Thank you, sir. We will now begin the question-and-answer session. We have the first question from the line of Vaibhav Jain, an investor. Please go ahead.

I have just one question from my side. I just wanted to know, after all our CAPEX, what will be the debt after we have sort of done with on the CAPEX?

So, we had guided towards a debt of about Rs. 1,400 crores to Rs. 1,500 crores by the end of this year, which is Financial Year ‘25, which will continue. And with this investment and other maintenance CAPEX, we should be in the range of zero to Rs. 200 crores net debt by Financial Year ‘28.

Net debt, so this is including the repayment that we are going to do on the --

Yes, so net debt, I am talking about. Net debt should be zero to Rs. 200 crores.

Thank you. We have the next question from line of Biplab from Antique Stock Broking. Please go ahead.

Okay. Good afternoon, everyone, and advance Diwali wishes to you all. I have a couple of questions. First is on the breakdown of CAPEX, I just missed it. And what is the total CAPEX, and what is the breakdown of that CAPEX, and how much CAPEX we have done till date?

So, CAPEX for this year, we have done about Rs. 492 crores till H1. And this CAPEX is mainly in the towel project at Anjar and the pillow project at Ohio.

And including the additional capacity announced today, how much more we have to incur?

So, this year we will continue to be at our Rs. 800 crores to Rs. 850 crores that we had guided towards. But the additional CAPEX that we have announced today of Rs. 709 crores for the bed sheet and towel additional capacities, that will be incurred over two financial year of Financial Year ‘26 and ‘27.

And what would be the capacity of these two, towel and bed sheet, sir?

So, towel capacity will increase to 1 lakh metric ton per annum, and bed sheet capacity will increase to 144 million meters per annum with this addition.

So, we are guiding towards a top line of Rs. 15,000 crores by Financial Year ‘27 and we are adhering to that.

So, this would be the CAPEX, that’s all? After that there is no CAPEX needed to reach to that?

There will be some additional maintenance CAPEX of Rs. 150 crores, Rs. 200 crores. But yes, I have guided towards zero net debt by Financial Year ‘28 with all these investments.

Second question is, what is the contribution of emerging business to your revenue and EBITDA in the first half of this FY ‘25? And by FY ‘27, where do you see this emerging business growing to in terms of revenue and EBITDA? Thank you.

Yes, I will take this up, Biplab. Our emerging actually businesses that include the domestic consumer business, global brands, advanced textiles and flooring businesses, they grew 22% year- on-year and they contributed around 33% of the total revenue of the Company. And we are looking at it growing to the extent of around 45% as we go forward by ‘27, ‘28.

And what would be the EBITDA contribution of this business by FY ‘27?

It will be the same. Actually, because this is also owing to our brands in India, and our licensed brands and our flooring, so it will remain the same contribution based play.

So, overall EBITDA margin will be same in both the businesses.

Okay. Thank you, and Diwali wishes to you all.

Same to you, Biplab.

Thank you. We have the next question from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Congratulations to the entire team for the record turnover and decent profits. Two, three questions, first on the margin side. As you mentioned that the container freight continues to hit margins, so can you give us more granular data on what kind of sales are happening on FOB, and what kind of sales are happening where we have to take into account freight, and what has been the trend for last 12 months? And when does this normalize?

Our FOB is actually now 80%, that contributes to our turnover. But I must tell you that owing to quarter three of ours vis-a-vis the quarter four of our retailers, this is the time there is a holiday season. So, while having said that, we had to tide over the Red Sea issues because we had to look at the challenges of containers and ships which actually led to the volume impact because we had to take on warehouses to store the increased inventories, planning the allocation with containers, because you know that since 15th of August China had sucked in the entire freight inventory from here. So, we were very time bound for the holiday season. So, Red Sea and along with the whole availability of the inventory of the container led to the impact on what you see.

So, overall, we have given about 1%, out of which 0.7% was because of higher freight and other inventory-related costs, and 0.3% we incurred more on marketing, because we are growing our brands massively across the world. So, that’s the breakup of 1% that we had to incur higher. However, going forward, we hope that this is arrested as we have seen some betterment happening from October. So, we would be keeping our fingers crossed for this quarter as well to ensure that we do not get hit more by this in this quarter.

Second question is on advanced textile and domestic retail. How are this shaping up, both in terms of growth and in terms of margin profile vis-a-vis our other businesses?

So, advanced textile actually has grown by 18% year-on-year, and with a revenue of around Rs. 148 crores. So, let me tell you that spunlace and needle punch, actually, we have been able to experience strong Quarter 2 sales growth. And in the future, also for the global markets, we see an upside in this because of our strategic partnerships, innovative and sustainable non-woven actually. And for India, as the Indian market, as you have seen right now, while we are looking at India, we are looking at a growth, the holiday season, as Diwali is just right around the corner. We have seen some green shoots in September, and our Welspun brand has witnessed a healthy growth of around 20% year-on-year, and it’s the most widely distributed home textile brand. So, we feel very, very optimistic about the Indian market. While there has been that little sluggishness in the Quarter 2. But as the quarter three comes in where there is marriage season, there is Diwali there, we definitely will see that upside coming up.

And in terms of margins, domestic retail, are they above breakeven and are they still burning cash?

So, domestic retail, it is still at near the breakeven low-single-digit EBITDA. And as the business will pick up this year, we would start seeing more EBITDA percentage coming from here. And advanced textile, we are at the similar margin of the entire home textile.

And let me just tell you, for retail growth we continue to invest around 10% into our marketing as well for the brand reach across the country.

So, the single-digit EBITDA is after accounting for marketing in that division?

Yes.

Yes, correct.

Thank you. We have the next question on the line of Kaustubh Pawaskar from Sharekhan. Please go ahead.

Sir, Red Sea has been a risk to our profitability for a while and it has been impacting our profitability, though we are achieving good numbers at the revenue level. So, are we looking at any alternatives or alternative route option? Or is it something which is feasible for us so that we can have better numbers and the profitability level? Or something on that front have we given a thought on it or some other alternative which will help us to see margins inching up for us?

Yes, of course. So, we are definitely continuing to try in this regard, try hard in this regard. So, we did not actually got hit in the last quarter of last year and the first quarter of this year when the Red Sea issues continued to persist. However, Quarter 2, it actually reached to a three-year high of 3x of container rates and the availability also got impacted, as Dipali stated, due to China sucking out the entire capacity in August. Hence, it became unavoidable for us despite our good relationship with the liners and keeping on top of this, but still you got impacted. But we are maintaining it, and with our major distribution presence in U.S. we ensure minimal disruption in our revenues. So, we are keeping a tab on this and we should tide over it. However, we are cautiously optimistic in this regard.

So, I just wanted to just add on here, it also got augmented with the splitting of the INDAMEX and the U.S. port strike actually. That also gave that freight kind of an impact. But we have our warehouses in America. We plan quite effectively. But however, this time, it was really unavoidable with a lot of disruptions, actually.

And ma’am, my second question to you, in your initial comments you mentioned and you gave some optimism about the improving demand environment in the U.S. market. So, can you just give us a broader perspective on the same? Whether this will continue or it is something which is just at this level? And still, it is kind of a wait and watch scenario, you do not have exact indication whether this will have better prospects for us in the near term and the long term.

So, there are a couple of things I want to just put actually in perspective. One thing, when I look at the big box retailers, and what they are talking about, so they are exhibiting a neutral to positive outlook in general merchandise category today. And they started stocking up for the new festive season. The holiday season, they are looking at around 3.5% of growth right now. The other important thing, let me just put forward very, very straightforwardly to you, that India is in a sweet spot. India is now continuing to become an integral part of the supply chain for all the global retailers. Because being the most stable democracy, even with the neighbors that we see, and along with the China plus One strategy, I think India stands to gain as well. So, it is the displacement plus the mildly kind of a cautious optimism that we see in the American market, both.

And any thought process on whether exploring any new opportunities into newer geographies? As you said that supply chain, we have a bigger opportunity going ahead, so any thought process on expanding reach into other geographies where we already have a presence?

We already are actually growing very strongly in U.K., Europe, where we this quarter actually have seen a double-digit growth, Australia, New Zealand, Japan, all of those areas. And it’s not just in retail, but also in the hospitality segment, in the flooring segment, and in the advanced textile segment, and also with the licenses like Disney in the U.K. and Europe as well. So, let me tell you that while we talk about USA right now, but we have also seen double-digit growth in U.K. and Europe.

And do you expect this mix of U.S. and other geographies to come down over the period of time? Or do you expect U.S. to be a key market for us while others will be growing along with the U.S. project?

So, I will tell you one thing, while when I talk about the mix, U.S. actually contributes around 30% of the consumption of the home textile market globally. While that basket will continue to grow as we take the share of shares there, but U.K and Europe also contributing to the goal. Let’s also be very, very clear on that the last quarter the inflation was hitting these countries very, very hard. We saw that cooling out as the Fed rate cut there as well, we saw the Fed rate cut happening there as well. So, we are going to see some kind of a cool down there and some kind of a hike in sales there. So, definitely it will be the mix. It will also have a domestic retail, which actually will today contribute around 6% of the top line. We are looking at that contributing around 10% of the top line. And the other businesses will continue to grow as we move towards the journey of Rs. 15,000 crores.

Right ma’am. Thanks for understanding. All the best for your quarters ahead. And Diwali greetings to you and your team. Thank you.

Thank you. Thank you so much.

Thank you. We have the next question from the line of Tejal Nagmoti from Elara Capital. Please go ahead.

So, I just wanted to understand regarding the CAPEX announcement that when are you planning as per the internal estimates for the facility to be fully utilized and achieve the Rs. 1,150 crores of target on full utilization?

So, Tejal, as we informed, so we will be spending this CAPEX over the next two years. So, we will be ready somewhere by quarter three, quarter four of Financial Year ‘27 in phases. So, the entire capacity utilization will come only by Financial Year ‘28.

So, we can build the capacity utilization by FY ‘28?

Yes. Full will be by Financial Year ‘28. It will come in phases in Financial Year ‘26, ‘27, and then ‘28 will be full.

Okay. And my second question was regarding the flooring business. Just wanted to understand that the growth still remains muted. When is it expected to rebound for the flooring business?

So, actually, let me just give you a perspective here. Our flooring business actually saw a revenue of around Rs. 250 crores and it grew by a muted 3%, yes. It actually got impacted the biggest also by the Red Sea because most of them are CIF and DDP shipments. That’s the reason. While we are continuing to focus on the Home Improvement business, we have added a few new big ticket customers across the geography. Like, we have also diversified by tapping opportunities in OMs in the U.S. and making strategic tie-ups to strengthen our positions in Australia and New Zealand. And we are gaining good traction from large retailers and big ticket distributors in the U.S. and the Middle East for soft flooring. Now let me come to the domestic market. We must say that we continue to see strong growth here in Hospitality and Commercial segment where the domestic Flooring actually grew by 28% year- on-year. So, I think, I will tell you that while we are seeing this kind of a little upheaval, but we are on the path of growth that we are talking about in Flooring.

And any guidance for the full year?

For the entire business, we continue to stand on the guidance that we had given earlier, with 10% to 12% growth of the total business, with 15% to 15.5% EBITDA.

Thank you, everyone, and wish you a very happy Diwali.

Same to you.

Thank you. We have the next question from the line of Harshit Nagpal from Yes Securities. Please go ahead.

Yes. So, yes, I just have a question, which is if you can explain the Flooring business. This 10% to 12% growth is for the whole year, right?

Yes, 10% to 12% is for that entire business.

So, my question was related to flooring. Will the revenue growth between 2% to 3% that we are seeing for the past few quarters, or would it be greater going forward?

So, within the entire business, flooring will grow in double-digits this year.

Thank you. We have the next question from the line of Biplab from Antique Stockbroking. Please go ahead.

Sir, do we see margin improving in the second half? Or do we see the margin deteriorating further? Because there’s no certainty on the Red Sea.

So, yes, while we see the uncertainties of Red Sea, which is now settling down to some extent, but we are guiding towards an overall EBITDA of 15% to 15.5% for the year, and we are standing by it.

Okay. So, that means that it is expected to improve, right, sir? Because the first half EBITDA --

We are standing by that we will be achieving that for the year.

So, from internal production, this sales would start coming in fully from Financial Year ‘28. However, we will start building the sales. So, sales will not stop. So, we will have to get it manufactured through our ancillaries or through outsourcing, whatever. But we will continue doing so, we are not missing our target.

So, this additional CAPEX, once they are onboard fully operational, they would be replacing those ancillaries. Is my understanding correct?

Correct.

Thank you. That was the last question. I would now hand it over to the management for closing comments.

So, Quarter 2 has been a challenging quarter with the difficult operating conditions owing to Red Sea issues and the resultant financial impact we had to endure. Despite the challenges, we have once again been able to show an outstanding revenue performance in all our businesses, leading to our highest ever turnover. It is heartening to see our global brands continuing on a stellar growth path, strengthening our focus towards B2C and being truly an FMCG of textile. India continues to shine with around 6.8% GDP growth, its conducive policies for India for the world, leading to greater share of Indian businesses in the global market, as well as providing opportunities internally with growing consumption rates. Domestic business, both home textiles and flooring, continue to grow with higher reach and visibility, cementing our leadership and thereby reinstating Har Ghar se Har Dil Tak Welspun. We are committed towards the guidance we have provided for FY ‘25 and our long-term objectives of sustainable and profitable growth. ESG remains a way of life at Welspun and our commitment towards being environmentally responsible and sustainable in operations continues unbated. With our focus on achieving our ESG target for 2030, LEED Green energy, zero-water usage, zero landfill or using 100% sustainable cotton and raw materials. Thank you for your continued interest in Welspun Living. For any further queries, please feel free to connect with Salil and Sanjay. Thank you.

Thank you very much.

Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.