Banswara Syntex Limited ($503722)

Ladies and gentlemen, good day, and welcome to the Q4 and FY '26 Earnings Conference Call hosted by Banswara Syntex Limited. [Operator Instructions] I now hand the conference over to Mr. Ravindra Kumar Toshniwal, Vice Chairman from Banswara Syntex Limited. Thank you, and over to you, sir.

Thank you. Hello, everyone. Good afternoon, everyone, and I welcome you all to our quarter 4 and FY '26 earnings conference call. Along with me, we have on the call our CFO, Ms. Kavita Gandhi, and SGA, our Investor Relations adviser. I hope you all have been able to go through the investor presentation uploaded on the exchange and our company website. Let me begin by briefly highlighting some of the key developments shaping the industry environment and market dynamics. FY '26 was a turbulent year in which Banswara Syntex demonstrated resilience despite a challenging and evolving global operating environment. The global textile and apparel industry continued to operate amid geopolitical uncertainties, elevated raw material and energy prices, logistics disruptions and labor availability challenges. The continued conflict in the Middle East has impacted key shipping routes and global logistics networks, resulting in longer transit timelines, higher freight costs, and cargo insurance costs, and increased volatility across polyester-based raw materials, and energy inputs. Despite these near-term challenges, demand conditions across our key markets in exports, such as the U.S. and Europe remained relatively stable, supported by -- and we were also supported by very healthy domestic demand trends. In response to these environmental challenges, we remain focused on improving our operational efficiencies, optimizing our supply chain, accelerating our production cycle and strengthening our customer relationships across key markets and customers. We also continue to work proactively on alternative sourcing and logistics strategies to ensure business continuity and improve responsiveness in a volatile environment. Before discussing the business performance, I am very pleased to share that the Board of Directors has again recommended a dividend of 20% on face value, translating into a total payout of INR 3.42 crores to the shareholders. Now coming to the business division. Let's start with the yarn division. The business continues to face operational headwinds during this year. A lot was due to the labor shortages, which impacted our capacity utilization and production volumes. Our Yarn revenue stood at INR 113 crores in quarter 4 FY '26 as compared to INR 123 crores in quarter 4 FY '25, a reduction of INR 12 crores, while FY '26 revenues stood at INR 449 crores versus INR 460 crores in FY '25. This reflects a decline of about 2% year-on-year. The sales volume stood at 46 lakh kgs during quarter 4 FY '26 and 194 lakh kgs during FY '26. The capacity utilization stood at 78% during quarter 4 FY '26 and 77% for the full year. Lower utilization levels during the quarter were primarily due to the labor shortages, particularly in spinning. And these challenges have continued to persist during the initial phase of quarter 1 FY '27. We are in May now, and the labor shortages still continue to be a challenge in spinning. Now despite lower volumes, realizations did improve during the year by approximately INR 30 to INR 35 per kilo. This was supported by our high-quality product mix and higher contribution from value-added products we have managed to now make Siro Compact Spandex Yarn -- dyed Siro Compact Spandex Yarn, a regular feature from Banswara. And this has elevated our value-added product mix. The raw material costs and energy costs, which increased did exert some pressure on profitability in the yarn business. Now moving to the fabrics division. The business delivered a very resilient performance and strong revenues were achieved during FY '26. Our fabric revenues stood at INR 154 crores in quarter 4 FY '26 as compared to INR 145 crores in quarter 4 FY '25. And the FY '26 revenues increased year-on-year by 5% to a record of INR 569 crores in spite of all of the headwinds. Our sales volume stood at 62 lakh meters during quarter 4 and 230 lakh meters during FY '26. The capacity utilization remained at a healthy 77% during the quarter. The division witnessed healthy traction in our premium fabrics and wool blended products, supported by improving demand trends in the U.S. market and encouraging domestic market momentum. Our brand, which is Simone Federico, and PV, and our Siro collection fabrics continued to witness encouraging acceptance across most key markets and have further strengthened our position as a premium supplier of fabrics. At the same time, exports to the Middle East did remain affected during the quarter due to the prevailing geopolitical situation. We also did face sharp increases in the wood fiber prices, the polyester fiber prices, chemical dyestuffs and the energy cost, which have, to some extent, impacted the margin. However, to address these challenges, we improved our operational efficiencies. We strengthened our domestic market penetration and innovation for the domestic market. We maintained ready inventories of fast-moving yarns to improve the customer lead times, and we leveraged outsourced weaving capacities to minimize bottlenecks in premium product categories. Reducing the lead times for fabric and garment orders remains a key operational priority for our company. To support this objective, we are reevaluating our model of made-to-order towards a more predictive analytics data-driven approach, supported by demand forecasting. Leveraging our growing data capabilities, along with enhanced IT solutions and AI-led solutions, we aim to scale our high-performing product categories more efficiently, improve the customer responsiveness and offer lower lead times with reliability in never out-of-stock solutions. We also continue to expand customer additions across Europe and the Far East while aggressively promoting blended fabrics that support both revenue growth and margin improvement. The demand visibility from our U.S. market remains encouraging. We have added new customers and a strong growth potential exists in this market. In fact, we are finding ourselves to be more competitive vis-a-vis China in the spun-synthetic segment, and this is something which is very encouraging. Garment revenues in the Garment division. Now speaking about the Garment division, this has emerged as one of our strongest drivers for our growth. The Garment revenues increased in the last quarter by 40% to INR 96 crores. And for the entire FY '26, the revenues increased by 18% to INR 324 crores. The sales volumes stood at 11 lakh pieces during quarter 4 FY '26 and 39 lakh pieces during the whole year. So the last quarter was particularly impressive, and there was also more volume in jacketing, which was used. The capacity utilization overall in the garment business went up to 72% for FY '26 compared to maybe 50% or so in FY '25. The strong performance is supported by a healthy order book, improved execution, and we are hopeful for a strong business momentum towards the final quarter of the new financial year. Recent geopolitical developments and elevated raw material costs have impacted just the near-term demand visibility, particularly in quarter 1 FY '27 in our garment orders. Customers and retail brands continue to remain cautious. However, there is still a need for product and the supply-chain disruptions have caused temporary pressure. Having said that, we remain optimistic about medium-term demand recovery, supported by improving order visibility, customer additions, strengthening our relationships with existing customers across our export markets and anticipated benefits once the India-U.K. free trade agreement and the European free trade agreement kicks in. While quarter 1 may remain relatively subdued, we do expect business momentum to improve progressively in the Garment business from the second quarter onwards. Now let's go through the financial performance for the quarter and the full year of the fiscal. For FY '26, the company reported total income of approximately INR 1,370 crores. The business continued to witness improving contribution from value-added segments with Fabric and Garment divisions contributing 66% of the revenue in FY '26 as compared to 63% in FY '25. Our strategic objective remains to further increase our contribution from the fabric and garment business to nearly 70% over the medium term, which we believe will support stronger margin resilience, stickiness to the customers and improve the overall quality of our revenues. During FY '26, our EBITDA stood at approximately INR 143.6 crores or INR 144 crores with a year-on-year growth of 22.5%, translating into the EBITDA margin of around almost 11%. Despite elevated raw material costs and geopolitical disruptions, the company achieved a better profitability, and this was supported by cost reductions, improved product mix and better fixed-cost absorption. The company also recognized a one-time exceptional expense of about INR 9 crores related to the implementation of the new labor code law. Even after accounting for this impact, the company reported a robust PAT of INR 28.4 crores for FY '26, registering a healthy year-on-year growth of 32.8%. For quarter 4 FY '26, the company reported a total income of INR 369.3 crores with EBITDA increasing 46% year-on-year to INR 46 crores, supported by improved operational performance and better cost absorption, PAT for the quarter stood at INR 9.6 crores, reflecting a strong year-on-year growth of 87%. So we had a really good quarter 4. The net debt as on 31st March 2026 stood at INR 483 crores as compared to INR 456 crores as on 31st March. A marginal increase in debt during the year was primarily due to higher working capital requirements and some investments towards machinery modernization that was planned. The overall debt-to-equity ratio remains comfortable at 0.8x as on 31st March 2026. The company maintains its focus on portfolio optimization, disciplined execution, leadership in design and innovation, and we will strive now to achieve a better capacity utilization by curating and focusing on the winning products and growing those, both in the Fabric and Garment division. Looking ahead, we remain optimistic about the company's growth trajectory and expect revenues between the range of INR 1,450 crores to INR 1,500 crores in FY '27. This inspite of all of the headwinds. This growth is expected to be led by a continued momentum in the Fabric and Garment business. We aim to improve the customer engagement and depth with each customer that is key to us. Increasing the domestic market penetration, substituting the Chinese products that get imported into the country. As the entire country now faces a foreign exchange crisis, we believe that we will have very good substitutes available to prevent the imports coming, and we can offer very good substitutes from India. Higher contribution also continues to come from our premium Worsted and Stretch Fabrics. At the EBITDA level, we expect margins to remain between the range of 10.5% to 11% over the medium term. Near-term margins may go down as the raw material costs are being passed on. The geopolitical uncertainties continue for a while, and I think this is something we have learned now to live with. While the first half may continue to see some volatility, we always have a better quarter 3 and quarter 4, and we expect demand conditions and business momentum to settle and improve. We expect a larger growth expected during the second half of the year as compared to the first. Our continued focus on being more relevant to the customers with faster lead times, more products which are more in tune with what they are needing and which are import substitutes continues to drive momentum. And at the same time, we remain conscious that the challenges will remain, and we will face them head on. With that, we open the floor for questions. Thank you, everyone.

[Operator Instructions] Your first question comes from the line of Akshay Ajmera from [ Mirza Security LLT ]. Please go ahead.

Congratulations on a very strong performance in this extremely challenging environment.

Thank you.

Yes. Sir, my first question is, have we added new clients in our export businesses? We have heard lately names like Walmart, JCPenney and the like. So any update on that? Have we added any new customers in our export business?

Walmart has been definitely a new addition, and we saw the impact of that happening in our quarter 4 results in the Garment division, where we achieved INR 96 crore turnover. Almost about INR 15 crore turnover increase in that quarter came from Walmart itself. So we expect the momentum with this customer to continue because the possibilities for growing with them are in our small company, quite infinite. So we can grow as much as we can service them. We are seeing this interest from them in particular. So other than that, we did have already JCPenney as our customer in fabric business, and we had Mango as our customer already in the garment business. We have basically pivoted towards more of the export customers that we had engaged with and are providing them now solutions which go all the way from our yarn to the garment as a vertical mill with faster lead times. And our pivot is away from the domestic market slightly in the garments towards exports as we found there is really a good latent demand due to the fact that the Chinese products now with the Yuan having become much stronger are becoming more expensive and the Indian Rupee being weak is allowing us to have a very competitive position. So we intend to take full advantage of this.

That was really helpful, sir. So again, coming back to the same question, how much of that could be a regular business with, let's say, Walmart and how quickly there -- we can get the repeat orders? Any ballpark assessment would be really helpful.

The engagement is very strong, and we are going to continue to maintain it. There is near-term challenges in the terms of the fact that they've taken in our products and they will try out many of them at retail and whatever works well, they will reorder and we are ready to support that very quick replenishment times. So I am very hopeful that this process is something not just we, but a lot of people in India will now be working towards. And we think that the ecosystem in India now is stronger to be able to support this. So I mean, let's just say that our target to grow in the next year in the garment business is another 20%. And we are also targeting growth in the fabric business next year to the extent of another 20%. So that's aggressive targets we have set. Let's see how much we can achieve.

That is highly encouraging, sir. So are we also in discussion with more such customers like Walmart, JCPenney and we can get...

We don't need that many more. Actually, we are saying that the easiest possibilities for growth is to grow with ones where engagement has already happened and to take more and more business from them. It is in this business of a full garment package supply, it is difficult to get a new customer, acquire it and scale it up. It is much easier to already have growth coming from very large customers whom we are already engaged with. And we have at least 5 or 6 of these very large ones, like we have Telio in France. We have Marks & Spencer, whom we have engaged with in the U.K. So in almost every continent and even now we have engaged with some of the Japanese, but we are finding it difficult to get the garment package out to them. So we are happy with whatever 6 or 7 target big customers in different continents in export and to go deeper in that relationship.

Right, sir. And sir, finally, we have seen a very good improvement in capacity utilization in our Garment division as well. So is that we have arrived finally and now it will be a sustainable basis about 70%, 75% utilization we would be seeing is that...

We hope that we can add some more capacity, which when Surat SEZ gets approved, then we will have additional capacity available. So we will use whatever present capacity we have and maybe the utilization won't go up because the denominator will become bigger. But that's a good sign. We do want to increase our garment capacity, and we do see a long-term vision for garment growth to continue.

Right. So any update on the Surat facility, sir?

Kavita, do you have any clear indication about when possibly we could get the permission?

So time lines exit timelines, we can't predict, but the file is in process and now they are sending the files to the various authorities of industries Ministry and the Kandla and all that. So it will take time. But now file is in progress at a good pace.

Yes. And just to let you know, Akshay, we also are considering expansions in the Garment business if required. And we may in the middle of the year in quarter 2, quarter 3, start upon that because it doesn't take that much investment. So, as this momentum builds up, we will not lose the opportunity because we don't have capacity.

Your next question comes from the line of Dhruv from [indiscernible] Enterprises.

Sir, this year in FY '26, we invested INR 30 crores and INR 40 crores in Yarn and Fabric business, respectively. However, I noticed that the installed capacity is actually down Y-o-Y. Could you just help us understand this?

Right. So you know that in this business, the installed capacity is a function of in yarn of the count we spin. And if we go finer in count, even though the installed capacity may go up, the production levels go down. So we have moved our product mix. Like we said, we have made siro compact yarn, and we've gone up to a capacity of about 200 tonnes per month in Siro compact, which is a low production yarn. So while the investment has been made in upgrading to better quality and better innovative yarns, the production in kilograms may not have gone up. And this is also strategic from our point of view because we see that you are going to always have labor shortages. And particularly in this month of April, May, June, labor shortages across the country have become de facto standard. And no matter how much effort you make, somehow you are not able to fulfill it. So we find that there are product mix plans and our looking at the calendar and understanding when labor is available and what yarn counts to run at what time. We have projected a capacity, which is based on a realistic availability of labor and going finer when the labor is not available because on finer counts, you can manage with less labor. So that's the yarn part. Now the fabric part, we have made investments, which also have happened in worsted machines, which finish worsted fabric. And those are expensive machines, but not necessarily generate more meters. So we are not concerned that we will be -- we are not looking at the bottom line in terms of growth in meters or growth in kilograms, but we are definitely looking at a 20% increase in revenue in Fabric and a 20% increase in revenue in garment.

Got it. And another one is that during last conference we had a guidance of around 15% to 20% growth in garment and fabric division. Are we still confident of achieving this number...

Yes, we have put it into our plan, and we have -- we are -- like now we are saying that we'll go from, let's say, INR 1,370 crores to maybe INR 1,500 crores overall. And this growth, which is going to happen is primarily in Fabric and Garment. And that is working out to almost that much. And this is what we are saying is a growth we feel comfortable in sharing with you all.

We have factored in the increase in energy cost or raw material prices and any labor shortages, et cetera.?

Yes, yes. We are making a much more realistic plan now, which is why we have scaled down certain capacities and are projecting the capacities based on our -- not on the simple arithmetic calculation of full utilization, but on the actual historical understanding of our usage with given product mix and given seasonality.

Just one last question, sir. The issue regarding the labor shortage, is it a transient sale? Or has it become more of a structural reset? Like how should we see this going forward? Any thoughts on improving the efficiency and production through manpower rationalization like automation and other such measures?

Yes, we are trying that, and we are doing as much as we can on the front. But given the kind of nature of our product mix being a little bit more, let's say, SKUs are too many to the automation in a really viable way. What we are doing first is identifying the winners we have, scaling up the production in those winners, and that automatically brings down the labor cost as well as improves the productivity. So it also helps you to manage more with less labor. So we are doing that on that front. It is a more strategic call to work like not really be -- we do have a history of the last 4, 5 years of all of our sales data post COVID when we started really increasing our sales in the Garment and Fabric business. And based on that, we have now a new understanding of moving from made-to-order to a predictive analytical approach towards our product mix. And this is going to make a shift much more than even any automation can. It will change the way we do our production planning. Our sales and operations engagement at a holistic level like a composite mill is now much stronger.

Your next question comes from the line of Garvita Jain from Seven Island PMS.

I have just one question on the borrowing side. So which seems to be at a very elevated level, I wanted to understand how do you plan to reduce the debt, both the working capital debt and the long-term debt.

Okay. I will let Kavita, our CFO, answer this, please.

See, we have a plan. This year, the current financial year, what we are talking about, there will not be a reduction. You will see [ much ] on that. But from FY '28 onwards, you will see a reduction happening in the long term. And working capital is also linked to the growth and the inventory and the debt. So it's a function of performance every year. So we are not really more concerned on the working capital as far as it is within the norm. But yes, the long term will get into the reduction part from FY '28.

Yes. I mean in a sense, the increase in our working capital has been very consciously done to support the customer in terms of whatever ready inventory they expect us to have. So we are just watching the inventory that goes above 90 days or the inventory that goes old. But otherwise, we are happy to increase this and increase sales because we have seen a direct correlations between the lead time, availability ready goods and sales.

Correct. So by FY '28, if we have to reduce our long-term borrowings, how much is the target to reduce that?

The same will get reduced over a period because it can't get reduced because the loans what we have taken has a 5 to 7 years tenure. So definitely slowly, slowly it will get reduced. Exact numbers and schedule, if you want, we can share with you later on.

The next question comes from the line of Ronit Kapoor with [ Investar ] Investments.

So congratulations on the margin despite the headwinds in industry. So my first question is, could you quantify the margin segment-wise for the year.

Yes. So we got an overall EBITDA of around 11%. Kavita, can you share what are the -- because when you do the individual segment-wise margins, it's not very accurate because there is a lot of internal transfers that happen, right? Like for example, our Yarn division supplies 33% of its yarn internally to fabric. Our Fabric division supplies about 25% of its fabric to the Garment division. And these transfer prices, while we try to be at market price is sometimes very defined products which are made exclusively for ourselves. So there is really no market price. So I think an overall EBITDA is a good way to look at it. And we are encouraging the company to become more holistic in its view towards getting an overall EBITDA improvement rather than trying to optimize each local optima. We are looking at a global optima. But I'll let Kavita share what numbers she has.

No, no, absolutely, Ravi, what you have given is right because the segmental EBITDA will be a misleading or rather not an accurate one. But it will be in a quite similar range what we have at the company level.

So but the garmenting will not have any intersegment transfer. So what is the EBITDA for garment?

Garment will also have because the fabric also garmenting use fabric from our own. So if they use fabric from our own, obviously, yarn is also from our own. So it has intersegmental element in that.

Almost 80% of the fabric we use in our Garment division is made using our own yarn and our own fabric.

Okay. Because the question is coming from the last year, you had said that your garmenting division is at breakeven. So I wanted to understand like are the margins improved in this segment.

Yes. Because see, we were trying to look at it very segmentally at that time. And we realized that looking at this segmentally doesn't help. Like say, for example, I will talk about an engagement with Walmart. Right? So Walmart says to us, I'm going to buy 100,000 jackets, and I will keep your 2 lines in jacketing busy where we have a capacity utilization, which is still not as good as we would like it to be. We could make 70,000 jackets on an average per month. But on an average last year, we've only done 40,000 to 50,000 per month. And to take this order, they say, okay, this is the price we want on the garment. Now we will accept the order and we will take the profit as a whole and say, okay, if we get a 15% EBITDA as a whole or a 12% EBITDA as a whole, let's take the business. Now how will you bifurcate what portion of it was due to yarn, what portion of it was due to fabric and what transfer prices to make. So this is the challenge.

Okay. And my next question is regarding the Textiles. I think it has seen a drastic improvement in profitability. So I wanted to know what is the turnover for this for the year? And do you also plan to increase your stake in this segment, like that's only 40% stake, right?

Right. So yes, Textiles has done very well, and it had its -- we got a share of INR 4 crores in that roughly INR 10 crore profit that they had because we are 40% owners. So that's been encouraging. The turnover there was about INR 100 crores. And on INR 100 crores, we earned almost a INR 10 crore PAT. So that was a pretty encouraging year for the automotive part of the business. Now we do not yet plan to increase our stake in it. The partners we have are both French and Korean, and they would not like to dilute their stake. But we have their support all the time to grow the business because the Korean brands are managed through our Korean partners. The European brands are managed through the French partners. So it's very -- it's a good positive momentum. We do intend that we increase capacities there. So there is demand, and we think that the capacity increase that is required, we will add on certain finishing or whatever other capacities they need so that, that division has its own momentum for growth in terms of CapEx availability.

Okay. And I want to know like for FY '27, what is your CapEx? And how will it be utilized across the segments?

Sure. Kavita, over to you.

Yes. The CapEx has been planned around INR 135 crores to INR 140 crores. And so we will be utilizing this across all the segments. But of course, the Garment being a low CapEx-intensive industry, the minimum CapEx goes over that. More it will be going into the Yarn and Fabric and certain other sustainability investments and the more like zero water discharge kind of a project. We are applying for the 132 [ kV ] line. All that CapEx will be coming -- getting finalized and implemented during the year.

Infrastructure-related CapEx.

Yes. So could you just quantify like for garmenting, how much are you planning?

Garmenting will be as per the current before expansion, what Ravi explained some time back, it will be in the range of around INR 3 crores to INR 5 crores. Because once we get our capacity, I mean, the SEZ machineries and all that available. So we don't envisage a more investment right now with the current infrastructure what we have.

The machines are already there. It just required training of the workers, and that's the investment we'll have to make. Thanks, Ronit.

[Operator Instructions]Your next question comes from the line of Akshay Satija with [ Alpha Invest co ]. Please go ahead.

I wanted to understand the impact of the Middle East situation for us. So has it caused the raw material prices to go up? Are these prices pass through any demand destruction that we are seeing from the situation?

Yes, that's a good question, and it's really relevant at this time. So yes, I mean, look, the whole Middle East scenario has increased raw material costs for polyester because it is based on petrochemicals. And that is an increase which is almost about 25% on the raw material front. It has an impact in the yarn prices, which we have increased in proportion, but not been able to pass on all of it yet. However, it is getting absorbed as now -- there was more of a challenge in the month of April. But now in May, people have realized that this war situation is going to be a little bit more long term, so they started to pay more. The good part for us has been in terms of the export with the Rupee depreciation to the extent of almost 6% to 7%, we have not had to even pass on an increase and we've got what we needed in garments or we've got what we've needed in fabric exports. So that's been good in the export front. In the domestic front as well, some increases have been readily accepted because the alternative is China. And the Chinese alternative has also become more expensive with the Rupee being so weak. So we are not seeing a real resistance to the price increase. And in fact, we were encouraging all our people to continue to book the garment orders and keep the lines full at even the old prices if you have to.

Got it, sir. Got it. Any shipping challenges that we're facing? I believe we have a good export portion to Middle East, especially Saudi and those countries.

So Middle East, we did feel an impact. We felt it even in quarter 4. In quarter 4, we had product about INR 8 crores or INR 9 crores, which would have added to our top line and helped our profitability more that could not be shipped because customers didn't accept it in time. And then whenever we are shipping, it's going into the Jebel Ali port and then being trucked into Fujairah and then going inwards. As far as the UAE is concerned, the biggest impact is there. Then we had -- challenges are there in the whole logistics cost, which we hope will ease-out soon. And we have made in our whole new business plan, a reduction in our total sales to the Middle East in Fabric and in Garment. We have anticipated that there will be a drop there. But we expect it to be more than compensated in the other markets. Total exposure also INR 100 crores to the Middle East.

Sorry, sir, total exposure would be?

About INR 100 crores to the Middle East. So we expect maybe about INR 10 crores, INR 20 crores reduction could happen.

'27?

Yes. Unless things improve really quickly or whatever, new channels are found. But right now, it is a bit sluggish, the demand from the Middle East.

Got it, sir. Also, if I -- you already mentioned that you've been investing a lot more into new value-added products. But if I look at our realizations, I don't see any material difference at least yet. So I wanted to understand what impact these high-value yarns would create on our realizations and also our EBITDA profile.

So if you look at the meters that we produced in this current financial year versus the last year, you will see that the meters were less, but we've actually got more value. Value per meter has increased on an average. And in particular, the Worsted sales has become a little bit more. So we are seeing that the entire increase in prices of wool. This has been the biggest challenge in terms of the price increases, even more than synthetic. The wool prices have increased even more. So we do see that these are going to be absorbed because the Chinese have done it across the board. and the market has accepted it that now the old scenario of old prices doesn't exist anymore. And we think that going forward, these prices will continue to be passed on, and then you will see the impact more. Right now, what has happened is the value-added product has been created, but we have not been able to pass on all of that margin to the customer. So the difference is not as stark on the bottom line numbers.

Got it sir.

Once it gets passed on...Yes, that's it. That's all I would say.

Okay. So final question, I also wanted to understand all the FTAs that have been signed, when can we actually see them materially fall in place and possibly start receiving some inquiries or any update on those lines from U.K., U.S. or EU?

Yes. The U.K. is expected to start, I think, by September, but we are -- when it happens, it will happen. And the European Union has said that they will finalize by December end as what I hear from the councils and the ministers and all of the lobbies that is working on it. But nobody knows for certain. All we see is that as this momentum towards -- getting to that deadline of when it gets implemented happens and even before that, we are seeing more interest in India as a supply source.

So can we say, sir, probably with all these things coming in -- falling in place in this year, we could do our peak INR 1,800 crores revenue target that we had possibly in financial year '28?

So I don't know if it will happen in the next financial year, but maybe the financial year after that, we hope we'll get there. Because the headwinds still remain quite strong, the ability to pass on is a little -- so we are happy even if we get 11% EBITDA, but we grow 20% for this present financial year because we do not want to stifle the growth by jacking up the prices to an extent where the customers shy away.

The next question comes from the line of Nirbhay Mahawar from N Square Capital.

Sir, I wanted to understand what kind of capacities we are planning in garmenting side?

Right. They're very -- we have -- as you know, the Surat division that we had in the SEZ, had a capacity of about 40,000 or 50,000 jackets and maybe about 100,000 pants. That capacity already exists in terms of the machine. And as soon as we get permission, that will come on. So other than that, we are just looking at utilizing what we have already in terms of the garmenting capacity, which is not fully used. Like I said, we have 70,000 pieces average capacity available. It can even go up to 80,000 if we really have some long runs. But we are only able to use 40,000 to 50,000 in jackets per month. So there's a lot of capacity headway available. It's about stimulating the right relationship and the right customer engagement, which we are working hard at, and I think we'll get there. The team in the Garment division is really working on that.

So in terms of revenues, if we add both the capacities, what kind of revenues we can do optically if demand is not a constraint?

Well, I mean, next year, what is our projection, Kavita, that has come from the garment division. for next year?

Next year, we are projecting -- the Garment division is projecting around 18% to 20% growth.

So I'm saying, let's say, we did INR 324 crores revenue this year, and we are saying our utilization is around 70%. So what is our -- adding Surat, what would be the revenue capacity of our existing setup?

Revenue capacity could be even INR 450 crores, but we are targeting that we'll get to close to INR 400 crores.

So last 2, 3 years, we have done reasonably aggressive CapEx. But then also our revenues are more or less flattish. And even if we look at next year, we are guiding for only 10% growth, which is probably that much will come because of the cost push only. We pass on the cost push. So are we giving very conservative guidance? Or I mean, this is...

Trying to be conservative. We should be because you will hold us to what we say.

Okay. So let's say, when do we see this INR 2,000 crore revenue possible in this company over what time frame? Are we reasonable -- I'm not asking for a guidance, but I'm saying, let's say, do we have the capacity to do more than INR 2,000 crore revenue? And when do we have -- when will our setup will be having that.

Difficult question to answer at this particular time in the global geopolitical scenario. So let's give this a break until the next quarter. And then maybe we can address this better. I'm aware that we have the capacity, and we have said in the past that we'll get to INR 2,000 crores without any significant CapEx, and I maintain that. As to the time line of it, we need now, a much more realistic plan given all of the new thinking that has come in and all of the constraints that have come in due to the labor as well. Because again, in the Garment division, labor is also a big constraint. And when we ramp-up, even though the CapEx is available, if you do not have a steady supply of orders throughout the year and the labor goes away during a particular period and doesn't come back for a while, then you lose that momentum. So we are working on strategies to be able to keep that engagement going and retain the labor in a way that allows the potential of the overall turnover to be achieved. So I think that this is a work in progress, and I can't give you a definite timeline.

So could we give some more detail on the CapEx of INR 130 crores to INR 150 crores, which we are mentioning for next year, what exactly that CapEx will be?

Absolutely. That I'm sure Kavita will be very happy to share with you in detail. So we can send you an e-mail with all of the details you want, and you can feel free to get in touch with Kavita and delve into that deeper. We welcome your input on that.

The next question comes from the line of Murtuza with Pinpoint X Capital.

Congrats on the good set of numbers. I just wanted to understand a bit better on the wool prices, they had sharply rosen in FY '26 and we still managed to expand the EBITDA margin. So can you -- like I do understand there's a pass-through. So what kind of a time-lag is? And how exactly do we procure and where are we exactly sourcing it from? And I would like to understand a bit better.

Okay. So most of our wool is coming from Australia. And we are buying this wool and then having it converted into tops in India. And some of the wool we also buy from China. So these are the 2 sources. Prices have gone up everywhere, and we have been able to pass on some of it in exports very easily only because of the currency issue as well. And some of it we -- because prices have gone up globally, customers are accepting that increase. But most -- all of the increases have not yet been absorbed. So we expect that when -- normally, it takes at least 6 months before a customer is even willing to entertain a new price. Sometimes it takes up to 1 year because as a retailer, the buyer and the brand who is buying from us fixes the price in the store for the whole season and for the whole year and will not change the price in the middle. So typically, we have to wait at least 1 year before all of the absorption happens.

Okay. Anywhere from 2 to 4 quarters?

Yes.

Okay. And just one -- I would also like some commentary regarding our D2C brand that One Mile were working on. So like what is the current status? And what sort of are the -- what sort of allocation has been done? And just wanted to understand a bit better and what sort of outlook we have for it.

Yes. So that's very slow at the moment. We are not spending a lot of money in building the brand yet. We're getting the momentum slowly and steadily. I think that the average sales is now at about INR 15 lakhs per month, no more. So it's still small. As the sales come up, we will, at some point, we want to get it to a level of about INR 1 crore a month before we try to raise some funds for this brand separately. And then we will go on a huge push to pull the brand through because as you know, for brand today, you need to spend a lot of money to build the brand. This requires much more deeper pockets, and we don't want to fund it out of our existing business alone. So we are waiting to get it up to a point where we can further raise money separately for this brand and then really launch it in a big way.

As there are no further questions from the participants, I now hand the conference over to Mr. Ravindra Kumar Toshniwal for closing comments.

Right. Thank you, everyone. I just want to make some concluding remarks. So in conclusion, I would say that the FY '26 was a year where we still had steady progress despite the headwinds in the global environment. and all of the geopolitical challenges. And we delivered a fairly reasonable performance and are happy with what we are able to achieve. We value our customer engagement and our customers who have been loyal and stayed with us and believe in us. And we look ahead with some short-term uncertainties, but remain encouraged by the traction we see in the export markets, by the continued momentum in the domestic market and growth of many new brands that have come into India with a strong focus now on looking holistically at the company's all 3 divisions, maximizing the global profit and while we bring about a more curated and more faster accessible product to the customer with the need of the day speed. And we have to be available with products to the customer that can be supported well. So I think the diversity we have is too large, and we are trying to bring that diversity into a curated, available, quick off-the-shelf range. And we hope that in that effort, we'll be able to get to when Nirbhay is asking us to get to faster. Thank you, everyone.

Thank you. On behalf of Banswara Syntex Limited, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.