Q2 23/24

Nov 7, 2023

Summary

Record Q2 and H1 results lifted FY24 volume guidance to 90–100 million meters, while margin guidance stayed at 16%–18%. Growth priorities include value-added products, new markets and domestic brands, alongside debt reduction.

Ladies and gentlemen, good day and welcome to H1 FY 2024 earnings conference call of Indo Count Industries Limited. 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 this 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 Q2 and H1 FY 2024 earnings call. I have with me Mr. Muralidharan, our CFO and Strategic Growth Advisors, our IR advisors. Happy to connect with you all once again to discuss the Q2 and H1 FY 2024 performance. Now let me highlight the business scenario. It gives me immense pleasure to share that we achieved a record performance in Q2 and H1 FY 2024. This momentum steadfastly maintains our performance and accordingly, we have increased the sales volume guidance. We remain on course in delivering the best financial year in our company's history since inception. Now let me share updates on our key markets. We are seeing positive signs in U.S.A. on a YOY basis as major retailers have initiated restocking activities since Q1 FY 2024. Additionally, retailers in global markets are expanding their sourcing strategically from Indian home textile manufacturers to de-risk themselves. In the longer term, the growth prospects of our sector is encouraging. The same is visible in our performance, where we have added new geographies and brands to our business. The government of India's promotional steps, the China Plus One strategy, our various omni-channel marketing strategies, existing FTA agreements with Australia and U.A.E., including the proposed under discussion FTAs with U.K. and E.U., will play a pivotal role in driving growth. Domestic cotton prices have stabilized in comparison to international levels. Also, India, with adequate raw material availability, ensures the security of supply chain, thus providing necessary confidence to our customers, thereby improving our market share. Now, coming to our recent performance and updates. I am delighted to announce that we have achieved remarkable success due to our robust balance sheet, our strategic investment in supply chain, and a continuous focus to increase the contribution from value-added segments of the fashion, utility, and institutional business. Our quick response to market trends and elevated service levels have been key drivers to our achievements. In Q2 FY 2024, we achieved a significant milestone by surpassing the INR 1,000 crore revenue mark. This accomplishment stands as our highest-ever quarterly and half-yearly revenue, along with EBITDA. We continue to maintain our gross margin. Our EBITDA has shown growth as anticipated, driven by increased volumes and cost optimization. The full integration of the Bhilad unit has further aided the improved performance. Additionally, we commenced production in our fashion bedding unit as well as the new spinning unit at Alte, thus enhancing our capabilities. In light of the H1 performance and our view on end markets, we are revising our volume guidance for FY 2024 to a range of 90-100 million meters. This is while maintaining our margin guidance at 16%-18%. This is a testament to the strong acceptance of Indo Count brand and Make in India product. Not only our approach has elevated customer delight, but has attracted new geographies like Australia, Japan, and Latin America. As we strategically pivot towards the B2C, B2B, and D2C segments, we are achieving better traction for all our different categories of product. Our domestic brands, Boutique Living and Layers, are garnering enthusiastic customer responses. Now let me talk to you about our ESG initiatives. In our pursuit of future growth, Indo Count is taking significant steps to enhance its operational efficiencies. We are spearheading our digital transformation with seamless IT integration to streamline operation, gain better control on supply chain, and thereby enhance our customer services. This digitization empowers our employees with quick access to information, boosting productivity and improving client relationships. Furthermore, we are driving sustainability with an investment of approximately INR 50 crores in 10 megawatts solar power generation project in Gujarat. This will enable the Bhilad plant to run on 90% green energy by Q4 FY 2024. Our commitment to ESG extends to initiatives towards development of branded cotton like BCI, organic, and ELS cotton. Our collaboration with Paltek Seeds is towards research in improving cotton seed varieties for farmers, thereby helping them to sustain and improve overall cotton yield. Further, we are focused on wastewater treatment to reduce freshwater consumption and have achieved the ZDHC progressive level certification, showcasing our commitment to best chemical management practices and global standards. Now I come on to the awards and recognition. Indo Count Foundation has been recognized at the national level as second runner-up in the Best CSR in Healthcare category by ASSOCHAM at the second Healthcare Summit and Awards 2023, highlighting our focus on quality healthcare. Additionally, our brand, Boutique Living, received the e-Retail Brand of the Year 2023 award at the ET Retail, eCommerce and Digital Natives Award 2023. Now let me share with you our consolidated financial performance. I am happy to announce that we have achieved our highest ever quarterly sales volume of 27.8 million meters for Q2 FY 2024. Total income, INR 1,033 crores in Q2 FY 2024 versus INR 849 crores in Q2 FY 2023, a growth of 22% on a YOY basis. Total income, INR 1,780 crores in H1 FY 2024 versus INR 1,571 crores in H1 FY 2023, a growth of 13% on a YOY basis. EBITDA for Q2 FY 2024 stood at INR 189 crores versus INR 120 crores in Q2 FY 2023, a growth of 58% on a YOY basis. EBITDA margin for Q2 FY 2024 stood at 18.3% versus 14.1% in Q2 FY 2023, a growth of 420 bps. EBITDA for H1 FY 2024 stood at INR 319 crores versus INR 261 crores in H1 FY 2023, a growth of 23%. EBITDA margin for H1 FY 2024 stood at 17.9% versus 16.6% in H1 FY 2023, a growth of 135 bps. PAT. PAT, INR 114 crores in Q2 FY 2024 versus INR 67 crores in Q2 FY 2023, a growth of 70%. PAT, INR 188 crores in H1 FY 2024 versus INR 144 crores in H1 FY 2023, a growth of 30%. EPS is INR 5.77 in Q2 FY 2024, and for the half year FY 2024, it is 9.49. Our net worth is INR 1,941 crores as at 30th September 2023. Our net debt to equity as of 30th September is 0.33. With this, I hand over back for the question and answers. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one to ask a question. 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 Mr. Jatin Damania from Swan Investment Managers. Please go ahead. Thank you for the opportunity. Sir, congratulations on the good set of numbers. Sir, just need a couple of clarifications. When you said that our margin is around 18% in your presentation for the current quarter, but when we exclude the other income, we are getting 15.9%. Just wanted to understand the derivation of 18% and the difference in terms of other income. What part is linked to an interest income, and what part is linked to a forex? If you can explain that. Yeah, I will request our CFO to answer. In this quarter, we have an income of over INR 25 crores, of which exchange rate difference is about INR 14 crores, and interest and other subsidies, we have about INR 11 crores. Sir, shall we consider this INR 14 crore as a part of our revenue rather than a consistent other income? Yes, the exchange difference is a part of sales, actually. But for accounting standards, we have to show separately. These are all sales income only. Okay. The unhedged portion, whenever it goes on spot with the hedge when compared, the income gained on this unhedged portion is accounted as other income. This is as per accounting standard. But it is a part of our sales revenue only, but it has to be shown separately. Sure. When we consider that, it comes to around 18% margin, which we reported in this quarter. Sir, second question is on your expenses. If you look sequentially, our expenses for employees as well as other expenses have gone up on a frequent basis. Can you explain the reason? What is the reason for the increase in both employee and the other expenses during the quarter? See, you have to compare the H1. If you see that H1, INR 150 crores, this has gone up because of the increment and the addition of our different units wherever we have CapEx. So those have been triggered and established and commenced. So there is an incremental quarterly to this extent because we have paid the dues in this quarter. But for the year, you have to take on the H1 basis. If you compare as per last year, it is more on similar line. Going forward, as the revenue increases, this will marginalize. Okay. That means for the annualized basis, we can consider INR 300 crores as the employee expense and accordingly the other expenses for the full year. Yes, please. Sir, last question before I come back to a queue. Sir, just wanted to understand now we are generating such a huge cash flow, and there is no debt on the book. Going ahead, how shall we once you look in the capital allocation strategy because our CapEx is, we don't have any more CapEx lined up, and given the operating profit that we are generating in quarter-on-quarter basis, we will be generating a huge cash flows for 2025, 2026. Can you help us in terms of understanding the capital allocation strategy? Yeah. Going forward, we are prioritizing the allocation of capital towards more value-added businesses because that gives us substantial growth opportunities. With the investment into fashion bedding, utility, and institutional bedding, we see a big uptick in the market towards acceptance of our brand. We have successfully completed our spinning and our fashion bedding unit and both the brownfield and the acquisition CapEx. We have almost invested INR 1,100 crores in the last two years. So now going forward, we will sweat this asset and see how we optimize our cost and have operational efficiency. Our objective will be to ensure that we finance our growth going forward, and the priority is also to reduce the debt overall. The board will take appropriate decisions regarding the future course of action. But the board is cognizant of the fact that we have to fund both the growth and reduce our debt going forward. This will be the major focus onto capital allocation strategies going forward. Sure, sir. Thank you, sir. That's all from my side, and the best wishes for the festive season. Thank you. Thank you. Thank you so much. I request all the participants to use handsets while asking a question and not the speaker mode. Yes, sir. Thank you. The next question is from the line of Kapil Jagasia from Nuvama Wealth Research. Please go ahead. Sir, first of all, congratulations on a very good set of numbers. Thanks. My question is on volumes for this quarter. Are some volumes for next quarter being pre-booked this quarter? No, that's the reason. You see, we have already given a guidance for volumes when we started this year to 85 to 90. Looking at the momentum and a better traction now, it has compelled us to give a better guidance going forward. However, we have kept the long range guidance of 90 to 100, keeping in view the various uncertainties. For this quarter, we have achieved because the second quarter seasonally is good for us and because of the new customer acquisition and the geographical expansion, we have achieved better volumes during this quarter. Okay. This would be kind of one-off quarter in case of this extremely good volumes, because if we go by your guidance of 90 to 100 million meters, the next two quarters should be producing around volumes of around 20 to 25 million meters on a quarterly basis. Would my understanding be correct? No, I think so, because, Kapil, if you look at our guidance, if I would have ended with 91, 92, I would not have revised my guidance at all. We are quite confident of the growth in our H2, looking at the momentum, and that's why, we have upped our guidance to almost 100 million meters. While our ambition is to see that we end up with our higher guidance, but still the geopolitical situation is compelling us to consider all the uncertainties around us, and that's why we have given this range as a buffer. Right, sir. Sure. This helps. My next question is on the realizations now. It has slipped further in this quarter, so would that be a case of change in product mix which led to this fall in realizations, or is it something else? Just your color on this. We had given a clear direction, if you remember in our last guidance that the cotton prices have corrected when you compare YOY, and that correction has compelled us to give a price difference back to our customers. Having said that, you should look at us from both volume perspective and margin perspective, because the other things are beyond our control. That we are maintaining the margin guidance and upping our volume sale going forward. But it will not be right to say that this is a sort of a one-off quarter and we tend to invest more into our B2C and D2C strategies and more value-added activities to see that how we further increase our value realization going forward. Right, sir. Because if I see the cotton prices and also the freight cost, that has been kind of stable over the last two quarters, but the realizations have kind of dropped. So are the new customers coming in and looking at the cotton price decline, they are looking for this decrease in realizations, or how is it? Like we are only offering them the decrease in realization because of commodity cost decline. No, no. We are not offering any discount to new customers because the Indo Count brand is very well-known and we are the largest global bed linen player, and we have a complete 360 degree solution as far as bedding is concerned. So we are investing, as I said earlier, into more value-added product, and we had given direction that our fashion, utility, and institutional bedding will be 30% of our overall revenue in the coming year. Our focus should be that how we can sweat our assets, utilize our capacities going forward, how we maintain our margin. The product mix may change to certain extent and the other factors sometimes compelling us to address the price range is also there. But having said that, there is no discount on the price levels which we offer to any customer when we are maintaining a different price realization going forward. Right, sir. Just my last question on gross margins, would need some flavor from your end. These gross margins have increased over the last few quarters to around 54%-55% as compared to the historical 50% levels. Now this commodity inflation has stabilized, so what should we pencil in gross margins from a medium-term perspective? Like 54%-55% would be here to stay, or it would be tapering down a little bit? Oh, it will stay this similar numbers because if you compare our H1 to H1, you will get a flavor of that, and if you compare even to our financial year 2023 number, you will get a decent direction on our gross margin. That is the reason I mentioned in my speech earlier that we are maintaining gross margin because the company is regularly investing into the supply chain, taking proper position onto the raw material side and hedging the position accordingly with the order book position. So the gross margin are here to stay and, definitely we will work on further optimization to see that how we can further improvise the gross margin through more value addition and through more cost optimization. Sure, sir. This helps. Once again, congratulations on a great set of operational numbers, sir. Wish you a happy Diwali in advance. Thanks, Kapil. Wish you the same. Thank you so much. The next question is from the line of Nirav Savai from Abakkus. Please go ahead. Thanks for the opportunity, sir. Many congratulations for achieving this INR 1,000 crore milestone revenue in a single quarter. Sir, I have three questions. One, you had alluded in your previous calls also that fashion, utility, institutional will contribute about 30% of revenues going forward. How has it progressed, and what is the contribution of these segments in the quarter? Last year we had reported 19% overall contribution from fashion, utility, and institutional to our overall revenue. This year we are slowly seeing an uptick because now we have commenced production on our fashion bedding unit. You should look at the full year numbers rather than quarterly, but there will be an uptick into the overall revenues coming from these particular categories of product. Okay. Fashion has already started production and it is already getting sold, or what is the progress on the fashion bedding side? Oh, it is performing very well. We have commenced production and we have interest of the customers. We are feeling quite confident with the setup which we have to deliver the product, and we have installed world-class facilities to see how we can add more value to the fashion trend and deliver to our customers. We are seeing an uptick here, as I mentioned earlier, and we will be able to deliver much more better results. But I request that you should see from a yearly perspective rather than on a quarter-to-quarter basis. But our endeavor is there to see that how we reach our 30% goal of the overall increased revenue in these three particular categories. There is a big scope in this and we have also mentioned in our presentation that the China Plus One strategy, if you look at on the bedspread and other items, the China market share is slowly decreasing and the share of India is increasing. So we see that there is big opportunity in this particular category, and we are working upon it towards it by establishing both back end and front end. Right. Secondly, sir, apart from U.S., we are also looking out for many newer markets. As you said, UAE there is already an FTA signed and Australia there is an FTA signed. So what would the proportion of revenue, if we were to look at non-U.S. revenue? See, we are increasing our non-U.S. market and we thank the government for giving us an opportunity both in Australia and UAE with the FTA, and we see an uptick in demand from these particular countries. That is why we have been able to successfully add customer base from Australia, Japan, and Latin American countries. Also in UAE, I need to mention that the GCC countries are looking favorably towards India for their supply chain. So I think there is a good opportunity for us to develop non-U.S. market. As a company, currently where we stand like around 70%-75%, which comes from U.S.A., slowly we are working on how we can improve the non-U.S. market share to almost like 40% and 60% to U.S.A. I am glad to say that our strategies are in the right direction, and we will provide you much information as we move ahead. We are also looking favorably towards having U.K. FTA sooner or later. There are things which are creating hurdles in it, which are being reported in newspaper every weekly. Both the government would like to resolve this very quickly, and we see that once this happens, it will also add on to our market share very well, positively. Right. The future growth which we are looking at is not only U.S., it is largely from the non-U.S. geographies where our presence is relatively lower, and that is where we see higher growth coming in? U.S. is also a very organized market, and as we always mention, that the categories which we have earmarked and embarked upon to develop that fashion, utility, and institutional bedding. There is a large market out there which is still to be tapped. Definitely we are working on that strategy. The e-commerce is shaping well which is a growing market share for us. Definitely, as you rightly mentioned, the non-U.S. market is also a big focus for us. The domestic market, I would also say we have been working upon it, and we are finding good inroads into pan-India distribution, and we are getting a good response to our brand. We see a good growth coming in in this area as well. As rightly mentioned, the non-U.S. market, the domestic market, the U.S. market with the new categories and the FTAs all will help us further improve our market share both for the country as well as for our company. Right. Last one from my side now. As you rightly said about large part of the CapEx is already done, and for the next 2 years we would be looking at sweating the existing capacities. What would be the CapEx which has been outlined for 2025, 2026? Are we looking for any other larger expansion plan or any inorganic kind of an acquisition in future, or how do we see the capital allocation side? Because we understand that a lot of CapEx capacity is already there in place. So what would be a CapEx for this year and next year? It will be routine capital expenditure, but we are not leaving any opportunity, both on the organic and inorganic side, to see how we can further improve our product base, our customer base, and our margin base. There are a lot of opportunities around us for value-added products to be exported out of India, and the board do recognize that from time to time, what are the opportunities, and accordingly, they will take appropriate decisions. But as of now, there are no large plans for investment coming in except for some renewable energy towards cost optimization, and then reducing our overall debt so that we become a debt-free company almost. These are the priorities for us. There are enough priorities out there for India to grow in the textile market worldwide as a global player. I think the board will take these decisions at appropriate time accordingly. Right. No large CapEx, at least in the foreseeable future for 2024, 2025. If at all something comes up, then it is a different case. Yeah, definitely. Sure. That's it from my side. Thank you very much. We wish you all the best. Thanks. Thank you. Thanks. Thank you so much. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Hello. Thank you for the opportunity. Congratulations for a strong set of results. Thank you. I wanted to understand, most of the questions have already been asked earlier. I wanted to understand, on cotton outlook if cotton prices increase because of the news articles talking about lower cotton production, do you think there could be a risk to the margins? No, not at all. You see, the overall exports of Indian cotton has diminished and the crop which is now getting to the market is quite decent, and we do not hear much of negativity about it, except that some association, they do revise the numbers. But what we hear and what we believe is there will be enough cotton for Indian players to both utilize and play on. So the range would be similar levels like, say, around 60,000 to 65,000 in the current year. That is what we expect. And whatever imported cotton also towards branded cotton is getting imported, as India is a big market for producing goods out of them. And we see not much of a concern on the cotton supply chain side and as well as the prices. So it will not impact much of it. As a policy, we also have a decent policy towards how we hedge our order book position and invest into supply chain to see how we can secure the supply chain to our customers. Okay. That's great, sir. Sir, also I'd like to understand by when will you be able to utilize your current capacities fully? We have already indicated, Prerna, going forward, like in the next 3, 4 years, we would like to sweat all our assets, the capacity which we have built on almost 153 million meters. There are large opportunities out there for Indian companies to tap. With our clear-cut strategies onto B2C, D2C, as well as domestic market, e-commerce, value-added products. As a company, we have invested both on the back end and front end to see how we can tap this opportunity. We are on the right track. When you look at our capacity utilization currently and the results which we are getting from our customer base, and also adding new geographies and new customer base, which is adding overall to our performance, we believe that we should be able to double our revenue in the next 3 to 4 years. Okay. Sir, by when do we see target net debt levels to come in? What is your target net debt level over the next 2, 3 years? See, as I mentioned, our priority is to see how we can conserve cash and fuel our growth. That is the first priority because we have a lot of opportunities, both organic and inorganic, to invest into and build the company further and utilize our assets much more effectively. At the same time, our philosophy has always been to reduce the debt. The priority is also to see that in the next 2, 3 years, we make the company debt-free with a free cash flow. But it will be prudent for us to say that the board takes on these decisions very rightly, balancing the act between both growth and the debt reduction from time to time. Understood, sir. And sir, last question on domestic market. You mentioned that there is a lot of opportunity in domestic market. Just wanted to understand, how do you see this geography panning out over the next 3 to 5 years? See, India as a country is growing into a $5 trillion economy, which we all know it is getting much more organized with the UPI payment and the middle class is growing. If you look at the various numbers of consumption, the overall consumption is growing. We are a young country, and we see that the entire demographic is positive towards consumer goods. And we as a brand are finding a lot of encouraging responses towards both our brands, Boutique Living and Layers. And we have set up the fundamentals right by setting up a good team, a good product range, a good set of distribution network, and we are building on more point of sales and taking the feedback from our customers and growing this market. So in the next 3 to 5 years, we see a good growth, and we are targeting that at least, in the next 5 years, we reach 10% of our revenues or more than that from the domestic market. And there is a very large opportunity out there, how people shop and how they consume home textiles going forward. So we are very optimistic about this and positively, we are taking the correct steps towards this direction, Prerna, going forward. Yeah. Okay. Sir, one more question. Just wanted to understand, how much of your revenues would have come from the new segments of fashion utility and others in this first half and in this quarter? As I answered earlier, Prerna, last year we reported 19% of our revenue came up from fashion utility and institutional business. We have established a new factory, and we have commenced the production. This is world-class facility, and we have been now recognized as one of the key players in Asia to supply filled product. We are seeing a good uptick, and it will be better for us to evaluate on a full year basis. Because when the winter starts, there are more needs of filled product. We see an uptick on the institutional side of the business also because the consumers are traveling more, they are using more hospitality products. We feel that we should grow this number, but we should be able to give a better guidance in our Q4 results. Understood, sir. Thank you for your detailed responses, and all the best. Congratulations once again for a great set of numbers. Thank you, Prerna. All the best. Thank you so much. The next question is from the line of Sajal Gupta from FE Securities. Please go ahead. Good afternoon, everyone, and many congratulations to you and the team for achieving such stupendous results. They have really been outstanding if you compare it to the rest of the companies in the industry. Plus your sales guidance getting enhanced is also a very, very positive thing. I just wanted to understand one thing, what has transpired to achieve such good EBITDA margins. Because as I understand, GHCL, when you had done an acquisition, it was around 10% margins. Is it the GHCL margins have moved up, or is the rest of the business doing a higher margins to compensate the GHCL margin? Just wanted to get an idea on that part of the business of yours. Thanks for your wonderful question. You see, GHCL, when we acquired, we had stated that we will bring about a complete better integration into the overall culture, the overall product basket, and the overall marketing strategies to see how we sweat those assets. We communicated and engaged with our existing customers, and we are able to offer them better end goods. We were able to communicate much more effectively that how we can collaborate more to increase their market share, and we were able to convince that. That brought in a dramatic change, and they were confident about Indo Count brand as well as our product categories which we have developed recently in the last four, five years on the fashion, utility, and institutional side. We got a very good opportunity to cross merchandise and offer them better end products, which they grabbed. That brought in an entire elevation to how they marketed their products. This brought in the change, wherein we were able to improve the margins what earlier GHCL used to have. Also on the better utilization of the capacities too, we were able to cost optimize whatever we could on the raw material side, on the supply chain, and other operational activities, to see that how overall we can improve the performance of this asset. We will continuously work upon it to see that how we can further generate much more value-added products from this facility, not only from our own facility, but this newly acquired facility. I am proud to say that we have been able to retain each and every single person when we took over this unit, and it has gelled with our culture, and they are now enjoying their work. So the overall efficiency and the productivity of our people has also increased substantially to provide us this success. It is wonderful to hear about all those things. I just wanted to know about this margin. That means what you are saying, that adding new value-added products, the margins could do have a scope to further move up going forward. Sure. Fantastic. This is all from my side, and I wish every one of you a very happy Diwali, and a fantastic bonanza, which you have given on the results side. Thank you so much for that. Thank you very much. Thank you, and wish you also a very happy Diwali. Thank you. Thank you. The next question is from the line of Sangeeta Purushottam from Cogito. Please go ahead. Yeah. Hi. Thanks for the opportunity and congratulations for a great performance. Thank you. Sir, my question was that what is your exact capacity utilization likely to be this year? Would it be about 60%? So as per the guidance given, it should be beyond 60%, and currently it is at 75%, but if you look at on a yearly basis, it should be over and above 62%-63%. Okay. So if the growth that we've seen continues and as you've outlined the various opportunities, are you likely to exhaust your current capacity by end of 2026? That's what our aim is, and that's what the guidance we had given last year also. We have mentioned that once we complete our capacity expansion, both brownfield and the acquisition, our focus entirely is to see how we sweat our capacities. And we have got a big market opportunity out there, and the company is with the right strategy, with the right financial balance sheet. We are able to penetrate and grab much more market share out there in our product range. And we are a focused company, so that helps us into bringing out the optimization into all the activities we work with. So by, say, in the next three, four years, we should be able to exhaust our capacities. And as and when needed, having a good balance sheet, and we haven't leveraged it any given point of time, so there is an opportunity, and the board will take appropriate decision to expand further. Right. Okay. Thank you. Sir, what is your domestic sales as a percentage of your total sales right now, and how has it grown in the last 2 to 3 years? Would you be able to give us some numbers on that? See, FY 2023, we were able to clock 2.5% of our revenue coming from domestic sales. Going forward, we will have a better on the increased revenue. As I mentioned, our endeavor is first to establish both our brands very well among the Indian consumer, to provide them necessary services, to set up the back end, to provide the distribution base so that we can deliver correctly and speedily. All these factors, we are working upon, and we have got a good traction and encouragement from all our consumers, and they are accepting the goods. Looking at overall Indian consumption moving up because of our economy moving up, we see a big opportunity here, and we have the right ingredients to see that how we evolve to a better number going forward. Once we are on our Q4 call, we will be able to better guide how much is the revenue on the overall domestic side. Right. In the domestic market, are you focusing on the higher end or the lower end or across the spectrum? It is across the spectrum because first we launched Boutique Living, which is an aspirational brand, and we are having a good success on this. It is positioned from mid to high end. The second brand, Layers, is a value-driven brand where we are targeting to provide a solution to the middle-class families, which is a growing class in India. We are targeting both the ends, and it is finding a good traction. It is across the spectrum. We are not attacking the lower end, the lower of the market. Right. Okay. Our last question is on margin. When I look at your margins over, say, the last 10 years, then with the exception of FY 2016, the margins are showing that they are at the highest that they've probably ever been. You are guiding for that range to remain. Is there anything which is causing a structural uplift in your margins, and will it scale over the next 2 to 3 years? Of course, all our strategies are toward value-added creation because we have moved away from a commodity supplier to a value-driven supplier, high value-driven supplier. As we have mentioned time and again, there are opportunities out there on the fashion, utility, and institutional side where China dominated all the time, and this is a high margin business. Secondly, on the e-commerce side, the licensed brands also provide an opportunity for higher margin business when you promote it correctly. The domestic business also is a good margin business. As a company, you see, we are working upon various B2C strategies to see how we can scale our margin up. Over and above this, if we utilize our capacities well, if we optimize our cost, if we invest into new technology, automation, digitization to improve our overall operational efficiency, thereby we will cut our cost. You see that we are also investing on the energy side through renewable energy like solar and wind, so that we reduce our overall energy cost as well. Going forward, the various strategies, whether on the marketing side, whether on the operational side, will help us improve our overall margin. Thank you, sir, and all the best. Thank you. Thank you so much. 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 Gunjan Kabra from Niveshaay. Please go ahead. Hello, sir. Firstly, what a superb set of numbers, and thanks for the opportunity. I wanted to understand if the volume growth on account of new customer additions or positive demand scenario. If you can bifurcate between the two. This is on both accounts. You see, because we have an existing business where we have a good customer base, which are relying more on us towards their supply chain. There is an uncertain world out there, so they are banking upon both India and our company as well is performing quite well with the necessary infrastructure, with our lean and mean and the China Plus One strategy, which we have been always mentioning about. You see, a lot of reliance is there to the outside customers to de-risk themselves from China and to have more businesses in India. And we stand out with our class of infrastructure and product range and our overall service level to see how we can deliver more. So that is part one. As I mentioned on the other part, that we have been successful in adding new geographies and new customer base, and this is slowly growing post these FTAs with Australia, U.A.E., and also we are targeting other countries like Japan and Latin America. So our overall marketing strategies is towards to build more new markets and new customers. And with the kind of a complete bed linen solution which we have as a product range and being a focused company, we are able to provide a much more better value proposition. So that is helping us gain much more market share going forward, and we will work upon it to see that how we can further grow our revenues by sweating our assets going forward. Okay. And sir, how is the demand scenario in the U.S. like with customer engagements? Do you think the growth that the number that we did in this quarter is sustainable for the next two quarters or in the near term? And how is the customer engagement in the Europe and the U.K. likewise? We are witnessing signs of recovery. And as I had mentioned earlier that the customers are also looking to do better business YOY basis because a lot of headwinds were there in FY 2023, which have diminished or gone away. And therefore we see a big surge in the order inflow. And that prompted us giving a better guidance in the very beginning of the year to from, say what we clocked 75 million last year to 85 million to 90 million. And the recovery is enabling us to further improvise our guidance to, say, 90 million to 100 million. So we see that there is a momentum and there is a demand for the right product, for the right price, and for the right service level. So that we are formulating as a strategy to see how we can accomplish that. Our omnichannel strategies are working quite well to see how we can improvise further on both the market share as well as our end of products. Okay. Thank you so much, sir, and good luck to you and the team. Thank you very much. Thank you so much. As there are no further questions, I would like to hand the conference over to the management for closing comments. Thank you. We maintain our unwavering confidence that Indo Count is poised for sustainable growth, which will not only enhance our brand but also bolster our profit margins in the future. As demonstrated by our past performance, we are optimistic about our ability to penetrate the market further through our B2C and D2C initiatives. Our track record is a testament to our potential for a promising future. That is all from my side, and I wish all of you a very happy Deepavali. For any further information, kindly get in touch with me or Strategic Growth Advisors, our IR advisors. Thank you. Thank you so much. On behalf of Indo Count Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.