Pearl Global Industries Ltd
NSE:PGIL

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Earnings Call Transcript

Earnings Call Transcript
2025-Q1

from 0
Operator

Ladies and gentlemen, good day, and welcome to the Pearl Global Industries Limited Q1 FY '25 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pallab Banerjee, Managing Director of Pearl Global Industries Limited. Thank you, and over to you, sir.

P
Pallab Banerjee
executive

Thank you. Good morning, everyone. I welcome you all to our Q1 FY '25 earnings conference call. Along with me, we have our Group CFO, Mr. Sanjay Gandhi; and SGA, our Investor Relations advisers. I hope all of you have gone through the investor presentation uploaded on the exchange and our company website.

I am pleased to announce that our growth momentum persisted for quarter 1 of financial year '25, resulting in our highest ever Q1 and quarterly revenue, adjusted EBITDA and the profitability. For the first time, we surpassed INR 1,000 crores in quarterly revenue and INR 100 crores in quarterly adjusted EBITDA on a consolidated basis.

During this quarter, we saw a 17.7% increase in revenue. Overseas revenue increased by almost 22% and India revenue increased by 7.3%. Once again, this is a proof that our strategies are working well and a testament to our competitive advantage as a global manufacturer. Our sustained growth, despite challenges at the industry level, is driven by the leveraging of our core strengths of multi-country presence, multi-category products, in-market design expertise and strategic customer relationships. This growth primarily stems from increased orders from our existing customers, yielding better relationships as well as better wallet shares from the customers, which we have added over the last 5 years.

Let me start with an overview of the industry. The textile and specifically the apparel retail and its supply chain is currently undergoing some significant challenges. This includes shipping delays, increased costs, higher container costs, higher energy prices and inflationary pressures affecting global economies and hence, the consumer spending. Overall, the raw material prices remain stable for now with the exception of the linen fiber, which continues to be an inflationary trend.

The U.S. retail market showed resilience in 2024 with the retailers clocking almost 2% of year-on-year growth January to May period, but June sales are up by almost 4.3%. And most of the prominent retailers have already optimized their inventory levels. So we are estimating that their buying numbers will continue to be healthier for the rest of the year.

On the contrary, we have the recent data on inflation, unemployment rate and the consumer confidence index of U.S. These have not been favorable. These add to the already roller coaster experience as we move closer to the U.S. election. So most of the U.S. retail industry leaders are maintaining a cautiously optimistic stance. Year-to-date, apparel imports into the U.S.A. are down by almost 7% year-on-year for the first 6 months. Now this is expected to improve in the second half of the year.

Moving on to the U.K. retail situation. This market grew last year by almost 5% and has shown a further growth of 2% to 3% for the first 6 months of this year. However, if you look at the import numbers of apparel for January to May, that is showing a downtrend of 12% year-on-year. So this is estimated to improve over the next months -- for the next -- second half of the year.

Similarly, we noticed the imports by the European Union is down by almost 7% and Japan down by 9%. Now again, both of these cases, like what we are seeing, the retail is flat or improving. So both these, again, these numbers of imports should improve for the rest of the year.

Now the Red Sea situation, the closure has increased the cost of transportation for the retailers of U.S. and U.K. and the Western countries, but it has not impacted our costs as all our shipments operate under FOB terms. The key for us is to deliver goods faster. Customers are now expecting shipments at least a week earlier to account for this additional time required to reroute their vessels around the African continent.

Further challenge in recent months is also the cost and availability of containers. Our manufacturing facility in Guatemala with the transit time to the U.S.A. with just over a week is attracting increasing interest and inquiries from our customers. However, the capacity of my Central America remains limited and is only a fraction of what we have in Asia.

Now moving on to Bangladesh. The recent curfew did cause a closure of our factories for a total of 6 days. There was a loss of productivity during these closures. We plan to recover this loss in the coming days and weeks. There has been no damage to any of our property, and our focus remains on minimizing the impact to our customers. We have already cleared all imports from the seaports and trucked out all export cargo to the ICDs with more goods on the way as we share this update to you. All our factories are working at full strength with high attendance.

The textile industry in Bangladesh do have some advantages compared to other geographies, which will further keep them ahead of the competition. The textile industry, it has become a major sector of Bangladesh's economy. It represents 84% of their total export and 15% of their GDP. It is still lower in terms of cost and reasonably good efficiencies and productivity if I compare it with other geographies. The skilled workforce and well-experienced middle and lower-level management staff is easily available, improving -- Bangladesh has been improving their logistical infrastructure by leaps and bounds in the recent months and years and it has got favorable trade agreements. We believe that whichsoever government is formed in the country, they will take adequate and fruitful steps towards maintaining the edge of the government and textile industry. Thus, looking at a high weightage of the industry has an overall economic performance.

Moving over to Vietnam. We will maintain our growth trajectory. However, at a more consistent pace, we will continue to expand this market for us, while focusing on delivering exceptional service to our high-end customers. Indonesia is set to regain its performance levels after a decline over the past 2 years.

India. India this quarter experienced a higher percentage of absenteeism and attrition at our factory levels. And this has been due to the prolonged election and the very high temperature that India experienced this summer. We also experienced the increase in wages and DA across all our states. All this resulted in additional manufacturing costs and some potential delays. We managed to avoid any major delays -- we have managed to avoid any major delays and air freights.

Now long term, Indian government is prioritizing garment manufacturing as an important contributor of employment growth through various initiatives. We enhanced our existing capacities in the states of Haryana, Karnataka and Tamil Nadu over the last year. And going forward, you will see us investing and starting production in other states like Bihar, Odisha and Madhya Pradesh, where there is an availability of labor force and is relatively less expensive than our existing production locations.

Also, recently we successfully completed our qualified institutional placement. We raised INR 149.5 crores. This QIP attracted range of prominent investors. We remain committed to investing in operational improvements, enhancing governing process, digitization of all our factories and improving our financial rating. Our dividend and capital allocation policies are already very well defined. Having announced our strategic plans and objectives for 2028, we believe we are progressing steadily and solidly towards our goals.

We will continue to expand our relationships with our customers who are strengthening their position in the global market. Our focus will be on consistently surpassing our previous records in revenue, capacity and efficiency, which will directly contribute to enhancing our bottom-line profits.

Now I will hand over to Mr. Sanjay Gandhi, our Group CFO, who will walk you through the quarter 1 financials for the fiscal year 2025. Sanjay, over to you.

S
Sanjay Gandhi
executive

Thank you, Pallab. Good morning, everybody, and welcome to our earnings call for quarter 1 FY '25. I would like to start by sharing our financial and operational performance for the quarter.

Starting with the consolidated financials, we are happy to report the best-ever quarter 1 and quarterly performance in terms of consolidated revenue, adjusted EBITDA and profitability for Q1 FY '25. Our consolidated revenue reached INR 1,052.8 crores, a notable increase from INR 894.2 crores in Q1 FY '24. Revenue for this quarter increased due to increase in overseas revenue by 22%, led by growth in sales in Bangladesh due to healthy growth in business for most of the customers. This represents a growth of 17.7% growth in consolidated revenue, marking our highest-ever revenue for a first quarter, setting records for quarterly revenue.

For the first time in our history since -- we have achieved quarterly adjusted EBITDA surpassing INR 100 crore mark and stood at INR 100.4 crores, which is a growth of 18.8% year-on-year. Adjusted EBITDA growth year-on-year is in line with the revenue growth. Adjusted EBITDA excluded ESOP expenses of INR 2.1 crores in quarter 1 FY '25 and INR 1 crore in quarter 1 FY '24.

PAT for the quarter stood at INR 61.9 crores versus a PAT of INR 47.4 crores in quarter 1 FY '24, which is a growth of 30.8% year-on-year. However, if you look at PAT after minority interest, it stood at INR 65.3 crores in quarter 1 FY '25 compared to INR 48.1 crores in quarter 1 FY '24, a growth of 36% year-on-year.

During the quarter gone by, volume increases led by increase in the knit business and the average realization is lower due to the change in product mix. Woven, 58%; knit, 42% in quarter 1 FY '25 compared to woven 73%; knit, 27% in quarter 1 FY '24.

Coming to the stand-alone financial, in stand-alone performance for quarter 1 FY '25 revenue increased to INR 276.2 crores compared to INR 257.5 crores in quarter 1 FY '24, representing a 7.2% year-on-year increase due to growth in business with new customers. Adjusted EBITDA witnessed a decline of 34.3% year-on-year to INR 13.3 crores in FY -- in quarter 1 FY '25 with adjusted EBITDA margin at 4.8%. This was impacted due to low productivity in a couple of our factories. PAT for quarter 1 FY '25 rose to INR 15.9 crores, reflecting an increase of 37.1%. Please note, we had an exceptional gain of INR 5.5 crores due to sale of non-core assets during the quarter.

Furthermore, we would like to inform that Pearl Global Hong Kong Limited, Hong Kong, a material subsidiary of the company has appointed M/s. Deloitte Touche Tohmatsu as its statutory auditor for the year ending 31 March 2025. Our focus continues to have a robust governance control.

As highlighted earlier, we had completed our QIP and raised INR 149.5 crores from marquee investor and we deeply value the confidence our investors have placed in us.

I'm now happy to take any questions you may have. Thank you.

Operator

[Operator Instructions] The first question is from the line of [ Vignesh Iyer ] from [ Sequent ] Investments.

U
Unknown Analyst

Congratulations on a solid set of numbers. So just to understand -- I mean, I understand we have lost some few days in Bangladesh due to the unrest. So I just wanted to understand what is the growth prospects going ahead? And how -- so we would have got a reasonable idea of how orders for the winter wear that would come from U.S., U.K. So if you could just give us an idea how would the winter pan out this time around?

P
Pallab Banerjee
executive

Specifically, you're talking about Bangladesh or in general for all regions?

U
Unknown Analyst

Yes. So firstly, I mean, immediate basis, how our performance -- I mean, how our volumes might get impacted due to Bangladesh? And on a more -- from a medium-term perspective, how the January, February, March quarter will pan out because if I understand right, we get it like 6 months before we have a reasonable idea how the orders are and how the demand is from U.S. and U.K. So from both perspectives.

P
Pallab Banerjee
executive

Got it. So as I just mentioned, let me just -- the second part of the question I'm replying first, which is the general market trend that we are seeing. Definitely, like last year was extremely tight because of the over-inventory situation that we saw in a couple of countries, especially the U.S. And I think that part is behind us. So in general, what we are seeing is definitely the order flow is much better compared to last year. In fact, we have planned a growth, and we are solidly on track with that growth plan.

So I don't see a big reason of concern at this point of time, unless until something -- some other surprises sprung up across the world. So that's something I think what we're looking at across most of the regions. I'm talking on behalf of U.S., U.K., Europe, Australia, Japan. So I think its -- business is at this point of time quite normal compared to what we have seen last year.

The second part of -- the first question that you had about what's happening in Bangladesh. So Bangladesh, we had a disruption. So for example, 5 complete days we lost of production. We had to shut down because of curfew. And then one day, we could only run partially. So that's why we consider that 6 days of production loss. But I think over the next few weeks, with additional overtime and working on a holiday kind of thing situation that we do normally in such extreme situation, we are confident of making up this production loss.

To our customers, what we have given the plan, there are very few delays that we're experiencing. So we are well in control, there could be a little bit of over expense that might happen to make sure that we are doing this kind of overtime or maybe a little bit of an adjustment in the shipments and all, but not a very big impact at this point of time.

In terms of what is happening currently, I think what we are seeing is very good turnaround, turnover -- sorry, the turnout of people in the factory. So in fact, normally, we see about 2% to 3% of absenteeism in our factories. But since the time that we opened up after the curfew, the attendance has been even better. So that's something encouraging. People do want to work. The workers are quite serious in terms of all our factories are running at full strength at this point of time.

We haven't seen any problem in terms of any logistics or any movement of material or movement of personnel. Most of our staff, like a lot of people from India are staying in Bangladesh also. Some of them did come back because there were a lot of concerns when this curfew and when this change of government happened, but most of them are now back and things are quite normal. And some of them continue to stay in Bangladesh because we immediately started our factory as soon as we could.

So that way, like we haven't seen much of problem in Bangladesh as of now. Does that answer both of your questions or...

U
Unknown Analyst

Yes. Just one more question from my side. So we have seen almost an 18% growth on Y-o-Y basis on a volumes plus realization, that is value part of it. So if you could tell me what is the volume growth that we have seen on a Y-o-Y basis? And is this number sustainable going forward on a Y-o-Y basis?

P
Pallab Banerjee
executive

So volume growth.

S
Sanjay Gandhi
executive

The volume growth is 35% is what we have seen here. And I think we mentioned that as a part of our 3-year strategy that much of the growth in revenue will come -- will be driven largely from the volume growth. And the realization is a function of the product mix, which is in that particular year.

And if you look at our February '24 analyst meet, we have mentioned clearly the product mix, which is likely to be 60-40; 60%, woven and 40%, knits business. And our all projections for the -- till FY '28 was based on the volume growth driven. And definitely, since it is in line with our strategy, it is sustainable in that way towards our objective what we set forward.

Operator

The next question is from the line of Palash Kawale from Nuvama Wealth Management.

P
Palash Kawale
analyst

Congratulations on good set of numbers. Sir, my first question is on Bangladesh again. So do you see any change in plans in terms of your capital allocation or are clients pushing us to like get out -- like supply them from other countries because of the recent civil unrest or do you see things would be as we had planned earlier?

P
Pallab Banerjee
executive

As of now, we haven't faced any pushback from any of our clients. But yes, in general, I think that's the sentiment that you expect when this kind of disturbance happens. The kind of strategic relationship that we have, we got immediately supporting messages from our customers. And we had the dialogue, like if anything becomes prolonged in Bangladesh, then we can shift some of our business from Bangladesh to our other regions. So that dialogue we were ready with, our planning and our backup was always there. But we didn't had to go that route, things became quickly very normal. And the productivity and everything is quite smooth, and I think totally as per our plan.

In terms of future capital allocation, like what we had in terms of -- before this revolution or before the change of this government. So we are not changing big time any of our capital allocation across all the regions as of yet, including Bangladesh. So although like we were not very aggressive in one region at the cost of other. So that was never our plan. So we have incremental growth in all the region and that we will continue, unless until we see there is a big change.

P
Palash Kawale
analyst

Okay. And sir, what was the contribution from partnership model in this quarter? And what was the contribution in Q1 FY '24?

S
Sanjay Gandhi
executive

So we have given that detail as well, the partnership factories are contributing around 21% in quarter 1 and 79% is in house. So this is in terms of the volume overall.

P
Pallab Banerjee
executive

Overall, yes, this particular quarter, you see that a little bit of a higher contribution from the partnership factory because we experienced a growth in our numbers. And as we adjust our production lines to grow. So yes, this particular quarter, we have a slightly higher number of partner factory contribution.

P
Palash Kawale
analyst

And sir, how do you -- how should we model FY '25 volume number since the volume growth is so high in first quarter. So are you confident of maintaining this trend?

S
Sanjay Gandhi
executive

I think what we have said for the 3-year period from -- in our meeting last, we continue to be that. Overall, on an annual basis, we are saying 12% to 4% (sic) [ 12% to 14% ] of revenue CAGR is something which we are confident of achieving over a period of 3 years. I think to be in line with our strategy, it is better to keep that model in [ place ]. Of course, there will be -- some positive surprises if comes in any quarter, we'll be happy to communicate periodically. But to really look at from the long-term perspective, we would like to keep our guidance of 12% to 14% CAGR in revenue growth and the EBITDA of 10% to 12% by FY '28 as we will -- we are optimistic about achieving that.

P
Palash Kawale
analyst

Okay, sir. And sir, my last question is, how is seasonality for Pearl since we have both knit and woven. So quarter-wise, how do we see the seasonality?

P
Pallab Banerjee
executive

So Pearl manufactures 7 different categories, right, from outerwear, knits, wovens, tops, bottoms, children wear. So when we talk about the seasons of outerwear to the Western countries, then the dollar-wise, you will a jump, a little bit of jump might happen because the FOBs are much higher compared to the spring-summer seasons. But I think in general, we don't see a huge swing in our total consolidated numbers.

Normally, for the spring-summer region, like India region becomes much stronger. For the fall holiday region, when outerwears are high, they tend -- Vietnam or Bangladesh, where a lot of denims and bottoms happens, that -- with summer. So more or less, it compensates each other. Maybe a little bit of variation that you might have, but not a major.

Operator

The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking.

B
Bhavya Gandhi
analyst

Congratulations on a good set of numbers. Sir, a couple of questions from my end. One, with respect to what was the revenue contribution from new customers in this quarter and how are we seeing these numbers move from last maybe 3, 4, 5 quarters, if you can throw some light on that?

S
Sanjay Gandhi
executive

Yes, you're looking at -- sorry, just to understand your question is less than 5-year customer and the more than 5 years is the breakdown...

B
Bhavya Gandhi
analyst

Yes. That is what I'm asking, yes.

S
Sanjay Gandhi
executive

For us, the real yardstick to measure this number is for the full year basis. If you recall our last presentation, we mentioned in FY '24, we had 44% of the revenue coming from less than 5 years and more than 5 year is 56%. Now what will happen over the period of this year, financial year '25, some of the less than 5 years will get converted into more than 5 years because they have been with us for now almost 4, 4.5 years, as when we mentioned in the last time.

So gradually, there will be shipped. But at the same time, we are working on addition of new customers, so that will happen. But it's a journey which takes over a period of 12 months' time period. So we would like to mention that last year, at the 31st of March, for the full financial year, less than 5 years were contributing 45%, 44%, and more than 5 years were contributing 56% of our group revenue.

As we started this journey, this 44% is gradually becoming -- migrating to the more than 5 years, but we will see the clear picture coming up by the end of the 5 year as to how the overall numbers look like. It's better to look at a full year basis.

P
Pallab Banerjee
executive

So conceptually, I can explain a little bit more. What happened was in 2019 onwards as we built up the strategy to take Pearl towards our goal of growth and achieving the numbers that we have stated. So we had introduced, and we had approached a lot of new customers at the same time. So that bunch of customers gave a good run now. And some of these customers are becoming much more strategic. So that means they are becoming very sizable and maybe like top 2 or top 3 customers of ours. So that part will continue to grow.

And then over this last couple of years, 2 or 3 years, again, we have introduced some customers who may not be going into the strategic level but will continue. Every year, we continue to add -- like we see the map of all our customers across the globe, who are the customers who are doing financially strong and where we can definitely add value to them, and they can be a good partner to us.

So that process is on. But this -- the huge jump of -- or a new infusion of new customers that happened in 2019, '20, that is now overall, like as Sanjay just explained, will go beyond 5 years now. So that -- we'll see a little bit of fluctuation out there, but this number would, I think, be in this region, more or less going forward as well.

B
Bhavya Gandhi
analyst

Let me ask you in another way. I get your point, but how big can this customer base be? I mean, let's forget about 4 years, 5 years or 7 years, the new customer addition that you've done after '19, '20, can they become? I mean in terms of revenue, it would be closer to INR 1,500 crores, INR 1,600 crores on an annualized basis. So can it be like INR 7,000 crores, INR 8,000 crores or we will peak out at INR 2,000 crores, INR 3,000 crores? If you can just throw some light on that in terms of absolute number.

P
Pallab Banerjee
executive

So in terms of individual customers, like, if I talk about, so there are -- what we do, we always include customers like who could be in my top 5. And by top 5, I mean that eventually they should have a runway to do about $100 million. So that means $100 million will be how much? INR 800 crores. So that would be -- I think, is a fair estimate. Of course, there are a few like Walmarts and Targets who can be even $200 million, $300 million also if we can service them well. But at this point of time, our target is to have this top 3 or 4 customers, which should be in the $100 million mark.

And then my second tier of customers should be in the range of about $40 million, $50 million, $60 million, in that range. $40 million to $60 million range. And then comes the tactical customers who should be in the below $20 million, as you say.

So that's how like we classify our customers. We always try to have -- when we're infusing some new customers, we want to see like over a period of maybe 4 or 5 years, what is the runway? Can they be a $50 million customer for us, or can they be a $100 million customer for us? That's not like we go through this process. So we do have identified like who those 3 would be, who could be more than $100 million, who are those 5 or 6 who should be in the range of $50 million, and then, of course, there is always the bottom of the pyramid where we'll have anywhere between 0 to $20 million.

B
Bhavya Gandhi
analyst

Got it. So let me again just -- I'm just trying to understand how directionally we'll be moving. So the 3 customers of $100 million that you are saying, what is the current size as of now? Are they like a $20 million customer or already they have reached $50 million?

P
Pallab Banerjee
executive

So one of them has touched $100 million. The second one is about to touch $100 million. The third one is crossing at this point of time, maybe around $55 million, $60 million mark, will move towards $100 million. So like that, similarly, the one which will be crossing $50 million, $60 million wherein one of them is at least around $40 million at this point of time, some of them are in the range of about $35 million, $40 million, in that range. So yes, that's the kind of mix we always maintain in terms of our strategy.

B
Bhavya Gandhi
analyst

Okay. And in terms of percentage of their total procurement, how much would be as -- we be as a part of their total procurement cost? I mean -- because I believe they might be working with at least 25, 30 vendors, and they would not allow you to penetrate within...

P
Pallab Banerjee
executive

So that you see like from their sourcing or procurement point of view, they would maintain us in the single digits of their share. So rarely it goes in the double digit. But yes, there could be either high or low single digits.

B
Bhavya Gandhi
analyst

So we have some room to penetrate in terms of percentage?

P
Pallab Banerjee
executive

Of course.

B
Bhavya Gandhi
analyst

Yes. Okay. So I mean, if we extrapolate all these numbers putting together, so we believe -- I mean, 12% to 14% would be on the lower side of revenue guidance, right? I believe we can even go at a faster pace than this. I mean I'm just indicatively asking that we have the ability to do it, whether we will do it or no is a different thing.

P
Pallab Banerjee
executive

Yes, the opportunity is -- will definitely, I would say, exist, like how we play our cards and how we strategize ourselves like overall, in terms of our infrastructure, in terms of our strength, in terms of serviceability, we do not want to go for a very aggressive growth and then may not be able to service it. So that also is very important in our -- in any industry.

So yes, that's how like we have planned in that range. But yes, like if it's a couple of percent more or maybe like 4%, 5% more, it's possible. We should not lose that opportunity. But yes, we will not go for a very high aggressive and over commit and under deliver. That's the situation that we would like to avoid. I think at this point of time, the market isn't such -- what I'm seeing, yes, anywhere a 12% to 14% or maybe a few percentage higher is possible easily.

B
Bhavya Gandhi
analyst

And sir, are we seeing any consolidation...

Operator

Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up question.

B
Bhavya Gandhi
analyst

Okay.

Operator

The next question is from the line of Parth Patel from Unifi Capital.

P
Parth Patel
analyst

Yes, am I audible?

Operator

Yes, sir. You're audible.

P
Parth Patel
analyst

Yes. So congrats on a strong number. So my question is -- so when you look at this Bangladesh situation, what is happening, okay? And I think in the last Analyst Day, which you did in February, you gave a plan of around INR 500 crores CapEx over the next 2 to 4 years, so can you explain strategically this INR 500 crore CapEx which you are planning for next few years, in which geographies it will go?

Because if I say Bangladesh is around 50% -- more than 50% of our capacity today. So this incremental CapEx, are there any strategic changes which you are thinking of doing of this CapEx, not in Bangladesh and other geographies going forward?

P
Pallab Banerjee
executive

Between Bangladesh and India, our major contribution as of now, in India, we realized that we are in places which are more expensive. So we have to some of our factory or add factories in the cost -- lower cost region. So that definitely would be an important part of the CapEx. Bangladesh being the largest contributor, almost about anywhere between 40% -- 44%, 45%, expectation is that it will continue to come from Bangladesh. So that will draw some CapEx as well there and then, of course, followed by Vietnam, Indonesia and Guatemala. So we are definitely spreading our CapEx across all the locations.

In terms of -- I would say, is there any change -- immediate change reacting to what has happened in Bangladesh in the last couple of weeks? No, we haven't -- at this point of time, we are keeping a close watch on that. We are seeing a good traction in terms of -- see Bangladesh, if you look at overall, the readiness for the industry is much higher compared to the other countries who are there in this particular industry.

So I don't see a huge change that will happen. But yes, Bangladesh also will undergo some kind of consolidation of players for sure. As the country regroups itself, there will be a little bit of economic ups and downs. So during this period the smaller players or the weaker players will move away. The stronger will become much, much more stronger. So that's what normally happens. That's the kind of trend we have seen in Sri Lanka, in Pakistan and in other third world countries as this kind of upheaval comes once in 5, 10 years, we have seen that. In fact, India also is undergoing in the past.

So that's something -- I think is something that we will have to have a very close watch. And we will definitely -- any investment that will happen from our side will be completely based on the ROI. So we do a very rigor analysis in terms of what kind of ROI is possible, what we are seeing and how fast we can achieve that. So that's something -- is a criteria for our decision-making.

So we'll continue to evaluate. We continue to analyze this and then take the steps. But yes, so far, we didn't have any major plan in Bangladesh that -- whatever plans that we have in terms of our growth in number of lines or incremental addition in terms of our production capacity that we are continuing.

P
Parth Patel
analyst

So just to understand near-term perspective, in FY '25, where are you adding the capacity? FY '25, where are you adding the capacity? In which geographies?

S
Sanjay Gandhi
executive

So FY '25, see our plan was -- is one is in India, we are adding capacity in Bihar and the second is in Odisha, in partnership factory, in collaboration with the existing factory, which is infrastructure, which is existing there. The second is in terms of adding capacity, it will be in Bangladesh and India also in Madhya Pradesh. The commitment to capital expenditure will happen in this year, the capacity addition may spill over to the next financial year.

So the commitment that will happen in this financial year in Madhya Pradesh in India and Bangladesh also, we are exploring good opportunity and at the right time and the right price, I think those commitment will also follow. So that's under evaluation and continue to be under evaluation.

P
Parth Patel
analyst

Okay. So the concrete plans currently are in India only, right? Okay. Now that -- in terms of EBITDA margin, I think the long-term guidance is to move to a double-digit kind of EBITDA margin. But if I see this quarter, if I include the ESOP expense as OpEx, okay, then the EBITDA margins are almost flat Y-o-Y, right? So how we can -- so what outlook on the EBITDA margins going forward in the next 9 months and FY '26?

S
Sanjay Gandhi
executive

So I think the way this year is coming up with respect to the capacity and utilization and efficiency and the order intake, I think as we go into summer and spring seasons, we are optimistic about hitting a double-digit EBITDA, I guess, by the end of this year. And the next year should be in line with those double digits as well. Here, I'm talking about a double-digit EBITDA, adjusted EBITDA, which is I think we should be -- we are optimistic about achieving it by the end of this year.

P
Parth Patel
analyst

Okay. Fair enough. And the last thing on a...

Operator

Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up question.

P
Parth Patel
analyst

Okay, no issue.

Operator

The next question is from the line of [ Kaushik ] from AK Investments.

U
Unknown Analyst

I have a specific question to Bangladesh and a [ broader ] question. So on the Bangladesh front, what makes you very bullish? I understand it is a larger exporter, but there are also -- because I think the margins are sustained because of the tariffs and the low-cost expenses, right, employee cost expenses. So once there was also news from the European countries that tariffs will be moved out, then how does it strategically fit in our company? That is my first question.

And the next question is basically, if you see that there is also a lot of push happening in India that you want to have a global sourcing partner from India, from moving from 5% to 15%. So how do you want to grab this opportunity?

And how much time it would take if you want to put up any additional capacity, suppose out of the world, right. If suppose something again happens in Bangladesh, right? Because we don't know about the geopolitical region, it can be anything. So for you as a company to mitigate the risk, how fast can we add the capacity anywhere or it will take time? Can you throw some light on this three?

P
Pallab Banerjee
executive

Yes. So first is about tariff arrangement in Bangladesh. So they have -- Bangladesh has got LDC status. And because of this, they have a GST benefit for the European countries and U.K. So that benefit they would have till 2029, if nothing changes. If they get an extension, then it will go beyond that. Initially, there was some conversation of not extending it, but I think with the current situation that has evolved, the chances of getting it might go a little bit better.

So anyway, so that's -- let's not speculate that. As of now, our strategy is to definitely make sure that all our calculations are on basis of it till 2029. Beyond that, when we make a project of CapEx and all, so we take it -- we take this part as a given. And beyond that, we don't take it in our calculations. So that is the first part of your question that you had.

In terms of strength of Bangladesh, as I said, like Bangladesh has got a population which is hungry, which needs to be fed. That's a country where the food cost or the food expenses will always be higher compared to a country like India or other places where we have a lot of farming and a lot of things, variety that we can do. So in general, what happens economy-wise, like that segment of population, which would need that work would always be there.

And that's something like what we have seen when we compare the workforce in various countries and find that Bangladesh or to a certain extent, Indonesia, definitely the stability and the kind of the output that we get is much, much better. Absenteeism, attrition, loyalty, all these things are definitely score much, much higher compared to the other countries like India or Vietnam or other places. So that's something that is important for the industry. And we are very much cognizant about the fact and our decision making or our analytics, as I said, would always be taking into consideration of all these trends.

Bangladesh as of now is close to about $50 billion. Most probably they will cross that. But as I said, I particularly -- I personally believe that, that particular country, the number of players would fluctuate. The smaller players or the fly-by-night operators or something like now who is -- may not be very serious or do not have a good connection of customers and all might reduce the business or might go out of the business. So the stronger player will continue to become stronger and stronger. So that's something will happen, and that's the kind of trend that I have seen over my last 30 years of in-depth analysis of the industry and my career.

So that is what continues to happen in Bangladesh, and I think we will be closely watching that, and we will be making use because we are in business of making money and doing business ethically. So if this kind of criteria are being met, then why shouldn't we do that?

Compared about India. India is a large country, like I think what will happen to this particular industry ours -- of garment industry. The southern part of India, like where we have like states like Karnataka, Tamil Nadu and all, if you see the factories that we are running there, a huge amount of population of the workforce is -- started coming from the north, from states like Bihar, Odisha, UP. So those are people like migratory labor that we see very often out there. So I personally believe that as the industry should move into their home states, that would have a bigger ramp.

If you see like even the geographic location, geographic area or the population, if I have to compare even Bangladesh with a Bihar or Bangladesh with an UP or Bangladesh with Odisha, that is possible. So definitely, what kind of policies, what kind of things that comes up, how -- government is showing a lot of -- at this point in time, a lot of interest. But fundamentally, if you look at it, the Bangladesh, it's much simpler in terms of the calculation and doing the projection because you pay a workforce, their salary, their overtime and they have a pension funds. Whereas in India, there would be a much number of other things that you have to take care of.

So the complication goes up, but that doesn't mean that we can't do it in India. So yes, there is definitely the DA revisions and the wage revision that is continuing to happen in India, and that's -- we have to see. Like today, if I look at it, India is not very, very high compared to Bangladesh. But in terms of productivity, Bangladesh has proven to be much better, the efficiency, the productivity, the middle management, the whole ecosystem is much, much stronger because they're so much bigger.

So these are some of the factors that we always look into as we planned. The other question that you had in terms of capacity, normally to set up a factory, if we have a building or if I have a shed, to operate a factory, it should take not more than 5 to 6 months, to build a shed maybe about a year, maybe 14 months. So that's the kind of timeline that is needed to start from scratch.

And what we do have is definitely we continue -- as a company, we continue to have capacity built up for much more compared to what my requirement is. So if you see like our utilization at this point of time is varying between 68% to 75% in that region. And countries like Bangladesh and Vietnam, we can also utilize the outsourcing model on basically like a partnership factory where we take dedicated lines from other factories, and we run it. So that's something also is possible in these 2 countries. In India and all that ecosystem still doesn't exist.

So yes, over the years, most probably our endeavor would be to develop this kind of ecosystem in India as well. Until that time, definitely, we will see Bangladesh and Vietnam giving a much better performance compared to India.

U
Unknown Analyst

So you're saying that basically...

Operator

Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up question.

U
Unknown Analyst

It's not follow-up just reconfirming. So what I'm saying is basically, you're saying till 2029, whatever -- the economics of Bangladesh are very strong. I mean, for Indian companies to compete with Bangladesh would be really tough. There is an ecosystem enhancement that is needed here. And for the new capacity, whatever you want to build, it would be easier for you to be in Vietnam, if suppose anything happens in Bangladesh, rather than in India because of long process or whatever it is. Is my understanding correct?

P
Pallab Banerjee
executive

No, no. A little bit of correction out there. India also like we are -- as Sanjay just mentioned, like we are already going ahead with all our plans, and we just started -- the plan started last year. So Bihar, Odisha and Madhya Pradesh. We are going ahead and building up our capacities out there. So part of it would be ready and operational this year and part with the operation next year.

So definitely, that will be a sizable capacity that we are building up because these are the places where we also intend to do a much larger capacity, we will be building it up and which is happening. Bihar, I think, is maybe a quarter or 2 away. Odisha, we have started in a small way already, and that's growing. And Madhya Pradesh, we have to build, as of now, the construction is going to start.

So India is definitely on the cards. I mean, what I meant was Bangladesh has the advantage of tariffs at this point of time, which India doesn't have. And second, the higher productivity and efficiency because of the whole ecosystem in Bangladesh that exists, which is existing in Vietnam as well. So yes, so I think every place has got their own strength, and we will continue to utilize each location as per their strengths for our strategy of building up a much bigger business and better bottom line.

U
Unknown Analyst

How many million per pieces you are adding the capacity? That's my last question.

P
Pallab Banerjee
executive

So we can give that -- so we have already -- in India, like this -- all these 3 locations, once fully operational, would give us almost about 5,000 to 6,000 machines per day. So that's quite a significant amount of capacity which we built up.

U
Unknown Analyst

So any ballpark number? Because actually it is 46 million from -- you have the figures, I mean capacity-wise from India. So how would it be increased? I mean 26 million, I think, yearly capacity...

P
Pallab Banerjee
executive

So we have already given that.

S
Sanjay Gandhi
executive

Already -- if you look at our plans to go to 130 million, 140 million, and let's talk about 10,000 machine additions. I think there will be machine added in a calibrated manner. There will be phase 1 and phase 2, which will get added. Overall, we are looking at almost 3,000 machines getting added in India in the plan which we have discussed. I think a number of this is the calculation we can share with you later in case you would like to know more details. You can please...

P
Pallab Banerjee
executive

And if it [ comes from ] 2 shifts, it's going to do about 5,000 machines...

Operator

The next question is from the line of Varun Gajaria from Boring AMC.

V
Varun Gajaria
analyst

Congratulation on good set of numbers. Am I audible?

Operator

Yes, sir. You're audible.

V
Varun Gajaria
analyst

Okay. Sir, how is your order book piling up right now? How is that?

P
Pallab Banerjee
executive

Order book is as per our plan. I think we are on track, thoroughly on track.

V
Varun Gajaria
analyst

Okay. So what would be your guidance for '25 or targeted...

P
Pallab Banerjee
executive

So we have already stated that, we are looking for a growth, at least a minimum of 12% to 14% year-on-year and with a better bottom line, double digit.

V
Varun Gajaria
analyst

Okay. And what is -- and how is the cotton yarn supply in Bangladesh at this point because we have heard some commentary from some of the yarn players that some of their orders were stuck in the last month. So how is it panning out there?

P
Pallab Banerjee
executive

I didn't get that part. Like you were saying that some of the other places, you have heard that -- what was it that you had heard?

V
Varun Gajaria
analyst

That their orders -- that the orders that they are exporting to yarn -- cotton yarn to Bangladesh, they were stuck because of the crisis. So how is it panning out there?

P
Pallab Banerjee
executive

No, we haven't faced any kind of problem in terms of logistics, of moving inward raw material or exporting. After 5th, everything has been very normal -- after 6th, sorry.

V
Varun Gajaria
analyst

So the impact in this quarter will be relatively minimal, I'm assuming.

P
Pallab Banerjee
executive

There will be some impact, as you said, because of higher costs and loss of that -- a couple of days of productivity. But yes, not a very big impact we're looking at.

V
Varun Gajaria
analyst

Okay. And how is the India exports market panning out? The inventory issues and everything else is behind us, I'm assuming.

P
Pallab Banerjee
executive

So India, the last 2 months have been quite good. If you look at the total exports of India has been double-digit growth. I think overall for the year is still about, I think, 1% or 2% growth compared to last year. I think India should grow. I personally believe that India should grow by at least about single-digit high number this year.

V
Varun Gajaria
analyst

Okay. And how long do you think it will take for India to recover towards earlier export numbers just as a market overall?

P
Pallab Banerjee
executive

No, I didn't get the question. How long India to?

V
Varun Gajaria
analyst

How long do you think India -- will it take for India to recover to its earlier numbers, we have been doing pretty good volumes from India also overall.

P
Pallab Banerjee
executive

So you're -- this is a general question. It's not about Pearl, are you asking specifically about Pearl or about...

V
Varun Gajaria
analyst

Just on industry -- just on industry basis.

P
Pallab Banerjee
executive

Industry. So industry like you know, India has been exporting and the highest export that India has done is about, I think, $16-point-some billion. So this year looks good to become a better number. I don't know how much it would be finally. But yes, it should be in the higher. But yes, like you can see the concern that if you're talking about what's happening in other countries like China or Bangladesh, who would be -- a lot of forecast is there, they should still lose some market share.

I believe China is definitely losing market share. Bangladesh may lose a couple of percent this year or may gain. I don't know like how the rest of the year would pan out. But yes, India like to grow by about 10%, 15% would need a sizable [ amount of ] capacity. So we are doing our bit. We definitely are increasing quite a lot in terms of our capacity over the next 2 years that you will see. I'm sure like the other players are also planning something to take this advantage of pro-India at this point of time.

V
Varun Gajaria
analyst

Okay. And how is the capacity...

Operator

Sorry to interrupt you, sir. May I request you to rejoin the queue for your follow-up question.

V
Varun Gajaria
analyst

Yes, sure. This is just a follow-up question if I can just -- it'll be the last question.

Operator

Okay, sir.

V
Varun Gajaria
analyst

Yes. Just wanted to get an update on the facility augmentation, how is that panning out? How is the capacity addition panning out?

S
Sanjay Gandhi
executive

Would you mind repeating the question, you're saying capacity augmentation. Do you have...

V
Varun Gajaria
analyst

Yes, yes. How is the capacity addition panning out, the whole plan?

S
Sanjay Gandhi
executive

The capacity addition, see one is augmentation. When you say augmentation is the existing facility in Chennai, which we already completed. It is under stabilization phase. And then comes the capacity addition, which is completely setting up a new plant, which is also we mentioned, is underway in India and in a couple of locations, states which we just mentioned. Third one, the capital expenditure commitment will start happening in the next 2, 3 months' time period.

And also for -- in a country like Bangladesh, after the evaluation, we will be looking to commit towards the capacity additions. The real capacity addition, commercialization will take time. But yes, commitment towards that I think should happen in the next 2, 3 months' time period.

Operator

The next question is from the line of Pulkit Singhal from Dalmus Capital Management.

P
Pulkit Singhal
analyst

Congrats on a good set of numbers. First question is on the capacity utilization. I mean, if you're growing at 35% Y-o-Y on volume front and commentary is stronger for the second half, are you already reaching, therefore, peak utilization in some of the geographies or expected to reach in 2 or 3 quarters?

P
Pallab Banerjee
executive

Yes, Sanjay, go ahead.

S
Sanjay Gandhi
executive

So if you extrapolate the number which is coming up right now, I think we will be looking at somewhere around 80%, 82% of the capacity on what we had in 83.9 million pieces as on 31st March '24. Just simple, continuing with the same trend if you take it that way, so there is a good headroom available still for us to really grow within that number also.

P
Pulkit Singhal
analyst

But that number includes Indonesia and Vietnam where utilizations are lower. So if you see Bangladesh, you're already at 80% utilization last year, India is at 65%. If you want to grow 35%, that will be...

S
Sanjay Gandhi
executive

Yes, yes. So our blended utilization last year was 68%, 69%. With this growth, we see that overall, we should be looking at blended utilization in excess of 80%. That's where we seem to be really heading with the revenue.

P
Pallab Banerjee
executive

From the benchmark that we had from last year.

S
Sanjay Gandhi
executive

Yes, from the last year.

P
Pallab Banerjee
executive

But at the same time, like as I just mentioned, that we are enhancing capacities at this point of time. So I think we are solidly in our plan. So we don't have any concern as of now.

P
Pulkit Singhal
analyst

Understood. And secondly, on the whole Bangladesh review front. I mean last 15 years, Bangladesh has gone quite well in a certain regime or environment and with certain stability at the helm and certain policies in place. Now with the new uncertainty coming up, are customers -- because while for you, it is 50% of your revenue. But I'm presuming there are certain customers who are heavily dependent on Bangladesh for their requirement. When you're talking to some of these, are they, I mean, talking about having to diversify away from Bangladesh over the next 3 to 4 years because I would presume that stability of sourcing would matter more than costing.

P
Pallab Banerjee
executive

So fortunately for us, like we don't have any customers who are very heavily exposed to Bangladesh. So there were certain Australian customers who have been working with us to diversify. And very successfully, we have done that over the last year with them. Apart from that, the U.S. customers that we have, they had quite balanced exposure in -- across all the geographies.

So that's something that I'm very closely involved with my customers' strategy teams as well. So I don't see any immediate threat. Yes, there are a few customers, and if you talk in general, who have been very heavily exposed in Bangladesh, and they would be moving out. So that will give me more opportunity in the other countries. So I'm seeing it as a win-win from both sides for us.

P
Pulkit Singhal
analyst

Okay. Just very last quick question on finance cost. It's roughly around -- it's been hovering around INR 20 crores, INR 23 crores per quarter. I'm just trying to understand, this is roughly INR 90 crores a year. In your plan, when you think of it 3 years out, does this finance cost come down? Does it grow because your revenues are going? Or does it remain flattish? What is the direction for this?

S
Sanjay Gandhi
executive

The finance cost as a percentage of sales is, I think, roughly around 2.2%. I think as we go and incur CapEx also, there will be some that will be taken. So -- but we will follow the very prudent norm of INR 30 crores to INR 35 crores equity and INR 60 crores, INR 65 crores debt.

And then plus the rest of the thing, the factoring per share will continue. That means if the receivables and the top line keep on increasing, the receivable financing will be expanding. So in absolute amount, those number will keep on increasing. However, with the interest rate getting softened, let's say, 2, 3, 4 quarters down the line, that will have a positive impact on the finance costs coming down.

Plus, we have also done some repayment of long-term loan. We have sold in India non-core asset, which -- because of which we have an exceptional gain of INR 5 crores reflected in our profit and loss account. The realization from that has been largely utilized towards the repayment of a long-term loan, which were at a high cost of 9.5% to 9.75% in India. Approximately INR 15 crores that long-term repayment has been paid, which will help us in terms of reduction in the cost.

So this opportunity of optimizing the interest cost, we are very clearly looking at it. And as and when this opportunity exists, we will definitely work on it in further reduction. But overall, in terms of our strategy of doing factoring of our receivable, having a nonrecourse financing, that will continue. And we will definitely look at optimization of the working capital requirements given the cash, which will be generated from the operations to really see how best we can optimize our finance cost.

And wherever there is non-core asset realization as we -- happened this year, we will definitely use the proceeds for this dischargement of the long-term loan, so that our interest cost and the leverage also get balanced in the process.

Operator

The next question is from the line of Palash Kawale from Nuvama Wealth Management.

P
Palash Kawale
analyst

Sir, my question is again on Bangladesh. So if I have to imagine a worst-case scenario where situation doesn't normalize and our clients are pushing us, so how confident are you then to reach to your vision 2028, so -- yes.

P
Pallab Banerjee
executive

So if you take out $50 billion of exports from Bangladesh, so then that $50 billion has to go to some other countries, if I have to hypothetically take your situation, so yes, then I think there could be a good opportunity for all the other manufacturing regions that we are -- so yes, it's a hypothetical question that you're talking about. So I think we are well poised. So we are present at this point of time in multiple geographies and not heavily dependent on only 1 geography as a company. So I think that gives us an advantage.

And yes, like I think, I personally -- as I said like Bangladesh, I don't see will go away so quickly at this point of time. Maybe like even in $50 million (sic) [ $50 billion ] like even like you talk about 10%, it's $5 billion. So that -- the $5 billion, if comes to India then I'm ready, we are ready to go for it. Similarly, like in Vietnam or Indonesia, I think there's still an opportunity. So we can definitely take it up.

Myanmar and other places I'm not very confident of, Central America would always be as very small. Yes, there would be -- some movement might happen in the North African countries, like Morocco, Tunisia and all, but not a great big change that will happen in the industry.

Operator

The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking.

B
Bhavya Gandhi
analyst

So I just wanted to understand that how long does it take to add a new customer? And what is the time frame? I mean, is there any entry barrier where other players also can add new customers or -- if you can throw some light on that?

P
Pallab Banerjee
executive

See, internationally, these kind of customers, they do have their own supply chain. There are 2 kind of customers. Let's talk first of all, of an established organization like a big -- like Gap or Walmart or Target. So these are big businesses that you have. So they have a very well-established supply chain for themselves. So generally, the entry barrier into these kind of customers is very high.

So they would only change either if they have a strategic change, like, for example, like we have been discussing what happens to Bangladesh and if you have to move something out of Bangladesh. So any of the customer has got an overexposure in Bangladesh and they have to move to India. So then that could give us an opportunity for a new entry to come out.

Otherwise, generally, if they are getting into a new product or something like where they have made a strategy into their product, and they are looking for a particular kind of product to enhance that line. So then they would go for the kind of design and product, which -- that is the reason for which a company like Pearl, like we have our design offices in the respective countries so that we closely continue to work with these customers.

Generally, apart from that, if a new player comes in today, if somebody starts an export house or a company, so then the barrier is quite high because definitely for a new player to entry at this point of time would cause a lot of problem. And to start from any customer is not easy. And of course, there is an issue of getting into the social compliance, technical compliance. So the whole process at times to take a new factory -- like if I put a new factory, as I said, it might take about 1 year to construct and another 4, 5 months to make it run properly. But to get through a compliance process also, this approval process of these international customers might take anywhere between 2 to 6 months.

So these are some of the barriers that we plan for as we go for our growth or our strategy planning, business planning. Am I able to answer your question?

B
Bhavya Gandhi
analyst

No. Actually, my question was on a different tangent. So what went right in '19, '20 that we were able to add so many customers simultaneously? So let me ask you in that way. I mean, because the same entry barrier is for us as well, right?

P
Pallab Banerjee
executive

Yes. So you see like we came into the market by saying that we are a global player. Pearl, I -- when I came into Pearl, like definitely the other regions like Indonesia, Bangladesh, India, Vietnam, so they were operating, they had some customer base but when we did the evaluation of all the customer base, we found some of them may not be financially strong, may not exist maybe 3 or 4 -- like some kind of downturn, if it comes in the Western market, so they might wiped off or get into a financial situation.

So that's the time we overhauled our customer strategy at that point of time. It's not that we got a lot of new customers just like that. It's like basically, we wanted to target certain customers. We started approaching them. We give them the strategic solutions that they were looking for into their diversification strategy. And of course, that's the time China Plus One was playing an important role.

So those are 2, 3 things which really helped us to develop into this new strategy. And that's the reason for which if you see at Pearl, we are in 5 different locations, providing our global solutions -- global supply solution to our customer. Second, we are providing them in-country design services. That means like my design teams are working with their own design team at real time in their offices or in their locations.

Similarly, we are a supplier like which is not giving 1 or 2 kind of products but we are doing 7 different kind of products. So if someone starts with 1, for them the cost of sourcing or cost of largening and working with us is much more efficient because we are providing this multi-country, multiproduct kind of things. So that's the kind of strategy that we built it up at that point of time and we went ahead with all these customers and added some of them to our thing.

Maybe like in past, Pearl was known to them. They have not worked together, but we could bring them up successfully and then continue to grow with them very successfully in these last 4, 5 years.

B
Bhavya Gandhi
analyst

So what was the timeline to bring them on board? That is what I'm trying to understand.

P
Pallab Banerjee
executive

So once a customer is convinced, we do definitely tell the customer, "Okay, these are the advantages, if you work with us." So then if they have a need, then things can move very quickly in 2 to 3 months' time as well. But if they don't have a need and then the right opportunity has to be waited -- to wait for at the both the sides. So that might take even a year sometimes and sometimes more than a year.

B
Bhavya Gandhi
analyst

So have we added any new customers in the last 2, 3 years? I'm not talking about 4, 5 years, '19, '20, I'm just talking about last 2, 3 years.

P
Pallab Banerjee
executive

Yes. We have added, and some of them are growing significantly with us.

B
Bhavya Gandhi
analyst

Okay. Fair enough. And sir, last thing, if I can squeeze in. Are we seeing any early signs of consolidation happening in Bangladesh? I'm talking about ground level consolidation. I understand philosophically, it may happen that we will see consolidation in years to come. But as of now on ground level, are we seeing any consolidation, early signs of consolidation happening on the vendor front?

P
Pallab Banerjee
executive

Not after the change of government, but it has been going on for maybe a year or so. But yes, it might accelerate now.

B
Bhavya Gandhi
analyst

So in the customers that we cater to, is there any consolidation taken place as of now?

P
Pallab Banerjee
executive

Yes. So I can give you one example. Yes, one of our customers did acquire more brands and become from a financially weak company to a much stronger company at this point of time. So we are definitely looking forward to grow with them very well.

Operator

Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.

S
Sanjay Gandhi
executive

Thank you very much. In case of any further queries, kindly reach out to us or Strategic Growth Advisors, our Investor Relations advisers. Thank you very much.

P
Pallab Banerjee
executive

Thank you.

Operator

On behalf of Pearl Global Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

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