GHCL Textiles (NSE:GHCLTEXTIL) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the GHCL Textiles Limited q one FY twenty seven earnings conference call hosted by Go India Advisors by LLP. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to miss from Go India Advisors. Thank you, and over to you, ma'am.

0:46 Thank you. Good evening,. It's my pleasure to welcome you on behalf of GHCL Textiles Limited. Thank you for joining us today for the q one f y twenty seven earnings call. Today on the call, we are joined by Mr. R. S. Jalan, nonexecutive director Mr. Raman Chopra, nonexecutive director Mr. Marshall, CEO and Mr. M. Parsuraman, CFO. Please note that today's discussion may include certain forward looking statements. Therefore, they must be viewed in conjunction with the risks that the company faces. I now invite mister Marshall to present his opening remarks. After which, we will open the floor for q and a. Over to you, sir.

1:38 Earnings conference call for the first quarter ended 06/30/2026. Our results and investor presentations are available on the stock exchange. Let me begin with the operating environment before turning to our performance and the road ahead. The global backdrop continues to present a case of cautious optimism and The U. S.-Iran conflict remains a source of uncertainty. During the quarter, the content drove raw material volatility across both cotton and synthetic fibers, pushing prices higher and causing some delays in order execution at elevated price levels. Markets remain volatile, and we are monitoring these developments closely. Despite this external turbulence, the demand environment has been encouraging.

2:28 The yarn market remains on an upward trend as demand is steady and higher prices are being accepted, albeit with some lag. Domestically, cotton prices witnessed an upward trend during the quarter, rising from INR 62,000 per candy in April 26 to INR 67,000 in May 26 and then dropping to INR 64,000 per candy in June 26. Prices have since risen again to INR 68,000 per candy. On the global front, cotton markets, particularly New York futures, have also increased, driven by ongoing international trade situation, reaching to $0.80 per pound at the end of June twenty six. On trade policy, the execution of India U. K. Agreement and the upcoming execution of the India Europe agreement represents meaningful structural tailwinds for the Indian textile value chain.

3:27 The new duty is imposed by The U. S. On Indian exports, replaces the first oil tariff of similar magnitude, clauses on fainting the tariff data quota for the competing nations and further potential conclusion on USTR Section three zero one overcapacity probe needs to be evaluated further to assess overall impact. Turning to our own operations. We continue to maintain optimum utilization and advance our operational excellence agenda. Of our total plant production, 89% was sold directly to customers and the balance 11% was consumed in fabric production. Our share of fabric sales to total sales has increased to 16% in this quarter compared to 9% in the same quarter of last year.

4:14 Our positioning as a preferred supplier has allowed us to strengthen relationships with global and domestic brands, optimize our product and customer basket and sharpen our focus on value added products. Our business has delivered robust performance and same is reflected in reported financials. In quarter one FY 'twenty seven, revenue came in at INR $4.10 crores, up 52% on a year on year basis. EBITDA was INR 70 crores and pad INR 39 crores. On our project pipeline, the first 15 heating machines were installed with commercial production stabilized and quality acceptance from customers is good. We are going ahead with remaining 25 heating machines in phases with part deliveries received by us and remaining to be completed during this year.

5:04 Additional projects pipeline includes additional 11 megawatt solar energy and land allotment under PM MRPAK. These are under progress, and we will share more details on these as they develop. Looking ahead, demand tailwinds appear to be strengthening on the back of FDA pipeline and domestic demand, which has been growing consistently. The evolving U. Iran situation remains a key headwind trigger, along with The U. S. Tariff policies and related investigations. Our strategic priorities are clear: expanding our value added product portfolio, deepening engagement with key customers, driving operational excellence and enhancing vertical integration to support sustainable growth. This will enable us to navigate the volatility and maintain our desired performance.

5:52 GHCL Textiles is well placed to capture these opportunities. We remain committed to creating long term value for our shareholders, and we thank you for your continued confidence and support. We are now happy to take your questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue is assembled. We take the first question from the line of Sarans Gupta from Swan Investments. Please proceed.

6:45 Yeah. Thanks so much for the question. Yeah. I hope I'm audible. Right? Yeah. You're audible. Yeah. Thank you, sir, and congratulations on a really good set of quarter. Sir, I had few questions that I wanted to ask. Firstly, what kind of quarter end inventory do we have currently? Arun, we maintain typically cotton inventory for the season. So as of now, we are well covered in the beginning of new season. Hello? You had three questions. Right?

7:32 Yes, sir. So it was at the lockdown at what current level of quarterly inventory are we at? Like, how many more months of quarterly inventory do we have at the low cost? Yeah. So I answered that. We are well covered in the beginning of new season, which will be about November, December. Okay. November, December. Understood. And sir, currently, with such volatile prices of the raw materials, so what are what are the spreads currently in the market? So currently, our spreads are about INR 160 per kilo without the packing cost. We can take the average packing cost of about INR 5. So this package, it is about 155 per kilo is what our current spread for the last quarter was. And this is sort of a jump from about INR 138 per kilo, which was there in quarter four at 5.26.

8:29 Sir, even the current trend in these prices and the low cost inventory that we have, is it trying to assume that the current numbers of what we reported in terms of the margin are a sustainable? In terms of the meeting and the fabric, which has come to 16%, definitely something has come from other new meeting capacity in the meeting capacity that was set up. So over a period of time, how shall we look at the fabric contribution and what sustainability of the current margin? So you have two questions, right? One, on the sustainability of margins. So yes, I think because of finally procurement of cotton, there is definitely a benefit which has been derived from that.

9:16 There are two effects to it. One, as we sort of progress towards quarter to quarter three, the lower cost cotton inventory would have been consumed, and there will be a gradual increase in the cotton price. We definitely have to see whether at elevated levels of cotton, which is at about INR 70,000 per candy right now, and the prices higher yam prices can be absorbed by the market or not. So definitely, there will be impact of higher cotton inventory, which will sort of start to come in now. If the market remains like this and prices are getting accepted, of course, the spreads will delay. But I think on a very conclusive basis, what we can say is that the spreads will be better than what we have seen last year for sure.

10:03 At least on quarter two, it will be similar to what we have right now. Post that, definitely, we need to see how the overall market delays. In terms of fabric, yes, fabric has almost reached about 16% of our overall sales, and it is composed of both our woven and knitted. There is definitely a contribution from our 15 knitting machines. On a woven and knitted, it is almost a split of about fifty-fifty odd percent. Woven continues to remain on a job up model, while, let's say a significant part of Mated will start to become in house. That case, as we have always said, there will be an incremental margin from in house production about 2%, 3%, which will get added over being only a standalone yarn manufacturer.

10:52 But even with 40 knitting machines, our total in house knitting capacity would be only about 12% to 15% of our overall yarn production. So you will have to sort of adjust the overall margin increase after that as well. Okay. So that means our total contribution from Strapi for the next two to three years, we are will it probably remain in the range of 60% to 20% only? For next two to three years, obviously, we have a plan to forward integrate further, right? So we have always said that our objective is to become a ready to cut fabric supplier, and the journey is what we have planned is for next two, three years. So I think that percentage will definitely go up when we become a ready to cut fabric supplier. Fabric will become a significant part of our overall top line, probably in the region of about 30% to 40%, which is right now at 15%, 16%.

11:50 But this is after three years is what I'm talking about. So that journey has to be traversed. And just in terms of the solar power, can you I mean, where are the in terms of power consumption and with the completion of the renewable project that is there in the hand, what sort of savings one can anticipate? So see, we have been working on two so as of now, let's say, renewable power have a total installed capacity of about 65 megawatt, another 11 megawatt is sort of in pipeline, okay? So in the last year, we have been working on two projects. One was a rooftop solar project of about three megawatt capacity. This has been implemented in January. So this year, we'll get the full benefit of it, which is the savings is expected about INR 2 crores per year.

12:39 The second project is on 11 megawatt ground solar project. That is in progress. There have been recent some changes done by MNRE on particularly ALMM list because of which the project slightly got delayed. The commissioning date is in December now. So that project would give a benefit of about INR 6 crore per year, but the full benefit will only come next year. Thank you. Thank you. We take the next question from the line of from Sequium Investment. Please proceed. I would request mister to unmute and then speak.

13:34 Yes, sir. Can you hear me? Yes. I can hear you. Sir, I just have one question with respect to the cotton. You mentioned that the cotton price have started to increase as of July 2026, and you will be purchasing the cotton inventory at a higher cotton price. So I just want to understand, you also mentioned that you will be able to maintain the INR 150 crores, 155 crores spread. So I just want to understand where is the demand coming from? Is it because of the EU, India, FDA? Or is it because of the internal domestic demand? So if you can highlight where is the demand coming from? And is the demand still persistent at a higher cotton price, like at a higher spread as well?

14:30 Ramundi, a few clarifications. What I said is that we have about let's say, we have quarter inventory till December November, December. We have been building up this inventory from the beginning of the season when the prices were much lower, right? And gradually, the prices have started to go up as the season has progressed. So in the quarter one, we got the benefit of our lower priced cotton inventory, right, apart from the price increases, which has happened because of demand, right? So that is number one. So we are not going to procure cotton today for utilizing for our sales as of now, right? So there is an inventory buildup whose benefit will accrue, and gradually, that inventory price will start to go up as well, right? So that is number one. Number two, on the demand side, there is a growth both in our domestic market as well as in export.

15:23 And definitely, the trigger points are resolving global situations with respect to tariffs, also some of the FTAs, which are coming in pipeline. What we are seeing in the demand side of things is that prices are increasing gradually and getting accepted with a lag. So as of now at 68,000, 69,000 level, these spreads are maintainable. But let's say, if the cotton prices increases further, which has already happened, will the prices get accepted or will get accepted with a lag? There could be a reduction in spread because of it. What I earlier said as well is that this year's trades will be better than what we have done last year, right, and even better than what was there in the quarter four. So that trend looks to be continuing. Whether it will be 155,145,150, I think that only we can say as we progress through the year. At least for quarter two perspective, we think it will be similar to what we have done in quarter one, maybe slightly lower.

16:20 Sir, I think in our quarter four FY 'twenty six, our spread was around close to 130,140 ish. So you are saying on an average basis for the entire year, our spread will be in that more than like around 140 ish? Hello? Sir. So you are correct. Our spend in Q4 was about 138. This definitely for the full year will be better than that, right, at least from a demand situation point of view that looks to be continuing. Understood. And sir, on the capacity front, we are almost at full utilization.

17:05 So apart from the knitting machines, on the splendor... On the yarn side, are we having any capacity expansion as of now? Until when... If so, till when are we expecting this capacity to be added, like fully operationalized? So yes, I think on a capacity expansion side, only the limiting issue is given pipeline for us, right? But as we have sort of said earlier as well, we almost have about $3.50 crores of CapEx to be deployed primarily for our ready to cut fabric production facilities, which is what we are focusing on now. Understood, sir. And sir, just last question. For the quarter, what was the inventory gain impact?

17:55 Like we did around INR 69 crores of EBITDA. So out of this INR 69 crores, what was the impact of like how much did we gain on the inventory? So see, if you think about if you see our sales price increase has almost been about 20%, 24%, while, let's say, cotton prices have gone or inventory gain could be about 10, 12% only. So rest of the spread increase has actually happened because there has been, one, better pricing in the market second, our customer selection and our entire strategy around strategic customers, bottom pricing and everything. Thank you.

18:44 We take the next question from the line of Reshak Jain from GHCL Asset Management. Hi. Good afternoon. Congratulations on very good numbers. So I have two questions. First one is on the overall yarn demand. So what we see from the numbers is that the demand from China for the cotton yarn has been quite muted since last few years. But certainly, I think beginning of this year, we have started seeing very good kind of exports from India. How big is this? And are you also exporting to China? And also, what has changed particularly in the overall cotton and scenario? Why the demand based on your assessment, why do you think the overall demand is much better?

19:44 From China, you mean, right? China and in general also, the overall demand conditions are much better right now. What is driving this? Yes. Okay. So we'll address first China, right? So yes, since I think December, we have been seeing a lot of opportunities for export in China. GHCL Textiles per se does not export much to China, right? But yes, there has been a lot of demand which is coming and getting fulfilled from India. And I think that trend has continued, right? It has slightly slowed down in quarter one, but yes, it is still It's much more than what it used to be before December. One reason which I can as in our assessment is that one, the overall cotton production in China is going down. So there has been more acreage reduction and output reduction when it comes to Chinese cotton.

20:40 And of course, the prices in India, at least before December, when a lot of these quantity was booked was much better or much cheaper compared to everywhere else. So I think that was one big trigger that happened. And it just continued because overall Chinese cotton output has gone down. And of course, the bans on Asian cotton and everything in U. S. Market. So I think that is, in our assessment, the reason why there is a significant demand and continued demand from China. In terms of the overall why demand situation has gotten better. One, of course, this entire demand tailwind coming from FDA signings and all the global markets and brands looking India positively because of it. Second, Indian domestic market itself has at least grown by 6% to 8% year on year now, and that seems to be strengthening as well. So this is also a second reason why even we see a lot of growth in the domestic market and export market. So I think some of these reasons are more structural in nature, and that's why we believe that some of these demand tailwinds are set to continue.

21:47 The third part is that before December, many of the retailers were sort of sitting on a very low inventory sort of thing, so which also they are as it is just replenishment of inventory, which is also happening. Reshma, I think in my assessment, these are the reasons why we see a good demand headwind happening. Peshav, any further questions? Yes. Sorry, sir. Sorry, I was on mute. So the second question is on PM MitraPark. The line has already been allocated. So if you can give more update on the same, like what is the next step and when are we starting the overall project here?

22:39 So as per our discussions with the execution body for PM with Tata Parking coming out, the project from their end is to be completed by December 27. That is the timeline which they are working on. As per the policy, we are supposed to complete our project within three years of land allotment. So those are the broad time lines, right? So some of the discussion we are actively engaged with Zipcar for initiation of the project. But overall, from a timeline perspective, both from policy perspective, also their timeline, '27 is when the project is supposed to sort of between '27 and '28 is when project is supposed to complete it and the commissioning can happen.

23:26 Like December 27, your commissioning should happen, right, is what you're saying? December 27 is the completion date for the PM Micra Park and the facilities to be provided by the government. And from the date of allocation, which was in 'twenty six, right, we have about three years to complete it. So basically, the land allotment happened at the end of within the first as in last quarter. So basically, it's three years from hence, we have to complete entire project and commission it. That is the maximum time. So along with the Kilometers Metropolitan body, you will also paranaly start the project. Is that the current Yes. That's correct. Understand.

24:12 Okay. So so from your time line, assuming their facility will get ready by December 27, when will your plant, like the processing plant or the fabric manufacturing plant will be ready? So it will be in CY twenty eight. Along with We have to start building it. So yes, in FY 'twenty, we will sort of plan to commission it and initiate it. Maybe a part of it could be done earlier as well. It all depends on how the progress happens on the overall part and its facilities. Okay. And this will be INR $3.50 crore or INR 400 crore kind of CapEx, right, which you're planning here? Correct.

24:57 Correct. So the second question is, given that the balance sheet is already quite strong for us and this project is going to happen within the next two years' time, while the cash generation, which I could see, is significantly higher. And I think PM Mitra part would have some debt concession as well, so you will fund it through some concessional debt as well. So how are you going to use the cash? Because I couldn't see any other project other than this. So right now, we are working on two projects, which we have said, right? One is on completion of permitting and solar projects, right? So that is where the cash we will be able to deploy.

25:45 And simultaneously, as government starts to build up the PMS buffer, there will be some activity starting from our end also. Small Those CapExes, right? Those are small CapExes compared to the cash generation which you are planning to have? Yes. So this year our CapEx, all projects put together including modernization, replacement of capital equipment will be about INR 100 crores, INR 120 crores. No, SMD, if I could add to what Marshall said, like you rightly said, at this point of a time, our plan of the INR $3.50 crores to INR 400 crores of investment is already there in pipeline. We're also debating within ourselves that what are the new other new initiatives we should be taking and at appropriate time we will share those details also with the investors.

26:41 Okay. And we are planning in next few quarters is how I think about that? Yes, yes, surely. We are planning in the next few quarters that how are we going to provide the resources going forward. Obviously, the journey is very clearly defined And like Marshall has been saying that our target is to double the revenue and obviously the margin will also expand because it is vertical integration. Along with this, what else we can do, we working on Got it, sir. Thank you so much. All the best. Thanks. Thank you. Thank you. We take the next question from the line of Shreya Chatterjee from HCLTEXTILES Capital. Please proceed.

27:28 Hello, sir. Thank you for a very good set of numbers. Like, thanks for taking my question, and congratulations for a very good set of numbers. I had a couple of questions on the demand side and especially what is happening on the FDA part. Like, the UK FDA has been lifted and everything. So if you could just give a volume guidance of your yarn or the fabric part, and if you could just quantify the impact of The UK and maybe the UFT also coming by the end of the year and then New Zealand FDA, that would be really helpful. So we don't have a direct exposure to these markets, right, to U. K. And U. S. We have direct exposure because these are the customers who would be exporting, right? So in terms of our volume, we are already at 98% plus utilization.

28:18 So this will definitely not impact in terms of our volume. Of course, where we sell, which customer we sell could sort of adjust. But overall, from a volume perspective, we are operating at 98% utilization. The way these FTEs, of course, will impact a lot of our customers, right, because U. S, U. K, both have very large markets. Particularly in U. K, of course, there was a duty disadvantage with India had with respect to, let's say, what Bangladesh would pay or Vietnam would pay. I think that brings us to parity. In a market, which is almost $40,000,000,000 our market share was about 45%. That could itself double, right? So there is a if we are doing about $1,520,000,000 business in U. K. Market, it could double to almost $4,000,000,000 Similar is the case in U. S. As well. I think U. S. Is almost a $400,000,000,000 market.

29:09 And where India, of course, has market share about 6%, at least on the apparel side. And that itself because of stability in that market, if it comes, then that could impact significantly also. The other markets, which is large and where NFTA would have a big impact is Europe in U. K, which is also sort of slated to go into execution mode by the end of this year. I think that is a big trigger and demand headwind demand tailwind, which can come from that market as well. So EU, U. K, U. S. Put together is almost a $900,000,000,000 market or $850,000,000 $900,000,000 market. So significant opportunity exists for India textile players because of these FTAs. Got it. Any market share gain that we like any particular volume number or market share gain that we see indirectly coming from all these changes?

30:05 As I said, for us, no. But what as in all the industrial bodies, government bodies has predicted is that at least in U. K, there's a potential to double the market share. In U. S, it is sort of supposed to go from 6% to less than 78%, right? So that is what all industry bodies are expecting. And largely, I think it would come as well. Got it. Got it. And sir, what's the guidance of inventory days that we like with cotton prices going higher, what inventory days do we want to maintain for the whole year? This year, as of now, we are maintaining inventory up till December between, let's say, November December is what we are maintaining. Going forward, I think we'll have to see how the monsoon evolves and the entire situation with respect to rates. Based on that, we'll take calculated calls, how much inventory to maintain or whether we sort of maintain similar level of inventory.

31:11 Before we proceed with the next question, participants, in order to ask a question, you may press star and one on your touch tone telephone. We take the next question from the line of Sagar from Astrolight Investments. Please proceed. Hello. Am I audible? Yes. Hello. Yeah. Sir, I just wanted to understand. So last quarter, like, four FY 'twenty six, your needed fiber volume was around triple six and utilization was 999%, right? And this quarter, your volume has jumped a lot and your utilization is 99%. So why the surge in volume? Have you the knitted machines have come into the picture?

32:01 Or how is it? So the 99% utilization is for our spinning business, not for our knitting. So that is one clarification I wanted to give you. Second part, yes, because we have received the 13 machine knitting machines, the volume has jumped because of that. And we still continue to operate some of the fabric business on a job of model, both on nickel and woven side. Okay. So what would be the capacity utilization for knitting fiber as of now? As of now, we are so this quarter was the first full quarter when we're making machines have been working. Gradually, the utilizations have increased. Currently, we are maintaining about 80%, 85% utilization for these 15 machines.

32:50 Fair enough. And this 25 machines, when can we expect them to enter the picture? So they are coming in parts. Some of the machines we have received in July. The other machines would come in part Q2 and Q3. So by Q3 end, we would have all the potting machines. Okay. And also with sales volume of Yarn, so like going forward, I understand that you are moving to the up in the value chain to more of a native private, then your yarn would be captive used and your yarn volume sales will de grow? Or how is it? Yes. A part of our yarn gets converted to fabric. So in my opening remarks also, I mentioned that 89% of our yarn was sold as yarn and less 11% was converted to fabric and sold.

33:45 So as we sort of increase the fabric volume, some part of our yarn will sort of start to get converted and getting sold as fabric. Fair enough. Okay. Yes. Thank you. Thank you. Thank you. We take the next question from the line of Deepali Kumari from Aryan Capital Markets Limited. Please go ahead. Yeah. Thank you for the opportunity. I just have a few questions. As a gas cotton production has been declining while imports are increasing. Do you see this becoming a structured disadvantage for Indian over the next three to five years? And if domestic cotton continues to trade at premium to global prices, how will it impact India's export competition?

34:40 Dipari, madam, I just to clarify, I couldn't understand your first question. I understand your second question that Indian cotton, if it trades at premium, how would it impact the export competitiveness, right? Could you repeat your first question, first part of your question? I'm asking like India's corporate production has been declining while imports are increasing. Do you see this becoming a structural disadvantage for Indian stinger for the next three to five years? Understood. So I think India's cotton production, at least compared to last year, this year has been higher, but I understand where you're coming from that earlier used to be much more, almost about 400 lakh days. It has dropped about three twenty four lakh days as of now.

35:33 Globally also, we have seen that cotton production maybe next year except India everywhere else, it is supposed to go down in terms of output. India has been working on improving the cotton yield as well as overall output. Recently, I think last six months back, government launched its entire mission on cotton productivity, where the target is to go back to 400 lakhs bin output. Also, your need has to go up from 400 to over 700 kilograms per hectare. So given those plans are in progress, I believe India will have sufficient cotton going forward as well, and we will not be in a situation where we have to rely a lot on imported cotton. We have been buying as a nation, we have been buying imported cotton, let's say, ELS and even government has timely removed the duty also on some of these cotton, which can come in duty free, which has been a big help to the industry. And overall situation of supply of cotton has been comfortable.

36:31 So I don't see that as a challenge in the next three to five years that India will have a shortage of cotton. Coming to the overall pricing of the cotton, as of now, Indian cotton is at parity with global cotton. So there is export competitiveness for sure. In, let's say, last quarter, Indian cotton was actually cheaper as well. At some point of time, it was cheaper, then gradually it has come at parity. So I think these things are there. But as of now, because it is at similar price at which imported cotton is, there is a good enough export competitiveness. And from a cotton competitiveness perspective for Yance, I think I don't see a lot of challenges there. Good. And sir, historically, every three years of strongly added has been followed by and and margin normalization.

37:26 Will this cycle will be different? Sorry, ma'am. I couldn't hear your question. Please, I'm ask... I'll have to ask you to repeat. Okay. Am I audible now? Yeah. Yeah. Yeah. Much better now. Yeah. So so I'm saying, like, historically, every period of strong year has been followed by fresh capacity addition and margin normalization. Will this cycle will be any different or the same? So I think what is changing this time is that overall, I think demand structural changes are happening, right? So let me just put a few points forward. One, all these FTAs are getting signed. So multiple markets are preferred for Indian textile industry.

38:13 The second part is there is a lot of infrastructure getting built, right? For example, we are also investing in PM Nitra Par. So some of these infrastructure has been built, puts in a lot of competitiveness because they will create an ecosystem and right environment, compliance and everything. So that also is a big step. On the synthetic side as well, there is a PLA scheme, which is there. Your raw material capability in terms of PTA and energy is getting built. So for India synthetic portfolio will also get strengthened. I think that gives us a belief that this time maybe the cycle will be more sustainable, right? And probably in the last few years, lot of have gone out of action as in they are not working. So capacity reduction or maybe normalization has also happened. I think that is also a step in the right direction. So probably this time, the belief is that this will be more structural changes have happened and the demand cycle will continue.

39:12 Oh, got it. And for, like, what the customer concentration Sorry. It's job, miss Deepali. I would request you to join back the queue as there are several participants waiting for their tone. Okay. No problem. Thank you. Participants in... Ladies and gentlemen, please limit your questions to two per participant as there are several participants waiting for their turn. We take the next question from the line of from Financial Services Limited. Please go ahead. Thank you, sir, for the opportunity, and congratulations on great set of numbers. So my first question is that how is the order book you are building for the second half of this financial year?

40:11 Are you seeing any orders from regions like US, UK, EU because of the tariff and FLTL win? So order book is healthy. We usually maintain about one point five to two months of forward booking, which we are able to maintain as of now as well. Let's say, when it comes to some of the demand from U. K, U. And U. S, as I said earlier, we don't have direct exposure to U. S. And U. K. But what I can say is that our exports have been very friendly to European region, at least in quarter one. So we saw good demand coming from markets like Germany, Italy and other European nations. Understood, sir.

40:58 So sir, you are not receiving any orders from U. S. Or UK? U. Typically, U. S. And UK both typically are ready to cut fabric and garment markets. They are not market, right? Because we are only in yarn and in brace fabric, typically, we are sort of Tier two vendors for some of the brands in U. S. And Europe, right, or U. K. We would be supplying to process houses or to garmenters who would ultimately be supplying to U. S. And Europe. So that is where we are. So that's why we don't have direct exposure to some of these nations. Particularly in Europe, yes, there are companies or markets where there is opportunity to supply yarn and even race fabric, which is what we have been doing, and it is a significant part of our export market as well. In that particular segment, we saw good demand coming in, in quarter one.

42:00 And I hope that answers Yes, your sir. Sir. My second question is how much improvement in the fabric segment fabric segment do we expect if we move to processing fabric, if we move to process fabric, basically? When you say improvement, what do you mean? So sir, as you said that you are going over the next three years, you are going to do business in the fabric segment from the shift to fabric segment from Yarn basically. So how much margin expansion can we expect? Yes. So let's say, when we are vertically integrated and have become ready to buy fabric, we can expect a normalized EBITDA of about 16% to 18%.

42:55 That is what we can expect. And also our ambition is to double our revenue, right, from 1,000 crores to INR 2,000 crores by FY 'twenty nine. I think that is the broad objective is what we are working with. Understood, sir. Thank you. Thank you. Thank you. We take the next question from the line of Saket Kapoor from Kapoor and Co. Please go ahead. Yeah. Namaskar, sir, and thank you for speaking on the opportunity. Just putting forward the point of EBITDA margin on the long term vision. So for this this quarter itself, we clocked to 17% EBITDA margin because of the factors that is very well explained.

43:45 And so in the most likelihood, is now that trap or the flow test of these higher margins sustainable? Or is it the inventory benefit that has played out for this Q1 and this will be now going ahead? So Kapoor, I think what we have always maintained, right, the normalized margin for our type of business is about 14%, 15%, right? So that is our normalized margin. So definitely, we have come from 12%, which was there last year to about 17% this quarter. We think the normalized margin for this year will be about 14%, 15.

44:30 So there will be some inventory gain, which is there in quarter one will not happen in going forward quarters as well. When we are becoming a ready to cut fabless supplier, of course, there will be an incremental EBITDA, which will come from our vertical integration, which is what would get added, and that's why we say that it is going to be between 16 to 18% when we are ready to cut fabric supplier. Sir, just to add to it, slide number 10, we have also mentioned about a specialized yarn for moving into value added premium product in each category. So what are we trying to explain? I think we are already in the value added yarn segment or specialized yarns. What are we trying to explain?

45:16 And then, sir, with respect to the addition of machines, in the presentation, Slide number 11, we have mentioned that Page two twenty five will be commissioned in FY twenty seven. So this year, from the existing quarter, it will start accruing the benefit, and hence, the incremental margins will be maintained. Is this understanding correct? You mentioned about five machines for July itself. So for 15 machines, I will receive. For Phase II, some of the machines have we have received about six machines, right? The rest 19 machines to be received in FY 'twenty seven quarter to quarter three. So by quarter three end, you will have this 25 machines commissioned.

46:02 I think this is what the message which we have given. In terms of our specialized SEAN, this is what we have been saying, right? When we work with strategic customers, we try and customize our products to their requirements. So we are sort of trying to give solutions to some of their fabric, type of fabric which they want to make and this is the direction which we are moving. Few things we have started to do in specialized young, but that capacity is much smaller. That's why we sort of did not illustrate it much more. But as and when we sort of get enough capacity build and it becomes sizable, we'll definitely sort of bring it out in much more detail. Okay. And the second question was point number Slide eight, wherein you have alluded to India's FDA as are a boost to the Textiles Limited. Therein under The U. S. Category, the... You have mentioned that the agreement carry free cash at 10%. And then the impact part, can you explain, sir, what what are we trying to convey by 20% plus US cotton import is equal to zero duty on export? What is...

47:09 If you could just elaborate further on the thing? So with respect to U. S, some of the delays are still to come through, as you would have said also. The U. S. Tariff has been set at 10% over and above the MFN duty, which is on an average about 16.5, right? MFN is more or less similar across all the countries, except countries where they have gotten LDC benefits and others, right? So more or less, it's similar. So the total tariff as of now is 26.5%. When India and U. S. FDA details had started to come out, there were a few benefits which were given on U. S. Cotton, which gets used, right? So the duty benefit would have been there if U. S. Cotton gets used. That is what is there on the slide as well, that if you have 20 plus U. S. Cotton input, probably the duty will be zero.

48:00 But there is a caveat that some of these details are still to come out in complete detail. This is what we had sort of understood as of now. Right. Sir, I will join the queue, but we have very detailed and explanatory investor presentation there. Sorry to interrupt, mister Sarki. No. I'm I'm concluded. I have concluded already, ma'am. I'm just congratulating the team for a very detailed investor day, and we hope for the continuity and all the best. That's all. Thank you. Thank you. We take the next question from the line of Resham Jain from VVT Asset Manager. Please proceed. Thanks for taking my question again. So just on the PM, Mitra Pak, what are the benefits which government is giving in this particular CapEx?

48:51 If you can just highlight some of the key benefits and including the debt subsidy or something which you are going to get? So, Reshun, I think majority of our benefits, the reason why we are we went there was in terms of common infrastructure, right? There are a central ETB with the Delhi facility, laboratories and other centralized facilities, which would make compliances much easier to maintain. I think that was primarily the reason why we went towards PM Mitra Pak. There are other benefits when it comes to debt and everything, which practically we won't be utilizing that much in a way. But our intention was primarily from a more operational ease perspective and compliance perspective what attracted us to PM Mitrappat.

49:42 Okay. So there is no concessional date available for PM Mitra Pak? So, Gurul, the land is available. It is yes, it is concessional in a way, but that is the same for all. Meaning, I think concessional rate. I will have to check. At least I did not sort of look much into it, but we can get back to it. As per our understanding, ResMG, at this point of time, we don't have that kind of an advantage. And in any case, all our investments, we are covered under the Tamil Nadu incentive scheme. There, we'll be getting many advantages, and this is part of that advantage also. Do you remember anything which you can highlight?

50:29 See, basically, in the overall the project which we have signed with the government of Tamil Nadu, we have certain advantages. Just at this point of time, I'll not be able to tell you that, but there are the significant advantage in terms of capital subsidy and those kind of a thing. But numbers are right. And in terms of the total investments of around INR 1,000 crores, total almost around INR 100 crores of INR 125 crores kind of a subsidy capital subsidy and other benefits will be there. Okay. Just And we have not received inspection has been the first stage of investment. The inspection has been done. And I think now the file will be moving and after that we will be getting some benefit out of that.

51:20 Okay, okay. Thank you, sir. Thanks. Yes, that's it from my side. Thank you. We take the next question from the line of, an individual investor. Please proceed. Hello? Am I audible? Yes, ma'am. You can hear You are audible. Yeah. Thanks for the opportunity. So as you mentioned that you would like to double the revenue in the next three years, can you can you give a kind of a road map on how you plan to get there? Like, how how... Like, over the next three years, how it will scale from the current to the next INR 2,000 crores?

52:10 So see, think when we set up this anchor of INR 2,000 crores, our top line was about INR 1,000 crores. So the idea was to double from INR 1,000 crores to INR 2,000 crores, which was I think, FY 'twenty three around that year, right? So from there, I think this last year, we talked about INR1350 crores, right? So that and we delivered about 14% growth. We will be able to maintain similar growth for this year or more. So our floor is definitely what we have delivered last year, right? So based on that, I think in next three years, similar growth we expect to continue. And by FY 'twenty nine, definitely, we will be able to reach 2,000. Okay. So can you explain how the growth will come? Like is it like how does is it Patrick and how the scale up will happen? Because you are already at full capacity for your spinning, so that is not increasing. So can you give a little bit of a color on this?

53:11 Yes. So let's say, when we were at 1,000 crores from then, we have increased our spin rates by about INR 60,000. So we built two new units, both put together about 65,000 spindles, which took us from this INR1000 crores run rate to about INR1300 crores what we delivered last year and including the growth about INR1450 odd crores is what at their minimum, which would be there, this year if you maintain the similar level of growth. Beyond this, I think there will be two things which we are happening. One, our great fabric portfolio is expanding, which is almost contributing contributed almost INR 55 crores for this quarter. And going forward also, that pace will continue. The other part would be when we move towards ready to touch fabrics, additional revenue will come in from that segment, right? So additionally, we will be putting almost INR $3.50 crores, 400 crores there.

54:04 So on an asset turnover about even one:one or one:0.8, the rest of the revenue will come from that direction. Alright. So for the current year, are are planning to maintain a similar growth rate as as last year. That... That's what the Yes. Yeah. Planning. Right? Yeah. That's the flow. That is what we are working with. As there are no further questions from the participants, I would now like to hand the conference over to management for closing comments. Over to you, sir. Thank you. Thank you very much. I think first and foremost, Marshall has really beautifully kind of articulated our vision.

54:55 He's also articulated the performance and the basis of this performance. I just want to add a couple of things in this. First, as I was mentioning, I think last two, three quarters, the tailwind sign has been seen two, three quarters before. I personally believe this tailwind will continue, like Mahsa rightly said, in terms of the many structural changes, which has happened, the FDA or overall domestic demand growth and those kind of a thing. So that's number one. So I think this structural change of the tailwind will continue for a little longer period of time. Second, our growth plan as in the last question he had mentioned, our growth plan is completely in place.

55:41 We have moved from INR1000 crores to this year likely numbers are around INR1500 crores. And hopefully in next two to three years of time with the ready to cut fabric business model which we are growing, we will be achieving that number and maybe slightly better than that number. We have a strong balance sheet and our focus on operational efficiencies, our cotton coverage expertise or including even the cost competitive in terms of the investment into the power, in terms of the modernization and even working towards the level of ability. If you look at the many industries are facing the problem of the labor availability, but the team is working on those things beautifully. And I'm reasonably sure that this year of 2627 is likely to be much better years of last two years. And this journey will continue going forward as well. We are committed for the value creation of the shareholders.

56:37 And you will see that even this time just for an update, of course, will be subject to the shareholders' approval. We have also gone for a ease of scheme for the executives in the or the management. I think that will also kind of help in terms of creating that kind of environment for the management team to kind of pursue a much bigger value creation for the team. I just wanted to also highlight in terms of the ROC. I think in the past also there was some concern on the ROCE. This quarter, our ROCE is more than 12, approximately around 12%.

57:22 And the way the value creation or the way this asset turnover ratio is increasing because of this leasing machine forward integrations and those kinds of things. Even the kind of a customer selection or the mix of the customers in that sport, all these things are adding to the, what you call, into the return on the ROC, this will improve. So, as we have been saying in the past also, historically also barring last two years, our EBITDA margin has been healthy. And I'm sure now that EBITDA margin as well as the ROCE will be significantly better as compared to last year.

58:11 But thank you very much to all of you for the support and the confidence in the management and we'll continue to deliver on performance. Thank you. On behalf of Go India Advisors LLP, that concludes this conference. Thank you for joining us, and you may now disconnect your line.