Thank you very much. We will now begin the question-and-answer session. We'll take the first question from the line of Prerna Jhunjhunwala from Elara Securities.

Congratulations on a strong set of numbers. I just wanted to understand the demand scenario. How is it panning out in the US for the next 2 quarters, whether Red Sea attacks are having an impact on the order inflow or you're trying to prepone the orders for the company? So just wanted to understand how the customer's behaving in the current geopolitical situation?

Thank you, Prerna, and very interesting question. So first of all, I must tell you I have always maintained and we have at Welspun always maintained that USA. is a resi lient economy. And today, even if you look at it, quarter 4 is at 3.3% GDP growth. Inflation also remains about the same. Interest rates are steady at around 5.25%. You know the rates cuts are expected in 2024. So the markets in the holiday season have been up it grew by 3.8% Y-on-Y and the retailers are pretty confident about the other markets as we go forward as well. However, the Red Sea definitely is an aberration, but I must say that there are opportunities and we are looking at the risk of mitigating the Red Sea. it might take the whole two to three weeks extra. So people are planning ahead an d we are looking at innovative ways for mitigating the turnaround times as well now, Prerna. There are a lot of things that we are doing along with our customer partners as well. So over and all, I must tell you about Red Sea that we'll be mitigating and make it minimal cost impact overall.

Okay. There is no rush from the retailers is what we are trying to understand too , because to mitigate this two-week delivery delay.

So here, Prerna, I must tell you, we are working very closely with our customers. We already know that we have our supply chain analysts who work in the geographies there. So we are looking at our warehouses wher e we can stock in USA as well and those are the opportunities we are looking at in pockets. So definitely, it will be a very need-based, curated according to the retailers' demand. But I just want to again maintain that the minimum impact of Red Sea will be there. So I just want to just put that forward to you.

Okay. Understood, and ma'am, second question is on the domestic market. You mentioned that consumer discretionary demand has been weak and we witnessed this across product categories and other retail business as well. So does it change your target for near -term, mid-term, for growth in the domestic market?

So Prerna, let me give you a perspective of retail. First of all, we are not going to change any of our targets because this is all kind of an interim blip. So the rural market has been very modestly grown at around 1.2% and our personal consumption is at around 3%. When you look at India's GDP, growth at around 7.3% that's come in with the kind of investments in energy sector, infrastructure that has actually contributed to that. But if I look at the consumer indexes, they have been a little low. However, the premium products have continued to be stronger here. But I can just tell you that this is all a blip and everybody will be looking at how the elections pan out and we will definitely see an upside. This could be absolutely a blip here and I can also maintain one thing here, Welspun's plan on the retail segment remains intact.

Great, ma'am. Thank you for answering the questions. I'll come back to the question queue for any further questions.

Thank you, Prerna.

Thank you. The next question is from the line of Monish Ghodke from HDFC AMC. Please go ahead.

Hello. Thank you for the opportunity. So my first question is what would be our split between CIF and FOB contracts in Home Textiles?

So yes, FOB is around 80% of our top line.

Okay. So there won't be much impact of this Red Sea disruption in our freight costs, right?

So the warehouses, which we have in the U.S., how does it work? Are those maintained for CIF orders? Or those are also FOB orders?

So, they are maintained for the domestic orders, CIF, let me be very, very clear on that. So we have three warehouses and that helps to get our customers, service them better in any kind of aberrations as well.

Okay. So what would be the typical freight cost in CIF contracts?

So it went down to about $2,000, and it's currently , in open market, it's hovering at around $5,000. But because of our contracts, we are not paying that much. So about $2,000 to $3,000 per container.

Could you explain in percentage of sales terms?

It's about 1.5%.

Okay. And sir, this inventory of 90 days, which we have in general, what is the breakup between RM and finished goods?

We don't give out that information, but it would be around any business, which has a breakup of RM and finished goods, we have the same breakup.

Okay. And sir, this utilization ratio, so our utilization for towel has improved, but t he bedsheet utilization appears weak. So is there any reason as to why bedsheets is yet to pick up?

No, Monish, it is a reason for the market demand quarter -on-quarter. If I can say that this year, we'll end up as an 80% util ization for towels, 70% utilization for sheets and 60% for flooring. So this is what we are looking at Monish.

Okay. Thank you.

Thank you. The next question is from the line of Hemang from Anvil Research. Please go ahead.

Yes, ma’am. Earlier we were targeting to have a very low amount of capex for next one or two years, and we want to become debt free. So have we changed our stance or this investment in a one-off?

Yes, sure. Over to you, Sanjay.

Yes, Hemang. Our target for being debt free in two years' time remains intact. These are strategic investments, which will help us in meeting our medium -term objectives that we have outlined for us for financial year '26. And hence, these are building up our product range and portfolio, which will help us in getting there.

So let me tell you, Hemang, we have one more thing here. Like this actually gives us an opportunity to improve our share of shelf with our fashion towels a nd our beach towels. And along with that, this gives us a better UVR a nd also the China Plus One is an opportunity here too. So let me just say that. With this, I must also share the prudence of ROCE has been maintained at 20% here. Now even whether that 's for the pillow project that we have in America, that actually is closer to our customers' needs and it is a very big demand after towels and it's a great opportunity that we see.

Yes, that's great. And ma'am on the flooring side, are we on track, whatever the assumptions what we are having, we are delivering on that line?

We continue to grow here. You must ha ve seen our growth of flooring of, say, over 40% here, highest growth that you've seen in this quarter. So defini tely, Hemang, that is on track and in fact, our EBITDA will be better from the next year onwards as we indigenize the supply chain and as we curate our businesses better and better going forward.

Okay. And flooring doesn't require any further capex?

General Capex may be required of INR50 crores to INR100 crores for balancing Equipment or maintenance, but no, nothing more than that.

And the last question, how much savings we will incur from the solar power plant what we had commenced in that 30 megawatt?

So 30-megawatt solar plant, solar power generally comes at a price of about INR4 to I NR4.05 per unit against current price of INR8.5 for thermal plant. So about 50% savings.

Okay. That's great. All the best for the future.

Thank you.

Thank you. The next question is from the line of Biplab Debbarma from Antique Stock Broking. Please go ahead.

Good afternoon, ma'am. So my first question is on margins, decent set of margins. So if we assume the cotton price remains stable, like INR55,000 kind of park and the kind of p rice and assume that there is no escalation in freight cost, what kind of margin shall we see as capacity utilization goes up? I'm just t rying to understand that can is there a headroom for margin to go upside from 15% to 20% in the next two, three years?

So we would maintain try to maintain our margin rate that we are currently doing, keeping into mind that cotton is remaining at the same level this year and next year. Other than that, we are not giving any guidance on a higher E BITDA or lower EBITDA. We'll try to maintain the EBITDA that we have currently.

You know that the global dynamics are still geopolitical scenarios continue to be there. So we want to maintain the numbers that we're committing here.

Second question is, because you have various subsegments in your business. You have advanced textile, domestic and export brand. So in terms of effectiveness, which kind of segments are you witnessing significant growth? Or you have a very optimistic outlook?

Here, I can just tell you one thing, Biplab. Here, Welspun is working on getting the share of shelves around the globe. So if I can talk about licensed brands like Martha, the additional share of shelves, apart from towels and sheets get better. We're not only doing towels and sheets, we're doing bedding, utility bedding. We are doing flannel and when we talk about Disney in UK and Europe that gives us additional share of shelves with different retailers, so the opportunities are everywhere. For the domestic market, we already know that we are the highest distributed brand right now in the country a nd we know that the consumption and the amount of housing opportunities that we are seeing in this country are immense. So definitely, that again becomes a very big deal. When we are seeing our brand Christy, which makes the Wimbledon towels, which again is becoming a very important B2 C play at a brand in UK and also now growing globally as well. So I can say that all of it is made according to the market needs. Advanced Textile primarily is very commodity driven, but however, our brand is going to be launched in wet wipes in India as well and which will definitely be available for consumers as well.

So Biplab to continue with further, our all these emerging businesses, their share of total revenue is going up steadily, so we have reached about 32% - 33% and we are seeking to take them to 45% of our total revenue. So all these businesses will continue to grow in excess of 20% to 25% over the next 2 to 3 years.

My final question is on the capex that you announced. One is the brownfield and one in Ohio. From when you commence this capex?

So Ohio will be commenced by quarter 2 and Anjar by quarter 3.

The next question is from the line of Sanika Khemani from Middleton Capital Advisors.

Yes. If I'm not wrong, in the opening commentary, you have said that we are getting growth rate of 15% this year so you are targeting a growth rate of 15%?

Correct.

No, no. So we have done about 19% until 9 months a nd we are giving a direction of minimum 15% growth by the end of the year. So there'll be no degrowth in the quarter.

But we've grown 19% in 9 months, correct?

Yes. So we are not giving any direction for quarter 4, but we all say quart er 4 will not be a degrowth and for the year, will grow a minimum 15% plus.

Okay and can we expect to continue this kind of momentum next year as well?

Next year, yes, we will continue this momentum, keeping all things constant.

So we are looking at a commitment to be towards the INR15,000 crores in 2026, we maintain that number and we will continue to look at maintaining our commitments that we have given to the market.

Okay and also just one last question. What kind of capacity utilization are we looking like for the Ohio and Anjar facilities in terms of new capacity which is coming pillow plant?

Yes. So any project, which ramps up. So it starts with about 50%, 60%, then we just say 70%, 80% then 90%. So similarly, the ramp -up would happen in both thes e projects in a similar manner and we have given that at full capacit y utilization, both these plants would gi ve above INR400 crores turnover each.

Yes a nd so I was actually trying to figure out when are we going to reach peak capacity utilization then?

I think it's the second year.

Second year itself because these are all very thought through investments and they already are made with the commitments that we have around with our customer partners.

Okay. So second year, basically, FY '26 or FY '27?

Yes, yes. FY '26.

The next question is from the line of Iqbal Khan from Nuvama.

So I just have one question, firstly congratulations for a very strong result. One question, you just mentioned that you're expecting a 15% Y-o-Y growth for the FY '24 and you mentioned that around INR15,000 crores is our target by 2026. So if I take this number in, it is translating into a CAGR of 27% over FY '24. So just wanted to understand what segment are you targeting to have so extended growth by FY '26?

So Iqbal, as I mentioned, so all our Emerging businesses of Flooring, Advanced Textile, Global Brands and Domestic business will continue to grow in excess of 25% over next 2 to 3 years and our Core business will continue to grow in double digit, if not higher. So all this will help us in reaching our target. We know and we acknowledge that it's a steep one, but we are setting up these projects that will help us in reaching there and we will make all the efforts to reach there.

And these numbers like actually thought through, and we are maintaining this. There are opportunities for inorganic growth as well that will come our way in the terms of Brand, as a journey, from B2B to B2C is also already on. So yes, there are those opportunities that will also come and we'll continue to explore them as well.

And just one more question. Can you please also provide your capex guidance for the next 2 to 3 years?

So for next year, we have already given the guidance. So INR430 crores plus anothe r INR200 crores for maintenance and then from year after that INR200 crores each year.

The next question is from the line of Prerna Jhunjhunwala from Elara Securities.

I wanted to understand this Ohio investment that you are planning with respect to the cost structure against India and what kind of margin profile that facility would have?

So those are very detailed answers to this, so we can take it up offline. However, we have already mentioned that the ROCE f or a project in excess of 20%.a nd we will not get into any project which is not margin accretive. So you can take that it's a margin accretive as well as ROCE accretive.

So it will be having better margin than normal Home Textile business.

Correct. Correct.

Okay. Yes. Okay. And any cost advantage that Ohio has against India?

Prerna, one thing I must tell you, this is a bulky product. So this gives us an opportunity to be near the market. Like here, we will be shipping air from here and those compressed pillow don't work in America. So this is something closer to and in just in time for our customers as well and that makes a huge advantage for us and as I said, the volumes are equivalent to towels.

And it's a fully automated plant. So the number of people required to work is very less as compared to India.

So it needs lesser people to work out these system is completely automated and state-of-art plants as well.

This is helpful. The employee cost is not a co ncern and even logistic cost is beneficial. So it's mixed.

Absolutely. Yes, that's kept in mind.

Yes. Okay. And second question is on your cotton, how much of cotton inventory in terms of months you would have today?

So as per our policy of buying in the cotton season , we are continuing to do that an d currently, we have in stock about six -plus months plus we have some forward position. So we are quite comfortable with that.

The next question is from the line of Biplab Debbarma from Antique Stockbroking.

Sanjay sir, can you repeat the capex spend for FY25, FY26?

So next year, 2024 -25 will be INR430 crores that we have just mentioned, plus about INR200 crores for maintenance, so about INR630 crores. Next year, aft er that will be INR200 crores to INR300 crores for maintenance.

Okay. This capex INR4.3 billion and INR2 billion plus INR2 billion in next year this capex would ensure your growth FY26 revenue of INR150 billion. Is that correct? Or you need to put more capex to achieve that revenue of INR150 billion by FY26?

So Biplab, here, this is the opportunity for us to grow our brands. So while one aspect of your core business. We are looking at 2026, where our Emerging businesses will be around 45% of our portfolio. So you can imagine, and that's where the opportunity is going towards the consumer, So there is something, which could be complementing categories. So Biplab, we will keep that open. The number is intact and we are going to achieve it.

Okay. So FY26 number of INR150 billion that is what target? As of now, this is the capex spend and going forward, we will evaluate whether to do more capex or use ancillary facilities or other permutation and combination. Is my understanding correct?

Absolutely.

Thank you.

All the best ma'am.

Thank you.

Thank you. We'll take the next question from the line of Prerna Jhunjhunwala from Elara Securities. Please go ahead.

Hi. Just one more question from my end. I saw some articles on launch of Christy in the US. Could you please highlight some of your plans related to Christy, where do you foresee the brand to reach and what all geographies you would li ke to cover, some insights would be helpful on Christy.

Thank you, Prerna. I must tell you that Christy has been growing quite positively even in these current markets and dynamics in UK It has been recognized as one of the great brands in UK as well. I must tell you that Middle East continues to grow by 25%. USA and Canada are the next stops that we're looking at, specifically first Canada, where we are looking at offline development, USA could be an online plan that we're looking at. Then we are also looking at China, Japan and New Zealand and Australia a nd the opportunity that I see with Christy is also to be launching in India very soon because it also covers a luxury segment as we go forward next year.

That's fantastic. Thank you for this answer. This is helpful.

Thank you. Thank you, Prerna.

Thank you. Ladies and gentlemen, that was the last question for today. I can now hand the conference over to Miss. Dipali Goenka, Managing Director and CEO, for her closing remarks. Over to you, ma'am.

Thank you, Michelle. So we are glad to see continued growth in all our businesses in quarter three, setting up new landmarks by reaching highest quarter three revenues in home textiles and highest ever revenues in Domestic and Flooring businesses leading to increased market shares in all areas of operations. Our ability to provide solutions along with innovation and unmatched quality to our Marquee customers, reinstates our position of being the FMCG of textiles. We continue to have greater focus on the India markets with deeper penetration in retail segment through increased EBOs and MBOs and higher brand visibility of hence reinstating "Har Ghar Se Har Dil Tak Welspun." Domestic flooring i s reaching new heights and overall Flooring business has continued its profitable growth during the quarter. Our robust strategy, sustainable growth and high levels of governance has resulted in us getting the best managed company award 2023, second in a r ow. We also continue to set up higher standards in our ESG leadership with complete visibility of our practices through audited sustainability report. Further, through our increase in a TT capacity and setting up a pillow plant in USA to enter into new pro duct areas, we are also striving to reach our stated revenue objectives 2026 with consistent profitability to ensure a healthy ROCE to create substantial value for our stakeholders. Thank you.

Thank you, members of the management. On behalf of E lara Securities, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.

1. This is a transcription and may contain transcription errors. The Company takes no responsibility of such errors, although an effort has been made to ensure high level of accuracy. Some minor editing may have been done for better readability. 2. Any of t he statements made herein may be construed as opinions only and as of the date. We expressly disclaim any obligation or undertaking to release any update or revision to any of the views contained herein to reflect any changes in our expectations with regard to any change in events, conditions or circumstances on which any of these opinions might have been based upon