Ladies and Gentlemen, Good Day and Welcome to Gokaldas Exports Limited's 2Q FY25 Investor 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 EY Investor Relations. Thank you and over to you, sir. Thank you, Zico. 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, uncertainties, and other factors. It must be viewed in conjunction with our business risk 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 also available on the company's website. In case 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. Sathya Murthy, Chief Financial Officer. We'll start the call with a brief overview of the quarter gone past and then conduct a Q&A session. With that said, I'll now hand over the call to Mr. Siva. Over to you, sir. Thank you, Binay. Good afternoon, everyone. Happy to have you at our earnings call for the second quarter of FY25. Retail sales have been resilient and maintained gains year to date. In fact, if I look at the current year to date, retail sales in the U.S. have been plus 3% over the same period last year. Brands have been able to sell their products at full price, reducing the need for discounts, which has contributed to growth primarily in terms of price and a little bit on account of volumes. U.S. apparel imports are now trending up over the previous year. After a major period of excess inventory, which the brands were consciously trying to liquidate, inventory holdings have reached a low level, record low levels, and they have started purchasing again. During this quarter, our revenue performance has been robust thanks to a strong tailwind that we have started seeing from the brands. This will start accumulating more and more as we move in the quarters ahead. Our consolidated revenue for the quarter grew by 85%, which is a reflection of some of the acquired entities contributing to revenue. If you look at growth without the acquired entities, our revenue growth was 28% year- on- year, and if I look at specifically export revenue of Gokaldas Exports without the acquired entities, our growth was 33% against India's export growth of 13.5%. This is the tailwind that I was talking about, and I can see this only intensifying in the quarters ahead. Our consolidated EBITDA grew by 48%, while EBITDA without acquired entities grew by 26%. EBITDA margin was impacted, and there were several reasons for it. The underperformance of acquired entities happened in the second quarter, primarily because these were seasonally weak quarters for the industry as a whole, and both Atraco and Matrix had a lower revenue than their usual quarterly run rate. This impacted their margin. In addition, in Atraco, we also had Kenyan Shillings, which is at an all-time high. It moved from 160 to a dollar to 127-129 to a dollar. It's moving in that range. So when Kenyan Shillings went up sharply, our cost in dollar terms went up, so that also impacted our margins there. In India as well, we had some one-time air freighting because of spillover from Q1 when we had some production loss. So production loss is on account of heavy absenteeism in Q1 due to elections. All of that is behind us, but these were some of the reasons why our costs trended up more than planned, and that's why our margins were slightly lower. However, Gokaldas Exports standalone has performed very strongly, and we believe that all the three entities, Gokaldas Exports and the acquired entities, will start performing even better in the quarters ahead. Integration of the newly acquired entities has progressed well, and we are poised to gain from operating leverage in the future. Most of the headwinds in the acquired entities are behind us now. Our strategic investment in BTL, the fabric processing unit that we invested in, strengthens our vertical integration into critical raw materials, and this will enable us to deliver high-quality, cost-effective solutions faster to our customers. In the first half of the year, we generated about INR 171.5 crores in cash from operations. Our new manufacturing unit in Madhya Pradesh has fully ramped up and is working for two major international customers, and we are planning to expand in Madhya Pradesh further. So we are planning to commence work on the second unit, which will happen in this quarter, and hopefully, the work will get completed in nine months. Monsoons are over, and the physical construction work will start soon. We are finding a strong tailwind for business in India and Africa now, and hence, we are looking at expanding capacity across our system. So we are looking at additional capacities in our existing units and looking at leasing some capacities as well in South India to allow for quick expansion. Apart from Bhopal and South India, we may also look at incremental capacity in Ranchi and Jharkhand. The company's order book remains strong, securing robust near-term prospects. The long-term outlook is also very favorable, supported by a continued shift in global sourcing away from China, Vietnam, even Bangladesh, where there is turmoil at the moment. There is also a trend towards supplier consolidation among efficient, well-capitalized players, and the ongoing supply-side instabilities across the South Asian region are also helping us. We are expecting the momentum to pick up in the second half of the year, particularly with Q3 production for Spring 2025, as brands are pushing incremental business to suppliers like us and are promising a good set of quarters ahead. This is also a period of increased sourcing from India, so we anticipate sequential growth to trend up from now. We believe that the strategic moves that we are taking will allow us to continue to grow the business going forward. We continue to closely monitor any potential macroeconomic situation and will take measures focusing on customer relations and service excellence. With the macroeconomic situation becoming more favorable for outsourcing from India, we only hope that the tailwinds will intensify. We are confident of a strong medium to long-term prospects for the company. I'll pause here. I thank you for listening and would be happy to address any questions 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 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 is from the line of Kaustubh Pawaskar from Sharekhan by BNP Paribas. Please go ahead. Yeah. Good afternoon, sir. Thanks for giving me the opportunity and congrats on a good like-for-like performance. Sir, my first question is on EBITDA margins. So at consolidated level, the EBITDA margins, including the acquisition, is around 7%. If we look into like-for-like EBITDA margins, it is around 11%. So as you said in your initial commentary that now things are looking good, acquisitions have been integrated, the air freight cost is also reduced, second half will be good for the acquired entities. You are seeing good momentum in the garment exports as well. So considering that, should we expect this gap between the consolidated and the like-for-like EBITDA margins to reduce? Or also would like to understand whether there is a further upside in the like-for-like EBITDA margins, which are currently 11%, to improve to around 12%, what was historical high for us? I believe that the like-for-like will definitely go up. I think your commentary on like-for-like, can it go to 12%? I feel confident about it. When you say like-for-like, it's the old Gokaldas organizations without the acquired entities. Yes, that will happen because that is the trajectory in which we are trending towards. Our production efficiencies are going up. We are seeing a robust order traction as well, not only for Q3, Q4, but also for the quarters ahead. I believe that some of those one-time impacts are all behind us, so we should be trending towards that number, definitely. As far as the consolidated EBITDA is concerned, there also, I feel that at a consolidated level, we should be seeing a 1.5% improvement in EBITDA margin. Okay. Okay. Thanks. That's one question. Yeah. Yeah. Sir, my second question is on the capacity utilization for our standalone entity in quarter two, and what was the volume growth? Because the revenue growth on like-for-like business was 28%. So what was the volume growth in this quarter? Sathya, would you like to answer the volume growth? The volume growth in Q2, the total volume what we have done is 14.95 million at a consolidated level. The realization is at INR 580. Sir, consolidated level, you mean including the acquired entities or this is only for the? Including the acquired entities, yes. Can you help me with the standalone entity volume figures as well? Standalone, we've done 8.1 million. And I mean, acquired entities, we have done around 6.89 million. Okay. Okay, and sir, what would be the utilization level and what do you expect in the second half? If I can answer directionally, and Sathya can probably give the number of pieces, though we don't look at the business from that perspective, given that we make a very wide variety of garments. If I look at the capacity utilization in the second half, we are running full capacity utilization. In fact, our Bhopal unit has reached its full utilization of 1,100 machines as we speak. And it's also running at full capacity. We are actually capacity-starved, and we have business for another one and a half factories, actually. We are looking at expanding our capacities in the system. At the moment, we are running at full capacity, which is higher than, of course, what the levels we were in Q2, given that the Bhopal unit fully ramped up only in Q3. So I would imagine that we would be at an incrementally another 5%-7% higher than the quarter ahead, quarter that went by. Right. Sir, my follow-up question would be, you mentioned about capacity expansion in your initial commentary. So what would be the CapEx? Is it going to be anything above what you have mentioned in the presentation, or most of it is covered in the presentation? Most of it is covered in the presentation. We had planned for it. It's just that we are now, we will just be implementing it now. I think out of 100 crore that we planned for this year, I think we've already incurred 55-odd crore. I think the rest of 45 crores, which will go in, will help in taking our capacities up. Most of these incremental capacities we are working on will yield fruit only in the next financial year. Right. Thank you. Thanks. CapEx will be spread between this year and next financial year for them. Okay. Thank you. Thank you. I will get back into the queue. One more point is, similarly, capacity utilization in Atraco and Matrix will also go up in Q3 as we have a fairly good order book for both of those entities. In fact, in Atraco, we are looking at expanding the capacity by another 500 machines. We have already gone ahead, and that work is going on in full swing. Okay. Thank you. Thanks for that. Thank you. A reminder to all participants, you may press star and one to ask a question. The next question is from the line of Bhavya Gandhi with Dalal and Broacha Stock Broking. Please go ahead. Yeah. I thank you for the opportunity. Sir, just wanted to understand. I mean, freight cost is a part of our expenditure because most of the other peers, they sell it on FOB basis. So why is this different? If you can help me understand. Sir, we also sell it on FOB basis. Our CIF revenue is very, very small. It's almost negligible, under 1%. So it's all FOB. However, freight cost comes into play when we look at inbound logistics. Since we do a lot of synthetic outerwear, etc., in India, and we are one of the market leaders in that, especially in Q1 and Q2, when we do a lot of Fall-Winter programs, we do have a significant component of our raw materials coming from the Far East. So we do have a freight component loaded in inbound logistics, raw materials coming in. Secondly, for Atraco also, there is a big component of freight because all the raw materials for Africa come from Asia. So either India or China or Vietnam and some of these countries. Okay. So let me just ask you in another way. What is the total raw material which we import across all? If I look at the standalone entity, 25% of the raw material on an annual basis gets imported. For Atraco, 100% gets imported. Atraco's revenue is between 200 to 250 crore. Raw material cost will be about 60% there. Almost 100% of that gets imported. For GE's 650 crore revenue, the raw material component will be about 300-350 crores, of which 25% gets imported if I take on a quarterly basis. But in second and first quarter, we usually have a higher proportion of imported, and in the third and fourth quarter, a much lower proportion of imported components in its raw material. Right. Another question with respect to the steady state, what would be the ROC and ROE? Because there are a couple of acquisitions. There are a few other cost elements and all. So it's very difficult to find out the implied steady state ROC and ROE. So what would be the number that we are targeting? Sathya, you want to answer this? Yeah. The current level is, we are trending around 15%-16%. In a steady state, our endeavors to reach towards or to reach over 20%, that's our endeavor over a period of time over the next two to three years. But because the investment, whatever we made, all these investments, it will take time. Once it comes in a steady state, all these results, our CapEx approval is always with the assumption of average ROC at the rate of 20%. So I wouldn't like to work at below 20% at any cost. So at this moment, if you look at the standalone entity, its ROC is high, it's almost approaching 25%. However, on a consolidated basis, the ROC is operating at around 15% because the acquired entities are yet to reach the level of performance that we want. And that will happen by end of this year. So we are working towards them and working towards improving the performance of these entities, and we will start seeing some of those benefits. Keep in mind that these acquired entities have come into the fold only at the start of this financial year. So there is a lot of work that is going on in integrating, in also changing the customer profile there and all of that. And that will be a work in progress for a year. We are also dealing with a fairly large volume and business growth, but we are very confident that the performance of those entities will also come up very strongly by end of the year. We are expecting by end of the year only we'll be touching on a constant level 20% ROC? That is what you're trying to say? No, no, no. No, no, no. So that means all the inputs to correct that will happen. So we will start seeing an improvement from the next financial year onwards. I will defer to Sathya to see what will be the ROC hopefully next year. But if you ask me the year after, we should be hitting closer to 20% or even exceeding 20%. But by then, all the investment, once you start yielding the results, only we'll see that. Got it. Got it. And just one more question, if I can squeeze in. Any progress on the U.K.-India FTA agreement? And do we see any significant benefit out there? So there has not been much progress. There is an intent on both sides, but there has not been much progress on the U.K.-India FTA. So we don't know what will happen or what will be the eventual outcome. Having said that, if it happens, the outcome is going to be very positive. And it is positive, definitely more positive for GE because we already are working with some U.K.-based clients in anticipation, and they will only increase their sourcing. But regardless of that, I'm seeing that with problems in Bangladesh, I'm finding even U.K.-based customers who currently enjoy a 12% delta in import duty between India and Bangladesh because Bangladesh goes duty-free are looking at outsourcing more from India. So we are seeing traction coming from there, which will only accelerate if the FTA happens. Okay. And is it possible to give us the share between brands versus retailers? What would be the contribution on a full-year basis? I think we only directly work with brands. I don't know what you mean by retailers. Retailers are retail brands we work with. We don't work with intermediaries or importers at all. We only work with direct brands. No, no. I meant, do we work with any large-sized retailers? The brands are retailers. So when we work with Gap, we work with Carhartt. All these customers are retailers. JCPenney, all these are retailers for us. So I don't know. These are retail brands. So when I say brands or when I say retailers, we are using them interchangeably for our customers. Okay. Got it. Fair enough. That's it from my end. Thank you so much. Yeah. Thank you. Before we take the next question, a reminder to all participants, you may press star and one to ask a question. The next question is from the line of Sundar from Avendus Spark. Please go ahead. Good afternoon, sir. Thanks for the opportunity. So first, I just wanted to have clarity in terms of what you had mentioned in terms of capacity and utilization. So not going through the volume numbers given the price mix impact. If I were to just look at it in terms of the potential that we've got today, that is, we did probably about INR 650 crores this particular quarter, and you said there's about 6-7% upside to that particular number. One, have I got this number right? And two, does this include the entire Bhopal expansion, or does it include only phase I? No, no, no. There is only phase I of Bhopal expansion as of now. Phase II of Bhopal expansion, the work will commence from Q3 and hopefully will get done by Q1 of next year. Effectively, it will come into play only in the second half of next year. Then we should start training people, etc. At the moment, Bhopal expansion will start contributing in Q3. Likewise, whatever incremental expansion that we have done in the south, in our de-bottlenecking of existing factories, that will also start contributing to our revenue growth in Q3. This is one part. Secondly, Matrix and Atraco, which have seasonally low quarters in Q2, will also start showing some incremental growth in Q3. That is how we are seeing growth in the third quarter. Now, Park, if you were to just talk in terms of numbers, we believe we can do INR 700 crores per quarter on the standalone numbers as per the current capacity that we have. Say that again. As per the current capacity that we have. Standalone. Standalone. Standalone, currently, we are at. I think this quarter, we were at 650 or thereabouts. And I think in the quarter ahead, we should be closer to about 675, 680, or in that region. And at a consolidated basis, we should probably cross 1K. Now, 680 here presumes that full utilization. Say that again, please. The INR 680 crores presumes full utilization. So at full utilization, we can do INR 680 crores per quarter. Is my understanding right? No, I think it could be more because I'll tell you why I'm saying that. Because what happens is revenue is based on not on production, but revenue is based on dispatches. And in December, especially during the last week, dispatches slowed down. That is because of Christmas and all those holiday season and all of that. So it may not be fully characteristic of the revenue. The revenue may not be fully reflecting the production capacity increase. So this is factoring in all of this. I'm just trying to comment from the views that on one side, we see U.S. inventory levels going down. U.S. imports from India have also increased. There is a possibility with the new government coming in place in the U.S. that the tariff rates on China could go up. You're saying, what is the production capability that we would have? Because on one side, demand seems to be a lot more of tailwinds are coming through from that front. So I just want to see what's the maximum revenue that we can do with the current capacity and with the extended capacity that comes in terms of Madhya Pradesh Unit 2, that is from 2H of FY26. So what is the maximum run rate that we can get to in terms of revenue, discounting for volumes and price mix effects? If you ask me, if you talk about max revenue, right, our current footprint should yield approximately INR 700 crores. And if you look at Unit 2 of Madhya Pradesh, that will, on an annual basis, yield another INR 175 crores of revenue. And then we are looking at more capacities going forward. Those are all work in progress. If we are able to lease some factories, we will do that as well. Right. So fair enough. Incrementally in Atraco and Matrix also, we are looking, for example, we are looking at another 500 workstations increase in Atraco. So that should hopefully bring in an incremental 10% capacity increase. So that's about INR 70-80 crores, INR 80-85 crores. Plus, we are looking at an incremental capacity in Matrix also, which should yield INR 100 crores. But some of those capacities will Matrix capacity and Bhopal Unit 2 capacity all will start playing up somewhere in the second half of next year. So should I presume that Matrix, the current capacity, allows us to do about INR 600 crores per year? About INR 500-550 crores per year. Right. And Atraco? Atraco will be about 900. And then, no, but the increased capacity can have increased by about another INR 100 crores, sir, given that the. You said current capacity, right? So that's why I said increased capacity will bring in another 10% or thereabouts. Perfect. Sure. So now just the other angle in terms of just the margins out there is that this quarter has been weak for various other reasons. But what should we look at it on a sustainable basis on these standalone numbers? On the standalone GE, right? Yes, sir. Standalone GE. See, I'll tell you what has happened is we are not seeing the pricing power come back yet. If you recall, last year, all the customers dropped their purchasing by a very significant amount, 20%-25%. Even if you look at YTD, you will find that the imports for this year, CYTD, compared to previous year, is actually lower, U.S. imports and European imports. But it has started picking up from July onwards. So the quarter from July, we have seen that imports for July, August, September, this period has trended above the same period last year. So we have started seeing the curve turn from Q2 onwards. Now the import increase, right? So I am seeing that when that starts picking up pretty significantly, that is when some pricing power will return, and which will really happen in the next financial year. So at the moment, when we are trying to ask for increased pricing for increased costs, that's not on the cards, especially for this financial year, because there is enough capacity going up again and competing with us. But I'm presuming, and I'm reasonably confident that we will be able to price in better going forward in the year ahead. So that will also improve margins. I'm presuming that that will help us take the standalone next year to close to 13. Right, and in terms of the other acquired entities, sort of margins, I believe Atraco has been the big pull down this quarter? Yes. Was there any one-off, sir, any work strike or anything of that nature, or this is all the one-time effect that we're seeing in Q2? So Atraco, you remember there was a strike early on when we had acquired, and there were some continued airstrikes, which happened until August of this year. So from September onwards, that one-off has gone. But the other one-off is the Kenyan shillings going up against U.S. dollar, which was not anticipated by us. That was the last currency we thought would go so strong vis-à-vis U.S. dollar, appreciating from 160 to 128 or 129. So it's almost a 20%-25% appreciation of the currency, which had happened. The effect of that should also, in my opinion, wear off. I'm not saying the currency will weaken again. If that happens, that's good. But we have started pricing it into our contracts going forward. So that effect will start happening from partly in Q4 and from Q1 onwards. So we are mitigating it by pricing and factoring in a stronger currency. But the impact will come in later. So when would be the target quarter when we say we go back to that 10% margins on the acquired entities, sir? Target quarter, I am very confident that that target quarter will be Q1 of next year. We will make every attempt to see if we can do that in Q4. Right. And then just a continuation to that is that I presume you started booking orders on you or the orders have been booked by Gokaldas from third quarter on the acquired entities also? Yeah. Gokaldas has been booking orders now for all these entities from third quarter onwards. Of course, the existing customers of theirs are contributing. But we are playing a role in pricing and all of that. So all that will start from third quarter onwards. All the orders that we booked in Q2, which will be executed in Q3, were all under our aegis. Right. That should also be a margin driver? Partially. As I said, the impact, the ability to raise prices in an environment where there is still a supply exceeding demand is not very high, right? So now we will start seeing the situation because there is an incremental demand coming in from the U.S. as they have completely worked out their inventory and everybody is coming in and buying more. As I said, the trend reversed from Q2 onwards. If you look at the import stats, and that is what will help drive the pricing up. Until then, the demand-supply mismatch won't help in pricing. However, India sourcing is growing. So even if they are not buying so much more, they buy much more from India, relatively speaking, right? So they are reallocating from other regions to India. So that is helping us. Even that will help us negotiate better. But all of that will happen, in my opinion, from the next year onwards. So we are seeing a volume tailwind in H2, and I hope that it will be augmented by some bit of pricing power also from H1 next year. Any update on BRFL also, where are we currently? So whatever support that needs to be made, we are doing. And in fact, GE has started placing orders on BRFL for fabric sourcing as well. And we are trading. We are pushing a significant amount of our purchasing to that unit. Simultaneously, that unit is also conducting a lot with the money that we have invested, they are also incurring CapEx to improve its machinery and improve its productivity and all of that. We are also seeing BRFL's product quality improve. Rejections come down, and also those are all positive signs, which gives us the confidence that they will be able to service our requirements well. So it's going in the right direction. It's been only a quarter since our investment, but all the operational metrics are trending up. Investment into that entity until now has been just INR 50 crores? Until the end of Q2, it's been INR 60 crores. And I think in October, we have infused another INR 20 crores, so it's about INR 80 crores. Right. And then one more question, just the last one on the balance sheet itself. Why specifically is it that debts have not been repaid and we continue to hold cash? The debt is in Atraco in Dubai. It was done from a tax efficiency point of view. So about $30 million debt, we are carrying more in Dubai. Otherwise, in Indian entities, debt is less, zero. Right. So is there any path to repatriate this back and have it paid out, given that cash is also there on books? We are exploring, but the only challenge is that repatriation at a later point of time, that could be a challenge. We are working on. Our intention is to reduce at least about 10 million to really bring down at least by 10 million in Atraco. We'll see that, how it works. Right, so thank you, sir, and all the best for exciting times. Thank you. Thank you. A reminder to all participants, ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Bhavya Gandhi from Dalal and Broacha Stock Broking. Please go ahead. Hi. Thanks for the opportunity. Sir, can you just help me understand what would be our top five customers' revenue contribution, and is it possible to name them after the merger of acquired entities? I believe that one new acquired entity does not have overlap of customers. Yeah. I think with Matrix, we don't have an overlap of customers. With Atraco, we have an overlap of customer, which is JCPenney. Our top five customers are Gap, Carhartt, Columbia, and JCPenney, which will be the fifth one. I think it's Puma. So these are some of the okay, I have a comprehensive. There's slightly more. So these are some of the customers. The combined contribution of the top five customers to our total revenue will be approximately 65%-70%. It will vary from quarter to quarter, but that is the range it oscillates. That top customer, how much revenue contribution would it be? Somewhere in the range of? The top customer? Top customer is close to 27%. 27%. And what would be the percentage of their total procurement? Because I believe Gap doesn't allow more than single-digit procurement from one customer, right, from one vendor. Peanuts. We will be peanuts. The Gap itself will be buying close to $4 billion. Our revenue will be single-digit%, very low single-digit%. Okay, so maybe I'm trying to look for without adding new customers also, there is significant runway, right, to penetrate deeper in the existing customers? 100%. Yes. But what happens is we will have to decide which kind of programs we want to go to. So we tend to remain in highly profitable women's business, fashion business, etc. We tend to stay away from men's knits that we use because there the pricing will be sharper. Secondly, we also stay away from core businesses, except in places like Africa or in Madhya Pradesh or some of these low-cost regions. That is because, again, the margins will be sharper in some of those programs. So if we start opening up our opportunity landscape, opportunity space in those programs, it's very, very large. Core programs will be large. If I look at just the bottoms, right, pants or shorts or shirts, there's a huge opportunity there. We really don't do that, not because we can't do it. In fact, we can do it very well, very efficiently, etc. But it's just lower margin, and we have to effectively use the capacities that we have for the best of the products. Between knit and woven, which would be a better margin provider to us? It depends. The knits that we do in India are high-value knits out of Matrix. And out of the erstwhile GE, we do sportswear knits. Both of them are very high-margin programs, relatively speaking, but also complex. Whereas in general, if you look at knits, which are the regular T-shirts and jerseys and the leggings, etc., the woven margins will always be higher. For us, we are in high-margin knits and high-margin wovens. So possible to share roughly what would be the margin differential between the two? Again, depends on which knits. If you look at ours, we don't see much of a delta between knits and wovens for the business that we are in. Again, if you look at the commodity knits, if you are a vertical player, you will have good margin because you will enjoy the benefit of verticality. But if you're a pure garment player, in commodity knits, you will have to offset it with high productivity. So there are lots of variability there. I think the net margin delta will be between knits and wovens. Commodity knits and wovens will be about 1% or so, 1%, 1.5%. If you look at the business that we have, we are more or less at par. Okay. And would you like to give any guidance for next three, four years on the revenue and EBITDA front? Because all these acquired entities and everything is there. So if you can just give a broad guidance on consolidated level. So you know our current quarterly run rate, and there is bound to be on a constant basis, our endeavor will be to grow at a minimum of 15%. And if we are able to grow even faster, there is nothing stopping us because there is a lot of business tailwind. And I'm seeing this business tailwind, at least for India, right? It all depends on what policies the new government in the U.S. comes up with. But I feel that whatever they come up with is only going to be helpful, incrementally helpful. If they go more against China, that's going to add to our business prospects. Things in Bangladesh will take time to settle. Anyway, Bangladesh capacity is at the moment fully being utilized, but incremental capacity could come to India. Most of the brands are looking at more India sourcing, and they are all capacity constrained. There is a good amount of tailwind. Our endeavor will be to add capacity at an even faster rate in country so that we can capitalize on it. 15% is the main growth rate, I believe. 15% revenue growth, not volume growth, you are saying, right? Around 2-3% realization growth would be there? Could be there. That is the endeavor. I mean, that is one crystal ball I refuse to get down to going forward because there's a lot of factors which come into play there. If U.S. tariffs go up, then would there be a pressure on pricing? I don't know. There's a lot of ifs and buts going on there. So we don't know because any such moves will be inflationary, and I don't know if the customer will have the ability to bear all those costs, but that's going to be a universal impact. So that's something which I don't have a sense on. But our endeavor will be to see definitely realization go up by 1% or 2%. Definitely, our endeavor will be that, and we'll push towards that. Volume growth will definitely happen. Right. And on the EBITDA margin, if you would like to guide anything, a steady-state EBITDA margin considering the consolidation and all that? As I said, the steady-state, our immediate endeavor is to take the consolidated EBITDA to over 10% pretty quickly, very, very quickly, and that should happen this year itself very soon, hopefully in the quarter ahead itself, and after that, we are looking at a steady-state EBITDA of at least 12% for the consolidated entity. Right. And beyond 12%, I believe we'll have to change the product mix only, right? Because even with operating leverage and because you'll be adding capacities also, so there won't be significant operating leverage, right? Or is the understanding wrong? Whenever new capacities come, there will be a deleterious impact on the EBITDA margin for the component of new capacity, correct? It takes two years before that starts kicking in incremental. Having said that, some of our newer capacities are in regions which are low-cost and which will contribute positively going forward, like our Bhopal unit, etc. So there are going to be some positives as well. And depending on the product mix, depending on the automation, because we are also shedding in a lot of automation, etc., and our production unit, which will also yield incremental productivity, our aim will be to take the EBITDA margin up through those means. Correct, and just one last thing on the India has an FTA with Japan. I mean, I don't see a lot of Indian companies capitalizing on this. What's your take on this, and are we looking any opportunities in that front? So we are and we are not in the sense that we do have an opportunity in Japan, but we have capacity stock at the moment, so we're not actively pursuing to add a new customer from that perspective. And it also takes a couple of years before we can orient our production to the Japanese market requirements because that market and its standards are very different from the rest of the world. So we have enough business opportunities in other regions that we have to take a strategic call. But having said that, Japan today imports a lot from the Far East. They are also looking at incremental sourcing from India. That opportunity does exist. We will have to take a call going forward. Fair enough, sir. Thank you so much. That's it from my end. Yeah. Thanks. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. Our next question is from the line of Varun Gajaria from Omkara Capital. Please go ahead. Hi. So, hi, sir. And thank you for the opportunity. I just wanted a little bit of clarity. How is Bangladesh shaping? And has there been any capacity closures in Bangladesh? The existing capacity closure, has there been anything as such? So the reality is that Bangladesh needs garment industry badly. So no matter who is in power, the garment industry in Bangladesh will function. And it's vital for the economic survival. So this industry is protected. So there is no capacity outage in Bangladesh. Having said that, there is a lot of investor lack of, I mean, customer lack of confidence in Bangladesh. So most of the customers think that there is going to be incremental volatility. The relationship of Bangladesh with India is not great. And Bangladesh depends on India for a lot of things, including day-to-day consumption items. So food, cooking oil, everything goes from India, so cement and all of that. So this will any friction in our relationship increases their cost and increases their inflation, which adds to instability in that region. Secondly, an election is due in Bangladesh because currently you have an interim government. When that election happens, there's going to be another round of instability during that process, so there is a lot of these uncertainties which people are looking at and saying that, "Look, we don't want to do incremental growth in Bangladesh anymore. We want to, in fact, look at diversification out of Bangladesh to India," so much so that even European players are talking about it, so that's the fascinating part where they're willing to forgo the duty arbitrage that they get from Bangladesh and look at alternate locations, so I feel that there will come a time, the time has come where people are really looking at alternatives to Bangladesh, but Bangladesh's existing volumes will not come down. I don't believe that the country as well as the world will need Bangladesh. Right. And are we witnessing any other countries or companies from any other countries probably taking up tie-ups with vendors in Bangladesh? Has that been the trend so far? Let's say Chinese players or Taiwanese players or even Indonesian? No, no. You're saying that retailers in China, Taiwan, etc., are sourcing from Bangladesh? Is that what you're asking? No, no. Manufacturers. Probably Indonesian also for that. So at the end of the day, this is driven by the customers, correct? Where do they want to source from? So customers incrementally are looking at other regions. Incrementally, they will not look at additional sourcing from Bangladesh. Customers are looking if they look at China, many of the customers are seriously considering more rapid descaling from China. Customers are looking at Vietnam and seeing that the costs have risen up so high in Vietnam and Indonesia that there are alternate options. So all of them are pointing towards India, pointing towards other regions in South Asia. Some people are even looking at Pakistan again because their currency is cheaper. There's a fabric ecosystem there and all of that. Some people are even looking at Africa again, and we've seen some renewed traction for that region also. So the world is exploring other options. I think India stands a good chance to profit from it. Right. But Pakistan will be more in the home textile space, right? I don't think it has much skin in the game in the garment space. It is increasing. Okay. It is increasing. Okay. Yes. Okay. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. Our next question is from the line of Bijay Shah from RTL Investments. Please go ahead. Yeah. Thanks a lot for the opportunity. My question is with regard to your standalone margins. So now, if I look at your standalone margins, it is around 9.5% for the last two quarters. And I'm looking at margins without including other income. So can you give us some idea that where this margin, what kind of margin we should build in for FY26 and FY27? And I'm specifically asking a question for the margin without other income because your other income, because of your treasury and investment in BRFL, will actually push your other income significantly higher. So can you tell us that operating level, what kind of margin you are expecting? So, I'm operating leverage for standalone entity. I'm expecting 1% up in the next financial year. That is FY 26, and one more% up in FY 27. Oh, around 10% kind of margin we should expect next year at operating level. Yeah. So plus one from whatever. So whichever way you calculate. I'm talking only from an operating perspective. That is one. Secondly, your tax rate? So my expectation would be take one and 0.75 in the year after because costs will also go up, right? Yeah. Got it. Got it. That's very helpful. Second question is on the tax rate has been pretty low for domestic business. So is there anything which we should extrapolate into future, or this is something which will fade away and you will go back to 25% kind of tax rate? I think there is some as we grow and as we add more people, there's some 80JJAA benefit or something, right, Sathya, which is also giving? That's why the blended rate, you see almost around 22% for both Gokaldas as well as Matrix. But the new entities, once both the fabric processing and the Bhopal units, all the new units are at a 17%, 18%, 15% tax rate. So that will be coming at a lower interest rate, lower tax rate. Sorry. Yeah. So overall, the tax rate will be lower than 25%? Yeah. Atraco is tax-free, whatever Atraco profits, and at a blended level, without Atraco, you can take it around 22%. 22%. Yeah. That is very helpful. Now, secondly, I mean, see, I understand that market is in turmoil right now, and I'm not questioning that there will be an improvement. But I'm just trying to understand that, I mean, how the pricing power, when we will get pricing power? Because on one side, what we hear and what you are also mentioning is that there is customers do not want to procure from the existing location, be it Vietnam, be it China, or Bangladesh. And I would assume that a good part of that, I mean, there are hardly any other large countries which can replace other than India. And they are coming to India. You are seeing 26% kind of growth in your revenue this quarter. And so despite that, Indians, I mean, I would logically think that Indians should have a lot of pricing power in this context, which you are saying not there. So what is the reason for that? The only reason is this is a global business. So if, let us say, we extract or we demand a higher price, immediately the business can go to Indonesia, business can go to wherever location because commercial considerations will trump everything else. So today, our aim is if there is a business coming our way, let us take it rather than just go for a kill on pricing because there are certain things which you can't obtain. So today, incrementally, if you look at globally, till June, July, the buying was only falling YoY. After that, slowly the curve has turned and they've started increasing. So at this point, the demand-supply mismatch still exists at a global level. For India, it may not. For India, it is still favorable. Demand is slightly exceeding supply. And for people like us, we are seeing a much better traction. So we're not in a state where we can suddenly demand pricing, in which case the option or opportunity to diversify away from us continues to exist with the brands. So our aim at the moment is to take the orders and keep it here and then wait for an opportune moment. Yeah. Got it. Very clear. Last question. See, I mean, this first year of consolidation, and we are also getting to know what is Atraco and the trades. So on a QoQ basis, I mean, we have seen around 20% drop in revenues of subsidiaries put together. Now, is this seasonal trend normal, or there was something which is due to transition and going forward, this kind of drop from Q1 to Q2 will not happen? No, no, no. So usually, Q2 is a weak quarter for the industry. For Gokaldas, we also used to have this about five years back. We have worked to remove the Q1-Q2 impact on us because we work with the right product mix, etc. So we have a strong Fall-Winter program which helps us in Q1 and Q2. So we have a more balanced capacity utilization in Gokaldas. This is not the case for the acquired entities, which will be a work in progress going forward for us. So historically, Q2 has been weak quarters for both the entities. Q3, they will both come back up in revenue terms. And we will have to work on fixing their Q2 for the year ahead. That is next financial year. Just if I understood correctly, what has happened this year is not something normal. But in the future, you will fix the Q2s of acquired entity the way you fixed it for Gokaldas in probably a couple of years. Correct. Correct. That is correct. Yeah. Thank you very much. Thank you. The next question is from the line of Bhavya Gandhi from Dalal & Broacha Stock Broking. Please go ahead. Yeah. Hi. Thanks for the opportunity. On the debt front, I just wanted to understand that do we have any debt financing ECGC cover or any sort of guarantee in terms of payment from them or export guarantees or any sort of guarantees? So for Indian operations, we do have an ECGC cover as a guarantee which guarantees the receivables from our customers. I think ECGC covers to the extent of 90% of the receivables. And for the other operations? For the international operations, for the specific customers, we have, to a limited extent, the back-to-back cover with early payment programs, what we could really ride on with a supply chain finance program, whatever has been offered. I would say at least about 50% of the receivables are covered. Got it. Got it. So on a consolidated, roughly 60%-70% is covered, right? Much more than that. Much more than that. We can take it around 50%. Okay. And do we resort to debt finance? Atraco's revenue is 25% of the total revenue, and half of it is covered. So that is 12.5% not covered. And for the balance, 75%, 10% is not covered. 90% is covered, right? So 10% of 75% is 7.5%. So 7.5% plus 12.5%, that is 20% not covered. 80% covered. Yeah. Hello? Yeah. Yeah, yeah. Yeah. Perfect. And do we resort to debt financing, or we do not take any early payment? We take early payment. In India, we take early payment. We rather prefer that because we get early payment at better rates than Indian rate because typically, early payment program that we enter into with our customers, we get the customer's financial customer's rates. So we only enter into early payment when we get better rates than what we can get from banks. Okay. And do you see any number of total customers added in the last three, four years, new customers? I think four or five. Four or five. And what would be their penetration in overall numbers right now? Anywhere between about 17%-18%, maybe. 18%. Correct. 17%-18%. And where do we intend to take it going forward? This will keep growing, right? So we keep acquiring customers, and we look at the right kind of customers so that we can also have the right amount of product diversification, customer diversification, and all of that. So this will keep growing as we take the business forward. What we are seeing is that our existing customers also want to grow with us because we have hardly cracked the surface with them. So there is a tremendous opportunity there. My intention is not to add a whole lot of customers. We have enough and more good customers that we work with. All the customers that we work with are top tier, almost like the top 20 customers of the retailers of the world. Our aim is to grow more with them. Also, what happens is if you start growing more with them, we become more strategic with them. That helps in pricing. If you have a customer who is only, say, 50-100 crores in revenue, frankly, our penetration in them is so low that we will only be used to reduce somebody else's prices. So we don't want to be in that situation. We would rather be more strategic and have a meaningful engagement with the customers. Right. Right. Got it. And largely, I mean, the industry is very cyclical. It goes through two, three years of demand-supply mismatch, then suddenly the demand drops and all those things happen, right? Either one loses customer or something of that sort. So I mean, what is the risk element in our business, and how do we try to mitigate it? I mean, what is your biggest fear when it comes to growth? Right now, we are growing, but in challenging times, what is the biggest fear that you would like to address? Good question. So we have to understand why is the cyclicality, right? So the cyclicality happens for many reasons. One is, of course, the retail industry itself can be cyclical because of economic changes, etc., etc. We will also find that certain retailers, especially in the fashion business, certain retailers have a season, right? They will tend to do very well. For example, Abercrombie & Fitch is flying high. They're doing exceedingly well. And certain retailers may be losing market share because their collections are not being appreciated by customers, etc. So that also drives volatility into the supplier base. So this is the root cause. And the other is, of course, a huge amount of volatility induced by post-COVID changes. So during COVID, it fell. Then post-COVID, there was stimulus money which pumped up the demand. Then immediately, excess inventory brought down the demand from the retailers. So there are a lot of pipeline-related issues also which brings in cyclicality. The good part is to avoid the cyclicality or to mitigate the cyclicality as a supplier, what we do is we work with good quality customers. We work with customers where we believe that their financials for the next few years are not going to be weak. So we track them very closely, and we only work with good customers. And if we do have a customer whose financials are not very strong, we then tend to slow down their business or pivot away from them. And we have done that in many, many cases. Then, in fact, even last quarter, we pivoted away from one customer because their financials were not good, and we actually exited their business. So we are very clear on some of these areas. Again, the other thing that we look at to reduce the cyclicality is being in the right location. So our increased footprint in low-cost regions, etc., helps us make sure that we will get business regardless of what happens to the rest of the world. And lastly, our ability to handle product diversity. So if we are in one product, then you are completely dependent on how that product does. If you're in knits, for example, and if you're doing commodity knits or something like that, or if you're just in commodity bottoms, then all the inventory-related ups and downs come and impact you. But if you have versatility in products, then one product type underperforming can be upset by going after some other product type. So we have also built in enormous versatility in our business that we have insulated ourselves from some of these possible cyclicalities in the business. I hope I've answered your question. No, no. That was quite elaborative and very helpful. One more thing, if I can squeeze in, is do we intend to be vertically integrated? I mean, we've already reached to the fabric level, but do we intend to go further back? Because, does that aid margins, and does it help in the longer run? So if you, this is my view currently, and these views can change over a longer period of time but won't change in the shorter period of time. I believe that we have to be in those parts of the value chain where there is a lot of value addition. So fabric processing, again, is made to order, and there is a tremendous amount of value addition there, and we have to be in that space. But when it comes to, say, going to weaving, weaving is highly fragmented. And unless we have a very, very specific kind of weaving capacity that we want, we are not that keen, weaving or knitting. But if it goes to spinning, which is, again, a high CapEx area and further backward integration, I believe it's commodity. And there are enough players who can put in that capacity to provide commodity on. But we are not that keen to go in those areas. So we will stay for now in up to fabric processing. For now, there is no interest in going further backward. Got it. Just last one thing, because before also, you had mentioned what would be the pecking order in the entire value chain in terms of EBITDA and ROC? ROC will be highest in the garment manufacturing, and it will start going lower and lower as we go backwards. Okay. Okay. Fair enough. Capital employed in garment manufacturing is the least. So it's the highest ROC business in garment manufacturing. Okay. If you look at EBITDA margin, however, you may find that it may be higher in fabric processing, or it may be higher in upstream. But that is only misleading because we don't only look at EBITDA margin. We look at ROC as well. Right. Right. ROC, I think, is the right metric to look for. Yeah. Perfect. Great. Thank you so much. That's it from my end. Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments. Thank you so much. I think as I continue to maintain that the business traction for India and even in a medium term for Africa looks very strong, so we are working to capitalize on it. We're working on capacity enhancements. We're also working at improving our productivity, which means increasing our operational efficiency so that we can offset some of the cost increases. We're also working with customers to increase the share of business that we do with them, and we have seen a good amount of progress that we have made from H2, which I've been maintaining since long now, that H2 is looking promising, and we're seeing that the business prospects turn from Q3 onwards. I feel that next year will be very strong, given how things are unfolding, and business prospects ought to be good. I don't see too many macroeconomic challenges which will further worsen, except for one, which is the U.S. market. We don't know how the new regime will impact the U.S. from an inflation perspective, etc. But at the surface, it looks very positive, given that the Trump administration or the president-elect is more indicating that he will go increase tariffs on China and all those regions. So all the guidance coming from there is positive, but we still have to look at how that economy will fare over a longer period of time. But in the short to medium term, it's going to be very, very strong and helpful for growth of sourcing from India. And regardless of any macroeconomics, at the end of the day, it impacts all regions simultaneously. India's position will always be much better going forward as we seem to be doing much better than all the other stronger government manufacturing countries. We also have a fairly good vertical ecosystem in our country, which we can leverage. So all said, it's going to be a good set of years ahead for Gokaldas and Indian industry. Thank you, sir. On behalf of Gokaldas Exports Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.