Welspun Living Limited (514162) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Welspun India 4Q FY '20 earnings conference call hosted by Systematix Institutional Equities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ankit Gor from Systematix Institutional Equities. Thank you, and over to you, sir

Thank you, Aman. Hi, everyone. Good evening. On behalf of Systematix, I welcome everyone on 4Q FY '20 Earnings Call of Welspun India. From the management side, we have Ms. Dipali Goenka, CEO, Joint Managing Director; Mr. Rajesh Mandawewala, Managing Director; Mr. Altaf Jiwani, Director of Finance and CFO; and Mr. Akhil Jindal, Group CFO & Head Strategy. Without taking much time, I would like to hand over the call to Mr. Altaf Jiwani for his opening remark. Thank you, and over to you, Mr. Altaf.

Thank you, Ankit. Good evening, ladies and gentlemen. On behalf of Welspun, I would like to extend a very warm welcome to all of you to our FY '20 investor call. I hope that you and your family and your colleagues are all safe and taking the necessary -- are all safe. As you would have seen, we have reported a strong set of results in spite of the challenging environment. But before we get into the details of financial numbers, I will give a brief overview of the business environment of -- as we see today. As you know, the world is currently going through a major crisis related to COVID-19. As per the government guidelines, our plants were also shut from the last week of March. Utilization was lower in April and the shutdown continued into the first half of the month, but utilization has improved in May and has further improved in June. A big driver for this is because of our vertically integrated facilities. We have built an entire ecosystem, which has vertically integrated plant covering spinning, weaving, processing and Cut & Sew. Cotton warehouses, ancillary park, workers colony, skill development centers, et cetera. And proximity to port has also helped us to resume operations in the shortest possible time. If I talk about the demand scenario, all the big-box retailers selling groceries and food were always operational in the U.S., which is the largest market for us around this period. It was only the department store, which saw a sudden drop in footfalls and we decided to close stores in March and April. Subsequently, there were some agitations, which had some impact. However, majority of the stores are back in operations now. Since our sales is skewed towards the big-box retailer selling essentials, we are witnessing a ramp-up in sales and every passing month has been better than the previous in the current quarter. As you are aware that the developed economies have good-better-best price points and our products are at the higher end of the good price points as well as in the better price point segments. These price points are the sweet spot for generating volume and are high in the current situation, unlike the best price point segment. We have launched new business vertical in the shortest possible time, namely Welspun Health, which focus on health and hygiene products such as masks, coveralls, et cetera. The time line could be crashed because we could synergize among our teams as Advanced Textile, product development and domestic retail teams, which could come out with a portfolio in a shortest possible time. Our surgical masks have received the requisite approval. N95 masks and coverall approvals are in the process, and it is expected any time. Currently, the government of India is in the process of bringing masks and coverall under regulated categories like other developed nations and also exploring the options of allowing exports, while maintaining the balance between domestic demand as well as export potential. We estimate the government allowed export of coverall on restricted manner. Our current capacity is 250,000 masks and 10,000 coveralls per day. Our domestic retail business team saw traction in the initial phase, but now this segment seems to be overcrowded. The aforesaid regulations and the opening up of export will offer a promising opportunity to us, keeping in view that we have strong relationships with the global retailers. Domestic opportunity could be INR 30 crores to INR 50 crores. On the flooring business, the Board of Directors in their meeting held yesterday have considered a committee of 2 independent directors, which will be assisted by me, to look at shareholders value creation of the flooring business and creating a long-term shareholder value for Welspun India shareholders. The committee has been mandated to examine all regulatory, taxation and banking aspects for properly structuring the entire business and submit the report to the Board within 45 days, that is by August 15, 2020. We will apprise all of you through the stock exchange as and when the Board takes decision on the options recommended by the committee. Secondly, on the flooring business, we are seeing the acceleration of process for product/facility approval by large U.S.-based importers, who were earlier dependent on the Chinese vendors, particularly for hard flooring. While we have invested into the project with domestic focus, but in the current circumstances, export business is looking promising, and we expect at least 50% of the revenue in FY '21 will be from export business. Coming to our [indiscernible] business, I'm pleased to inform you that the business has been -- has seen a robust turnaround in FY '20 on the back of significant cost reduction and converting into a digital brand. The current tailwind has helped the e-commerce across all geographies, namely, U.S., U.K. and India, and we continue to focus on strengthening on this channel. Hospitality segment obviously has seen a dip and may take a little while before we see traction. Our innovation portfolio continues to grow, and this year, 41% of our revenue has come from innovative products. We are also growing our brand portfolio with 20% of sales coming from our own brand, licensed brand as well as integration brand. We have launched Martha Steward for bed, bath and flooring categories. Brand Welspun has also moved to the #2 spot in India in the value segment in home textile. As far as cotton prices are concerned, we have seen sharp decline post COVID-19, and we expect the current prices to continue during the fresh arrival season, which will start from October 2020. As you are aware, that as part of our cotton price risk mitigation strategy, we buy cotton during October to March period for current consumption as well as off-season requirement that is April to September. So in our case, the impact of lower cotton prices will reflect in H2 of the current financial year. On the ForEx front, we have been consistently following the Board-approved policy to sell 50% to 65% of our receivables on rolling 12 months basis. The impact of current spot will reflect in our revenue with a lag effect that is from Q4 FY '21. We continue to hedge 50% of our future receivables currently. Coming to the financial numbers, I would like to mention that we had a good set of numbers for Q4 as well as for the full year, particularly for the home textile business, where EBITDA margin for Q4 is 23.8% and for FY '20, it is 22%, which are substantially higher compared to last year. Overall EBITDA for FY '20 is 19.2% against our guidance of 19% to 21%. Overall revenue growth is 3.5% after considering the impact of reversal of INR 94 crores because of EMEA and COVID-19 impact during our peak of March 2020. If we adjust for this, then the growth will be higher single digits, which is in line with our guidance. If you look at the split of growth, volume was down by 5%, but the exchange rate impact has a favorable 6.2% impact. Exchange rate for the year was INR 72.6 versus INR 68.1 last year. Emerging businesses such as flooring and retail contributed 2% to the overall growth. Our emerging business continues to grow at 30% year-on-year. Flooring revenue was at INR 87 crores for the year, while retail and Advanced Textile were both INR 250 crores each. Overall CapEx for the year was INR 525 crores against our guidance of INR 600 crores. Net debt for home textile business is down by almost INR 400 crores in FY '20, while the overall net debt is INR 2,961 crores against our guidance of INR 2,700 crores. We were carrying RoSTCL script, which could not be converted to cash during last quarter due to prevailing situation. If we consider that as cash equivalents, then the net debt would have been in line with the guidance. I'm pleased to inform you that during the last 2 years, net debt of home textile business has been reduced by INR 700 crores. And in fact, we have prepaid some loans of around INR 285 crores during the financial year FY '20. We continue to pursue our goal to become nil net debt company in next few years. The interest and depreciation costs have increased on the back of flooring business as well as Ind AS 116 impact. Dividend rate for FY '20 has been 100%, and the payout ratio has been 25% for consecutive 6th year now from the time we announced the dividend distribution policy. As far as the guidance for FY '21 is concerned, we are not in a position to give guidance now. We believe that there are too many uncertainties, and we will take one quarter at a time. With this, I will leave the floor open for question and answer. Thank you. Over to you, Ankit.

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

So first, a few data points. I'm sorry, I missed the initial opening, also may have been mentioned. Could you give the split of the revenue growth between exchange volume and price?

So -- see volume is a degrowth of about 5%. Exchange is about 6.5% favorable. And the new businesses have added about 2%, so that's how overall 3.5% impact is there on the revenue.

New business that includes flooring. I was just looking for the textile or home textile, what will be the revenues?

Yes, yes, flooring, yes.

Okay. Sure. And -- sorry, sir, yes, you were saying...

Yes. So emerging business, which is flooring, retail and advance textile all 3.

Second, to understand how COVID impacted us significantly, what was the run rate of our top line growth this February? And how badly has it decelerated in March? Also, how does it continue into the current quarter, if you could just give us a little bit color on that?

So Nihal, it's very difficult to say -- give those specific numbers like that because as we see the April, May, June, every passing month has been better than the previous month. So it's difficult to say how much of that was impacted because of COVID. And we have not seen cancelation of orders. Of course, there were deferral of the orders, but we can't really attribute specific orders to COVID.

Absolutely. Now sir, what has actually been surprising is that when you look at how the U.S. retail sales or in general, the pickup has been, it has been quite encouraging. Initially, maybe the thought was that it may take at least 6 to 12 months for demand to come back to pre-COVID level. But just speaking to the big-box retailers and assessing the situation in the U.S., what is your sense? When do you think that you will be back to pre-COVID sales, at least on the home textile products? I'll ask flooring separately after this.

Dipali, you'd like to take that, please?

Yes. So for the big-box retailers, we have seen a steady rise here. And that has been, I think, to the level of pre-COVID. And the challenges have been with the departmental stores. For the big-box, the mass retailers and the clubs have continued to see a kind of demand. And definitely, the grocery stores also globally have seen an upsurge. So let's see what happens post July and August, because there could be a blip in the secondary sales that might come. But at the moment, they have come back to the pre-COVID era.

Sure. Dipali, just a continuation on that, as you -- you mentioned about secondary sale. But like in India, there is the case of the online as a channel has gained significantly. And we know for a fact that earlier online was something where there was movement away from big-box retailers, which was denting sales. So has that also started accelerating the U.S. and just could be a concern in the future? Just your thoughts on that.

So online sales has seen a growth globally, actually. And when I talk about India as well, and when I talk about U.S.A., U.K., all of them, I mean, our sales have gone up by 100% on e-commerce itself, when I talk about Welspun alone and so has for the retailers. So I think key -- I would say that the growth of e-commerce and the penetration of e-commerce has accelerated globally. And I think all of us will have to focus on it as a channel going forward.

Okay. It's not a channel where you think we currently can have a weaker presence. We are equally good even if online as a channel keeps moving.

We have a reasonable presence, and we want to strengthen it as we go forward.

That's helpful. One last question. It's interesting on the flooring side, you mentioned that the Board has appointed a committee to look into a prospectus to enhance shareholder value. So I'm just thinking about, is it -- you're looking at -- it's too soon to think of demerger, but what are the potential options that the Board is considering that the committee has to look into?

Over to you, Altaf.

So let me comment here. So this -- all options are open. And so, there's a committee of 3 people that have been formed. And so, all -- we are keeping all options open. So this -- it could be, let's say, this high -- it could be a high ball. It could be this strategic, this inducting a strategic -- this investor or whatever sources. Whatever this committee is, this -- we will do a professional job on this. And whatever they bring up, this will be deliberating on that. And we have put a time line to it, so that it doesn't drag on indefinitely. So we are looking at a 45-day this time line, adding another 2 weeks or, let's say, 2 months' time, this -- we want to do this -- make up our minds on this.

Absolutely. Rajesh ji, but any reason for getting into this review?

So it's -- the Board actually felt this that we need to look at this, considering that this -- they are 2 separate businesses and one with a clear streak of B2C and that the heart of the business is actually sitting in India. And the home textile business is principally, let's say, this -- the heart of the business is international, although we are pushing this -- the business on the India side as well. So the Board generally felt that we should definitely explore options, and which is why we are doing it.

The next question is from the line of Aakash Jain from Kotak.

Can you share the expected sales number for the next 3 years, which we can expect from the flooring business?

So Aakash, Altaf here. So it's very difficult to give any guidance right now at this stage, because there are so many moving parts and so much of uncertainty. So give us some time before we can get the grip and then we can talk of future -- futuristic numbers.

Okay. And what is the domestic demand or domestic market size for the segment?

Aakash, I didn't get the question, please?

What's your domestic demand and the domestic market size for the segment?

Yes. So I will just give the number. Then Dipali, you can add up.

Yes.

So domestic business, which is INR 250 crores, Aakash last year. And we are -- our brands are growing at almost 30% plus in the domestic business for both Welspun and spaces, they are doing very well. And over to you, Dipali.

So Aakash, your question on what is the potential of the brands in India, I think we see a great potential in our country. And we definitely are looking at around INR 1,000 crores by around 2022, and that is something that we are going to be focusing on. So it's going to be spaces at Welspun, more penetration on the sales and distribution. And of course, e-commerce has also become a very important vehicle for growth for our domestic business.

So I believe we can reach to a sales of INR 2,000 crores, right, within this?

I said INR 1,000 crores by 2022.

Yes, but the maximum sales that we can achieve in the segment is INR 2,000 crores, right?

That depends upon the kind of nature of business and the portfolio. So I think when we have spaces, which is actually in the metros and the kind of middle to the upper consumer, but we also have Welspun as a brand, which is a mass brand, which is for [Foreign Language] Welspun. And that's where we see a great opportunity as well.

So what is the expected market share that you're trying to aim maybe for next year or down the line next 3 quarters in the flooring business, in the carpet business?

Are you asking about flooring?

Yes, for the carpet business.

Yes, yes. So our goal is -- so we are looking at a 10% market share. The addressable market is currently -- this at about INR 35-odd thousand crores. But there is -- for us, the addressable -- if everybody can go on mute, please, because there's a lot of disturbance on the line. So the current -- this product mix that we have, this addresses about INR 8,000 crores of market. So we are looking at a 10% share. And this -- on an overall basis, we are looking at a 50-50 mix between export and the domestic market. So yes, you are right. So this take a 5, 6-year view, this, we are looking at this INR 2,000 crore kind of a top line on the flooring side.

The next question is from the line of Naushad Chaudhary from Systematix.

A couple of questions for you on the flooring business. In the last quarter, we had mentioned that we were in some very serious discussion with some large business order for our flooring business from some international clients. If you can highlight something on that part?

Sure. So yes, yes, you are right. I think this -- we were very -- this close to, let's say, the signing up with some of the major international partners. Having said that, this as COVID struck, so obviously, there's an impact. And with our customers were also locked down like we are, they are reassessing our plans. But I think the good thing that we are clearly noticing is, let's say, there's a diversification of their supply chains, which in some of the products that we do are entirely depending on China. So customers are looking to diversify. And so we are in active discussions with a few of them. And hopefully, in the coming quarter, July to September, I think, we should be able to seal a couple of this noteworthy -- this business partnerships internationally.

Okay. Second thing, in terms of expanding our dealer network for our flooring business. We had some very ambitious target of around 1,500 touch points by FY '21. And -- but in the presentation, we have just mentioned 50-plus dealers we have clogged by end of FY '20. So just wanted to have your comment on this. And do you feel we are being comparatively slow in our flooring business as we had targeted earlier?

Yes, yes, yes. So first thing is, is we have 475 touch points, not 250. So 250 are, let's say, this, what we call them plazas and gateways and portals, which are significant presence in shop in shops. And the rest of them, this, let's say, that what we call them this standees. So this -- but we have today with existing in 475, let's say, these outlets in the country. Yes, we were aiming to go up to about 1,500, but we have scaled back that plan so that we want to double from where we are. And we have lost 3 months. So right now, so that we could -- in fact, we just opened up our first plaza in June this post-COVID. So this obviously, we have lost 3 months. And this -- so in the back half of the year, let's say this, we will double the network. And this from 475, we will be looking like this anything between 900 to 1,000.

In FY '21, you say?

'21, yes.

Okay. On our debt part, we had a target of having net debt free by March 2023. Would there be any revise in this target? Or do you still maintain this?

So we are -- in the current situation, we'll have to reassess this time line. So as I mentioned, while we continue to pursue our goal, time line, we'll have to come across to you.

Okay. 2 more questions quickly. Do we have any exposure to this client called JCPenney? Recently, they have filed for bankruptcy. If we have any exposure, what is the value of that?

So we don't like to comment specifically on any real customers, but suffice to say that we have this robust credit control policy, which we have been following always. And we have looked at -- we have adequate coverage either through LTE or through insurance cover. If we have to take the exposure on the customers, there's a very stringent decisions, which is carried out based on the financials, based on the payment funds, as we always workout jointly a solution to that.

Okay. And last thing on the CapEx, sir, CapEx for FY '21 and '22.

So we have been always calibrating our CapEx, as you know, based on the cash flow available. So even if you see consistently last 3, 4 years, we have been maintaining our cash flows, CapEx within the free cash flow available, and we continue to maintain that same policy. So while we are not giving any guidance right now, because it's dependent on the EBITDA also. So -- but lastly, just to give a figure for FY '20, against our guidance of INR 600 crores, we did INR 525 crores in FY '20.

The next question is from the line of Saurabh Patwa from HDFC Mutual Fund.

Able to hear me properly?

Yes. Yes, we can.

Yes. Sir, as you mentioned that since online sales are picking up a good traction, and I think we were very early in maybe like last 2, 3 years back, only we started preparing ourselves for this, right? But since this current rise led by this pandemic has been pretty sudden, how does it impact our plans in terms of working capital, in terms of CapEx, whether we need to increase more warehouses in multiple locations globally? Or what were the inventory levels? And also, does it make any changes to the kind of SKUs which we operate or the pricing is the same? Just broad-based thoughts on your -- on this.

Dipali, you want to take that, please?

Yes, I can take that. So I think if I talk about the focus on online, definitely, this will entail a couple of -- but SKU investments. But if I look at the back end, I think we'll be working with our warehouses, and of course, with our e-tailers warehouses as well. So a lot of -- I think we will be looking at incremental investments, if any, in the terms of automation and turnaround times and the service to the customers. So I think that's where our focus will be. SKUs will be something definitely. But we will also look at the inventory turns and a lot of work has gone into analytics now. So I think we'll be pretty good there, so with a little of CapEx.

The next question is from the line of Resham Jain from DSP Investment Managers.

Yes. And congratulations for a good set of numbers. So sir, if you can just give your thoughts around various product lines achieved, towels, rugs and fabrics, what kind of -- because all this different product line will have a different impact in the current situation. And given different presence in the hospitality sector, so overall, how are you seeing each of the segment in the current situation, and at least for the next 2, 3 months where you have some visibility in terms of your order book?

So I will just step in on this. So for us, if we look at the opportunities and the kind of order book and the visibility that we have, definitely, the upside will be in towels, and that is something that we have strongly seen, but that also hasn't left our product portfolio of sheets behind. So sheets definitely is also contributing to that. So the whole idea of, I think, hygiene is coming into place. So hygiene, and so that's where I think the portfolios are focused on. So whether it's towels, sheets, and rugs, rugs have seen an upside because of the China factor, actually. So definitely, we have seen some upside there too. And I think going forward, I think a portfolio that you already know that our innovation has contributed around 41% to what our portfolio is. But we're also looking at a brand and our licenses like Martha. That has actually seen a lot of traction this year. And in the times to come, definitely will be a big contributor to our portfolio. And Christy definitely has seen a surge in our digital focus.

Okay. Is it fair to assume that the current order book given further season, will be like normal to what we have seen like the last year? Or will it be lower or higher? Just some color if we are not -- it's not a [indiscernible] numbers.

In these uncertain time, I think it's difficult to give any numbers or any kind of a focus to what we can. I think our guidance will be focused quarter-on-quarter actually. So that's what we will maintain, because these are very uncertain times. And as you know, in the United States, there's a second surge of COVID, so we don't know what is next for us.

Yes. And my second question is on overall, on the cost side, even the current situation where a lot of costs might have gone up and down. So given the current situation, how is your margin looking like as of today, is it normalized? Or are you seeing any impact on the same?

Resham, so as I mentioned, actually, the -- in our case, the cotton costs since we have holding inventory, so it will reflect the current price, which is where for cotton Shanker 6 say between INR 33,000 and INR 34,000 per candy. That will reflect in Q2, so not in Q1, not in H1, reflect in H2. Similarly for the currency, with the lag effect, it will reflect in Q4. As far as other costs are concerned, there has been a significant drive to eliminate all these costs wherever there's an extra opportunity available to remit that cost. So that exercise is going on. That continues. It's -- we -- and since cotton and currency, these 2 have bigger influence on our margin, we expect that H2, you will see a substantially different margin. So margin profile will be very different between H1 and H2.

Sorry, what I was trying to understand is that you had a very good quarter last 2 quarters, quarter 3, quarter 4, where margin has actually seen a very good improvement. Obviously, April month was under lockdown. But in June where you've seen normalization of your volume, has the margin -- that same momentum is continuing is what I was trying to understand.

Yes, Resham, it's a valid question, but I know I'm afraid I won't be able to share it right now. We in just 1 week announce our quarterly results and you will get to know them.

Okay. And just one accounting number, RoSTCL, what is the amount which was due in March and has been received in quarter 1?

You are talking about what has been recognized in the books or?

No, I mean to say the outstanding amount.

Okay. Okay. So roughly, we were holding almost INR 300 of script with us, Resham, end of March, which was practically the full year accrual. Yes. And that got converted into cash in April to June quarter.

Okay. So to that extent, debt must have come down in quarter 1?

Right.

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

Sir, I just wanted to know were there any hedging losses impact in this quarter?

So yes, you have to consider that ineffective hedge, the impact of that, so approximately about INR 8 crore, which has been already considered in March quarter.

Okay. So if we look at the cotton prices have crashed and our currency has been reasonably favorable. So would it be fair to assume that this kind of margin can continue, assuming the volumes remain intact?

So in our case, the impact of cotton, as we mentioned, actually, will reflect in H2. So that impact has not come yet. And similarly for the currency, the impact will come in Q4 because there's almost a fourth quarter line effect there. So we are only holding the cotton, which we had bought during October to March period.

Okay. There was some qualitative remark on the order book side, but would it be fair to assume that your order books are at almost all-time high levels? Or how is it -- I mean, how will you compare it vis-à-vis last year March?

So -- yes, Dipali, you can...

These are uncertain times that -- yes, yes. So these are uncertain times. At the moment, I mean, we can't say anything. But we definitely have seen traction from big-box retailers, clubs and the grocery stores. So that is something that is coming. And gradually, as these stores are opening up, we are seeing a traction. But given that, I think, we are very, very conservative in the way the markets are going to be looking like, because we definitely don't know what the second surge of COVID might look like. So hence, we will be giving you a quarter-on-quarter kind of a guidance going forward in this year.

Fair enough. In case, if we have got -- let the strong demand, are we geared well in terms of production capacities as well as is there any logistics constraint to meet that demand? If there is?

So I think I will just put in a few facts here. And as our factories opened up, the thing and the advantage that I think Welspun definitely had, where our integrated facilities are cotton that we had in our warehouses, which we actually store for 6 months. Our ancillaries, which are just a kilometer away for our trims. So I think -- so that way, we were pretty geared to get for. And of course, logistics, March and April, did see a little challenge because that's the time everything came to a grinding halt. But then things started improving. The advantage we also have is also that we have a proximity to the port at one of our plants, too.

The next question is from the line of Aman Sonthalia from AK Securities.

Sir, my question is, how does the opportunity is provided by China in home textile?

Dipali, you want to take that?

Yes, I didn't get the question, Altaf.

What is the -- with the China backlash, what are the opportunities Indian retailer are seeing?

So I think the opportunities that we definitely are seeing, I think, for us, I would talk about, would be definitely in the rugs and the carpets category. That definitely has an upside for us. And I would also just say that for us is India, we are basically primarily into cotton, and that's been our strength. And China strength actually has been into microfiber, so that still remains with China. So I would still feel that it's a very kind of a different kind of a perspective to what we are talking about. Definitely, rugs and carpets will see an upside, but the other is cotton, we definitely see where we are heading. We are anyway strong and will strengthen further. But microfiber is China's forte, which will, I think, continue.

And how much we have invested in the flooring business?

So we have INR 880 crores of investment we made so far as of March.

INR 880 crore?

Yes. Yes. And Arvind, would like to add on the flooring business with the China angle?

Yes, yes. So though the current investment is at about INR 880 crores and there is still about this couple of hundred crores of project, which has been left. We have been calibrating the CapEx based on how we see the utilizations happening. So that's where it is. And this Dipali already covered, so on the carpet side, also on the flooring side as well, so I think the -- this -- the customers are -- international customers are looking to broaden this supply base. And consequently, this -- we think this -- there are parts of the flooring business, which will benefit significantly from this. So this -- and we believe that some of it could materialize in the July to September quarter itself. So -- but early days and this -- we are certainly seeing, let's say, there's a lot of action and urgency from this several customers.

And sir, one last question is what -- how big is this the technical textile business is going to be? Because right now, I think we get very good business and just, say, dividend?

So we are currently about INR 250 crores. This budgeted to do about this north of INR 300 crores in the current year if all goes well. But as we speak, there are discussions happening in that area because to grow the business faster and this, obviously, with the health and hygiene focus. So this 2/3 of our business is around health and hygiene. So consequently, this -- so we are in hectic discussion in fact the company to see if we can actually grow the business a little faster and which means adding some capacities. But this decision on that will be taken in the next few weeks, so discussions are going.

The next question is from the line of Giriraj Daga from K M Visaria Family Trust.

My first question is on the CapEx guidance. So is there any CapEx spending on the flooring or any growth CapEx that we are committed so far but that is spending in FY '21?

Yes. I just mentioned that on the flooring side, there is a couple of hundred crores of CapEx that is still balanced. Our original estimate was INR 1,150 crores. We have held back this about INR 200 crores or thereabouts of CapEx. And as we see better visibility of the business, we will calibrated way spend that money.

But that will surely come in FY '21, right? Or is that going to be deferred to FY '22 also?

So this -- see this, I think that with the current quarter, we will see the events in the current quarter and take the call. But yes, this at least a good part of that should get invested in the current year.

Okay. Are you also calling out like maintenance CapEx numbers for FY '21, which we will have to do irrespective of the environment?

So the maintenance CapEx is generally around the INR 50 crores, INR 100 crore this March. So anything between INR 50 crores and INR 100 crores every year, this we have been incurring that. And this year should be something similar.

Okay. My second question is on the flooring side. So like, I know you're not giving guidance on the overall side of it. But any guide -- where we want to stay tuned where you ended FY '21 on the flooring side in terms of revenue, which is a new business, and we are looking at multiple growth. So what is the like FY '21 [EBIT] number you are looking at last quarter number?

So look, we have just reopened 30 days back, and it's very early days to put out numbers, and there's still a lot of uncertainty. And this -- also this frankly, these numbers will be determined by how quickly is we are able to close the international business and which we believe that in this July to September quarter, we should be able to do that. The domestic business is we have clearly lost a quarter and will take us some more time because this -- the markets are still not -- is completely opened up. So this -- take us a quarter more to get some sense of where the numbers are going to look like.

Okay. The last question is like what would be the fixed cost do we have in flooring business as well as home textile business? Or month run rate or whatever at length?

Yes. So we are sitting on INR 150 crores or thereabouts of fixed cost. And this, of course, over and above the variable cost. So this overall, this outstanding cost on the facility about is INR 150 crores.

So INR 150 crore per month it was, right?

No, no, annual, [Foreign Language].

Thank you. Ladies and gentlemen, that would be the last question for today. I now hand the conference over to the management for their closing comments. Thank you, and over to you.

Thank you, Ankit. Thank you once again, everybody, for joining this call. And if you have any more questions, please reach out to our Investor Relations team, Vipul or Harish or myself. And I wish you all very safe and the future. Thank you.

Thank you, everyone. Thank you.

Thank you, everyone. Thank you.

Thanks.

Thank you very much. Ladies and gentlemen, on behalf of Systematix Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.