Filatex India Limited (526227) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Earnings Conference Call of Filatex India Limited, hosted by Motilal Oswal Financial Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Sumant Kumar from Motilal Oswal Financial Limited. Thank you, and over to you, sir.

Thank you, everyone. Good afternoon, everyone, and a very warm welcome to Filatex India Limited Q1 FY '22 Post-result Earnings Call hosted by Motilal Oswal Financial Services. On the call today, we have management team being represented by Mr. Madhu Sudhan Bhageria, Chairman and Managing Director; Mr. Madhav Bhageria, Joint MD and CFO; Mr. Ashok Chauhan, Executive Director; and Ms. Stuti Bhageria, Senior VP and Corporate Strategy. We begin the call with key thoughts from the management team. Thereafter, we will open the floor for Q&A session. I would now like to request the management to share their perspective on the performance of the company. Thank you, and over to you, sir.

Thank you, Sumant. Myself, Madhu Sudhan Bhageria. Good afternoon to all. Once again, a warm welcome to all of you attending this earnings call for the quarter ended June 2021. I hope all of you have safety sailed through the havoc caused by the second wave of COVID, which has affected millions of lives. I presume you would have certainly have gone through the presentation, which has been uploaded on our website as well as on the stock exchanges. The textile industry, after a very tough period from April to July in 2020, enjoyed a breather from the upheavals of slowdown, shutdown, corona, labor shortage, container shortage, high shipping costs, et cetera, et cetera. In fact, the performance in fourth quarter last year was the best till date, and this would be true for almost all companies in textile sector, where the company was not just for synthetic yarn, but for the cotton and other blends. Increase in duty rates on cheap imports had a solid effect, which also contributed to the firmness in the market. Export market opportunities came in plenty, but could not materialize fully due to very erratic shipping schedules and rather steep shipping costs. We had expected the momentum to continue in the first quarter, but it started going down as the number of COVID cases increased rapidly. In the last con call, we had expressed exuberance in the market in Q3 which continued almost through the next quarter. We have said that if Q3 was extraordinary, then Q4 was stupendous. Our -- we also mentioned that it was rather exceptional and unlikely to continue as a benchmark for any comparison. The first quarter of FY '22 has been a mixed bag as the second wave of COVID hit the country. Let me quickly go through the results of this quarter Q1 FY '22 before talking about the second wave. We achieved a production volume of 78,000 metric tons, which is around 81% of our capacity. The revenue for the quarter is INR 699 crores, and operating profit EBITDA is around INR 101 crores. Profit before tax is INR 76 crores and net profit, PAT INR 52 crores. We have not compared the results on a Q-on-Q basis for Q1 of last year as the comparative conditions are vastly different, and it would not make much sense. To understand the economic impact of the second wave, let's revisit and remind ourselves of the first wave and its impact on the economy. In the first wave, we went through a prolonged national lockdown and a significantly lower number of these cases. Manufacturing and the urban economy had come to a grinding halt, while the rural economy continued to move because of less strict lockdown. As a result, agriculture, which is primary driver of our rural economy, providing employment to 58% of our population, continued to grow. Agriculture further benefited from good monsoon and cheaper and higher availability of labor. Reflecting on the GDP figures, our agriculture economy grew by 3.4%, while the overall economy contracted to 7.7% in FY '21. The first wave was primary urban in its spread, so when partial relaxation was announced, manufacturing activities at partial capacity started rolling up, Gradually as the migrant labor return, the capacity utilization rates went up. In fact, by the end of full financial year, almost all manufacturing sectors did well. The joy of splendid recovery in Q4 last year was short-lived. Signs of second wave were visible. However, the mood across the country was that we have managed to bear and now contain the virus. The visible signs were not taken seriously, no travel ban and laxity in testing. Comfort of first shot of vaccine gave us a false sense of security. The COVID patients number started rising exponentially and no one knew what to do and how to treat the infected person. There is hardly a family which did not have a case. The second wave was more devastating in its effect, causing extreme stress on health care infrastructure. As in the second wave, rural areas effect started reporting more cases than urban ones. The distress and panic was widespread. And -- an analysis of more than 50 more severely hit districts indicated that 26 were in rural areas. The situation was further aggravated due to the inadequacy of medical infrastructure in the rural areas and the rush of patients from villages and smaller towns to urban centers. We believe that economic fallout of the second wave of the pandemic, at worst, is likely to remain restricted to the first half of this financial year. Although availability of vaccines and revival in private consumption will determine the speed of economic recovery. Although some contact intensive sectors like hospitality, leisure travel may continue to be hit harder than the rest of the economy. The economic damage from the second wave is likely to remain restricted. We also expect the overall hit to India's economy to be softer than that during the first wave last year. As the lockdowns have been localized in city or state specific, consumption was stalled but manufacturing activities were allowed to continue. So there was little loss of production. However, the pace of economic recovery will be determined by access to and delivery of vaccines and the strength of recovery in private consumption, which could be hampered by the slump of income streams of low and middle-income households from job and wealth losses. Beside the increasing health care infrastructure spend, it is crucial for the government to extend employment and income support to smaller firms, the rural economy, including unorganized sector, the services sector and the urban poor, the 4 segment most likely affected by the reimposition and extension of restrictions. Steep rise in medical expenses, along with dwindling income has also added to the pain. The textile sector as a whole is quite self-reliant in terms of raw material, skill sets, manpower and not to forget a well-established domestic market. Several experts and advisers had identified stagnating factors such as lack of steel, biased towards cotton, inadequate support to MSMEs, preferential trade agreements, et cetera. The government's blueprint meriting policy initiatives have started addressing all these issues as AatmaNirbhar vision moves on to implementation stage. The government has recognized the importance of textile sector in job creation and importance of man-made fibers in textile fiber basket. We continue to remain bullish about our prospects. The Indian polyester industry, after removal of antidumping duty on key raw material that is PTA, has improved its competitiveness and capacity utilization has improved. There are some other structure anomalies like inverted GST structure, which are hampering the growth. Polyester industry continues to suffer on account of inverted GST structure, higher rate of 18% on raw materials, and 12% on finished products like yarn and going forward in the value chain 5% on fabrics and garments. Our uniform GST rate across the whole chain will ease the working capital needs and spur growth across the whole industry, which has many MSME companies as the end users. The policies are being reviewed and modified to remove the roadblocks for accelerated growth in fabric and garments made from MMF. The government has taken effective steps to plug loopholes by imposing value addition norms on garments, which have curbed the duty-free import from FTA countries. Custom duty rates have been increased from 10% to 20% on import of around 300 textile products. The government has extended the rebate of state and central taxes and levies, RoSCTL for exports of apparel garments and made-up till March 2024. However, textile products, which are not covered under RoSCTL would be eligible to avail the benefits under RoDTEP. This will be a big boost to exports, including textile products. Another boost is inclusion of MMF garments in apparel in PLI scheme. Anti-China sentiments are gaining ground in global trade, and these seems unlikely to boost exports, which are currently hampered due to high shipping rates as well as high number of COVID cases worldwide. Load trial of 30-megawatt captive power plant at Dahej is going on since last 2 weeks. We are aiming to achieve commercial operations of the power plant shortly. Direction and commissioning was hampered severely by travel restrictions of exports from Pune, Maharashtra and spread of COVID which led to suspension of work. Almost the whole erection team of boilers suppliers had to be quarantined due to COVID. Upon completion of this captive power plant, the annual impact of savings in energy costs will be around INR 40 crores. The company continues to review its plant operations and equipment and their optimal utilization. This exercise helps us optimize operating costs as well as opportunities for debottlenecking any surplus capacity. The company has identified opportunities to increase its CP melt capacity by around 50 tonnes per day. This additional melt, along with surplus CHIPS volume, will be utilized for producing around 120 metric tonnes per day of POY. In my last conference call for Q4 FY '21, I had explained our rationale about chemical recycling. Our company has again engaged in R&D activities, developing process parameter for recycling of polyesters. The future of textile manufacturing is at an inflection point. Global production of textile in apparel has rapidly increased over the last decade, which has led to generation of large amount of textile waste, polyester owing to its affordability and versatility is the preferred and most dominant fiber to ensure sustainability and reduced environment impacts in the textile and apparels industry. Utilization -- utilizing a sustainable and circular economy model is of utmost importance. The industry requires manufacturers to set up its efforts for meeting sustainable environmental spending. Initial efforts on recycling were limited to PET bottles being washed, cleaned and reprocessed into fibers. Another possible alternative is by way of chemical recycling in which all kind of PET waste, be it bottles or textile waste, is depolymerized in a controlled manner, which after purification is repolymerized to produce PET products, matching in quality to that produced by virgin raw materials. After successful lab trials, now we are moving ahead with 1,000 kgs per day pilot plants, which help us revalidate our process conditions and operating costs. With the growing textile and apparel markets of India improving exports competitiveness, there are significant opportunities across all fiber types and products. Our MMF-based textile products are expected to be leading in demand globally. India's MMF-based textile manufacturing is focused towards low value-added and commodity products. The demand for high value-added products like sportswear, performance wear and athleisure is growing rapidly worldwide. Countries like Taiwan, Korea and China are already into manufacturing high-end MMF-based textiles. To keep pace with current trends and need, Indian economy needs to invest and develop capabilities, MMF textiles and apparel products to tap the higher value-added segments. Thank you all for listening to our assessment of the current economic scenario and continued belief in bright prospects of polyester textile industry. I now will gladly respond to all the questions that you may like to ask. Thank you.

[Operator Instructions] The first question is from the line of [ Ravi Sundaram ] from Sundaram Family Investment.

I have 2 questions. Sir, my first question is, how has been the demand as you see -- as you are progressing into Q2 and the realizations for yarn? You don't have to give me the number, but the trend?

Yes. Going forward in Q2, the demand has started picking up. And I feel that by the end of Q2, we should be having demand as we had in last year in Q2. And as per the margin also, right now margins are under pressure, but they have shown signs of improvement. And I think as the demand increases, the margins will also increase going forward.

Okay. I had one question on margins. I noticed that PTA prices, which is one of your key raw materials, have actually gone up. I assume MEG prices also have gone up. Will this have any impact in your upcoming quarters or Q2 to start with?

Upcoming quarter depends. If the demand increases, we will be able to pass it on. But in this Q1, we were not able to pass it on solely because the demand was low, and it was going down. But from beginning of July, the demand has started showing signs of improvement. And as the demand increases, we will be able to pass on whatever increase is there and maybe more than that.

Okay. And last question. This is on accounting entry side. So the -- what is the depreciation number that would hit the quarterly numbers when we have the new power plant coming in? I understand we will have nearly INR 40 crores saving in power cost.

I couldn't get your question, please.

Once we have the new power plant commissioned, what will be the depreciation number that will be added due to the new asset?

Depreciation I think on a quarterly basis, it will add to -- maybe on an annual basis, it will add around INR 4 crores to INR 4.5 crores more.

The next question is from the line of [ Vivek Savaliya ] an individual investor.

Sir, in the last call that you mentioned that we did an EBITDA of about INR 120 crores in Q3. And you said going forward, we should be able to maintain that a bit more and then the power costs in terms of I mean, Q1 has been a bit weak. But are we still on track to deliver this kind of number? Or there could be -- there might be a lag of 1 or 2 quarters?

No. Already there's a lag of 1 quarter. And the second quarter, I also don't expect to reach that level. But from third quarter onwards, yes, we expect to do what I have said or maybe better than that. Because now the demand has started picking up. And as it is going forward, it picks up, the margin will improve, and we will be able to achieve what I've said, maybe better. And this is based on the facts seeing the international margins. Internationally, the margins which are there, we have, based our calculations on that. And that to on a little lower side.

Sir, one more question, sir. I was just going through the numbers over the past 5, 7, 8 years. We've done a margin kind of 8% to 10%. And after COVID that has obviously almost doubled to 16%, 17%, 18%. I just wanted to understand, do you think it's a 1-, 2-year sort of a scenario where they're going to utilize maybe a tightened market in terms of supply? Or do you think there's some structural change in which over the next 3, 4 years, you will feel confident that you will be able to maintain the sort of numbers that we have and showing at the moment. I just wanted to get a broad picture of next 2...

Yes, there has been structural change, and there are a lot of factors which are contributing to this. One I said is the antidumping duty removed on our raw material has helped us in improving the margins. Also, the demand has also grown locally. And there has been no capacity additions in the industry for the last 1.5 years. Rather, there was a fire in FY '20 -- sorry, February '20, which destroyed almost like 6%, 7% of the capacity. And also, the government has put some curbs on imports, which were coming at a very 0-duty or a lower duty. So all those factors have helped us and in the long run will help us in keeping the margin at these levels.

Okay. Sir, just one more question. On the media interview today you said that we hope to achieve a top line of about INR 30 crores to INR 100 crores this year. I was just wondering, get a sense, over the next 2, 3 years, should we -- can we do a 10% to 15% CAGR on the top line? Or I mean, understand for FY '23, can we expect an increase in the volumes on the top line figure of FY '22?

See it's difficult to say on the top line because top line is also governed by the raw material prices in our case. We expect to do around INR 3,200 this year on the current raw material prices. And next year, we should add, because we are adding certain new capacity of POY. So we should be able to add at least 12%, 15% next year. And then going forward also, once we do more expansion or more value addition things, we should be able to add, but the top line would be dependent on the raw material. Definitely, profitability, we will be able to improve year-on-year.

The next question is from the line of [ Rishabh Shah ] from [ RS ] Capital.

Sir I just want to -- there are some news article in Investor Day that Europe has suspended some GSP status of Pakistan. Is this true? And does the company any way benefit or some opportunity can arise for us?

I think that status is yet to be suspended. There are talks about suspension. And once it is suspended, I think the whole textile industry can get some benefits. And then indirectly, we will also get benefit because of the demand of textile products increasing in Europe from India.

So how does Filatex stands to benefit? Is it a game-changer, possible game-changer if it happens?

No, no. I can't say right now because the demand for the fabrics and garments will be more there. The demand for yarn is not too much, and Pakistan was not exporting too much yarn to Europe. So I don't see yarn directly getting impacted by this.

Okay. And sir, you've seen a change in the ministry, textile ministry sometime back. So is there any -- is there any talks of new national textile policy that is yet to be announced? Are you seeing any kind of benefit that we can get from that?

I think the PLI scheme which they have to -- which they will be announcing very shortly. I think maybe after the session, parliament session. So there, they have included a lot of garments of manmade and fabric of manmade in the PLI scheme. So that will give a boost to us because the demand for the manmade yarn and fibers would increase. That is one big announcement, which is to be coming. And then also after the session, there's a GST council meeting scheduled. In that we expect that they will rationalize our GST rates. That also will be a boost for us.

The next question is from the line of [ Dipesh Karan ], an Individual Investor.

Congratulations on the results. I think you have done commendably. And looking at the financial, I was just concerned on the change in inventory front. So I think we have constantly been decreasing our inventory. Any statistical move on that front? Or any -- on that?

Change in what did you say?

Change in Inventory. Inventory of finished goods, talking about...

Yes. Finished good inventory has increased because we didn't reduce the production as per the demand. So inventory is higher because the raw material prices were firming up, and we didn't want it to lose out on the production. So at the moment, the finished good inventory is on a higher side. But we hope to liquidate in this quarter and next quarter, as the demand increases.

So you said are we piling up because I think the Chinese inventory shows a negative figure. So I think we are realizing on our inventory.

So negative shows that we have increased the inventory because that's on the expense side. Expense side negative shows there is an increase in the inventory. It gets reduced from the expenses because it's the inventory. It's not expenditure.

[Operator Instructions] The next question is from the line of Sudhir Bheda from Right Time Consultant Services.

Congratulation on good set of numbers given the challenging circumstances. You did -- your team and you did a really commendable job. Sir, my question is we have produced around 83,900, so almost 84,000 metric tonne in March quarter. But we understand that given the circumstances, we have produced around 67,000. Out of that 5,000 was -- 62,000 were yarn. So going forward, in the coming quarters, when do you expect to reach at this 84,000 level?

I think in Q3, we will be able to reach that level for sure.

Great. And if you look at the margin, there is a 22% margin was there in Q4, which was, of course, it was accepting the high margin. And then we have around 14.45 percentage in this June quarter. So how do you see margin going forward after the commencement of power plant? And also we are going for value-added product. So how do you see this margin panning out in the rest of the year?

I think on an average, we should be doing in the whole year around 14%, 15% -- maybe 15% to 16% because the power plant will also add up. So that is what I feel we should be doing. And it should gradually improve. I mean, in second quarter, I don't expect it to improve much. But from third quarter, I expect it to increase.

The next question is from the line of Maulik Patel from Equirus Securities.

Congratulation on good set of numbers, sir. Sir, a few questions. One is any further clarity we have on the recycled project, which you have been following up?

Yes. The recycle project, we have done trials in a very small manner, which was like 50 kgs per day. And now we are going on the second stage. We are building a small plant where we'll be able to do almost 1,000 kgs per day. In 1,000 kgs per day, we can do some feed marketing also with that. So once that is successful, then we will go for the final big plant. So this will take another at least 6 to 7 months, 5, 6 months to establish and then to work around the parameters for another 1 or 2 months. So by -- once we are successful in that, then we will go for the bigger plant, which would take at least 1 year after that.

Okay. And second question is on competitive intensity side. There was a [ Vilosa ] plant which was acquired. And I think there's capacity addition also announced by Indorama also a couple of months back. So are we still looking at another deficit market for the polyester yarn for the next 1.5 year? Still -- is that same situation is still there?

Yes, I think the polyester market will remain deficit for a long time to come because the -- internationally, in the normal time, the demand is increasing by almost 2.5 million to 3 million tonnes. And so that demand, once the COVID is over, I think will come back. Also according to me the population increase is happening worldwide. So that demand will also come in one go, and there has been no increase in the supply from last 1.5, 2 years. So all these things will -- I think, will have a good period once the COVID is over worldwide and there will be good demand.

And sir, any update on the PLI scheme where you mentioned that the manmade fibers are at the part of the [Foreign Language]

Yes. See there has been no update from the ministry, but whatever we have been hearing and there have been some agencies who have been talking and taking the views. So whatever we have gathered from that, based on that I have said that they are bringing PLI scheme for mainly MMF-based garments and fabrics and also some technical textile. Technical textiles are basically also made from manmade.

Sure. Okay. And sir, the last question is on our domestic demand. I think there was definitely hit in month of April, May because of the second wave. Have you seen a similar uptrend, what has happened the last time and the last time, in the previous year, the first COVID wave. There was a tremendous demand, which is pent-up demand, which has come up from the hinterland, rural and other areas but are you looking...

Yes, you see last year time also the main demand started coming from end of August only. Till mid-August, there was not much demand. The demand immediately picked up end of August only. So I expect the same to happen. But this time, what is happening, the pipeline was not so dry because people were producing and holding the stocks. So I think by August end, then we should see. Because there is the marriage season also starting and also the festival season starting. And I think this vaccination drive would also have picked up quite a bit by now -- then. So all these factors will see that there is a good demand for textiles after August end.

The next question is from the line of [ Niraj Manjenka ] from [ Wiseline ] Investments.

Congratulations in doing reasonable numbers in the reduced environment. I wanted to know on the CapEx front, you guys in the press release on increasing capacity. Can you give more color on how, I mean the time lines on when it will scale up? And how much capacity addition you will add on yearly numbers, yearly volumes?

See, right now, we have just planned for one CapEx, which is expansion of POY capacity and some debottlenecking in polymer. So that will be completed by first quarter of next year. And so you will have 9 years of -- 9 months of production in next quarter, next financial year from that. And also, we are planning to put a more picturizing unit but that we are planning to put in the subsidiary of Filatex because there are a lot of benefits, which will be available to a new company. As textile is a park -- textile, we get now also from the center and also there are certain benefits from the state, like interest subsidy and also power subsidy of INR 2 per unit is available. So we will be doing it in a different country, but 100% subsidy of that. But that is yet to be finalized. I think maybe after the second quarter, we'll take a decision on that. And the second, we are doing a small expansion or you can say in R&D, we're putting up that 1,000 kgs per day of waste recycling. That will be operational by end of this financial year only. So these are the only available. And then next year once that recycling, waste recycling is through, then we'll invest in putting up a plant for the waste recycling in a bigger way of 100 tonne project.

Got it. And what was the gross margins of the DTY and FDY for the quarter?

It's very difficult to say for the quarter. But as I've indicated, we should be doing around INR 14 per kg on our total production as a year so INR 13, INR 14.

And there's some restatement in the capacity that you have put in the presentation. Any...

There is minor changes we have done because of the day a year changes. It means in the same machinery, if you change from 1 day a year to another, the capacity changes. Based on the last 1 year experience, we have done minor changes. You will see the total waste reduction of only 1,760 tonnes out of 383 tonnes. Rest is just shifting from one to the other.

Okay. Any specific color on how would have some changes for your output alone, like in terms of margins or mix would change or any color on that?

Margins will remain quite healthy, I think, once demand picks up. The main products is, see, FDY and DTY and POY. So CHIPS, we don't have much margin. So that's why we are trying to convert maximum possible CHIPS to yarns. That's why putting more capacity of POY and DTY in next 1 year.

And last, how is the margin trended over the quarter and the current run rates of margin? Just a color on that rather than our numbers like...

Margins after Q4 had been going down since the COVID restriction was applied and the demand and the markets were closed. But now as things are opening up, the demand is kicking up and the margins are also started to inching up. It will take some time for the demand to pick up, like maybe another month or so.

The next question is from the line of [ Deepesh Sethit ] from [ Value ] Finance.

Am I audible?

Yes. Yes.

Just wanted to have an update on what is the situation of our shares, is that being pledged? And when are we planning to unpledge them?

See the share pledge is not that we have borrowed money against that. At various times when we had borrowed money for the company from the banks, so this has been given as a collateral security. And now since the security with the banks is quite good, we have already applied for de-pledging them and the -- it's in the advanced stage. And hopefully, we will be able to get de-pledged by end of this quarter. There is no actual borrowing on this, like when you borrow term loans, so they ask for collector security at various times. And that time, they would say that, okay, why don't you give shares if you don't have any property to pay. And we used to give them certain shares to get the loans.

It's basically for the loans for the company only, not for any personal.

There is no personal borrowing on this. These are all pledged with the banks of Filatex only. The commercial banks which have given loan to Filatex. There is no -- not even INR 1 borrowing of personal loans by pledging the shares.

Okay. And all the expansion, which we are planning to grow about INR 130 crores according to the latest announcement, is all by foreign currency loans only? Or are we planning to even do a preferential to promoters or...

Right now, we will be taking from ECB, which is the machine which we are importing from Germany. So there, we can get ECB at a very lower rate of interest. Rest will be all through internal accruals.

Okay. So how much is the loan...

Loan would be around INR 52 crores.

INR 52 crores. Okay. The rest...

The rest all will be internal accruals. And whatever extra cash flows we have, then we will retire rupee loans in advance in this year also, like we did last year.

Okay. So by this year or what is the target...

Our target is to achieve at least on term loans to equity around 0.5%. Right now we are at 0.7%.

This will include the INR 52 crores you are taking from...

Yes, It will include that. Including that, by end of the year, we should be targeting to go to 0.5.

The next question is from the line of G Chokkalingam from Equinox. As there is no response from the line, we will move to the next question which is from the line of Darshit Shah from Motilal Oswal.

My question has been answered.

[Operator Instructions] The next question is from the line of [ MS Rajasekar ] an individual investor.

My question is this -- you are doing the chemical processing of the recycled yarn, recycled waste. Will you be the first one in the country or the world to do this kind of chemical processing?

No, we will not be the first one. I think there is one company which was named Polygenta, now the name's been changed. They are doing it, but their process is different and they use only transparent and very white bottles only. We'll be able to use any colored bottle also, and we'll be able to use yarn waste and as well as we are working to use fabric waste also. So it will be different than them.

Okay. And what is the demand for this recycled yarn? Is there a regulation to use this recycled yarn all over the world?

No, there's no regulation, but a lot of brands have taken a pledge to use the recycled yarn. And they have taken a pledge, I think before COVID that by 2025, they will be using 100% recycled yarn for their products. To name a few, like Uniqlo, H&M, Zara, and a lot others. So they are ready to pay a good premium for the fabric made out of this and the availability is quite poor. So right now, it is commanding a good premium in the market. And the way we are producing, our cost of production will not be higher than the cost what we're doing to produce the virgin yarn. So it will be similar or lower than that. So there is no risk. So whatever extra premium we get, there will be additional margin over and above the virgin margin.

That's right. But it looks like the way you are -- now you are putting up 1,000 kg plant -- per day plant. By the time you come up with your production, it should be 2024, I think, in case you are successful.

Yes. Yes, it will be the beginning of '24. You are right. Yes.

'24. So after that -- yes, that's right.

Sir this is '21, '23. Sorry. Will be somewhere in first half of '23, we should have the plant running.

You should have the plant -- full fledged plant running?

Yes, yes. Full fledged. This plant will be running in the next year only. I mean, the first -- last quarter of this financial year. And once we are able to establish that, then it will take another 12 months, so which will be end of FY '23.

But my question is, are you satisfied and successful with the small plant of 100 kg per day on that...

Yes, yes. We are quite optimistic. We have done a lot of trials outside also, and we are optimistic. That's why we are investing more money going in with 1,000 kg. Because whatever shortcomings are there, it's easier for us to correct in the 1,000 kg plant. There are a lot of things which are -- we are not able to do in the 50 kg, so we have to go for a little higher capacity. So there, we can do some modification and bring it to a level where we can take a pledge for the 100 tonnes per day plant. We are taking a help a lot of experts in the industry. We have hired 1 or 2 consultants who are helping us to do all this.

And you feel -- Filatex feels that this is a good area that's why you are investing and then all your...

Yes, yes. I think R&D is a good area. We are also investing and developing different kind of yarns also. Because of COVID, we've not been able to launch them properly, but we have made a lot of different varieties of polyester yarn, which will give different feel in the fabric. So once this COVID is over, we'll be able to do that. You can see on the website, we have developed a lot of different specialty yarns also.

Okay. Okay, sir. One small question is, what is your total debt now as of date?

As of debt, term loan is around INR 530 crores.

So that should come down by about INR 100 crores, INR 150 crores by this year.

It will come down by INR 100 crores, INR 150 crores, and there will be addition of -- yes, net, it will be coming down by at least INR 100 crores.

Okay, right, right. One small question is, are you increasing your promoter shareholding in the company?

No, no. We are not increasing anything as of now.

Anything as of now. All the best, sir. Looking forward for this recycled yarn project.

Sure.

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.

Yes. I'd like to thank all the participants for sparing their time and joining us and hope to see you again in our next conference call of Q2 FY '22. Thank you very much. Bye.

Thank you. On behalf of Motilal Oswal Financial Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.