Good day and welcome to the Gokaldas Exports Q1 FY23 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from E&Y. Thank you, and over to you, sir. Thank you. Good morning to all the participants on the call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what is expressed as such forward-looking statements. Please note that we have mailed the results and the presentation, and the same are available on the company's website. In case if you have not received the same, you can write to us, and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited, represented by Mr. Sivaramakrishnan Ganapathi, Managing Director and CEO, and Mr. Sathyamurthy, Chief Financial Officer. We will start the call with a brief overview of the quarter and past and then conduct Q&A session. With that said, I'll now hand over the call to Mr. Siva. Over to you, sir. Thank you, Binay. Good morning, everyone. Happy to have you at our earnings call for the first quarter of FY23. We continue our exceptional growth trajectory despite a challenging macroeconomic business environment, delivering a revenue of INR 613 crores. Revenue grew by 152% YOY compared to a COVID-impacted Q1 FY22. Exports revenue grew by 5% over a seasonally strong previous quarter of Q4 FY22. The solid revenue and profit growth were driven by excellence in execution and optimal utilization of capacity. Seasonally, H1 is relatively weak for the Indian apparel industry. This is the period when brands source synthetic apparel for autumn-winter. India is most strongly rooted in the cotton fiber ecosystem, which caters largely to spring-summer demand. With a strong expertise in outerwear, we have been able to mitigate the impact of seasonality. Higher business volume and superior cost management helped in delivering a strong earnings performance. Starting this quarter, the company started providing for ESOP charge of INR 6 crores, amounting to about 1% of revenue, which despite impacting the P&L is a non-cash expense that is accretive to the cash flow as it provides a tax shield. Our EBITDA prior to non-cash ESOP charges is INR 80 crores, generating an EBITDA margin of 13.1%. The EBITDA margin of 12.1% that we reported after considering the ESOP charge is still higher than FY22 level. Increase in minimum wage effective this quarter increased labor costs by INR 4.3 crores. Though this had an impact of 0.7% on the margin, it was offset by business volume and productivity. The company had accumulated tax losses till FY22. Starting this year, the company anticipates normal tax incidence impacting PAT accordingly. The company earned a profit after tax of INR 39.4 crores. Adjusting for the non-cash ESOP charge, the PAT would be INR 45.4 crores. We continue to be zero net debt company, having a net cash and cash equivalent of INR 220 crores. We also managed our working capital well. As an organization, we have shown enormous resilience in the face of all odds. We had supply chain disruptions in Q1 from China. We heavily depend on imported fabrics and prints in H1. Repeated delays in raw material supplies due to lockdowns in China affected efficient factory operations. We worked with the suppliers and our customers to mitigate these challenges. We also battled labor shortage due to school closure period of April, May this year, as this was a period for most of our people to visit families that were not possible in the previous years due to COVID. Looking ahead, anticipating changes and planning for eventualities, we persevered and delivered. Our newly commissioned units in Karnataka and Tamil Nadu are ramping up well, and our project work on new factories is also progressing well. We continue to manage our working capital well and generate adequate free cash flow to support our growth ambition. Our entire team worked hard to deliver exceptional product quality and service to our customers. We continue to outperform on various customer delivery metrics. We see headwinds in the near term and strong tailwinds supporting the ongoing growth of the business. While U.S. retail sales has grown 12.8% YTD in May calendar year 2022, large brands are wary of slower consumer uptake in the seasons ahead till inflationary trends persist. They are also battling higher levels of inventory from last year. It is expected that this may impact imports in the short run. We are also simultaneously seeing several opportunities present themselves in the form of continuing shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized suppliers, supply-side instabilities in countries like Sri Lanka, Pakistan, and Myanmar, a favorable currency, PLI, and signing of FTAs with key markets. While the order book for H2 is work in progress, we see reasonable traction for us. Falling raw material prices is aiding the industry. Despite near-term headwinds, we anticipate good growth in FY23 and a surge from FY24. I thank you all for listening and would be happy to address any question that you may have. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Okay. The first question is from the line of Aditya, an individual investor. Please go ahead. Yeah, hi. Hi. Just wanted to if you can elaborate more on the opportunities that will come up because of the dire condition in Pakistan and Sri Lanka, which are huge garment exporters. My second question is, since Gokaldas Exports 80% of its goods to the U.S. and they're pending recession there, what is the plan of the management to mitigate this? Just these two questions. Thanks. Thank you, Aditya. It's a global opportunity, and if there are supply constraints in certain countries, it automatically results in customers looking for options from other places as well. Customers are also bound by long-term support that is required for suppliers in those countries. So at the moment, we see some amount of goods moving some amount of orders moving out of Sri Lanka to India, and we have been recipients of those as well. And it does help us in the short term. But in the long term, I think the Indian story is so strong that we feel that there will be considerable tailwind and support for growth on our own street. However, we are indeed seeing some benefits from challenges in our neighborhood. To your other question, what was your second question? Basically, there's a slowdown in your top market of our company, Gokaldas Exports. Yeah. You mentioned about U.S., right? 80% focused on U.S. Yeah. So we do have a reasonably strong and diverse customer base, and that helps us from one to another to ensure that we have the ability to fill up our order book from multiple customers, even in the event one of our customers don't seem to do well. In our particular case, since we do woven and most of the garments that we produce are fashion and elevated fashion, we are not seeing as much of a challenge even from the US market since the inventory that they hold don't seem to be the inventories of the kind that we produce. And since the markets are opening up post-COVID, people are coming back to work and traveling, etc., there seems to be reasonable demand for products that we make. So we are not as challenged, even though the slowdown may impact all the suppliers like it impacts all the brands. Our impact is a lot less. Having said that, we are pivoting a lot more towards Europe in anticipation of an FTA which is being signed with the U.K. and hopefully an FTA that could be signed with Europe going forward. So slowly but surely, we are trying to increase our share from the European markets. That's work in progress as we speak. All right. Thanks. Thanks. I'll come back in the line if I have something else. Thank you, Aditya. Thank you. Next question is from the line of Aman Agarwal from Carnelian Capital. Please go ahead. Yeah. Thanks for the opportunity. My question was basically, we operate a double shift in terms of garment production, but most of the players in the industry are not able to do that. Can you please highlight what we are doing different compared to the industry in terms of executing that double shift? No, no, no. I think there's a misunderstanding. We don't operate double shift. We also operate single shift. Most of the employees that we work with are women, and it becomes extremely difficult for them to work very early morning shifts or very late evening shifts as they have children to tend to and families to take care of. So we do work one shift only. We are highly efficient in what we produce, so our productivity levels are good, and we have been reasonably successful in driving up our productivity YOY as we keep searching for more and more growth. So not all of our growth comes from just capacity addition. Even productivity yields us growth, which has got a higher contribution to return on investments. While we tried experimenting with double shift, we have not been very successful because most of the labor force tend to resist double shift. We have seen enough growth coming with single shift operations itself. Excellent. Thanks for that answer. It was really helpful. My second and final question was basically that we have a good CapEx plan over the next one and two years. So in terms of given the near-term demand blip, would we like to go ahead with the CapEx? And second, in terms of labor procurement for this new CapEx which we are going, so do you think there will be any problem in terms of procuring the labor, or we would be able to execute that fairly steadily? Good day and welcome to the Gokaldas Exports Q1 FY23 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from E&Y. Thank you, and over to you, sir. Thank you. Good morning to all the participants on the call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what is expressed as such forward-looking statements. Please note that we have mailed the results and the presentation, and the same are available on the company's website. In case if you have not received the same, you can write to us, and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited, represented by Mr. Sivaramakrishnan Ganapathi, Managing Director and CEO, and Mr. Sathyamurthy, Chief Financial Officer. We will start the call with a brief overview of the quarter and past and then conduct Q&A session. With that said, I'll now hand over the call to Mr. Siva. Over to you, sir. Thank you, Binay. Good morning, everyone. Happy to have you at our earnings call for the first quarter of FY23. We continue our exceptional growth trajectory despite a challenging macroeconomic business environment, delivering a revenue of INR 613 crores. Revenue grew by 152% YOY compared to a COVID-impacted Q1 FY22. Exports revenue grew by 5% over a seasonally strong previous quarter of Q4 FY22. The solid revenue and profit growth were driven by excellence in execution and optimal utilization of capacity. Seasonally, H1 is relatively weak for the Indian apparel industry. This is the period when brands source synthetic apparel for autumn-winter. India is most strongly rooted in the cotton fiber ecosystem, which caters largely to spring-summer demand. With a strong expertise in outerwear, we have been able to mitigate the impact of seasonality. Higher business volume and superior cost management helped in delivering a strong earnings performance. Starting this quarter, the company started providing for ESOP charge of INR 6 crores, amounting to about 1% of revenue, which despite impacting the P&L is a non-cash expense that is accretive to the cash flow as it provides a tax shield. Our EBITDA prior to non-cash ESOP charges is INR 80 crores, generating an EBITDA margin of 13.1%. The EBITDA margin of 12.1% that we reported after considering the ESOP charge is still higher than FY22 level. Increase in minimum wage effective this quarter increased labor costs by INR 4.3 crores. Though this had an impact of 0.7% on the margin, it was offset by business volume and productivity. The company had accumulated tax losses till FY22. Starting this year, the company anticipates normal tax incidence impacting PAT accordingly. The company earned a profit after tax of INR 39.4 crores. Adjusting for the non-cash ESOP charge, the PAT would be INR 45.4 crores. We continue to be zero net debt company, having a net cash and cash equivalent of INR 220 crores. We also managed our working capital well. As an organization, we have shown enormous resilience in the face of all odds. We had supply chain disruptions in Q1 from China. We heavily depend on imported fabrics and prints in H1. Repeated delays in raw material supplies due to lockdowns in China affected efficient factory operations. We worked with the suppliers and our customers to mitigate these challenges. We also battled labor shortage due to school closure period of April, May this year, as this was a period for most of our people to visit families that were not possible in the previous years due to COVID. Looking ahead, anticipating changes and planning for eventualities, we persevered and delivered. Our newly commissioned units in Karnataka and Tamil Nadu are ramping up well, and our project work on new factories is also progressing well. We continue to manage our working capital well and generate adequate free cash flow to support our growth ambition. Our entire team worked hard to deliver exceptional product quality and service to our customers. We continue to outperform on various customer delivery matrices. We see headwinds in the near term and strong tailwinds supporting the ongoing growth of the business. While U.S. retail sales has grown 12.8% YTD in May calendar year 2022, large brands are wary of slower consumer uptake in the seasons ahead till inflationary trends persist. They are also battling higher levels of inventory from last year. It is expected that this may impact imports in the short run. We are also simultaneously seeing several opportunities present themselves in the form of continuing shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized suppliers, supply-side instabilities in countries like Sri Lanka, Pakistan, and Myanmar, a favorable currency, PLI, and signing of FTAs with key markets. While the order book for H2 is work in progress, we see reasonable traction for us. Falling raw material prices is aiding the industry. Despite near-term headwinds, we anticipate good growth in FY23 and a surge from FY24. I thank you all for listening and would be happy to address any question that you may have. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Okay. The first question is from the line of Aditya, an individual investor. Please go ahead. Yeah, hi. Hi. Just wanted to if you can elaborate more on the opportunities that will come up because of the dire condition in Pakistan and Sri Lanka, which are huge garment exporters. My second question is, since Gokaldas Exports 80% of its goods to the U.S. and they're pending recession there, what is the plan of the management to mitigate this? Just these two questions. Thanks. Thank you, Aditya. It's a global opportunity, and if there are supply constraints in certain countries, it automatically results in customers looking for options from other places as well. Customers are also bound by long-term support that is required for suppliers in those countries. So at the moment, we see some amount of goods moving some amount of orders moving out of Sri Lanka to India, and we have been recipients of those as well. And it does help us in the short term. But in the long term, I think the Indian story is so strong that we feel that there will be considerable tailwind and support for growth on our own street. However, we are indeed seeing some benefits from challenges in our neighborhood. To your other question, what was your second question? Basically, there's a slowdown in your top market of our company, Gokaldas Exports. Yeah. You mentioned about U.S., right? 80% focused on U.S. Yeah. So we do have a reasonably strong and diverse customer base, and that helps us from one to another to ensure that we have the ability to fill up our order book from multiple customers, even in the event one of our customers don't seem to do well. In our particular case, since we do woven and most of the garments that we produce are fashion and elevated fashion, we are not seeing as much of a challenge even from the US market since the inventory that they hold don't seem to be the inventories of the kind that we produce. And since the markets are opening up post-COVID, people are coming back to work and traveling, etc., there seems to be reasonable demand for products that we make. So we are not as challenged, even though the slowdown may impact all the suppliers like it impacts all the brands. Our impact is a lot less. Having said that, we are pivoting a lot more towards Europe in anticipation of an FTA which is being signed with the U.K. and hopefully an FTA that could be signed with Europe going forward. So slowly but surely, we are trying to increase our share from the European markets. That's work in progress as we speak. All right. Thanks. Thanks. I'll come back in the line if I have something else. Thank you, Aditya. Thank you. Next question is from the line of Aman Agarwal from Carnelian Capital. Please go ahead. Yeah. Thanks for the opportunity. My question was basically, we operate a double shift in terms of garment production, but most of the players in the industry are not able to do that. Can you please highlight what we are doing different compared to the industry in terms of executing that double shift? No, no, no. I think there's a misunderstanding. We don't operate double shift. We also operate single shift. Most of the employees that we work with are women, and it becomes extremely difficult for them to work very early morning shifts or very late evening shifts as they have children to tend to and families to take care of. So we do work one shift only. We are highly efficient in what we produce, so our productivity levels are good, and we have been reasonably successful in driving up our productivity YOY as we keep searching for more and more growth. So not all of our growth comes from just capacity addition. Even productivity yields us growth, which has got a higher contribution to return on investments. While we tried experimenting with double shift, we have not been very successful because most of the labor force tend to resist double shift. We have seen enough growth coming with single shift operations itself. Excellent. Thanks for that answer. It was really helpful. My second and final question was basically that we have a good CapEx plan over the next one and two years. So in terms of given the near-term demand blip, would we like to go ahead with the CapEx? And second, in terms of labor procurement for this new CapEx which we are going, so do you think there will be any problem in terms of procuring the labor, or we would be able to execute that fairly steadily? Good day and welcome to the Gokaldas Exports Q1 FY23 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from E&Y. Thank you, and over to you, sir. Thank you. Good morning to all the participants on the call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what is expressed as such forward-looking statements. Please note that we have mailed the results and the presentation, and the same are available on the company's website. In case if you have not received the same, you can write to us, and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited, represented by Mr. Sivaramakrishnan Ganapathi, Managing Director and CEO, and Mr. Sathyamurthy, Chief Financial Officer. We will start the call with a brief overview of the quarter and past and then conduct Q&A session. With that said, I'll now hand over the call to Mr. Siva. Over to you, sir. Thank you, Binay. Good morning, everyone. Happy to have you at our earnings call for the first quarter of FY23. We continue our exceptional growth trajectory despite a challenging macroeconomic business environment, delivering a revenue of INR 613 crores. Revenue grew by 152% YOY compared to a COVID-impacted Q1 FY22. Exports revenue grew by 5% over a seasonally strong previous quarter of Q4 FY22. The solid revenue and profit growth were driven by excellence in execution and optimal utilization of capacity. Seasonally, H1 is relatively weak for the Indian apparel industry. This is the period when brands source synthetic apparel for autumn-winter. India is most strongly rooted in the cotton fiber ecosystem, which caters largely to spring-summer demand. With a strong expertise in outerwear, we have been able to mitigate the impact of seasonality. Higher business volume and superior cost management helped in delivering a strong earnings performance. Starting this quarter, the company started providing for ESOP charge of INR 6 crores, amounting to about 1% of revenue, which despite impacting the P&L is a non-cash expense that is accretive to the cash flow as it provides a tax shield. Our EBITDA prior to non-cash ESOP charges is INR 80 crores, generating an EBITDA margin of 13.1%. The EBITDA margin of 12.1% that we reported after considering the ESOP charge is still higher than FY22 level. Increase in minimum wage effective this quarter increased labor costs by INR 4.3 crores. Though this had an impact of 0.7% on the margin, it was offset by business volume and productivity. The company had accumulated tax losses till FY22. Starting this year, the company anticipates normal tax incidence impacting PAT accordingly. The company earned a profit after tax of INR 39.4 crores. Adjusting for the non-cash ESOP charge, the PAT would be INR 45.4 crores. We continue to be zero net debt company, having a net cash and cash equivalent of INR 220 crores. We also managed our working capital well. As an organization, we have shown enormous resilience in the face of all odds. We had supply chain disruptions in Q1 from China. We heavily depend on imported fabrics and prints in H1. Repeated delays in raw material supplies due to lockdowns in China affected efficient factory operations. We worked with the suppliers and our customers to mitigate these challenges. We also battled labor shortage due to school closure period of April, May this year, as this was a period for most of our people to visit families that were not possible in the previous years due to COVID. Looking ahead, anticipating changes and planning for eventualities, we persevered and delivered. Our newly commissioned units in Karnataka and Tamil Nadu are ramping up well, and our project work on new factories is also progressing well. We continue to manage our working capital well and generate adequate free cash flow to support our growth ambition. Our entire team worked hard to deliver exceptional product quality and service to our customers. We continue to outperform on various customer delivery matrices. We see headwinds in the near term and strong tailwinds supporting the ongoing growth of the business. While U.S. retail sales has grown 12.8% YTD in May calendar year 2022, large brands are wary of slower consumer uptake in the seasons ahead till inflationary trends persist. They are also battling higher levels of inventory from last year. It is expected that this may impact imports in the short run. We are also simultaneously seeing several opportunities present themselves in the form of continuing shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized suppliers, supply-side instabilities in countries like Sri Lanka, Pakistan, and Myanmar, a favorable currency, PLI, and signing of FTAs with key markets. While the order book for H2 is work in progress, we see reasonable traction for us. Falling raw material prices is aiding the industry. Despite near-term headwinds, we anticipate good growth in FY23 and a surge from FY24. I thank you all for listening and would be happy to address any question that you may have. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Okay. The first question is from the line of Aditya, an individual investor. Please go ahead. Yeah, hi. Hi. Just wanted to if you can elaborate more on the opportunities that will come up because of the dire condition in Pakistan and Sri Lanka, which are huge garment exporters. My second question is, since Gokaldas Exports 80% of its goods to the U.S. and they're pending recession there, what is the plan of the management to mitigate this? Just these two questions. Thanks. Thank you, Aditya. It's a global opportunity, and if there are supply constraints in certain countries, it automatically results in customers looking for options from other places as well. Customers are also bound by long-term support that is required for suppliers in those countries. So at the moment, we see some amount of goods moving some amount of orders moving out of Sri Lanka to India, and we have been recipients of those as well. And it does help us in the short term. But in the long term, I think the Indian story is so strong that we feel that there will be considerable tailwind and support for growth on our own street. However, we are indeed seeing some benefits from challenges in our neighborhood. To your other question, what was your second question? Basically, there's a slowdown in your top market of our company, Gokaldas Exports. Yeah. You mentioned about U.S., right? 80% focused on U.S. Yeah. So we do have a reasonably strong and diverse customer base, and that helps us from one to another to ensure that we have the ability to fill up our order book from multiple customers, even in the event one of our customers don't seem to do well. In our particular case, since we do woven and most of the garments that we produce are fashion and elevated fashion, we are not seeing as much of a challenge even from the US market since the inventory that they hold don't seem to be the inventories of the kind that we produce. And since the markets are opening up post-COVID, people are coming back to work and traveling, etc., there seems to be reasonable demand for products that we make. So we are not as challenged, even though the slowdown may impact all the suppliers like it impacts all the brands. Our impact is a lot less. Having said that, we are pivoting a lot more towards Europe in anticipation of an FTA which is being signed with the U.K. and hopefully an FTA that could be signed with Europe going forward. So slowly but surely, we are trying to increase our share from the European markets. That's work in progress as we speak. All right. Thanks. Thanks. I'll come back in the line if I have something else. Thank you, Aditya. Thank you. Next question is from the line of Aman Agarwal from Carnelian Capital. Please go ahead. Yeah. Thanks for the opportunity. My question was basically, we operate a double shift in terms of garment production, but most of the players in the industry are not able to do that. Can you please highlight what we are doing different compared to the industry in terms of executing that double shift? No, no, no. I think there's a misunderstanding. We don't operate double shift. We also operate single shift. Most of the employees that we work with are women, and it becomes extremely difficult for them to work very early morning shifts or very late evening shifts as they have children to tend to and families to take care of. So we do work one shift only. We are highly efficient in what we produce, so our productivity levels are good, and we have been reasonably successful in driving up our productivity YOY as we keep searching for more and more growth. So not all of our growth comes from just capacity addition. Even productivity yields us growth, which has got a higher contribution to return on investments. While we tried experimenting with double shift, we have not been very successful because most of the labor force tend to resist double shift. We have seen enough growth coming with single shift operations itself. Excellent. Thanks for that answer. It was really helpful. My second and final question was basically that we have a good CapEx plan over the next one and two years. So in terms of given the near-term demand blip, would we like to go ahead with the CapEx? And second, in terms of labor procurement for this new CapEx which we are going, so do you think there will be any problem in terms of procuring the labor, or we would be able to execute that fairly steadily? Good day and welcome to the Gokaldas Exports Q1 FY23 earnings conference call. 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from E&Y. Thank you, and over to you, sir. Thank you. Good morning to all the participants on the call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what is expressed as such forward-looking statements. Please note that we have mailed the results and the presentation, and the same are available on the company's website. In case if you have not received the same, you can write to us, and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited, represented by Mr. Sivaramakrishnan Ganapathi, Managing Director and CEO, and Mr. Sathyamurthy, Chief Financial Officer. We will start the call with a brief overview of the quarter and past and then conduct Q&A session. With that said, I'll now hand over the call to Mr. Siva. Over to you, sir. Thank you, Binay. Good morning, everyone. Happy to have you at our earnings call for the first quarter of FY23. We continue our exceptional growth trajectory despite a challenging macroeconomic business environment, delivering a revenue of INR 613 crores. Revenue grew by 152% YOY compared to a COVID-impacted Q1 FY22. Exports revenue grew by 5% over a seasonally strong previous quarter of Q4 FY22. The solid revenue and profit growth were driven by excellence in execution and optimal utilization of capacity. Seasonally, H1 is relatively weak for the Indian apparel industry. This is the period when brands source synthetic apparel for autumn-winter. India is most strongly rooted in the cotton fiber ecosystem, which caters largely to spring-summer demand. With a strong expertise in outerwear, we have been able to mitigate the impact of seasonality. Higher business volume and superior cost management helped in delivering a strong earnings performance. Starting this quarter, the company started providing for ESOP charge of INR 6 crores, amounting to about 1% of revenue, which despite impacting the P&L is a non-cash expense that is accretive to the cash flow as it provides a tax shield. Our EBITDA prior to non-cash ESOP charges is INR 80 crores, generating an EBITDA margin of 13.1%. The EBITDA margin of 12.1% that we reported after considering the ESOP charge is still higher than FY22 level. Increase in minimum wage effective this quarter increased labor costs by INR 4.3 crores. Though this had an impact of 0.7% on the margin, it was offset by business volume and productivity. The company had accumulated tax losses till FY22. Starting this year, the company anticipates normal tax incidence impacting PAT accordingly. The company earned a profit after tax of INR 39.4 crores. Adjusting for the non-cash ESOP charge, the PAT would be INR 45.4 crores. We continue to be zero net debt company, having a net cash and cash equivalent of INR 220 crores. We also managed our working capital well. As an organization, we have shown enormous resilience in the face of all odds. We had supply chain disruptions in Q1 from China. We heavily depend on imported fabrics and prints in H1. Repeated delays in raw material supplies due to lockdowns in China affected efficient factory operations. We worked with the suppliers and our customers to mitigate these challenges. We also battled labor shortage due to school closure period of April, May this year, as this was a period for most of our people to visit families that were not possible in the previous years due to COVID. Looking ahead, anticipating changes and planning for eventualities, we persevered and delivered. Our newly commissioned units in Karnataka and Tamil Nadu are ramping up well, and our project work on new factories is also progressing well. We continue to manage our working capital well and generate adequate free cash flow to support our growth ambition. Our entire team worked hard to deliver exceptional product quality and service to our customers. We continue to outperform on various customer delivery matrices. We see headwinds in the near term and strong tailwinds supporting the ongoing growth of the business. While U.S. retail sales has grown 12.8% YTD in May calendar year 2022, large brands are wary of slower consumer uptake in the seasons ahead till inflationary trends persist. They are also battling higher levels of inventory from last year. It is expected that this may impact imports in the short run. We are also simultaneously seeing several opportunities present themselves in the form of continuing shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized suppliers, supply-side instabilities in countries like Sri Lanka, Pakistan, and Myanmar, a favorable currency, PLI, and signing of FTAs with key markets. While the order book for H2 is work in progress, we see reasonable traction for us. Falling raw material prices is aiding the industry. Despite near-term headwinds, we anticipate good growth in FY23 and a surge from FY24. I thank you all for listening and would be happy to address any question that you may have. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Okay. The first question is from the line of Aditya, an individual investor. Please go ahead. Yeah, hi. Hi. Just wanted to if you can elaborate more on the opportunities that will come up because of the dire condition in Pakistan and Sri Lanka, which are huge garment exporters. My second question is, since Gokaldas Exports 80% of its goods to the U.S. and they're pending recession there, what is the plan of the management to mitigate this? Just these two questions. Thanks. Thank you, Aditya. It's a global opportunity, and if there are supply constraints in certain countries, it automatically results in customers looking for options from other places as well. Customers are also bound by long-term support that is required for suppliers in those countries. So at the moment, we see some amount of goods moving some amount of orders moving out of Sri Lanka to India, and we have been recipients of those as well. And it does help us in the short term. But in the long term, I think the Indian story is so strong that we feel that there will be considerable tailwind and support for growth on our own street. However, we are indeed seeing some benefits from challenges in our neighborhood. To your other question, what was your second question? Basically, there's a slowdown in your top market of our company, Gokaldas Exports. Yeah. You mentioned about U.S., right? 80% focused on U.S. Yeah. So we do have a reasonably strong and diverse customer base, and that helps us from one to another to ensure that we have the ability to fill up our order book from multiple customers, even in the event one of our customers don't seem to do well. In our particular case, since we do woven and most of the garments that we produce are fashion and elevated fashion, we are not seeing as much of a challenge even from the US market since the inventory that they hold don't seem to be the inventories of the kind that we produce. And since the markets are opening up post-COVID, people are coming back to work and traveling, etc., there seems to be reasonable demand for products that we make. So we are not as challenged, even though the slowdown may impact all the suppliers like it impacts all the brands. Our impact is a lot less. Having said that, we are pivoting a lot more towards Europe in anticipation of an FTA which is being signed with the U.K. and hopefully an FTA that could be signed with Europe going forward. So slowly but surely, we are trying to increase our share from the European markets. That's work in progress as we speak. All right. Thanks. Thanks. I'll come back in the line if I have something else. Thank you, Aditya. Thank you. Next question is from the line of Aman Agarwal from Carnelian Capital. Please go ahead. Yeah. Thanks for the opportunity. My question was basically, we operate a double shift in terms of garment production, but most of the players in the industry are not able to do that. Can you please highlight what we are doing different compared to the industry in terms of executing that double shift? No, no, no. I think there's a misunderstanding. We don't operate double shift. We also operate single shift. Most of the employees that we work with are women, and it becomes extremely difficult for them to work very early morning shifts or very late evening shifts as they have children to tend to and families to take care of. So we do work one shift only. We are highly efficient in what we produce, so our productivity levels are good, and we have been reasonably successful in driving up our productivity YOY as we keep searching for more and more growth. So not all of our growth comes from just capacity addition. Even productivity yields us growth, which has got a higher contribution to return on investments. While we tried experimenting with double shift, we have not been very successful because most of the labor force tend to resist double shift. We have seen enough growth coming with single shift operations itself. Excellent. Thanks for that answer. It was really helpful. My second and final question was basically that we have a good CapEx plan over the next one and two years. So in terms of given the near-term demand blip, would we like to go ahead with the CapEx? And second, in terms of labor procurement for this new CapEx which we are going, so do you think there will be any problem in terms of procuring the labor, or we would be able to execute that fairly steadily? We're not slowing down our CapEx. Our CapEx plans are intact as we speak. The factory that is coming up in Madhya Pradesh will come up shortly. It will start trial-run production and slowly ramp up by the end of this year. At this moment, we don't intend slowing down anything. Even our PM MITRA unit, which is under construction in Tamil Nadu, is progressing at its pace as per schedule, and it will also get completed by end of this financial year, that is March 2023. We're not altering the timelines. We are not, at the moment, daunted by any recessionary trends globally. We feel that by the time these units come up on stream, we should be fine, and we should be able to drive business into these incremental capacities. As far as labor is concerned, since these are incrementally, we are looking for locations outside of Karnataka, and even within Karnataka, we are going to far-front places. We don't foresee as much of a labor availability challenge as well. Okay, sir. In terms of venturing into new regions, do we contract with agencies to get labor for our new factories, or what is our strategy in terms of going to new regions and? We hire the labor from the local areas. We solicit people. We train them, and we hire them. So we don't use labor contractors. Okay. That was really helpful. Thanks for the answers. Thank you. Thank you. Thank you. Next question is from the line of Venkat from Tata Asset Management. Please go ahead, sir. Hi, sir. Thank you for the opportunity. My first question is, if you could give some color as to how are your clients performing for FY24. It's slow. The run rate is not really good. And also the recent quarterly performance, that is, their revenue decline. So how are we impacted by that? Hello? Venkat, we could barely hear you. One second. Hello. Hello. Is it better? Yes. Yeah, yeah, yeah. Sir, my first question is with respect to the top client for us, the news flow surrounding the top client, maybe with respect to the management changes or recent quarterly performance wherein there was a sharp revenue decline, isn't really good, right? So how are we seeing impact from them? Could you give some color? Oh, you're asking about Gap as a customer? Yes, yes, yes. Correct, correct. Okay. So see, Gap is a very, very large company, and we do a small, tiny fraction of what they buy. So for instance, their global buying would be in the region of $3 billion-$4 billion, and our business is closer to $50 million. So it's a small share that we have. We don't foresee much of a problem. Our relationship with the customer is deep and wide. We have access and relationship with a wide number of people across that organization, and we work with three brands there: Old Navy, Gap, as well as Banana Republic. So we do have enough diversification within the Gap ecosystem as well. So I don't see any problem with any leadership change or their own business, as Gap also is talking about moving more and more production out of India. So we don't see much of a problem. There could be these local, I mean, short-term recessionary trends can lead to a small hiccup in a quarter or so, quarter or two at best. But I think the general trend is strong. Our relationship with Gap is strong. We are one of the top suppliers for them, strategic as well as a high-quality supplier for them. So we don't foresee much of a problem with that relationship. Understood, sir. That's helpful. And my second and last question would be, you did highlight in the presentation about seeing some challenges with respect to supply, especially from China for procurement of certain RM items. So did it lead to any forgoing of any revenue either in Q1 or Q2 because of that? No. So I mean, there was a little bit of a deferment of revenue as some of the raw materials could not come in on time, and hence, we could not take up those particular sites for production in time. But we could obviously take up alternate orders and work with them. But the impact was more on productivity and profitability because constant supply disruptions impact smooth and efficient working of factories. So we did see a lot of that in the months of April, May, and early June. Now, the flow of raw material has been streamlined as the factories and the supply chain in China is working smoothly regardless of the lockdowns there. Understood, understood. Right, right. And quickly, sir, on the gross margins, you did highlight, and we are seeing cotton prices kind of ease off. So when do you see that reflecting in our margins? I mean, kind of bottoming out and seeing some improvement there? See, our raw materials are always pass-through, right? So when the raw material prices were increasing, we were able to pass through back to the customers. When raw material prices decrease, that also gets passed through to the customers. So I don't get too much hassled with raw material price volatility unless it becomes volatile beyond a certain band. A lowering of raw material prices is always good as it will lead to increasing demand from India, given that the overall FOB price of the garment will go down as the material prices go down. So it will reflect more in the demand trend rather than on the margin side. As far as gross margins are concerned, in Q1, we largely produce synthetic-based garments. We have less to do with cotton and cotton pricing movements in Q1 and Q2. It has got a higher bearing in Q3 and Q4 when we produce more for spring and summer, and that's where a large quantum of cotton-based garments are produced. But declining cotton prices do help garner more demand. Sure, sir. That's helpful. Thank you. Wish you all the best. Thank you, Venkat. Thank you. Next question is from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead. Thank you for the opportunity, and congrats on a good set of numbers. I just wanted one clarity because recently, you were on an interview where you guided to something like a 20% revenue growth for the year. Now, I'm just trying to ascertain the net impact of the headwinds and tailwinds because if I just annualize your last two quarters, which has both a seasonally good quarter and a seasonally weak quarter, that itself implies more like a 35% kind of growth rate. Now, I understand there will be more capacities coming in during the later part of the year. At the same time, we have RM deflation, and we have those headwinds we talked about. But how should I see this on a net basis? Is it the 20% figure to go with, or what should it be? So I feel that 20% is a conservative number given out there. In these days, it's very difficult to say anything with certainty. One of the mantras is the paradox of macroeconomics is that it is predictable and its unpredictability. Having said that, I feel that 20% is conservative. We may most likely do much better than that. Understood. And in terms of the pricing pressure, I mean, are you facing I mean, you have both, obviously, I mean, RM prices, you have to pass through, but you also have currency depreciation. In this current environment, are you having to pass through more of these benefits back to the customers, and is this year, therefore, going to be a margin decline year to a certain extent versus the previous year, or do you think you'll be able to still maintain or grow? So obviously, when there is a demand-supply imbalance in any period, there is going to be some amount of pricing pressure. So last year, when we had the demand-supply in our favor, despite raw material increases, we were able to pass the incremental raw material cost back to the customers. I foresee that in H2, we may have to take a small amount of pricing pressure from the customers as there is a lot of suppliers from other countries also who may be chasing the same demand. Having said that, our aim is to mitigate it as much as possible through improved productivity and better raw material sourcing or lower-cost raw material sourcing. So all effort will be on. We had earlier said that this year, we may be looking at an EBITDA margin of 11% compared to 12% last year. Our endeavor will be to do it at least at that level or even better than that. So far, we have been able to hold it. I had also mentioned in the last call that this is after adjusting for ESOP charges, which amounts to almost 1% of revenue. At the moment, we are trending higher than what I had indicated. We hope to keep it that way, but there will be some amount of pricing pressure I can see going forward, which may have a marginal impact. Understood. And lastly, ESOPs, if you could just clarify, how much should we bake in for the full year and whether this is a recurring item which will continue for the next two, three years, or should we look at it? This is a recurring item which will continue for 3 years till FY25, and it will be at the rate of INR 6 crores a quarter for the period until FY25. Understood. Great. Thank you and all the best. Thank you. Thank you. Next question is from the line of Mohit Khanna from Banyan Capital. Please go ahead. Yes, sir. Thank you for taking my question. So my point was regarding the order intake that we are currently seeing for the U.S. summer and the spring season. How is that going along and your conversations with the customers? Is it regarding deferment of any orders that you are seeing right now, or are you sort of overbooking currently because you might have some sort of a deferment? So at the moment, we are booking for spring, which is Q3 from a production standpoint. And if I look at the order status as of now versus same period last year for spring, and spring order booking will continue till mid-August, so it's a bit early to predict anything as order booking is happening as we speak. For now, we are trending at last year's levels, so we don't seem to have too much of apprehension. Having said that, we are being cautious as we hear a lot about recessionary trends in the U.S. So we'll wait and watch to see how it pans out at the end of the order booking season. Very nice, sir. So are you also witnessing some sort of increase in wallet share per customer, or when you say that you are trending like last year, you are acquiring new customers who trend at the same level, or are you increasing the wallet share? So at the moment, it is increasing the wallet share. So all the customers eventually will end up buying less this year. There is no doubt in my mind. The aim would be to try to increase the wallet share of our existing customers. That's the best way to handle headwinds at all times. So a new customer will not grow that sharply to provide a huge revenue cushion. So it's always best for us to work on new customers so that it paves the way for growth over a three-year period, whereas in the short term, work on increasing the wallet share so that we are able to still keep our share of business or keep our growth intact as far as possible. Very nice, sir. So just last point if I just use it. So when you say that you are trying to increase the wallet share and customers will buy less this year, then what gives you confidence that you would be able to hold at least 20% revenue growth this year? Okay. So I mean, looking at the trend going forward, I do have some discussions with the customers and visibility, which is what is giving me the comfort that there is that we will be able to drive this growth. There is also some amount of supplier consolidation, which the brands are doing, which also gives me comfort that we will be able to take up additional wallet share. The other comfort that I draw is that our delivery metrics are outstanding and best-in-class. So customers in this business actually tend to go with those suppliers who can supply on time, in full, in quality, are able to meet the technical requirements of the customers, and we are able to do all of that. So all of this gives me the comfort that we will be able to progress our business well. Thank you so much, and just a pleasure for us coming here. Thank you. Thank you. Next question is from the line of Akshita Talesara from SBI General. Please go ahead. Miss Akshita, can you please go ahead with your question? Miss Akshita, can you please go ahead with your question? If you're mute from your phone, please unmute yourself and please go ahead and talk. Yeah. Am I audible? Yep. Yeah. Sorry. Yeah. Thanks for the opportunity. I wanted to check on your plans on the CapEx in Bangladesh. Is it still on track, or we anticipate any delay given the macro environment? No, so there are no delays on a sort of macro environment. At the moment, we will have some revenues coming from Bangladesh in the second quarter, but those are from a leased facility that we are working with. We are looking at setting up a new facility, and that's going on at full speed. The work on that is going on. We hope that we should be able to conclude that sometime by early FY2024. So that's work in progress. In the interim, we will be working with existing available capacities on a leased basis, and a lot of work is going on on that side. In Q2, we will see some amount of revenue starting from that side. All right. Okay. Thank you. You're welcome. Thank you. Thank you. Next question is from the line of Abhilasha Satale from Quantum Asset Management. Please go ahead. Thank you for giving me the opportunity. My first question is on the outlook in FY24. So basically, this year, we will see some inventory restocking and things like wearing. We will see some pressure on the margin. So I am not talking specifically from the GOKEX as we will have more share from our customers, but then overall, the outlook on demand is subdued for this year. As we move forward in FY24 and so on, how do you see the overall demand environment picking up from the end customer point of view? And in that tandem, how are we placed to gain market share as compared to competition? So the way the global supply chain is working is that more and more brands are looking at sourcing from India as costs rise in China, in Vietnam, and they are looking at increasingly alternate locations like India and Bangladesh. Bangladesh is also fairly mature and large, and most of the brands would like to source even more from India given that India is a large country, has got a good textile ecosystem, particularly on the cotton side, and availability of labor in several parts of the country. So there is a concerted push from global customers to source more from India. This has been obtained from various discussions that we have had with the customers, and it's also available in the public domain. So we see that to pan out from FY2024 onwards as the market end consumer demand situation will improve. By and large, what is bought in FY24 will be consumed in calendar 2024 and 2025 onwards. So by then, the recessionary trends also should be behind us, and the brands will rally to buy more, and they will also try to allocate more share to India. So I see a strong growth for the Indian apparel industry. I also foresee that established players and larger players like us will be able to drive faster growth simply because while the Indian industry is fragmented, there are a few large players like us who will be able to get a bigger share from the global pile and thus drive our growth. So reasonably confident. The other point which will work in India's favor is FTA with UK and Europe. If the FTA does materialize with U.K. by end of this year, then we will see the British brands also move some amount of sourcing from Bangladesh to India for diversification reasons. So that also will add to the tailwind for growth in FY 2024. So there's a lot of macroeconomic factors which will drive overall growth for the industry in 2024, and better players, obviously, will see a higher share of that growth. Okay. Sure. And can you give details of FY24 CapEx because in this year, we will be starting two facilities. FY24, we are incurring CapEx of around INR 120 crores. So can you give details of which plants we will be commencing in FY24? So there will be more additional apparel manufacturing plants that we are looking at. So those are under planning at this stage, and those will get executed in FY2024. So now they will get commissioned sometime during that financial year. So there is one factory we are looking at in south of India for sure, and that's still at a plan stage, but we will execute that in FY2024. Bangladesh will also start picking up steam from FY2024 as we set up that unit, and we will look at incremental capacities as we go forward. How much investment we are looking totally in Bangladesh? What's Bangladesh investment? Investment in Bangladesh. It will go up to about anywhere between INR 35 crore-INR 50 crore. Okay. Okay. Sure. Thank you. Thank you. Thank you. Next question is from the line of Aman Batra from Goldman Sachs Asset Management. Please go ahead, sir. Yeah. Hi. Just wanted to. Hi, Aman. To confirm this, you presented some headwinds in front of us in terms of the inventory at the retail channel, etc. But if you look at the initiatives that we are taking as a company, they seem to be geared up for growth. We have new capacities coming in Madhya Pradesh. We have more capacities coming in Bangladesh as well over the next 12-18 months. So how should we look at it that can we continue to grow despite these macro headwinds, and that's why we are confident enough to continue investments? Good question. See, I am more worried about these macroeconomic headwinds only for FY23. I don't foresee this as much of an issue from FY24 onwards. See, let's take Q4 of this year. In Q4, we will produce for spring, I'm sorry, for summer of 2023, 2023. Summer of 2023 is June, July, August of 2023, which is almost a year away if you look at it. That's what we will produce in this Q4. So my assumption at the moment is that any headwinds, recessionary impacts, inflationary impacts, at best will play out by the next one year, and after that, brands will also would have also worked out all their inventory and will be back into the market for buying more. If you look at FY24, that's what is going to be consumed almost more than a year from now, and by then, the demand should have picked up very strongly. I'm not particularly worried on demand side for FY24. If FTA does indeed materialize, then that will also augur well for the country because more demand will come from Europe, which also we are readying ourselves for. Creating capacity for FY24 should not be a problem. Even the capacities that we are working now, more or less, will be effective only FY24 as they will ramp up then. I'm not so worried about the short-term macroeconomic headwinds. We will have to take it in our stride. We may have to absorb it in our business in 2023 and move on because there is going to be growth beyond that. The other aspect which I want to touch upon is because the products that we supply are fairly seasonal products. Typically, the way I understood is that these retailers, if they are saddled with some inventory at the end and they need to refresh the inventory from spring to summer and autumn, etc., they will discount it out and not keep it as inventory. There should not be much concern of overinventory and therefore orders not coming through. It's just only that the sales velocity at retail end could be slower, so there could be some marginal impact. Should it be that way? That is correct. So most of the brands are actually trying to liquidate the inventory, and sitting on inventory has a cost and obsolescence, both. So they don't like, and it impacts their return metrics because money is locked up in their capital is employed in their inventory as well. So inventory will get liquidated soon. Nobody likes to sit on excess inventory. The excess inventory was really built up on account of supply chain deficiencies of last year as more and more goods were sitting in the shipping, and they came home late in the season, which they could not sell. But all of those will get worked out this year, and I don't anticipate it carrying forward going forward. Got it. Okay. And just because we are in a June quarter, which is typically a lean quarter, we have done fantastic INR 600 crores per sale, INR 600 crores of sales. Can this level be maintained despite, let's say, the slowdown that we are witnessing over the next two, three quarters? See, our seasonally weakest quarter is Q2 usually, right? If you look at our historical trend, that's because this is where we produce even more synthetic-based garments for the holiday season or winter season. There can be seasonal variances. You can't look at this business on a linear quarterly basis. There may be a seasonal dip in the linear dip. But if you look at YOY comparison, we will always have a very strong growth even this year compared to last year. Got it. Just one last question is, how should we look at the depreciation of rupee coming to our benefit in margins? So depreciation of rupee will definitely aid the margins. On the other side, demand-supply-related push and customers asking for some amount of price breaks, especially when they are a bit weak in their financials, will tend to erode it. So there are counterpressures happening on both sides. So it may tend to get nullified in the short run. In the long run, it is definitely beneficial from a margin standpoint. Thank you, sir. Thanks. Thank you. Thank you. Next question is from the line of Aditya from HDFC. Please go ahead, sir. Yeah. Hi, sir. I had a question on the labor policies in the sense that I believe you're setting one of your garment plants in MP. Can you throw some light because garments is labor-intensive? So are you having any flexibility in the lean season in terms of maybe getting some labor on the contract roles and then being flexible in terms of increasing or decreasing the headcount depending on the order book? We don't do that. We hold all the labor on our books. The reason why we do that is that we are not very confident of contractors maintaining all the compliance requirements. We are bound by extremely onerous compliance audits by all our customers. And concurrently, four or five brands will be always auditing any one of our factories at any point in time. Let's assume that an employee joins, leaves in a day or two for whatever reason because she determines that this is not the place where she wants to work. We still have to ensure that we pay the ESI, everything for those two days. We feel more confident having them on our payroll rather than through a contractor payroll and take their liabilities and responsibilities. Having said that, since overall there is a growth environment, we are not particularly worried about flexing the labor up and down. To a small extent, if we have to do that, the attrition itself takes care of some of that requirement. But we are not anticipating any major problems from having labor on our books. Okay. And second, sir, is there any integrated textile policy which has been passed? Because now you are backward integrating into fabrics, right? And earlier, this was not so much the case. A garment company only used to be focusing on garments. But now we are seeing even the yarn companies are forward integrating into fabric and garments, and you are backward integrating. So is there some policy push which is helping you out? No. So we are entering into a knit space, and that is where we are getting into fabrics because knits require an integrated value chain to play as the value addition purely on the garmenting side is very low. So you've got to make your fabric, and then you have to convert it into garments as well when it comes to knits. In the woven side, there is a huge amount of product types in the fabrics as well, which is why on the woven side, you will find that the garmenting players are usually separate from the fabric players. So our entry into backward integration is largely a result of our getting into the knit space where we are setting up an integrated unit. On the policy side, the government has come up with some textile parks called PM MITRA scheme. The details, the paths are yet to be notified, and those are some things which will happen in FY24, FY25. But there are certain incentives that they are offering for setting up fabric mills and providing the supporting infrastructure. As and when that happens, we will take a look at them. But at the moment, we are only going by our business requirements. Okay. Got it. Thank you. Wish you all the best. Thank you. Thank you. Next question is from the line of VP Rajesh from Banyan Capital Advisors. Please go ahead. Hi. Thanks for the opportunity, and super congratulations on navigating many rough quarters in this quarter. And thank you. Thank you for being Q2 as well. So my first question was that if you think about the business model, right, so we are adding capacity, and we are getting incremental revenue from those for sure. But for the base capacity, are we doing anything to get higher revenue from that, or how should one think about the base capacity? So the base capacity, the only way to work with base capacity is to drive up productivity so that we are able to produce a little bit more. And obviously, there will be cost pressures in terms of rising labor costs, etc., in the base capacity. So it's always a race between productivity and rising wages. Productivity has to stay ahead of that curve. And depreciating rupee will also ameliorate some of the rising wages. So that's how we see the base capacity. The potential to grow the base capacity is not very huge, and most of the base capacity is almost fully utilized. I see. So the fact that we are diversifying into knits now, that doesn't really help the top line from the base capacity. Is that the way one should understand it? Base capacity will continue to contribute its top line. Knits will be accretive. It'll add. We'll have to add incremental capacity. So downstream garmenting units, we'll have to add to utilize the fabric that we will produce. So we will be setting up those incremental capacities in FY 2024 to take care of that growth. Right. But isn't it true that knits has a higher sort of revenue per capacity, or is that not correct? I don't think so. I mean, we don't look at it that way. Actually, knits is a lower-value garment as compared to woven. So revenue-wise, we may have a higher throughput and a higher revenue per unit investment, etc., in the woven side. I see. Okay. Then the second question is, with respect to our facilities now coming online in Bangladesh, are we thinking about going into Europe with those facilities, or those will continue to be focused on the U.S. market? No. So initially, it will start with U.S., and then eventually, it'll pivot to Europe. It'll start with U.S. only because we have stronger relationships with brands there. So we are really talking of FY 2024 because by then, the factory has to come up, and the first customers would be our existing customers and then slowly pivot. That probably could happen by FY 2025. But eventually, the intention is to utilize Bangladesh for its purpose, which is catering to Europe. Okay. All right. Thank you so much. That's all I had. Thank you. Thank you. The next question is from the line of Kunjan Kabra from Niveshaay. Please go ahead. Hi, sir. My question is that according to our channel checks, if there are four seasons, in a particular season, if a customer is sourcing four times, is giving you order for four times, and now they have skipped the first two times, and they're just thinking of waiting and watching the situation and going maybe order the third or the fourth time. Is this impacting our order book? No. So see, the four seasons are four distinct climate seasons, right? So there is a need for products in all these seasons. So for example, what is consumed in autumn and winter, the kind of fabrics and the garments that are consumed are not what gets consumed in spring and summer. And summer styles are very different from spring styles. So there will be order in all the seasons. I mean, there is nothing called skipping a season because I bought higher in the previous season. So the only way that works is, let us say, if I bought excess in last spring, then this spring, and if I'm saddled with excess inventory from the previous year, it may have a bearing on how much I, as a brand, may order in the forthcoming spring. So inventories are categorized for those seasons. It doesn't work on a linear basis. It works on a YOY basis. So going forward, when we are booking for spring and summer, we will have to see how much of spring inventory those brands are carrying and summer inventory brands are carrying. Accordingly, there may be some amount of calibrated buying. We also will have to see how much of demand the end users are exhibiting in spring and summer. When I'm talking of summer, which is Q4 production, we're talking of consumption next year, next 23 June, July, August, which is a year from now. We will have to see how that demand pans out. If that demand is strong, then we will see reasonable and if the brands do indeed think that next year, the demand will be reasonably good, then they will buy. So no. Actually, I wanted to ask this way that in suppose in a particular season like summer or winter, okay, so in a particular season, a customer is actually giving you order 4 times maybe. In a particular season I'm talking about, if the customer is giving you orders 4 times, so now they have reduced the frequency of their orders is what our channel check is suggesting. So in a particular season, now they are. Are you saying intra-season? Within the season, right? Yeah, yeah. Yeah, intra-season, which is one particular season I'm talking about. If I'm talking about giving you orders during winter or during summer, then if the particular customer is giving you 4 times frequency of order is 4 times in a particular season, then they are just reducing it to 2 times now because of the slowdown or the hiccup in the macro factors. Too early to call out all those. They do tend to give a large component of that in the first round itself. During the season, they'll come in for more in-seasonal purchases. I don't see at the moment that in-seasonal purchase is impacted. We will have to wait and watch as to how that pans out. I'm not so sure that the three or four times purchases will not materialize. It can happen, and it will happen, is my view. Okay. And sir, also, like we discussed in the previous question also, that there was a high sourcing last year on account of supply chain deficiency by the apparel brands. So the result is high inventory right now. So going forward, so this year, can we say a little top line getting impacted? Because if we see year-on-year basis, A, on account of this, and B, on account of decrease in the cotton prices, somewhat offset by rupee depreciation. So going this year, can we see a little impact on our top line if we compare it to the previous year? When you say impact, see, there are two forces, right? One is the demand, and the other is momentum of our own growth, correct? So what we are saying is that the momentum of our own growth will help us still grow in FY23 regardless of demand-related issues based on a prognosis that there could be recessionary trends in the U.S., etc., right? So momentum will offset that, and we will still show a reasonable growth, reasonably good growth in FY23. That's what I'm saying. The demand-related problem, we will have to deal with. In my opinion, it's a two-quarter phenomenon. And if we are looking at it from an equity standpoint, we are all here for the long run. Even if there is a one or two quarters of a minor demand slowdown, what I'm trying to say is that beyond that, this problem will work itself out, and the demand will get restored, and the strong growth will continue. See, markets are favoring more and more India sourcing. At best, what you're saying is a one or two-quarter issue, which we will tide over. We are doing our best to even mitigate that to the best extent possible. Okay. And sir, the recent Capex, the Tumkur unit and the Bengaluru unit that we started last year, so what capacity utilization is it operating at currently? Oh, it's almost 95% now. Okay. Okay. And sir, also, with Reliance partnering with Gap and to bring Gap to India, and Gap is one of our major customers globally. So if it is getting Gap to the country, can we see a little market share? Maybe we can supply to this brand in India also. How does this business model work? So when we supply to Gap, we supply to Gap globally. Clearly, India is a very tiny fraction of Gap global consumption that India becomes a rounding error in what we supply to Gap. So if Gap India grows, then overall Gap buying will grow because as far as the Indian market is concerned, they will tend to buy a little more from India rather than ship it from some other part of the world. So see, if Gap India grows indeed in partnership with Reliance, then that will increase the demand from that particular customer for us. But overall, I wouldn't say it would make much of a dent for us. Okay. Okay. Yeah. Thank you so much, and all the best. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. Next question is from the line of Venkat from Three Sigma Financials. Please go ahead. Thanks for the opportunity, and congratulations for driving the business in such a challenging environment. Sir, we were talking about inventory concerns earlier. So I just wanted to understand, are we in fast-fashion business, or are we in some kind of stable designs that we work on? Okay. So about 40%-45% of our business, or you can even say up to 50% of our business is fast-fashion. The rest is outerwear and athleisure, which are less prone to fast-fashion trends. They are much more stable and have a predictability about how those businesses go. The other half is fast-fashion. Sir, if the fast-fashion is there, so whatever inventory is left out, will they send us back, or will they try to sell in the next year's same season? How will that happen? How does it work out? The moment we hand over the goods to our customers in the ports in India, the goods have shifted from us to the customers. We have zero liability on it. If the customer sells all of it or doesn't sell any of it or part of it, it's their liability, their lookout. We have nothing to do with that. Okay. Fantastic. Sir, my second question. It's not a problem, not ours. Yeah. So my extension of that question is, we are working on this knitted clothing. Are they being used for any technical purpose like sports or something like that, or is it general-purpose knitted clothing? No. There are a lot of knit T-shirts and knit jogger pants and those kinds of garments. That's what we are talking about. So these are all casual clothing. But these are value-add also, right? Normal technical textiles have more value compared to regular-use clothing. Is that how I understand? Our knits, what we are planning, we are not getting into technical textiles. We are planning the regular casual wear that gets consumed in the marketplace. Okay. Fine. Fantastic. Sir, my second question is on PLI. So since we have selected for PLI, so what is the roadmap for the PLI scheme? So roadmap, PLI, by the time it comes into effect, it will be FY24 to FY25. So see, then we have to produce goods which fall under certain HS codes, which are all synthetic-based garments in order to qualify for PLI. So that's work in progress as we speak as we still have time for it. Okay. Fine. Sir, my last question. Mr. Venkat, may we request that you return to the question queue for the follow-up question as there are several participants waiting for their turn? Next question is from the line of Mr. Pankaj from Affluent Assets. Please go ahead. Hello. I'm audible? Yes, you are. Oh, well. Thanks a lot for taking my question, sir, and congrats on a good set of numbers. I just wanted to ask, given that we have performed very well in this quarter, and would it be a rational assumption to analyze this quarter's results both on top line and bottom line? No, no. Absolutely not. You can't just analyze one quarter's number as it is a seasonal business. And our business doesn't move in a linear fashion like that. So you have to always compare a quarter with its corresponding quarter last year. That's point number one. Point number two, as I said, we may see some macroeconomic headwinds in the second half of the year. So we may have to factor a little bit of that. Going forward, I don't foresee any of those problems. We will continue back on growth. But simply extrapolating it on a linear basis is not the right way to look at the business. No, where I'm coming from is, as I understand, Q1, Q2 are among the weakest quarters throughout the year as far as results are concerned. So given that we have posted INR 600 crore of top line and almost INR 40 crore of bottom line, so should we understand that it should be given the history, our annual results, FY23, would be far better than our first quarter's results? No, sir. Again, as I said, FY23 has to be compared against FY22. When you compare FY23 versus FY22, there will be good growth. Someone earlier asked, "Would it be 20%? Would it be higher?" I said, "20% is conservative. We will look at higher growth than that." I will leave it at that at the moment as none of us are any wiser on how the macroeconomic environment will play out. Our anticipation is that we are best suited and best able to tackle it and still be able to drive growth in corresponding quarters of this year versus previous year. We will try to do our best to do that. I do anticipate that headwinds will probably be limited to FY23 only. Well, thanks. My second question is that we have been improving our. Thank you. Next question is from the line of Nishit Shah from Ambika Fincap Consultants Pvt. Ltd. Please go ahead. Hi, Siva. Thanks for taking my question. First of all, congratulations on an exceptional quarter. I think it's an exceptional company, and you are an exceptional leader. My question is, you mentioned that in India, we do more of a cotton-based garment thing. So on the synthetic-based material, we are more dependent on China and other things. Are we taking initiatives to see that we develop that part of the fabric capability in India? Because over a period of time, if we have to be taking away market share from China, then we will need that kind of a capability internally in the country over here? Very good question. I think I would like to see that happen in the country, that more synthetic fabrics are available. It will certainly help growth in that synthetic sector, which is almost two-thirds of global capital. So it's a very large segment, which India is not strongly playing in. So that fabric ecosystem has to come to the country. The PLI initiative of the government also is a step in the right direction to support more capacity creation here. My feeling is that it will take a few years before all of this can materialize. The right technology has to be available in order to set up synthetic fabric mills, and people will have to come forth to do so as well. I'm hoping that it happens so that more growth can be driven. If there are fabrics available in India, obviously, it will be margin-aggressive as well rather than bringing it all the way from China, etc., incurring additional cost. Yeah. Thanks. On this global brand penetration, like you mentioned on the Gap, that it's a $3 billion-$4 billion global sourcing on garmenting, and we are very tiny and very small. What initiatives are we taking to penetrate more into the existing large brands, and how are we going to shape these up over a period of the next 2-3 years, let's say? We're working on both sides. One is expanding our relationship with various incremental customers, so diversifying our customer base so that we do have large customers and can start doing incremental business with them too to drive growth. As far as increasing the wallet share is concerned, we are getting into newer and newer product categories with the customers. So we tend to maximize the wallet share within their sourcing from India. But then if we have to tap into what they are sourcing from other countries, then we will have to get into certain product types like synthetics, etc., which are manufactured in Vietnam, China, so that we are able to compete well with the players there who have access to local fabrics. So we're doing our best from a relationship perspective, trying to maximize local share, and then trying to take up some share from other countries as well. Would it be far-fetched to say that we can become 10% of a global brand? Would that be the aim for us? That will be very difficult because the product types are so widely varying. Also, we may not want to take that level of exposure with one customer. So we will have to see where to cap the relationship with one customer. So about, say, $100 million-$150 million, beyond which we may have to be wary about increasing the exposure. Okay. Just ask last question. You mentioned that we are working on one shift, but can we bring in a China model like they hire young girls and put them up in a hostel and then nearby the manufacturing facility, and they can work from 8:00 A.M. to maybe two shifts or a one-and-a-half shift, 8:00 A.M. to 8:00 P.M. or 8:00 A.M. to 6:00 P.M.? Then you can elongate the working hours if not really just one shift. Would you like to elaborate here? So very early days. We haven't really much evolved in our thinking on this. Doing that in our existing units is quite a challenge as our current model supports people living in their homes, and we recruit them and utilize their services. So the hostel model, taking responsibility for people, managing them in-house, etc., is not a model which we have gone. And we sometimes feel that that may become an impediment to our spread of growth. So if we want to put some capacities in multiple parts of the country, taking advantage of labor availability and labor costs and certain incentives available there, our ability to replicate an in-house residence model may or may not be that efficient. So we are still at work in progress on this particular issue. We'll update you as and when we have a better, more evolved thought process. Thank you. Next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Yeah. Thank you very much, sir, for the opportunity and good result in the challenging times. And now, sir, I wanted to understand. You mentioned 11% EBITDA margin for this year. So is this after adjusting for ESOPs? I mean, would like-to-like comparison would be like 12.1% that we reported this quarter. As compared to that, we are expecting about 11% for the entire year. Is that the right interpretation? When I had earlier mentioned 11%, that was the adjusted EBITDA that is prior to the ESOPS charges. So 13.1%. After making an adjustment, so after writing back the INR 6 crore per quarter, that's what I had mentioned. The comparison is 11% versus 13.1% in that sense for this quarter, right? Now, maybe we will do better than that. Our endeavor will always be to do better than that. The first quarter, we have done better than that. We are working towards it. It all depends on how much of pushes and pulls we will have to bear in the third and fourth quarters with our customers given the demand-supply imbalance. Definitely, the rupee depreciation is also helping us to shore up, to mitigate some of those pulls and pressures. So I feel more confident that we may eventually end up having a margin better than that. Better than that. But we do expect a margin to see some pressure in the second half because of economic headwinds and the pricing pressure that you mentioned about, right? Yes, yes. There will be some amount of pressure. We are trying to minimize that to the extent possible. Okay. Understood. My second query is regarding your revenue growth. Now, this 20% growth for the entire year effectively means for the remaining nine months, you will not grow. It will be kind of a flattish kind of revenue that we might be looking at, right? That is why I said 20% is very conservative. It will be better than that. Okay. Fair enough. Fair enough. Okay. Yeah. Sure, sir. Understood. Understood. Any kind of range that you can provide? What sort of growth we might be looking at? It will be purely speculative at this point if I start putting growth numbers, but suffice to say it will be strong. Okay. Understood. Fair enough. Okay. That's it from my side. All the very best, sir. Thank you. Thank you. Thank you. Next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Congratulations, sir, on a good set of numbers on the margin front. 13% is really a very great number that you've achieved. Thank you. Most of the questions are answered. I just wanted to have a look on some bookkeeping questions with respect to sales. So what has been your volume growth for the quarter and product mix? You can share the same. Prerna, good morning. As we have already mentioned, in terms of quantity, there's a number of pieces. It is 6.66 million as against 7.84 million last quarter. So it's again, it's a product mix because it's outerwe wait, if you really look at it in terms of the yield, in terms of the price, it is almost 17% in terms of the yield because it is because of the outerwear mix. Outerwear during the quarter is 42% is outerwear as against 25% last quarter. Against 45% last quarter. Okay. And sir, on your working capital, I see your trade payables increasing this quarter against last year's same quarter. Could you just help us understand why this is the same, and is it going to increase with time? No. This is for the quarter based on the current buying pattern. Whatever purchases, most of the import purchases have been taken care in Q1. Q2 is mostly the domestic purchase, and that's the reason you see that. It is almost in line with the current purchase pattern. Also, with the available cash, we try to take advantage by taking discounts. Even to really offer the pricing to get the better pricing on raw material costs, we have given some of the people advances and got the material at a better rate. That is the reason you see the trade payables is relatively lower. Okay, sir. Thank you so much. In terms of the quantity growth, if you ask me, Q-Q, sorry, year-over-year, it is 125%. Okay, sir. Thank you so much. Thank you. Next question is from the line of Bhavin from Enam Holdings. Please go ahead, sir. Yeah. Congratulations, sir. Very good performance in a difficult environment. Thank you. Yeah. Sir, 2, 3 questions. Just on this ESOPs chart, this is accounted from this quarter only, right? INR 6 crore. That is correct. That is correct. ESOPs was issued in the month of April. So that's why we will start accounting it from Q1 of this year onwards. Roughly, it's INR 24 crore per annum. You said it will be there till FY2025. That is correct. So this is based on Black-Scholes valuation. Because our stock had a huge amount of volatility in the period running up to the first quarter, the Black-Scholes valuation came out to be high. And that's the reason why the ESOP charges are amounting to INR 24 crore a year or INR 6 crore a quarter. And that will be applicable for three years, FY23, FY24, and FY25. Now, remember, this is a non-cash charge, and this will, in fact, from a cash flow perspective, be beneficial because we will get a tax shield out of it. So cash flows will actually improve thanks to this. But yes, from a PAT and EBITDA perspective, we will find the INR 6 crore charge for these three years. Yeah. And sir, what is the rough mix, sales mix between U.S., Europe, and rest of the world? And how much would be top customer and top five customer now as a percentage of sales? So U.S. continues to be about 80%, between 75% and 80%. So that is high. Though going forward, we may see Europe slowly going up given FTA and other developments. The top five customers put together will be about 70%-75%. Okay. And sir, last question. The effective tax provision would be roughly this quarter was 22.5%. So should we assume that, or it will trend up? Yeah. We expect that around 22.75 with the current workings, with the current estimations. Okay. Thank you. Thank you. Next question is from the line of Niraj Mansingka from White Pine Investment Management Pvt Ltd. Please go ahead. Yeah. Thank you. Two questions. One on the margins for generally outerwear, generally our gross margins are generally higher, but that doesn't seem to be the case in this quarter. Any color on that? No, no. So gross margins will not be higher. On the contrary, it may be lower. EBITDA margins may be higher. The reason is that the material cost in an outerwear, since it's all synthetics and it's all imported, will be very high. It's also a technical product. So there is a lot of material component in there. So the material component of an outerwear far outweighs the manufacturing component. That's why your gross margin may notionally look lower in the first two quarters. Whereas when you are producing cotton-based, lightweight garments, etc., the stitching effort aside, stitching, packing, and all those efforts are higher compared to the material cost. So gross margin may look notionally higher. Got it. Second question is on FTA of U.K. How large can it be for you as a flow-through business to India? Oh, it will be significant because most of the Europeans barely buy from India, barring very few. I'm talking of UK, not the Europe, actually. UK. Okay. So UK also, there are several big buyers from UK like Primark, Marks & Spencer, and Next, and so on and so forth. They are sourcing a significant quantity from Bangladesh, and all of them would look at diversifying out of Bangladesh. So from an opportunity standpoint, for India, it will be reasonably good. And for a larger established player like us, we do have the opportunity to tap into that incremental growth. Any percentage market growth that you can see for India, like the opportunity of size growth as a percentage, would be a useful one, actually. Oh, it will be. I'll have to think and get back to you. Let me come back. Whatever that happens, that will happen in FY 2024 because the FTA is not anticipated before the end of this calendar year. In terms of growth, it will, again, pan out. It will grow year-over-year. Eventually, we may see an incremental sourcing of about $250-$300 million or something like that from India, maybe even up to $500 million. So we will have to see. India is exporting about $16 billion of apparel. So you can do the math on that. In 2% or so. Okay. Good. Thank you. But it will take time to reach those levels. It will start picking up the speed. Thank you. The next question is from the line of Monish Ghodke from HDFC Mutual Funds. Please go ahead. Sir, our top line of INR 600 crore, does it include any duty drawback benefit or any export benefit? It includes all of that. What would be the percent? Duty drawback plus RoSCTL, which is refund of state and central levies, all put together, approximately adds up to 5%. 5%? Yes. Okay. So excluding that, our sales would be around INR 580 crores? Yes. Okay. Sir, one more question. In terms of currency depreciation, we say that rupee has depreciated against dollar, but other currencies like Bangladeshi currency has depreciated a lot more. Is it possible that India will suffer because of that? At the moment, I don't see much of a problem because if you look at our depreciation over a longer period with vis-à-vis China, ours have depreciated much more than China. So eventually, more and more business will come out of China. And if the relative depreciation favors India vis-à-vis China, that is what we are competing with. I don't think we are competing with Bangladesh. So Bangladesh is competitive in its own right, and there is more competitive than India. So we have to look at countries which are bigger and which have the potential to lose business. And vis-à-vis them, we are in a better position. Okay. And sir, one more question. So in terms of fabric sourcing, so who are our key suppliers? Where do they come from? Is it China or is it India-based? And what is the mix like cotton and man-made fiber? If I look at it on an annual basis, 30% is imported, 70% is domestically sourced. All the big players are our suppliers domestically. The weightage, however, will change in the first two quarters where a larger proportion becomes imported. Okay. We largely import man-made fabric, right? That's correct. We import it from which countries? China, Taiwan, Korea, but a larger proportion comes from China. Okay. Okay. Thank you, sir. You're welcome. Thank you. Next question is from the line of Manish, an individual investor. Please go ahead. Hi. Good afternoon. Am I audible? Just checking. Yes, you are. Hi, Manish. Hi. Hi, Shiva. Congratulations and well done to the overall all team of Gokaldas. Just quickly, one short-term question. Do you think we'll grow in each quarter versus the previous quarter this year as in Q3 over Q3, Q4 over Q4? That is the endeavor. We will try our best to do that. We may be more challenged in Q3 and Q4 on this count as we have to still see how the demand situation pans out and how deep the recession, if at all, there will be. So our endeavor will be to see if we can grow year-over-year on every quarter. It will be more demand constraint rather than anything else. Till about last quarter, we had capacity constraint. I guess we're moving the other way now, at least for Q3, Q4. Correct. Beyond which, again, we will be back into a capacity constraint zone. Yeah. It will be a good situation. Secondly, on a medium-term basis, we have INR 200 crore of cash and cash equivalent. Capex requirement, as outlined, is about INR 200 crore. Hello? Yes. Yeah. Capex requirement INR 200 crore, cash of around INR 200 crores still, and we continue to generate cash. Anything extra that you plan to spend beyond what you have outlined in the next two years to make sure that the capital allocation is better from here? Even better. Yes, I understand. I understand your question. It's dynamic. So as we move towards the end of this year or as we enter FY24, we will look at we will evaluate the situation, and if required, we will deploy more CapEx to drive growth. So those decisions will get taken. Any CapEx decision above the current plan, we will revisit only in FY24. Okay. In terms of capacity, sir, we exited, say, at X in end of 2022. Where will we be at FY23 end? Say what percentage higher in terms of capacity? End of FY23 versus end of FY22? Yes. Again, from, I would say about 20%-25%. Okay. Okay. In terms of volumes, I was mentioning, not, of course, the turnover fine. Thank you so much, sir, and all the best to everyone. Thank you. Thank you. Next question is from the line of Nagaraj Chandrasekar from Emerge Capital. Please go ahead. Hi. My question is well answered. Thank you. Thank you. Next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead. Hello, Sanya. I just wanted to know now with a probable recession looming around the world, is there any fall in freight price as such? Is there a better availability of containers, or is the prices of the freight still at higher levels like it was in FY22? So it's coming down from the previous year's levels. So that's the good news. And hopefully, if the oil prices stay low, then we will see the freight rates also come down. U.S., as a country, is also working on breaking the cartelization on the freight side. So there is an anticipation that the freight rates will continue to fall as there is being pressure exerted from the United States as well to bring down the freight rates. Okay. So when. For us, anyway, freight rates only impact our raw material purchases or imported raw material purchases. All our exports are FOB, so the freight component is picked up by our customers. So we don't really have to deal with freight cost volatility. Oh, okay. Understood. Understood. Okay. Yeah. So okay, I got the point. I got the point. My other question was, there was some, if I'm not wrong, in last quarter, you had said that there would be some increase in labor cost in quarter one, and there was some shortage of labor. But as things stand, I think that cost has been accounted already in quarter one, right? And the labor issue is more or less sorted, right? If you could. The incremental labor cost is because the GMS allowance, which is the inflation-linked wage increase, mandatory wage increase has happened from April 2022 onwards. It did result in an incremental INR 4.3 crore of expense in the first quarter. That was about 0.7% of our revenue. But we absorbed that, and that's the level which will continue for the rest of the year as well. As far as labor availability is concerned, at the moment, we did have some amount of challenge in Q1, but that has also worked its way out. We don't seem to have much of a problem now. Oh, okay. Sir, just one more on my side. The thing is, quarter 1 and quarter 2 are, in general, a slower quarter for us, and 3 and 4 are a bigger quarter for us. If I have to just take into account the fact that the mix of product is different for the first half and the second half, am I right to say that the products we sell in H2 are more margin lucrative? Yes, it is because it's based on domestic fabrics and all that. So from a margin perspective, usually, we find that H2 is better than H1. Other things being equal. So market conditions, etc., if they are normal, we will find H2 is better than H1. Okay. Fine. That's all from my side. All the best, sir. Thank you. Thank you. Next question is from the line of Pankaj from Affluent Assets. Please go ahead. Thanks for taking my questions again. Well, sir, you mentioned about the margins differentiating H2 and H1. I would request you to elaborate more on it. Secondly, I also wanted to know, our margins have been improving over the last couple of years. Have we reached the peak margins, or do we have more legs for growth as far as margins are concerned? So you're talking of margins in H2 versus H1 and growth in margins? That's correct? Yes. So margins, usually, I'm saying if the business was as usual and there was no recessionary trends and demand pressures, etc., H2 margins are better than H1 because the product types are more favorable in H2. We make a lot of elevated fashion in H2. We also use a lot of domestic fabrics in H2, which has got lesser of supply chain costs embedded there. And the export incentives also work better for domestically sourced raw materials. So H2 margins are superior. Having said that, this year, we will have to see how it works because I do anticipate for one particular period, which is H2 of this year, we may see some pressure from our customers on pricing since their demand or their buying will be somewhat muted. So we may have to let go a little bit of that. That's as far as this particular year is concerned. Otherwise, H2 is better than H1. In terms of growth in margin, I continue to maintain that in the longer run, over three years, we are working towards a 1.5% improvement in margins, in the EBITDA margins. However, for FY23, as I had indicated earlier, that we may see a slight reduction over FY22 levels. That's only because of the current recessionary trends. We're working to even mitigate that, but that's something which we'll pan out as we go forward in FY23. FY24 onwards, I think in the next two, three years, at least over FY22 levels of 12%, we will see a 1.5% growth. You mean to say we will advance towards 13%-14% for FY24 onwards? No, between FY24, FY25, FY26, we will work on a 1.5% growth over 2022 levels of 12%. Okay, sir. Thank you. Thanks a lot. Thank you. Thank you. As there are no further questions, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments. Thank you all. I think this year is, again, characterized by a combination of headwinds and tailwinds, as I've been maintaining for the last six months. We have drawn on our ability to anticipate and adapt to the changing business environment. We are doing our best to procure as much of business as we can to feed the capacity and to maintain the growth momentum in FY2023 over 2022. I believe that most of the recessionary trends impacting our business will be over by end of FY2023. Starting FY2024, we will have to gear ourselves up for growth. That's one of the reasons why we're still working on our Capex plan as we speak and are looking for incremental capacity from FY2024 onwards. We are always agile and nimble to any business headwinds or tailwinds that may come our way. If there are improvements in the business environment, we may accelerate things. If there are slowdowns, we may slightly decelerate. But overall, at the moment, when I see the business environment, I feel that 2024 onwards, we should see reasonably good growth. In 2023, we will see growth for sure. But I think from 2024 onwards, we will see stronger growth. I will pause here. Thank you so much for attending this earnings call. Thank you. On behalf of Gokaldas Exports Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.