Nitin Spinners Limited (NITINSPIN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Nitin Spinners Limited Q4 FY '24 Conference Call hosted by SMIFS Limited. [Operator Instructions] please note that this conference is being recorded. I now hand the conference over to Mr. Awanish Chandra from SMIFS Limited. Thank you, and over to you, sir.

Thank you, Zico. Good evening, everyone on behalf of SMIFS Limited, I welcome you all to quarter 4 and full year FY '24 Earnings Conference of Nitin Spinners Limited. We are pleased to hold the top management of the company. Today, we have Dinesh Nolkha, Managing Director of the company; and Mr. P Maheshwari, CEO of company. We will start the call with initial commentary on the results, and then we will open the floor for question and answers. Now I will hand over the call to Mr. P. Maheshwari, CFO of the company. Over to you, Maheshwari Sir.

Thank you, Awanish. Good evening, and a very warm welcome to all the participants for this conference for Q4 and FY '24 earnings. I hope all of you had a chance to go through our investor presentation that has been uploaded on the company's website and stock exchange portals. Before Shri Dinesh elaborate on current industry and business landscape. I shall be providing the financial highlights, fourth quarter and full year end ended 31 March 2024. Revenue for Q4 '24 was INR 800.71 crores against INR 750.42 crores during Q3 FY '24, that is an increase of 7% on Q-o-Q basis. On Y-O-Y basis, revenue increased by 22% from INR 654.8 crores to INR 800.71 crores in Q4 '24. For the full year, revenue is INR 2,905.65 crores against FY '23 revenues of INR 2,406.71 crores, posting an increase of 21%. EBITDA for the quarter stood at INR 116 crores as compared to INR 103 crores in Q3 FY '24 and INR 71 crores in Q4 FY '23. EBITDA for full year FY '24 is INR 377 crores versus INR 297 crores in FY '23, that is a growth of 27%. EBITDA margins for the quarter stood at 14.52% against Q3 FY '24 margins of 13.7% and Q4 FY '23 margins of 10.8%. Profit before tax for the quarter is INR 52.78 crores against INR 43.07 crores in Q3 FY '24 and INR 40.75 crores in Q4 FY '23. For the full year FY '24, profit before tax is INR 177.53 crores against INR 175.88 crores in FY '23. PAT for the quarter is INR 39.17 crores against INR 31.75 crores in Q3 FY '24 and INR 38.54 crores in Q4 FY '23. PAT for the full year FY '24 is INR 131.52 crores against last year's PAT of INR 164.81 crores, lower due to higher tax effect during the current year. EPS and cash EPS for the quarter is INR 6.97 and INR 13.42 per share respectively. Full year EPS and cash EPS is INR 23.39 and INR 44.47 per share respectively. As of March '24, the company's debt profile stood at INR 1,339 crores comprising INR 811 crores in long-term debt, INR 383 crores working capital and INR 145 crores as current maturities of term loan. The Board of Directors has recommended a dividend of 25% that is INR 2.5 per share, that is same as last year. That is all from my side, I now request Shri Dinesh to apprise the participants about industry and present business landscape.

Thank you, Maheshwari ji and Awanish ji. I would like to first elaborate on the industry. After the challenges which we have faced in the previous year, the textile industry in India has undergone a phase of consolidation during the year, 2023-2024, benefiting from stable raw material prices and a gradual increase in demand. Despite ongoing geopolitical challenges such as Russia-Ukraine conflict, Red Sea crisis, which has resulted in a higher freight cost and extended transit times, our country's cotton textile exports have demonstrated a healthy rebound. This resurgence has led to improvement in capacity utilization and margins within the cotton spinning industry. This growth is largely driven by increased demand from downstream sectors such as home textiles and apparel. The capacity utilization in knitting and denim is still subdued, which is expected to revive in the near future. Cotton prices heavily fluctuated in the previous year, which reached to the levels of INR 110,000 at peak and came back to INR 55,000 to INR 58,000 per [indiscernible] recently. The prices are now fairly stable since last few months, and Indian cotton prices are competitive against international cotton prices. Going ahead, the cotton prices are expected to remain stable in view of good crops in various countries overseas in anticipation of a good monsoon and crop in India as well. The stable cotton prices eliminate uncertainty and help international customers and the retail chains to plan and forecast their purchases in a better way. This augurs well for the Indian textile Industry. Looking ahead, the textile sector is eagerly awaiting implementation of various measures from the Government of India, like establishment of textile parks, PLI, various schemes for boosting exports. The measures were in active consideration, however held up due to elections. I hope implementation of these schemes post-elections will help long-term growth of Indian textile Industry. Coming on to the company's performance, the company has effectively executed its expansion strategy, leading to a substantial growth in our revenues. Through the strategic utilization of technology, process optimization and capacity enhancement, and investments in our workforce, we have witnessed notable improvement in our operating margins as well. Both spinning and woven fabric utilization have reached fairly the optimal levels during the last quarter contributing to a 7% quarter-on-quarter growth in the revenues. Looking forward, our commitment to innovation, operation excellence and expansion into value-added segments while being sustainable remains unwavering. With a strong foundation in place, we are well-poised to capitalize on emerging opportunities and possess the ability to address any potential challenges. With this, I would like to open the floor for questions from the participants.

[Operator Instructions] The first question is from the line of Manish Ostwal with Nirmal Bang Securities Pvt. Ltd. Please go ahead.

Yeah. So, thank you for the opportunity and good set of numbers for the quarter given the environment. My first question on the volume growth outlook for F '25 given we have excess capacity. So, we want to ramp up our new facility also. So, what is your outlook for F '25 in terms of volume growth?

Already in the last quarter, We are nearly running to the top capacity levels. And our total production, if you see our presentation, it is about 91,000 tons of yarn which we have done last year. Our rated capacity is around 110,000 tons per annum. And we can produce, after giving all efficiencies and others, about 105,000 tons. So, we are looking for that kind of capacity utilization which is about 10% more from the present last year's capacity.

Okay. And secondly, sir, the current spread of yarn versus cotton versus quarter 4 average spread. So, how is the current spread moving in the market?

Spreads have definitely improved which is why the reason you are seeing an improvement in the operating margin. So, and since the cotton prices we expect to remain stable, basically, the cotton prices have remained in the range of INR 57,000, INR 58,000 plus minus INR 3,000 a candy for good last 6 months, 7 months, 8 months which is going to continue going forward as well as we look forward. So, margins should remain stable and as the demand increases, definitely the margin for the spinning should also improve.

And lastly, on the export side of the demand whether things are improving at a gradual pace or you are seeing a very meaningful improvement in the export demand especially the centers like Bangladesh and Vietnam where the demand is improving ultimately. So, how you are reading those things?

Demand is definitely improving and it is not very fast pace, it is at normal pace. If you see the data of imports by various of these countries we are seeing, that China has started to re-import large quantities. In March they have increased their imports of cotton yarn substantially. I think the year-on-year basis the increase is about 35% 40%. So, there is a substantial increase happening everywhere. But exports from India overall if you see they have improved at a good pace in last 6, 8 months. And now I think they will remain stable for next another 6 months on the same level what we have seen in March and April.

And lastly, what is your outlook on margins operating? We closed the year, full year 13% EBITDA margin versus 12.3% last year. So, how do you see the margin trajectory going ahead F '25 basically?

Basically, we do not give any projections for the margins. But just an indication is that our last quarter margin was 14.5%. So, if you are able to maintain that also, it should be substantial Improvement from the existing levels, yearly levels.

Thank you and all the best for the F '25.

Thank you.

The next question is from the line of Jatin Damania with Svan Investments. Please go ahead.

Good evening, sir. And thank you for the opportunity. Sir, as you indicated that we are already….

Sorry to interrupt sir, may I request that you use your handset? Your audio is not very clear.

Is it audible now?

Yes, sir. It is better now. Please go ahead.

Yes. So just wanted to understand that as you indicated that we are operating already at 80%, 90% of rated capacity. So, taking the...

Mr. Jatin Damania we are unable to hear you, sir. Sorry to interrupt, Mr. Jatin Damania. Hello. Sir, your audio is not clear, sir.

Hello. Is it audible now?

Yes, sir. It is audible. Please go ahead.

I am extremely sorry. Just wanted to understand that we closed this year with a rated capacity and we clocked revenue here about INR 800 crores at this point of time. So, taking that into consideration, FY '25, we will be able to manage INR 3200 crores of top time. If I want to look -- if one wants to look 2-3 years down the line, how can one look at the capacity allocation and the change in the product mix?

Both are separate things, I mean utilization of the capacity and then accordingly, one is growing the existing capacity. Another thing is the change in the product mix. So, as far as capacity is concerned as I have told that we are near to our top capacity and we have very small leverage left if you compare our last quarter number to increase the capacity especially in the spinning business. As far as our fabric business is concerned we still have some scope left to improve upon there. There is the scope of improvement. Here the scope of improvement is only 4%, 5% whereas there the scope of improvement is another 8% to 10%. So, there also we can try to improve. Our knitted fabric capacity utilization has been on a slightly lesser side. So, knitted fabric capacity is slightly on the lower side, we have a scope to improve upon there as well. So, going forward we are trying to optimize all the capacity utilization which we have and that is the motto which we have for the coming financial years.

So, coming financial year I agree, but if I am looking from 3 years to 5 years perspective, so from a longer term vision. So just wanted to understand, I mean are we looking at further expansion or probably we are looking at addition of a spindle and how shall one look at the growth for '26, '27?

Basically, we are going to add the capacity as we will look at the various kinds of products which we want to get into. We have a lot of gamut of products which we can get into. That is still on -- we are always continuously studying the products which we need to go ahead and do the business in. So there is a scope there. Also, we have a lot of scope to increase our capacity in the fabric business. Since our size is very reasonable at this point of time, we have ample scope there to grow as well. So we are evaluating and definitely will continue to grow going forward as well. We have been in past also we have taken measured expansion considering our size and considering our size of balance sheet as well and accordingly we'll continue to do that as well.

And last question from my side. So on the operating margin or the EBITDA margin, definitely on the sequential basis we did improve, but just wanted to understand you were also talking about some improvement in power and fuel cost. So what are the steps taken by the company to lower down the power and fuel cost and the benefit of the same that can come in coming years?

We have added substantial solar capacity -- solar power capacity. Now our capacity is about 23 megawatts. If you see at the end of the last year this capacity was about 12, 13 megawatts. So we have added more than 10 megawatts of capacity. Further, we will be adding some more capacities during the current year. Whatever capacity, whatever the available infrastructure which we have within our plants we'll further trying to add up another 7 to 8 megawatts of power within our own campuses. So this will definitely have -- I can just share with you the total generation which we are supposed to have from solar is about 2 crores 70 lakh units. That 2 crores 70 lakh units and our average rate of power is about INR 7 and there the cost of power is substantially lower. Substantial improvement in the power cost is going to come in going forward.

And last question, I'm sorry, but can you help us in understanding what are the current spreads as compared to the Q4 average?

Current spreads?

Current spreads.

More or less like Q4. There is no major change in the spreads if we compare it with Q4 at this point of time.

Thank you and all the best. That’'s all from my side.

The next question is from the line of Rohan Shah from Valcore. Please go ahead.

First of all, congratulations on a good set of numbers. Sir just a couple of questions from my end. Sir could help us with the degrowth that happened last year due to price like the last year price degrowth if you can help us how much it was?

Last year, price degrowth was -- Maheshwari, can you highlight on that? What was the average realization per kg?

So overall yarn price we are talking about last year it was 338 per kg and this year average price was 274 per kg. So it's about 19% reduction in the yarn price.

Okay. Sir, would you say that as far as the margins are concerned and the revenue is concerned now we would be going up as compared to the past year like the last year and we'll be achieving better margins in the coming year?

I think the worst is over for all the textile industry barring some uncertain things happening geopolitically. I think we should be looking for a better times only.

And sir in Vardhman Textiles commentary they said that the demand is gradually increasing, but it will take around 6 months to 9 months for a more robust demand. So would that be the same as you said that through 6 months you see the exports being a bit stable?

Yes, our point of view is also similar that still because of all these disruptions, we expect that maybe it should take full demand to come in 5 months to 6 months more.

The next question is from the line of Hemang Kotadia with Anvil. Please go ahead.

My first question is on the cotton side. Have we covered cotton for the coming season like the season ended in March, so have we covered cotton till September or October? And the second question is what will be our priority in FY '25 to reduce the debt or are we going to expand further in like value-added fabric or kind of thing?

First of all, we do not share what kind of inventories we have and how much we have covered. So that is not shared for confidentiality reasons. Secondly, as far as going forward we are definitely tearing down some of our debt which is a normal repayment of debt of about INR 150 crores in the next year. So that will definitely come down. And whatever our growth plans will be we are going to plan some - we'll have some growth plans going forward as well. So some part of it normally in the initial phases is spent on the internal accruals only. So for at least for this next year you can consider that no new additional loans are going to be added to the company's balance sheet.

Okay, thank you and all the best for the future.

The next question is from the line of Abhineet Anand from 3 P Investment Managers. Please go ahead.

Yes, just on the - you gave the yarn prices, Maheshwari ji, average for the 2 years. If you can help the fabric and cotton prices as well?

For this year as I have told, it is about 274 per kg.

Sir, I was talking about cotton and fabric.

Fabric prices, this year average realization of fabric was 160 per meter. Last year it was about 182 per meter.

And average cotton prices?

Cotton prices this year average is about 180 and last year it was about 220.

On the debt side what are the long-term and short-term debts and what are the rates for that?

Long-term debt on the balance sheet is at present it is INR 811 crores which is long-term and INR 145 crores of current maturities. So that is INR 956 crores of term debt and INR 383 crores of working capital. Term debt is about 5.5% net of subsidies. Of course, new debt subsidies is still to come. Term loan, this working capital is about 7.5% average.

So when you say subsidies still to come, so we are charging at 5.5% or we are charging at normal when the subsidies are coming?

No, new loans we are charging off in the quarter at full rate. For the older loans, we are booking the subsidies because we are getting them. For the new loans for INR 650 crores we are not booking the subsidies.

Okay, out of that INR 960 crores, INR 650 crores is new loans and there you are probably charging 8.5% as a number. And [indiscernible] crores you are charging probably 5.5. So what is this issue with -- I mean, is there some delay in getting or something? We have approval for that, right?

No, due to election process, the meeting is not happening and that's why the sanction is delayed. So we have complied with all the formalities. It's just a formal sanction to come.

So this quarter's [ INR 27.8 crores ] is ideally higher, right, than a normal number?

Yes.

Because 3Q was INR 25 crores and I assume that INR 25 crores is an average number for the current group debt?

Correct, yes.

So this can go down even -- I mean, without debt going down, this rate can come down, right?

Correct.

Thank you, sir. That was my question.

The next question is from the line of Kaushik from Wallfort. Please go ahead.

Just one thing on the subsidy. You said you are not accounting for the subsidy on the new loan, which last time you had mentioned is about INR 20 crores for the full year and INR 5 crores per quarter. So once the subsidy is approved, our interest cost will come down by INR 5 crores per quarter, right?

Correct.

So right now it's INR 28 crores approximately, it will come down to INR 23 crores?

Yes.

And for the last two quarters, we have not accounted for that. So once that's approved for the last two quarters also, we will account for the INR 10 crores approximately?

So this depends on the terms and conditions of the sanction. It might be from the date of sanction for 5 -- because the subsidy is for 5 years, so we have to see the sanction letter from which date they give, but of course it will be for 5 years whichever date they will start.

Okay. And we don't see any hurdle, right? It's just because of the election. So now because the central elections are going on, so it's further delayed?

Yeah, because the results day is 5th June, so maybe the sanction meeting may be held anytime in the first week of June or so.

Okay, sir.

Actually due to model code of conduct, they are not able to take it up, this kind of sanction because it is, they have to take permission from the Central Election Commissioner for this, which the state government is not pursuing with. So we'll definitely, as soon as these elections are over, everything is crystal clear in this particular case. So we should be able to get it through within the next one and a half month.

The next question is from the line of Nikhil Agrawal from VT Capital. Please go ahead.

Sir, my question was regarding exports. In FY '22, our exports, I believe, were about 73% of the topline came from exports. And currently, it's about 60%. So going forward since the export demand is picking up, do we see this 60% mix going towards the 70% plus this year itself in quarter three or four maybe?

I think your numbers are not right on the export for the FY'23. FY'23 also…

Sorry, FY '22.

Yeah, FY '22 was an extraordinary year, wherein we had a lot of export demand coming from all around the world. So I do not foresee that number going there. As a strategy, we would rather keep ourselves limited up to 50 -- in the band of 55% to 60% on the export side. And that's what we're doing.

So your realizations in domestic and exports are the same, right, or is it better on the export front?

It is more or less same. It is practically maybe not anything major to talk about as far as realizations are concerned on that side.

Okay, and you mostly export yarn, or do you export fabric as well?

We do export fabric as well. Our export share of fabric is also substantial. So both are getting exported.

Okay. So what about -- just a clarification, you said you're -- can you just repeat your Yarn, fabric and cotton prices for the year, for FY '24 and FY '23? I think I missed out some numbers.

Maheshwari ji, they want the numbers of yarn, average yarn realization, fabric realization and the cotton prices for last year.

As I already told, this yarn realization for this year is 274 per kg versus last year 338 per kg. Fabric realization was 160 per meter and last year 182 per meter.

Okay. And this is FY '24 and FY '23, right?

Yeah.

Okay. And cotton, average cotton prices?

For average cotton prices, this year was INR 180 and last year it was INR 220.

The next question is from the line of Ameet Kalyanpur from East India Securities. Please go ahead.

Yeah, thanks for the opportunity. Sir, can I get to know what is the debt repayment in FY '25 And FY '26 that is scheduled?

I think it is INR 145 crores in FY '25 and in FY '26, it is INR 177 crores. Maheshwari ji, am I right?

Yes, INR 174 crores.

INR 174 crores.

Okay. And what is the CapEx expected in both these years?

We have not yet planned the CapEx. We will -- as we get the plans ready for our CapEx, we'll let you know about that. Normal CapEx, which is of the routine nature, is about INR 15 crores to INR 20 crores that is happening. That happens every year due to various requirements for debottlenecking and other things. Apart from that, major CapEx plan has not yet been decided.

The next question is from the line of Priya Gupta from PG Capital. Please go ahead.

First of all, congratulations to the management team for giving a good margin performance. Sir, I have a couple of questions. First is, now we have charged INR 36 crores depreciation. So it is the full depreciation we are charging now or this will be a quarter run rate now?

Yeah, this INR 36 crores every quarter will be charged. So the average -- the depreciation next year is expected to be on the current set of fixed assets is about INR 145 crores. So I think this is what the depreciation is going to be in the next three, four quarters at least.

Okay. Sir, my next question is what would be the maintenance CapEx for the existing total gross [indiscernible]?

Normally, we do not have a kind of maintenance CapEx. We do all the maintenance part of equipment and others is normally put to the revenue itself. And if we do some value addition or some debottlenecking or we add some machines, then only that is considered in the CapEx which I just now told is about INR 20 crores every year.

Okay, INR 20 crores. Okay, sir, my last question is, like what is your view on cotton prices and cotton crop size in current season?

I have shared in my opening commentary as well that the cotton price have practically remained stable from INR 58,000 plus-minus INR 3000. It has been there for last six, seven months. And we expect this to remain like this only. We are expecting very good international crop in various parts of the world, and especially in southern hemisphere. And also the coming U.S. cotton as well as Indian cotton crop is also looking good because of the good forecast of the monsoon. So I do not foresee any major increase in the cotton prices, at least in this calendar year.

The next question is from the line of Vinayak Mohta with Axia India. Please go ahead.

Congrats on a great set of numbers. So I had a few questions focused on the growth and the capacity utilization front. So like you mentioned that you've just sold around 73,000 of the 110,000 capacity on the yarn front and 5,000 of the 11,000 capacity. So right now you have decent amount of capacity left. So is it fair to assume that going forward, you will have a double trigger of volume growth as well as realization growth flowing into the business as things improve? And how do you see the volume growing in the next two to three years?

Actually, for the yarn, our capacity, our utilization was about 91,000 tons in the last year. So I think you must have seen the sales number of 73,000.

Yes.

But we have internal consumption also about 18,000 tons. So that has to be added up to this. So on the capacity utilization front, we do not have much left as far as yarn business is concerned. We have a scope to -- if we see on annual to annual basis, maybe another 10% to 12% capacity utilization can improve going forward. As far as our weaving capacity is concerned, similar weaving and finishing capacity, we can grew about 7% to 8% there as well. Yes, knitting utilization level is slightly lesser. So there we can have a slight improvement over there. So we are focusing on that as well. So considering everything put together, we should be in a range of volumes. We should consider 10% around volumes for the coming up, coming years. As far as realization are concerned, as I've just now highlighted that cotton prices we expect to remain stable. So only trigger now left is the demand. If we foresee a good demand going forward, then only the prices could substantially improve from this level.

Understood. So when you say that you don't have a lot of capacity left, so and right now you don't have any kind of CapEx plans, you might be working on that. So is it fair to assume that you will be able to put up capacities much faster? And if yes, then what is the timeline of putting up that capacity? Because if we are at a cyclical low, then we would want to have capacity set for as in when demand comes to be able to garner a larger share of the demand, right? So how are you pleased with that thought process? Because you believe that it's almost, we are at the Cyclical low.

We have just now -- I completely believe in what you said. And accordingly, we have just now put a substantial capacity CapEx in place and it is [indiscernible] fully in last quarter itself. So we added about 35% of our capacity in last six months only it has come up. Going forward also, utilization as we, everything is on drawing board at the moment. So we'll, once we are ready with our plan of what capacity we are going to add up, what are our breakup of that, we'll definitely share with you about the same. So that will be definitely something on the cards.

Understood. But it would be safe to assume that we'll be able to put up capacity faster and utilize the same as well, right?

Yes, of course, because now the delivery availability of the equipment is also quite reasonable. And also ramp up, we have already the infrastructure to ramp up the capacity. So definitely we should be -- we are in a good state. We have already demonstrated this in past four or five years continuously that as the capacity is put up, we are able to ramp it up pretty fast.

And so you had also guided towards margins eventually moving into that 16% to 20% range. So is it like, how do you see that evolving as a longer term target? I would not ask for next year, you've said that we will try to target the 14.5% range. But how do you see the margins evolving over a longer period of time? Because from a historical 10, 12 year perspective, this 12%, 13% for the year is more or less the lows, technical lows that you have seen as a business, just wanted your thoughts on that.

Yes, exactly. I mean, this is the margins of spinning industry in the range of 10%, 12% and overall have been the lowest levels, which we have seen in last 8, 10 years. So definitely it is going to improve from here. Major -- if you see industry as a whole, major trigger has been the exports. We have quite a substantial capacity dedicated towards export in form of yarns or fabrics or garments in India as such. So exports need to move on. So that is the prime criteria today. If that is, if there is a demand, substantial demand coming up on that side, definitely we should expect better margins going forward. And that is expected as well. Once all these free trade agreements that is going to happen with UK as well as EU and various other countries, that should also propel the demand going forward.

Understood. So one last question. So, given the kind of debt we are sitting at right now, and given that you're almost utilized fully and you expect to put some additional amount of CapEx as well, how do you see two things? How do you see the debt picture? And because of that, we have also seen suppressed ROCE. So how do you see these two parts evolving considering the fact that you are also aiming to have certain amount of CapEx, which maybe you are thinking to put through internal accruals but just wanted to see how do you think the ROCE expanding in the next three to five years or from a longer term perspective? Where do you see it as a target?

Actually, debt to total equity is about [indiscernible] level, which is very reasonable. Plus, given the nature of the industry where the CapEx involvement is quite high to putting up the capacity and then using it as well. So considering that, this is a very reasonable level. And we would continue to try to continue to see that we remain in this 1 to 1.2 band itself. That is one part. Second part is, as far as your ROCE is concerned, all these debts are at subsidized levels, 5.5%. So, we do not see any logic in prepaying them. If you see our return on assets is about 13%, 14%. In a normal margin level, it should be 15%, 16%. So, if you have debt at 5% level, you should rather leverage it rather than repaying it. So need to keep it at a reasonable level. I've also stated in my earlier calls as well that we would like to keep this particular debt interest costs in the range of 2.5% to 3% of our revenues. As long as that is there, plus debt equity in the range of 1:1.2, we are quite comfortable making the growth plans as well.

Understood. So, just one small clarification. You said that you will be getting subsidy on the Interest cost for five years as in when the approval is received from the government, is that correct?

Yes, right.

Okay, perfect. Thank you so much, sir, and all the best.

The next question is from the line of Anil Kumar who is an investor. Please go ahead. Mr. Anil Kumar, your line has been unmuted. Please go ahead with your question. We'll move to the next participants as there's no response. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Firstly, sir, in your presentation, and also I think I missed your opening remarks, so sorry for repetition. You spoke about increasing the proportion of value-added products. So with now the capitalization of around INR 340 crores rupees from capital work in progress to your asset, what should be -- what is the current year proportion of value-added and next year [Foreign Language]?

Actually, at this point of time, if you see our breakup of the revenues, the fabric portion itself Is about 25%, 26% of our total revenues. So that is definitely a value-added portion. Plus, we have in the spinning business also certain value-added products. So that constitutes around 14% to 15% of our sales. So that all put together, it is about 38% to 40%, where we do a reasonable value addition in comparison to normal commodity yarns. So this proportion slowly is going up. We expect that total, we should be doing it more than 50%, value addition proportion has to be more than 50% of our total revenues. So this is how, as far as capital asset is concerned, Yes, we can distinguish between the total, what is the capital CapEx we are doing for fabric and other business, but we cannot distinguish for the value-added yarns specifically how much is being given. It is a continuous process where you have various equipment's changed and their production capabilities changed and other things done so as to get a better value-added product.

[Foreign Language] what would be the time period by which we will be...

It is about 40% -- 38% to 40% at the moment. It's a process which we should be able to, which we are continuously exploring and even if we do not do any CapEx or substantial CapEx, we should be able to get this thing done in the next one to one and a half years.

Okay, and this entire INR 340 crores CapEx has gone in building up the yarn capacity?

No, no. It is not INR 340 crores. Total CapEx has been done over the last one and a half year. INR 340 crores was of -- capital work in progress at last balance sheet. Since then, we have added another INR 500 crores during the last year. So total CapEx done was about INR 840 crores, out of which nearly 30% has gone to the value-added portion of weaving, processing and knitting part that has gone there and rest has gone to spinning part. And in spinning also we have taken up certain value-added products also in that. So some portion of that has again gone to the value-added yarn as well.

Sir, when you look at your power and fuel costs [Foreign Language] and what has been our investment in the renewal segment over the last 3 years?

First of all, the renewal mix at this point of time is about 7%, 8%. About 7% to 8%. At this -- the capacity which we have is around 7% to 8% depending on the generation. So that is there. And the investment is in the range of, in last three, total investment is nearly INR 100 crores, INR 95 to INR 100 crores, out of which we have invested in three years about INR 75 to INR 80 crores.

And those are in the conventional only. That is, we have created assets for power and fuels. If you could give the mix, INR 100 crores where the investment has gone?

Everything on solar.

Everything on solar. So INR 100 crores investment in solar is translating into only 7% of our dependence on the renewal segment?

Yes, exactly, exactly.

Okay. And so going ahead, we will be spending more of it? What is the cost of our power, sir? [Foreign Language]

No, no, we have power from the state electricity boards. And the state electricity board power cost is about INR 7, INR 7.5 paisa, varying as per the fuel surcharges.

Okay, so that is a significant cost.

Yes.

So, sir, as we are seeing that there is so much of investment in this solar space and then the cost -- return ratio and the cost will go down significantly. So do we have any plan to -- going ahead, lowering the cost of power just going through investment or also pooling of resources with other solar manufacturer or other people coming up with plants and be sharing coming up with equity investment as has been the case with other companies also? So what's the path you want to guide and that will also give us an ESG score going ahead, a positive ESG Score.

Yes. Actually, that is always on the cards, but if you see, there is a restriction by the Central Government as well as the state governments of not putting up power capacity, in terms of capacity, more than what is your sanctioned loads. As of now, we have about 50 megawatt of sanctioned load. So the maximum we can go up to is 50 megawatt. And in that 50 megawatt, the actual power generation is only about 16%, 17%, about 17%. So the maximum with solar, which we can do is about 17% of our total power requirements and we are already at half of that and another half, we are continuously exploring that. Secondly, as far as the reduction in the power cost is concerned, it's a continuous process. We work very efficiently on that. We continue to evaluate our power costs in different business different machines, different businesses as well, how we can continue to improve upon that as well. So continuously, that process is again, helping us to reduce our power costs.

Right. And lastly, from the RoDTEP part out of the exports that we do, what is the RoDTEP receivable for FY '24?

I think, Maheshwari Ji, how much is the RoDTEP last year? About INR 40 crores?

Receivable total?

Total RoDTEP for the full year.

Should be about INR 35 to INR 40 crores.

Exact number is not there with us, I'm sorry.

And how much, is it INR 30, INR 40 crores we have accrued or these certificates are still lying in the receivable and we will be selling them? How much have we realized in our book?

Half is realized, half is there in the books, still to be realized.

We have made provision for the entire amount, sir? [Foreign Language]

No, no, we have to do it at discounted rates, whatever we sell at. We cannot account it for the 100% value.

So INR 17 crores realization will be for the next year?

Yes. So that is already accrued for, average rates are about 98.5 to 98.6. So accordingly, they have been accrued out. They have been considered for. Maheshwari ji, exact how much?

[Foreign Language]

Yes, right. Only to be concluding, the CapEx part of the story is done now? And we will be -- so the capitalization of INR 340 crores this year and previous year of INR 500, what would be the increased turnover we should be going on a quarterly run rate? I think so, the quarterly run rate for this quarter was INR 800 crores, but the assets which have been capitalized, the benefits of the same will be accrued in the next financial year. So going ahead taking into account and running at the current exit prices of March quarter, what should be our quarterly run rate of revenue?

I think we have reached the top level in this quarter itself. There is very small capacity which is to be used. If you see the total INR 850 crores investment which has gone, would have added about INR 800 to INR 850 crores of topline as well, about INR 900 crores of topline. So we were at INR, 2,400 crores of topline last year. And then that this new CapEx should add to another INR 900 crores. So that is about INR 3,200 to INR 3,300 crores level. Topline which should be there.

Thank you. The next question is from the line of Tejal Nagmoti with Elara Capital. Please go ahead.

I just want to ask, what is the captive consumption percentage?

20%.

40%?

20%, two zero.

20%. Okay. Thank you.

Thank you. Ladies and gentlemen, due to time constraint, we will take the last question from the line of Vikas Rajpal with GRV Capital. Please go ahead.

My question is regarding the potential impact of the FTA on our revenues, or rather the benefit of FTA on our revenues, will we be a direct or an indirect participant in benefit? What percentage of our total revenues comes from the UK region? And what could be the ballpark figure that could probably percolate into a bottom Line?

First of all for UK, FTA with UK itself is a very small portion of our topline. In UK, we have exposure of only about 3%, 4%, not much. But if it happens with EU as well then that is a substantial portion of our sales, which is more than 20%. So, there it is going to be substantially accrued. Now, it will depend, what is going to accrue to us will depend on what kind of terms and conditions have been agreed. Today, we are at a disadvantage of about 7% to 8% in comparison to competitors like Pakistan and Turkey, where we have our customers factoring that kind of reduction in the per prices from our [indiscernible]. So hopefully, we should be able to take care of a major portion of that particular advantage.

All right, sir. So that's it from my side. Thank you, and best of luck.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Awanish Chandra. Over to you, sir.

Dinesh sir, before taking your closing comment, a small query. One of your peers is doing good in technical textile, and one of your largest peers has just announced that they are going into technical textile. So have you ever thought getting into technical textile? Because by the looks of it, it is a huge space globally?

Yes, definitely. This is a very huge space globally, and it has a lot of scope to grow, because in India, still we are at a very smaller size. And definitely, as a company, we keep on looking at all the opportunities, even the technical textile. So even if something comes up, definitely we'll update you about that as well.

Okay, sir. Thank you very much, Dinesh sir, and Maheshwari sir, for giving us this opportunity to host the call. Any final commentary before the closing?

Yes, sure. First of all, I would thank everyone for taking out the time for joining this earning call. I hope we have been able to address all the queries. I also thank SMIFS and Awanish Ji for hosting this call. For any further information, kindly get in touch with our finance team or our Investor Relations advisors. Thank you all for once again taking the time to join us.

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