Ladies and gentlemen, good day and welcome to Welspun Living Limited Q3 FY 2025 Earnings Conference Call hosted by JM Financial. 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 the star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashutosh Somani from JM Financial. Thank you, and over to you, sir.
Yes, thanks, Steve, and welcome everyone to the call. I will first thank Welspun Living for giving JM Financial the opportunity to host today's call. Without much ado, I'll hand over the call to Mr. Salil Bawa, Head Investor Relations, Welspun Group, to introduce the management. Over to you, Salil.
Thank you very much, Ashutosh. Good afternoon to all of you. On behalf of Welspun Living Limited, I welcome all of you to the company's Q3 and nine-month FY 2025 results earnings call. I understand there is some issue, and some of the investors are still not able to log in. We are trying to resolve that. Along with me, we have with us today Ms. Dipali Goenka, Managing Director. We have Mr. Sanjay Gupta, Chief Financial Officer. We hope you have had a chance to review the investor presentation that we filed with the exchanges. It is also available on the company's website. During the discussion, we may be making references to the presentation. Please do take a moment to review the safe harbor statement in our presentation.
As usual, we'll start the forum with opening remarks by our leadership team, and post that we will open the floor for any questions. Once the call gets over, should you have any further queries that remain unanswered post the earnings call, please feel free to reach out to us. With that, I would now like to hand over the floor to Dipali ma'am. Over to you, ma'am.
Good day, everyone, and thank you for taking the time to join us today for a Q3 FY 2025 Analyst Call. I would like to share some highlights of our operating performance as well as some achievements during the quarter under review, after which Sanjay would share highlights on our financial performance. We are pleased to share that the company has achieved consolidated revenues of INR 2,528 crores during Q3, growing by 3% year-on-year. The company achieved an EBITDA of INR 319 crores at a margin of 12.6%. Looking back at our revenue growth guidance for the year, which was at 10%-12%, we've already achieved 11.7% growth YTD and are well on track to meet our top line this year.
We are on course to achieve our FY 2027 vision of reaching INR 15,000 crores by maintaining market leadership and profitability in our core business while scaling up our emerging businesses. YTD company revenues are at INR 8,049 crores, with our emerging business comprising of domestic consumer business, global brands, advanced textile, and flooring, witnessing double-digit growth of 10% YTD, 25%, and contributing about 30% of the total revenues. Brands are at the heart of our future growth ambition, with Christy going global as a luxury brand and clocking record-high sales during Black Friday.
Welspun brands showing strong 12% YTD growth as the most distributed HT brand in India and Spaces on the path to offer a complete home experience to the premium Indian consumer. Domestic flooring showed strong double-digit 17% growth YTD, and we continue to revitalize our international flooring strategy, focusing on home improvement chains, hospitality segment, and indigenization.
Advanced textile business grew 11% YTD as we continue to build strategic partnerships to diversify value-added product application and diversifying into new categories in home care, personal care, medical, and high-performance filtration. Our home textile exports witnessed steady growth of 6% in Q3 and 14% YTD. We continue to gain market share in the U.S. in both bed and bath, with higher dispatch growth as compared to the market. Our pillow factory in the U.S. helps us to tap into the utility bedding segment and complements the make-in-America ambition of the new U.S. administration. Let me give you an overview of our branded portfolio, starting with global brands. Our global brands witnessed robust growth of 10% in Q3 and 23% YTD. Christy has shown global potential beyond the U.K., with extended presence in the Middle East, USA, and Africa, and plans to soon launch in India.
Christy has made significant strides in its premiumization journey, with a higher gross margin in Q3 and YTD this year as compared to last year. Our licensed brands, Martha Stewart, COCOCOZY, and Disney Europe, witnessed over 40% growth YTD, opening up additional shelf space with key retailers. Next, moving on to our domestic retail business performance, urban consumption was subdued and inflation hovering around 5%-6% during the quarter. As per a survey by RAI, defensive demand in the retail sector improved during October-November at about 7%, lower than the anticipated growth of 10%. Amidst higher food inflation and softened urban spending, we witnessed a modest growth of 2% in our domestic retail business, clocking a revenue of INR 177 crores in Q3 and over 6% growth YTD 25.
Welspun brand witnessed a healthy growth of 8% in Q3 and 12% YTD, and continued to be the most widely distributed home textile brand in the country. Brand Spaces has outgrown the category in modern trade channel, emerging as a leading brand within the category and gaining market share. Quick commerce segment has been significant traction, with 8X growth between Q1 and Q3 FY 2025. We have continued our investment in the domestic market, with marketing spend to the tune of 10% for improving brand visibility and salience, as well as a focus to build profitable business growth. India is expected to bounce back stronger in the next few quarters, with expected consumption recovery, green shoots surfacing already seen in rural consumption. Our focus on the India market is unwavering, with a strong offline and online strategy and a brand for every consumer.
On the domestic flooring front, while we continue to see growth in hospitality and commercial segments, residential segment showed strong performance in Q3. India's specific product development initiatives have further driven up the sales. Domestic flooring revenues grew by 6% Y on Y and 17% YTD. Our home textile exports witnessed strong performances across regions. The U.S. economy continued to show resilience in the current year, with the Q3 growth at 3% Q on Q and 2024 GDP growth expected at 2.8%, aided by consumer spending growing at 3.3%. Annualized rate in the fourth quarter after accelerating at 3.7% pace in the July-September quarter.
India continues to be the leading supplier of terry towels and bedsheets to the USA, and as per the OTEXA data, India continued to enjoy dominant market share and exports to the U.S. for trailing 12 months, November 2024 period, both in TT at 43% and bedsheets at 60% in value terms. Welspun expanded its market share in both bedsheets and terry towels, with bedsheets at 18% dispatch growth vis-à-vis overall U.S. export market growth of 5% in bedsheets and flat growth vis-à-vis 2% market decline in TT. Our fully automated pillow factory in Ohio, USA, started commercial production in September 2024, overall achieving capacity utilization of average 24% in Q3.
Every month, we would see increasing utilization of the plant, thereby increasing our footprint in the largest market and helping us better serve our customers with differentiated products such as a patented Gx Pillow to promote better, more restful sleep. In Q3, we saw strong traction in the EU, driven by large programs in the Bath category. In Q3, our dispatches to the rest of the world also witnessed robust growth led by offtakes in Japan, Middle East, GCC, and ANZ. Moving on to flooring, the challenges we witnessed due to Red Sea continue to impact the transit times and invoicing, with the business recording a revenue of INR 216 crores, degrowing by 12% Y on Y. We are hopeful of recouping the growth in the business in Q4 and next year, with lower expected freight rates due to the Israel-Palestine truce and distributors starting to restock.
We continue to focus on the home improvement business and have added new big-ticket customers across all geographies. We have also diversified by tapping opportunities with OEMs in the U.S. and strategic tie-ups with Stonhard acquisition in ANZ. The advanced textile business witnessed a revenue of INR 132 crores, degrowing 5% YoY but growing 11% YTD. While transit times issues impacted sales during the quarter, we have strong spunlace order book across the US, UK, Europe, and Middle East for Q4, and new partnerships across the globe with our innovative and sustainable non-wovens. ESG is embedded in every aspect of operations at Welspun, keeping us ahead of our peers globally in sustainable practices. We published our sustainability report, third time in a row, with data assurance as per GRI framework. We are well on our journey towards achieving 100% RE and our ESG targets for 2030.
We stand by a guidance of 10%-12% revenue growth at 25, considering sometime costs that have hit us during Q2 as well as Q3, majorly due to external factors. We would like to revise our full-year EBITDA guidance to about 14%, with our strategic efforts moving in the right direction. With this, I would now like to hand over to Sanjay, who will take you through the financial highlights.
Thank you, Dipali, and greetings everyone. I'll give you a brief overview of the financial numbers for the quarter three before we open for question and answer. During quarter three, we reported consolidated quarterly revenues of INR 2,528 crores, up 3% year-on-year. Our YTD revenues are at INR 8,049 crores, up by 11.7% versus last year. EBITDA margins of quarter three stood at INR 319 crores, that is 12.6%, which is down by 16.6% YOY. YTD EBITDA stood at INR 1,133 crores, that is 14.1%, up by 1.6%. Our contribution margin was impacted to the extent of about 1% due to a change in product mix in the quarter from a one-time promotional program, which led to higher input costs. Further, as mentioned in earlier two quarters discussions, we kept a vigil on the Red Sea front to ensure that we do not get affected adversely.
Even with some normalization of capacity and freight rates, we had to incur relatively higher ocean freight at about 40% more than last year, resulting in an impact of about 0.4% to the profits. With the situation further normalizing with Israel-Palestine truce, we are hopeful of freight rate rationalizing in the upcoming quarters. Further, the sudden depreciation of the rupee against the dollar in December also impacted our profits by another 0.6% due to mark-to-market adjustment for reinstating our net current assets at quarter end, despite higher realizations for the month of December. We have a board-mandated policy of covering our 60%-65% of net exposure for one year rolling forward. Our average exchange realization for the U.S. dollar during quarter three of 2025 was 84.62 rupees, compared to 83.80 rupees in the corresponding quarter last year.
YTD stood at 84.3% compared to 83.17% in the corresponding period last year. We still have the same coverage situation in quarter four, and the correction in mark-to-market took a couple of quarters. Overall, these one-off costs impacting our EBITDA are expected to be set right from quarter four onwards. Profit after tax, after minority interest for the quarter, is at INR 121 crores vis-à-vis INR 177 crores, down by 32% year-on-year. YTD PAT stood at INR 507 crores vis-à-vis INR 535 crores YOY, a decrease of 5.2%. Consequently, our consolidated EPS for quarter three stood at INR 1.27 per share as compared to INR 1.84 per share, down by 31% year-on-year. YTD EPS stood at INR 5.30 per share as compared to INR 5.54 per share, down by 4% year-on-year.
Net debt stood at INR 1,658 crores versus INR 1,832 crores last quarter, which is lower by 174 crores, and versus INR 1,542 crores last year, which is higher by about 117 crores. This increase, as compared to last year, has been due to investment in CapEx and higher working capital. The interest costs due to borrowings for increased CapEx, which was around INR 595 crores year to date, and working capital requirement have gone up to INR 62 crores from INR 42 crores last year. With reduction in working capital planned in ensuing quarters, we will see savings on account of this cost. Coming to segmental results, quarter three financial 25 core business home textiles revenue stood at INR 2,282 crores versus INR 2,251 crores in quarter three of financial year 2024, up by 1.3% year-on-year.
YTD financial year 2024 core revenue stood at INR 7,383 crores versus INR 6,641 crores last year, up by 11.2% year-on-year. Quarter two EBITDA of home textiles stood at INR 286 crores at 12.5% as compared to INR 347 crores at 15.4% last year. YTD home textile EBITDA was at INR 1,009 crores at 13.7% as compared to INR 1,019 crores at 15.3% last year. During quarter three, revenue from flooring business was INR 216 crores, down by 12%. EBITDA was at INR 17 crores, that is 7.8% as compared to 8.1% last year. YTD revenues for flooring are at INR 693 crores, down by 2.9% year-on-year, and EBITDA is at INR 60 crores, that is 8.6% as compared to 8.2% last year. In quarter three of financial year 2025, we have spent INR 103 crores towards CapEx, majorly towards our new towel project at Anjar.
Year-to-date total CapEx stood at INR 595 crores versus our guidance of total year's CapEx at INR 860 crores. With this, I'll leave the floor open for question and answer. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Prerna Jhunjhunwala from Elara Capital. Please go ahead.
Hello. Thank you for the opportunity. Just wanted to understand the demand scenario in the U.S. for home textiles, largely as consumer sentiment there continues to remain a little weak for December since. So please give some color on how home textiles and other market weeks went and what is the feeler that you're getting for next one year's demand scenario.
So I think I can just tell you about the global scenario. Global scenario still remains in a kind of it's a mixed bag. There are certain times when there are seasons where you have the annual events or seasonal offsites, there will be a peak. But having said that, the United States still remains at a bright spot. It'll come back. It is definitely going to come back. Middle East has its great opportunity as well. So I think overall, and I think I must tell you that having said that what the markets are, but I think India stands a great chance and opportunity to be a centerfold of supply chain globally for all the countries.
And you have seen even the OTEXA data and even seen in the Welspun numbers that we've seen that despite the market, India—not only India, but Welspun—has grown in terms of exports from India. So just to sum it up, Prerna, while the markets can look the way it is, the consumption will continue in the United States being the largest economy of consumption for home textiles. U.K., Europe are subdued, but the Middle East and rest of the world are going to take that share in terms of consumption, and India will be the centerfold of the exports and the supply chain for the world.
Okay. Understood, ma'am. The second question is, how should we look at gross margins in the current scenario of declining cotton prices? Cotton prices continue to remain weak. So how is it likely to impact your profitability going forward?
Hi, Prerna.
Hi.
As we know, cotton prices have been slightly coming down from 56 to 52-53. We have been continuously buying. We have about five to six months of stock with us. Hence, on a consolidated basis, we should be looking at about 54 cents to cotton. We should see 1%-2% benefit from this coming in the ensuing quarters.
And the top line is, yeah.
I think margin gains. Yeah, you can continue, ma'am. Then I'll ask again one last question later.
Yeah. So 1%-2% margin gains we can see in the ensuing quarters due to cotton based on the current prices of cotton.
Yeah, and overall, seeing if I look at the numbers, I think you're asking about the EBITDA and the subdued EBITDA, right? Prerna, that was your question.
No, I asked for gross margins only for how cotton can improve or what will be the impact of lower cotton prices on our gross margin.
Last question is on. You mentioned about there was a mixed impact in our numbers this quarter. Is it going to continue going forward, or it was a one-off?
It was a matter of one program that we did in this quarter, actually, Prerna, so that mixed impact has gone. However, there were these macro impacts that have been playing, the Red Sea and the others, and hence that has also impacted our EBITDA, so having said that, our path towards our commitment towards the 10% growth on the top line remains, and a little deviation on the bottom line is there, but it's just a small deviation.
Okay, ma'am. Thank you. All the best. I'll come back to the question queue for any further questions.
Thank you.
Thank you.
The next question is from the line of Yash Dharak from RSPN Ventures Private Limited. Please go ahead.
Yeah. Hello. Am I audible?
Hi, yes, yes.
So yeah, I do appreciate the fact that we are closer to meeting our yearly guidance of 10%-12% revenue. I mean, if you could still shed some light on what led to a dip in the revenue in the December quarter.
As we said in our opening remarks, while exports continued to grow, it grew at about 6%, maybe slightly 1% or 2% lower than what we had anticipated. However, the other businesses of flooring and advanced textiles were impacted due to the Red Sea issue, which led to an increased rate of freight, due to which the buying dispatch decisions were postponed by many buyers. Hence, we saw that reduction, or we saw some dip in those businesses. However, as we go along, we have seen that the Red Sea issue is setting itself right, and also the costs, freight costs have come down, which will ensure that we will do these dispatches in quarter four and the ensuing quarters.
Okay, and as far as the interest rates are concerned, I think the interest cost has increased despite the gross debt going down, if you could give some color.
Yeah. So during the quarter, we had to keep some stocks because of the delays in dispatches, which we were seeing due to Red Sea issues and the freight rates. And hence, during the quarter, we had to hold stocks, which we were able to sell to a large extent by the CY. But that led to a slightly higher interest cost during the quarter. However, the working capital is coming down, and we will see a remission in that as well from quarter four.
Okay. There was an INR 41 crore CapEx, which was supposed to be completed by Q3. Has it been completed, or when do we see it being completed?
It is on the verge of completion, so we should see that happening by this quarter.
Just a few questions more. Any guide on the effective tax rate for the year, and do we see any benefit accruing to us due to tariffs being implemented on China by the U.S.? If you could comment on that.
So, first question on tax, our average tax rate is about 25%-26% effective tax rate.
For the year?
Yeah, for the year.
And for the tariffs, to your question, let me say that I think India has anyway become a part of the supply chain globally. So I think that's the opportunity India continues to enjoy and will in the future also continue to do so, from the terms of traceability of the cotton and also the stable democracy and the integrated supply chains that we have in India. So that will continue here. I think that's what we will maintain as of now.
Okay. Thank you. Thank you so much. Yeah.
Thank you. The next question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.
Yeah. Good afternoon, sir. Sir, I missed on the margin guidance, what you gave of FY 2025. You're maintaining sales guidance. What is the revised EBITDA guidance for FY 2025?
We gave in our opening remarks that due to some one-time costs that we had to incur in quarter two, quarter three, we are revising it to about 14% for the entire year.
Okay. And yeah, I heard that you said that there was contribution margin impact of 1%, ocean freight of 40 basis points, and rupee depreciation of 30 basis points. So that you also said that this will last for one or two quarters more only?
Only for U.S. dollar impact because we have covered 60%-65% dollar for next one year. And because we are out of the money, the current U.S. dollar rate, so this affects because of it's just an accounting impact. There is no cash impact. So because of the hedge accounting.
Of your sales, how much percentage is covered?
About 60%-65%, so we are covered about 60% right now.
You're covered for 60% of the 12-month rolling sale for next year, and at what rate, sir?
So I mean, yeah, we cover it at various points of time. So that rate, we cannot disclose, but we are currently out of the money.
Okay. And that is accounted before the EBITDA line?
Yeah. That's accounted before the EBITDA line, and that's only an accounting entry, not cash. If in the next quarter we realize better, then that loss goes away, but setting itself right, it will take about one quarter or four, five months more.
Okay. So say two quarters, basically. Then obviously the forward rates will keep continuing higher. So that depreciation impact was 30 basis points in the EBITDA margin, which possibly may continue for next two quarters. The other two, you're saying ocean freight has largely reversed now. So that impact would start getting diluted from next quarter onwards, right?
Correct. So in quarter two, we saw about 1% impact because of this. In quarter three, we saw 0.4% for freight. Now we don't foresee any impact on freight. $0.6 we saw, but the impact of it will taper down and will become close to zero in about four to five months. And the 1% impact for the COGS because of mix will also be not there. That's also one of them.
On the operational side, if I see even bath linen sales on a YoY basis decline in volume terms by almost 6%-7%, whereas your bed linen actually showed a very good growth. So was there any base effect issue or a specific client issue where actually the U.S. bed linen has picked up in quarter, but the bath linen has not picked up? So anything specific here or was it just a general inventory or a program-related issue which had such diverse figures in two product segments of home textiles?
If you look at, I will just talk about, I think, the utilization if you're talking about, I think, in America. If I look at the bath, the bath has actually degrown in America according to the OTEXA data, but we have seen a growth of 2%.
So it's stocking, yeah.
It is just a stocking issue, which will actually be corrected in this quarter.
Our production was slightly lower.
But it has picked up already.
We had stocks already there, so we sold, so we saw a growth both in towel and bedsheet. Of course, towel was slightly lower and bedsheet was slightly lower, but we saw growth both in that, in the sales.
Bedsheet has actually grown for us in 15%. Towel has been a little like a flattish, but that is a matter of a quarter.
Because in the presentation slide number 12, you give the production numbers, right? So you're saying that sales volume number was decline is not so high. What is reflected in the production volume number which you give in slide number 12?
Correct. Yes. Because it's a matter of goods in transit and also the matter of warehouse inventory also. So there's a whole lot of mix there.
Bed linen growth was much, much higher than the bath linen growth.
Yes. Yes. Absolutely.
Okay. And post-December, you think this has normalized now and both will move in tandem going forward? So this was a stock-related, client-related issue, but this would now largely, if that is sorted out by December or a calendar year end in U.S., this will normalize from next quarter?
Correct. So quarter four, so whatever stock we had, many of which we sold off, hence you are seeing also a reduction in our total stock as compared to September and December. So more or less it's in order. However, if we sell more out of stock, then probably we also see again more sales. But yeah, it's.
Last question on the flooring business run rate, which declined after many quarters. So you mentioned Red Sea issues in that. So is that largely sorted out and this will go move back to INR 250-INR 260 crore type of a quarterly run rate with improved margins, or this should also take time to normalize in it? Because obviously you are also maintaining a INR 15,000 crore top line run rate for reaching by FY 27, and flooring has to play a very big role there, almost like if I'm seeing figures like incremental 1,000 to 200 crores. So what confidence are you getting on the floorings to get back to normalized run rate and in fact a double-digit growth rate in the floorings business?
So I think Red Sea actually has played a very big role in terms of being a deterrent in terms of our flooring business globally. However, I must tell you that the carpet tiles grew by double digits. It is basically the hard flooring which actually degrew. And we are going to actually it will get mobilized by, I think, quarter four end. And I think next year looks as a steady run rate.
Okay. Thank you.
It will continue to grow at 20%-25% next year onward. So we should see closer to our number of financial year 2027.
Okay. Thank you.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Pradeep Tolia from Systematix. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Just wanted to understand the reason for this sharp increase in your finance cost in this quarter.
Pradeep, as I was mentioning earlier, we had to hold larger stock during the quarter. If you see our quarter two end stock was quite high and we are building for the festive business, so some of which trickled into quarter three. Quarter three, we will continue to face the Red Sea challenge and higher freight rate. The dispatches are getting postponed. We had to hold larger stock and hence investment in working capital. We saw a slightly higher interest cost. If you also see from last year to this year, our interest cost per se has also gone up by about 1% because of the increase in interest cost. These are the main reasons why interest cost.
But as we have pared down our working capital, you should see a reduction in this cost as well from quarter four and more so from quarter one, of course.
So what is our average cost of debt?
It's about 7%.
Which you were saying earlier was 6%.
Earlier was 6%.
If I see a nine-month balance sheet also, your gross debt is around INR 2,800 crores. How do you see this number by the end of this financial year?
We have guided towards a 10%-12% growth for the whole year. We are standing on that, behind that. We should reach that number.
No, no. I'm asking you the gross debt number?
Okay. Gross debt. So gross debt, so we talk about net debt. Net debt, we are at INR 1,650 crore. Yeah. So gross debt is about INR 2,800 crore. So while for quarter four end, we should reach a net debt of about INR 1,400-INR 1,500 crore. That means a reduction of about INR 200 crore in financial year 25. Financial year 26, we should be at INR 1,000 crore. Financial 27, INR 400-INR 500 crore. Financial 28, zero.
Okay. That's helpful. That's just how much I have. Thank you and wish you all the very best for the future.
Thank you, Pradeep.
Thank you. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead.
Hello. Thank you for the opportunity again. Just wanted to understand the volume growth number for the quarter and how average realizations have moved for this quarter and nine months.
So we actually don't give out those numbers. Overall growth is 3%. And we have in some quarters volume growth. Some quarters, we have price growth, but.
But when we maintain the numbers, Prerna, our numbers, our growth that we have discussed, I mean, the 10% growth annually, we are on that track, Prerna.
Oh, so much. Thank you. Thank you so much.
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Monish Ghodke from HDFC Mutual Fund. Please go ahead.
Hello. Thank you for the opportunity. Just wanted to ask about pillow business. So what was the revenue from this business in Q3, if you can share?
So here, hi Monish. We are looking at this year to be having a top line of around $20 million from our pillow business, and next year, we will double this number, so this is what it is, and we feel this is a huge opportunity for us because it is as good as a volume as towels.
Okay. And when you say the effective capacity, I mean, it's 4.7 million pieces and installed is 13 and a half. So how much time will be required to ramp up this from 4.7 - 13 and a half?
It will take about two years. So this is based on the machine capacity and then one shift, two shifts. So it will take about two years to reach the full capacity.
Do we have to do any CapEx to increase this capacity?
No, no, no. Just people.
It is a matter of kind of productivity because it is automated.
Yes.
Could you just give a broad idea as to what would be your realization per piece in case of pillow?
As of now, we will not be giving out that, but.
But there's one thing, Monish. We will play in better and best category here. We want to. We are not going to go into the deep down dirty goods like a cheap category. But we are going to talk about better and best. That's what we are working on.
Okay. Okay. Thank you.
Yeah.
The next question is from the line of Reshma Jain from DSP Asset Managers. Please go ahead.
Yeah. Hi, Reshma Jain here. So I have just one question on the cotton. Since this year is a unique year where a lot of cotton has been bought by CCI. And typically, we have seen that in the past, CCI has resorted to selling cotton even below the price and incurred huge losses. And you are currently having a good amount of cotton with you, as you mentioned in your remarks. So how are you thinking about the overall cotton dynamics playing out this year, given the kind of unique situation of cotton being bought by CCI?
Yeah.
So there are around 18 lakh bales in the market, and they have taken on around 185 lakh bales that are there in the total arrival. They have taken around 85 lakhs. And today, if I look at it, the average cost is around 53-54 thousand per bale. And I think the opportunity right now, which I see as India and the others, is that globally, Brazil and the other countries are the countries from where our peers are outsourcing their cotton. We have an import duty from outside into India. So hence, I think we'll be consuming our cotton internally. So overarchingly, our cotton cost should be around 55,000.
To carry it forward, you talked about MSP and CCI. Yeah, CCI is buying at MSP which is much more than 53, 54. When CCI sells it, depending on the seed prices, we may see cotton going up to maybe 56,000 as well. However, everything depends on at what seed prices are. If seed prices are higher, the cotton cost will be lower. If seed is lower, then yeah. It could be, but we are seeing only a two to three thousand rupees.
Okay.
Yeah.
Okay. And for you, do you have an option to import cotton without duty, given you have a large export? So you might have kind of export license against which you can import as well. So is that option available to you? Because globally, it is cheaper, so.
No, so we have to pay duty. In some cases, we may get a remission if we export out of it, but that's a long-term affair, and we don't get into it because getting the remission takes time, a lot of time.
So you don't use advance licensing for importing cotton?
No.
Okay. Understood, and the second question is generally on the demand. How do you see the overall demand shaping up in the U.S., given that the festive was not as great as expected? And I presume that there will be some inventory left with some of the retailers, given some of the retailers have already come out with numbers. So overall, what is your sense? What kind of order book you are seeing both in bed linen and in towels?
So our top line, we are going to maintain what our steady state top line we're talking about, around 10% growth. And I think that's what it is going to be. One thing is, guys, right now, the inflation impact in America is high, which I think with the new administration coming in is something that they're going to be working on. And I think that is going to be something to be seen regarding the housing market and the inflation.
Okay. So for you, the order book is normal. There is no change.
Yes.
Okay. Understood. Can I ask one more?
Sure, sure. Not really.
Yeah. So the last one is on the branded piece in India. And because it is still in the build-up stage where you are doing a lot of activities, so I presume that the margin in that business will be low. So how is the profitability going to shape up in that business? Because that must be pulling down your overall margins as well.
I think India is the market that we are definitely investing in. It is going to take time. With the kind of, I think if I look at all the global economies, India has got the highest potential of growth. As we look at it, we are actually focusing on both our brand Spaces and Welspun at a steady state growth of CAGR of around 25%-30% and at a breakeven. That is something that is going to be a very important aspect that you will see this year in 2025 as well.
Okay. Understood. Thank you. All the best.
Thank you.
Thank you. The next question is from the line of Biplab Debbarma from Antique Stock Broking. Please go ahead.
Good evening, ma'am. So I have just one question regarding the new regime. I mean, Trump has become president again. So do you see any uncertainty regarding tariff and textile side? So do you see any uncertainty? Because we have been hearing from news that left, right, and center is putting some tariff on some products. I'm not an expert in those. But on textile side, do you see any uncertainty, any challenges going forward?
So there are two things. Actually, this regime is talking about balance of trade across the globe. That is the first thing. Secondly, the focus towards inflation control is going to be a very important focus. Now, Biplab, when you talk about India, I think India having the most robust supply chain in terms of cotton traceability, stable democracy, the vertically integrated plants, I think there is a chance to gain. And the relationship of India is strong. So we will wait and watch there, Biplab.
Okay. Thank you.
Thank you.
Thank you. As there are no further questions from the participants, I now hand the conference over to Ms. Dipali Goenka for closing comments.
So thank you for your time today. The mid- to long-term attractiveness of the business continues to be high as we work with unwavering focus to achieve our current and future objectives of sustainable and profitable growth. Home textile export business continues to grow in excess of 14% with positive momentum across the U.S., Europe, and rest of the world, and steady start of our U.S. pillow facility. We'll continue to focus on our branded sales with Christy leading our global presence and Spaces and Welspun in India reinstating our Har Ghar Se Har Dil Tak Welspun. Our sustainable and responsible practices have made us leading ESG corporates not only in India but globally, and we are well on our way towards achieving our targeted metrics by 2030.
Thank you for your continued interest in Welspun Living. For any further queries, please feel free to connect with Salil and Sanjay.
Thank you.
On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.