Nitin Spinners Limited (NITINSPIN) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Nitin Spinner's Limited Q4 FY26 Earning Conference Call hosted by Smith Limited. As a reminder, all participant lines will be the lesson only more, 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 touchstone phone. Please note that this conference has been recorded. I now hand the conference over to Mr. Avinash Chandra from Smith Ltd. Thank you, Anu, to you, sir.

Yeah. Thanks a lot, Julius, and thank you very much, everyone, for joining this call. On behalf of Smith Ltd., I welcome you all to fourth quarter and full financial year FY26 earning conference call of Nitin Spinous Ltd. We are pleased to host the top management of the company. Today we have with us Mr. Dinesh Nolka, Chairman and Managing Director of the company, Mr. Nitin Nolka, 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 questions and answers. Now I will hand over the call to Mr. P. Maheswari, CFO of the company. Over to you, Maheswari, sir.

Thank you, Avniji. Good afternoon, and a warm welcome to all the participants to this Q4 and FI26 earning call of Nathan Spinas Limited. I hope you have had a chance to go through the financial results and investor presentation available on company's website as well as on stock exchange websites. I will start with a brief overview on the operational and financial performance for the quarter. Post debt or CMD, Mr. Dinesh Nonaka, will give you an overview of industry and business scenario. Coming to our financial and operational performance for Q4, revenue for Q4 FI26 stood at 59.8 crores, that is higher by 7.4% on quarter-on-quarter basis and 2.2% on year-on-year basis. This is our highest-ever quarterly revenue driven by improvement in demand and yarn prices. Ebitda for the quarter stood at Rs. 130.4 crores, that is a growth of 16.9% on quarter-on-quarter prices and 8.4% on year-on-year prices. EBITDA margin for the quarter stood at 15.17% against previous quarter margin of 13.93% and Q425 margins of 14.30%. That is an expansion of 124 basis points on Q1Q basis due to improved realization, operational efficiency, and cost-saving initiatives. Profit after tax for the quarter stood at 57.4 crores, that is higher by 29.2% on quarter-on-quarter basis, and 23.7% on year-on-year basis. EPS and KCPS for the quarter stood at Rs. 10.20 and Rs. 16.74 per share, respectively. In terms of geographical state, Split. In Q4, FI26, exports contributed nearly 63% and domestic market contributed 37% of total revenue. And coming to yearly performance, revenue for FI26 stood at Rs. 3,213.9 crores, that is marginally lower by 2.8% on year-on-year basis, mainly due to lower yard and rental prices. Particularly in first half. EBITDA for the year stood at Rs. 452.8 crores, that is degrowth of 4% on year-on-year basis, and EBITDA margin for the year stood at 14.09% against 14.26% last year. Profit after tax for the year stood at Rs. 177.6 crores, that is higher by 1.2% on year-on-year basis. EPS and case EPS for the year stood at Rs.31.58 and Rs.57.93 per share respectively. In task of geographical split, exports contributed 61.9% and domestic 31.8% of total revenue. In terms of revenue mix, in FY26, contribution. The total revenue from yarn, fabric, and others stood at 74%, 21%, and 5% respectively. On the operational front, in Q4FI26, spinning capacity was operating at over 98% utilization, and woven fabric capacity was operating at over 90% utilization. The Board of Directors have recommended a dividend of 30% on equity share capital. That is 3 per equity share of rupees 10 each for the financial year ended 31st March 2026. Our balance sheet continues to remain strong in FI 26 and our net debt to equity has come down to 0.76 times as of 31st March 2026 as compared to 0.89 times in 31st March 2025. That is all from my side. I now request Syriza Energy to share his insights about industry and business energy. Thank you, and over to Syriza Energy.

Thank you, Maishwuriji. Good afternoon and a warm welcome to all the participants. FY26 was a very challenging year for the textile industry. However, it ended on a positive note for the upstream textile players in view of uptick in demand and improvement in yarn prices. With U.S. traffic uncertainties, which has affected the textile value chain, particularly in first half of the year, resulting in demand destruction and underutilization of capacities. The second half was again full of uncertainties due to ongoing West Asia conflict, which has disrupted supply chain. Increase the freight costs as well as transit time, and increase in the raw material and other input prices. The industry observed improvement in demand in Q4 FY26 due to removal of tariffs by USA, restocking across downstream channels, and increase in transit times. This has resulted in improved utilization and increase in realization as well as margins. As far as cotton was concerned, The last year, till December 25, the international prices were lower at about $0.63 to $0.64, and similarly, domestic prices were also lower, ranging from $52,000 to $55,000 per county. This was the lowest level in the last three, four years. Moreover, domestic prices were in parity with the international cotton prices. Government of India also helped by removing duty on imported cotton between August to December 25. Since the last few weeks, international and domestic prices are showing upward trend. Our parity between two still remains. The industry is requesting the government of India to again remove the cotton import duty to ensure availability of good quality cotton at reasonable prices. While the ongoing tensions in the Middle East remain key monitorable, the long-term demand of Indian textile industry remains intact, driven by India's long-standing advantage in cotton products, Thank you. An addition to market depth to the sector in view of the implementation of various free trade agreements. The Indian-UK FTA is expected to certify soon and benefit Indian textile industry with elimination of long-standing duty disadvantage as compared to the competing nations. The India EU FTA, which is another big boost to the Indian textile industry, will take another couple of quarters for implementation. After gaining duty-free access in these markets, Indian exporters expect strong order for inflows and improved competitiveness. Already, various customers from Europe have started inquiring and planning to diversify their sourcing from India, looking into these FTAs and other benefits which they are going to get. Coming on to the company's performance. Mithin Spinners has delivered its highest ever quarterly revenue of 859.8 codes in Q4 FY26 due to optimum utilization of capacities and improvement in yarn prices. This has resulted in improved margins also during the quarter. Our existing capacities of spinning and woven fabric are running at optimum capacity utilization. We are continuously expanding our geographical reach in all business segments to offset the demand volatility from a particular geography. Here, I'd like to highlight that over the last decade, we have grown our revenue, EBITDA and FAT, by nearly three to four times. Also, increased our gross success and cash flow from operations by more than four times. Also, over the last decade, we have generated more than 2,000 crores of cash flow from operations. We are hopeful of keeping up the pace in future as well. As regards to the present ongoing CapEx, The plan is progressing very well. It is expected to commercialize in second half of FY27. Post-expanding our public capacity will add another 35 million meters to 17 million meters annually, and spinning capacity by another 22,000 tons to about 130,000 tons. We'll be able to supply a wider range of products to our existing domestic and international customers, and also serve the newer geographies. This CAPEX will enable us to increase the share of value-added products in our total revenue, resulting in improved margin profile. The renewable power CAPEX is also progressing as per schedule and expected to be operational in the second half. External environment like normalization of U.S. traffic scenario, most probably settlement of the U.S.-West Asia war, and signing of multiple FTAs give us confidence of faster ramping of the new capacities once they get operational. In the renewable power sector, we continue to expand our renewable power footprint to reduce our per unit power cost and marginally mitigate the impact of rising power costs. So in Q425, F525, we announced an additional investment of 9.5 crores for a hybrid power purchase agreement of 10 megawatts, which will be operational by Q327. With this, the total renewable capacity addition during, including PPAs during the year, will be about 75 megawatts, and with the already installed capacity, we would be very near 200 megawatts of power capacity. After these capacity additions, nearly 50 to 55 percent of our present and future power requirements will be catered by the renewable energy. Looking ahead. We are confident of improved overall performance with better demand visibility, increased realizations, and supported by capacity expansion. Renewable power initiatives and addition of value-added products to the portfolio should further enhance their competitiveness. With this, I'd like to open the floor for the questions and answers. Thank you.

Thank you. We'll now begin the question and answer session. Anyone who wishes to ask questions 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 handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Our first question is from the line of Rehan Syed from Tenetra Asset Manager. Please go ahead.

Hello, good afternoon. So, I have a couple of questions. Am I audible, right?

Yes, I heard. Your voice is not very clear. Can you please increase your voice level?

Now it's clear. Hello?

Yes.

So, yeah, I have a couple of questions. First, on your Rajasthan investment, like you have done KPEX. So, what with Rajasthan investment promotion scheme benefits applicable on the new KPEX? So, can management help us understand the total incentives likely to be approved over the project life and how much this could improve our project IRR?

Basically, Rajta Investment Promotion Scheme has two parts, I would rather say three parts to its whole scheme. First is the capital subsidy, which is ranging depending – am I audible?

Yeah, you are audible.

Yeah. So, the capital subsidy part is ranging depending on the – The capital allocation which you are doing plus the employment generation you are doing from 20% to 25-27%. So that will be of the total project and eligible assets. So for our new capacity expansion also, this will be allowed to us. So that is one part. Second part is the interest subsidy, which is about 5% of the eligible fixed investment, which is again allowed for five years. So that is, again, we are eligible. And apart from this, there are various electricity duty benefits, plus we have certain land and other rebates, which is Monday tax rebates, and other rebates are also applicable, which is also as the case with the last project also. As far as IRRs are concerned, I think that is capital subsidy is a part which we get over a period of 10 years. So that is rectifying accordingly. So, and the interest cost you are already seeing in the numbers, which is accrued to us every year.

Okay, fair enough. And my second question is around your sum of the renewable energy side. So, the company has announced significant delay on energy investments through solar and hybrid power projects through by FY28 watt percentage reduction in overall power cost per unit does manage and expecting for its current levels.

So, instead of per unit capex, we need to look at what is the total saving which we can generate out of this. In the... On an annual basis, we are expecting that total savings will be around 50 crores per annum, one of these complete things is 35. And during this year itself, we expect that we will have a saving of around 30 to 35 crores.

And my last question is around your EBITDA margin. So, in the upcoming fabric expansion project, what kind of acceptance and EBITDA margins are management targeting once the new 35 million meters capacity is stabilized? And would fabric margins structurally remain superior to yarn margins over the cycle? Just a bit of understanding here.

Yeah, first of all, there is no, we are not targeting any margins, and specifically, we do not give any numbers for the fabric margins, but for sure, the fabric margins, finished fabric margins, are superior to the yarn margins. That is one thing. And secondly, as far as assert turn is concerned, normally, for the new capex, the total assert turn is 1 is to 1, if you remove the energy, renewable energy capex, which is there. On a company basis, our asset turn is around the ranging between 1.2 to 1.3.

Do you want to want to give any idea about EBITDA margin? Anything?

As such, I can say that we have been stating this for the last four or five years that with the kind of product profile which we have, our normal margin should be in the range of 16 to 20%. We expect that we should be able to maintain, we should be able to fall into this level during this current year, the financial year 2021.

Okay. Okay. Thank you. And that's it for my answer. And good luck for your coming.

Thank you. Thank you. The next question is from the line of Kishore Kumar from UniFi Capital. Please go ahead.

Yes, sir. Thanks for the opportunity. Sir, I just have a follow-up on the timelines for the new capacity. You mentioned H2. So, the commercial production for both fabrics and land incremental capacity will start from October test. Correct, sir.

Not October, exactly. H2 means the second half of this financial year. So, at this moment, as it looks that we may start some of our capacity for the fabric in the quarter, starting from October to December, and the spinning capacity by January to February of next year.

Got it, sir. Just a follow-up on this. See, when I look at the capital work in progress, it's around 100 crores. So, our capex planned was about 1,000 or actually 1,000 crores. So, the remaining will be spent in the current financial year, the six to eight months time. Correct? Is my understanding correct, sir?

Yes, sir. Here we have three parts to the CAPEX in this number which you are seeing. First is the capital WIT, which you are seeing in the balance sheet. There are certain advances to the tune of about 140 crores which has already been given to areas, machinery and other assets. So that is again in the capital advances segment, other assets it is already showing there. So that is second part. And third part is certain assets which has been of modernization and balancing, which has been already received and have become operational. They have already been capitalized, that is to the tune of about 55 to 60 crores. So in all, if you look at that, we have already spent more than 300 crore rupees already on the project at the moment, and balance will be spent during this quarantine.

Got it. And on the balance, most likely it will be funded through internal equipments and the mining through B to DEC. Yes, of course. Got it. And one more thing on the realization in front, if I look at the sequential improvement in the realization, yarn realization went up by 5-6%, but the fabrics realization for both the knits as well as one was flat. So, is it because of lag in the pass-through of the dry legs to the customers? Is my understanding correct there?

If you see quarter-on-quarter, our net fabric realization has also improved by about 5%. They are more or less in line with what is the yarn realization has been there. And the woven fabric realization has increased by about 2-2.5%. So, yes, fabric generally falls to the lag, so it takes more time to pass on the increases, as well as when the prices goes down, it is slow to reduce as well. So, these are the exact numbers, I would say.

Got it, sir. Got it, got it. The second question is on the U.S. inflation. Off late in the past couple of months, the apparel inflation in the U.S. has started in June. Yes, most probably the tariffs has started being passed on to the customers. What is your view on that? Will it have an impact on the demand trend if the inflation starts to go up further?

It's quite a macro question. Yes, very difficult to predict that. But what we are seeing is that the prices of the products have come down significantly. If you see the year 21, 22, and since then the retail prices as well as the wholesale prices of textiles have gone down only. So this is just a course correction. So, we feel that we are in the middle of the course correction, and these kinds of prices which are prevailing at this point of time is expected to be passed on without affecting the demand. Yes, if they are further significantly increased by another 5 to 10 percent, then it may have an impact.

Got it, sir. Got it. So, whatever you are hearing from your customers is on the positive side.

Yes, because they had been planning for a duty of about 20%, and against that, they are getting only a duty of 10%. So, they have already planned for that increase in the prices. So, that is benefiting them at the moment.

Got it. I have one more question, if I may. Sir, the Indian spinners are actually exporting a lot to China, Bangladesh, and other South Asian countries, the yarns. If FTA gets ratified and then demand moves from those countries to here, the Indian Springer's demand, which is actually going from India to the other countries, will be sold domestically. In that case, do you see net positive impact for companies like Nikon after the FTA gets ratified? Of course, near-shoring definitely helps.

It reduces the logistic costs, transit times, and overall demand scenario from the domestic market, if it improves, it has a positive impact on companies like us. So, further, our fabrics, which is being directly supplied to various garmentals, that proportion also increases domestically. So, again, that is of a help in our competitiveness, I must say.

Understood, sir. Thank you. Thank you so much, sir. Thanks a lot.

Thank you. The next question is from the line of Chatin Damanya from Swan Investman. Please go ahead.

Good evening, sir, and thank you for the opportunity. Am I audible?

There is some background noise, if you can see too much.

Sir, now am I audible?

It's clear?

Yeah, yeah.

So, sir, first of all, congratulations on the good set of numbers. I just wanted to understand that over the last couple of quarters, we have seen the yarn prices have been moving up, and that has been translated into our numbers. But when you look at the fabric, definitely you indicate that it comes with a light effect. So is it try to assume that in the coming two quarters or the FY27, along with the improvement in the yarn spreads, we will get a benefit of the uptick in the fabric sizes also? Yes, of course. They have already started to improve. Okay. And to what extent, sir, the fabric prices have improved?

Fabric prices, they are, as they move with a lag, the prices which were in the March of, March numbers are getting translated, March increases are getting translated into the fabric prices now. And going forward, we expect that these prices will be improving further as well.

Okay, and in terms of the yarn spreads, so what was the spreads last quarter and what are the spreads as of today compared to the last quarter yarn spreads?

The last quarter spreads were about 110 rupees a kg. And now it is about 125, around 125 rupees, 120 to 125 depending on different counts and other things.

So, sir, taking our Q4 number as a base and assuming that current scenario with the 120 or 115 as a spread and the improvement of fabric prices and 30-35 crores of the incremental benefit once we get from the power, which is almost 1% of the current margin, is it safe to assume that this margin for this year could be around somewhere around 17-18%? Is it safe to work on that number?

I have already indicated to the answer in my last question, last, the respondent who asked me question, that the normalized range is about 16 to 20%, and we expect that in this year we'll fall in that range.

Sure, sure. That's all from my side. Thank you, and I'll give us.

Thank you. The next line is from Perinat Junjunwala from Ilara Capital. Please go ahead.

Thank you for the opportunity, sir, and congratulations on the recent set of numbers. I just wanted to understand what would be our normalized spread to earn normalized margin for the yarn business, not as a whole goal, but for the yarn business. If we earn 14-15% margin, so what should be the spread, given the cost of cotton, is also increased currently.

Basically, yarn margins are, at the moment, if you see, it depends on the base price. These per kg numbers which we are giving is a differential between the yarn prices and the cotton costs. And this may vary depending on the yarn prices. If it is, the percentages changes. As you know, if the base increases, the percentages may look lesser. But the numbers overall, in absolute numbers, they improve. But with these kind of margins, I just speak about what was last year. It was about in the range of about 12%. These margins were in the range of about, if you see, 110 rupees was reflecting at about 11.5 to 12% kind of margin.

Okay. So, which means, sir, if we have to go back to 15% margin, the spread should improve further to get back to normalized margins, and not including inventory gains over here, that is, that's it.

So, already I am saying that it is about 10 to 15 rupees already has increased from the last year, last margins, last quarter margins. So, further that will add to the margins.

Okay. Understood. I was just thinking from normalized margins. Will this be enough for us to have normalized margins, excluding inventory gains?

Yeah, I'm also talking about normalized margins without inventory gains. That is, I'm also talking about the inventory gains.

Understood. And so, upon commissioning of this purchase, what would be our peak debt that we would be having?

Our peak debt depends upon our working capital, but our normal total debt we are expecting to be less than, in the range of about 1,900 to 2,000 crores after this, including the working capital exposures.

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

Thank you. The next line, the next question is from the line of Ridesh Gandhi from Discord Capital. Please go ahead.

Hi, sir. I just wanted to understand your own perception on whether these spreads of 125 are sustainable, and how much they've historically been over the last five years, and how you see this over the next few years.

So, first of all, If you see the yarn margins, the differential has ranged from rupees, on the minimum side, it has been about 90 rupees, and it has gone up to 140 to 150 rupees. If you see the post-COVID, it has gone up to 140 rupees also. And, but we must also consider the fact that over a period of time, there has been an inflation. So, in this differential, we have to also reduce the cost of power, the cost of labor, and other component costs, which has also marginally increased over a period of time. So, considering that factor also, this normally the 90 rupees should a minimum margin should now be minimum at least 100 rupees. That is now become a minimum side. So, as far as this 125 rupees is concerned, I think this is a median of the margins, and I feel that looking to the capacities which have gone down in the country, demand which is coming up going forward, with the kind of various measures which has been taken, I feel that this 120 to 125 rupees margin should be sustainable going forward as well.

Sir, and the question is with regards to the capacity. Reduce in the country. Is it possible that this supply will potentially come back, even spreads are now higher, or do you expect it to stay offline? There's no way back on it.

Some of these capacities have gone out because of obsolescence, because of... Lack of working capital also for various other reasons. So I don't expect that majority of the capacity which had very small economic sense will come back. But yes, of course, the new capacities can come up. Some companies which is in the middle of that can modernize and increase their capacities. Yes, of course, that is always possible.

Thank you. The next question is from the line of Rahul Jain from Credence Wealth. Please go ahead.

Thanks for the opportunity. First of all, how have the synthetic yarn prices moved in the last three months, or specifically post-war? The polyester prices, we understand, have moved up. So how have they shaped up, and how do you look at in terms of the spread between your final product and the raw metal prices?

Yes, that is significantly, if you see, the polyester prices have moved up by about 20% plus. This is increase of more than 20% highest than any other raw material. And consequently, the yarn prices have also moved in tandem. Of course, their margins have not increased substantially. The margins still remain at the levels which were there in the month of... In March, the spread has not been increasing to the extent which people would like. Yes, in the blended yarns, this has improved marginally, where the polyester cotton is concerned or that kind of yarn where the cotton is involved or the cotton blended with other synthetic fibers, their margins have improved. But purely in synthetic, the margin still remains static.

So, is it difficult to pass on the synthetic raw material push, even China could also be a competitor in this, specifically, in terms of the exports?

No, it is not so. Actually, that is not the case. The major, if you see our synthetic exports, Majorly, especially on the blended sides, polyester, viscose, and others have been to the Asian, Middle East, and the African continent. So, there, because of this logistics issues and the problems which is still persisting, the goods not getting transited over there. So, that is why we are not able to export only. That is creating slightly more available capacity in the domestic market, and that is hitting. Once this gets over, we expect that all this, the increase will also happen in the synthetic market also.

And, sir, with regards to the cotton spread, which you mentioned, I understand that last year, on an average, till the war started, the spreads were around 110, plus or minus 2. And then, in last, post-war, the spreads have moved up to almost 125, as what you stated. So, what are the primary reasons for this going up?

There are a couple of reasons I have highlighted in my speech as well. First of all, the prime reason is there is a one which is there is there was a lot of destocking happening when the prices went down. A lot of destocking happened. And because of lesser operational capacities, also the prices were, once they are going down, tendency to buy less. So that is, so that restocking things started from January of this year. So that is one of the reasons. Second reason is the transit times across the globe has increased. That created a fear among the customers that they may be out of the stock, so they wanted to buy more, or you can say there were more goods on the sea. So that also helped in increasing the demand to a certain extent. And plus, the prices, the raw material prices, which were at the all-time low levels, they could not, cannot remain at that level forever, looking to the cost of the raw material production. So, that has also helped increasing the raw material cost and consequently the prices.

So, sir, we understand also that, you know, the yarn ability from China somewhere, specifically on the cotton side. So, there have been issues on the cotton and cotton yarn from China. And the shift from polyester to cotton, given the polyester prices in domestic have gone up substantially post the war started. How much of these two reasons could be, you know, the reasons for the spread increase on the cotton? Yeah, that's right.

I don't think so. Still, the effect of polyester shift has happened. Whatever polyester shift was to happen has started to happen only in April-May, but that is also not very major. China has a very good capacity of polyester manufacturing, and rather they decide the prices at which the polyester is sold all over the world. So, I don't see any major dent happening in the demand side of the polyester and still polyester is quite cheaper than the raw cotton. If you see in last three months time, the polyester have prices per kg has increased by about 25 to 27 rupees a kg. And cotton price has increased in per kg terms in rupees is about 30 to 35 rupees. So, it does not... There is no advantage as such going in for replacement of polyester at this point of time. Okay.

And with regards to cotton availability and cotton young prices moving because of the China factor?

China was contributing to this because they were buying more of raw cotton as well as But that has not been very substantial, I would say. Still, if you see the numbers in the month of March, the shipments which were going to China have just increased marginally from 10-11% to 15-16%. It has not gone up quite substantially. This used to be in the range of 30% plus 4 years back. So, I would not attribute all the increase in the margins to China alone.

Thank you, sir. Thank you. Thank you.

Thank you. A reminder to all participants that you may press star and want to ask question. The next question is from the line of Saranj, Gupta, Fonsu, and Investment. Please go ahead.

Hello, am I audible?

Yes, sir, you are.

All right. Thank you for the opportunity and congratulations on a great support. I just wanted to understand like how the fabric segment is spanning up like you mentioned quite a few times that the yarn prices have increased, followed by due to the war uncertainty. So has that been flowing in the fabric sizes also and are we able to pass it on to the customers?

Yes, that is happening on the fabric side also, but that happens with a slightly lag, and we have also increased our prices in the fabric side, and expected to increase, so this takes a bit more time than the yarn price, like cotton to yarn, it is faster, but in case of yarn to fabric, it takes more time, so that will happen over a course of period. We have already started to increase the prices.

And just one more question, what would be the total contribution of our knitted fabric and woven, if you can quantify in Q4 and SR22?

We've already given in our investment presentation, but for your, just for your, this thing, 22% is our total fabric sales from, revenue from the fabric sales, all put together. Fabric sales.

Yeah, that I know. I just wanted, if you can help us with the number of how much revenue was contributed to knitted fabric.

Knitted fabric contribution was, I think, woven fabric is around 20% and knitted fabric is another 2-3%.

Thank you.

Thank you. The next question is from the line of Saloni Munshi from Crystal. Please go ahead.

Yeah. Hi. Am I horrible?

Yes, ma'am.

Yeah. So I just wanted to understand in Q4, you mentioned that the demand had improved. So is it the domestic demand you are talking about or the export demand?

Both sides. In the domestic market also, the demand has improved as well as in the international market.

Okay. And do you have any outlook regarding the export? So, export demand has been little for the YAN specific. The export to China has increased, but the export to Bangladesh has decreased as well. So, do you have any outlook on how it will pan out?

Demand, I think, we have seen that there is a steady demand of exports. If you see the total number of exports, about 100 million kgs of yarn has been exporting out on an average basis from our country to various markets. I think this 100 million kgs will be still maintained, and we can think about a slight increase, maybe about 5% to 10%, going more towards because of the increase in demand coming in from China. So we expect that the incremental demand internationally will be about 10%.

Okay. That's it from my time. Thank you so much.

Thank you. The next question is from the line of Anil Kumar and Anuji Rinvisto. Please go ahead.

Yes, thank you for the opportunity. First of all, congrats for the good set of numbers. So my question is regarding inventory. How much inventory we are having on the cotton side and finished gold side and how much month inventory we are having and what is the status of number. Second question is regarding FTA. How do you think that how much we can increase total demand will be increased when the FDI is materialized? So, two questions.

First of all, I'm sorry that I cannot share the numbers on the inventory side. So, you can extrapolate on your own since the balance sheet and other numbers are available to you. So, you can see that on your own as well. Secondly, as far as FTAs are concerned, I think we should be expecting very good demand coming in, especially from the Europe FTA. Most of the international weather brands are there in Europe as well as in the UK. So this demand should, this should increase our garment demand as well as the fabric demand, which is there, which they are sourcing at this point of time from our competitors like Bangladesh, Vietnam, and China. So there is a significant demand increase expectation. China, plus also we are seeing that a lot of the inquiries are coming in from all these brands, and they want to diversify their sourcing instead of all these countries. Thank you.

Okay, sir. Then my second last question will be, sir, what do you think, Ben, is it possible that the government can go for this duty consumption that is the main demand of the industry? What is your views on that? Is any progress there? Anything, any comments on that? We have, as an industry,

we have always, all been vocifering about this removal of duty. We, in fact, we want that they should be permanently removed. We have a mechanism in India by which is a minimum support price. So there is a complete protection of the farmer. And also any increase in the input cost will automatically be increased in the minimum support price. So there is no threat to the farmer because of any removal of duty or anything, which we've also seen when the last time the duty was removed for four, five months. So, we have been requesting the Finance Ministry as well as the Textile Ministry and Agricultural Ministry to remove the duty for complete forever like it was possible from the year 2010 to 2021. However, we have been also requesting that for immediate relief, this should be removed for first six months, and we can have a debate on this for a permanent remover. So, there is a progress on this subject, but it only depends on the government, how they move about it, and how do they think about growing the textile industry.

Okay, sir. That's gracious.

Thank you. Good night. Thank you. The next question is from the line of Lakshmi Narayan from Keshma, Well Private Limited. Please go ahead.

Yes, sir. Am I audible?

Yes, sir. You are.

Sir, I want to throw some light on whether the forecasted weather conditions on any node would have impact on an inventory level going forward.

As far as cotton is concerned, in India, we have, since last year, there was good rain. We have good water reservoir available, and many of the areas, especially in the northern part and western part, is based on the irrigated, basically on the water, which goes from all these reservoirs. So, as of now, till now, we are not expecting, already the crop was lower last year, and we are not expecting the crop to go down from this level, even if there is lesser rains. And also, if you see the geographical distribution of the rains also, we find that in most of the cotton growing areas, we are not growing much below the northern.

Okay, that's all for me.

Thank you. The next question is from the line of Reena Kaisha from An Individual Investor. Please go ahead.

Yeah, hi. Thank you for the opportunity. I have a few questions. One is on your reply on the import duty on cotton. Can you elaborate on, is there any communication from the side of the government post-December? Well, media articles do state that the industry has asked for a removal again, but I was just wondering, is there any communication the industry has received from the government? That's my first question. My second question is on, you gave guidance for the margins being around 16 to 20%. Anything on the top line front? If not quantitatively, could you? Could you comment on what is the focus or how does Nitin Spinoz expect to grow its top line in the next couple of years? And my third question was on the knitted fabric production, which was down. Could you comment on the reason for this and how do we see this going forward?

Yeah. So, first of all, your first question, communication with the government, by the government. Normally, government does not communicate to the industry. It is the industry which communicates continuously with the government, and we have been putting our request and demand to various government officials and the ministers who are concerned with this, that is, finance minister, textile minister, commerce minister, and the agriculture minister. And there has been a lot of discussions on this. Of late, our parent organization, City, Confederation of Indian Textile Industries, have also released a white paper on the need to remove the duty permanently. And because if we want to grow the industry, we need to have a more pragmatic approach and need more raw materials. So that has already been there. And all the ministry officials, all the concerned people are aware of these facts. So there has been a continuous dialogue which is happening. Various representations are being made, and also we are receiving various, I must say, concerns of the various ministries also in this. So there is an ongoing process. We expect to have a fruitful result out of this. So, that is one part. Second part is...

Sorry, to interrupt, just on the timeline of that, how soon do you expect any...

Madam, we cannot put the timelines to the government, unfortunately. This is something...

It's just your sense of... Yeah, it's just your sense of... Do you see that happening in the next six months, one year old?

We have, of course, it should happen. Six months is a long period. We should be able to see this before that. But a long-term solution, I still feel there will be, they will need another five to six months. If they formulate a new textile policy which covers all, that all the raw materials are reasonably available, then this should happen earlier as well. So that is something which we are pushing on from the industry side.

Thank you.

Yes, and secondly, as you were asking about the increase in the top line as well as the revenues going forward, as you know, we have embarked upon a capacity expansion of more than 1,000 crores, nearly 1,100 crores. So, this should yield us another more than 1,000 crores in our top line going forward. So, that is one part. Apart from this, the normalization of the yarn prices should also contribute to about 5% to 7% of our existing turnover. We have degrown last year. We expect to recoup that plus some certain additional gain out of the present prevailing prices. So, in all put together, we expect that we should be, from here onwards, we should be easily able to add 30 to 35 percent to our existing revenue numbers. Third question was regarding... Yeah, 528, of course, that's right.

Okay, got it, got it.

And as far as netting is concerned, as a netting business, we have the major exposure on the netting side, as you know, from India, as well as from our company also, was to the various brands across the, in US. And that was one of the prime, when the tariff was imposed, this being a low-value item, this was the 50% tariff. It could not handle the 50% tariff. So, that's why we had to reduce our productions on this side. Now, as the tariff is reduced, it is now coming back to the normalcy level, and we should be expecting the knitted fabric production to be better than what it was. But in this process, in the last one year, we also lost some of the customers to other competing countries, which we are trying to make up, and hopefully, with the domestic demand of knitted fabric going up, since the garmenting locally also will improve, given the FTA with UK as well as FTA with Europe, We expect that the normally utilization level of 65 to 70 percent will come back to the knitted fabric in another 1 to 1.5 years.

Understood. Understood. Thank you so much.

Thank you. The next question is from the line of Harish Mittal from MK Global Financial Service. Please go ahead.

Yeah, thank you. Good evening to the team. Sir, I have two very small questions. First question being that we manufacture gas-based yarns, so have we seen any disruption in the manufacturing of the same, given that the gas prices have doubled or rather 3x?

First of all, in the yarn business, gas-based yarn is a very, very small number and the requirement of gas was also very small for us. We had a very small deception of less than a day. Since we were adding the stocks of gas, but of course, the costs have increased, and it is nearly, at this point of time, it has gone up 1.7 times from what it was in the February. So, in view of the overall cost, that is not significant at this point of time, and that is easily passed on also, because this is a global phenomena, and not only a phenomena which is there only in one of the topics. Understood.

The second question is that when we say the spreads are currently at 120, 125, how should we look at in terms of count? Is it 30 count, 60 count? What is the exact count specification we should look at?

Basically, this is on an average of about 33, 34 count.

Thank you.

So, the average 30 to 34 count. On 30 count, if we go by the average spread, today the average spread would be about 120.

Thank you. Thank you, Zadiba Makushas.

Thank you. The next question is from the line of Varun Puduwal from Smith Limited. Please go ahead.

Good evening, team. Thank you so much for the opportunity. I have just a few questions, and I think most of them were answered before this. My first question is on the lines of the utilization. The yarn utilization is approximately 99. And the fabrics are about 90% and above. So, how do you see the next two quarters spanning out considering the incremental demand for the fabric and the yarn? How do you plan on that before the TFX gets executed? That is the first question. We can answer that.

So, basically, the utilization, these are the peak level utilization. Given the complexity of the business, I think this is the kind of utilization will continue. Slightly in the summer period, some slight utilization comes down because of extraordinary heat. That is a normal process. So we expect that the utilization to be in the range of 97 to 98 for the yarn business. And for the fabric business, it will also be 90 plus only. So this will continue for next two quarters before the new capex comes on board.

Okay, so are we focusing more on the woven fabric right now, if we look at the fabric segment or the finished fabrics more?

So, the new expansion is completely integrated, and whatever capacity we are putting on the woven side is also for the finished fabrics. So, it will be a complete end-to-end finished fabrics only.

Okay, and my second question was on the side of the debt that you would be utilizing for the APEC. You mentioned the total debt would be maxed out at 1,900 crores odd. Can I just understand what would be the approximate average cost of borrowing for the thing?

Average cost of borrowing for us is about 5.6%, or average is 5.6% at this point of time. And the working capital, which is less than 7%. So that is the blended. If you blend it out, it should be in the Renew 6.5%.

And one more small question was on the lines of the geographies that you've added recently. So is there any major geographies that you've added and that you look into as a very big scope for improving your export business?

As such, you see, geographies, we have just increased our reach in the geographies. We are presenting most of the continents at this point of time. Now, since we are seeing FTA happening with New Zealand, already we were present in Australia, so that is an area where we are focusing, and that could be one of the areas where we can increase our footsteps going forward.

Okay. Yeah, that would be it. Thank you so much.

Thank you. Due to time concentrate, we take one last question from the line of Uday Kumar from UK Capital. Please go ahead.

Hi, sir. I'm Audible.

Yes, sir.

Sir, just one last question on the war front. You already mentioned earlier that you have some delays pertaining to the Iran-US war. To what extent it has impacted your logistic cost or revenue in that sense? Do you see still some impact going forward?

First of all, as far as our revenues are concerned, we have no impact as

our exposure to that particular area is very minuscule.

So, on the revenues, there is no impact. Yes, there is transit time increases for most of the destinations, especially going towards Europe and others. So, there is an increase of about two weeks' time, the transit has increased. Plus, there is a sea freight cost increase also. Sea freight cost, there is an increase, especially for the Europe, there is an increase of about 75 to 80% increase in comparison to what was there in the month of February. And rest of the world also, there is an increase of about 15 to 20% given the increase in the crude prices.

So, this will be impacted in the margins, right, or are you passing on this?

Most of the trade costs are normally passed on because most of the sales happen on the FOB basis. Maybe some small impact comes in, which is already factored in, already in our, in the numbers, like in March. In fact, since March, the price, the seed rates have normalized what it was there in the March. So, it is already factored in the numbers.

Thank you, sir. Thank you for answering my question.

Thank you. I now hand the conference over to Mr. Avnish Chandra for closing comments. Please go ahead.

Sir, before taking your closing comment, one quick question. Our new CAPEX is anyway getting commissioned in the second half, and we understand that you will not have concrete number for future CAPEX, but, sir, any indicative thought related to future plan from you will be helpful.

At this point of time, I would not be able to comment on the future CAPEX. As we have already, as you see, apart from the CAPEX which we have done, we have already done an additional CAPEX of about 230-40 kV on the energy side. So that is, again, out of the, which was not originally planned before last year. Further, we keep on looking at various avenues available. At the moment, I cannot give any number, but definitely there are many things on the drawing board. As soon as it comes up, we will definitely share with you. Sure, sure. And I would like to thank everyone for taking out the time to joining the call. And I hope we have been able to address all your queries. I also thank Smith's team and Avneji for hosting the call. For any further information, kindly get in touch with our finance team or our investor relations advisors. And thank you once again. See you all over again in the next running box.

Thank you. On behalf of Smith Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.