Q1 24/25

Jul 30, 2024

Summary

Q1 FY25 volume grew 26% and total income 27%, while reported EBITDA margin was 16.2% amid logistics and brand investment. Guidance is maintained; management expects branded growth and margin benefits mainly from FY26 onward.

Ladies and gentlemen, good day and welcome to Indo Count Industries Limited Q1 FY 2025 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. K.R. Lalpuria, Executive Director and CEO of Indo Count Industries Limited. Thank you, and over to you, sir. Thank you. Good afternoon and a very warm welcome to all of you to the Indo Count Industries Q1 FY 2025 earnings call. I have with me Mr. Muralidharan, our CFO and strategic growth advisor, our investor relation advisor. Happy to connect with you all once again to discuss the Q1 FY 2025 performance. Let me start with our Q1 FY 2025 performance highlights. This quarter, we achieved a 26% increase in volumes and a 27% rise in revenue, demonstrating the effectiveness of our operations despite ongoing macro challenges. Our Q1 FY 2025 results show an EBITDA margin of 16.2% in line with our guided range of 16%-18%, reflecting the strength of our core business. Despite increased expenses for logistics and building Wamsutta licensed brand, the achieved margin underscores the effectiveness of our strategies. Market sentiments are improving with new inquiries from key markets. As the festive season approaches, we are optimistic about a successful FY 2025 and are confident in achieving the guidance. The successful acquisition of Wamsutta, the U.S. natural brand, through internal accruals of INR 85 crores reinforces our global home textile vision. The e-commerce segment and licensed brands such as Jasper Conran and GAIAM are performing well, and with brand promotion of Fieldcrest and Waverly, they are progressing as planned. Market demand and industry scenario. Encouraging development in our key markets are shaping a positive outlook for the year. OTEXA data shows an increase in the bed linen import share in the U.S. from India, reflecting a strong trend across big box retailers and omni-channel platforms. The Government of India's promotional steps, including proposed FTAs with the U.K. and the E.U., and existing FTAs with Australia and the U.A.E. are crucial for our industry's growth. Competitive domestic cotton prices and the China Plus One sourcing strategy, which is gaining traction among major retailers, position the sector well for a better future. Future strategy and initiatives. Looking ahead, we are focused on utilizing our capacities effectively, enhancing our product range, and extending our geographical reach. Our strategy involves leveraging advanced technologies, boosting customer engagement through digital platforms, and investing in overall sustainability. The recently announced Wamsutta brand acquisition and licensing of Fieldcrest and Waverly will drive innovation and broaden our market presence. With these initiatives, we are well positioned to achieve new milestones. Since entering key bedding segments such as fashion, utility, and institutional bedding, supported with adequate brand strategy and capacity, it will help us significantly to improve our overall business growth. Additionally, with the developing domestic market, we are making a comprehensive plan to enhance our presence and seize growth opportunities. This focus will complement our existing export activities, which will remain a core market while leveraging the company's debt-free status to support future initiatives. CapEx and investment. Our major CapEx projects are completed, setting the stage for sustained growth. Moving forward, we will strategically invest in renewable energy and essential maintenance CapEx to further enhance our operational efficiency. In addition, we will continue to expand through targeted acquisition and licensing arrangements and agreements within our business verticals. These efforts will ensure that we capitalize on growth opportunities and maintain our competitive edge in the market. Now, awards and recognition. During the quarter, we have received following awards. Gold trophy for highest export performance. This accolade recognizes sustained excellence in exporting made-ups, marking a remarkable fifth consecutive. Best environment friendly initiative of the year 2024. This award celebrates our exceptional CSR effort in environmental care activities. Best wastewater treatment initiative of the year 2024. This recognition highlights our innovative approaches to wastewater treatment within the factory, demonstrating a strong commitment to sustainable practices. Now, ESG initiatives. Indo Count is at the forefront of environmental, social, and governance practices. Our Bhilad unit now operates at 90% renewable energy, significantly reducing our carbon footprint. We have achieved a fresh water intake to 25% through upgraded RO and ETP facilities. Our impressive S&P Global 2022 ESG rating of 42, well above the industry average of 28, demonstrates our commitment to sustainability. Active engagement with the Dow Jones Sustainability Index ensures continuous enhancement of our practices. By embedding sustainability into our strategic goals, operations, governance, and supply chain, Indo Count is setting a strong example in ESG integration. Now, let me share with you our consolidated financial performance. Volume. Sales volume for Q1 FY 2025 stood at 25.3 million meters versus 20 million meters in Q1 FY 2024, a growth of 26%. Total income, INR 950 crores in Q1 FY 2025 versus INR 747 crores in Q1 FY 2024, growth of 27% on a year-over-year basis. EBITDA. EBITDA for Q1 FY 2025 stood at INR 154 crores versus INR 130 crores in Q1 FY 2024, growth of 18% on a year-over-year basis. EBITDA margin for Q1 FY 2025 stood at 16.2% versus 17.4% in Q1 FY 2024, a dip of 128 basis points. EBITDA was impacted due to conscious increase in branding expenses along with investment in human resources to support the new acquisition and licensing business. The logistic challenges also increased, thus impacting margins. It is important to note that despite these challenges on macro front as well as our strategy to upfront investment in human resources, we have been able to report EBITDA margins in our guided range. This bodes a strong undercurrent in our core business. PAT, INR 78 crores in Q1 FY 2025 versus INR 74 crores in Q1 FY 2024, growth of 6%. EPS is INR 3.93 in Q1 FY 2025. With this, now I open the floor for the question and answer. Thank you. 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 handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jatinder Mania from Swan Investments. Please go ahead. Good afternoon, sir, and thank you for the opportunity. Good afternoon. Good afternoon. Yeah. Sir, in your opening remarks, you indicated that the employer expenses Sir, in your opening remarks, you indicated that the- You are not audible correctly. Yeah. Now it is audible? Now I am audible? Yeah, now it is audible. Yeah. Sir, in your opening remarks, you indicated that the employer expenses, if you look on the standalone and consol basis, has increased by 10 INR-15 INR. Does it entirely link to the increase in the branding expenses and the results of which will be visible from Q4 onwards? Yes, certainly, because this is where we acquired Wamsutta in Indo Count Global, our U.S. entity. We have appointed new talent in order to manage the brand and promote it. These are the expenses related to that, and this will certainly help into building the brand and bringing in additional revenues in the future. That means the Wamsutta, I think you already started spending on the branding exercises. Is it right to assume that Wamsutta will start contributing to the revenue from Q4 onwards, or the major benefit will be postponed to FY 2026? Some revenue will start trickling from Q4, but you will see major value coming in FY 2026 onwards. Yes, sir. Second question, if you look on the quarterly numbers, our other expenses have increased substantially if you compare quarter-on-quarter and year-on-year. Can you highlight the reason for the same? See, other expenses also includes some of the conversion costs, which are related to the raw material consumption, basically. It is for some of these, like power and fuel and job work charges. Some of these operational expenses, conversion charges, are in the other expenditures. This goes along with the production levels. This will get adjusted once the goods are sold. It will come to the normal levels. Our other expenditures should be in the range of around 30%-32% overall. As similar the inventory gets liquidated from finished goods and WIP because the costs have already been captured there and it has gone to other expenses. Once that gets liquidated, you will see the impact that it will normalize as for the full year as similar to last year. To correct one aspect of the employee expenditure, it has gone up by only INR 6 crores between the two quarters. We now, yeah. Yes, sir. I was comparing between the standalone and the console numbers, but that answered my question. Yeah. Yeah. Yeah. Sir, last question from my end. Can you help us in terms of our other brands, Fieldcrest and Waverly? How is it progressing and when can we start expecting a contribution from them? See, we are developing this brand because we have just licensed it during the quarter. We are forming a team and we are presenting it to our customer base, and we will see some traction when we launch this in the September market week. For the spring-summer FY 2025. We will definitely see some traction happening in Q4. Sure, sir. That is all from my side. Thank you and all the best. Thank you. Thank you. A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Akash Gawali from Nuvama Wealth. Please go ahead. Sir, thank you for the opportunity. Hope I am audible. Yeah. Okay, thanks. Sir, congratulations on good traction in volume. My first question is on branding. How much did we spend on branding in Q1, sir? Could you give an absolute amount? See, we have just started the journey by appointing appropriate talent for promoting the brand. As we move up the ladder, we will have some expenses, but we will start to see also the fruits of these expenses from Q4 onwards. During the year, whatever is needed for promoting this brand, we will do so, and we will keep everybody informed about these expenses from our Q2, Q3 onwards. Okay, sir. On logistic front, how much is the increase in cost, and can we expect it to normalize going forward, or will it remain high? What do you expect? See, this is a moving item, because during the quarter, we faced challenges on both the availability and the cost of the containers and the freight cost. Whatever we were impacted to the extent we have reported in our investor presentation. What we are seeing during this quarter also, the situation has aggravated, but there are some green shoots into the availability of the container, not particularly the cost factor. We are watching the situation. We cannot define a number to it because you see our FOB and CIF keeps on moving to certain extent, and there are new customers also added with demands, CIF cost. With a better exposure to the number, we will report to you later, but now we cannot give you a definitive number. Okay, sir. Thank you for that. Did we lose any volume because of availability? Not to that extent, but yes, certainly it does impact our OTIF and deliverance to some. But as a company, because our strategy is committing to the customer and we are a customer-centric organization, we forego the cost at the level of providing service to the customer. That is our prime objective. So definitely we keep that intact, keeping in mind the customer service and not the cost. Going forward also, that strategy will be adopted, and we will try to see how we can service the customer better. With the kind of volumes which we handle, we are certainly having priority in the marketplace, so we get a better option to deliver. Okay, sir. India's market share in bedspread has increased from January to May this year. Do you see this trend going forward, will we continue to gain market share here also? Because last year India had lost some market share. Even last year on the increased revenue, we reported 19%, the same number, but that on increased revenue. We haven't gone down in those categories. But certainly, yes, we are working on it, and our team is putting the best effort to see how we can add up. We have invested into a new fashion bedding unit, and that will help us project a better image to the overseas customers that we are a major player in this. Definitely that we will be able to provide you better inputs in our next con call because the year has just started, and with the festive season in the front, we should be able to report better numbers going forward in these categories. Okay, sir. Sir, if I could squeeze one more question. Year on year our volume has grown by 26.5%. Do you see this number being maintained and do you see any upside to our guidance on volumes? See, we'll currently stick to our guidance of 110 to 15. Of course, our endeavor is to improve the numbers with the kind of this run rate and with the capacity at hand. We'll definitely work towards improving this number going forward, like our own guidance, but we'll be able to better provide you with this improvement in our next con call. Okay, sir. Thank you. Thank you for your answers. That's it from my side. Thank you. Thank you. The next question is from the line of Surya from Suniti Sikdar. Please go ahead. Yeah. Am I audible, sir? Yes. Yeah. Thank you, sir, for giving the opportunity and congrats with the good set of volume growth, which is growing good, 26%. One question is that going forward because of the recent brand acquisition strategy that we have adopted, when can we see a meaningful rise in the EBITDA margin, maybe closer to 18% or 19% from the current band of around 15%-17%? Certainly, as what we reported even with the kind of impact of this brand expenses where we are investing in and the logistic expenses, we have almost been impacted by almost 1.5% on our EBITDA during this quarter. We are watching the situation carefully through the logistics side. While I say this, on the branding side, we can see action moving upwards from FY 2026 onwards. Because what we need to do during this year is to project this brand to the consumer in a better way and bring back the glory of Wamsutta and the other licensed brands. We are into positive discussion with customers, and this will also help us expand our product mix because not only bedding, this will also help us into sourcing other product categories across the globe and see how we can increase our both volume and value. Going forward, our strategy is through this brand elevate our to our premium and budget segment to expand our product mix, to utilize our capacities through operational leverage, work upon omni-channel, expanding as a B2C brand and overall building our capabilities to showcase and improve our perceived value in the marketplace. Altogether, this will help us improve our margin profile going forward as what we mentioned. But this will only get reflected from FY 2026 onwards. Shall we mean that if we can pencil on the numbers going forward, will it be fair to assume that around 25 million meters of additional revenue or volume growth will be coming from the brands, apart from the steady state of growth currently we are observing from our existing portfolio. If that is the case, then if I, let's say, assume 10% for FY 2025 and 30% for FY 2026 and for FY 2027, 60%? No, this calculation does not support the capacity consumption because the overall brand volume and value will not be just bedding alone. It will be other product categories also. Even if we consider 50% as what we had projected as 100 million in the next three years, the branded goods sale, if we take 50 million and through which at higher margin level and higher value level, we can safely say that we will be able to consume almost around 8%-10% of our existing capacity. Because both the value and the margin profile will be higher on the branded goods side, and we are not going to consume just from the bedding side. As I mentioned earlier, we will be also promoting towels, rugs, pillows, et cetera, as a new product mix in this branded business. Okay. Instead of 225, we can expect 50 million meters altogether. No. I am thinking. Calculation support in FY. As I mentioned, we will see a traction in FY 2026 onwards. Correct. Such a capacity consumption during this year. No, I am not expecting this year. I am expecting from FY 2026. That is why I am just now taking a precaution of 10% this year only, 30% for FY 2026, 40% to 60% rest will be FY 2027. That is what I am assuming. No, I think we should discuss offline so we will be able to Okay answer and explain you in a full way our branded strategy. Both Sir, another point is that because we are just now growing at a very rapid pace, that will be leading to capacity constraint maybe in FY 2027 because then FY 2026, I see around capacity could be utilization factor could be touching 90%. What would be the case going forward so far as CapEx is concerned, whether we will be considering build-out expansion then? Yes, to a certain extent you are right. When we put up on the drawing board our 153 million meters capacity, our endeavor is to see how we reach this number very quickly and sell this capacity very quickly. But realistically, with the kind of challenges in the marketplace, realistically, in order to grow the overall vertical across the board with a strong footing, with fundamentally a strong footing, we need at least three years to double our revenue. We are confident as an organization that we will be able to double our revenue in the next three years. That is what we have indicated in our guidance as well. Post that, say in FY 2027, the board will come across with the kind of capacity utilization to see that how to invest further. Okay. As far as the bedding, are we looking at any sort of adjacencies like pillows and others in the bedding segment itself? With the kind of strategies, we always look at opportunities, and we are into both inorganic and organic growth because the company is debt-free, and we are on a fundamental footing with a good customer base and a good service level. With this kind of volume, we are in a leadership position. Definitely we look at opportunities which come in the way, and we are open to discussion. We are also looking actively to see that how we can strengthen our all verticals, whether it is fashion, utility, institutional, and all omnichannels also, like online and offline, as well as our domestic branded business, because these are huge opportunities for us to grow each and every vertical. Utility is also one of them because the China Plus One strategy is clearly visible. China as a country is dominating this category for a long time, and we are seeing some green shoots for Indian companies to strengthen their position in this business. We are also looking actively into how we can participate in this growth. Okay. Looking at the current logistic concerns due to the ongoing geopolitical situation, will it not be fair to assume that the offshore production, because we are said to be exporting maximum to U.S., and also let's say U.S.-centric production will be far more, I don't know, say capital efficient than local production? I cannot comment on this, but to logistical challenges, yes. In this new world, we have to make our organization resilient and build up model in such a way that we can absorb all this volatility. As an organization, once you look upon our growth in the first quarter, it means that we have built this resilient organization to absorb all the necessary volatility. This is how we have demonstrated with both our capacity and capabilities to move up the ladder and to see how we do even offshore venture and get into areas where we are new and develop them as a completely new vertical with a lot of market share building. I think to think about on the logistics side and decide something will not be correct. Yes, whatever opportunities which comes in our way in order to develop offshore manufacturing or offshore trading, we will definitely seize those opportunities. Sorry to interrupt, Mr. Surya. Hello. I request you to come back in the question queue for further questions. A reminder to all participants, please restrict yourself to two questions. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you. Thanks for the opportunity, and congratulations on good volume growth, sir. Thank you. Sir, wanted to understand this brand strategy. Over the next three years, how much share of your revenue do you target to get from brands and which you're targeting which geographies for the same? Good question, Prerna. First of all, I would correct that brand strategies are built for a midterm and long term. Wamsutta is clearly a long-term strategy for us as a company and not only for 3 years. As I mentioned, we will be working initially into North America. As the brand has recognition worldwide in more than 45 countries, we will elevate it to the next level once we learn and are able to promote it effectively in the North American market. That is about Wamsutta and the opportunity there. Secondly, on the licensing brands, like the existing ones, GAIAM and Jasper Conran are doing well respectively in the U.S. and U.K. Fieldcrest and Waverly have been just added in order to complete the demographic and the existing consumer space and the customer segment. Wamsutta will be established in the departmental and the club level, whereas you see other brands will have an open access to all kinds of retailers out there. Secondly, in the next 3 years, we have already indicated that our branded goods sales, we are targeting almost $100 million in all the brands taken together. That is what the ambition is. Moving forward, we also plan to see that we add new product mix and new categories as a strategy to our existing bedding range. This will provide us a lot of opportunity to grab more market share in these new product ranges, and it also will enhance our capabilities into sourcing within the U.S. and grab more market share with the retailer through other product categories as well, like towels, rugs, and window, and other home textile products. The overall branded strategies have completely switched upon our company's overall strategy of sales and marketing by helping us, not only sell to the mass merchant, but helping us to sell overall in the branded and the premium segment as well. These are the opportunities going forward, both short term, midterm, and long term. Okay. Sir, could you please add India progress as well to this? Certainly, because India is a growing market. It is a INR 5 trillion economy coming in force in maybe another four, five years. We are growing at a good GDP rate and the middle-class consumer base is growing very strongly where they are aspirational. They need good brands and good products to decorate their home. The overall outlook of wellness and luxury will help us promote better end goods in the Indian market also. Our brands, Boutique Living and Layers, have been extremely accepted very well pan-India among the distribution base. We will leverage this opportunity to see that how we can increase our market share in the domestic market as well. Coming to our licensed brands and Wamsutta, at appropriate time, we will see to it once we establish the distribution base and the point of sale, we will leverage our branding strategy in India as well. Okay. Sir, that is helpful. Thank you, and all the best. Thanks, Prerna. Thank you. The next question is from the line of Piyush Sontiyala from Beyond Capital. Please go ahead. Thank you for the opportunity, and congrats for the good set of numbers. My first question is, can you please provide me with the absolute increase in the inventory from the base of March 2024? See the inventory in absolute number, we will provide you offline. But what you can see that because of increased activity and the increased revenue, we do need to invest into inventory and the supply chain as indicated earlier also. Because there are so many volatilities and headwinds on the logistics side, like container availability, the cost of the containers, the freight charges, and the availability of other raw material goods as well. We are investing into supply chain, as indicated earlier, to see that how we can develop a better service level to our customers. Let me tell you that supply chain security will be much more important than the cost factors going forward. As a company, it is our policy to see that once committed, we kind of service our customers to the last level. On these strategies, the inventory level has gone up to a certain extent, but these are investment for the future. Just for example, for cotton, we are covered till October. Got it. Sir, second, the 100 million target that we have from the brand, what margins we will make on that? We have already indicated that the margin on the branded business ranges between 22%-24%. The product mix sales from the branded goods sales will definitely help us improve our margin, and that's why we have provided a band also of 16%-18%. Got it. Thank you, sir, for answering the question. That's all from my side. Thank you. The next question is from the line of Pankaj from Affluent Assets. Please go ahead. Thanks for taking my question, and congrats on good set of numbers. Sir, just wanted to understand, since you are moving from, say, commodity product now towards branded, what would be the margin structure, say, FY 2025 or 2026, when you will be fully implementing this brand strategy? See, our endeavor is always to make better margins, and that's the reason we have this branded strategy. We acquired Wamsutta. As a company, you see from a commodity supplier, we are shifting on to serving much more branded products in the marketplace. We have also developed strategies around fashion bedding and utility and institutional in order to increase our margin profile. That's why we have improved from 16% to 17% last year with a band of 16%-18%. While our endeavor is there, but as you see, being in a country with growing inflation and with the geopolitical situation and the logistical changes as what we see, certainly their margins get impacted in the process. Our endeavor always is to better this band of 16%-18% to 18%-20% going forward with both operational leverage as well as selling better end products. This quarter, you have reported margins of 16.2% because of the higher expenses related to logistics and brand building. Right? Right. Yes. What are the adjusted margins for this quarter, which will exclude these one-time cost expenses? I already mentioned that 1.25% it got impacted due to the logistics charges as well as investment into building brands. So you mean to say we had reported adjusted margins would be around 17.5%? Exactly. You have calculated rightly. So going forward with advent of this brand, would we not be able to build upon more on this as our share of branded products increases in our total portfolio? Certainly. I did mention about that with a complete answer that our endeavor is always. See, why somebody would invest into brand, why we will invest INR 85 crores in Wamsutta, why we will invest into talent in building us and making expenses onto showroom and product development and innovation and all that, to get better margin business. As I mentioned, with this brand strategy, we have elevated ourselves into the premium and the branded segment as well. So apart from selling to mass merchants, we always will be aspired to sell to stores like Nordstrom, West Elm, Pottery Barn, Williams Sonoma, Saks Fifth Avenue. So we will aspire to go to the better end of that market and grab market share out there, which will certainly help in improving our margin profile. But you cannot assume that today with the increasing expenses in India, we cannot identify or notify how much that brand incremental will bring in on the margin side. Yes, we are aspiring and we are working towards it, and we will see to it that some or other how we have a better product mix going forward, which will help us improve our margin profile. Okay. Sir, last question. You mentioned that you would endeavor to double our top line in next 3 years. So by FY 2027, would we be able to cross INR 7,000 crores with margins of, say, at least Just let me correct. When we were there at INR 3,000 crores, we had indicated that we will go to INR 6,000 crores in three to four years. That is where we are trying to double our revenue with the necessary investment in both the core capacity as well as you see in the branded segment and other product categories. That is the reason we have flagged down to say, almost seven verticals for the company and on each vertical, we are working hard to see that we develop that category into a business in itself. There lies the full strategy to see how we can sell and market the product in each vertical category and bring about this change to achieve the new milestone of doubling our revenue in the next three to four years. So definitely we are on target. As you can see in Q1, we reported almost a volume growth of 26.5% despite logistical challenges. Okay, sir. Thanks a lot. The only disappointment was margins, though. Where is the disappointment? See, already I told you, if you do not adjust the logistical expenses and branding expenses, we are at 17.5 and Q1 is the most toughest quarter for us. We had provided a record-breaking Q1, both with volume, value, revenue and the margin. What else we can do? Yes. Okay, sir. Thank you and good luck for the future. All the best. Thank you. The next question is from the line of Naveen Baid from Navam Asset Management. Please go ahead. Yeah. Thank you for the opportunity. I just wanted to clarify that you spoke of getting to 100 million from your branded side. So that's a cumulative number or that's the number you wish on the volume side, you wish to achieve, by FY 2027? It's a cumulative number. Okay. Got it. We have to slowly build it up. Say maybe first year we may do 5-10 million, then we do 30-50 million, then we do 100 million. It's like we'll reach there to that target. Because in the overall revenues, if we are able to build in 100 million, say for example in 500 million, hypothetically, if we are able to build 100 million, we are at 20% of branded additional business going forward. Okay. And this 100 million obviously, will require some increased capacity. So what are your plans in CapEx? We are servicing through the existing capacity only. Yeah, as of now. But once the branded business ramps up. Yeah, definitely. As I mentioned earlier also, in FY 2027, the board will look at the capacity utilization and the business overall, and will take appropriate decisions. We are a debt-free company, so we have all the means to expand our capacity. I had mentioned in my last call as well that in our Bhilad capacity, we have got appropriate land to double our capacity going forward. Okay. Got it. That's helpful. Thank you. Yeah. Thank you. The next question is from the line of Rija Namital from Ratnatraya Capital. Please go ahead. Hi. Thank you for the opportunity and congrats on the good set of numbers. I have two, three questions. One is on the growth side. Your growth is, you have done about 27% of volume for this quarter. Would it be possible to give more color on, where are we able to clock this higher growth from? Is it largely because of the China Plus One shift, because of which India is gaining share, and so are we, or is it also because we are adding new customers and also maybe upselling to the existing customers? Just a little more color on the growth side. That would be helpful. You have answered my question, in fact. Not only the existing customers are served better, but we are adding up new customers, number one. Number two, the China Plus One strategy is clearly shown in the OTEXA data that they are losing ground and particularly on the sheet side, India increased its percentage share from 58% to 64%. As a company we are well-positioned. One sheet in every five sheets sold in the U.S. is the market share which we enjoy. On that basis, this has added up to this kind of growth. Certainly, we focus on the bedding side, but as a company, we are quite competitive and we are a debt-free organization where we can take up strategies to see how we can become much more competitive and meaningful for the customers, which we have a good base of. These are all the strategies. Lastly, I would like to say that even the FTAs in Australia and UAE had helped us to a certain extent into growing our value proposition to the new customer base out there because earlier we were paying duty over there and that is the reason it will be a cherry on the cake if we get the U.K. FTA because we have an office showroom and we have a good customer base in the U.K. as well. That is the reason for our growth confidence which we have indicated during this year. Currently, we will stick to the guidance of 110 million to 115 million which we have provided, but we will come back to you as situation changes and certainly the freight and logistic challenges are continuing. But we are watching it closely and with the kind of volume. The exports, we are able to see that we get some priority in this part, and that is the reason we have performed well in the first quarter, and we are confident of performing in the other quarters as well. Understood, sir. Just to follow up on that, so when we guide for the revenue growth, we are guiding for some 20% plus revenue growth. So what percentage of that could be coming from the new customers and what could be coming from the increasing wallet share and with China Plus One playing out? We cannot define what percentage will come, but as I mentioned, the growth always comes from the existing business portfolio as well as the new customer base and new geographies. As I mentioned, the FTA of Australia and UAE is also helping us, the company, to garner more market share in this region. So it is across the board the growth is coming. Overall, as I mentioned, that the fashion utility institutional business, which we are trying to grow since the last five, six years, and our strategies into developing D2C and B2C omni-channel distribution base also is helping the company to draw up this growth plan for the future. Understood, sir. Thank you. Just one more question. Our depreciation this quarter is a little bit on the higher side. What could be the reason for that compared to the last quarter? These are like in CapEx, which we had done and the amortization of our brand expense, which has come into this quarter. Whatever investments which we are doing, the depreciation is bound to increase to a certain extent, and this has happened in this quarter. Understood. The cash for the acquisition has already gone through in this quarter, the Wamsutta acquisition? Sorry, I did not understand you. The cash for the Wamsutta acquisition that has gone in this quarter, is that paid? Yes. We have already mentioned that in our investor deck that we have paid nearly INR 85 crores through our internal accruals, where we haven't drawn any debt to make payment for our brand. Right. Understood. Thank you for taking those questions. All the best. Thank you. Thank you. The next question is from the line of Amruta Deherkar from Wealth Managers India Private Limited. Please go ahead. Thank you for this opportunity. Hi. Could you please delve more on the Australia business? What are the margins there, and what is the kind of market potential in Bedding that we are addressing out in Australia? Australia is similar to U.K. as far as per capita consumption of home textile is concerned. It is a good market out there. It has got a limited population of around 25 million, but the consumption is high as compared to what U.K. has. The retail structure out there is quite dynamic, and we have been recognized as one of the key supplier in this area as what we have been in other geographies as well. They are looking at focused players who can service them well and who are financially sound. Post FTA, we have seen an upsurge into their approach. Since they are also having a China Plus One strategy, they are looking at Indian suppliers, and we are one among them. Being a leader in this category, we are getting priorities into getting inquiries from both existing customers and new customers. We feel that going forward, the FTA will certainly help India to post better numbers of exports to Australia. The only hiccup currently is the transshipment out of Singapore and the cost structure as compared to China. But looking at the logistic issues for everybody, China will be at similar levels to us. We see there an opportunity to grow our business in the Australian market, both with the existing and the new customer base. What is the kind of market potential that we see in Bedding in Australia? See, market potential is good overall. Now, with the kind of complete market out there, definitely it's a good market. That much I can say, but I cannot give you a number that this will be my number or this is the industry number. From Australia, do we export to the U.S.? Pardon? From Australia, do we export to the U.S.? See, we are not based out of Australia in manufacturing. Why we should look at that like exporting out of Australia to U.S. doesn't make a sense as a question, I think, or I have not understood it properly. Okay. No, as in I was talking about the GHCL acquisition that we've done. Yes. That has given us capacity in Australia. If I'm not wrong, or is my understanding wrong there? No. There's no capacity. GHCL has a home textile division in Bhilad, and they have a textile business of spinning in Vadodara. That's all I know about. What we acquired as a slump sale as the home textile division of theirs in 2022, and we have built this up to an efficient level. Just imagine they were at 8% EBITDA and our overall EBITDA for the company, including the capacity consumption out there with the value and volume, we have brought it up to 16% plus level. That's what our team has geared up and have delivered to see that the acquisition was meaningful and has worked judiciously for us. Going forward, we will leverage this capacity acquisition further to expand our footprint in all the other markets apart from the U.S. Okay. Thank you. Thanks. Thank you. A reminder to all participants, please restrict yourself to two questions. The next question is from the line of Varun Gajaria from Boring AMC. Please go ahead. Hi, sir, and thank you for taking my question. Sir, just one question. We've seen a rise in our share in the branded segment while the realizations haven't improved that much. So if you could just shed some light on that. Come again with your question, please. Just wanted to understand. Very clearly. Am I audible now? Yeah. I just wanted to understand that considering our share of revenues from the branded segment has increased, but vis-a-vis our realizations haven't improved as much. If you could just shed some light on that. The overall EBITDA, as I mentioned, got impacted by 1.25%. Our adjusted EBITDA is around 17.5%. It is still good. What we have given the band also of 16%-18% as a guidance is maintained. Okay. I was alluding to realization for- Also, you see, we have just acquired Wamsutta brand just this year in this quarter. We have invested into the licensed brand also in this quarter alone. The brand sales will come only in FY 2026 as I mentioned earlier, because we will be promoting this for spring, summer FY 2026. The sales have not got added up in this year to that extent. Okay. All right. Thank you. Thank you. The last question is from the line of Mahesh from Almondz Financial Services. Please go ahead. Sir, thank you for taking my question. Hello, am I audible? Yes. In the call, many times you have mentioned about the logistics issues and supply chain related investment. How is the situation? Is it likely to improve or is it likely to just remain same and we have to adjust to these realities? As I mentioned, we are watching the situation closely. There are two issues. One is getting the containers and the other is the cost factor. There are some green shoots into getting the containers as we speak. Going forward it may improve, but currently it has not improved, that much I can say. With the increased revenues going forward, as per the guidance which we have provided, definitely we will be able to absorb to certain extent these expenses. As on date, the situation is fluid. It's not corrected to the extent what we desire. Okay. Sir, our guidance of the 16%-18% margin is likely to remain at the lower end, 16.5%. That is what With the increased revenue, because see, we have already delivered a 26.5% volume growth. Yeah. If you look at on a yearly basis, whatever guidance which we have given, if we are able to achieve the higher band of our guidance, then definitely it will offset whatever additional expenses to this account are. And we will try to see that how we can bring about operational leverage and sell better. Right, sir. Understood. Thank you very much and all the best. Thanks. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to Mr. K.R. Lalpuria for closing comments. Thank you. We remain committed to utilizing our capacities efficiently to maximize our growth potential. Yeah. Our strategic focus on a branded approach is showing promise, and we anticipate continued upward momentum in volumes and market share gains. Okay. Leveraging our strong debt-free balance sheet further supports our ability to drive innovation and seize opportunities. We are confident that this effort will position us for sustained success and enhance our market leadership. Thank you very much. Thank you. On behalf of Indo Count Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.