Thank you very much. Good morning, everyone, and I am delighted to welcome you all to our earnings call for Q3 and 9 months FY26.

I hope you all had an opportunity to review our press release and the investor presentation, which are available under the investor section of our website, and the same are uploaded on BSE and NSE websites. To discuss our results, we have with us our Managing Director, Mr.

Pallab Banerjee, and our Group CFO, Mr. Sanjay Gandhi.

They will take you through our results and business performance, after which we will proceed for the question-and-answer session. Before we start, I just want to highlight that this call may include forward-looking statements based on the company's current views and expectations.

Actual results could be different, as future performance is uncertain and involve risks that are hard to predict. I will now hand over the call to our MD, Mr.

Pallab Banerjee. Over to you, Pallab ji.

Thank you, Shishir. Good morning, everyone.

I welcome you all to our Q3 and the 9 month of financial year 26 earnings call. We continue to deliver growth in top line and bottom line despite the challenging and uncertain macro environment, driven by our focused execution and a multi-location presence.

Our 9 month revenue stands at ₹3,711 crore. It grew by 13.2% year-on-year, and the EBITDA stands at ₹333 crore, which grew by 14% year-on-year.

It stood at 9%, and if we exclude the tariff-related cost and the incremental ramp-up cost, this EBITDA margin is standing at [10.1%?] .

Here is an update on the key positive developments in our industry. For an apparel manufacturer like us, the major markets with size and scale are European Union, USA, Japan, UK, and Australia.

All our manufacturing location countries are working to readjust with the new world tariffs and trade agreements that's happening across the world. A major and long-awaited development was the India-US bilateral trade deal, which reduces the tariff from 50% to 18%, significantly enhancing the India's textile export competitiveness.

Above development is following the recently signed India-European Union Free Trade Agreement and the India-UK FTA, which was signed in July 2025. Now, if you see, India has concluded the BTAs and FTAs negotiations with all major markets that Pearl Global is selling its products to.

These are the European Union, US, Japan, UK, and Australia, with a total market for these countries approximately about $250 billion that we have seen historically. Bangladesh and Vietnam already has the advantage of tariff-free access into European Union, United Kingdom, Canada, Australia.

Guatemala has a zero-tariff access to the USA and also is a nearshore for our US. Indonesia has the duty-free access to Australia and Japan.

As you can see, with the latest world that we are living in, Pearl Global is very strongly positioned to grow and take advantage as we maneuver through the ever-changing geopolitics. Now, let's speak about the outlook for each geography, starting with India.

The 9 month profitability has improved despite the discounts extended to the US clients for the tariff, and we maintained our strong relationships, this particular move had a temporary impact on our margins. This improvement was driven by the cost restructuring.

During the 9 month of our India operations were mainly impacted with this US tariff deal signed, we could leverage Sorry.

Okay. Is this better?

Is it clear now?

See, the India business is operating at an annualized revenue run rate of about ₹1,100 crore, and we have built up the capability to generate revenues which can exceed even ₹1,500 to ₹1,600 crores. The current contribution of India revenue is our group revenues almost 22% to 24%.

With the US trade deal and the FTAs with UK and EU and the existing trade deals of Japan and Australia, we expect higher volumes, increased sourcing from India, and growth in our India operations from 2027 financial year onwards. Moving on to Bangladesh, Bangladesh operation has well consolidated the last year's 30% plus growth, and order book is showing now further growth.

Our capacity expansion plan remains on track for completion by second quarter of financial year 27. This will lift the capacity by about another 6 million pieces in Bangladesh, positioning us to scale further and deliver sustained value.

Since the regime change, our operations have been very smooth in Dhaka. Bangladesh as a country is clocking a year-on-year growth in garment exports, and we expect it to grow on its strength, and we have a mature operation which is running.

Two major customers just got added in our portfolio in Dhaka, and we expect to continue our growth trajectory. In Indonesia, as I have been updating all of you, we are undergoing a ramp-up in our business volume after the new factory got commissioned.

We are confident of this growth in top line and bottom line from our Indonesia operation. Vietnam as a country experienced a slight degrowth in its garment exports in terms of dollar value.

Our operations have only become stronger. Some of the most well-placed brands and the fastest-growing specialty brands of North America have consolidated their business with us.

Our Hanoi operations have demonstrated strong momentum in recent quarters, with factories operating at optimum utilization. We are also very comfortable and confident, and we are well prepared for the future growth.

Guatemala, we continue to remain focused to improve the efficiencies and reducing our losses in this new operation. USA has declared this week that it will waive off even the 10% baseline tariff that Trump administration had implemented on Guatemala in 2025.

That means it will again become a zero tariff to USA. With a positive outlook, we expect further progress and also better results in the coming financial year.

With that, I will now hand over to Sanjay Gandhi, our Group CFO, to share the financial highlights. Sanjay, over to you.

Thank you, Pallab. Welcome to our quarter three and 9 months financial year 26 earning call.

I will now take you through our financial and operating performance. 9 month financial year 26 consolidated performance: In 9 month FY26, our consolidated revenue rose to ₹3,100 ₹3,711 crore, reflecting a growth of 13.2% year-on-year.

This strong performance were driven by high value-added products sales growth in Vietnam and Indonesia. Adjusted EBITDA, excluding ESOP expenses, stood at ₹333 crore, up by 14% in 9 month FY26.

Adjusted EBITDA margins stood at 9%, excluding tariff impact of ₹31 crore and incremental ramping up cost of new operation of ₹11 crore. Adjusted EBITDA margin adjusting for these adjustments stands at 10.1% for 9 month FY26.

PAT in 9 months FY26 grew to ₹189 crore, a growth of 14% on a year-on-year basis. Quarter three FY26 consolidated performance: For quarter three FY26, total revenue stood at ₹1,170 crore, an increase of 14.4% year-on-year, and this is the highest ever revenue registered in the last 5 years in quarter three by Pearl Group.

Adjusted EBITDA, excluding ESOP expense, at ₹97 crore, up by 4.4% year-on-year with the margin at 8.3%. Adjusted EBITDA margin, excluding tariff costs and incremental ramping up cost of new facility, stand at 9%.

PAT rose to ₹52 crore, marking 6.8% year-on-year increase. Now talking about standalone financial performance.

9 month FY26 standalone performance: In 9 month FY26, total revenue stood at ₹777 crore. Adjusted EBITDA stand at ₹43 crore, grew by 64% year-on-year with margin at 5.5%, up by 220 bps year-on-year, mainly due to cost restructuring.

Adjusted EBITDA margin, excluding tariff cost of ₹14 crore, stand at 7.3%. PAT stand at ₹55 crore, comparable to ₹32 crore in 9 months FY25, reflecting a robust growth of 72.6% year-on-year.

Quarter three FY26 standalone performance: For quarter three FY26, total revenue stood at ₹246 crore, a growth of 4.6% year-on-year. Adjusted EBITDA stand at ₹12.6 crore, EBITDA margin at 5.1%, improved by 140 bps year-on-year.

Excluding tariff costs of ₹5 crore, EBITDA margin stand at 7.2%. PAT stand at ₹14 crore.

Update on capex: Capacity expansion in Bangladesh: Construction of apparel manufacturing unit is targeted for completion by quarter two FY27. Out of ₹110 crore allocated, ₹66 crore has already been committed.

Capacity expansion in India: Capacity expansion in Bihar is completed, and commercialization is in progress. The entire capex which was allocated has been already committed, incurred.

Sustainable laundry capacity expansion: Construction of the laundry facility is targeted for completion by quarter two FY27. Out of ₹90 crore allocated, ₹51 crore has been committed.

Solar power installation is completed for all plants in India, and all five plants in India, and power generation has started. This will help us in achieving our goal of sustainability.

Other capex for replacement and efficiency improvement: These are capex which are incurred on ongoing basis. Out of total ₹25 crore allocated or planned so far, ₹14 crore has already been committed.

Other highlights: We are pleased to announce that our founder and Chairman, Dr. Deepak Seth Dr.

Deepak Kumar Seth was honored with the Global Leadership Award for building the world's largest apparel supply chain company from India for FY23-24 and FY24-25, presented by Mr. C.

P. Radhakrishnan, Honorable Vice President of India, at the AEPC Excellence Honors ceremony in New Delhi.

We are happy to share that the company has achieved a notable improvement in its credit profile, with the long-term credit rating upgraded from ICRA BBB stable in 2021 to ICRA A+ stable in 2026. Concurrently, the short-term rating has advanced to ICRA A1+, underscoring our robust liquidity and operational resilience despite the challenging economic environment.

In summary, our 9 months FY26 results reaffirm the strength of Pearl Global diversified business model, which has enabled us to sustain growth even in an uncertain environment. With this, I now hand over to the moderator to open the floor for questions and answers.

Thanks for the opportunity. Good morning, sir.

I hope I'm audible. Sir, on the ramp-up cost of ₹9 crore for Q3, is that pertains to Bihar facility or Guatemala facility?

Can you give us some sense on this, and is it expected to continue in the coming quarters as well?

Thank you, Kishore, for this question. This is an incremental ramping up cost.

Largely right now it is for Bihar, but some part for Guatemala operation is also there. We expect this cost to go down substantially from next financial year onward, and we will see a reduction in this cost in quarter four, but it will come down substantially from financial year 27 onwards.

Can you give us some sense on the capacity addition from these facilities as well, sir?

Yeah. Pallab, would you like to add on this piece?

Yeah. Bihar, we have planned for 900 machines.

As of now, 500 is already installed, and we are hiring all the people and most of the people is already getting trained at this point of time, and we have started the bulk production. Over the next few months, we should be able to hit the higher number in terms of hiring more people and getting it fully operational.

Got it, sir. Sir, my second question is on the US demand sentiment.

Now it's actually 20% average tariff across the major exporting countries for the apparels. What proportion do you think has been passed on to the end consumers, and is there any variation that you're seeing in the high-end fashion apparels versus general clothings?

Also, how is the inventory shaping up with your customers? Hello?

Hello.

Pallab, you there?

Oh, sorry. I was on mute.

The first part of the question that you asked is about the price ticket increase for the end consumers due to the tariff. Now, what we are seeing is that there is an increase in the US market in terms of price ticket, but it has been done surgically.

It is not done across all product across all retailers. Wherever the retailers are seeing that, okay, they can get that price, they have started increasing that price.

For the rest, for example, some core products and all where they feel that they want to see how the overall competition is going to increase the price or not, wait and watch game is still going on. What we see is that there are certain products where the prices have started inching up.

The second part of the question was about the inventory. If these retailers and brands are increasing the price ticket, accordingly what we are seeing is a slight decrease in the buying numbers, so that their overall buying budget is still being maintained.

I think they are assuming that if the consumers are spending a little bit more money, they might buy a slightly lesser number of pieces. Now, what percentage and how this will play out, that is yet to be seen.

These are the early signs that we are seeing in the behavior of our central customers.

Got, sir. Just a follow-up on this.

For an economy with 2%, 3% of inflation, if brands pass through 7%, 8% of the cost to the customers, will it impact the demand in the coming quarters? What do you think on that aspect?

As I said, 20% full pass on we are not seeing from any retailer as of yet. They are doing it surgically on certain pieces, but not the full 20%.

There is always a pressure on absorbing some part of the cost by improving their efficiencies at the retailer's end. As you have seen, they had asked for the suppliers also to share part of it earlier.

Now I think it has become in a norm. Slowly we will see some increase.

Mind you, if I talk about the cost of goods, the 20% increase should result anywhere between 30% of it or up to 50% of it depending on what retailer that we are talking about. Yes, I don't know, percentage-wise you can calculate if they have to pass on this 20%, 30%, how much increase they have to do if they have to completely pass it on.

Because we have not seen that entire effect as of now to play in the market, it's difficult to say. Let's wait and continue to observe how this plays up.

Yes, most of the agencies or the surveys are saying that the consumer sentiment has been low or decreasing. The numbers had not shown so far, but yes, everybody is cautious at this point of time.

Got it, sir. Got it.

Understood. Sir, one more question if I can squeeze in.

Far, actually, in the last few years, the growth has been driven by the customer addition in both existing as well as new geographies. Now we are adding almost 10 million pieces in Bangladesh and India together coming up in the next financial year.

How are we placed in terms of new customer additions or a wallet share increase with the existing customer for these incremental facilities that is coming up? How are you placed on that aspect, sir?

I think that's the confidence that we have been sharing with you repeatedly. See, we are a growing organization, and the way that we have placed ourselves by having five different country of manufacturing and at the same time five major markets that we are catering to.

4 years back, we were almost completely dependent on US market. Today, we have been able to share all the five major markets, and plus we're looking at other markets also.

That journey we continue to do. We always are look out for the major growing retailers or the growing brands who are gaining their market share.

As I just mentioned that, if we talk about these five economies that is European Union, USA, Japan, Australia, and UK, that itself gives us apparel market of close to about $240 to $250 billion. I think the pie is quite big.

Yes, we know that we have to be aggressive. We have to show our strength and gain market share from our competition.

I think that's the journey that we have undertaken very consciously. Far, as you see that whatever promise that we have made to you in terms of our growth percentage, we are in that range.

Every moment we are seeing which are the other big retailers who are gaining market shares and if we can start working with them. That's still continuing.

As I just mentioned in my earlier speech that we have added recently two very marquee retailer in our mix. We'll continue to add that and look for that opportunity.

Got it, sir. Got it.

I will join the queue, sir. Thank you so much.

Thank you.

Yeah. Thank you for the opportunity.

Hope I'm audible. Sir, just trying to understand that the Bangladesh capacity that will come up by 2Q FY27, when can we expect the full ramp-up for that capacity to take place if you can throw some light on that?

See, Bangladesh what we feel is a much more mature market, and because it's concentrated more in Dhaka and the regions around Dhaka, I think we have seen that to ramp it up is much smoother and much more easier compared to when you start a new factory in countries like India. This construction should be ready in 2027.

We should be able to ramp it up in the year of 2027-28 for Bangladesh manufacturing part. We are also, as we have shared with you, we are making one of the washing project out there.

That, I think, should be ramped up much faster.

Sir, just to understand that the capacities that we'll add next year in '27 to take our production pieces to 112 million approximately, those capacities will take a typical amount of time of how much to ramp up to our optimum utilization levels?

In apparel industry, if you see, once you have the factory and the machines already, then we start hiring people and then training them. As we train, if you are taking fresh workers, then they need a proper training.

If we have experienced workers, then it becomes faster. Then once the factory starts operating, it starts with a low efficiency, and then over a period of 6 months to a year, the efficiency continues to grow.

That's what we have been experiencing. Specifically, for every project to say, okay, this is the exact date by which it will be working optimally is a little difficult.

For example, if I talk about these two projects, one is in Bihar, this is something as a new state and a new location that we have started, it's comparatively slower. A project that we are doing in Dhaka will be comparatively faster.

That's how we are seeing it.

All right, sir. Just to a follow-up on that point only.

Do we expect to see operational losses come in our mature regions as well, or is this just a phenomenon that we are seeing in Bihar because it's a new region?

As Sanjay just mentioned, operational losses is just because we are ramping it up for this quarter. I don't think that's a prolonged part in most of our operations.

Yes, when we did Guatemala, Guatemala was again a new country, it took couple of seasons or I would say maybe more than a year to get a complete handle of it. Dhaka kind of place, which is very mature market, or Vietnam place, which is very mature again production center, there we have seen or experienced much faster return.

All right, sir. Got it.

Just, sir Sanjay, you want to add anything on this? Yeah.

Sure. Thanks, Pallab.

Just to add that, for Bangladesh factory, garment factory and the laundry which will likely to be get construction completion and commercialization by end of quarter two of FY27, we see a significant contribution should come respectively from this factory in a financial year 27-28. I think 5 to 6 month should be the time to ramp it up.

Generally we have seen in the past when we started Prudent 4 year ago in 2021, in the first year itself it was at an EBITDA breakeven, and the next year onward it started contributing significantly to the bottom line and the top line. We believe that the same trend and the pattern should follow for Bangladesh, the new factory which is under construction.

All right, sir. Got it.

Just, sir, on our margins, just trying to understand that

No worries. I'll get back in the queue.

Good morning, sir. Thanks for giving me the opportunity.

Sir, my question is on your earlier comments. You mentioned that the trade deal with US and the FTA signing with EU and UK will increase the opportunity for us, and you are guessing a market of around $250 billion opening for us.

In that context, we should also be ready from the back-end point of view. We should have that production capacity to cater to the demand which will be opening up in this market.

Just want to understand that whatever capacity expansion we are doing, is it good enough, or you need to add some more capacities in some of your existing markets, especially in India? Because if you are adding clients or if you are getting orders from the existing clients, you should have that capacity with you to cater to this client.

From that point of view, do you expect capacity addition over the next 2 years, and if it is, then what would be your capex plan going ahead?

I can start this, and then Sanjay can add the second part of your question. See, we do have a continuous growth plan, which we have been saying that, okay, we have a compounded growth of anywhere between 12% to 15%.

That's the growth that we have factored in in our business, and that kind of capacity addition has been a continuous process for Pearl Global. As I just said that, in India we were expecting this trade deals and the implementation as much faster, we have already built up some capacity.

That's why I said that, even we are doing a business of around ₹1,100 crore at this point of time, we do have capacity ready to do at least about ₹1,600 crore. As the only requirement is to put in the people as and when we start getting the business, and maybe a very minor kind of charges like addition a few machines here and there.

That kind of readiness we have in India. Then this is not the end.

Definitely for the next years, the future years again, we continue to grow. That we will continue to update you what kind of projects and what kind of plans that we have.

For the rest of the other countries Sorry?

Yeah. Just wanted to understand, this 12% to 15% growth what you are talking about, it is considering the trade deals what we have signed with US and EU, is it?

Or you are expecting incremental growth? See,

yeah. Specifically if you're talking about India, yes, if India wants these trade deals are implemented, for example, European Union deal would be implemented in 2027, and the UK FTA is expected to be operational within this financial year, maybe at March or April.

Let's see when it gets start. The US bilateral agreement is, I think, operational now.

We thought that 2026 should have been the year where we would get a jump, but it got delayed because of various reasons, and we all know that in the news that it's coming. This particular year we lost that opportunities, but that readiness we already have for India.

Definitely if you talk of the total impact of it, that will be definitely much higher, and that we continue to grow. We do have two partner factories already ready with us in India, which we are not considering our capacity as of yet.

That's something that we have been working upon. In countries like Bangladesh and Vietnam, which is more mature market, where we can easily work with our partner factories, we have been taking that advantage even before putting our own plants at that rate of growth.

Like this washing plant that is coming up, we have this business already happening with us. Naturally, further growth that comes in, as soon as our washing unit is ready within this next two quarters, we should be able to immediately make it operational and also expect to breakeven quickly.

That kind of planning will continue to do. There are opportunities that comes in.

For example, the regime change in Bangladesh gave us a good opportunity last year. We saw a major jump in terms of volume.

Similarly, whether it's a trade deal or with this other things, if a sudden jump is required, we try to be at best ready for it. Yes, really to plan in a long-term compounded growth that we have planned around 12% to 15% for our top line.

Right, sir. Yeah.

My second question is on the impact of the US tariff. This quarter we have seen it is around ₹31 crores.

Now since the tariff has reduced to 25% because 18% would be somewhere from mid-March when actual trade deal will be signed. This ₹31 crores, I believe that in quarter four there would be some impact which will be there because the retrospective date is 7th Feb.

That impact will be there. From quarter one, should we expect it to be zero, or since it is 18% still, there will be some negotiations with the retailer over there and they will be asking you to take some hit on your margins?

Just an understanding from that

point. This 50% tariff that we had was putting us in a disadvantage.

Similarly, the European Union and the UK FTA, these are some of the disadvantages that India as a country we had. If you compare with the other countries like Bangladesh, Vietnam, Indonesia, neither they had that 25% penalty tariff that India had, they also had some kind of advantage like LDC or a comprehensive treaty with other countries, their goods were not subjected to tariff in European Union and UK.

What India has done now is at least from that perspective, this disadvantages that were there for Indian exports, that is getting removed. Yes, it's happening part by part.

Specifically for now for US, to maintain the business of US customers shipping from India, we had to absorb part of this tariff, especially the penalty tariff. What happens is with immediate effect, this penalty tariff is waived off.

That gives some kind of advantage to our bottom line. Then the rest is more like a competitiveness.

Let's say if the same goods they are going to source from any other country, which is subjected to 20%, and maybe for next couple of weeks it is 25 in India, and then it comes to an 18, so that will give India as an advantage of maybe 1% or 2% better compared to these competing countries. Those are the things that the brands will negotiate from all the vendors across all these countries.

That's a competition game, like who gives the best price and more sustainable price for them, that's where they get the business from. Strategically, when these customers are talking to us, they have invested with us to train us, train our factories to get that product and that consistency in their products and all.

I'm talking about this marquee retailers. Naturally, they would like to continue to use those facilities for their own benefit.

This disadvantage that they had temporarily in US market and UK, EU that they have been having for a long time, that is getting removed from India. We in India will definitely need to grow certain other strengths, like the variety of fabrics which are available in other markets and all.

That I think now better investments and all would continue to come into India to make it much more competitive overall. It's a good time, I think, for India that is coming up.

My question about capex

Yeah. Yes, sorry.

No, no, no. Hold on.

Capex is something that he asked earlier only. Sanjay, would you like to reply to that?

Yeah. Sure.

On the capital expenditure, so as Pallab mentioned, I think your question is specific to India. In India, we do have a capacity ready for 1,600 plus kind of a top line, which is in-house.

There are plus two partnership factories also which Pallab mentioned that are also not ready, but not included in this capacity of 1,600 plus crore turnover. Now on the further capex, we keep evaluating, and we will do the evaluation.

We have got a land parcel allocated to us in Madhya Pradesh, and we have stated earlier also, as we see how the progress on Bihar commercialization takes place, we will be definitely evaluating it and committing the capex well ahead of the time when we have the order in hand and we want to execute it. As far as current run rate is concerned, I think we are good for 25% CAGR.

The opportunity may come very fast, we may have a good growth coming in India in the next 2 year basis the FTA which has been done. We will evaluate the capex at that point in time, and we will do it much ahead of the requirement.

That's where I would just like to mention to you.

Right, sir. Thank you.

I will get back into the queue. Thank you.

Thank you. Thank you.

Hi. Sir, could you just help us, you did talk about, but just on India, it looks like if I look at your financials ex-India, the growth has been quite phenomenal.

It is only India which is dragging you. With the three FTAs which has been signed with EU, UK, EU, and US, how soon can you ramp up India operations and get the India margins back to, let's say, company level margins, right?

Because there's a substantial difference between the global company average versus India even on an adjusted basis. I'm not saying report basis, just on an adjusted basis also.

There's a big drag in India. How soon do you think you can reach this ₹1,600 crores kind of a business?

That's question number one. Definitely we are seeing a very positive movement in our order books.

There are two things. If I have to club the problems of India into two parts, one was that definitely had some disadvantages of this trade agreements and the variety of raw material apart from cotton.

I think if the trade deals are there, what we have seen in budget also is positive comments to diversify the fiber base and other things. I think this is something which should get resolved in India very soon as a country.

For Pearl Global, we also had another drag because all our investments were in the metros. That means Gurgaon, Chennai, and Bangalore.

As we have been mentioning that, we are now trying to expand to the locations which are lower cost as well as can be ramped up because the availability of the workforce would be better. I think we have started both this journeys right from a country level also and at Pearl level also.

I think these 2 years we should be able to see a huge improvement and movement in these two direction. Yes, proof of the pudding would be the order books and all.

We are seeing positive movement already.

Understood. Fair.

That's helpful. The second question, sir, just a clarification.

The other segment in the segmented format, that's Guatemala?

Yes.

Okay. Sequentially, I see the PBT losses increasing, right?

I don't know whether that's the right way or one should just look at YoY because there is seasonality involved. Sequentially, I saw the losses increasing.

Is that more to do with seasonality or something else?

You see, this season you have to see because every season is different in terms of what kind of product. Like winter seasons are always Northern Hemisphere market is much bigger market.

Naturally, the outerwear and jackets goes in the first quarter and the fourth quarter. That way, every quarter becomes important.

I think for us, for apparel trade, you should be looking the corresponding quarter of last year versus this year.

Sanjay, the path to profitability here In the sense, that's also like

Please go ahead, Prateek.

No, no. I'm just saying, sir, there are two big drags in your financials.

One is India, and you just talked about that next 2 years India will be on a healthy growth path. With growth, obviously, operating leverage will play out.

The second was obviously Guatemala, where obviously losses are declining on a year-on-year basis. I just wanted to know the path to profitability for the Guatemala division.

Yeah. We are working very aggressively, and we are chalking out a plan where Guatemala losses should reduce substantially in FY27 onward or we should reach a breakeven in the next financial year itself.

Contributing to the bottom line thereafter will be our strategy. Our complete focus right now is to really stem the losses and to bring it to the breakeven point, which we are confident in the next financial year we should be reaching there.

Just to give a perspective on Guatemala, it will be always a small production center. You see, Guatemala is nearshore.

The raw material availability is a constraint there. There are two ways that you can do business in Guatemala.

You can import the raw material from Asia and manufacture there. That doesn't give the benefit of the tariff advantage for USA.

Only if you source the raw material from Guatemala or that region, Caribbean region, then only you get the tariff advantage. The raw material is scarce out there.

That's the reason for which that market has never been a big one. It's an attractive one because, for example, since the time that we have taken this small facility in Guatemala, almost every marquee customer wants to walk in.

Everybody is having a conversation with us. That brings a lot of attraction for the nearshore.

Yes, how to make a good amount of profit seems to be a puzzle at this point of time. We are also watching it very closely.

Our main goal is to not to lose money there. Then yes, if we can make some money, that will be excellent.

That, as Sanjay mentioned, there's a close watch and control is being put in place at this point of time.

Understood. Just to summarize, essentially what you're saying is that even though the top-line growth will be 12% to 15%, because of the movement of this incremental growth coming from India/Guatemala, you will see margin expansions, right?

It's just not top-line growth, coupled with margin expansion, and I'm saying adjusted on the base of adjusted EBITDA. That's a fair understanding, right?

Normal math.

Yes, yes. That's a fair understanding.

Okay. Last question, sorry.

If you just Bangladesh, right? Again, on a YoY basis, we have seen some dip in profitability, not material, but any comments over there?

You see, you're referring to the segment report, I guess, right?

That's correct, sir.

Yeah. The segment report, as we mentioned that, there is a part of the revenue which is bill-to-ship-to model as per the contractual terms with the customer, which means the invoicing takes place from our entity in Hong Kong right now.

Which means when you look at Bangladesh profit, some profit will be definitely, by virtue of following the contractual terms will be there in other entity as well. When we evaluate Bangladesh profitability, we add it all the things to really see how they are faring compared to the previous year performance.

When we add this, I think they are faring a very stable performance in Bangladesh, and we expect them to continue to improve. That is from the regulation perspective, which we have to comply with those disclosure requirement.

If you see the less inter-segmental revenue and inter-segmental reduction, this is where the necessary transaction between the related party get knocked off, and eventually you arrive at a total profit which is there at a group level. We need to take care of those related party intercompany transactions to really arrive at the final number.

That's where it is. Whereas inter-segmental will show the related party transaction for all the countries.

Yeah.

Just to summarize, sir, there are only two countries which are below company average in terms of margins today, which is India and Guatemala? Or even Indonesia?

No, no. Indonesia also have been much below their capacity utilization, and the margin profile is also not what they were delivering, let's say, 2, 3 year before.

I think there is a ramp-up of capacity as well as the improvement in the gross margin and the EBITDA margin in Indonesia, which we are expecting and hoping that it will deliver in next year and a year after.

What's the broad Indonesia range today? I don't get that.

EBITDA margin will be still in a single digit. We expect it to be a double digit in next year and year after.

Fantastic. Superb.

Thanks a lot, sir. Thank you.

Thank you.

Thank you. The next question is from the line of Sani Vishe from Axis Securities.

Please go ahead.

Thanks for taking my question, and congratulations on a good set of results. My question is kind of a follow-up on whatever discussion has happened earlier.

As you rightly said, there are multiple positives for India's textile industry that are happening, which splits India on a cusp of a golden era going ahead. Pearl Global especially has taken steps which will enable them to benefit from it strongly going ahead.

At the same time, it also means that Bangladesh, which had a competitive advantage against us or many other countries, they're somewhere losing out on it. Plus, there are some challenges that are going on there in the domestic industry on the raw material side, etc.

How does that affect our strategy in Bangladesh? Does that change anything for us, or what are your thoughts on how you would plan to handle the possible negatives or the risk that comes with this?

Yes, slightly different from our perspective, slightly different from what you just mentioned. One thing we have to see first of all is that India had some disadvantage.

India as a country, I think, again, my perspective, was more focused on domestic industry compared to the exports. Whereas countries like Vietnam, Bangladesh have been a more export-oriented economy, and especially if you talk of Bangladesh, they have really focused on the garment exports.

The kind of readiness, kind of infrastructure that they have been able to build up in the last 15 years is way ahead. As a result, if you can see the numbers on these peaks, they're close to almost about $50 billion of garment exports compared to a small country like Bangladesh compared to India, which is such a large resources also, we are doing only about $15, $16 billion.

There is definitely a catch-up things to do. Bangladesh had the advantage of LDC and a lot of investment had come in and a lot of other interests, large manufacturers of garments have been looking at Bangladesh or Vietnam more positively over the last two decades.

As India is coming into all these BTAs and FTAs, plus if we can improve certain other things like labor laws or the ease of doing business and other things, then definitely we should be able to compete with this smaller nations which have been totally dependent on the export economy. The other thing that you said is, I think, their own political problems.

Now these third world countries always have some kind of disturbance. Like if you go back in the Bangladesh history for the last two decades, yes, there was a period of about 10 years where we saw less amount of disturbance because only one party was ruling there.

Whenever we have seen a party change, if you go back to last 30 years, whenever there has been a party change from BNP to Awami League, there has been a disturbance for a few months or even up to a year politically. That has not disturbed the garment exports or the industry of garment.

The second part of your question is also about the import restrictions or certain other things of raw material that is going on. That, I think, you mean that there was a strike that was called and finally called off about the yarn spinners in Bangladesh.

They were trying to say that if you're importing yarns from India and other countries, then the local industry will get wiped out. You see, the bigger revenue and the more important part of Bangladesh economy is the garment exports, and yarn manufacturing is a very small portion of it.

We have been doing business there since 2002. We are not buying any local yarns.

Most of the yarns are imported and then converted there for the price competitiveness. I don't see a big change in that.

Nothing is changing from our side, or nothing is changing from the customer side. Yes, the investment that went in for spinning yarn in Bangladesh is facing a little bit of financial issues, and also that government is addressing or maybe giving them some kind of incentive to be more competitive locally.

That's how we are seeing that part. I hope I answered all of your questions.

Yeah. Just one small part.

On the pricing side, you don't assume that we'll have to take some hit to be competitive against India after the removal of the additional duties?

As of now, Bangladesh is much more competitive than India. Because it's an export-oriented economy, I said, importing goods and raw material and then exporting, they had built up a much more robust and smoother way of functioning in that, which India needs to do a catch-up.

Being a small country and only one location, only one port, there are certain things that they have done much, much better at this point of time. Yes, India we look forward to seeing that improvement as we have done with FTAs, and there would be more investment coming in in all form.

I think we would catch up soon. In terms of Bangladesh, the only risk that I see is many retailers have a very high exposure.

For example, Bangladesh is today known for the denim manufacturing, the denim jeans. If I talk of any big retailers of European Union or UK, they have almost 90% or 100% of their business coming off from one country.

They were stuck because the price difference was very high from Bangladesh to any other country. Now in this last few years, like Vietnam has the comprehensive treaty done, India is getting onto these treaties, they will have more choice for their business in Bangladesh.

That could be an interesting phase to see which country gains. Historically, in the last few years, China plus one was being talked about.

The countries like Bangladesh and Vietnam really gained out of it. We could not gain, but I think now we are in much better shape to gain more.

Let's see how it plays out. I don't see an immediate impact on Bangladesh, but yes, there will be this competition as this countries like India and all really ramps up their act, then definitely there should be some competition in Bangladesh.

Still some time before that.

Perfect, sir. Best of luck for the future performance.

Thank you.

Thank you.

Hi. Congratulations for the good quarter.

Two questions. Vietnam, it seems, has had some minimum wage hike starting 1st January.

How has that in margins in Vietnam?

Every country will have a regular annual wage hikes, and so is for Vietnam. At least it's much more predictable for a country like Vietnam what kind of wage hike that they have been doing year-on-year.

Yes, to compensate or to mitigate that, there is a continuous effort towards improving the efficiency. Countries like China, Vietnam, and all, we are seeing much more automation, much more robotics that is coming in because the wages are quite high out there compared to countries like Bangladesh and India.

Even at Pearl also, we continue to invest in those technologies and upgradation of our machinery and automation, as well as robotics. That's the only way that we can have similar kind of productivity at a similar kind of cost in this competitive world.

We continue to do the same thing. We have continuously invested in automation and robotics in a country like Vietnam.

That continues to happen.

That would reflect gradually in numbers. In the near term, do we expect margins to take a beating in Vietnam on a sequential basis?

No.

Yeah. That's what exactly I was trying to say, that this is something which is predictable.

A country like Vietnam, we have seen the predictability as very high. That's the reason for which certain markets like US and all have been really all these customers goes to Vietnam first.

That predictability is high, and so we could plan that out. This is the year, how much of cost will go up and how to compensate that.

That's something we have been actively working. We don't see a major challenge.

Yes, the overall geopolitics or suddenly some kind of other FTAs happening in other countries and all, so that will continue to happen. I think all of us have to be really nimble at this point of time to mitigate that.

The local wage hike of a country like Vietnam, that's something which is predictable and planned for.

Got it. Sir, another question, which is not related to this quarter in specific, but if I look at our payable days and compare it to our peers, that seems to be almost double of the other peers.

Why is it that the payable days are so high relative to competition?

Our payable days has been around 45 to 50 days, and this all actually follow as per the credit terms which we have with all our supplier. Many of them are backed with letter of credit.

Letter of credit allows you to enjoy those credit period, and it is in line with our working capital cycle period. In terms of the net working days when you look at it, we are hovering between 35 to 40 days time period only, which is I think the lowest net working capital days compared to peers in India or internationally.

You have to look at overall net working capital days to really see the efficiency in managing the working capital.

That's true, sir, but I was just a bit curious as to how have we been able to negotiate better terms with our suppliers versus our competitors?

It's just a follow-up on my earlier question.

Sanjay, it's a follow-up question. You can answer that.

Yeah. Yeah.

See, there is a long-term relationship which we enjoy with all this suppliers, whether it's a Bangladesh procurement or Vietnam procurement, and there is a much more stability also, and they see the volume growth coming over a period of time. It's a relationship which is built, I think a number of years.

As the business grows and our payment terms we have never delayed payment to any of our stakeholder, whether it's a supplier or employee or any statutory compliances. I think this all built a lot of confidence, and they really then are able to collaborate with us for a symbiotic relationship to really grow business together.

That has been working well for us, and we intend to continue working on those best practices.

Sure. Understood.

Thank you, sir.

Thank you.

Hi. Thanks for taking my question, and congratulations on a good set.

Most of the questions have been answered, but a couple of questions probably from my side would be, I just wanted to understand a bit on technicals of these US tariff reduction. Now that the joint statement for 18% tariff is out, and there's also an executive order for withdrawing all tariffs also in which it's written that goods shipped probably post 7th of February would be attracting lower duties.

For us now, going forward, all the goods shipped, for that the discounts automatically get withdrawn? How does it work?

Sanjay,

you take that?

Sure. On the technicality perspective, I just spoke to, before, this call in the morning itself to our forwarding and custom agent that, any filing which is done from 7th onward will be after 7th onward, which will be considered as a consumption entering into for entering for consumption in America, will attract will not attract this 25% penalty tariff.

Now, which means that, the shipments which has already sailed will have those pricing which is on the which will be which had the risk of 25%. Going forward, as soon as, we have the proof of, the tariff really going out and the burden is not there on the importer, we will be able to get credit for all the all the extra tariff which was presumed to be there, but actually it is withdrawn from the that date of 7th of February.

In all our future shipment, we are already engaging with our customer to really make necessary amendment in the purchase order. Exact nitty-gritty of that is still under discussion.

Yes, the expectation and the discussion following the earlier understanding has been withdrawal of the same as soon as, this restrictions are lifted or the penalty is removed. Okay.

Thanks. When the customers had asked for these discounts, they had said that if the tariff gets reversed, then this discounts also would be reversed.

I think that's something which is coming into effect now.

Okay. There won't be a further need for doing a second round of negotiations on the discounts just probably get reversed?

Not on these orders. For the fresh order that they're placing, they would like to be competitive across the globe.

If Indonesia, Vietnam, Bangladesh, as I said that India had that disadvantage so far. I think now it's more like a level playing ground.

Of course, India has an additional advantage of 2%, but yeah, that's what it is at this point.

Got it. Just a clarification on the tariff-related discounts till now, in our P&L, we were setting it off against our revenues or realizations or booking it as a separate expense line item?

Sure. Thank you for asking this.

Basically, it's a combination of both. In some part, it is revenue reduction, and in some part, where it is going at a part of the other expenses also.

It's all depends, as I mentioned, that the exact technicality of that will be in discussion with the customer. Same has happened in the past as well, the way the contract has been drafted.

It has been reflecting in the P&L. Part of it is in sales reduction, and part is part of other expenses also.

Could you quantify the proportion, how much is sales reduction?

I will share the detail later offline with you. Surely.

Okay. Just the last question if I can squeeze in is what is your current EU presence, and how are we ranked on the sustainability aspect as this market is much more conscious about that?

Your thoughts here would be helpful.

Yeah. We have been supplying to EU because presence of our Bangladesh operations, and that has been quite a substantial amount.

As I speak, I think our EU-based customers were already 17% plus or moving towards a 20% kind of thing if I talk about total import into the country of EU. Then see, most of our production is EU ready in terms of garment traceability, in terms of the ESG that they are looking for.

Yes, there are some few changes like countries like India and all which was low. That also we have been investing and making it ready, especially for the water, solar, renewable energy, as well as waste management.

We are, I think, ready in all our facilities to execute EU business.

Okay. EU is around 17%, 18% of your overall revenues right now.

You're saying that Bangladesh you have already been EU market ready. India, there are some more investments to be done to make it market ready, just to summarize.

India also we have been shipping to EU. Now this ramp-up is going to happen.

Let's say out of our eight own factories in India, four were already approved for EU. The balance four also is now getting approved as these numbers are going up.

That kind of thing. It's a very minor thing, not any kind of major investment or anything is required.

That way, we are ready for the EU and UK.

Okay. Entire

India also. Yeah.

Bangladesh, Vietnam always was ready. India also now we are ready.

Sure. Thank you.

Thanks a lot.

Hi. Thank you for the opportunity.

Sir, like you mentioned that you're targeting about ₹1,500 to ₹1,600 crores from India. Could you also share the revenue target from other geographies as well?

I think we have been mentioning about 12% to 14% revenue CAGR at a group level. We are still maintaining that guideline, and we are always trying to really beat this number.

As far as the India is concerned, this number become relevant from the capacity readiness perspective. What we mentioned, our capacity is ready, in-house capacity, to do a top line of 1,600 plus crore.

With FTA in place, I think the opportunity to accelerate that is there in front of us. We are ready to have those scale up the revenue from a current run rate of 1,100 or odd crore to 1,600 plus crore turnover, and that's why the reference came.

Overall, at a group level, we are looking at a 12% to 14% revenue growth in the next 2, 3 years. That's what we have stated, and we always try to really beat that number.

Understood.

I must add one thing out here is that because this India FTA is coming into action, everything has to be made from India, that's not a compulsory thing for Pearl Global. We do have the options of servicing the customer from Bangladesh and Vietnam as well in the same free without any tariff.

Naturally, wherever we see that the best advantage is there for us as well as for customer, we will continue to do that. Yes, India, we are ready today to ramp it up to that number.

That's the main point. As Sanjay just said, that we target to beat this 12% to 14%.

That's something is definitely given that we want to do every CAGR that we want to maintain.

Understood. On the EU and UK FTA, earlier if I talk about the India operations, we were competing with Bangladesh, Vietnam, and it would have been coming into our pricing as well.

Now with these FTAs, do we see margin expansion as we'll have to provide lower discounts if I'm shipping to an EU or UK geography? Is my understanding correct on that?

For an Indian vendor who was competing with a Bangladesh competition, they had a disadvantage of this 10% of additional tariff to EU, European Union and UK, which from 1st of January has become 12%. This particular year, till the UK FTA comes into effect or the European Union FTA, which is expected to come into effect from next year, we have an additional burden of 2 additional percent compared to last year.

That's because of the finishing of the GSP advantage that we had till 31st of December 2025. That's what is happening.

Yes, there is a renewed interest from all the customers and the Indian players to secure business and to get on with it. Yes, if you're asking me, if the retailer wants to be getting the best price, then there is a disadvantage of 12% between Bangladesh and India as I speak.

Expected to move away from UK maybe from April onwards, and expected to move away for EU maybe 2027 January onwards. Yes, to really if the customer insisting that, okay, I need the same price of my landed as Bangladesh, then the Indian vendor have to give that 12% or take a beating of 12%.

Now that will depend on the negotiation, the willingness of the customer to take that extra 12% or not to develop a vendor or an Indian supplier to see that, okay, whether we want that business so that we can secure some business for future by taking this extra hit. These are all negotiation tactics and the relationship that we have.

Now specifically for Pearl Global, as I just mentioned earlier also, we have this choice between this three countries. The other two countries definitely have the FTA and the tariff benefit as of now.

India is going to have it soon because we have signed the treaty. I hope this makes sense to you

what you're looking for.

Yes. Absolutely.

Yeah. If you could give some color on the volumes from Vietnam and Indonesia, how they have changed YoY?

Vietnam, we are experiencing about I would say more than the 15% kind of growth at this point of time. You wanted only Vietnam or

Vietnam and Indonesia.

Indonesia, we mentioned that we are in the ramp-up period because we shifted that factory 2 years back, and that we had taken that hit from our $30-plus million that we had a capacity earlier, it had come down to in the $15, $16 region. That we are ramping it up.

This year, we will see a significant growth, and next year onwards growth to the bottom line both in a significantly higher. Sanjay had mentioned in the earlier questions.

Right. Thank you so much.

Greetings to the management. Sir, one question particular to the Vietnam geography.

The growth seems to be very healthy there at 66-odd percent. These numbers I'm talking from the segmental data that has been disclosed.

The margins for some reason aren't as positive as the growth is. Any particular reason there?

Thank you, Manju. In the segmental, as I mentioned earlier, the revenue from Vietnam is also bifurcated between the two countries because we follow the bill-to-ship-to model.

All the invoicing for the customer of Vietnam is through Hong Kong entity. You will see the margin basically a combination of the two entity, Hong Kong plus Vietnam, to really arrive at only Vietnam revenue.

That is what we do as I mentioned for the Bangladesh. Same to hold good for Vietnam and more good for Indonesia as well.

Purely segmental revenue when you see it, it is only entity revenue. Then there is a inter-segmental adjustment which happen below that.

Likewise on the PBT part also, what you see is what is reported in the local entity. Then thereafter, there is bill-to-ship-to model, and there are certain expenses which we had incurred on account of following the bill-to-ship-to model.

The margin profile of different entity, but pertains to the Vietnam division, will be there. We have to really combine all this margin to arrive at a total margin profile of Vietnam operation.

That may require a certain discussion to arrive at, and which is what we do our internal evaluation when we really work on it.

Okay. Necessarily, you're saying do not look at the segmental margin on a stand-alone basis, just look at India versus all the other geographies, and that will give us a better picture of how the profitability has moved for the other geographies other than India.

Yes, your understanding is correct. Because here, there are related intercompany transaction which requires an elimination, you may not get the complete overview of the specific geography.

However, India, since stand-alone accounts are published, you can definitely get a clue about Indian operation directly from there.

Understood, sir. Just one more question for the 9-month ended timeframe, we had these one-off tariff-related plus ramp-up costs cumulating to ₹42-odd crores.

Previously in the conversation, you did mention that the ramp-up cost will reduce in Q4, but from F '27 onwards only we should assume it to be nil. In that sense, there is going to be a tailwind of at least let's say, ₹30, ₹35-odd crores from the margins perspective in Q4 versus Q3.

Is that a correct understanding?

This is 9-month number. Quarterly impact will be accordingly calibrated one.

Yes, it will flow through in the P&L when you look at a complete full year next year compared to this full year next year. There will be definitely the number improvement on account of operation efficiency or setting of the operation which will happen.

Sure, sir. Are we looking to increase our margin expectations from the group company level?

I think earlier you had talked about aspirations of reaching a double-digit EBITDA margin in the India geography, and that will also reflect in your overall group level EBITDA margin trajectory. Would you look to increase this number, sir, as we are seeing all the headwinds and trade negotiations, etcetera, are all behind us now?

Certainly, our target is to really move to those double-digit EBITDA at standalone, at a group level. We are definitely working towards it.

All this FTA and the trade barrier going out and a one-off costs also getting cooled down next financial year, we are well positioned to achieve this double-digit number. Directionally, we are going in that direction, and we are pretty confident we should be able to accomplish those targeted number in the coming quarters.

Definitely. Thank you very much, and wish you all the best, sir.

Thank you so much.

Thank you to all participants. We have successfully sustained our growth momentum despite challenging macroeconomic conditions.

With positive developments in the industry, more specific from India perspective, we are poised for accelerated growth in our India operation as well as across the group. I hope we have been able to address all your queries.

For any further information, kindly get in touch with Shishir, our Head of Investor Relations, or Strategic Growth Advisors, our investor relations advisor. Thank you.