Q1 23/24

Aug 8, 2023

Summary

Q1 FY24 volume grew 5% to 20.03 million meters, while EBITDA and PAT eased YoY. Guidance calls for 85–90 million meters and 16%–18% margins for FY24, with capacity utilization and value-added growth central to the longer-term plan.

Ladies and gentlemen, good day, and welcome to the Q1 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 the 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 call, please signal an operator by pressing star then zero on your touch-tone 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 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 Q1 FY 2024 performance. Let me first highlight the industry and business scenario. After a challenging and subdued FY 2023, we now anticipate demand revival across global markets due to realignment of inventory levels at the retailer's end. In current Q2, we are witnessing incremental business, and our order book position continues to improve. Despite 5% volume increase in Q1, we expect to achieve double-digit growth in next three quarters, thus meeting our volume guidance of 85 to 90 million meters for FY 2024. The long-term growth prospects of the Indian textile industry are intact. As per the trend witnessed in our key markets, we have observed global companies have stepped up efforts to implement the China Plus One strategy of diversifying their supply chain. The key export markets focused on shifting to India for a long-term supply, and the government's favorable policies provide scope for textile companies to post robust growth in the long run. We strongly believe India's textile industry possesses immense potential to achieve the target of $300 billion by the year 2030, fueling economic growth, generating employment opportunities, and showcasing the nation's cultural heritage to the world. With a strong balance sheet, financial prudence, and laser-focused approach, we continue to remain positive to grab any opportunities in the textile trade. Now, coming to our recent performance and updates. During Q1 FY 2024, we achieved 5% volume growth and clocked 20.03 million meters versus 19.1 million meters in Q1 FY 2023. We have maintained our operating margins for Q1 FY 2024 at 17.2%. Over the last two years, we have built capacities through organic and inorganic routes. I am happy to share that our CapEx projects are completed as per timeline. With this, we position the company as the largest global bed linen player. Updates on B2C and D2C segment. We are strategically moving towards B2C, B2B, and D2C segments with better margin and value proposition business. The company is focusing more on enhancing our presence across the digital marketplace and high-quality product offering. Our e-commerce sales are growing, and revenue share is improving. Our domestic brands, Boutique Living and Layers, both are getting good traction. To summarize, I would like to add that our strategy revolves around adopting a customer-centric approach, which enables us to create innovative products, move up the value chain alongside our customers, and increase our market share. This is also the result of several years' efforts of work improving the business mix, shifting to higher ticket size and value-added segment. Let me now talk to you about our ESG initiatives. Sustainability is deeply rooted in our culture and business operations. Our philosophy, which transcends into policy and practices, balances the aspiration of being a sectoral benchmark in value creation and corporate citizenship. On awards and recognition, I am happy to announce that Indo Count Industries Limited has been awarded the Niryat Shri Gold Trophy. The Niryat Shri is awarded to member exporters of FIEO for achieving outstanding performance in the exports of goods and services. Now, let me share with you our consolidated financial performance. I am happy to announce that we have achieved a quarterly sales volume of 20.03 million meters for Q1 FY 2024. Our order book continues to remain healthy, and we continue to remain optimistic and expect volumes for FY 2024 to be in the range of 85 to 90 million meters. Total income, INR 747 crores in Q1 FY 2024 versus INR 722 crores in Q1 FY 2023. EBITDA of INR 130 crores in Q1 FY 2024 versus INR 141 crores in Q1 FY 2023. PAT, INR 74 crores in Q1 FY 2024 versus INR 77 crores in Q1 FY 2023. EPS is INR 3.72 in Q1 FY 2024. Now, I wait for the question and answer. 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 handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, you may press star and one. The first question is from the line of Kapil Jagasia from Nuvama Wealth Research. Please go ahead. Hello, sir. Sir, my first question is on the volumes. As most of the retailers have specified improvement in demand and also a correction in inventory at their end from the last three, four months, volumes have been flattish sequentially. I wanted to know why it hasn't been a specified pickup in volumes in this particular quarter, and I know you have specified from next quarter it would pick up, but my question pertains to this particular quarter. So as we all know, the first quarter is a bit slow in our industry. Even then, we have performed well if you compare on a YOY basis by almost 5%. As we move ahead, once the demand revival is better, we will perform much better. Due to our order book position, we already gave you the guidance of 85 to 90 million meters. So we believe that you should look at us from a full year perspective. Okay. Sure, sir. Sir, my next question is on realizations. Now, it has been on a downtrend since last two quarters. So what would be your take on it? Would the realizations be at these levels, or it would be going further down? What would be your take on it? See, last year, cotton prices were in the range of INR 90,000 to INR 1 lakh. Currently, if you observe, the cotton prices have corrected and gone down. Hence, there is a difference in ASP if you compare on a YOY basis. Now, going forward, yes, certainly if the raw material prices are better, we will be able to hedge our raw material better. Secondly, the utilization of the capacities will also help improve our margins further. Our entire focus is to see how we can promote more value-added items. This will also help us to evolve and get better margins on our sales. So all these factors will definitely help us improve our margins going forward. We expect that the average selling prices going forward may improve to a certain extent. But sir, if we look at the cotton prices over last three, four months, it has remained stable. Even then, our realizations on a sequential basis have dropped by around 6%-7%. So, my question was pertaining to that. There is a stable commodity cost, but the realizations have gone down. Just wanted to understand on that part. Yeah, you should look at the full year, Kapil, when you look at our realization, because we have been able to provide a margin guidance also of 16%-18% together with the volume guidance. So you should look at the overall picture for the full year rather than the calculation on a quarterly basis. Okay. Sure. And sir, my final question would be on the debt levels. What would be the debt as on June 2023, and what would be your outlook on it by the end of FY 2024? See, I think we would be able to give you a better picture at the end of H1. Certainly, as we have been stating earlier, too, whatever free cash flow generation would be is to reduce our debt. So overall, if you look at the year-end, we should be able to reduce our debt by another INR 200 crores. Sure, sir. That helps. Thank you so much. Thank you. Before we take the next question, a reminder to participants that you may press star and one to join the question queue. The next question is from Ashutosh Chaubey from Centra Insight. Please go ahead. Hi, sir. This is Ashutosh. Thank you for the opportunity. Sir, I have a question with regards to any guidance. Now we have done a lot of CapEx in last two, three years, organically and inorganically. So with this 153 million meters of the capacity that we have, how do we foresee ourselves in next three, four years? Where do we want to reach, say, on a revenue basis or probably on utilization level basis? See, we have already given a capacity utilization of more than 60% for FY 2024. Okay. Going forward also, we have given a statement that in the capacity utilization, we will be able to bring about a 2x revenues in the next three to four years. Okay. This is how we intend to move forward. Okay. This year we are roughly looking for around INR 5,000 crore-INR 6,000 crore of revenue, right? With this regard, what are the new markets that we are tapping with this FTA coming in? I know that the company is probably planning to get into U.K. and Australia, but how do we see this FTA panning out? Because we have been talking about this FTA thing for probably over two years now. What is the update on that? See, already we have seen an uptick in demand from Australia and UAE. Their FTA has already been achieved. Currently, the Commerce Ministry is working with U.K. and Canada, which should happen in this financial year, which is what our expectation is. Secondly, you see the company is working upon various strategies. It is not just we are dependent upon the FTA because we are making attempts because we are market ready with the capacity. We are a customer-centric company where we do promotions into various business distribution channels like whether it is e-commerce, whether it is domestic business, whether it is B2C strategies, whether it is the value-added segment like fashion, utility, institutional, where we are trying to grow our business. The China Plus One strategy is also helping us to get better market share in the markets apart from the U.S., where things are going to improve in the future. Solely we are not dependent upon the FTA, but it is the company's strength, its positioning, its strategies evolving various marketing approach. That is what is helping, and our competitive advantage. India as a country itself is positioned with a lot of competitive advantage. We believe that all these factors together should help us achieve the growth in the coming years. Okay, sir. Understood. Sir, one last question. With regards to the home textile business, I just want to understand Indo Count's point of view. A lot of players in this home textile segment have made a comment that they are not able to pass on the prices very often, and they have to observe the cost, and that is affecting their margins. But sir, if you go through the Indo Count statement, you have been able to pass on the prices on a better way than compared to peers. What is this thing that is helping you to pass on the prices but not the other home textile players? See, we as a company have got core strength. We have innovation, quality, and services, which are our core strengths. Our customer-centric approach helps also us into positioning both our product and our marketing strategies around it. We have been building brick to brick our distribution channels in various markets like the U.S., U.K., and Dubai. We also intend to develop various other distribution channels in other markets too, as and when the FTA happens. So continuously we are working upon innovating ways how to promote our product, get into better creativity and product development, and help the customer get its market share, maintaining the competitive advantage. So the value addition, which we are trying to do both in goods and services, help our company to achieve better results. Okay, sir. So probably because we have a far better reach and connect to our customers, that is one of the reasons that we are able to pass on the prices. Is it to assume so? Of course, we are in made-to-order business, so we have to work around the CRM, that is the customer relationship management, but it is not that only thing. We with such a flexibility, scalability of capacities and our capabilities around it is helping the company to provide a better value proposition. The product mix which we are catering to in the bedding side of the business is a full 360 degrees, which we are offering in the soft furnishing side. So I think with the kind of product basket, with the kind of innovation which we bring to the table, with the kind of service level which we are able to provide to the end customers, all this help us into giving a better result, both on the volume as well as the value terms. Okay, sir. Understood. Okay, sir. That will be all from my side. Thank you very much, and all the best ahead. Thanks. Thank you. The next question is from the line of Hemang Kotadiya from Anvil Share and Stock. Please go ahead. Yeah, sir. Congratulations on the good volume and margin front in this difficult time. Sir, where we stand at Top of the Bed as a percentage of sales currently, like our fashion or utility bedding or institution bedding, and where we have target to reach by next two years, basically by FY 2025? My second question on- Can you speak louder a little bit because your voice is faint. Hello, am I audible? Yeah. Yeah. Just louder. Yeah. First of all, congratulations on the good volume and margin front in this difficult environment. My first question is on Top of the Bed, so basically your fashion, utility, and institutional bedding side. What is the percentage of sales currently we are getting from that, and target to reach at what level by FY 2025 end? My second question is on what is the premium we are getting on the basically fashion bedding compared to the normal sheets business? Yeah, this one. We have already reported in FY 2023, 19% of our revenues comes from these three segments, which are fashion, utility, and institutional bedding. Right. Going forward, we have also invested into a fashion bedding unit, completely vertical and world-class, state-of-art facility in order to service our customers. So that will also bring us particular advantage in order to service our customers with better lead time, better product innovation, and better shipments. Now, having said that, going forward, we will be able to provide you by the year-end, because you should always look at these segments from a full year perspective. And we have already commented that we believe that we should be planning to have at least 30% of our revenue from fashion, utility, and institutional bedding in the next three to four years when we double our revenues. So from that, we intend to see that we develop this business to the extent of 30% overall. Right. And on the premium on the margin front, or any color on that? No, absolutely. When you add something to a particular product and you do value addition apart from the commodity, like the sheet set which we supply, definitely there is a value enhancement. And overall, if you look at the company, we should be able to increase at a company level, our EBITDA by almost, say, 100 to 150 basis through this mode. Okay, sir. Thank you and all the best for the future. Thank you. Thank you. Before we take the next question, a reminder to participants that you may press star and one to ask questions. The next question is from the line of Ashwini Agarwal from Demeter Advisors. Please go ahead. Good afternoon, Lalpuriaji. Good results in a challenging environment. Just a couple of questions. You mentioned that Q1 tends to be a little soft. I just want to understand the cyclicality. I mean, why does Q1 tend to be soft? Any particular reason? Because the festive season is over, and you see there is only one reason, that is the back to college and back to school and the vacation. They all fall under this particular season. They are not major events for the retail to promote their product during this season. That is the reason you see normally the Q1 tends to be a little bit slower than the other three quarters. Is there a fabric mix difference or product mix difference between the fall season and let's say, what you see in the June quarter, which adds more value? Or is there some other way to understand the seasonality of your business? So Q1 is weak because there is really no reason for people to be buying new bedsheets or new bedding things. But fall should be very strong because it is back to school and colleges and so on. Then there is gifting and Christmas. So Q2 and Q3 would be the stronger quarters for you? Would that be a fair way to think about it? Yeah, you are absolutely right. Q2 is the largest, and Q3 is also equally good. But as far as you see the fabric mix is concerned, since we are supplying 70% of core business to the U.S. retailer, mostly it remains static. Of course, during the festive season, there might be some value additions which may add upon, but certainly it is a continuous, consistent product mix which plays their role during the year. Only that the demand during the first quarter is a bit slow. Okay. Just looking out a little bit medium-term, somebody else also alluded to it, and you have often said that you want to grow your revenue 2x in three to four years. In terms of feedback that you are seeing from on the ground in the U.S. and Europe, your commentary suggests that things seem to be okay. But yesterday, there was a results release from a garment maker who seemed to suggest that things are quite soft. So we are getting these conflicting signals from the marketplace. What are the risks that you see on the horizon, if any? Of course, you see post-COVID, you have been seeing some sort of uncertainties creeping into the economical stage. You always need to be both optimistic and as well as cautious. So cautiously optimistic is the order of the day. Having said that, you see there are various factors which points that the textile trade overall will improve from India going forward. So India is at a good position. India has got the raw material, India has got the complete value chain, India has performed well, and we as a company also have performed well. The category which we are serving is 58% of the market, and the FTAs are around the corner. So all these factors provide a positive outlook. Of course, we always need to consider somewhere some uncertainties which may creep in. Overall, we feel that going forward, it is a positive outlook for both our industry and country. We are well-positioned as a company. Our balance sheet is robust, and we have the capacity. We have a customer-centric approach. We have built upon various marketing strategies which are paying off. As you can see, during the tough times also, we were able to perform better. So we feel that we are confident enough going forward that our brands, our licenses, our brand recall value, and whatever, which where we have been able to connect with the customers, is doing pretty well for us. So I think going forward, we are quite positive about that we can utilize these capacities in the next 3 to 4 years and grow 2x in the coming long term, both midterm and long term. Okay. No, that's great. One final question from me, sir, is that when do you think you'll start spending money again to expand capacity? Two years from now? Would that be a fair assumption? We already have a capacity, actually now 153. So our entire focus is how we sweat this asset first. So our focus is to do that. While we say that, we have always maintained that both organic and inorganic opportunities which may come into our way, we certainly as a company would look at it because we are financially well-positioned. So we have never leveraged our balance sheet. We have a robust balance sheet number. Our net debt was only INR 589 crores, which we reported in end of FY 2023. So I think with the kind of positioning we as a company should look forward to all types of growth going forward. Whenever there is a need to spend money judiciously, there is a reasonable payback and we can justify as an investment and can get proper return on capital and return on equity front so that we keep on track our growth not only by deploying the capital, but at the same time making a good payback on it. That is what our entire philosophy is. As and when the board will think that there is an opportunity, they will take proper steps to invest into it. Great. Thank you, sir. All the best. Thank you. Thank you. The next question is from the line of Sajal Gupta from FE Securities. Please go ahead. Yes. Good afternoon, Lalit Kijad. Congratulations for the set of numbers. Thank you. Although you have answered quite a bit of my question, still, I would like to go through my question. My question is that you have already demonstrated a good EBITDA and volume growth in the company. What is going to be the strategy going forward for this company? See, the strategy is simple. As I mentioned, Sajal, that our entire focus is to how we sweat our assets, the capacity which we have built. Because in the last two years, we have invested almost INR 1,077 crores, and that we have invested keeping in mind how much debt we should draw. We drew only around INR 200 crores debt, and we utilized all our internal accruals to build on this capacity and capability. Now we are going to sweat this to make the revenues come from the sales, wherein we can grow the company's revenue by almost 2x in the next three to four years. The entire focus is to sweat the assets to get these revenues as well as keeping in mind not only the volume growth but the EBITDA growth as well. That is the focus going forward, Sajal. Okay. That's very comforting, and I think you will take the company to the next level altogether. Thank you so much. Thanks. Thank you. The next question is from the line of Falguni Dutta from JetEdge Securities. Please go ahead. Yeah, good afternoon, sir. I am new to your company, so pardon my asking this basic question. Sir, what is the level of our backward integration into yarns? We have almost 25% of backward integration, whereas on the front-end side, we have almost 100%. On which side, sir? I missed you. On the value addition side, like yarn finishing and stitching and the front-end marketing, we have 100% in it. Sir, when you say 25% in terms of yarn, is it all cotton yarn or how is it? Both cotton and blended. We are capable of producing even the blends. Okay. Like whether it is Tencel or rayon or linen or hemp, we can blend anything. Okay. Thank you, sir. That is all from my side. One more thing I will add, Falguni, here, that our Yeah entire focus is to spin value-added yarns. We do not want to get into commodities. So the company's philosophy is value addition, wherever it adds. So whether it is a standalone investment into spinning or weaving, we focus on the value addition side of the business. So that is what the criteria is towards our investment. We do not want to invest into commodity business. Understood. Thank you, sir. Thank you. Before we take the next question, a reminder to participants that you may press Star and One to ask questions. To ask questions, you may press Star and One. The next question is from the line of Harshil Sethia from AUM Fund Advisors. Please go ahead. Hello, sir. Hello. Sir, when you said that our whole focus is to expand Can you speak louder? Your voice is fumbling, Harshil Sethia. Okay. Am I audible now? Yeah. Okay. Sir, what I want to understand is, when you said that our whole focus is to expand into value-added products, correct? Yes. In terms of expansion, the products that earlier GHCL had were basically majorly commodity products. What was the rationale of buying into GHCL? You see, value addition by means of. There are various ways into adding value to a business. GHCL was in commodity business when we say was in majorly sheet set business. They were not into fashion, utility, and institutional business. Then they were not into other distribution channels like say, e-commerce, licensed brands and areas of developing B2C channels of distribution. These various value additions, wherever we do, whether it is product or whether it is service, we have to see where we add value to the customer and provide him not only the convenience part, but help him get better value for his product sale. That is the criteria of value addition, whether it is product or services. The rationale behind buying are many as far as GHCL is concerned. Okay. Understood. Thank you. Hello. You may go ahead with the question, Mr. Kumar. Yeah. Hello. Yeah. Am I audible? Yeah. Please a little bit louder. Yes. Am I audible now? Yeah. Yeah. Sir, you said that you are looking to utilize your capacity fully in, say, next 2-4 years. That means some incremental 40-50 million meters kind of volume that you are looking at. Can you help us with a sense in terms of where we will get this volume, which geographies we are targeting, where we get this kind of volume? You see, currently our large market is U.S., where we are selling around 75%. There are duty anomalies in U.K., Europe, Canada, where we need to pay duty, where other countries are not paying duty. We could not penetrate those markets. There are certain other very large developed markets like Australia, Japan, Korea, Russia even to a certain extent, then South Africa, Latin America. All these countries are still not very much explored. We would focus on the non-U.S. businesses, and that's what the Indian government is also focusing by bringing about FTA with E.U., U.K., Canada, Australia, U.A.E., GCC countries, so that it is at an advantage and it can help the textile industry to grow further their market share. I think the strategy for us also is to explore these new countries and new geographies where we can promote our businesses going forward. This will come from them and also certainly U.S. too, because the fashion bedding businesses, the utility and institutional where China is dominating is also a case where the China Plus One strategy is happening as we speak. That also will help us to grow our business. Lastly, you see India also becoming a $5 trillion economy going forward. The growth in the domestic business is quite large, and we are also having two strong brands, Boutique Living and Layers, which are very well accepted into the domestic market. We see a quite a good uptake in the domestic front too. All these markets, this positioning and this various other distribution channels will help us grow our business and consume our capacities to the extent which we are planning. At the full utilization, non-U.S. will contribute equally what we will have in future? Sorry, come again. When we achieve the full utilization level, at that level, what would be the contribution from non-U.S. market that you have targeted? We intend to keep almost 60% U.S. and 40% non-U.S. market. Okay. And sir, with respect to U.K., post FTA, what kind of additional opportunities that you believe that can come to us? See, currently, you see unfortunately the duty factor in the U.K. was 9.6% and it increased to 12%. Of late what we are hearing that the U.K. FTA will happen sooner, because most of the issues have been sorted out by the Commerce Ministry. There will be a good uptick into the demand from the retailers because India is positioned onto the mid to high segment only and it is not there into the other segments of the marketplace. Secondly, on the e-commerce front, on the licensed brand front too, India is still struggling to find a foothold. We believe that, once the FTA happens in U.K., it will provide us a lot of opportunities to grow our business into the other product categories and other distribution channels as well. Okay, sir. Thank you. Thank you. Thank you. Before we take the next question, we would like to inform participants that in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to two per participant. The next question is from the line of Chirag Sidwa from ICICI Securities. Please go ahead. Yeah. Thank you so much, sir, for the opportunity. Sir, I have a couple of questions from my side. Sir, firstly, just wanted to understand what is the current cotton price inventory which we have in our books, and how many months of cotton inventory do we have right now? We have hedged around till October when the season starts. That is what the quantity which we are holding. As a policy, as you all know that we have been able to maintain our supply chain well in the previous years as well. Okay. Okay, sir. But currently the cotton prices are hovering in the range of, say, around INR 155-INR 160 per kg. It will be the similar range, our cotton at the moment? At the moment, you see it is around 60,000. A good cotton which we buy. That is around this range. It should maintain because there are enough stocks available in the market. Right. Okay. Sir, I just wanted to understand the INR 270 crore CapEx, which we had spent towards the backward integration of commissioning the 68,000 spindles. That is already done, right? Yes, that is completed. Sir, how much incremental margins would these capacities yield, and when shall it start kicking in from, given the INR 270 crore of CapEx which we have invested? Historically, we have done, say, close to around 53%, 54% kind of gross margins for the full year. How much would that incrementally contribute these capacities? Because you see it is almost like 10% of what capacity utilization we need, so it will be very marginal. We haven't calculated it to that extent. It is for more convenience, traceability, transparency to our customers. That is what we have invested into it. Secondly, Pranavaditya Spinning Mills was our subsidiary, and we had asset over there. It was an old mill. So we rebuilt it with new machinery so that we can help our home textile business with a captive consumption. We sweat the assets also for subsidiary because we amalgamated that company into the parent company. So this is the reason why we invested into it, and we have fairly a good payback also for this investment. Mostly, you see, as I mentioned earlier, that out of INR 1,077 crore, mostly our investment has been through internal accruals rather than drawing debt. We drew only INR 200 crore debt towards all this investment which we did. So I think the return on capital will be fairly good going forward. Frankly speaking, we haven't calculated that way that I can give you a particular number for that it will improve my EBITDA by this much percentage. But certainly, it will contribute to my overall EBITDA margin. Sure. Sir, got it. Sir, just one last question from my side. Sir, just this year, what we have seen is that India has gained significant market share, be it cotton sheets or be it cotton pillowcases. Last year it was around 50%. This year it's almost 1,000 basis point higher. So what exactly has been the reason for that, as we have gained market share from both the countries, China as well as Pakistan. Such a sharp jump or like 1,000 basis point jump, what exactly has driven this? See, as we are all mentioning about China Plus One. China has faced dual problem. One is the duty tariff which U.S. increased. Right. The other was the Indian cotton. They lost the ground, as far as cotton is concerned, into convincing the buyer to buy from them. Secondly, on the Pakistan front, the supply chain was volatile and their economy is not doing well. The confidence of placing long-term order is not there onto Pakistan supplier. Both these got impacted in the process, and these were gains made by the Indians. Indians are already well-positioned in the marketplace with a fair distribution base, both in offline and online businesses. They have serviced the customer well in times of difficulties also, and we have maintained the market share. I think the jump was regaining the confidence whenever there was a disruption, because India stood out to supply these goods even in difficult times during COVID. I do believe that definitely India stands out today among the top five countries in exports, and it will definitely gain because of this. Okay. Because sir, last year actually what I was seeing, last year we lost market share from 57% in FY 2021 to FY 2022, it was 49%. That would also be attributed to our higher cost of cotton as compared to U.S. cotton. Now with disparity kind of reducing, we have seen again market share going up to 57%-58%. Is it correct, that thinking? Yeah. That is correct. Your assessment is correct. Okay. Sure, sir. That is it from my end. Thank you so much, sir. Thank you. The next question is from the line of Pankaj from Affluent Assets. Please go ahead. Thanks for taking my question. Sir, just wanted to understand, since U.S. contributes 75% to our top line, how is the scenario out there for next two quarters going ahead? Has the destocking been completely done, and are the customers ready to refill the channels? See, we see the demand revival, as I had mentioned in my speech too because of the realignment of the inventory levels at the retail end. We all knew the various headwinds which we have faced in FY 2023. They are now, most of them have diminished except for the geopolitical situation, which still continues. There is some uncertainties on the economic front, but most of the other headwinds have diminished. That is prompting us and helping us to draw a better guidance and which we gave as per our order book position that we will do 85 to 90 million meters in the very first, end of FY 2023 only. We gave a full year guidance. The things are looking positive as we move ahead, and there would be sustenance of business going forward unless and until there is some disruptions which may impact, but we don't see that disruptions happening in the near term. Long term, the position is intact and India should do well. We as a company should also do very well. Right. From 75 to 90 million meters, we would be making around 20% more production, right? Would it then get translated into maybe around INR 3,600 crores to INR 4,000 crores of top line, and accordingly penetrate down the line on bottom line? I answered by that previous question also. You see, the last year cotton prices were higher, and they got adjusted now. There is a difference in average selling price if you compare on a YOY basis. Certainly the revenues will not be as proportionate to what the volume growth will be. But at the end of the day, you see it is better that you track the home textile companies onto sales volume basis and the margin profile basis, rather than on the average selling price. Because the product mix is quite broad based, and it moves around into different countries and with different cultures and different seasons and different requirements, different consumer experience getting changed. There are so many permutations and combinations. You can never get the right answer when you start calculating the average selling price. What you should focus upon is how much we are able to utilize our capacity and whether we are able to keep our margin intact. That is very important. Will it be safe for me to assume better margin in FY 2024 as compared to FY 2023, given that the demand is intact and the cotton prices are under control or lower than last year? We have already given guidance. Last year we gave a guidance of 15%-17%, and we have given a margin guidance of 16%-18%. Cotton prices you see they get adjusted, and we have to either pass on or add on. They get adjusted. But you need to manage your gross margin right. That is what the key to the success is. Okay, my last question, sir. We have specialized in bed and bed linen related products. Going forward, since we have reached 150 million meters of capacity out here, and as and when we utilize it optimally, do we look forward to diversify our product basket? We have such a huge product basket already. As I mentioned- I mean to say a different line. Say from bed linen to say bath linen or something else. If we are able to provide our stakeholders with a better return on capital, who stops us from investing into organic or inorganic ways is any product category. We are in home textile business. We are currently focusing on bed linen, which is our forte. We have become globally the largest company on the bed linen side, so on a leadership position. Once we are going through this, and if we get a good opportunity somewhere, we can always look at it. But as of now, we are focusing only on the bed linen side of the business. Sure, sir. Thank you. Thanks a lot. Thanks. Thank you. The next question is from the line of Amit Kumar from Determined Investments. Please go ahead. Yeah, good evening, sir. Just one question at my end. It has almost been a year since the U.A.E. and Australia FTAs have been in operation. I mean, obviously difficult, slightly challenging operating periods. What, if any, benefits that you have seen of the FTAs from these markets currently and, just a little bit of outlook for this year would be much appreciated. Certainly we are seeing the customers from Australia and U.A.E. are looking positively towards India as a country because of the FTA getting signed. Now we are at level playing field with other countries like even China. We are seeing an uptick in demand, and as we move ahead, we should be able to add customers also from these countries, and we should be able to do well. These countries are with large per capita consumption of home textile. Certainly this will help us to grow our business in the near future and long term both in these countries. Okay. Any sort of quantitative comment that you can give for first quarter overall sales growth has been flattish. I understand, volumes have grown and pricing has declined. Relatively, these two markets, have they sort of outperformed in any way or you still have to sort of develop that customer base? No, it is like just it has happened only just recently this FTA, because even though when the FTA is around, the nitty-gritties of the FTAs take almost 4, 5 months for both the custom department to sort out their HSN code and their duty structure and the mechanism, how they will allow us duty-free access. It takes a little bit of time. It is too premature to presume and provide you with figures. Certainly there is a good uptick in demand from the customers based out of these countries. Definitely we will have a good advantage going forward. In the, say, next couple of years, we should be able to also provide you how we have grown there. Because it takes time. Understood. There is a cycle of 12 months when you start with any country or a customer. It takes time for this to fructify. Understood, sir. Thank you. Thank you so much for this. Thank you. Thank you. Due to time constraints, that would be the last question. I would now like to hand the conference back to the management team for closing comments. Thank you. We remain confident that Indo Count will have sustainable brand enhancing and margin positive growth in the future. Through B2C and D2C forays, we will continuously strive to increase our market penetration. That is all from my side. For any further information, kindly get in touch with me or Strategic Growth Advisors or IR advisor. Thank you. Thank you very much. On behalf of Indo Count Industries Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.