Ladies and gentlemen, good day and welcome to the Q4 and FY25 Post Results Earnings Conference Call of Vardhman Textiles Limited, hosted by Batlivala & Karani Securities India Pvt. Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an 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, then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Roshan Nair. Thank you, and over to you, sir. Thank you. Good evening, everyone, and welcome to Q4 FY25 Earnings Conference Call of Vardhman Textiles Limited. On behalf of B&K Securities, I welcome all participants and the management of Vardhman Textiles Limited to the call. We have with us today Mr. Neeraj Jain, Joint Managing Director, Ms. Sagarika Jain, Executive Director, Mr. Sushil Jhamb, Director of Raw Materials, Mr. Mukesh Bansal, Head of Fabric Marketing, and Mr. Varun Malhotra, Head of Finance. Without further ado, I would like to hand over the floor to Mr. Neeraj Jain and Ms. Sagarika Jain for their opening remarks, after which we can have a Q&A session. Thank you, and over to you. Good afternoon, everyone. We have declared the results, so it's a little better compared to the third quarter and the corresponding quarter. At the same time, I think the challenges continue both for the world market, textile market, as well as Indian textile market. Considering the earlier concerns were only because of the two wars, but now considering the tariff war, which is started by the USA, there's definitely more uncertainty as of now for the next couple of weeks or couple of quarters. Till the time there is a negotiation or there is an understanding on the tariff to be put on the various countries. On the business front, definitely this has been a very, very challenging period for the spinning business because our cotton in India continued to be on a very, very high basis, almost in the range of about 81-82 U.S. cents, whereas because of the minimum support price over here and the inability to get the cotton imported duty-free in India. For most of this period, cotton in the range of about 66-67 U.S. cents per pound on a New York futures, which means the landed cost of cotton to Vietnam or to Indonesia would be in the range of about 78-79 US cents. Compared to that, the Indian cotton in this period continues to be almost at 82-83 U.S. cents, which means putting us at a disadvantage of 3-4 U.S. cents in addition to the quality variation differentiation because of the contamination and so on, so on. So the industry in India continues to struggle. The second aspect of the same is the quality control standard put in by the government, where the import of synthetic fiber, import of any kind, where any material to be any raw material to be sold in India or any fiber to be sold in India, man-made fiber, has to be approved by the BIS. This basically has prevented the import of synthetic polyester or viscose in India. Our raw material, both polyester and viscose, are almost, as of now, expensive by about 18%-20% compared to the mill which is getting it either in Vietnam or Taiwan, Thailand, or China. So as a result of that, the Indian spinning industry is a little uncompetitive as of now on the man-made fiber as well. These are the two big concern points. Of course, on the silver lining side, definitely the brands are coming to India, that business is available. Whichever can give them the delivery in the time schedule they require, whichever can manage their lead times as well as the sourcing requirements with the new product development innovation, that business is surely there, which is going on. So that's the direction the company has taken, where we are trying to look at more of these products where you can enhance your margin. To that extent, we are modernizing our machine park also so that the software is more robust, working wholeheartedly on the marketing and new products so that we could capture the lead kind of businesses where the competition is relatively less and the loyalty of the customer is surely better. So that's what is happening. The Indian crop, almost it was estimated to be about 30 million bales and almost 90%. But considering the minimum support price, this year cotton cultivation of India throughput almost 10 million bales. Now they have started selling it. Of course, the prices in India again are higher because virtually now, as of now, the entire quantity is available with CCI only, and mills have to buy day to day, but at a much, much expensive rate. The next year thing is about to start. The U.S. intentions are already there, which is lower by about between 10%-14% considering the weather and the low remunerative crop over there. So that's going to be one concern where the overall shortage would be there. But at the same time, if USA puts in any kind of duty, that means there could be a possibility of some reduction in the consumption also over there. So to that extent, there could be a possibility of the consumption also being lower in USA, which is one of the biggest consuming countries in the entire world. So as of now, the atmosphere has become very, very challenging, very, very uncertain. Most of the shipments which have happened in the last three, four months, the customer expectation is, or the brand expectation is, whatever is the 10% duty that has to be absorbed by the supply chain, including the brand. But whereas spinners, because of a very low margin, is not in a position to take that. So in any case, it's being negotiated between the brand and the government as of now, most cases. Two, I think since this facility of 10% is only available for 90 days, so there's more uncertainty how the things will happen next because any order which comes in today will be delivered three months down the line only. So those are all uncertain period times as of now, which are posing a big concern to most of the, not only the textile, but I think other non-textile products as well. Another piece of information that there's been some issue between India and Bangladesh, where they are not allowing now the shipments by roads to Bangladesh, which used to happen through Benapole border earlier. So which means the cost may not increase, but at the same time, the lead time surely will increase from about 10 days to three weeks, which is again a concern for the yarn industry as it is moving more and more on the value-added side. So this is definitely a most or a very uncertain period, but I'm sure it looks like there seems to be some silver lining also because if the USA puts in all kind of duties, as of now, India would have one of the lowest in duty. As per the previous understanding, it was 24%, whereas most other comparative countries were between 45%-50%, which includes Vietnam. Bangladesh was also higher. China was much higher, so there could be a possibility, even in the uncertain times, there could be a possibility of India getting some advantage by the relatively lower duty so that we could enhance our exports to USA. That's my starting comment on the yarn side. I'll request Sagarika to give her opening remarks on the fabric side as well. Thank you, sir. As for fabric, there was good demand from the markets all around. There was good retail sales during the festive season of Christmas and New Year. As a result, import numbers in January and February were quite good for U.S., U.K., and E.U. markets, so we had a very good quarter four. In fact, this has been one of the best quarters that we have ever had. We ran on full capacity, and we also had a good financial year. Adding to what Mr. Neeraj Jain had said on U.S. tariffs, some of our U.S.-based customers are referring to this situation as short-term pain for long-term gain, and we share the same optimism, so as a response, we are actively engaging with customers to understand what their evolving needs are, and we are positioning ourselves as a strategic and reliable partner. Our proactive approach, combined with India's tariff advantage, subsequent tariff advantage, places us in a strong position to not only navigate the current disruption but also to achieve sustainable growth over the next quarters. As far as capacity expansion goes, by the end of our current calendar year, 2025, our production capacity will increase by 38%. So this expansion will enable us to shift to other products, including synthetics, to increase our product basket and also reduce the sale of gray fabrics. So we will be converting our gray fabric proportion to dyed, processed fabric. We have seen strong demand from both existing and new customers, which is encouraging. While the fear of U.S. market slowdown could potentially impact short-term demand, but we're committed to utilizing this expanded capacity immediately. Our aim is to fully absorb this capacity enhancement and optimize our production by fiscal year 2028. We are confident that with strategic planning, agility, and the right customer engagement, we will maximize this capacity expansion and drive growth. Hello. Hello? Sushil, can we open the line for Q&A? Yes, sir. Sure. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use hands-free while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rajesh Jain from R.K. Please proceed. Hello, sir. Good afternoon. Can you tell me why is there a sharp jump in other income and other expenses in this quarter? The other income increased sale of some land at one of our plants, which is about INR 25-26 crore. Other than that, I think it's all normal. Sorry, other than that? Other than that, it's all normal. And the remaining is we do Mark to Market on the dollar rupee also. So whatever is the foreign exchange gain, that also gets captured into other income, as per the accounting standard. Okay. And why is there a sharp jump in the other expenses? What does that comprise of? No, that's generally because we have a huge amount of modernization going on in all the factories. So that's all related with the repair, maintenance, and the capability building expense. Okay. So going forward, I mean, this will be the trajectory of the other expenses going forward also in the next few quarters? No, it will come down for sure. I think most of the modernization are getting completed in the first quarter itself. After that, it would normalize. Okay, sir. And sir, apart from so which are the countries to which you export? Can you give a country-wide bifurcation in terms of percentage of your revenue country-wide? That keeps changing, but most of our I can just give you an idea. I think as a country, whatever yarn we export, 50% goes to Bangladesh, and the remaining goes to almost all the Asian countries or Central America. Maybe some part of this goes to Mexico and so on and so on and this is the trend for the country. Our trend is almost in line with the country exports. That is true even for the fabric also. Okay, so is the Bangladesh exports seeing any continued impact because of the stand that Bangladesh has taken? No, as of now, no. But it's only the serviceability will be a little poor because we'll have to ship it through the water route only. So maybe the number of days to reach the product will increase somewhat in some of the products. For Vardhman, let's say 70% of products were already going by the ship. So I think 20%-30% will have some impact on the serviceability. So cost-wise, it may not have an impact. Okay, sir. And sir, just can you provide any update on your foray into technical fibers? How is the capacity expansion going on that front? Sagarika, can you share? Yes, so the progress is as planned, as anticipated, and we should be operational in quarter three. Okay. Okay, thank you. Thank you. Thank you. The next question is from the line of Avinash Chandra from SMIFS. Please proceed. Thank you for taking my question and congratulations management on good PAT performance. Sir, first thing, in the historical, if I look at the number of EBITDA margin and textile EBIT, which you report, most of the time, rather all the time, textile EBIT was lower than the overall EBITDA, kind of one and a half, two% difference. But this is the first time our EBITDA margin is 11.4%, whereas textile EBIT is 12.5%. And I understand this is due to unallocated cost and all. So could you describe what are the huge unallocated cost which is there in the number which is not related to textile business? No, this is all our business is textiles only. There is hardly anything other than that. Sir, then in that sense, EBITDA margin should be higher than the EBIT margin, correct? If you look at your number, your textile EBIT margin is 12.5%, which is reported, and reported EBITDA margin is 11.4%. And historically, the whole trend was 1.5%-2% higher EBITDA margin than the textile EBIT. This is the first time it is a reverse. Sorry, I'll come back to your question in a little while. Let me just look at. In the meantime, can you move forward? Sure, sir. Sir, the same question you have already talked about in detail, the problem the sector is facing rather than uncertainty and everything. In a few of the other calls, also many management highlighted that due to these lower international cotton prices, even for some of the spinners, business is not viable. So did we reach to that situation even in India that a lot of small players are not able to manage any EBITDA margin? Can you repeat your question? So, sir, I mean, in the start, sir already talked about that international cotton prices is lower, and that is making an issue as far as our competitiveness against other countries. So, I mean, has it started impacting our EBITDA margin already compared to the historical? Because our EBITDA margin is far lower than the historical. That's where my question is. No, there are two issues. Definitely, as of now, since our commodity expenses are higher, our EBITDA margin surely is lower, and it is impacting all the industry. Two. Historic margins on EBITDA margins have always been in the range of about 17, 18, 19%. But if you look at the change of base of yarn cost in the last three or four years, the Indian cotton used to be about INR 34,000-INR 35,000 rupees a candy four years back. Today, the base has become INR 55,000. So the yarn cost has increased by 70% in this period. Whatever is the yarn cost, to that extent, yarn prices have increased. But if you look at percentage of EBITDA to net sales, that's not grown by 70%, 60%. So whatever increase in the raw cotton prices has happened, our EBITDA per se may be same, but definitely in terms of percentage, it will never be comparable unless the margins improve significantly. Sure, sir. I mean, a lot of few companies have shown some expansion in EBITDA quarter and quarter year in that part. But when you answer the first question, maybe that will give more clarity. The last question. Yeah. On the other business, I just looked at there is acrylic fiber business also, which is added into the consolidated numbers. Yeah, yeah. So I had done this math also, but acrylic is just 2-3 crore EBITDA. So that's a very small contribution. So that will not change my number from 12.5- 11.4. It's a kind of difference of 100 crores to match the whole number. Let me just look at. Okay. And sir, the last question while you do that math, and you can come back during the call on that answer. The last question, I mean, on the tariff, you explained everything, so I'm not repeating anything. Let's say the tariff remains as it is, 10%, and then some more tariff comes. And if U.S. retailer keep pushing to Indian supplier to give discount, do you think it will also some bit of negative repercussion come on the spinners as well? I mean, those textile garment manufacturer will ask us also to take some cuts. There could be a possibility whenever anyone in the supply chain is being asked to share the cost, they will definitely try to come back to the spinner also. But some of the things the spinner margin is so poor as of now that spinner may not be in a position to help at all because there is hardly any margin available. So to me, that doesn't look like that the spinner will have to bear this cost. But yes, up to fabric sales product, it can come to some extent. It can. So we are resisting. But at the same time, I think it's a temporary period of one or two months. Let's see how things go because if this continues, they will have to increase the price at the retail side. But since it is a sea of uncertainty and the people are not sure how much final duty has to be, so transit will take a little time. And by the time once the duties are finalized, it will take a final call how do we want to go on that. Okay, sir. Okay, sir. I will wait for that EBITDA and EBIT thing. Okay. Yeah. Thank you. Participants who wish to ask a question may press star and one. The next question is from the line of Anil Kumar Sharma, an individual investor. Please proceed. Thanks, sir. For a good set of numbers, congratulations for that. Madam Sagarika, you have mentioned that our capacity is running at the full capacity regarding garments. But in the quarters, what the sales side you have mentioned, 515,000 you have sold in this quarter vis-à-vis it is 554,000. It has come down by almost 76%. So can you explain that? Hi. So are you talking about garment or textiles? I mean garment. Gray yarn capacity sales products you have given, it is less than the YoY quarter in volume. Sorry, what are you talking about? Volume by? Hello? Hello? Hello? Yes. Madam. Is it about yarn numbers or the fabric? No, not fabric number. Gray Fabric number particularly. It has come down volume you have given day before yesterday. It has come down from 554 to 511 meters. Okay. So it could be quarter to quarter difference. But what I was saying is, in this now in FY26, we are expanding our capacity. So the gray fabric will be converted into processed fabric. Okay, madam. Very okay. But my question is actually overall also, if we combine both, even then this quarter is volume-wise less than the last quarter, YoY quarter. Is it so? It should not be because earlier we were running at 90% capacity. Now we are running at 100% capacity. So volume-wise, it should not be less than that. It may not be the case. There's also other factors like change in the product mix. So if the product mix changes, then the price will be different. So the revenue also is different. But the volume should not be less than the YOI. Hello, sir. Sorry to interrupt. We may request you to return to the question queue for the follow-up questions as there are several participants waiting for a turn. Okay. Thank you. The next question. Thank you. The next question is from Prerna Jhunjhunwala from Elara Capital. Please proceed. Thank you and congratulations on a good set of numbers on improvement on margin sequentially. So just wanted to understand the cotton yarn spread position today and how do you foresee for the coming period? Though I understand that uncertainties continue, but do you think there is some trend in the yarn business now given that our margins have been improving every quarter? So cotton yarn trade, if you go by the international cotton, it's almost in the range of about 85-90 U.S. cents, which is still reasonably okay. But if you go by the Indian trade, it is almost a little lower than 70 U.S. cents in this period also. So of course, there's some improvement happened, but at the same time, it's not enough. And if you look at the capacity utilization in country as a whole, there seems definitely almost 15%-18% capacity has stopped in this period last two years because of the lower margins. So of course, though there has been some respite in this period because when the cotton season started, at that stage, we were buying cotton at about 78-79 U.S. cents in India. But it slowly has increased to now 81-82 U.S. cents. The NY future has been coming down steadily, $0.67-$0.68 U.S. cents only. Indian spread is not more than $0.70 as of now. Okay. So what is leading to margin improvement for us? Is it improvement in fabric margin or is it improvement in? Yeah. For Vardhman, for Vardhman, the major improvement is coming from the fabric margin. Though there's an improvement in the yarn also in this quarter, but I think substantial increases on account of the fabric. Okay. And do we see that there is further potential of improvement in margins given the uncertainty and the challenges at the global economic level? Or given the uncertainty, we would stay away from giving any comment on that? No, I think it's good. Very difficult to say anyone guess what will happen. But as I mentioned earlier also, considering even if the duties are put in, India surely looks like would be one of the countries with the lowest duties on it. So though one or two months uncertainty would be there, but if we are at the lower end of the duties amongst other competitive countries, there will be an opportunity for the Indian textile industry, be it spinning, be it fabric, be it garmenting. Okay. The second question is on Bangladesh exposure to Bangladesh. Given that land route is now closed by Bangladesh, could you help us understand the impact of it in terms of the cost increase that we'll have to incur to supply there? So as I mentioned earlier also, in terms of cost, there's not much of a difference whether material goes through the roadway or it goes through the ship. So cost is not really very expensive, but more impacting on the serviceability because it takes almost three weeks to send the material through ship, whereas by road, it takes only about 10 days. So there is a gap of about 10 days, 12 days on the delivery side. But other than that, direct cost really is not very big difference as of now. Rather, it may be advantageous only to send it through the ship as on date. Okay. So cost-wise, there is no material difference as such. Yeah. Okay. Okay, and sir, just wanted to ask you on other expenses. This quarter, other expenses has seen a huge jump. Any line item that you would like to highlight? No, not really. So as I mentioned, there were basically two things happening. One, in this period, there has been increase in the ocean trade because of the various uncertainties and export also destination-wise. So that's one increase. Two, there are lots of repair maintenance going on in all the factories where we are trying to monitor those factories. So since lots of work has happened in the last six months, there's some increase on account of that. Other than that, I think it's all normal. Okay. Okay. And so the last question is on the timeline of capacity that comes in the next one year. Could you help us understand which quarter we can expect some capacity coming in? On the spinning side, there is only one expansion which was announced on Open End where we are yet to start that project. We're still waiting for the government to give us some couple of approvals. And also, we are evaluating the overall business circumstances. All modernization of spinning is going on as per the plan. And I expect most of the modernization will be completed by September. So it will be helping us both in terms of reduction of cost as well as some increase in the production on the existing setup only. The fabric expansion, Sagarika has already given the schedule. If you want again, Sagarika, can you just repeat when the fabric expansions are coming in for the various products? Yes. Sure. So fabric capacity expansion should be operational by quarter three. So we will be able to see an impact then. Okay. But we had two capacities. One is existing product and one was synthetic fabric coming in. So this answer is for both. Okay. For both, it will be coming in third quarter. Okay. Okay. Yes. And it will be coming in full or in phases? So the one from the expansion of the existing capacity would come in full. And as for synthetics, so we have two phases. So phase I is 15 lakh meters per month. That would be coming now. And then based on how quickly we are able to establish our product and our brand name in the segment, we will expand according to that. Understood. Thank you, Sagarika. And thank you, sir. Welcome back to the question queue. Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please proceed. Yeah. Hi. Good evening. So I have two or three questions and clarification as well. So last time you mentioned you are currently incurring almost CapEx plus OpEx because modernization is also there, close to INR 3,000-odd crore. And if I'm not wrong, the yarn and fabric modernization and the yarn modernization is almost like INR 900 crore and INR 330 crores. Is that number correct? Almost INR 1,200 crore of modernization-related CapEx. Yeah. Yeah. That's true. Almost all of this INR 1,200-odd crore will be routed through P&L because you mentioned some while back that some of this repair and maintenance and modernization-related work is a part of other expenses. No, no, no, no. No, sorry. Whatever is repair maintenance, which is required as a building repair and those things, that goes as a P&L expense. All new machinery because major expenditure in this will be the machinery. All that machinery will be capitalized whereas the earlier machine will be taken out or will be sold. Whatever the difference in the depreciated value of those machines or sale price, that can come to P&L, be it in the form of a profit or a loss. All new machinery will be capitalized. It's only the repair, maintenance, etc., building repairs which go to the P&L. So this INR 1,200 crore is the capitalization-related number, the P&L-related number separate? No, no. No, just include the P&L number. But the P&L will be only INR 30, 40, 50 crores, not more than that. Understood. Okay. Clear. Clear. So for the full year, FY25, the incremental repair and maintenance, so if I look at your trend of repair and maintenance as a percentage of sales, this number would have gone up by what number on an average this year, FY25 as a whole? 0.5%. Will it be INR 100 crores on a full-year basis? No, no. No, the over and above the normal repair and maintenance, it won't be more than 0.5%. Okay. Okay. 50 odd crores. Got it. And the second question is, with all these measures, you will have renewable energy coming in, modernization happening. Some of the new machineries will also, whatever new CAPEX you are doing, are all automated machines. So I presume this all will lead to slightly better margins than our historical trends. And these are all internal measures which we have taken. So on an aggregate basis, how much improvement do you expect because of all the internal improvement measures you have undertaken over the next one or two years? You see, if you look at the nature of these expenditures, one is a couple of things are done to ensure the proper quality of the product, which may or may not give you any direct advantages. Two, some of the machinery we are replacing because saving in the electricity cost or saving in the number of people. Over there, there would be an advantage for sure on account of the same. So third is creating more flexibility in the system so that we can produce the differentiated products, which sometimes on the existing infrastructure may not be done. So depending upon how much those products we are in a position to sell or that kind of business is priced into the India or by us, the advantage would come. But in any case, whatever expenditure we do, our expectation is always on the CAPEX, at least 15% margin should be with that, should come at least 15% over and above the existing cost. Understood. Okay. The second question is with respect to the technical textile business. So obviously, our project will get completed in third quarter, as I understood. But from the business development perspective, where are we and what kind of inquiries and what kind of customers we are seeing in the technical textile business? Yeah. Sagarika, please. Yes. I can answer that. So currently, we've received good response from our existing customers. So our existing customers in their portfolio also have the synthetic products. For example, they'll have a jacket which will be a windcheater or which will protect against the rain. So we've gathered quite a few samples, and we are building our know-how and other things to how to develop products. So from existing customers, the demand is decent, and we are also going to be touching. We've already reached out to some new customers who we weren't catering to. For example, there would be mainly sports brands. So it will be a mix of both existing and new customers. That's been the progress. Okay. And just one clarification here because in the initial comments, sir mentioned that there has been import duties on polyester as well as viscose and several other synthetic fibers. So because these are all export-led products, the import duty will not have a bearing on our competitiveness. Is that a correct understanding? No, no, no, no, no. So these are not the import duties. This is basically a Quality Control Order which has been issued where any fiber which is sold in India has to be approved by the Bureau of BIS. So all the companies which are sitting outside, if they have to sell their fiber in India, they have to get it registered with the government for that. Which most of the companies sitting outside, Chinese, Taiwanese, they are not doing it. If they are not getting themselves registered to the Indian authorities, in that scenario, that import cannot be done in India. So practically, the import of all fibers, they were banned in India. And as a result of that, the local players, they increased the prices, and our raw material has become expensive. It's not the import duties. It is the outside barrier which is put into the system. But will it impact our technical textile business? Because I presume that a lot of this material will be imported only to begin with. Polyester, we will still, I think majority, we will be relying on the domestic market as it is available and quality is also okay. Nylon, we will have to import. Now, of course, our first preference would be to go to those suppliers who have BIS. Okay. Understood. It will depend on product to product. Okay. Got it. Okay. Thanks. I'll come back with more questions. I have a few more. Thanks. All the best. Thank you. Before we take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Shivaji Mehta, an individual investor. You may proceed. As there is no response from the current participant, we may move to the next participant. The next question is from the line of Phalguni Dutta from Mansarovar Financial. You may proceed. Yeah. Good evening, sir. Sir, how are the cotton yarn spreads now versus Q4? Q4 was for the Indian mills about $0.68-$0.70, and it continues to be the same. Sir, at these spreads, are we making something at the PAT level for yarn? On the basic products, probably no. I missed you, sir. You said on the basic products, no? Yeah. Okay and sir, I just missed your comment on the tariff. If it's not a problem, can you just repeat that part, meaning what is the situation as regards to the U.S. tariff, and it is on fabric, right? Oh, the tariff will be there on all the products, but. Including yarn. Yeah. We don't export yarn to that country, and even the fabric will go to the different countries depending upon where the garmenting happens. So the tariff is all across all products, and it looks like if they're going by their earlier list, India has one of the lowest tariffs. So indirectly, there could be an advantage of exporting garments from this country. So even if our dealing is, if the tariffs are on, and if India gets the lowest tariff, there could be some indirect advantage to India that we will be more competitive. Sir, currently, it is 10%, right? It is 10% as of now for everyone. Okay. And sir, as of now, how is it like? Is it being passed on to the customers there? It's being absorbed by the suppliers? Yeah. As of now, it is being taken by the brand itself, but they have started requesting a part of that to be borne by the fabric producers or the spinners. But spinner, as of now, is clearly not possible. We have margins. So they are requesting the fabric business also, though we haven't agreed as of now on anything. But yes, that request is there. So let's see how things go. Okay. So answer one final question. How do you see the spreads directionally for this year? It all depends upon because the government, the industry has already requested the government to waive the import duty on cotton. So I think if they are in a position to do that, our margins of spread would improve. But in case they don't do that, in that scenario, CCI will continue to be the sole supplier of cotton. And if our cotton is on almost 1,500, 1,600 basis points on, then I don't think spreads improving for the spinning industry even next year also. So unless we have our raw material aligned to the international market, it looks a little difficult that margins would improve. On the spinning side, fabric definitely with the kind of customer base we have, the cost reduction measures taken by the business, and all the expansions are coming in the overall capacity enhancement, there would definitely be an advantage. As a company, we may have advantage, but purely on the spinning side, that advantage may not be available during the time our raw materials are expensive. Okay, sir. Thank you so much. That's all from my side. Thank you. Before we take the next question, we would like to remind participants you may press star and one to ask a question. The next question is from the line of Resham Jain from DSP Asset Managers. You may proceed. Thanks for taking my question again. So two questions. First is on the cotton, given that one-third of the cotton is with CCI, and probable import duty cuts may also come in, which means that in both cases, possibly the cotton prices may actually come down. I don't know. This is my hypothesis. But when I look at the balance sheet, it seems that we maintain our cotton procurement policy this year as well. So is there any other view which you are carrying, given that so much of inventory is already with CCI? And in the history, we have seen that typically those inventory then land up in the market at slightly lower prices. There are two considerations for us when we buy cotton. One is the commercial, which is the pricing. Second is the quality. Since most of our customer base or the product base is based on high-quality products for the export market, we never compromise on the quality of cotton. In the season, we definitely try to buy the good quality cotton because that's available practically in about three and a half months' time. We respect the prices. We don't want our customers to get suffered for a smaller period of time. That's one where we will have to buy the cotton too. Our observation can be correct that in case the import duties cut, then definitely CCI may have to reduce the price, and the prices of cotton in the country can come down. So to that, as I said, balance sheet, I think this year. Even cotton inventories much less than what we normally have. Okay. So typically, you have till September, October, so possibly one or two months lower than usual. Is that a right way to understand? Yes. That's true because beyond that, it's difficult for a company like Vardhman because we don't get quality at a later stage. Then the customer definitely will start having bigger issues. So we generally don't take that call. Maybe one, two, three months we can take here and there. But we don't keep ourselves open to the not-so-good quality of cotton. Understood. Clear. The second question, sir, is with respect to the overall CAPEX which you have undertaken. And assuming all this CAPEX gets consummated, what will be the peak revenue at the current price which you are looking at? So on the spinning side, as I mentioned, it's only modernization, and about 3%-5% production increase may happen because of the modernization. So that's not likely to give any top-line increase. On the fabric side, Sagarika, you can tell me how much top-line increase can happen? On fabric side, given keeping the prices constant, we can expect a revenue increase in FY26 by 10%. And the year after that, we can expect about 30%. Okay. What is that absolute number, ma'am? So the absolute number on the fabric side, it's about INR 4,000 crore turnover they have. So 10%, that means about INR 500 crores per year. And the year after that, maybe about INR 1,000 crores or so. So total INR 1,500 crores of top-line increase. Okay. Got it. In two years' time. In two years' time. Yeah, yeah, yeah. Perfect. Thank you. Thank you. Thank you. The next question is from the line of Manish Godke from HDFC Mutual Funds. You may proceed. Yeah. Thank you for the opportunity. So the kind of tariffs which the U.S. has put on China and Vietnam, and given the fact that India might be entering into an FTA with the U.S. as well as E.U. by year-end, I mean, have you given any thought to enter into the garments space? So again, there are two ways of looking at it, whether the advantages come only to the garmenters or if India starts exporting garments to these countries, then whatever textile we are producing, that will be supplied to the Indian garmenters. So our major business as of now is the textile material, and we want to continue to be a stronger player in that. So we have a small shirting division which we are expanding also, but I think there is still no clear-cut decision to expand the garment division in a big way. So I think if India becomes competitive, definitely that advantage would come to us as textile suppliers. We directly want to do garmenting, or we want to increase it to 10 times. That's not a decision as of now. Okay. And sir, another question. You said that MMF fabric in India, MMF raw material in India is approximately 20% expensive than China. So the MMF fabric which we will be making, are we catering to domestic demand, I mean, end domestic user demand, or is it to the export demand? It will be a mix of both. So initially, we could start with more domestic market, and then as we establish our products, then we will move to both domestic and export. And it will be difficult right now to commit that how much percentage will be domestic and how much will be export. I think we can say that once we actually start the production and build up. Okay. Thank you. Thank you. The next question is from the line of Rajesh Jain from R.K. Capital. You may proceed. You mentioned that more than 50% of revenue comes from Bangladesh, and the tariffs on Bangladesh are on the higher side compared to India. But you mentioned that India tends to gain because of comparatively lower tariffs. But in particular, how will Vardhman gain? Because Vardhman supplies mainly to Bangladesh. Are you seeing any negative impact on demand from Bangladesh buyers, or how do you see the situation unfolding? Going by today's consideration, China will be the most expensive in terms of the duties, etc. China is a huge exporter to USA. In case China is not competitive, that business will go to all other countries, which will include Vietnam, which will include Bangladesh, which will include Pakistan, or India, or many others, so to that extent, till the time all other countries have the slice, they'll be getting a share from China. Every country may have some advantage, and in any case, wherever we are exporting to these countries other than China, I think that advantage can be shared between these various suppliers because of the duties advantage. It's only whatever business which will be derived or which will be shifted from China going to any country, that country is going to get advantage only, including Bangladesh. But I'm still not able to get one part of it. So you are supplying yarn to Bangladesh, right? And Bangladesh is going to be impacted, right? So just help me understand that how will you tend to gain in this scenario? Because once China is out of the system, ultimately, the business coming to Bangladesh, they will be in a position to enhance their prices of garments because they will be replacing China. So even if whatever we are supplying to them, we should also be in a position to enhance our prices. On the fabric side, you mentioned that we can expect 10% revenue increase in FY26 to around 4,500 C and to around 5,500 CR in FY27, right? Yeah. On this increased revenue with the new capacity, how much margin expansion do you anticipate? How many basis points or percentage? Sorry, I'll just correct you. So currently, about 35% of our revenue is fabric. So from that, there will be an increase of 10% in this financial year. And as for margins, I think, again, one, it would depend on how the U.S. tariff war plays out. So very difficult to say. I think we should wait for the dust to settle down, where we will find the relative advantage and disadvantage and what different brand strategies will be. And then we can let you know what the margin we can expect. But on a very ballpark number, can we expect one, two percentage point gains on the fabric side, or even that is tough? I think, again, it depends on the strategies that brands take. Okay. All right then. Yeah. Thank you. Ladies and gentlemen, before we take the next question, I would like to remind participants that you may press star and one to ask a question. The next question is from the line of Lakshmi Narayan from Tunga Investments. You may proceed. Yeah. I have one question. If you look at the entire continuum of cotton producers, yarn producers, fabric makers, and garmenters, right, so current situation benefits whom in a relative sense and world perspective? Yeah. Your voice was not clear. Can you repeat your question? So my question is that if you look at the entire continuum from the cotton producers to the yarn producers to the fabric makers and garmenters, who will benefit the most in this challenging phase, and who will actually benefit the most and who will actually suffer the most? All uncertainty as of now, it's very difficult to comment what duties will be there on our export duties will be there on the other countries. My only belief is if the country as a whole will gain, then the entire supply chain will get advantage of that. How much who is going to get will depend upon your own negotiation and other things, but if as a country, we have the advantage of a lower duty, that advantage comes to the garmenters. Part of that will be going to the fabric region. Part of that may go to the yarn region also, so this will be shared at a later stage provided that gain comes to us. Who is going to get what? It's very difficult in this scenario. We don't know how much duty differential will have, how the capacity of the garmenters will be in a position to take advantage of that. So it will be totally theoretical if you try to make a model that this is a duty advantage and who is going to get what. Not possible to put it in any numbers as of now. Thank you, sir. In the interest of time, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you, and over to the management. So thank you very much for your participation and being invested into the company. We have been sharing the challenges continuously the last two years as in a very, very difficult time. But at the same time, considering whatever is controllable by the management in terms of modernization, product mix, new product, cost, or the other efficiencies, we are really, really working very hard. And whatever results we are seeing, a part of that is into the team. So though these are all the issues and difficulties at this point of time, but as a serious player of textiles, we still believe a good future for this industry. And that's the reason we are investing heavily both on the spinning and on the fabric side. Our idea is that, I mean, sooner or later, these policies will get corrected. That's what we believe. So at least we should be prepared and ready to take full advantage of the game. So it looks like there is some consolidation happening in the industry. There are lots of smaller players, unfortunately, that are going out of the system because they're not in a position to sustain the business. So indirectly, there is some consolidation happening. And eventually, as the brand business is moving to India from China, more and more brands are coming. We are looking at the companies which are more diversified in terms of portfolio, which are financially strong, and which have the technical capabilities and the machine part. So Vardhman gets fit into all these strategies very, very well. And also the quality of management, where we definitely score quite good in the eyes of these various brands in the overall textile chain. With a good size, good technical know-how, good management, good financials, and a reasonably good machine park, and a good product portfolio, we feel definitely that even in these odd circumstances, we will do better, which we have shown also in the last couple of years, and whenever there's a small change that happens in the government policies, definitely that advantage will come up, so in this period, because it's a tough time, we are looking at all cost advantages or cost cuttings and whatever could be done internally, and thank you very much for your participation, your patience, and I'm sure bad times will pass soon. Sabriza of China, talking. Just adding to that, I think we remain vigilant in tracking global development, especially around tariffs and the demand cycles. So our focus will continue to be on building resilience and driving long-term value for our stakeholders. And I'm sure that with our strong fundamentals, customer alignment, and operational agility, we are well-positioned to navigate the near-term challenges and deliver sustainable growth. Thank you for joining us, and we look forward to the next call. Thank you. On behalf of Vardhman Textiles Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.