Nitin Spinners Limited (NITINSPIN) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Nathan Spinner's Ltd. Q3-FI26 post-results conference call hosted by Smiths Ltd. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Avneesh Chandra from Smiths Ltd. Thank you and over to you, sir.

Thanks a lot, Bhumi, and thank you very much, everyone, for joining this call. On behalf of Smith Limited, I welcome you all to third quarter and nine-month FY26 earning conference call of Nitin Spinner's Limited. We are pleased to host the top management of the company. Today, we have with us Mr. Dinesh Nolkha, Promoter, Chairman, and Managing Director of the Company, Mr. Nitin Nolkha, Managing Director of the Company, and Mr. P. Maheswari. Chief Financial Officer. We will start the call with initial commentary on the results, and then we will open the floor for question and answers. Now, I will hand over the call to Mr. P. Maheswaris, CFO of the company. Over to you, Maheswaris, sir.

Thank you, Avniji. Good afternoon, and a warm welcome to all the participants to this Q3 and 9 months FY26 ending call of Nathan Spinnas Limited. I hope you have had a chance to go through the financial results and investor presentation available on the company's website and stock exchanges. I will start with a brief overview on operational and financial performance for the quarter and nine months. Post that, or CMD, Sridhar Nankhaji will give you an overview of industry and business scenario. Coming to our financial and operational performance, revenue for Q3 FI26 stood at Rs. 800.68 crores against Rs. 760.08 crores during Q2 FI26, that is an increase of 5.3% quarter-on-quarter basis, primarily driven by stable demand and higher sell volumes. On a year-to-year basis, revenue declined by 4.5% from 838.87 crores in Q3 Fi25 to Rs.800.68 crores in Q3 Fi26 due to weaker demand and reduced selling prices. Revenue for 9 months ended 31st December 2025 each Rs. 2,354 crores against last year's same period revenue of 2,464 crores. EBITDA for the quarter stood at Rs. 111.54 crores as compared to Rs. 99.56 crores in Q2 FI26 and Rs. 117.16 crores in Q3 FI25. EBITDA for 9 months ended 31 December 2025 is Rs. 322.35 crores against Rs. 351.11 crores in same period last year. The EBITDA margin for current quarter stood at 13.93% against Q2 FI26 margin of 13.10%. And Q3 FI 25 margins of 13.97%. Profit after tax for the quarter stood at Rs. 44.41 crores against Rs. 34.78 crores in Q2 FI 26 and 44.78 crores in Q3 FI 25. That is an increase of 27.7% on quarter-on-quarter basis, while 0.8% down year-on-year. Profit after tax for 9 months ended 35th December 2025 is Rs. 120.18 crores against last year's PAT of Rs. 129.06 crores in the same period. EPS for the quarter is Rs. 7.90 and cumulative for 9 months is Rs. 21.38 per share. Cash EPS for the quarter is 14.53 and for 9 months is Rs 41.19 per share. In terms of revenue mix, export contributed nearly 61% of revenue and domestic market 39%. On the operational front, the spinning capacity is running over 98% utilization and woven fabric is operating at over 90% utilization. That is all from my side. I now request Sri Dineshji to share his insights about industry and business scenario. Thank you, and over to Sri Dineshji.

Thank you, My Sri Jai. Good afternoon, everyone. The first half of FY26 was a challenging phase for the textile industry as a whole, primarily due to uncertainties around U.S. tariffs. These pressures persisted into third quarter, with the industry continuing to face tariff-related headwinds in global trade uncertainties. Our modest recovery was visible in demand. India's export of cotton yarn and fabric remained subdued on a year-on-year basis. As far as cotton is concerned, the cotton prices were favorable during the quarter due to temporary removal of import duty by the government. Now it has again started regaining its earlier trend of trading at a premium than the international cotton prices. Going forward, we expect stable raw metal prices. During the quarter, yarn prices had a marginal decline in tandem with the reduced cotton prices. However, we expect the prices to improve and also the demand to stabilize going forward. Long-term, if you see the long-term perspective, then structural tailwind of the sector remains intact. The recent budget announcements also reflect the government's focus on textile. With the announcement of natural fiber mission expansion of textile parks. And textile skilling initiatives, etc. Recently, there were positive developments around the free trade agreements with the EU. It is said to transform India's textile industry as well as all other sectors with removal of long-standing tariffs, disadvantages of Indian products in the European market. Industry is now awaiting faster implementation of EU and UK trade deals and expect stronger order flows and improved competitiveness in these markets. Yesterday's announcement of tariff reduction by U.S. will also further stimulate demand recovery and improve the performance of the Indian textile industry going forward. Coming to the company's performance, quarter three FY26 was moderately improved as compared to previous quarter. Largely driven by the stable demand, favourable cotton prices, and optimum capacity utilization. Although there was continuing impact of ongoing global uncertainties, which had impacted the margins. Going forward, we foresee improved margin profile as demand as well as romptu prices are stabilizing. We are also focusing on other geographies to widen the customer base. We also expect favourable impact of EU FTA as we have strong foothold in EU markets. And has been one of the largest exporter of cotton yarn in EU countries from India. The announcement of U.S. regarding tariffs will also have favorable impact on the demand as well as margins going forward. Regarding CAPEX, our capacity expansion of spinning and weaving is progressing well. Post its completion, we'll be able to offer wider product range to our existing customers. And also we'll be able to cater to new demand. From domestic market as well as international markets for finished woven fabrics. They have already commissioned certain modernization and balancing equipment, and about 4.6 megawatt solar plant is expected to get operational in the current quarter. The hybrid power purchase agreement of 18 megawatt announced in quarter two has started partial power supply, and it is expected to get fully operational in the Q1 of the FY27. We've also announced a new CAPEX, which has been there to mitigate the power price high in the state of Rajasthan and further increase our renewable power footprint for the company. The board has approved an additional CAPEX of 230 crores for captive solar power capacity of about 41.51 megawatt AC. Out of which, 33 megawatts will be under open access at Jodhpur district and additional 8.1 megawatt of solar power capacity within our Chittagal unit premises. Both of these capacities are expected to get operational by Q2FH227. The cumulative renewable power footprint will be about 40 to 45 percent of the total power consumption and will result in significant reduction in our power costs. With this, I would like to... Let's open the floor for the question and answers.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 Reena Kashyap, an individual investor. Please go ahead.

Yes, hi. Thank you for the opportunity. I just had a few questions. So, the first one being the Capex done on the solar power. Can you give us details of this 23 crore expense and the benefits exactly? Can you quantify them for me? How much are we currently generating internally and what is going to be the captive power? The second question is regarding the U.S. announcement yesterday of the tariff reduction. Can you help us understand how this will impact little spinols quantitatively? What will be the impact on revenue?

Yeah, let me first answer your second question regarding the U.S. tariffs. Basically, we had an exposure of our knitted fabric business in U.S., and which contributed to about 3 to 4 percent of our export sales. That was the direct sales, and apart from this, there was indirect sales of about 7 to 10 percent to our customers in India who used to export to U.S. We're probably dominantly dependent on the US to exports. So that was reflected and we had to divert these products to various other markets. And maybe underutilized our netting capacity also. So with this direct reduction and we becoming competitive in comparison to the rest of our competing countries, I think we will be back, this business will be back with us in short time. So that should add to our demand profile and also which could ultimately lead to the margins. The first question was regarding your power. So, this is not a 23 crore, it is a 230 crore investment. Here, we will be putting about 60 megawatt of DC solar power capacity. In AC terms, it is 41 megawatt with a battery backup capacity of about 38 megawatt hours. So, this will be set up in Rajasthan, in Jodhpur, and some will be within our own campus. So, expected power cost savings from this particular project will be about 51 crores going forward. So, this is what I think you are wanting to know exactly.

Yeah, I wanted to understand how much are we currently generating and what will be the captive power from this APEX?

So, total we are generating at this point of time, I think about 6.5 crore units we are generating at this point of time. My figures are right.

So, current solar renewal capacity is 3 crores.

3 crore units per annum.

Yes, 3 crore units per annum.

So this will be adding how much?

Yeah, how much will it be after the CAPEX?

In totality, after this, all the CAPEX which we are going to do, our total solar generating capacity will be about 21 crore units every year. This is inclusive of our existing capacity and then the hybrid power investment which we have done, plus the investment which we are already doing in our own campus here. So this will be about 45% of our equipment.

Understood, understood. So, just another question, was there any impact on the financials from the new labour code?

No, we were very well, as per the laws only of the new labour codes, we have already followed that with the graph policy also, so there is no impact on us.

So this was done previous to the Cold War.

We were already in compliance with all the provisions which have come up now. We were already in compliance with that.

And this is one, sorry, just one more question. On the domestic demand, I think last call you had mentioned there was more interest seen, you know, in the domestic market, even your share of exports have fallen and domestic has increased. How do you see this going forward?

I think domestic demand should remain additive. We are expecting it to be stable and going forward remain. Good itself because a lot many exporters who are selling to the US market will also be back in business.

Thank you. Thank you. Our next question comes from the line of Resham Jain from VVD Asset Managers. Please go ahead.

Hi. Good afternoon, Dineshi. So, I have two questions. The first one is with respect to the weaving expansion, almost close to doubling of the capacity. So, is it only processing or is it processing plus weaving as well?

It is both, sir, weaving as well as processing.

Okay, so it's a 100% integrated facility which is coming up.

Yes, even the spinning is also integrated with this. So it's a project which will have its own spinning, weaving, and processing all together.

Okay, I understood. And so this particular weaving and finishing which is coming up, is it a yarn guide or it is just for bottom weights or what kind of product we are planning here?

Here, we are also adding yarn-dyed capacity. So, this project also includes our yarn-dying capacity. So, we'll have yarn dyes as well as already we are into bottom width. So, that will also be there in this. And we also have the printing and finishing facilities as well. And coating facility will also be in this.

Okay. I understand. But largely, it will be bottom width. That's how I'm shifting.

No, it should not be, it is not primarily bottom rates. Now the ratio we are expecting is 50-50. At the moment, it is about 65-35. Now it will become 50-50 after this expansion.

Understood. And how much is for like X spinning, what will be the capex, sir, out of 1-1-2-0 total project cost? What will be like X spinning, what will be the capex? For weaving processing.

If we remove the spinning part, I think it is going to be about 600 crores.

Okay. I understood. And sir, as of today, between weaving and spinning, what will have, or which segment will have better margins? I know you are integrated, but still, if you have to choose, you have to think between the two businesses, which is more profitable?

I think today, as on today, weaving and processing cumulatively is better than spinning.

Okay. Understood, sir. Perfect. Thank you. Thank you, sir, and all the rest. Thank you.

Thank you. Our next question comes from the line of Madhur Rathi from Counter Cyclical Investment. Please go ahead.

Sir, I am trying to understand that in our fabric segment, sir, what is the bifurcation between weaving as well as knitted fabrics, and the capex that we are doing in fabrics, is it only in weaving or in knitting also?

The capex which we are doing is only for weaving? Only for weaving? It is not going to be for knitting. And the breakup is about, if you see the total sales is about 160 crores, 61 crores, out of which I think 130 crores is for weaving and 30 crores is for knitting. Okay.

So, and sir, I can see that our knitted fabric volume is down year on year from 1564 tons to around 1000 tons. So, what is the reason for this?

Basically, because of this market, we had a large exposure of knitted fabric in the U.S. market. So, because of these tariff issues, we had to scale down the operations in this particular segment.

Sir, and what is the per kg yarn realization as well as the spread on cotton and yarn?

Yarn realization for this quarter was around 250 rupees a kg. And the cotton cost was around 151 rupees, so the spread is around 899 rupees.

So now with the favorable trade deal with USA and with Europe also, though it might take some more time, EU FTA to get operationalized, sir, you think that the golden age of Indian textile industry is now ahead of us? I hope so. Sir, and so what kind of spreads do you foresee going forward?

I do not want to forecast anything, but definitely I can say that we have already passed the worst, and we should see better times ahead.

Great. And sir, lastly, sir, between knitted fabric as well as woven fabric, which of the two is more profitable?

In woven fabrics, we are completely integrated with the dyeing and finishing. So, definitely, with the woven fabric, with dyeing and finishing everything put together, it's definitely more profitable.

Sir, so, knitted, we are not, since you said we are not expanding capacity, sir, so our future plans are on the weaving and spilling side only? At the moment, yes. Okay, sir. So, thanks a lot.

Thank you. Our next question comes from the line of Sanjay Shah from AASK Securities Private Limited. Please go ahead.

Yeah, good afternoon, sir. And I appreciate decent performance in this volatile situation. So my question was more towards the most growth levers what we see on fabric side. Sir, with this 35 million meters of fabric capacity, how much will be finished woven and knitted fabrics, was my first question. And second was, what is the expected EBITDA margin differential between yarn and finished fabric?

First of all, it will be all, this 35 million meters capacity will be all for Bowen fabric only, nothing for knitted capacity. It is 100% for Bowen only. And as far as margin profiling is concerned, we have also... I have told in the past that overall margin of the company, EBITDA margin of the company, which we are operating at, should be improved by 100 to 150 bps, given the new composition, which we are going to have going forward, because of this more value addition part on the weaving and finishing side.

That's great. And sir, when we see the ramp-up after commissioning this capacity, did we need any trial order or we have got any advance order on that side?

Already we are operating our viewing capacity at full stream. We are running at more than 90% capacity. And we have already, it's not a new product specifically for us. So we can easily increase our footprint. And with this new FTA is happening in Europe, US, it is opening a lot of new customers in these markets where we are not present. So this could be a very good beginning for us to expand our footprints in the export market, which we are not there so much in the fabric business.

Thank you, sir, and wish you good luck for the coming future. Thank you.

Thank you. Our next question comes from the line of Vyom Daga from Valcour Capital. Please go ahead.

Hello, sir. Thank you for this opportunity. So, my first question is if you could share what the current spreads are and how do you expect them to normalize over medium term?

Pardon, can you repeat the question, please? Current spread.

Yes, sir, current cost.

I have just, in my last question, I have answered that it is about 98, 99 rupees. I think with the present current cost, it is a reasonable kind of spread, which in the good times go up to 115, 120 rupees. So, if the demand stabilizes and the raw material prices stabilize, this should improve going

Okay, so my next question is, once the demand recovers from U.S., how fast do you expect the supply to ramp up? Like, the mills which were previously shut down, what proportion of them do you expect them to recover?

At this point of time, first the demand has to come in. This is a cycle wherein we are out of the cycle for the last six months. A new business will come in, and that should first fill up the existing capacities which are running and improve upon the demand. Then only we should be seeing. I don't foresee some of the mills which are not operational and not viable today will not come into business because it's nearly one and a half years since they have been down. So, significantly improvement in the capacity, maybe new capacity may come in going forward, but the existing old mills coming back in business is a difficult task at the moment.

Okay. So, and my last question is if you can give us some tagline on the Capex or when do you expect the spinning and the fabric division to be the capacity to be set up?

First of all, the fabric capacity should be there in the early second half of this year, of next financial year. We should be, we are going to commission the things from June, July onwards, and expect the production to start somewhere from October, November onwards. So second half beginning, we should have some production coming up, and maybe ramp up the capacity by the end of this. Next financial year. As far as spinning is concerned, I think spinning will take one more quarter, and we should be ready by November, December, by the end of this calendar year, I think. Okay. All right. Thank you.

Thank you. Our next question comes from the line of Tanishk from Antique Stock Broking. Please go ahead.

Thank you for the opportunity. My question is, can we sustain the current level of gross margins or EBITDA margins as there has been increase in the prices of domestic cotton? Do we see the yarn prices going forward increase? Just want your thoughts on that.

I think as we have seen that domestic cotton prices have increased, also the yarn prices have also increased during the current quarter. So, more or less it is the differentials are still maintained.

Okay. So, my second question, do we see line sizes to go up going forward due to the U.S. trade deal that recently continued?

Of course, it should normalize. What we have seen is that during the last one and a half year, initially because of Russia-Ukraine issues, then happening and Europe getting affected, and then this U.S. effect coming in, the demand was very subdued. So going forward, we expect the demand to normalize, and in the meantime, we have already seen some capacity shutting up, so it will be a stable kind of demand where the margins should also stabilize and improve going forward.

Okay, thank you.

Thank you. A reminder to all the participants, if you wish to ask questions, you may press star and one. Our next question comes from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead.

Sir, I wanted to understand the domestic cotton pricing scenario, sir. Are zero imports still there after 31st December or now there is again 11% import duty and are domestic cotton prices trading at a premium with export like international cotton prices? And if so, then what happens to the competitiveness of the domestic cotton industry in the export markets?

Yeah. First of all, zero-duty regime is over. Now it is 11% duty, back to 11% duty. For export purposes, under advanced license, they have allowed us to import in duty-free, but then the drawbacks and other benefits are not being given on that. So that is an implication cost of about 6% to 7%. At this point of time, the Indian cotton prices, if we consider without duty, then definitely they are expensive than the international prices. But if the duty, if we consider whatever the duty impact, which is there, 6-7%, then I think Indian cotton is still cheaper than the international prices. And as far as competitiveness is there. Competitiveness is concerned. I think we have a large domestic market, and the ratio of the export to domestic is about 70-30, and we are able to somehow manage with nominal margins. If we have to have much better margins than what we have than today, then we need to have this policy of consistent duty-free import or international price parity in the raw economy.

Thank you. And, sir, any plans to get into garmenting going forward?

As of now, we do not have any definitive plans to get into the garmenting. Okay, sir. Thank you very much.

Thank you. Our next question comes from the line of Priyam Srivastava from AC Capital. Please go ahead.

Hi, thank you so much for the opportunity. I just wanted to understand the trend with total spindles in the country. And second, are you seeing market shifting away from Tirupur versus states which offer better incentives like Gujarat, Rajasthan and Punjab?

As far as spinning capacity is concerned, I think we have in India total about 56 million spindles in stored capacity. Operational capacity is about 42 to 43 million spindles, so operating about at 78 to 80 percent levels. As far as shifting is concerned, I think there is no new incentive by any other state in the last one or two years, except I think Odisha offering some new textile policy. And the shift is also not very major. If you see in proportions, the capacity is shifting towards whatever capacity had to shift to Gujarat or to Madhya Pradesh or to Rajasthan has already happened in last. Three, four years back itself. So there has been no major change in the last two years in the shifting pattern of the spinning capacity.

Okay. Like around what percentage of capacity has shifted out of Tirupur to these days?

I think there is no shift as such. Tirupur is more of a knitting segment, knitting area, dyeing, finishing, garmenting area. And that has remained, it has remained their forte and still they have a forte on that. So, that has primarily been there. Yes, it has been shifted within Tamil Nadu or also due to the environmental concerns within the nearby areas itself only.

Oh, okay. Got it. Thank you so much.

Thank you. Our next question comes from the line of Resham Jain from VVD Asset Managers. Please go ahead.

Thanks for taking my question again. So, I have this question on cotton, which has been a key kind of challenge for the whole spinning industry per se. So, what I could see is that cotton productivity per acre in India has been flat-ish or coming down in the last 5-7 years, while globally, some of the countries, we have consistently seen that it has been increasing. And this has to do with the new variety of cotton seeds, which somehow is not being allowed in India. So, from an industry perspective, are we taking any steps to improve the overall productivity per acre? Because eventually, this is going to be the differentiator for Indian spinning industry. It has been... Like the Indian cotton prices always has been 15% lower than US cotton prices and that's how we always remain competitive. Any thoughts on this, sir?

Yeah, of course. We have, of course, not at the individual level in the company, but on the association level and along with the government body, there has been a sincere effort to improve the productivity all over the country. And we're late. And we have already, I mean, there is an MSP policy in the country, as you are aware, and there has been an average increase of, every year increase of about 5% to 7% of the minimum support crisis. We have been requesting government. That we need to work on the other side, and that already we have set up a complete full-fledged committee with the industry members also, wherein we have to go and improve upon the productivity side. So we need not increase the price, but the income of the farmer increases, and also that suffices the requirement of the industry. Of course, it's not a six-month or a one-year job, but for a long term, already there has been a lot of initiatives happening, and we may see the results coming in, going forward in another one to two years' time.

Okay. Any states where you could see this happening?

A lot of efforts have been done in Maharashtra. Also, some parts of Rajasthan also are giving better productivity and results. So that is also there. But there have been efforts in Madhya Pradesh and Maharashtra primarily more so towards this development.

Okay, and so just one last point with respect to this, given that we have very good exports, so for us, compared to the industry, we will always be a little better off, given that we can use advanced license to some extent, from a cotton price perspective. Of course. Yes, okay. Thank you, sir. Yeah, yeah, yeah.

Thank you. Our next question comes from the line of Yesh Tawani from Amara Capital. Please go ahead.

Yeah, hi, sir. So, I have two questions. So, one is on the subject business side. So, I just want to get a sense that with the new facility coming, what are the utilizations that we expect to run on by the next year when it runs on a full capacity? One, it's fully operational. What is the utilization that we expect there? And second is on the fabric business side. So what is the bifurcation we have on the fabric business sales in terms of how much goes to, let's say, the brand owners or the garment manufacturer versus the trade-off? How the bifurcation runs that side? So these are the questions.

Next year, we are, first of all, regarding the capacity utilization. They're already running our existing capacity on 90% plus site, and the new capacity which is going to come in, we are expecting that next we should be able to ramp it up to at least 80% capacity in the next financial year. So that is the capacity ramp up which we are expecting. As far as this breakup of brand owners and others, we have not yet worked out on that particular part. At this point of time, I can just give you a ballpark picture that the traders are having nearly a one-third share and the brand owners and redimit garments are having one-third shares. One-third each. So, exactly, I am not having the data, so I do not want to comment on that, but maybe we will get ready this data and then comment going forward.

Perfect. And is the margin similar in all of these, the trader versus them, or is it like hierarchy-wise, if you can put it, which comes first, not just the hierarchy?

Of course, the brand owners with a consistent kind of demand is definitely better, and their expectation of the quality of the fabric is also better. So, there, the margins are better. And, of course, then, secondly, comes the ready-made government manufacturers and then the traders, because traders are ultimately stock and want to have some margins with them as well. Thank you.

A reminder to all the participants, if you wish to ask questions, you may press star and one now. Our next question comes from the line of Adityu from UK Capital. Please go ahead.

Hi, sir. Am I audible?

Yes. Yes, please.

Sir, could you please clarify the current capacity utilization that I looked out for the knitted and movement segments?

Our capacity utilization at this point of time for spinning is about 99 percent, for weaving processing it is about 91 percent, and for knitting it is about 40 percent.

So, for knitting, you said that USTAR is impacted, the knitting segment, and you said that you are redirecting the volumes to other international markets. With the current recent US deal in place, do we replan or re-engage the US market or scale up the business in the US? How is this going forward?

It means we have to cautiously trade with them. This experience has not been good. We have never expected that this can happen in the U.S. So definitely we'll try to regain the market share. Already our utilization, especially in knitting, is lesser. So we'll try to regain the business here. But of course not become as dependent as we were in the past on the U.S. market. And, of course, with the UK market and EU, I mean, free trade happening, agreement happening over there, you could have really good times in the European market where you have a very good food.

And with the removal of the cotton duty exemption, do you anticipate higher raw material procurement going forward, especially in the imported cotton?

Of course, means prices of the imported cottons remain more or less at the same level what it was there in U.S. dollar terms. Only that the duty proportion, since we are doing it in the advanced license, it's not going to have a major impact on us. Of course, our sales incentives goes down. That is what we have. That should not have a major impact on the raw material cost as such for us. Domestic cotton prices, of course, already have been, because of that, have already gone up by about 5% what was there in the last quarter.

So, just last thing on the recent news from Bangladesh, where the report shows that the cheaper yarn imports have significantly disrupted spinning and textile sectors. So, are you seeing any impact regarding this?

At this point of time, they have not taken any action or anything. And, in fact, our industry associations have given a due clarification to them. When we say they have imported cotton, which is cheaper than us, they do not have any duty, their labor cost is less than us, their power cost is less than us, so how their spinning industry can become uncompetitive in comparison. Either we are too efficient, and they are inefficient, I don't know, but we have given you, and this is something euphoria has been created there by the spinning industry there. And the government industry in Bangladesh is overwhelmingly opposing this particular move. At this point of time, till now, there is no action has been taken on that side, and the business continues as it is.

So, our business doesn't change as of now, no impact on the business?

As of now, there is no impact.

Thank you, sir. Thank you. That's it so much.

Thank you. Our next question is a follow-up from Madhur Rati from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity once again. Sir, I wanted to understand with the new 35 million meters of the fabric that we are planning to add, sir, will this be a higher realization fabric because we are expecting 1,000 crore revenue from this segment versus on a similar volume weighted 700 crores in FI-25?

We are expecting a revenue of about 650 to 700 crores only. From the fabric size. Balance, 300 crores is going to come from the yarn. We are also putting up some yarn dyed capacity, which would be put for sale, as well as some additional yarn capacity also. So, 300 crores will come from, 300 to 350 crores will come from yarn.

Okay. And, sir, do we, can we expect, sir, our margins to conservatively move to 16% by FI 28 with ramp up of our fabric capacity?

I can just say that whatever margin profile we have, of course, margin depends on many other factors, but whatever margin profile we have, we should have a, because of higher value addition, it should improve the things by 100 to 150 bits going forward.

And so that base would be, so the current base of 14%, can you expect that 100 to 150 basis point improvement?

Yes, exactly, exactly.

Okay, sir. So, that was from the answer. Thank you so much, and all of you guys.

Thank you. Our next question comes from the line of Vishal Prasad from VP Capital. Please go ahead.

Hi, good afternoon. So, Dineji, I have one question. In the past, when someone asked you about our interest in moving into governments, you mentioned that if we have to do governments, then we would need to have some incentives like PLI, as otherwise it would not be very enumerated for us. Given the EU FTA and U.S. trade deal, do you think? There is a case for us to think about government business, even if PLI is not available?

Definitely. With this kind of markets opening, I think we must look into that, because we already have the alignments with the various international brands. So, we will definitely look at this aspect as well going forward. But at this point of time, we do not have any definitive plans.

Right. So, if just in case, if you think about augmenting, probably it will be in two, three years or even more?

It doesn't take that much time to establish, but our first target today is to establish this new fabric capacity which is coming up. That is a major leap today because we are doubling the capacity and maybe post that we may definitely have a look at these aspects.

Okay, and second point, if I remember correctly, you had mentioned that in garment business, there is a challenge of labor, because they are not available at a lot of places. They come from two or three states in India, and there, the garment business is still in fancy, like Bihar or Jharkhand or Malkavish. Given your experiences, do we have, I mean, how do you think about getting into governments if labor shortage is a consistent problem?

First of all, we have not thought about it as of yet. So once we think of getting to the details, definitely we will work out our case. As far as I understand, a lot of skilling is required. It is a job where a lot of skilling has to be done, and then only we can do. Hopefully, this new government has launched a new scheme, somewhere too, where they are skilling a lot of people, and they are giving incentives for skilling the people. This should also help going forward in skilling the laborers or the garmenting business also. So, we have not yet gone in the meeting of how we want to go about and what is the area, which area, which market. So, it would be not right for me to comment at this point of time on that subject. Once we are ready with this, then definitely we will share all the details with the rest of the rest of the rest.

Sure. Thank you, Dhanush.

Yeah, thank you.

Thank you. Next, we have a follow-up question from Reena Kashyap, an individual investor. Please go ahead.

Hi, yeah, thank you again for the opportunity. Just the last couple of questions. How much is the share of UK in your exports, and how do we see that increase? Like, if you can quantify that for me? And second is, just in continuation of the previous participants' question, if it's not garmenting, are we also exploring any inorganic growth opportunities?

Yeah, first of all, as far as UK market is concerned, we have exposure in yarn as well as fabrics in there. We have exposure to the various brands which are working from the UK market, and also we have yarn business there, which is today not very significant, maybe about 3-4% of our total sales, but with this FTA getting into place, this could increase multifold. Second question was regarding, can you repeat the second question, please?

Yeah, you mentioned garmenting, that you don't plan on getting into garmenting right now, maybe after a couple of years, but side by side, are you all exploring any inorganic growth opportunities?

Yeah, inorganic, we keep on looking at it, but we do not have many, we have not been able to find a right fit. So, if something right comes up, we are open to that.

Understood. Thank you so much.

Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Avneesh Chandra for closing comments. Over to you, sir.

Sir, before taking your closing comment, one question. Sir, you mentioned that every CAPEX line item will be completed in 2027 by November, December. So, and history says that you reach 100% utilization very fast, things get stabilized. So, any thought on expanding our existing capacity further? Any plan you have started thinking about?

As of yet, we have not planned any new capacity expansion, but with this kind of all the FTAs happening, the market getting opened, we will definitely looking for the growth prospects going forward as well. So once we are ready with the prospects, maybe then we can share with you, but definitely as a growing company, we have to look forward as well.

Thank you very much, Dineen, sir, Nitinji, and Maheshwari, sir, for giving us this opportunity to host the call. Sir, your final closing comment.

Thank you, Avneji. And first of all, I would like to thank everyone for taking out time for joining the call. I hope we have been able to address all the queries. I also thank Smith teams and Avneji for hosting the call. For any further information or other things, you can get in touch with our finance team or our investor relations advisors. Thank you. And see you all over the next yearly conference call.

Thank you. Thank you. On behalf of QF Limited, that concludes the conference. Thank you for joining us, and you may now disconnect your line.