Financial Performance Highlights

  • Revenue: Increased by 57% year-over-year to ₹144.5 crores in Q1 FY27
  • PBT (Profit Before Tax): Increased by 225% to ₹4 crores
  • EBITDA: Grew by 330% to ₹5.5 crores
  • Operating Cash Flow: Before working capital changes was ₹4.35 crores
  • Cash Balance: Closing quarter cash stood at approximately ₹58 crores

Segment Performance

Sewing Machine Business:

  • Recorded robust growth of 74% in Q1
  • Trade channel grew more than 25%
  • ZigZag Machines grew more than 20%
  • E-commerce business delivered more than 55% growth
  • Revenue split: ZigZag Machines (~20%), Black Sewing Machines (~50%), Industrial Sewing Machines and accessories (~30%)
  • Gross Margin Value for Industrial Machines increased by 15% (absolute), with percentage terms up approximately 5%

Appliances Business:

  • Revenue growth of around 15% during Q1
  • Segment result lower by approximately ₹74 lakhs compared to Q1 last year
  • Fans business grew by around 61%
  • Impacted by EPR (Extended Producer Responsibility) cost of approximately ₹1.2 crores for the quarter
  • Also impacted by investment in strengthening organization for market expansion and fan business

Operational Challenges

  • Steep increase in commodity prices resulted in demand disruption
  • Labor shortage and price volatility posed sourcing challenges
  • Rising commodity costs led to price increases which dampened purchase demand in appliances

Strategic Initiatives and Updates

  • Introduced new range of Made in India ZigZag Machines manufactured in Jammu factory
  • Strengthening presence in fast-growing E-commerce channel
  • Expansion of fan business with comprehensive range receiving encouraging trade response
  • Reducing dependence on high-cost channels such as modern trade
  • Listing several additional products to enhance brand visibility in appliances segment

Manufacturing and Capacity

  • New factory in Bhiwadi, Rajasthan progressing well
  • Plan to commence pilot production from second half of the year
  • Factory will primarily focus on manufacturing ZigZag machines
  • Will also be capable of assembling and manufacturing Industrial Sewing Machines and select consumer appliances
  • Initial production capacity target: 10,000+ units per month

Kendriya Bhandar Order Update

  • Management aims to complete the entire order by end of the quarter
  • Order value: ₹202 crores (previously disclosed)
  • Contract includes built-in automatic volume expansion scale-up clause of 25% if government gets high beneficiary enrollment
  • Government may add 25% volume into upcoming tenders (potential ₹300 crores tender)
  • Higher-end machines (ZigZag or Industrial) being considered in other government initiatives (discussion stage)

Working Capital and Investments

  • Strategic inventory buildup of ₹32 crores deployment:
  • ZigZag machines inventory
  • PMY [Kendriya Bhandar] order completion inventory
  • Fans business inventory
  • Advances given:
  • ₹14.3 crores advance to Singer Sourcing LLC (30% advance for import machines)
  • ₹4 crores advance for import of Industrial Sewing Machines

Future Outlook

  • Aiming for EBIT breakeven in appliances business next year (FY28)
  • Cautious approach to large industrial projects, focusing on trade channel (50% of industrial sewing machine market)
  • Priority remains on Indian market expansion over exports
  • Open to inorganic growth opportunities but cautious about cash deployment
  • Dividend policy decision rests with Board

Management Participants

  • Mr. Rakesh Khanna, Vice-Chairman and Managing Director
  • Mr. Anuj Kumar Vasdev, Chief Financial Officer
  • Moderator: Mohit from Emkay Global Financial Services Limited