Ladies and gentlemen, good day, and welcome to the conference call for analysts and investors for post-results discussion for Quarter Three, Financial Year 2022/2023 for Arvind Limited. As a reminder, all participant lines will be in a listen-only mode, and there'll be opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Samir. Thank you, and over to you, sir. Thank you. Good afternoon to you all, and thank you for participating in this call to discuss the Third Quarter FY 2023 Results of Arvind Limited. Joining me are our usual team, Mr. Jayesh Shah, Mr. Soham Shah, and Mr. Kaushal Shah. I would like to start by sharing our observation and perspectives in the macro environment in the market before we get into the specifics of the results. Copies of it we already have. If you follow the U.S. data, it suggests that inflation has come down, but it's still higher than the target rate of 2%. Having said that, the commentary right now is much more milder as compared to what we had heard about three months back. So most brands have delivered better results, and this is true in both U.S. as well as Europe for the quarter ending around October, November of 2022. Having said that, people are still concerned, and hence what we are seeing is that some of the key customers are not going ahead and making large orders, but postponing their purchases and ordering lot sizes which are smaller and expecting us to create more frequent inventory drops. Closer to the home, in the domestic markets also, there are a few trends which are playing out. First is that the Diwali was a bit muted, compared to what was expected, and the winter season started a bit late. So a lot of winter merchandise, which was there in the retail shelves, did not move in November and early December. It only started to move now, right? Further, in case of fabric retail, because we are seeing falling cotton prices, the distribution network is stuck with inventory, which is high cost. Because the retail demand is not good and there's an expectation of price correction, there is a lot of working capital, which is logged in the supply chain, and that is impacting the volumes absorbed by the wholesale channel in case of Fabric business as well. On the cost side, we did go through softening of cotton prices, which were INR 1 lakh a candy and upwards, now quoting between INR 60,000-70,000 a candy. As of now, it appears that cotton prices will move in this range only. On the other input cost side also, we've enjoyed lowering of costs, including that resulting from the lower shipping costs for imported items. So in summary, you know, the business environment is, is continuing to be quite volatile, and the uncertainty is kind of driving the behavior of, on part of key customers in terms of making large orders. So in, in this context, you see our results. Our portfolio has had both good news and not so great news. AMD continued its robust growth and margin improvement. Woven had good volumes reserved and closed the cost profits. Denim and Garmenting certainly saw volume reduction because of the demand postponement and softening. In terms of specific numbers, our overall top line for this quarter stood at INR 1,980 crore. It was lower by about 13% compared to the same period last year. EBITDA was lower by 22% and stood at INR 186 crore. In terms of margins, EBITDA margins stood at 9.2% for the quarter, compared to 10.6% for the same period last quarter, last year. If you see a nine-month picture, it is kind of comparable. This is 9.3% for the nine months ending this quarter, compared to 9.5% for the same period the last year. Profit after tax, before exceptional items, stood at INR 75 crore, and the reported PAT was INR 84 crore. There are some one-time adjustments. Our note clearly explains those. In terms of segments, textile revenues were lower by 19% at INR 1,549 crore. Volumes did decline across the segments, and higher margins partly were offsetting the impact of the volume decline. But this volume decline was specifically pronounced in case of Denim, where for last two quarters, we have seen that 9-10 million meters kind of volume, which is significantly small compared to our earlier numbers. Having said that, we feel that this volume at this level is kind of getting stabilized, so we can take it with a normal course for the time being. Textile margins reduced from 9.3% last year to 10.2% in Q3 of FY 2023, largely on account of lower volumes. AMD continues to do extremely well. The revenues were up 26% for this year Q3, as compared to same quarter last year, and on a nine-month basis, we are up 23%. So our promise of blocking 20%+ growth on an annual basis continues. AMD margins also are continuing to improve, and they are now pretty close to 14%, actually 13.8%, as input cost pressure increase and business is scale up. Thereby for business, this business has touched 26%+. And overall, overall, across the board, we continue to maintain fairly tight operating discipline, and we have been kind of having tighter and tighter working capital, situation as well. So our net working capital turns, which were 5.6 turns in Q1, rose up to 6.1 in Q2, and now we did 6.3 in Q3. During this quarter, we reduced our overall debt by INR 214 crore, and the long-term debt was lower by INR 135 crore. This important priority for us continues to be on track as we maintain strong discipline around capital expenses. We are broadly on track for INR 300 crore of reduction on long-term debt by March 2023. Looking ahead, we continue to remain cautiously optimistic about the demand revival in both export and domestic segments, and I would reiterate the word cautious as things are still a bit uncertain. On cotton prices and currency exchange rates as well, we are seeing wide fluctuations. AMD continues to maintain its momentum on revenue growth and margin expansion, and we expect the same to continue in Q4 as well. As we have discussed in the past, we have made calibrated investments in this business, and some of the de-bottlenecked capacities AMD have started to now go live, which is starting to reflect in our growth. I'd also like to share that we have made three investments in expanding our renewable energy capacity, and there's a 24 MW hybrid solar wind installation, which is expected to get commissioned in the next month. This will help us strengthen our, you know, best in industry sustainability credentials and also reduce the energy costs. So while the short-term outlook is a bit uncertain, we continue to invest in the growth areas, mainly AMD and Garmenting. We will be investing over INR 250 crore in the next financial year, which will go into expanding the capacity in these two areas. We are preparing more details of these CapEx and growth plan, and we shall share some of that with you all in the next call. So in summary, as I close down this opening remarks, we remain optimistic about our ability to navigate these uncertain times in coming months and quarters. We expect our growth contribution will start showing improvement from Q1 of next FY, as we get further benefit of lower input costs and rupee depreciation. We will continue to reduce our long-term debt further during the rest of the current year and coming financial year. So with that, I wrap up my opening comments and invite you to ask questions. Thank you. Participants, if you wish to ask a question, you may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have the first question on the line of Nihal from Nuvama Wealth Management. Please go ahead. Yes, thank you so much. So I just one question, which was on the Denim business, that currently we are seeing Denim volumes go down significantly. And we've in earlier cycles, also seen that ideally when you see the start of the Denim business, you know, seeing a bit of a deceleration, it does end up lasting long, and then even the margins get impacted significantly. So if you could just give a sense of what is your outlook for the Denim business over the next 12 months, and where the margins of the business could go in the same period in time? Right. So, let me take this question. Denim as a business, and let me also give you a view on textile, because in the overall context, you know, it's easier to appreciate. Denim as a business is calibrating, and we have been maintaining this for last few quarters because of extreme volatility in cotton prices, where our focus has been to, you know, curtail the bottom line. You know, primarily focus on managing or working with deals where margins are, let's say, above a threshold and/or with strategic customers. I think right now, you know, the 12 million meter a quarter is the volume we foresee also going into future quarters. That's roughly 60% of where Denim historically used to operate. But what is important to understand here is Denim at this level remains profitable. We expect further benefit in margin coming in from rupee depreciation, as well as a number of cost optimization initiatives we are working on. We want to optimize ourselves in terms of fixed cost to be optimum in terms of margin at these levels. ROTCE is positive. Other focus for Denim is improving verticalization with our Garment business, which we think will create value for the entire chain. We strongly believe that, you know, with the cost optimization in place, holding margins well, even at lower levels, as you see right now, when the volume returns in, let's say, 2, 3, 4 quarters from now, this business is well poised to grow and go back to the old level of profitability. Let me maybe take a little bit continuing on this question, bit about other part of textile as well. What we have not been, you know, stressing enough is our Woven business, which in quarter three has recorded in absolutely record performance, both in terms of volume and realization. I mean, you don't see that on revenue numbers, but our profitability level at this moment are, you know, highest ever. I also remember, you know, hearing a question around our total contribution for textiles, which used to be about 30%, went down to 25%. That contribution level is coming back, even with the lower volumes of Denim, where it has reached about 27%. We are running Woven on, you know, full, almost full capacity. We are putting some CapEx to bottleneck some additional capacity. Our quarter core order books looks very, very healthy. We think that, you know, this trend should continue, which also if you look at the numbers which we reported, despite, you know, Denim coming down, our total, our EBITDA level for, for textile business was 10.4%. And, that means as a unit, textile as a unit, the business is, the Woven is performing exceedingly well. We are also holding, despite Denim volume drop of 15% kind of ROCE, which will just shoot up, you know, given some currency positives, which we expect in the coming quarters. Also, you know, when the future Denim volume picks up. So all in all, we are very confident about, of course, demand is a question mark on Denim side right now. But, going into future quarters, we are very confident that, we now will come out and be a clear winner. If I can maybe take a minute to talk about Garment as well, because I'm sure there'll be question here as well. I mean, you would have seen Garment volume sort of plateauing at about 8 million Garments for last two quarters. And, we have been saying, you know, it is some customer order discernment. We have been, you know, sort of realigning our manufacturing base. We are rebuilding the machineries, which have come from Ethiopia, you know, in additional capacity. What we are also focusing in Garmenting over last two, three quarters is gradual improvement of margin, while volumes will come up, and we are confident going into quarter four and next year. Our margin profitability in Garmenting are improving quarter-over-quarter. Garmenting is a very high strategic priority for us. I mean, we have been talking about AMD and Garmenting as key areas where capital will get allocated going into future quarters. We are, you know, looking to, for example, government is looking to announce PLI 2. You know, we are actually looking forward to that. Once those will come, you will see far more investment from our side going into Garmenting, because not only Garmenting as a business supports naturally our textile side of business, but we strongly think that, you know, if I, if I take a two-year view, other than AMD, that's going to be the next driver of growth and would deliver EBITDAs, which are above our current threshold. So this is how, you know, we see an overall, let's say, Arvind pivoting, although AMD we have not covered, but, you know, Sunil, you want to talk about AMD? Yeah, sure. I think this probably will be a bit of a preemptive kind of information, because I do expect questions as got to in practically every call. So, like I said, AMD is comprised of three major clusters, you know, protection, industrial fabrics, and products and composites. And overall, we've been maintaining that this is a primary growth engine in many ways for the company. It's been growing at 25, 20+% consistently. In fact, in FY 2019-20, AMD used to contribute less than 10% of the company's top line. In current financial year, we see it reaching 12%-13%, and that increasing portion of AMD in our overall pie continues to kind of, you know, have the momentum. So, you know, this growth is powered by a combination of like-to-like growth, which is, you know, getting larger and larger share of volume in our key accounts. And then, AMD is a innovation and IP-led business. We continue to allocate part of our capacities and energies and investments in experimenting with new areas. So we also have some new work in them, which will be carrying on. So that's just the broader commentary on AMD. Margins, as you saw, have reached about 14%, and, you know, they were 13% just about two, three quarters back, and they continue to expand. We expect this to reach 15%-16% level in a reasonably kind of comfortable pace in next three quarters. ROCE for this business is around 26.4% in this quarter. We expect it to grow to about 30% levels reasonably soon. And, because of this whole, you know, momentum and success and priority, we have practically planned about 40% of our overall CapEx to this business in the current year, and even for next year, it will continue to enjoy a lion's share of our capital spend and leadership attention. So I'm going to just sign off on that note on AMD, and of course, you know, as further questions come, happy to answer those. Thank you. This is one question that with, cotton prices moderating, what would be the expectation of margins in the coming years? Historically, we've done 15, 15% also, and it has been around 10% for the last three years. Just with cotton now moderating, what's the expectation for the same? Thank you. Thank you. We are the next. Sorry, your voice was not very clear. Sorry, just I was asking on the margin expectation now that cotton is moderating, considering historically, we've touched 15% also, and it has been at around 10% for the last three years. Right. So, you know, cotton prices moderating, definitely, you know, already if you see, you know, we are gradually inching towards the targeted 30% contribution, and part of this is coming from cotton. We expect margins to further improve as cotton stabilizes. Thank you. I'm done. Thanks. ...Thank you. We have the next question from the line of Abhishek Nigam from B&K Securities. Please go ahead. Yeah, hi. So my first question is, what kind of demand momentum are you seeing in January? Have things sort of improved a bit versus December? Is this for a specific business or overall? I think overall across Denim, Woven, and Garmenting. The demand momentum for this quarter is good overall, and it's kind of similar. Particularly, you know, we expect Q4 to be broadly similar to what we have, you know, reported, maybe slightly improved. Certainly AMD continues to do successfully well, and, I think we do expect some improvement in even, you know, Denim and Woven, of course, has done well, but not a significant change. But from where we were in Q3, we expect Q4 to be slightly better. Okay, fair enough. I was looking at realizations. They remain fairly, you know, stable, resilient, despite cotton prices coming off. So is it fair to build in similar realizations going forward, or should we build in, you know, slightly taking the numbers? Hello? Yes, the manager has dropped. We have reconnected them back again, so you may go ahead. Yeah. So my question was, if I look at realizations in this quarter, there's been fairly stable, fairly resilient, despite cotton prices coming off. So should we expect realizations to largely stay here, or should we expect them to sort of, you know, get lower? We did see some reduction in the realization between last quarter and this quarter. Quite obviously, it's a set of B2B businesses where prices realized do reflect the underlying raw material and other costs, however, with a lag. With that trend, as cotton prices continue to soften, we will see even in next quarter. There will be some softening, just like we have seen some softening between last quarter and this quarter. Fair enough. And last question for me, any capacity expansion which is planned for 2024, 2025, or will you rather wait for PLI to clarify before you make announcement? Right. So, you know, for Garmenting, obviously we are waiting for PLI. We will have more clear guidance on what capital gets allocated to AMD or Garment perhaps in the next call. But directionally, we are looking to invest in building capacity in AMD and Garmenting. About INR 200-250 crore at a company level. Okay, perfect. Thank you so much. Thank you. We have the next question on the line of Biplab Debbarma from Antique Stock Broking. Please go ahead. Good afternoon. Thank you for taking my call. My first question is on your investment plan. Earlier also you have indicated that you would be investing around INR 200-INR 250 crore in AMD and Garmenting. This INR 250 crore of investment you are mentioning, is this a part of the same plan that you mentioned earlier? Or is there a- Our CapEx this year should exceed north of INR 200 crore, which would be slightly better than what we had indicated earlier. Next year, we expect to be in the similar range, actually better. We're targeting to invest about INR 250 crore, but we will have more clear plan perhaps in the next earnings call. So this year the CapEx that you did, is it some augmentation of capacity? Or we will be seeing that the capacity of, let's say, AMD or Garment has increased, or this is the common maintenance or cleaning bottleneck kind of, you know- So, you know, at a very high level, about 40% of our total CapEx this year has gone into AMD and in building your capacity. About 20%-25% would be towards cost optimization in businesses like Denim, Woven, Powerloom, etc., and the rest of it is scattered. The capital which has been allocated for Garmenting sort of is deferred simply because PLI-2 has been, you know, delayed a little bit. But we are looking to invest that in Garmenting as well, once it's being announced. Okay. Okay, okay. Okay, good. My second question is on the Denim business. Just trying to understand, sir, actually, what is ailing this business or this sector? Because we have been seeing that we have seen momentarily some good numbers coming from this segment. But in general, time and again, we see Denim seeing challenges. It's not the first time we are seeing challenges in Denim business. So what ails this Denim business, and what is your future projections about this business? Right. Let me give a short and, you know, I'll invite Jaiprakash to add to his long experience here. I think there is... If you take, and you are talking about last very few years, you know, this is where the cycle we have seen play out, right? It's a combination of demand and supply, both side factors. A little of the past what has happened is that, especially in Indian context, the capacities have continued to get augmented, especially in India. You know, as we have shared in this call through times, the installed capacity in India for Denim fabrics is close to 2 billion meters, which is almost two and a half to three-eighths of the total demand, domestic and exports combined. So there is an oversupply theme which continues to be an overhang across the Board over any period of time, right, the recent quarters. On top of that, in recent two or three quarters, as we have been sharing, what is played out is that post-COVID, there was a buying surge in almost same time last year. And as demand surged, many of our global brands and retailers were forced to do air shipments and all, to fulfill their, you know, immediate needs. That, in turn, prompted them to prepay the buying. So if you see our Q3, Q4 results last year, they were sort of super normal because the buying which used to happen, let's say, in April, not till to January, February and so on, which naturally meant that at some point when the buying cycle went back to normal, there would be a trough. So what happened this year is that we are seeing the trough play out in parallel with the softening prospects for the retail demand, because of all the macroeconomic factors playing out in the global market. We all have heard about the, the consumer confidence going down, the inflation and so on, so forth. So all these have kind of together hit the... As we speak, the reason why our global brands are not buying is because of the uncertain consumer demand, and hence, they are not wanting to take long positions. That's what is happening from my perspective, and because Jaideep might maybe add a bit more. Sure. Good afternoon, everyone. I think there is a factor in Denim that unlike what you see in global, which is related to cotton. So if you see, cotton has been at historical high levels, and every linear meter of Denim, which is almost 750 grams or thereabouts of cotton. And so when you price the Denim Garment with a fabric, which is almost selling like we are selling cotton, which is at a very high level, The final retail product gets outpriced compared to any other product category. So if you look at our Woven, which is also using cotton, is producing almost 6 linear meters out of 1 kg, and Denim is, you know, is almost like 1.3 m out of 1 kg. So it is very, very competitive to cotton. Looking at where we are in cotton, the current market price, minimum support price in India, the 10% import duty that India has, Indian Denims are more expensive than global Denims. For example, today, if you see cotton, Indian cotton is more expensive than international price of cotton. So unless this equation changes, and India earlier used to be always more cost competitive as far as cotton is concerned, there was a 10% impact Indian cotton was lower always. It is reversed as of today. And this, it doesn't change. Till that time, Indian Denim will find it difficult in marketplace to compete. So the right strategy for now is to scale down capacity, maintain margins and profitability, and do not in deploy excess capital into that business till the situation works out in that favor. Yes, sir, that means that two factors. One is that our product, like cotton prices, has to be, has to come at par with international prices or a bit lower than the internal prices, international prices. This is first one. Second is overall the demand environment from exports has to come back only to the normal level, right, sir? These two factors have to drive. If, if my understanding is correct, sir? I would put it in this manner, that, you know, there may be slight changes in demand story, some postpartum, and particularly if a company which is very close with one brand and that brand gets into oversupply and all that situation. But the fundamentally is going to be cotton. If cotton doesn't correct, because there is always Denim consumed. Now, whether you can sell or some other company or a country can sell, will depend upon what is the cost competitiveness of Denim. And today, as we speak, India is not competitive in the demand. The cotton prices are at, if it is at INR 60,000 or INR 55,000 or INR 60,000 per candy, even then it is not competitive. Am I correct? We have to see it which way. Yeah, it is at that price that cotton Denims are expensive. And if we are 10% more expensive as a country compared to, say, just to give you an example, Pakistan, then obviously Indian Denim mills will find it difficult to compete. Okay, sir. Okay, sir. Okay, sir. And my third and final question is on Garmenting. So as you mentioned, that we have been slightly focused on Garmenting business, as well, besides AMD. And, this business is, has been flattening at, around 8 million pieces, for some time. And, sir, what could be the reason suddenly we are flattening? And if my understanding is not correct, if it's not wrong, that the Garmenting business is one segment of the textile we have-... still, India is doing well, even if you export that. Just trying to understand why it has been flat in 8 million pieces, for some quarters? Right. So, you know, one reason why the Garmenting volume came down in last quarter is deferment. You know, customers bought both, you know, COVID restrictions were taken out in larger quantities, and that created some, you know, inventory buildup, especially in U.S. and Europe market. That basically created one impact where, you know, orders moved out. Other was a bit of, you know, Russian war, which is sort of impacting emotions and consumer, let's say, buying, you know, demand cycle in Europe. But we are, this is a business we are very confident about, and, you know, we have been saying that we are focusing on building capacity. We would have committed some CapEx by now. I mean, we are waiting for the scheme to get announced. Strategically, this is, this is, you know, as important a pillar as AMD for us. In coming quarters, you would definitely see improvement. We have been focusing right now on improving margins, although, you know, we don't share the Garmenting margins, standalone margin numbers, but the margins have been improving. Our focus is on getting volumes back, and you should see that coming back in, future quarters. Sir, then what gives you the optimism in Garmenting and not so much in maybe in them? I mean, a number of factors. The customers who have deferred orders are coming back to us. We have a view of our order book, and we are also—we have used this time to develop some new key accounts. Also, we are, you know, aggressively, more aggressively participating in domestic markets. A number of these factors, you know, are helping us, believing that it, you know, indeed remains a very strategic area from a priority perspective for us. We will see the impact in this financial or next financial year, the impact of the all these factors? You should see a gradual improvement, you know, already going into quarter four. But the full impact would be visible going into next year. Thank you, sir. Thank you for the patient answer, and all the best. That's all from my side. Thank you. Thank you. We have the next question from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you for the opportunity. So wanted to understand the investment that has gone into your renewable energy capacity that commences next month, and how much energy cost reduction can we expect from this? Right. So, you know, we are... So we have made some investments indeed, and we are expecting an annualized basis of saving of about INR 25, INR 20-INR 30 crore, depending on what gets delivered. This should start to be available to us, starting from April. Okay, okay. This year's CapEx was expected to be around INR 150-INR 200 crore, and in this, it was Garment as well. So now you're saying that Garment will not be a part of this year's CapEx. Is my understanding correct? No, no. We, so Prerna, we still think, you know, of course, it'll all depend on how fast government moves, but this is, but this is our discussion. We anticipate, you know, PLI should get announced very quickly. We are prepared with, part of capital, you know, in Garmenting, and we think some part of Garmenting investment hopefully should already happen this year. This is part of our INR 210 crore buildup. But, for sure, Garmenting investment was not as large as we, you know, anticipated when we started the year. Okay, okay. And, actually, I am also having the same question that an earlier participant asked, because Garmenting for us earlier was business which was derived from your Fabric business, but now it is becoming a growth engine. So what has led to this change in view for us? Be it customer interactions who are ready to source from you, and they want more capacity from you, or is it the sheer opportunity numbers from the global data points that we see? What is the actual trigger which has led to this optimism in the Garment opportunity? And can we have a structured view on where do we want to take this business over the next three to five years? Right. So, Prerna, I think there is a let me clarify this, right? So Garmenting role as a strategic enabler of Fabric business stays the same. I don't think that we are saying that anything has changed on that thought process or the role of Garmenting. All we're saying is that a much smaller portion of our fabrics used to be delivered as a vertical product, as we call it. And as we scale up our Garmenting capacity, larger and larger portion of our Fabric business kind of becomes vertical and get secured. In the process, of course, you know, it helps expand the top line as well. So that's the limited point we are making when we say that we are putting Garmenting as one area of focus for the growth and investments. Okay, and any indication from the customers who are with whom you are dealing with, or giving you more confirmation on using your Garment capacities a little higher than earlier or more higher than earlier, which is helping you scale up on your Garment business? Right. So Prerna, there are two things. One is, it's, you know, a little bit of change. After COVID, the world is seeing in how Garment gets bought. A company like Gap, you know, historically used to have their own fabric team, nomination team, who deal with fabric manufacturers and, you know, then separate team who's working with, you know, Garment manufacturers. I think companies more and more are taking, you know, Garment backwards. So they want to, they actually prefer people who could take away the translation risk on behalf, you know, on, on fabric getting converted or fabric quality issues, which one faces in the chain or delays. So they are, they are preferring more and more, and this is what we are hearing from a number of customers, people who can deliver end-to-end Garment to them. Companies like us who are vertically integrated, have deep relationships, becomes their natural choice because they also know we have complete control over value chain, including quality. So this is one change we are seeing from couple of our large customers, and this is also a conversation we are having with some new customers which are in the process of developing. But this is a direction a lot of large Garmenting companies, large brands taking, you know, LGC in the last six to 12 months. Okay. Any color you could give on structurally, where you want to take this business in over three to five years? Three to five years, you know, I mean, this business should double in terms of revenue. And, that's directionally where, you know, we are working on. You will see next year capital allocation also going into this business. And, perhaps we can throw a little bit more light, once we are clear with next year plans. Okay. Okay, understood. Congratulations on your debt reduction efforts where you reached INR 1,500 crore at the end of this quarter. I just wanted to understand this INR 300 crore that you mentioned on your, on your slide on long-term debt reduction for this year, how much of this has been done already, and how much can we expect in fourth quarter? So we have, I think, we paid just over INR 200 crore so far, and expecting close to INR 100 crore in quarter four. Okay. Okay, understood. And sir, one more thing, interest cost has not started declining despite the debt reduction. So, can we see that coming in from fourth quarter? So what is happening, Prerna, is, while our total debt is coming down, the cost of debt is going up, and that sort of nullifies each other. So, you know, perhaps next year, I mean, we have no control on where the interest cost will be, but we are confident that it will start to gradually edge down going into next year. Okay. Understood. Thank you, and all the best. Thank you. Thank you. We have the next question in line of Monish Ghodke from HDFC Mutual Fund. Please go ahead. Hello. Thank you for the opportunity. Sir, what is the CapEx which we have done in this wind solar installation? The question is how much CapEx? Yeah. The total CapEx is around INR 29 crore. On INR 29 crore, you are saying that there will be annual saving of INR 20 crore-INR 30 crore cost? Yes, it's an SPV, and yes, about INR 20-INR 25 crore arbitrage price saving we should expect to see, versus our current grid cost. So the question is correct. The total investment is much larger, but it is run by a power company. We have put in 5% of that as a capital. As a result, what you said, the question is correct, that is about it, yeah. Okay, great. And so, in terms of Denim, Denim sales, you are saying that there is slowdown in the world, that I understand, but even your domestic Denim volumes are significantly down. Now, so one reason could be higher cotton prices, but if I say that cotton prices have corrected now, should we expect domestic Denim demand to go up? So, actually, the demand does exist even today, but at this price of cotton, it's not profitable. So we could sell more, but it will be, you know, the return from that investment of selling will not be lucrative enough right now. So the approach we have taken is to scale down the cost for some time, so that we can remain profitable and returns are better on capital employed. But quickly go back to capacity enhancement or CapEx or invest on fixed cost enhancement, as and when the market conditions improve. I think at this price of cotton, the threshold of, you know, certain value for the, you know, what you call INR 999 or INR 1,499 or INR 1,999 pricing, is not working out for most of the brands. ...And that is why there is a demand. So, you know, it, INR 10, INR 20 of reduction can make a material difference because you come at a level of a psychological price for the Denim Garment in the market. So right now, demand does exist. You will see all the textile mills are, which are in Denim, must be selling in India, and they are selling in India, but none of them will be able to make substantial profit out of it, if at all there is any profit. Okay. And for Denim export, you said that, India as a country, we are not competitive because of the duty which we have to pay 10%. Right. That is true for Garments also. Even in Garments, we are not competitive as compared to other countries. I mean, is there any risk in our Garment capacity over medium to long term? No. So, you know, when you look at Garment, the element of cotton in Garment goes down substantially, right? The cost, other costs come into play. Okay. Unlike fabric, which is pure, bit of a value addition, and that balance is all cotton. So cotton will constitute, say, 65% or thereabout of fabric sales price, which will constitute about 25%-29% of our Garment sale price. So that makes the difference, you know. You can sell at slightly lower margin the Denim Garment, but when it comes to fabric, you will find it difficult to make money. Okay. Okay. Thank you. Thank you. Thank you. We have the next question on the line of Saket Kapoor from Kapoor Company. Please go ahead. Yeah. Namaskar, sir, and, thank you for this opportunity. Am I audible, sir? Yes, yes, please go ahead. Yes. Sir, so firstly, for the CapEx part, what has been our CapEx for the nine months and for the balance part of the year, what has been planned? And then for the next financial year, along with in which segment, we will be putting spending the money? So we've answered this question already. We said that, you know, this year we are totaling to about INR 200-210 crore, you know, by the end of this financial year, and next year, slightly higher, somewhere around INR 220-240 crore is what we are talking about. So we've answered this question earlier as well. In which segment, sir? So we've said, you know, it's going to focus around growing our capacities in AMD and Garments is the primary focus. And, can you give more color on what has been the utilization levels, specifically for the Denim segment? You spoke about Woven, I think so, at higher, at 100%, if I'm not wrong. But what has been the capacity for Denim for this quarter and for the nine months? So, capacity is a little bit irrelevant, simply because we are choosing to sort of cap the volume which we want to produce, because of the external reasons, you know, which I just explained. So we are operating right now at 60-65% of our existing capacity, but that's what we have chosen to do. Our focus is on profitability, and, Denim as a business still remains, EBITDA positive and EBITDA positive growing. Correct, sir. So that means we have the flexibility to produce, we have flexibility to have to be in either of the category, not to be, in the value chain Denim need to be produced. This is what you are trying to convey? Sorry, your question is? Sir, I was trying to— Repeat the question. Yes, sir. No, are you saying that our capacities in Woven and Denim are interchangeable? Is that the question? What's the question? Yes, sir. As you were, as you mentioned, that we can, whichever is profitable or as the market condition, demand, we can, it interchange. That was my understanding. How does that work? No, no, no, no. Denim is a different product. Right from spinning stage, it requires a different thread counts, and hence the capacities between Denim and Woven are not interchangeable. What we said is that we have right now recalibrated our Denim capacity and fixed costs to reflect the volumes which we have seen in recent quarters and the near future. If and when, if our demand scenario improves significantly, we will scale things back up to service the market. That's all we said. Right. Sir, can you give more color on the order booking status? As in your presentation, you may have mentioned about the U.S. and the European markets, your customers are not in the best of health, and the demand is on the lower side. So, as of now, the Q4 situation looks very similar to what we saw in Q3. It is starting to improve a little bit, but as you know, as things kind of unfold in next few weeks, we will know what Q4 has in store for us. But I would say broadly similar, but somewhat positive as compared to Q3. Right. Sir, a few more questions. Sir, firstly, sir, on this green energy part, the investment we are making. Of course, this investment, what will be our energy mix, the conventional and the non-conventional part? Our will improve to about 45% of our total consumption. No, no. So, I think our renewable consumption will improve from about 7% to about 26%-28%. 45 is associated. Okay. So, and that's the maximum which current hybrid laws permit. But we are also looking forward to possible, you know, rethinking, where perhaps an enhanced ceiling could be allowed. When that happens, you know, that would create further value because we will be looking to participate. Okay. So out of the total energy, requirement, 28% would be derived from the, the green energy, that, that being the ceiling. This is what you have conveyed. That's it. Right. Okay. Sir, and you spoke about the interest, cost, cost of fund also, moving up. So can you provide what is the blended cost of fund for us, for separately for long-term and short-term borrowing? Blended cost, for us is, 6.5% in this quarter, and, that has, let's say, gone up over the year by almost 1%, 1.2%. Correct, sir. And, what is the RoDTEP receivable, sir, we have in our books, currently, and what percentage of our sales is, export denominated? This is related to exports. Yes. So RoDTEP, we have, you know, as the value of RoDTEP started to improve, we have started to liquidate. In fact, as a matter of fact, very recently, there is a RoDTEP amendment announced, which should provide, let's say, additional margin opportunity for us. And, you know, but, but RoDTEP as a value, I mean, total pool, which we have, is largely liquidated. Okay. And you mentioned that the, the discount has narrowed. So, can you give the comparison, sir? You were, thinking about the discount. Yes, our realization is 97%-98% today. Right, sir. Two line items that I have. That is for the employee benefit expenses. I find that that could be on, on the higher side and also incommensurate to the, to the revenue. What should be the number as a percentage of sales? Should we look ahead at the employee benefit expenses? This quarter, it is around INR 218 crore. I think you should look at YTD, and that should be factored in, let's say, if you are projecting future quarters. So to, sir, to what was it the mix that, that led to the lower employee benefit at INR 205 crore on a top line of INR 2,170 crore? See, you know, as it was also explained earlier, our revenue is a factor of volume and price, and price has a large underlying element of, of cotton. So these percentages, you know, quarter-over-quarter might not give you the right reference, but using YTD number and employee cost as a percentage would be a good reference to plot future. Correct. Correct, sir. And about the other expense part, sir, that has also fluctuated by 10%. The revenue, the, the revenue decline is there, but how should, how should one, look at this line item of other expenses at INR 512 crore? It should be, you know, it should be very similar. Again, if you, you know, sort of take an average of YTD number, this is what we should look to plot. YTD number means in nine months, so whatever nine months, that is what you are—Right. What we can also do, you can get in touch with us and, our Investor Relations team can provide you more information. I will definitely get in touch. And, sir, lastly, on the, this purchase of stock and trade part also, how should, what factors led to this, change in numbers? You know, since there are other people in the queue. I'll get in the queue, sir, and thank you for the opportunity, and all the best to the team. Thank you. Thank you. We have the next question from the line of Vikas Sharda from NT Asset Management. Please go ahead. Yeah, hi, good afternoon. It will be quite helpful if you can comment on the change in CEO, the resignation and the reappointment of Mr. Jayesh Shah. Sure. So, you know, Swayam joined us about a year plus back. He's, he's looking to get into some profit center opportunity within the group, so he's starting with... And that will conflict. So as a call, as a policy, the audit committee recommended that we shouldn't be having a conflicting role. So he will be part of, immediately, he will start with the largest purchase item, which is cotton, which is at INR 1,100 crore-INR 1,200 crore, roughly for June, as a first step, and then, of course, he will start the role in the organization. Sorry, your last part was not clear. What is last part is not- That, the, that, he will look into the cotton or? That's correct. That's what I said. That last part I said that he will immediately start looking at purchase of cotton. We are already in the season, and he wants to kind of grow into more on the business side than be on the controller side for now. Okay. So would you be actively looking for another replacement or what is the plan? Right now, I have assumed the role of a CEO, and I have been with the company for some time... and I have assumed the role as our CEO. Understand. Another question is on the tax rate. This year it appears to be low. What is the full year expectation, and how should it be for next year? I think, so if you ignore the one time, which is currently in 2023, which is there as a part of a note, to our, Yes. Which has gone, our tax rate will be around 22%-23% for the year. Okay. You could assume around a similar percentage next year. Understand. Finally, just one more question on this GST sales write-off, which is, in the notes that it's, INR 14.5 crore. No, it is part of the GST write-off. The balance is a political contribution by way of electoral bonds. Okay. So how much is the political contribution? It's about INR 9 crore out of, say, INR 15 crore or INR 15.5 crore. Understand. Thank you very much. Bye-bye. Thank you. We have the next question on the line of Nirav Savai from Abakkus Asset Manager. Please go ahead. Hi. My question is regarding the AMD segment. We have done some debottlenecking during the first nine months. So what can be the optimal revenue, which we can achieve from the existing capacity? See, this capacity augmentation through debottlenecking is an ongoing process. And if you, you know, remember what I explained about the portfolio itself is three clusters, and within each cluster there are multiple product market lines. And hence, you know, I can't give you a specific number. As, as and when we can, you know, keep expanding our volume and the run rate, with their part comes in the way of further growth. We go ahead and debottleneck that through additional investments, in some cases, ourselves, or in some cases, through partners. Right. Right. So the order book, what we have, is it long term that we get a visibility for 20%+ growth, let's say, for next two, three years? But are there clients who give us a long-term kind of an order which is repetitive in nature? Yeah. So the way the business works is that it's not as if we have order books which are locked into our next several quarters. That's not how it works. But what happens in this business is that you develop a set of customers and accounts over a long gestation period, which typically involves clearing a lot of certifications and compliance requirements. As such, it's a slow and steady build, and hence typically it's hard for anybody else to come and knock you off. So what we are having confidence on is the basis of the accounts where we are continuously seeing improvement in the share of wallet and also gradual addition of new accounts. And that's the basis for us to say that the business is robust and growing, and we don't see any problem taking this business grow at 20%+ for next few quarters. Right. Right. Right. The second thing is for the strategic customers. In the Textile business, do we have customers which give us or lock in a plan for capacity for let's say, six months or two to three quarters, where we have visibility of orders in our hand? And, do we have those kind of strategic customers, and how do you... Which kind, you know, what kind of customers are exactly, you know, classified as strategic customers? So even in Textiles business, the nature of how the relationship is built and the kind of way the buying happens is not that different from what I talked about AMD. These are accounts which have worked with us as, you know, key partners for several years, maybe in many cases, more than a decade. The buying cycle traditionally has been two seasons, spring, summer, autumn, winter. The process starts about 18 months earlier than the time that the merchandise hits the shelf. You go through different phases of design alignment, sampling, pre-production, and then the bulk production. Now, obviously, what's happening is that over time, brands are wanting to shorten this cycle and limit their exposure because their confidence, which they used to kind of forecast, they are buying, you know, 12-15, in some cases, 18 months out. That confidence is getting lower. The world is moving to a fast fashion. Right. So our, you know, buyers also are asking us to kind of, you know, expand sooner and hence. At any point, it's not as if we'll have a clear 18-month kind of a order book. But yes, we have conversations and discussions as a matter of routine in different stages. Right. Right. Today, it is subject to change, but they want to ensure the supply side, issues should not be there in case a demand comes up. Absolutely. On the realistic monetization side, I understand that we were about to get some INR 1,150 crore this year. So this would be the funds of Forreste project, right? This would be the last payment Forreste project, and when do we see this recognizing in P&L? So this year should clear about net INR 150 crore, should see us to get around slightly below INR 10 crore. This is largely coming from the Forreste project. We should see another INR 75 crore-INR 100 crore load coming in the next financial year. And, after that, maybe either end of the year, next year, year after, or in the first few quarters of the calendar year, then we should be recognizing the profit on it, though the profit would have come in the earlier period. Right. Right. And we had also classified some assets, you know, which we were planning to liquidate or monetize. That is in the last stage of getting government approval.... and we are hoping that that gets done over next, within next five months or so. In FY 2024, there might be another tranche of land which you would like to- That- Either send it out or develop it through one means of market. That is correct. That is correct. Right. Right. That's it, sir. Thank you. Thank you. Thank you. We have the next question on the line of Surya Narayan from Sunidhi Securities. Please go ahead. Yes, sir. Thank you for giving me the opportunity, sir. Just one clarity from Jayesh Shah regarding the cotton purchase. What is actually currently was expected in November, December, that the prices should come down as the arrival you know increases, but that is not happening. So are you going to accept that this is the new normal in the cotton situation, and cotton won't drop, say, currently around hovering around INR 170-INR 180 per kg. So are we at all going to have price of below INR 150 per kg anytime this year? So unfortunately, you know, very difficult for us to predict the commodity prices will move because it has combination of fundamental factors, we could say, where the demand is sluggish globally or the prices should come down. But there are counter factors where China market is opening up where consumption can grow. Yes, cotton is not particularly, production is not particularly as much as it was expected to be. So as we said in the earlier commentary, it is similar to cotton, the exchange itself is, you know, moving between 83, and then it's come down to below 81. It's back between 81 and 82 now. So they are volatile, and in that situation, we currently are avoiding taking a view, and we are doing mid-day, you know, purchase. Okay, understood. And second, sir, regarding the renewable side, we have around INR 560 crore of, you know, expenses towards the power fuel last year. So just to understand that now, one of your colleagues told that, now, this is the maximum capacity we can think of as far as renewable is concerned. So what is, what is the SPV detail can you just give so that now we—I got understanding that now only 5% of investment has gone into the SPV. So what sort of capacity that is, and, if you can give some clarity on that? No, as we said, we have invested INR 25 crore, as an investment into, a power SPV created by a power generating company, which gives us certain power, as, as we mentioned earlier, that will give us an annual saving of INR 25 crore. Now, back to the question whether we can further reduce the power cost, there is a representation and I would say, active discussion going on with the government to remove the cap of 25%, and we can manage that things. We will further try and invest, or get the renewable share of renewable increase, which anyway is our aim that we want to become more sustainable. So but it is currently, as we speak, we should take only this, because that's not the reality. Okay. And sir, from the U.S. market side, are we seeing any kind of good, I mean, demand returning, you know, for the summer season and especially- So as my colleague mentioned, that there has been a reasonably good uptake in the U.S. as well as in Europe, much better than what I was expecting. It has to translate into them putting an order as of today. Everybody is a bit cautious, having done the, you know, having inventory pile up and everything. So we believe market will start to respond back in terms of demand, which may be, you know, if not three months, maybe within six months. But it is difficult to say how things are moving in the market and everything. So for now, we are just playing a cautious game for demand achievement. Let's see what happens when it's, you know. There are definitely the updates are not under so much of pressure as we were fearing, which is a good thing. But has it translated into demand generation? So far, no. But, but possibly, maybe when we speak next time, we could give you more, more update on what's happening with our customers. So, so how do you manage- how the company is looking to accommodate the elevated cost year on year, year? So when we, when we talk to the B2B customer- If you look at, you know, the question is that whether the demand will never come back, that may be a- Yes, sir. That may be a challenge for three months, that may be a challenge for one year. But if you said year-on-year, textile is responding. It's not a year-on-year demand problem. Otherwise, there is no point in remaining in Textile business, right? So we believe that this is a phase which we have to pass through, and we are strong enough as a company with debt reduction, with bridging fungibility and, or rather, flexibility to reduce capacity as and when we need to. We will be able to pass through this short-term period, but we are continuing to invest. That shows that we are believing in the long-term or medium-term prospects of this business. Regarding the AMD business, just to understand what is the total addressable market we are capturing to, and how that addressable market share has to be growing, and where we are placed it. I mean, I mean, in the broad, broad figure of our market share, you know, because, you know, I understand that, you know, it is not possible to detail it out. At least, you know, if you can give some idea as to what kind of addressable market. See, like I explained, you know, this AMD is a collection of two sets of businesses. Each of those sets has got multiple underlying lines, and hence, you know, it's very hard to kind of put a market size for AMD. I will say that I think the intent of the question is to understand what's the headroom. Suffice to say that we are still quite small in the global scheme of things. I don't think that we should bother about, you know, headroom for growth for next 12 quarters in each of these lines. So, any idea, because, you know, my gauge is just not my calculations is that, you know, we could be, I mean, on the year-over-year basis, it could be heading towards, you know, INR 100 crore of bottom line in the AMD business itself. So are we thinking of to demerge the business, or away from this, you know, total concentrated one? So or we will be- Before the Board as of today. Sir, can you pardon me? There is no such proposal that has been considered by the Board as of today. So again, when we carry anything on capital or business restructuring, it will happen only when the Board takes it up as an agenda. Whereas, regarding the Denim business, is it, is it because the textile Garment generally has a longer, you know, really longer life. So is it the, is it the, it is a long-term cyclicality, compared to the- I think I spoke about it at length. Did you come just now into the- No, no, no. But this aspect actually, I, I heard you. I heard you. But this aspect actually, I am just asking you about the cyclicality you have just mentioned. So if you understand- Long life of Denim has been for 100 years, you know, it's not that the Denim has now become long-lasting. I think, I think as I explained earlier, there are challenges in the market, and there are challenges on the cost front, particularly the cotton. I think that is, that is the equation that needs to be corrected for Denim to become profitable. So you are... I understood. You, you cited supply side challenges rather than demand side. Understood, sir. Thank you, sir. Thank you. Due to time constraints, that was the last question. I would now like to hand it over to the management for closing comments. Thank you everyone for taking interest and taking out time and joining our call. We hope to see you again in future investor call. Hopefully by then we would have firmed up our CapEx, CapEx plans and next year plans, and we will be able to share some more detail on the outlook for the company. Thank you. Thank you very much. On behalf of Arvind Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.