GHCL Textiles (NSE:GHCLTEXTIL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the GHCL Textiles Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Go India Advisors. 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. Please note that this conference is being recorded. I now hand the conference over to miss Gareema Singla from Go India Advisors. Thank you, and over to you, ma'am. Thank you. Good afternoon, all and all. It's my pleasure to welcome you on behalf of GHCL Textiles Limited. Thank you for joining us today for quarter two and h one f y twenty seven earnings conference call. This call this call is being hosted by Go India Advisors.

0:55 Today on the call, we are joined by mister, non executive director mister Raman Chopra, non executive director mister Marshall, CEO and mister, CFO. Please note that today's discussion may include certain forward looking statements. Therefore, they must be viewed in conjunction with the risk that the company faces. I now invite Mr. Marshall to present the company's business outlook and performance, after which we will open the floor for Q and A. Thank you, and over to you, sir. Thanks, Gareema. Good morning, everyone, and a warm welcome to GHCL Textiles' earnings conference call for the second quarter and half year ended 09/30/2026. Our results and investor presentation are available on the stock exchanges.

1:42 Let me begin with the operating environment. The global backdrop continues to present a case of cautious optimism. With the demand tailwinds continuing, potential to strengthen further with the signing of FTAs and at the same time, increasing raw material prices and a volatile global situation creating resistances. Domestic demand across our segments continued to remain steady with a strong order flow. However, the sharp price in cotton and yarn prices towards the end of Q2 led buyers to limit purchases to immediate needs. The export markets as well did not face challenge in terms of volume. U. K. And New Zealand FTAs are now in force, and the benefits of the same will be visible in a year's time.

2:29 The India EU agreement is expected to be operational in early twenty twenty seven, and there seems to be a steady progress on other discussions other in discussion FTAs. Overall, the demand scenario remains positive. On the cotton front, global and domestic output has declined, while consumption has remained stable or increased. Within India, the crop size is expected to be lower due to El Nino effect. Proactive steps from Government of India to remove the duty on imported cotton and also extending it till December are steps in the right direction and will help stabilize the cotton prices and availability. Domestic cotton prices rose from around Rs. 64,000 per candy to Rs. 69,000 per candy during the quarter and have remained around Rs. 67,000.

3:19 This price is at parity with Global Cotton, helping in the competitiveness of Indian Yarn. We follow robust cotton procurement process from both domestic and imported cotton to ensure our high standards of product quality and at sustainable prices. Turning to our own operations. We continue to operate at around 99% capacity utilization. Our Menashi unit has reached full capacity and the share of fabric in our revenue increased to 16% from 11% in the same quarter last year. Overall, we delivered a robust Q2. Our revenue has reached INR $4.46 crores, up 31% year on year. EBITDA came in at INR 92 crores, up 141% with margin improving to 20.6% from 11.2% and PAT adjusted for the exceptional loss was INR 56 crores, up $2.49 percent.

4:16 Reported PAT is Rs. $3.36 crores, up 124%. For H1 FY twenty seven, revenue was Rs. $8.56 crores, up 40% EBITDA at INR 162 crores, up 129% and adjusted PAT at INR 95 crores, up 223%. Reported PAT is INR 75 crores, which is up 155% compared to last year. On a sequential basis, revenue grew 9%, EBITDA grew 31% and adjusted PAT grew 42%. All adjusted PAT figures mentioned above exclude the one time exceptional loss of about INR 27 crores on account of inventory lost in the fire incident at our rented warehouse in Kutikorin in August 26.

5:10 There was no impact on our manufacturing operations due to this incident. The inventory was adequately insured and the claim is under progress. Our balance sheet remains strong. During the half year, we repaid about INR74 crores of debt and now net debt is at INR48 crores. Our net debt to equity of 0.03x. Our strong balance sheet enables our growth plan. Of the INR1035 crore committed under the MOU with TN government, INR675 crore has been invested. Our planned knitting expansion will be completed in quarter three with receipt of balance machines. 11 megawatt ground solar project is under progress and will be commissioned by end of quarter three.

5:56 This will take the total green energy installation to 76 megawatt. We have received the land allocation at PM Vitrapar, a total of 56 acres, which will be used primarily for processing. In addition, we have received a Board approval for an investment of Rs. $4.10 crores, which includes margin money on working capital requirements towards adding 58,368 spindles along with five megawatt of rooftop solar. This project will generate a revenue of INR 400 to $4.20 crores at an EBITDA of 14% to 15%. We expect to complete this project by end of FY twenty twenty eight and the full benefit can be expected in FY twenty twenty nine.

6:43 Looking ahead, we remain cautiously optimistic. Underlying demand is steady and should gain momentum as FDA benefits take effect. However, higher raw material prices will take time to be absorbed and margins may see some near term pressure as cotton prices move up. Our strategic priorities remain clear. Value added yarns, vertical integration, green energy and operational excellence. These keep us on track towards our goal of INR 2,500 crores revenue at a 15% to 18% EBITDA margin by FY 'thirty. 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.

7:42 Our first question comes from the line of Rideshram Gandhi with Discover Capital. Go ahead. Hi, sir. Congratulations on a great set of numbers. So just wanted to understand, you know, given the large CapEx that we have already done, just wanted to understand from you when all of this is expected to hit all... To actually come on stream exactly. And if... Also given our leverage levels are so low and effectively we've got a reasonable amount of free cash flow, are there further expansions that we're looking at beyond this 56,000 spindles that we're looking at?

8:38 So, Rideshi, there are a couple of projects which are in pipeline, right? So the first project, which you said is the 58,000 spindle expansion. That is expected to come online by FY 'twenty nine beginning, right? So it is almost a year of installation and commissioning. So this project will most likely give benefits in FY 2029 full year, okay? The second part, we have been discussing about vertical integration in our last call also, right? So that is on processing for PM Mitra Park. We expect that project to sort of come in, in FY 'thirty, okay? There are other projects, for example, the 11 megawatt ground solar project that will get commissioned in December this year, right? And the rest of the meeting project is sort of mostly closer to completion. We will have all the balance 40 machines, having the total 40 machines by this quarter three end. So we can start seeing the result of those machines from quarter four onwards.

9:39 Got it. Got it. So then effectively, we have the rooftop from like Q3. We've got the additional machine from Q4. And then towards Q4 of FY twenty eight is when we'd expect the news spindles to come on stream. That's right. Got it. Understood. Sir, and just to understand the overall, the spinning in time and per se, does it continue to be robust? Or is there some more slowdown we're You were asking about demand? Sorry, I missed Demand one part of and spreads. Yes. So the spreads in Q2 went up. So our spread in Q1 was just a minute.

10:31 Yes, the spread in Q1 was 160 and Q2 it is at 173. So the spreads actually went up. In Q3, we sort of expect the spreads to come somewhere in between these two. Definitely, there is some sort of stabilization in margins. But in terms of overall demand, it remains robust. So it would definitely be better than what we saw even towards the end of quarter four. So quarter three will come somewhere in between quarter one, quarter two. Right. And even forward as well. Ritesh, just sort of to summarize, even going ahead also, we see the demand, absolutely no challenge. Demand is quite robust from all the markets, exports and within domestic as well. There could be some impact because of raw material volatility.

11:20 But overall, I think it is shaping up to be a very good year for the selling industry. Super. All right. Thank you so much. Appreciate it. Thanks. Thank you. Our next question comes from the line of Suraj Gupta with Swan Investments. Please go ahead. Suraj Gupta, your line has been unmuted. You may proceed with your question. Yeah. Thank you for the opportunity. I hope I'm audible. You're audible. Yeah. You're audible. Yeah. Congratulations, sir, on a great set of results. Sir, I have few questions. So firstly, I wanted to understand, like, our fabric contribution in this quarter has been somewhere around 15, 16%. And it has been, I guess, it's in that level in the last quarter itself.

12:08 So I wanted to understand what by the year end and by FY 'twenty, what can be your target contribution? Sanhashi, I think it was 15.6%. Now it is around 16.5%. So definitely, the contribution is inching upwards. We sort of plan to end the year somewhere in the range of 16.5% to 17% from our overall fabric contribution. Understood. And, sir, I see that we are already running at 99% utilization. So at least for the next year, like, where do we see the growth coming in from? Because I believe that the current realizations are the peak that are going in the market. So if they decline, so will our top line?

12:57 So yes, next year, definitely, are projects in pipeline, which will sort of benefit. This 11 megawatt solar, which we are putting up, the benefit will start to get it from December this year. So that could add to our margins. The second part is knitting machines are in place now. The entire 40 sets of machines are with us. We'll get a benefit from there also. And in addition to that, we keep working on our product portfolio and customers segmentation, right? From there, definitely, what better we can do from our existing utilization and how we can get to a better product portfolio. That is a third lever, which is something which is always in operation with us. And there are few debottlenecking projects, which we are doing, which will sort of add some additional capacity from our existing unit. I think a mixture of these three, four things is what will help us for next year. But yes, year after that, definitely, there are large projects which are in pipeline.

13:56 Understood, sir. And sir, like to the last participant, you mentioned that the spreads were 173 per kg in Q2 and you see them declining going ahead. So what were the current spreads in October month and what are they currently? So October month's spread was similar to September, but definitely, November will come slightly lower. The benefit as in the overall prices are getting stabilized, but the impact of cotton prices is sort of getting into the overall spreads now. But as I said to the last participant as well, we see the quarter three spreads to come somewhere in between quarter one and quarter two. And so just last thing from my side before I join back the queue. So were there any inventory gains in this quarter? And if they were, then if you can quantify what was it?

14:50 So see, benefit of lower cotton inventory is definitely there, but that is not sizable. Even at our current cotton prices, we would be getting similar sort of margins, so to say, right? And cotton procurement is something which is very strategic for us. Definitely, there will be some sort of benefit. Sometimes, will be lower as well. But ultimately, our first objective on the inventory is to ensure we are able to procure cotton, right set of cotton at the right time to ensure our quality levels are sustainable. Understood, sir. Thank So Yeah. Please go ahead. Go ahead. Yes. So just I will No. You can you can go ahead with the process. Yeah. So I had an... I just wanted one more clarity. So I guess you've mentioned about two CapExes that are coming in. One is for the and other one is for the processing unit that is being set up at the PM which will come by at 05:30.

15:44 So... And I believe we have already spent somewhere around $6.06 600 to $6.50 crores out of the 100,000 crores MAU commitment. So the incremental CapEx that we are going to do, like, if you can quantify how much will that be, like, $4.10 is for your spindles and the 11 megawatt. Yeah. Incremental CapEx, $4.10 crores for the spindles, somewhere between INR $2.75 crores to INR 300 crores will be for our processing unit. The 11 megawatt is about INR 32 crores, right? And balance fitting machine probably somewhere around 7 crores to 8 crores. So that is something that CapEx, which is already in pipeline for us. Understood, sir. That will inform us. Thank you so much, and happy to the team and you.

16:32 Thank you. Happy Devalik to you also. Thank you. Our next question comes from the line of Uday Kumar with Smiths Limited. Please go ahead. Hello? Am I audible? You are audible, sir. May you proceed? Sir, I had a query on the land bank you have. Sir, what are the plans of monetizing the land bank currently? And may I know the details of how much the acreage of land is and how much what is the book value of that land? So I'm going to answer the first part, and then I will leave it to Mr. Jalan or Mr. Chopoda to answer on the value of the land and extent of land.

17:22 See, this land is available for expansion. Now this INR $4.10 crore spindle project, which we are putting up is going to come up on our own land. So this land is primarily for the expansion of our current business. In case, for example, if the land was not available, we wouldn't have been able to execute this project within a year. So that would have taken one longer time. Second, the commercials would have been very different. So this land is primarily available for expansion. Sorry, Udagh. Udagh, total approximately the land, which if I can say, including the land, which we are already having utilized for the purpose of the factories and everything, will be in the range of around two fifty acres of land. Some land out of that will be a surplus land and the book value of the surplus land will be in the range of around INR100 crores.

18:22 Thanks, sir. That will help. My last question is on the export front, sir. We how much export do we do to Bangladesh? And currently, has extended the LDC criteria. So any impact on us or any impact on the industry process regarding this? Our export is almost I think last quarter, in quarter two, it is about 8% of our overall top line. Out of that, about 30% goes to Bangladesh, right? So 32%, 35% depending on quarter to quarter, it goes to Bangladesh. We have as in the continuation of LDC status of Bangladesh, I think it's a very neutral for the industry. It was there earlier also, only thing it is getting extended.

19:15 Bangladesh is a very critical market for India. I think it is both the markets are conjoined together, I would say. So continuation of LDC is absolutely neutral for the industry. You, sir. Hope I have answered your question. Sir. Thank you. Thank you. Our next question comes from the line of Shreyas Pimpley with Nomura. Please go ahead. Yes, hi. Thank you so much for the opportunity. From the commentary that you have given, Q1 margin was 17%, Q2 was 20.6%. And the commentary that you have given is the spreads would be in between, which means can we expect 18% to 19% margins EBITDA margins for Q3?

20:14 Sorry, I was on mute. I'm saying that the Q3 margin, our view is that it will be closer to Q1 and maybe Q4 comes closer to Q2. So overall, I think somewhere between Q1 and Q2 is where our yearly margin would be. Sure. Sure. That is really helpful. From the guidance that you have given of INR 2,500 crore for FY 'thirty, if we just extrapolate that guidance, around INR $18.50 crore is what will it be fair to say INR $18.50 crore for FY 'twenty eight revenue? As in, yes, it will so we sort of you have seen our H2 number H1 number is almost INR $8.50 crores, right? So this continuation of that H2 will be somewhere around, we'll be closing at INR 1,700 odd.

21:11 So yes, I would say INR 1,800 odd number is something which is, yes, very likely for FY 'twenty eight. Fair. Thank you so much. And the last question that I had was around the exceptional loss item that we had reported around INR27 crore, INR20 crore after tax. Just wanted to understand what was the cause of it, a? And b, do we have the insurance for the particular fire incident that happened? And do we expect any kind of recoveries from that fire incident? So the total inventory was insured, right? That is most point number one, that the entire inventory was insured.

21:57 Investigation is underway. So there are multiple steps in the investigation where police has to investigate, forensic has to investigate. That is all in progress. We expect the conclusion of this investigation by quarter three end, right, and most likely we'll get some recovery by the end of this year. There will be some deductible, which is there in any insurance policy, but barring that, we expect that a large part of the impairment will be sort of recovered. Sure, sir. And I understand that you might not be able to answer what was the reason because the investigation is going on. Yes, yes. Just wanted to understand one more thing more. Has there been any incident like this before also in the factory that we have?

22:46 No, it has not happened in our factory. In our entire history, we did not face an incident like this. But cotton is a very combustible material and fire in cotton go down is something which happens often. So there have been incidences in the same area where we are and also across the country, there are multiple incidences like this. This also not happening outside. This is Yes, but this happened so as pointed out by Mr. Jalan and Chopra that this incident did not happen in our premise. It happened in a rented go down, which is far away from our factory. And second part, this entire quantity as in the inventory was insured. Sure, sir. Thank you so much for answering the questions. That was really helpful.

23:34 Thank you. Thank you. Our next question comes from the line of Resham Jain with VVD Asset Manager. First of all, congratulations on very strong set of numbers. So I have three questions. So the first question is, given that there has been an extension given to import cotton till December now versus October end of year, are we going to have more reported inventory in this quarter beyond what we've seen as on September end?

24:25 So Resham, I think we have a mix of imported and domestic. Definitely, this extension from October to December is going to help stabilize the prices. But as in we already had planned our imported cotton by then, okay? And definitely within the short window of three months, not a lot of inventory can be bought from the origin. It will whatever is upload shipments, we'll sort of try to cover it. But our decision making is not just based on extension of the duty free period. We have a robust procurement mechanism across both domestic and imported, and we will be sort of guided by that. And the in the balance sheet, the other current assets, which has been increased, does that include advances for inventory?

25:17 Yes. Essentially, that current assets increases largely because of cotton advances. Okay. So I'm just trying to understand because typically, March end, we used to have very high inventory. But this time, if I include your inventory plus the advances assuming it is just a margin money, the inventory is as good as what we used to have in March. Is that the correct understanding? So not so much. Definitely, when we are in March, we are looking at a coverage till the end of the calendar year, but we are not in that situation now. This is the cotton procurement season. We will sort of ramp up our inventory as an opportunity and our strategy guides it.

26:04 Understood. The second part is that you mentioned you will be commissioning 11 megawatts of solar by the end of Q3. But when I see TWD, it is just INR 6 crore. So presume this will be like INR 45 crores, 50 crore CapEx. That will be completely done in Q3? No, no, no. That is some of the advances are there, which is lying in the capital advances. Therefore, when you see this quarter, there has been increase in the non current assets also capital advances. So that figure is there. Clear, clear. Okay. The third question is with respect to the incremental CapEx, which has been announced. So the PM Metropark is a 300 crores to INR $3.50 crores CapEx, Somewhere around INR 300 crores, it will come up. But obviously, it can go higher, but what we are saying is INR 300 crores first.

27:00 Yes. Then on top of that, there is this another INR $4.10 crores CapEx, which you've announced now. Right. With this 04/10 and the earliest 675, will you be eligible without PM Mr. Park CapEx, will you be eligible for Tamil Nadu mega this eligibility for the mega project thing? So see, we had planned for $10.45 crores investment as per the MoU with TEAN government, INR $6.75 crores was spent. Now balance NOK 400,000,000 odd, we are sort of going to we are in discussion with government that which CapEx can be considered within. But nonetheless, whatever is the balance, we will have a separate discussion with the TN government to see what benefits we can get for that particular CapEx.

27:53 No. What I was trying to understand is that this INR $4.10 crores incremental CapEx will lead to your eligibility being considered so that I think 145 crore is the capital subsidy, which may get released because of that? Yes, most likely. Okay. Understood. So recently, we have already applied this recently, have already applied for this change. Change, and I'm sure that they will be able to consider it. Because all other terms and conditions like your employment and everything, we are matching with that. And their basic interest is more of an employment. And second is the PM Park investment. We also know that PM Metra Park is going to take some time because it's a land allotment has been done and a lot of, what you call, common facility needs to be developed. So that is going to take time. So I'm reasonably confident that we'll be able to get this included into the incentive And that for PMMittal part, we'll go for a separate MOU with them where we will get an extra, what you call, subsidy or whatever you call it, incentive from the government.

28:59 Got it. Got it. Very clear. Sir, my actually, this third question was related to that only, given that PM Metropark compared to our earlier thinking, it seems that there has been a delay because you're mentioning commissioning by FY 'twenty nine or something. So what really happened? Why there is so much of delay in the PM with regard? The delay comes because we have taken a very consultative approach where all the alloties are working with the, which is sort of the execution body to ensure that the common infrastructure comes as per the requirement of the alloties. So there has been some of the tenders we have requested them to change the specification so that it is more helpful for the LOT. I think that is why they have to go for some of the retendering or the DPRs have to be redrafted.

29:56 I think that is what has taken a little bit of more time. And also, while CEPCTEXTIL the team is very confident of completing this project by their earlier time line, we have just put some cushion on our side to see that whatever facilities are coming as per our requirement, and then we can sort of plan our project CapEx. Okay. Understood. And sir, lastly, just from the cash flow perspective, if we look at this year end, even if slightly lower, assuming lower margin next year, the cash generation will be quite empty. And even the current valuation, it trades at, like, three times or 10 EBITDA. So are you planning to... You have been very, like, steady in your capital allocation in the past also, even in GHCL.

30:51 But here, would you think about doing a buyback given that some of the CapExes have been over a period of next two, three years? Reshanti, no plan as of now. Our focus is more on growth side, right? So whatever margins and cash flow we'll have, we'll sort of put it into the business to ensure that this company can grow even faster. Okay. Perfect. Great. Thank you and all the best. Thank you. Thank you. Our next question comes from the line of Amit Chhedra with Banyan Capital. Please go ahead. Yes. I just had one question. You mentioned that the Q3 margins will be more or less in line with Q1 and then Q4 will be in line with Q2.

31:43 So I understand the drop in margins in Q3, but why will it increase in Q4 is one of the reasons the lower cotton prices that you are anticipating post the arrival of the new crop? No. Usually, strengthens towards the end of December. And Q4, generally, if you see our past data also, Q4 is generally better based on the customers and the markets we operate in. There is definitely a shift from the end of Q3 to Q4. And as well, we would have our benefit from knitting as well as our 11 megawatt solar. Okay. And the next question is the earlier participant mentioned that you can do INR $18.50 crores revenue next year.

32:30 So does that trajectory look like INR $18.50 crores, then INR 21 and INR 100 crores and then INR 2,500 crores? Is that how are you thinking about the revenue going forward? That is not the guidance, okay. That is what the earlier participant alluded to, right? And what he said looks to be in the trajectory, which is highly likely, right? So I think this is where I would leave it at. We usually don't give guidance like that. But yes, what he said looks very likely to it is achievable. Our next question comes from the line of Karina with Smiths Limited. I just had a couple of questions.

33:24 One is on the margin front. What would you attribute the expansion of margin towards it? Like, how much of it was cotton procurement? How much of it will product mix shift? That's my first question. My second question is, you know, with the recent trade agreements with... Coming into force with Oman, UK, and New Zealand, what is the immediate response that you're seeing in terms of volume realization benefits? And what is your order book sort of looking at looking like, if you can just give an update on that? Those will be my questions. Thank you. Yes. So the first question was about on drivers of EBITDA margin expansion, right? So see, some of it is more because of our internal efforts, some of it is market tailwind supporting.

34:17 From an internal point of view, our contribution from fabric is going higher. I think it is inching upwards. Second, our strategy on or our strength on green energy. If you see our power costs are lower, primarily because of our own green energy installation. The third part is our focus on product optimization and strategic customers. I think that is the third reason why it is sort of inching higher. And of course, market tailwinds are there. There is a benefit of lower cotton inventory as well, which is what is resulting into a spread expansion also. A large part of it is sustainable. We believe that the margins which we have achieved in Q1 and Q2 are sustainable because, one, our vertical integration is there. We are constantly focusing on ensuring our power cost remains on the lower side. Third, as we have sort of said multiple times, we have an approach of focusing on strategic customers and ensuring that we are able to continuously bottom slice our lower margin products.

35:19 And fourth, we believe this change or market tailwinds will sort of continue and even strengthen further, primarily because all the FDAs will come into action and the benefits of those are still to come in, right? So because of this, we believe the margins which we have achieved in Q1, Q2 are largely sustainable. Now coming to your second part on the FTEs. We are in the upstream segment, right, where we sell to people who export to these markets. Wherever we as in our customers who have higher exposure to, let's say, U. K, we have seen a larger volume from them, which is going to U. K. Markets and U. K.-based brands. So some of the green shoots are visible, but I still believe that this could get strengthened a year down the line when a lot of the buyer nominations and supply chain shifting takes place, then we will see a much more benefit out of this.

36:15 Sorry, what was your third question? I missed that. No, it was just these two questions. Just a follow-up on the second part. Do we see some bit of benefit coming from the FDAs in like was it in this quarter? Are you expecting it in the coming year? See, U. K, for example, is not a yarn market, right? So U. K. Is an end product market only. So our customers who have higher exposure to U. We have seen like good volume coming from them, which is primarily going for UK based brands. So we do not as in it is very difficult for us to comment what is the direct benefit out of it because we are in the upstream part of the value Our next question chain. Comes from the line of Resham Jain with BBD Asset Managers.

37:18 Sir, two questions. One is just accounting capital subsidy will get deducted from your gross block. Is that correct? Yes. Okay. Got it. The second question is, sir, more strategic. I think I have been hacking this since last almost one or two years. But on government side, given that too many FTAs are opening up and it doesn't require too much capital as well, and it is very sticky business. With vertical integration, are you still thinking about targeting or you are averse to getting into targeting business? So, Resham, it's a very logical next step because we anyways are planning to come to ready to cut fabric. It's a logical next step to look at garmenting.

38:10 All I can tell you is that we are looking at it favorably. Right? I have nothing to announce right now, but yes, we are looking at it favorably. Okay. Like with PM MitraPark or without that also? Just to be more clear about this. It will be PM MitraPark is settled, as in we are going ahead with that. And if it comes, it would be addition addition of that. Okay. Understood. Very clear. Thank you. All the best. Thank you. Thank you. We have no further questions, ladies and gentlemen. I would now like to hand the conference over to the management for closing comments. Over to you, Thank you very much.

39:02 I think all the relevant questions have been asked. I can only in the last say that overall, the way we look at this business that we clearly see there is a kind of a long term positive tailwind into this business. And we over a period of time what we have done in this business of optimizing the cost, going for a better product mix, going for better strategic customers. So overall, we are in a much better position in terms of capturing. And one good thing which is also happening is consolidation is also happening in this industry. All these things are favorable for this sector and I'm sure that next two years going to be good for this industry. In the meantime, our objective is to make sure that we vertically integrate so that the margin, what you call, fluctuation because of this only in one commodity probably can be kind of minimized.

39:57 So that is where the long term objective and that is what our CEO has said that ready to cut fabric, we should be ready by 2930. And in the meantime, we are also favorably looking at the possibility of going beyond that also. So I think we are on the right path, and I'm sure that we will be able to create value for this all our shareholders. With this, thank you very much and wish you all very happy Diwali and a prosperous New Year next year. Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.