Gilbert Lee: Well, the joint venture is going to be a separate company. It’s just a new company that we set up in Hong Kong. The company is already registered, we just need to wait until the joint venture agreement is signed. This company will be formed by two shareholders or two partners: one is Jerash Holdings and the other is Busana Apparel Group. Jerash will own 51% and Busana will own 49%. We will consolidate Busana’s revenue, gross margin, all the profits, and then 49% will go to Busana, so that’s how the sales and profit will flow to our consolidated.
Mark Argento: Great, that’s helpful. Then I think it was Eric, in the prepared remarks mentioned that you guys are expanding capacity or adding capacity for that relationship. Can you talk a little bit about where you stand right now in terms of production capacity and what you’re looking to add?
Gilbert Lee: Eric?
Eric Tang: Gilbert, should I answer this question?
Gilbert Lee: Yes, please, about capacity expansion.
Eric Tang: Okay. Regarding our current capacity, we will be–we are running at full capacity until July, and I am also expecting that we will continue to run at full capacity until maybe September to October with the coming in of the Busana orders. For Busana, because all the factories are located in Asia, it is–the reason why there is a joint venture with us is because they are requested by the buyers to move the orders out from Asia and then to the duty-free country, and the selection from the buyer is Jordan. Jordan is because of the duty saving issues, so we will be expecting the inflow of Busana orders starting maybe between July and August, okay, we will continuous. For the capacity, I think we also made announcement that we are going–already started our in-house expansion in Jerash One, so we are expecting the in-house capacity, we can increase four production lines by the end of July.
This is explained by extra capacity for Busana, that if they have more orders to inject into Jerash–I mean, the joint venture company.
Mark Argento: So you’re taking existing facilities and adding onto those, or maybe could you just give us a little more color on how you’re adding the capacity?
Sam Choi: Yes, the building–
Eric Tang: For the existing–yes, please?
Sam Choi: The building, actually we–
Eric Tang: I mean, for the–yes?
Sam Choi: For the expansion, we basically added an expansion to the existing building, so I think we added one more floor and then the building was expanded horizontally also, so that will–I believe we estimated it will increase our capacity by about 15% for that particular factory, by adding more–of course adding more machinery and adding more people.
Mark Argento: And you expect that to be complete by July, or is that done already?
Sam Choi: Right, yes. We’re still working on it. We anticipate it will be done by July. Earlier, we–I think we started this in 2022. Just because of the market conditions, we are just kind of taking the time and not really pushing to get it done earlier, but right now we’re almost done. We’re just finishing up and we anticipate this could be put into use by July.
Mark Argento: And just one follow-up in terms of the capital required to do the expansion, is it relatively nominal, or what are you thinking from a capex perspective?
Sam Choi: For the capex, I think this is just slightly above $1 million, $1.1 million or $1.3 million.
Mark Argento: Great, thanks guys.
Operator: Your next question for today is coming from Aaron Grey at Alliance Global Partners.
