we import also low-price products from China? (multiple speakers)

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : No. Are there any trader who import from China and sell it in India? It this correct?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And so what would be the content, sir, in terms of the size of the industry, how much would be the import percentage?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : And sir are there any chances like other export, other industries that BS IV was implemented where it's difficult to import from China? Is there anything possible in our industry also?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : So, okay, within your segment you're saying in some products it's mandatory, some product, it is not mandatory, 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. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. And has this happened in the last two, three years because of which we are seeing some growth?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : The BIS implementation, has this happened in the last two years? (multiple speakers)

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : And now on gross margin, I wanted to understand what is the gross margin difference between a white label business and branded business?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Okay. Yeah, I was talking about gross margin. You're saying that the margin is similar, you're saying?

Question: Anand Mundra - Soar Wealth Managers LLP - Analyst : Yeah. Thanks a lot, sir. Thanks a lot. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Rushabh Shah - BugleRock PMS - Analyst : Thanks for the opportunity. Sir, in the previous call, you mentioned that you can move into India isn't easy because different industries work in different manner and there's a lot of [standards] as well in the country. But if there is no standard, then anyone can order anything, like 100% they can order. So how difficult is to deal with this and how difficult to deal with all these things like most (inaudible)

Question: Rushabh Shah - BugleRock PMS - Analyst : These kind of products, you may not be having a problem in exports, right? The cheap quality China products, you may not be having problems in the export market?

Question: Rushabh Shah - BugleRock PMS - Analyst : Since we are in the -- my next question is, since US was never a big market for us. And in the past, also we have stated that we are putting all our efforts, but it was a slow growing market and also entry into such market is very difficult. But once you enter these kind of markets, the customer sticks with you for a very long time. So my question is, have we progressed into the US markets and are we able to crack the US markets?

Question: Rushabh Shah - BugleRock PMS - Analyst : So we should be able to crack that market, how -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Ankit Gupta - Bamboo Capital - Analyst : Thanks for the opportunity and congratulations for a good set of numbers. So my first question was on, we have been trying to sell our products to contract manufacture, white label our products to some of the large MNCs and also trying to increase our product basket with them. So if you can, particularly, talk about how has been the progress there with some of these large MNCs, which will have an opportunity of billions of dollars. So how has been the traction there for us and how do you see this building up over the next two to three years? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Ankit Gupta - Bamboo Capital - Analyst : So and my second question was on our top line, if we look at last December FY24 Q3, the numbers were impacted because of the supply chain issues as we know that. But last two to three, last three to four quarters, our top line has been in the range of around INR120 crores to INR130 crores per quarter. And despite some scale up, our margins have also not improved. So two questions here. So basically, when do you see this top line crossing this barrier of INR120 crores, INR130 crores? And like, why hasn't the increase in our scale of operation? Because there is an improvement in margin which normally should have happened given our scale and some operating leverage should have come in.

Question: Ankit Gupta - Bamboo Capital - Analyst : The surprising thing is we have in fact seen some decline in margins over the past two quarters. And you -- (multiple speakers)

Question: Ankit Gupta - Bamboo Capital - Analyst : Sure. And this last question one, our target for reaching INR1,000 crores by FY28, given like we have put in a lot of CapEx-es over the past three years. And we have been trying quite a bit to enter into large accounts and increasing our product basket with them. So do you think we'll start seeing acceleration in growth from next year onwards? Let's say, this year we might end up with, if you look at our nine-month numbers, we are up 13%. And for full year basis also, if we look at it, we'll end up somewhere around INR480 crore, INR490 crore top line for this year. From that base to double our top line in three years seems to be a bit of steep task. So like will we start seeing 20%, 30% growth from FY26 onwards? Or it will be more of a back-end kind of growth which will come in '27, '28? Or how do you think about it?

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Hi, good afternoon, sir. A basic question. How long does it take for the customers to approve product? That's one. And does the approval time vary between product, for example, between garments and shoes? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 6:00AM, MLCM.NS - Q3 2025 Mallcom (India) Ltd Earnings Call

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : I think products, also, do that time vary, for example, between garments and, for example, tools?

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Okay. Sir, if I may ask another question. You mentioned that USA -- I mean, I just want to ask is the USA picking up faster and EU? Though you mentioned that you are not yet see slowdown in EU because that's very contrary to what we have been reading in the media and the international papers and magazines. So I wanted to get your -- is US picking up faster?

Question: Priyankar Sarkar - Square 64 Capital Advisors LLP - Analyst : Perfect. Thank you very much and wish you all the best.

Question: Rushabh Shah - BugleRock PMS - Analyst : Yeah. Thanks for the opportunity. I think so since the whole market size is $60 billion and most of it is catered by China, approximately 75%. So in the past four to five years, have you seen a shift from the PPE world market mostly denominated by China to other countries as well?

Question: Rushabh Shah - BugleRock PMS - Analyst : Okay. So that's not too quick but going further, going down the road like five to six years down the road, do you see India contributing to portion of the market?

Question: Rushabh Shah - BugleRock PMS - Analyst : Fine. Thank you so much.