Welcome to Gokaldas Exports Limited Q4 FY 2023 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 Ernst & Young LLP. Thank you, and over to you. Thank you, Venu. Good afternoon to all the participants on this 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, uncertainty, and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievement to differ significantly from what is expressed or implied by 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, Vice Chairman and Managing Director, and Mr. Sathyamurthy, Chief Financial Officer. We'll start the call with a brief overview of the quarter gone 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 financial year of 2023. Global markets continue to be volatile, with central banks continuing to wage a war on high inflation by maintaining high interest rates. Post-COVID quantitative easing, followed by quantitative tightening in the United States, has unleashed a whiplash in the economy. The supply chain disruption in CY 2021, that is calendar 2021, and early 2022, coupled with robust post-COVID demand facilitated by governments pump-driving their economies, resulted in brands ordering excess inventory. Higher inflation also meant that prices of goods went up while volume growth was modest. Subsequent easing of the supply chain and a tight money supply led to a reversal of the situation. Brands were stuck with higher inventory and have been working on liquidating it over the last six-nine months. For Gokaldas Exports, this meant that the year started with a strong revenue and profit growth resulting from a robust order book and effective capacity utilization. The second half of the year saw muted volume in line with market conditions. Major customers were consciously liquidating excess inventory holdings and dealing with sluggish retail markets. We managed our operations very well, consistently growing our operating margins and delivered improved PAT quarter-on-quarter. Our ability to effectively balance capacity with orders on hand and execution excellence played very well in delivering 25% revenue growth and 48% net profit growth year-on-year. For context, the Indian apparel exports for FY 2023 grew by about 1%. Our EBITDA margin grew by 116 basis points over the previous year after providing INR 23 crore for ESOP charges, indicating a superior operating performance. We generated cash from operations of about INR 296 crore during the year, securing a healthy financial base for the company. The company continues to build on its financial strength and currently has cash net of debt of INR 333 crore. While part of the reduction is due to business volume, tight business management helps the company unlock working capital. Our ROCE remains high at 27%. We continue to closely monitor potential macroeconomic risks and take measures to mitigate them by focusing on strengthening customer relationships and service excellence. We are vigilant to concerns such as ongoing military conflicts, global monetary tightening, and China's economic trajectory. Our immediate focus is on maintaining exceptional service delivery while navigating potential short-term challenges. We maintained a high on-time and in-force delivery metric, endearing ourselves to customers. The long-term prospects for the industry remain intact, with continued shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized players, and supply-side instabilities in several countries. Favorable currency, PLI, and FTAs with key markets should drive the company to a strong future. In these egregious times, the company operated with a lot of determination while constantly assessing risks and above all showing courage. As an agile, high-performance, and entrepreneurial organization, we thrive on such disruptions, taking advantage of the opportunity such challenges throw at us. Seizing new opportunities, grabbing market share, expanding our manufacturing footprint, investing in productivity improvements, staying razor-sharp on customer delivery metrics, we emerged as an indispensable part of the global value chain. While the global economy is anemic at the moment, the good news is it can only get better over a period of time. We expect the demand situation to improve in the second half of the year. We are committed to gaining market share and preparing ourselves for business growth when market conditions turn more favorable. Our capacity addition is also in line with this. As an organization, we are future-ready. I thank you for listening and would be happy to address questions that you may have. Thank you. We will now begin the question-and-answer session. Anyone wishes to ask a question, may press star and one on the 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. The first question comes from the line of Gunjan Kabra from Niveshaay. Please go ahead. Hi, sir. Thank you for the opportunity. I'm fortunate to congratulate you for reporting such great numbers in a very difficult time. Sir, I had a couple of questions. First is, when you interact with domestic players also here, there is some slowdown, and in the export market, of course, there's volatility and slowdown there also. So while you have always guided H2 to be demand starts picking up, so how are you seeing the markets right now in the near term, say, for one or two quarters? Also wanted to understand, though, why have we reported steady numbers in terms of sales quarter-on-quarter. So wanted to understand if we have added any new customers or are we in talks with any customer that can also help increase the revenue going forward when the business environment is a little slow. Okay. Thank you, Gunjan. We had always guided that the second half of FY 2023 would be what we said right over the last one year, and I think it played out as we had guided. We had also indicated that the first half of FY 2024 will also remain somewhat similar in terms of the market demand conditions, with the second half of FY 2024 is when we expect growth to pick up. I think we are maintaining that situation at the moment. We see that the economic conditions haven't dramatically improved. It has remained where it is. However, we see that come calendar 2024, we should start seeing an upward trajectory because most of the inventory would have been liquidated. Year on year, brands would see growth on a muted base of calendar 2023, which itself means that they will start coming back to buying more from us. So starting Q3, we should start seeing some upward trajectory, and we are hoping that we will stay prepared for the incremental fraction that we shall start seeing from then on. This is based on what we see at the moment, how we read the economy at the moment. As for the next question on customer addition, we have just recently added two new customers, one U.S.-based and one U.K.-based, and we are hoping that we shall be able to continue to grow with them. These are prestigious clients and clients with good business potential going forward, and we hope that we will be able to capitalize on this addition. Sir, so the revenue from the new customers will start coming in from this quarter, right? It was not accounted in the previous quarter. That is correct. They has just been acquired, so it will start playing out in FY 2024. Okay. Also here, there's inventory getting depleted or getting lower a little by the U.S. But anything from our customer-specific point of view, what are they guiding in terms of revenue growth to you? I mean, how is that scenario? Only from what we know of the global data and everything, but according to that customer-specific, if we have any guidance that you can maintain this growth rate, how are they telling you in terms of inventory? And is that the problem getting solved faster, maybe because we supply to the bigger brands or something? So wanted to have that perspective from our customer-specific point of view. So it's a mixed bag. We supply to a number of customers, and different customers are at different stages in their own market handling situation, inventory situation, etc. So there are some customers who have liquidated quite a bit and still have some residual inventory to liquidate. Some of them have liquidated almost all of it, and hopefully, they will start buying more once they start seeing the demand pick up. But they are not ordering at the moment. They are maintaining a lower inventory-to-sales ratio at the moment. So it's a mixed bag. At the moment, nobody is bullish, but I think I don't think they are very bearish either. So we will hopefully see better, we will be able to read things better as a few more months pass by as to how confidently they'll come back buying. The general trend seems to be that things are seemingly bottoming out, but let us see how it plays out. Okay. And also, for this quarter, we did higher a EBITDA margin such as 13.4% around. So do you think we can stretch this to the entire year, or is it just one quarter, or is it sustainable? Good question. It is not sustainable. What happened in Q4 was that we had made excessive provisions on certain gratuity and employee-related cost items. This is based on certain assumptions. Keep in mind that we are extremely conservative when it comes to taking up accounting provisions. So we had overprovided in the first three quarters, which we kind of wrote back after making actual evaluation of the employee benefit cost. So that's why there may be a bit of a higher margin being indicated in Q4. You should take the average for the year as an indicator. Okay. Okay. Got it. Thank you. Sir, thank you so much, and good luck for your Q4 interviews. Thank you so much. Thank you, Gunjan. Thank you. Next question comes from the line of Abhineet from Emkay Global. Please go ahead. Yes, sir. If you could just highlight the status of various CapEx that you are doing. Are they on track, and when do we see revenues coming through? Your voice faded out. Was your question, "When will CapEx start playing out in revenue terms?" Was that the question? Yeah, yeah, yeah. Both for the routine and the MP units. Okay. So the new unit, we anticipate to start commercial production starting somewhere in June of 2023, so next month. We are hoping that it will clock about INR 50-odd crore in this financial year. The other unit, which is coming up in Tamil Nadu, we anticipate it to go live somewhere in September, which is the early third quarter. Really, its bigger contribution to revenue shall come in FY 2025. So in FY 2025, both of them put together, we should hopefully see about INR 300 crore of top-line being contributed by both these projects. Our thought of that Bangladesh, JV, where do we stand right now? Most of the work has been done. The site has been identified and everything. We are just in a holding pattern there, waiting for signals of market turnaround before we start activating that capacity. We're just waiting to see some improved traction before we start work there. Okay. And lastly, on the margin side, you did indicate that FY 2023 is a better indicator. But over the two-three years of history, our earlier type of indication that we should improve our 50 basis points every year, that continues for the next few years? So as I had indicated earlier, that we probably have about 1.5% EBITDA improvement opportunity going forward in a two-three-year time frame. So I maintain that. In the short term, based on demand-supply situations, there may be some aberrations, especially when there are demand headwinds. There will be pricing pressure. There are short-term, in fact, labor costs have gone up because minimum wages have gone up in Karnataka, where the bulk of our operations are, and the costs have gone up by 9%-10%. So we are offsetting that also through improved productivity. So there are those kind of short-term challenges. But the trajectory that we mentioned about EBITDA improvement of about 1.5% over a two-three-year time frame will continue, notwithstanding short-term aberrations, which we will anyway overcome. Thank you, sir. Those were my questions. Thank you. Thank you. Next question comes from the line of Nishid Shah from Ambika Finstock Consultants Private Limited. Please go ahead. Hi. Thanks for taking my questions. Congratulations on a very good set of numbers, and I think the presentation is very informative. On the cost structure, the advantage of India, what has been presented, is really helpful. My question is, Siva, on industry tailwinds is so positive. Now that we are through with the so-called slowdown and all, can we expect over a normalized period a 20% growth for us now that you have capacities and all in place? So thank you, Nishid. In a normal period, a 20% growth is definitely possible, and that's definitely within the realm of what we will target. There will be short-term inability to do that over a few quarters because of demand-related headwinds. But in a normal period, what you mentioned is absolutely correct. That is what we are targeting. We will probably try to do better also, but trying to do 20% is something which we will always endeavor to. Secondly, on the margins, with rupee having depreciated, where do you see our margins? Is there a scope for improvement over the next 12-18 months? So in the next 12 months, I won't be very sure given the demand situation, at least for the next six months. And whenever there is a demand headwind, there will always be an inability to increase prices, etc., etc., right? On the contrary, there will be a pricing pressure. We are partially elevating that through better raw material prices and better production efficiencies at the moment. So improving margins will certainly happen, but I would say if we take a three-year time frame, I am confident that we have the ability to improve the margins by about 1.5%, EBITDA margin by 1.5%. These new plants at MP and your other initiatives at Bangladesh, etc., should also help you improve margins, isn't it? That is correct. However, the initial effect will be to drop the margins. But since they will be small in relation to the rest of the business, it may not be very material. But as these plants start ramping up, the cost will be higher, so they may be negative for a brief while till they reach their proficiency level and start yielding margins. At a steady state, those new units will be more margin-friendly than our existing business given the cost structures in those zones. Yeah. Thanks for taking my questions. All the best. Thank you very much for a very good presentation once again. Thank you, Nishid. Thank you. Next question comes from the line of Rahul Mishra from RTL Investments. Please go ahead. Yeah. Thank you very much for the opportunity, and congratulations on a very good set of numbers in this difficult time. I have two questions. First, and I'm not talking about anything short-term, I quite appreciate there are challenges in short term. But if I look at FY 2023 results as compared to FY 2022, our gross margins have actually fallen by gross margins have actually seen a decline, maybe also on account of prices and all. And we have also had employee cost issue because of the ESOP, so that has also gone up. And despite that, we have seen a 70 basis points improvement in margin. So if I look at this I mean, if I look at efficiency, which are there beyond the gross margin, it is almost like 400 basis points or more than that. My question is that when things normalize, can we actually look at much more margin expansion than what you are guiding at 1.5% over three years? That is question number one. Question number two is, finally, when do you expect the tax rate actually to go up? Because tax rate was supposed to go up in FY 2023. It's good news that it has not gone up. But should we expect normalization of tax rate in FY 2024? Okay. So as far as the gross margin is concerned, it is a function of the product mix. So product mix changes sometimes can have a gross margin change because gross margin is revenue minus the material cost. So when we have high-value products being produced, quite often, we may see a lower gross margin but a superior EBITDA margin because the manufacturing effort for that may not be as high, but the gross margin expresses a percentage of sales would tend to fall because the raw material costs seemingly are high. So we are judicious. We try to maximize our bottom line rather than simply gross margins given our product mix basket. As far as your question on, is there a potential to improve our EBITDA margin more than what I've guided? So there always exists opportunity, and we will always be exploring those opportunities to go for it. Let it play out. There are several variables that we deal with, including raw material prices, demand, supply, etc., etc. So what I've given is an aggregate of various factors at play, but certainly, we will endeavor to see if we can push the envelope more. As far as the tax impact is concerned, from FY 2024 onwards, we will be having the full impact of taxes. The tax percentage should be 25.1%. 25% or 25.1% from FY 2024 onwards. Okay. Thank you very much, and all the best. Thank you. Thank you. Next question comes from the line of Amar from AlfAccurate. Please go ahead. Thanks a lot for the opportunity. Sir, largely, I wanted to understand if in the market, what I understand is that ours is a slightly premium products business versus the knitting business, which is at the lower end of the pyramid. Normally, what we see, even in the tough time, the luxury or relatively ultra-luxury kind of business does not get impacted, and it revives faster. Is this a scenario for us also? That is why we were less impacted relative to the industry? Okay. Good question. So see, for example, our ASP will be in the range of $8-$10. So we are certainly high-value but not ultra-high-value. So what happens is that commodity products like, say, knitwear, etc., may see headwinds depending on the economic conditions. Ultra-luxury products may not see any headwinds regardless of market situations, but we don't produce those Guccis and Armanis and all of that. We are in mass fashion, premium products out there. So we are in that sweet spot somewhere in between where volumes exist, where we can produce cost-effectively, where we can drive production efficiencies. The demand for our products has not been as hit, and I think the probability of it recovering a bit faster could be better. Okay. And sir, you are indicating that second half would be significantly better than first half. But do we see that the revival should start from the, let's say, sequential revival should start from the second quarter onward, or? Okay. So it's very, very difficult to predict anything for various reasons. One, nobody is any wiser on the economy. Second, brands on whom we are dependent on demand have also started ordering closer today given that their ability to predict demand has also been weakened, and they are unwilling to ramp up their inventory until they actually start seeing huge traction in terms of demand. So my anticipation is that we should start seeing growth momentum pick up from the third quarter. I don't think it will come earlier than that, but it's very, very difficult to predict. Who knows? If things start looking up, it may happen sooner, but I'm not going out there predicting things happening sooner. So third quarter is more likely. Okay. Perfect, sir. Thank you a lot. Thank you a lot for the opportunity. Thank you. Before we take the next question, a reminder to all the participants to press star one to ask a question. Next question comes from the line of Pulkit Singhal from Dalmus Capital Management, LLP. Please go ahead. Thank you for the opportunity, and congrats on a good set of numbers. First question is just on the nature of conversations and the number of conversations you are now having with customers. If you could throw some light as to what is the texture of that now versus how it was one year ago and two years ago and whether those conversations have suddenly picked up in terms of number? Thank you, Pulkit. It's a very good question. So the nature of conversations again, when I say two years ago, during COVID, what was highly uncertain. Post-COVID, there was some buoyancy. But at the moment, the nature of conversations vary from customer to customer. There are some customers who have liquidated inventories who are quite hopeful of demand picking up from spring 2024 and are hinting that they will come back and start buying from the third quarter onwards because in the third quarter, we produced for spring 2024 and fourth quarter for summer of 2024. The general consensus of brands seems to be that by fourth quarter, the market should reasonably stabilize that summer of 2024. So we will have to see that. In the interim, brands are playing it close to their chest. They are indicating that they will come closer today to buy more based on demand traction. The good news is that some of the brands have actually come and followed through on it and have placed near-term orders as well, indicating that some amount of traction that they are seeing or that they are predicting. So it's a bit all over the map, but that's how it is happening in the U.S. U.K.-based customers are actively talking, waiting for the FTA to happen, and many of them are waiting in the wings. Once the FTA happens, they would start taking advantage of it. With that in mind, quite a few of them are having aggressive conversations. The market conditions in the U.K. also seem to be similar, but duty delta plays a big role. So it all depends on where the customers are located. At the end of the day, the mood, I would say, has. It's not exuberant for sure. It was quite muted. It is slightly improving. There is a bit of an optimism, I would think, but it's yet to really translate into significant numbers at the moment. Understood. So are there a lot more plant visits being done by various new customers now to kind of keep the work ready and then test the trigger if they choose to do so later? Is that how they're approaching it? Yes. We have a considerable number of visits to our factories and our design showrooms. Understood. Secondly, these two new customers that we added, the U.K. and U.S., just trying to understand what was their individual thought process to give orders to you? I mean, is it more driven by China Plus One? Are they even willing to pay a premium to kind of source from India, or they're trying to get it cheaper? So what was their individual thought process? So both of them are a bit fashionable brands and a little premium in the market. So they have not seen as much of a negative traction as many other mass-market brands have. The U.K. one is motivated by FTA, so they're clearly out here to take advantage of the situation. They like our ability to handle designs and our quality of production. The American one is clearly coming here because they like our quality, and they haven't seen as much of a headwind in their sales. So they're just adding quality vendors, and we have become one of them. Got it. Thank you and all the best. Thank you, Pulkit. Thank you. Next question comes from the line of Apurva from PhillipCapital. Please go ahead. Sir, thank you very much for the opportunity. So my first question is on your commentary. So as we understand, the growth lever also comes from the wallets are increasing from our clients. And if I look at our clientele, so likes of Gap, Zara, or H&M, so they are very significantly large clients, and our contribution or our revenue to them would be highly significant. So I'm just wondering why that part is not mentioned in the commentary case. We are just focusing on the market outlook and whatever is happening in the broader market but not on the wallet sale. Can you throw some light on that part? So what happens is when the overall buy from a brand comes down by, say, 25% or 30%, the higher-quality producers may not see as much of a drop because we will be grabbing wallet share from weaker suppliers in the ecosystem. Having said all of that, so wallet share may grow, but in absolute terms, from our own base, we may not be able to grow because the volume of buy from the brands have actually come down. So it may be inappropriate for them to have certain vendors grow while other vendors take a deeper cut. So while everybody will decline YoY, there may be a vast differential between declines across this segment, but it always accompanies with a wallet share gain. In such difficult market times, wallet share gains are more easier for us to attain because if the demand is down, they typically tend to shut down a few suppliers or significantly reduce the outlay for certain suppliers. We have actually gained wallet shares in some of our larger customers. Sir, got it. That was my point. Currently, this might be a very favorable period for us. As a company, what steps we are taking to garner more wallet share? That could help us to sustain so we are adding a customer or not, but at least the existing customers base would give us some set of revenue visibility or growth because of incremental wallet share. So that's exactly the point I'm saying, that if you look at the buy from brands, they have fallen by about 20% or 25% in many cases, whereas our revenue in—let's take the fourth quarter as an example—fourth quarter revenue has fallen by about 10%. So our drop of 10% in relation to the brand buying 25% less clearly indicates that we are gaining wallet share. The specifics will depend on the individual brand, but across the board, we have gained wallet share. And the reason we have gained is because we have simply executed well. We have ensured on-time delivery. We have ensured quality throughout the past period and been very, very consistent in this. Once we do that, we automatically are in a position to grab incremental orders at the cost of others. We have taken orders from China and Vietnam. We have taken orders which were hitherto being done by others in India and so on and so forth. So that endeavor continues, and we have done that across most of the brands. Got it. And so final thing on the Bangladesh. So as you mentioned, we are waiting for more clarity on the market conditions. So do we expect it to start in this year, or again, it would be linked to the market condition only because Bangladesh can open a route for the U.K. or maybe the entire Europe market? So that's why we were curious whether irrespective of market and it's a very small CapEx compared to your overall balance sheet size, so why we are slightly conservative on that Bangladesh part. Okay. So keep in mind that Bangladesh also has a lot of capacity. So we want the market conditions to improve and time it appropriately. I believe that we should be doing that somewhere. We should initiate the work in FY 2024, and it's only a matter of taking a call on the timing. We are keeping a close watch on it, and we are also talking to some customers. Based on that we will take a final call somewhere during the year. Understood, sir. Thank you very much and all the best. Thank you. Thank you. Before we take the next question, a reminder to all the participants to press star one to ask a question. Next question comes from the line of Amruta from Wealth Managers (India) Private Limited. Please go ahead. Thank you for the opportunity. So I have two questions. First is regarding the other income. So in the past three quarters, it has increased a lot. So what was the reason behind that? Is it the improvement in the cash balance that we have? And my second question is regarding the knitwear facility. So how is the customers, how is the traction with our existing customers in the woven category? Even they have knitwear products. So how are they taking our CapEx, and are we looking to add more customers there? Yeah. With reference to the other income, it is primarily on account of our investment income coming from the mutual funds and the fixed deposits. On account of our cash surplus, whatever we have, it has been deployed in the mutual fund, and that income is being reflected under the other income. Coming to the knits versus woven demand, I think the knitwear demand is a bit more muted than woven demand. I am speaking at very macro level. Again, situation will change from brand to brand, but at a macro level, that is the situation. For our knitwear unit, which is expected to come by September, we are hoping that the knits demand situation might improve by then. And we are also in advance discussion with several customers to facilitate offtake of those products. So all of that is going on as we speak. But at an overall level, knits is going a bit slower than woven at the moment. Okay. Sir, roughly how much time does it take for us to onboard a new customer, so the whole process, and for them to actually start the ordering activity after they are onboarded? So it depends on the business situation. In a weak market situation, it could take up to a year. Sometimes it can take even two years, depending on the customer and their protocols. In a strong market condition, when there is growth, many of the customers may be under intense pressure to ramp up volumes, and hence, things may happen much sooner as well. It can happen in three-six months at least. As far as the ramp-up goes, it usually starts small in the first three quarters, and it takes over a year before we can start really seeing meaningful revenue of anywhere between INR 50 crore and INR 100 crore. Again, in a strong market situation, things can happen faster depending on the customer. Thank you. Thank you. Before we take the next question, a reminder to all the participants to press star one to ask a question. Next question comes from the line of Abhineet from Emkay Global. Please go ahead. You did indicate that there was an extra provision during nine months, which was written back now. What is that number? So it can quantify? It's about INR 6 crore. Okay. And secondly, on the present raw material cost, what can be the max FY 2024 revenue that the company can clock, sir? Can you repeat the question? I didn't get it. At the present raw material prices, what could be the maximum FY 2024 revenue that the company can clock? FY 2024 revenue. Is that your question? Yes, yes, yes. I wish I had that crystal ball at the moment. Our endeavor is to see growth in financial year 2024 over 2023 for sure, and we are working towards it. But to pin a number at the moment may be harder for me. Three months from now, I may be in a slightly better situation to predict. It's a bit difficult for me to pick a number for now. Okay. I understand that. What I was trying to understand in what can be the max revenue at the current raw materials, not exactly what you are guiding for 2024, just trying to understand with the current capacity that we have, what can be the max revenue for FY 2024? So I don't want to confirm a number given the market dynamics and situation, right? Our endeavor would be to do as much as possible. Raw material prices are not the determinant at the moment. While it helps us from a cost standpoint, it's really market demand, which is a factor. And that, in turn, is a factor of economy and several other situations out there. My best guess is that things should start looking up in the second half, and we should start seeing good traction. The pace of growth, etc., will determine how much we can grow in FY 2024. It's a bit hard at this moment, at the start of FY 2024, to pin a number on percentage growth. In a normal year, I would have been very, very confident to say that we will always do about 20%. But this year, it's a bit harder to pick a number given that most of our customers are a bit unsure of how they're going to buy in the very short term. Okay, sir. Thanks. Thank you very much. Thank you. Next question comes from the line of Rahul Mishra from RTL Investments. Please go ahead. Yeah. Thanks for the opportunity again. My question is, I mean, one of the most important things about Gokaldas is the ASPs and kind of product mix we have. And I mean, we are primarily in woven, and most of the knit buys, much lower ASP and product mix is really not that great. So with addition of knit, how would our product mix and ASPs change? And would it also make our margin or demand slightly more volatile as compared to where we are right now? And once the full capacity ramp-up happens whenever in FY 2024, FY 2025, FY 2026, what would be the breakdown between knit and woven in terms of revenues? So let me answer the second question first. When the knits business fully ramps up, my expectation is knits will be anywhere between 10%-15% of total revenue. Wovens will still constitute to be a majority of our revenue, and hence, the impact on our overall ASP may not be as much. Knits will have its own set of characteristics. And remember, knits, we are backward integrated as well into fabric. So the EBITDA margin percentages may look different, may even be superior because of backward integration. But that said, I would think that knits' ability to impact ASP may be lower because of its lower contribution. Okay. And I mean, I think in wovens, we have really high, I mean, outerwear and probably higher-end products. So in knits also, there is higher-end products, or it is more about T-shirts and all those kind of things? So, of course, there are higher-end products in knits, and those are more like the athleisure products. Unfortunately, most people in India do not do that because the fabric ecosystem doesn't exist. Synthetic knits are not available in India, and that's why China, Vietnam, and even Indonesia are producers of those higher-value knits. Since we will also be in cotton knits, it is likely to be the regular product. Within that segment, we will try to be as premium as possible given our customer base. Okay. Thank you. Thank you. Next question comes from the line of Manish Sehgal, an individual investor. Please go ahead. I just wanted to understand the first dividend has been paid out after a long time. Do you have any policy put in place for that given the cash flows have been quite decent? We do plan to invest, but not that much in terms of capacity addition. We did have a deliberation at the board about this, and we thought that since we are generating adequate cash in the business, we would like to start by giving dividend. In a normal course, we would like to maintain this trajectory. We will look at the business conditions as well as our investments going forward, but that's where we are at the moment. Okay. Thank you. Thank you for the question. Thank you. Thank you. Ladies and gentlemen, 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, everyone, for listening to us and asking questions. We are happy to engage with our investors in full transparency and discuss our business prospects, and we continue to do that. While the market conditions are somewhat unknown at the moment given the macroeconomic situation, we continue to explore ways to improve our operational efficiency and thereby hold on to our margins. There are certain headwinds which challenge us in terms of cost structures, in terms of pricing, etc., but we are doing our best to offset it. As I had mentioned, that in a steady state, we would like to continue our 20%+ kind of growth trajectory, and we would like to work on a 1.5% EBITDA improvement. This road may take a little longer given the current market conditions, but we will get back on that trajectory as soon as possible, as soon as the market permits us to do so. We are cautiously optimistic about how the market situation will improve. I believe that come the third quarter, which is when we will be producing for calendar 2024, we should start seeing improved traction. It's also an election year in principal markets, both U.S. and U.K., so we should hopefully have the economy perform a bit better in an election year. We will see how things evolve, but we are very opportunistic, and we will work with our customers and not let go of any opportunity to seek growth, which becomes available to us. Thank you for your support, Gokaldas. We will remain committed to driving business performance as we go forward. Thank you, one and all. Thank you. On behalf of Gokaldas Exports Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.