Arvind Limited (500101) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the conference call for analysts and investors for post-results discussion for quarter 2 financial year 2021/'22 of Arvind Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Samir Agrawal. Thank you, and over to you, sir.

Thank you. Good afternoon, and thank you all for participating in this call to discuss our results of Arvind Limited for the second quarter of financial year 2022. Joining me today is Mr. Jayesh Shah, our Executive Director and the Group CFO. At the outset, I'm very pleased to start by sharing that we clogged the highest profit before tax and profit after tax numbers since the demerger of Anup Engineering and Arvind Fashion, which you all recollect, happened about 10 quarters back. Overall, during this quarter, the business was characterized by surge in volumes across all segments, and high prices of input raw materials in parallel to that. Most of our business secured price increases to offset input cost increases and that helped maintain unit operating margins. Also during this quarter, the government announced a much awaited RoDTEP rate apart from the PLI and MITRA schemes. So getting to specifics. Overall, the revenues for the second quarter stood at INR 2,115 crores, which was 62% higher than Q2 of last year. The EBITDA margins were at 11% compared to 10.3% last year. Before -- profit before taxes, PBT stood at INR 116 crores and the net profit was INR 70 crores, current year. Included in these numbers is the EBITDA -- is the RoDTEP income of previous quarters of INR 18 crores, INR 1-8 crores. Textile revenues were INR 1,711 crores, INR 1,711 crores, which was 68% higher than by Q2 last year. Denim shipped out 25 millimeters of fabric after a gap of several quarters. Wovens volumes also grew to a healthy 31 millimeters. Garment volumes were up at 9 million pieces. In general, apparel demand continues to stay buoyant across all segments in all markets. Our key global accounts continue to deliver strong results and positive commentary as demand has bounced back post recovery from COVID across the board. This has also resulted in strong volume growth in wholesale brick-and-mortar channels across key U.S. and European customers. Domestic brands and retailers continue to place orders, even though there have been price increases. It is keeping the demand quite strong, both for Diwali as well as beyond. Input costs continue to increase or remain high. Cotton prices continue to soar as reflected in Shankar-6 prices that are coping around INR 61,500 per candy. Internationally, the prices for U.S. cotton remains strong as major selling places like China and Turkey continue buying. Other raw materials also saw increasing prices, partially driven by higher freight costs and more recently, heightened energy pricing. We have been able to pass on most of the cost increases. And as a result, textiles delivered an EBITDA of 11.3%. Average sales price realization in Denim stood at INR 214 meter, and Wovens at INR 176 per meter. ROCE in textiles business came close to 20% in this quarter. Our Advanced Materials business clogged a robust 60% growth in the top line. EBITDA margins in AMD stood at around 12%. The 2% to 3% pressure on AMD margins was a result of lag in price increases to offset the higher input costs and lower-than-planned dispatches. Also, in this business, we have a long lead time order book, so that made some of the delay in passing on the increase in the cost as well. Net borrowings, which have increased from INR 1,950 crores in FY beginning, to INR 2,141 crores by June 30, came down to INR 1,881 as of 30th -- INR 1,881 crores, as of 30th December 2021. Looking forward in Q3, we expect the demand to continue staying strong. We expect revenues to grow by almost 40% on a year-on-year basis, and 3% to 4% sequentially. We will continue managing the RM sourcing tightly while deploying the corresponding price increases from key customers. As a result, we expect to improve our absolute EBITDA as compared to Q2 of current FY. We are also working on building up our investment plan to capture the opportunity opened up by the PLI schemes. We will share the details of the same at an appropriate time. Otherwise, we continue to be very calibrated in the capital expenditures with the aim of further reducing our net borrowings. So this concludes our opening remarks. And now, I invite you all to ask questions. Thank you.

[Operator Instructions] The first question is from the line of Nihal Jham from Edelweiss.

Congratulations to the team for this performance. Sir, three questions from my side. First is that how easy was it with our customers to take the price hike decision? And also, given the current state of raw material inflations continuing, is there a need for further hikes? And how possible or easy would that?

[Technical Difficulty]

Mr. Shah, sorry to interrupt, but your audio is not coming clear, sir it's breaking up.

Okay. Can you hear me now?

Yes, it's better now, sir.

Can you hear me now?

Yes, sir, this is better.

Okay. Yes. Okay. So the cost increases have been like quite unprecedented as you know. And the good thing is that the demand for the product is very strong, number one. And number two, the cost increase is across the board for all the participants. So as a result, we have been able to keep increasing prices to take -- it's not full mitigation, but significant part of the cost push, we have been able to get here by increasing the prices. We believe that the current price increases that you see, which is the last 1 month also, there has been further price increase. And then, as a consequence, you will see price increases in Q3 as well compared to what we had in Q2. It is a industry-wide phenomena led by commodity price increases. So all the brands of all our customers do understand that. As you know, the cost of fabric in any garm -- in any MRP of a garment is only 15% to 20%. And a 5% to 10% increase in that will have to be factored in by the brands, and they do understand. And we are able to kind of increase prices. Of course, there is a lag effect because every time you increase price, the cost keeps rising, even at a faster pace. So to that extent, you do have an impact on margin percentage, but we are more or less able to cover our unit cost increases. Hello?

Mr. Nihal Jham, if you have any further questions?

Yes, I'm so sorry. Am I audible?

Yes, sir.

Yes. Thank you so much Jayesh Bhai for that. My second question was that if you could just give a little more clarity on the Advanced Materials business that there, obviously, the growth remains exceptionally strong. And first, what has been the price hike in the 60% growth that we've seen? And second is specifically, which are the segments which is driving such strong traction in this segment?

Samir, do you want to take this question?

Yes, sure, Jayesh Bhai. So Nihal, on AMD, like I explained in some of the previous calls, it's comprised of three segments of business or subsegment. One is woven protection, which is more specialty apparel for people like FR and military and so on and so forth. The second is industrial products, which is belting, filtration, ironing and so on. And the third is composite. We have seen top line growth across all our segments. And it's a result of the secular demand increase which is happening around the work in the industry, right? So we see that this thing is growing, and we delinquently budget for a fairly healthy growth rate. So at an aggregate level, this is as pretty much as a plan. Now as far as the specific top line growth in this quarter is concerned, it is also a result of the fact that in the previous quarter, there were shipments which we are not able to send out because of budgeting issues, which got built in this quarter. So to some extent, this is, I would say, slightly more extraordinary by about 10-odd percentage points. But by and large, it's tracking the plan which we have, which is to grow this business by aggressive double digit in any case.

Samir, just one related point on this would be that there would definitely be a component of maybe getting a higher wallet share from customers or new customers also, which should be happening, right? Because the kind of growth, even if I take the 10% off, is still significant and not that the industry would be seeing that growth. So just on that, is it that we are seeing -- we are increasing wallet every quarter, or is that new customers are getting onboarded. How are those trends moving now?

Both. Both. So we have a set of 4 accounts, which we have developed in the last 3, 4 years, and they continue to kind of have more and more comfort with us. So that gives us a higher wallet share within the categories we are supplying. And most of those customers are happy to add categories as well, which they are not working with us. So it's both getting a better like-to-like growth and a wallet share on the business we're doing as well as getting new growth for business.

Sure. I just had one last question, if I may. That in the commentary, you mentioned that a lot of the orders are getting preponed. So is there a possibility, specifically, when in Q4, when ideally, most of these orders could be dispatched that there, there could be a lull in demand considering that most of the...

We are -- also so looking at the current inquiries that we have from customers and the kind of understanding that we are reaching. Q4 looks to be -- I think it will be equally a strong quarter in terms of demand. The other thing you must -- as you possibly know that even the Indian market, which is also in a very buoyant situation, and most of the retailers and brands do not hold inventory. And as a result, we believe that even Indian market, demand is not to the full potential as of today, but it could further increase the -- the order book may come more from India as well in Q4. So we don't see a situation of a onetime deep, so to say, in Q4. However, over next 6 to 9 months, it may just start tapering off, whatever is excess demand, but not really impacting a very large volume deep.

The next question is from the line of Kirti Jain from Canara HSBC.

First of all, excellent performance. Much above what you had guided during the last quarter call also, much above that, sir. That's what I'll say. Sir, with regard to the PLI opportunity, what are the things we will be looking to do in the PLI, sir? That is the first question I have.

Sure. Sure. So Kirti, as you know, and I think we spoke in the earlier call also, that there are certain product categories that Arvind is focusing on, and Arvind is not focusing on too much on the so-called our traditional textile business, which is cotton-based, Denim or Woven business. And in terms of growth, of course, we are focusing to make most out of it. But in terms of growth, we are looking at athleisure fabrics. We are looking at multi -- I mean, the -- what do you call, man-made fibers. We are looking at Advanced Materials. So good thing is that the PLI scheme is actually directed towards the areas that Arvind has been focusing since last couple of years and trying to get the expertise in those businesses. So for us, PLI scheme is a very welcome development. We have started working on preparing proposals -- our proposal to government. There are a few things we need to clarify, which we have already submitted our recommendation, which is adding a few product categories, which are very vital for -- from the overall global demand point of view, but they are currently absent. So we are getting -- requesting government to add that. And we would look at investing over INR 300 crores, INR 400 crores in next 2 to 3 years in product categories, which are man-made fiber and Advanced Materials.

Okay, sir. Sir, my second question is with regard to our accelerated business opportunities we are getting. This quarter also, we have got 50% growth on quarter-over-quarter basis. So given that our capacities are filling fast, what will be our CapEx plan for our textile business, sir?

So we have still the headroom to grow a little bit in Denim. We have capacity to grow in woven. We have capacity to grow in our knits business. We have capacity to grow in garments. In fact, you will see garment volumes rising quite well in Q3 and Q4. In fact, Q2 also would have been good, but the delays in shipments could resulted into lower volumes this quarter. So we have good amount of still available opportunity to grow. And we have been, as you know, outsourcing a lot. So for us, even that opportunity exists. So I think for us to continue growing at between 8% and 10% for next year or so, we don't really need to invest substantially. And as I just said that we are preparing plans to invest INR 300 crores to INR 400 crores in the product categories that we talked about. So we are looking at a healthy growth over the next couple of years on the volume side. So price will change based on the cost, but otherwise on the volume side. So the rupee value may change, but volumes will certainly keep rising.

Okay, sir. Sir, my last question. Sir, when will you think like the pricing power can improve for our textiles business. If you can give some highlight on that, that would be great, sir?

I think the fact that we are able to increase the prices in this situation is a good indication that we have a bit of a goodwill in the market. Our products and our customers like our -- both products and service levels that we give them. So we are in a healthy situation. And I think the margin, if you look at percentage margin, if you are to -- not at the price, but if you were to convert that into percentage margin, if, for example, if the rupee rather the cost push had not come, our percentage margin would have been significantly higher. Just that it is -- it will remain on a lag effect till the prices settle down. So cost, when they settle down, you will see the EBITDA margin in percentage terms to start catching up to a very high -- reasonably decent number. So till that time, you are passing on the cost, you are making absolute unit contribution as much as you were making earlier, with some time lag effect, but not necessarily percentage term because earning on such high cost push if effective on that would be difficult in a B2B business.

Correct, sir. Sir, like further more inflation is happening as well. So we are able to pass on that inflation like cotton has been good in the quarter.

Yes. I think this price increase, I was just telling Nihal also on this question that the cost of fabric is not that high in the MRP of the garment. So we are able to talk to our customers, and we have been so far able to increase prices. And it being an industry phenomenon, I think this -- we will continue to strive for increasing prices so long as cost push is there. Other steps also, we take. For example, increasing volume and getting operating leverage to kind of maintain our margin. And also reengineering a product. We don't talk much about it, but that's also a very key component to be able to maintain profitability without affecting or fully passing on the cost push to the customer.

The next question is from the line of Sagar Parekh from One Up Financial.

Congratulations for excellent performance. My first question is on this other segment, so in the last 7, 8 quarters, we are continuously seeing this other segment showing losses, right? So that is pushing down the overall margins to that extent. So my question is -- sorry.

Yes, do please go ahead.

Yes. So my question is, a, which are the segments within the others, which is driving these losses? And when can we see at least a breakeven in this other segment on a consistent basis?

So the -- in the recent couple of quarters, and particularly this quarter, I would say, is the reason is that a large component of our other segment is our water business, which we are nurturing in our company. That business is doing extremely well on the -- some are on the projects that we are seeing, the business the way it is being based. However, that project has been very badly hit in this period because of the cost push that we have got. We have contracts, which are at a fixed price, and the cost push has been, as I've said 60% to 80%. And that has led to -- and we are -- as a result, the margins have been, in fact, eroded completely for certain projects that we are undergoing right now. That should be over the next quarter. So till that time, you will see the negative, but we don't see that continuing beyond that.

Right. So water is the only segment, which is dragging the overall other segment margins...

Yes, the fact of that is water. The other is a very small component, which we are -- which we continue to invest in, which is our Arvind Internet business. But that's a very, very small one.

Very small. Yes, that's very small.

Yes.

So Q3, we will still continue to see other losses, but then...

Not as much as what you saw in Q2, but it will be smaller and will go away after that.

Okay. So from FY '23 onwards, fair to assume this will be at least 0 to positive?

Absolutely. Absolutely.

Okay. Great. And second question is on the CapEx. So H1 CapEx is about INR 80 crores, INR 85 crores, if I'm not mistaken. How much are we -- so I believe you were looking to spend about INR 100 crores, INR 120 crores for the year. So we've already...

It will be below that. It will be within that number.

So we have already spent INR 80 crores, right, in the H1. So...

Yes, yes, yes.

So H2 will be negligible then in terms of CapEx?

That is correct. So the H2 -- the H1 number, there was one -- the amount has come as in CapEx on the books but there was an advance paid already in the previous year. So actually, from a cash flow perspective, the amount spent is not INR 80 crores. It's only INR 40 crores.

Okay.

Yes. So -- but overall, we will not be exceeding INR 100 crores, INR 125 crores during the year.

And on the deleveraging part, we are on track for another INR 200 crores, INR 300 crores deleveraging for the H2?

The answer to that question is yes, we are on track. But I want to caveat it in these 2 ways. One for example -- or let me complete that. For example, in October itself, we have reduced debt by INR 50 crores so far. So it is on track to that extent. However, as you know, there has been -- the cost push has been very high, and that obviously resulted into increasing working capital in absolute number. So far, we have been able to maintain or manage that as well. The second thing, which we are completely -- we are currently -- we do have a view is whether we will have to invest for a short period of time in cotton based on what the market conditions are and what kind of order book we have and whether we need to hedge it or not. But it is if at all, we do that, it will be like a self-liquidating amount. We buy cotton and consume and money comes back. So to that extent, we are unsure of that. But subject of these 2 carriers, yes, the answer is that we will be reducing debt because we don't have a CapEx program this year.

Right. And in terms of that land sale, Ahmedabad land sale there is noncore that we were looking at, any kind of update on that?

Yes. So we have received about INR 70 crores out of INR 150 crores we have targeted this year by September, and we hope to get INR 150 crores and a little more than that by end of the year.

So another INR 70 crores, INR 80 crores for H2 then?

That is correct.

Okay. Perfect. And my last question would be on the Advanced Materials division. So as the opening remarks, you mentioned that there was some lag in terms of taking the price increases. So fair to assume that going forward, we will be back to 14%, 15% EBITDA, which we did earlier?

Actually -- so Sagar when we reach a stable price situation, both in textile and AMD, we'll be able to come back to the normalcy in percentage margin so -- because the cost push has been continuing. That always keeps us in a percentage terms with a lag of 3 to 4 months.

The next question is from the line of Prerna from B&K Securities.

Congratulations, sir, on a strong performance despite cost inflation that you've witnessed in your businesses. I had a few questions with respect to sustainability of demand. So currently, there is lower inventory with the customers also, which is also helping us in taking price increases as this is what I understood in the call as of now. So could you please correct me and guide me on how strong is the demand in domestic and export market across businesses? And till when do you see that this lower inventory in the system for the customers would help us over the next few quarters?

Prerna, so I think the key reason why I think the demand is strong is because customers are buying efforts. And because you have less inventory, so there is a surge in volume. I'm noting the surge in volume will continue. Then you saw 20 million becoming 25 million or 22 million of woven becoming 31 million. I don't think you will see a 10 million quarterly nor do we have that capacity. I think the point is that whether the demand in the -- the customer demand will continue. So we believe that, that phase of the sudden spike, which has come has led us to increase our capacity utilization to a very high level. From here on, the demand may remain stable and we go up by a percentage 2 or 3, but it will not be a surge in the demand that you saw in the recent times. As a reason, what we were trying to explain to you why you see a surge in the sales or the volumes in the quarter 2. So not for all times to come that there would be such low inventory or a surge in the customer demand. The second thing is that there are factors which are -- which we have discussed in the past also. It's helping Indian industry in general, textile industry in general, which is China Plus factor, which is also as we have onboarded several customers. We have got demand and orders for products from the same customers that we were servicing, which they were not buying from. So those are additional factors why we feel that the demand for us, at least, for the capacity that we have and additional 8% to 10% that we want to grow should not be a major area of concern.

Okay. And sir, how are we placed in garments business now? We've seen improvement in utilization you're seeing improvement further?

Very good situation we are in. We have significant improvements. We have -- our plants are completely full. And you will see the -- we would have -- had that not been a delay in shipments because of containers and all, you would have seen in that in Q2, but you will certainly see that in Q3.

So sir, what could be our annual...

I think we are hoping to end the year at a run rate of 50 million garments.

Sorry, I didn't hear you properly, sir.

So let me -- run rate of 50 million garment in Q4.

Okay. Okay. This is actually very encouraging sign because you've mentioned about your capacity being 55 million pieces, approximately. So there will be capacity expansion in garments also. And how is the profitability in that business? Because you mentioned about unit margins in Woven and Denim, but...

It is -- it has improved considerably because of the utilization, number one. And as you know, the RoSCTL rate, which was also being restored. So with that, the margins are going towards -- they're not least but somewhere, it is inching towards double digit. And we hope that when we end the year or in the quarter 1, we should be there.

Okay. Okay. And sir, one clarity on PLI scheme. The scheme is quite restrictive in terms of 25% growth every year on the CapEx that you do. So based on the asset turnover in textile business, is it possible to achieve those kind of growth every year because I've not seen any company delivering 25% growth in any CapEx that has been done year-by-year.

The government has been very intelligent in favoring business. So let me try and explain to you what they have tried to do. What they are saying is invest INR 300 crores or INR 100 crores, and you achieve INR 600 crores sales in year 1. These are the criteria, okay? And then you achieve 25% more every year. That's another criteria. But what they are not telling you or what they have not written, or what they have not stopped you from doing is to do incremental investment year-on-year, okay, and keep achieving the turnover. So INR 300 crores is not the max investment. It's the min investment.

Okay. So you can invest further every year and attain that kind of growth. That is also okay?

Exactly. That is the thinking of government. They are pushing you to do that.

Okay. Okay. Understood. Understood, sir. And sir, last question on AMD. Is the current run rate sustainable of around INR 300 crores every quarter?

Over to you, Samir. So I must say there is a cost inflation as well in that revenue. But Samir, you want to answer about this revenue target and are you...

So Prerna like I mentioned earlier, we have ambitious plans. A solid double-digit growth is something. Directionally, I would say we are on track. And I think there is enough headroom. Now specifically, some part of what you saw in Q2, obviously, the result of some postponement of shipping and some cost inflation. So to that extent, those two factors will not be playing in all the future quarters. And hence, what you saw in Q2 will not appear exactly as it is. But directionally, we are on to have the kind of solid double-digit growth for sure.

The next question is from the line of Sanjay Shah from KSA Securities.

Sir, my question was regarding, as you cited, a very optimistic view about the domestic demand where there's still lot -- very low inventory line with the manufacturers. So how do you see the trend internationally since our export is more than 60%, if I'm not wrong. And we have seen good tailwinds and headwinds both on that side. Can you run us on that side, how we are doing on export? And what do you see in future about it?

I think export demand in general is very, very strong. And right now, as you know, U.S. market -- in general for all product categories is very strong, not only textile. And that applies to us also. That's one, I would say, reason why export demand is strong is because that demand in both Europe and U.S. is stronger. The second is, as we have discussed in the past, is that there has been challenges in terms of supplies from China and now Vietnam as well for various reasons, including some cotton and human rights-related reasons and all. And as a result, there has been a shift in supply chain also from those parts to India. And I think as a result, India, we are seeing a continued strong inquiry and interest from our customers in both Europe and U.S.

And how about these logistic issues and all. Are they becoming hurdle to us right now?

It is. Supply, there are quite a few issues in terms of -- so availability of raw materials to price, cost of raw materials to availability of containers to cut of, what you call, choking of the -- at the border -- choking at the border of Bangladesh where a large quantity of our fabrics are being shipped because of the nonavailability of warehousing on the Bangladesh side. So there is a very long -- I think it's an unprecedented amount of truck choking has happened in Bangladesh border. So all of these are challenges. So I mean, there are. Yes, to answer in short, yes.

Sir my next question was regarding -- sir, you sounded very humble by saying that you can grow 8%, 10%. So don't you think it's very conservative what you are talking? Or are you talking on volume terms because value-wise, because of price appreciation, we have done very good in these 2 quarters. So how do you see that?

I think I would not want to change what I said. And it is a combination of both price and the volume. Of course, I was talking more on volume rather than on price because in value terms, we may go down if the raw material prices go down. We may not grow. In fact, we may have a negative growth if the cotton has to come back from INR 60,000 to INR 35,000, for example. So I was talking about purely volume-related growth.

In stable circumstances, we will at least grow by 8% to 10% in volume as that you want to say, right?

We are talking about next couple of years. We have headroom to grow at that way.

The next question is from the line of Nishit Rathi from CWC.

Great performance, Jayesh Bhai. I think commendable, the way the team has managed such challenging times. So Jayesh Bhai, if I underhand it right, I just wanted to ensure that all -- I've understood it right. Point number one, you're saying that there has been the revenue growth, the spurt in revenue growth is also because of the low stock that was there. But you're saying that going forward, you may not see such spurt on a quarter-on-quarter basis, but the revenues will remain constant. So we might have taken this -- what we might have seen is a big spurt, but you're saying that the spurt is more or less sustainable. That is the first point that I wanted to understand. The second point -- sorry...

The answer to that would be that we are not seeing a degrowth.

Perfect. So you are saying that we have reached a new normal. This is the new normal in revenue, which we will kind of maintain out there. We may not see similar kind of growth, but this kind of revenue, we may sustain. Is that understanding correct, firstly?

This kind of volumes, we may sustain.

Perfect. So that is point number one. So we will sustain these kind of volumes. Now the second point is these kind of volumes, we have seen revenue -- we have seen a massive cost inflation. And that cost inflation is the reason why our percentage margin looks lower, but we've been able to maintain our EBITDA in overall terms, that whatever increase you have said, we've gotten that. You're saying eventually the inflation will come down. But when the prices normalize, does that mean that even the pricing -- our pricing, what we have seen on a per unit basis, will that also kind of normalize, which will mean that there will be some pressure on the realization? Or do you think that the realizations might also sustain and you might actually see the spread increase, which will mean that at some point of time, EBITDAs will grow?

No. I think the -- if you see currently, what has happened is that, whilst we have been able to get our unit margin intact and we have been able to increase price and as a result, due to increase in volume, we have been able to improve significantly the absolute earnings that we made during the year -- in the quarter. We believe that as the costs stabilize at some level, high, low, wherever. There would be a -- we will be able to adjust because the lag effect will go, the margins, as a percentage, which were -- which is -- if you were to compare with H2 of the last year, we were at 12% plus. We are at close to slightly below 11% right now. So that percentage or so margin, which has gone away, we would want to try and recover that as when the costs are stable. I do not think we will be able to, over a period of time, improve our profitability by keeping the cost reductions in pocket because as we have put -- today to give us the price increase, the customers would expect us to reciprocate when the input costs go down. However, for us to improve profitability are continuing to grow and get the operating leverage and utilize all our plants more than 100% and continue to keep a tight leash on our overheads, which we have been successful last year, as you know, would give us the leverage that we will get and as a result, our profitability should grow.

Correct. So Jayesh Bhai, I fully appreciate what you're saying, but I'm just trying to understand in my mind, right, see when you say that you pass on the benefit of the cost to the customer, it, too, some extent means that you will lower your realization, right? And as you realize, if it's on an increased base and lower realization, there is a third component wherein you've not gotten any benefit of -- so basically, what you're basically saying is your revenues on an overall revenue basis, might come down a bit, but your profit margins might go up a bit, which will mean that even your EBITDA level -- absolute EBITDA, absolute EBITDA might remain very similar to where we are today. But the margins will look better. Is that understanding right? And eventually, then incremental EBITDA growth should come through volume growth?

The answer to that is yes. That's more arithmetic that our efforts should be to increase EBITDA by improving efficiencies, by utilizing plants more, by reengineering products, by improving service levels. So our effort will be to not remain where we are. Our effort will be to keep going ahead and improve our overall absolute and relative performance of the both profits and the ROCE.

So just to summarize, we have reached a new normal in terms of revenue and EBITDA. Now from here on, for us to grow eventually, the path for that will be volume growth and efficiency improvement, right? It is -- the volume and the ASR will be [Foreign Language] the ASR will be a wash. When the costs come down, the ASR will also do some extent come down? But eventually, the part will be higher efficiency and better volume growth, right? That is the way to think about it.

That is correct. That is correct.

Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Samir Agrawal for closing comments. Over to you, sir.

All right. Thank you, everybody, for your engagement and participation. We will see you in 1 quarter ahead. Thank you. Bye-bye.

So thank you, everyone, and wish you a very happy Diwali. Thank you.

Thank you. Ladies and gentlemen, on behalf of Arvind Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.

Thank you.