Thank you. We will now begin the question and answer sess ion. The first question is from the line of Bhavin Chheda from Enam Holdings. Please go ahead.

Good afternoon Sir. Congrats on record results mainly on the topline front and very good performance on the flooring front , a few questions if I s ee the capacity utilization it has been increasing dramatically for the last two quarters and in September quarter bath linen has crossed 90, rugs and carpets 98 and bedsheets 81 so considering the current b uoyancy in the US market should we expect second half to be at a similar level or what is the outlook?

Thank you Bhavin for the question and the outlook we will say that we are cautiously optimistic and we are committed to the growth of around 10 to 12% on the topline and 15% EBITDA and the capacity utilization will be the same ; however, we might look at some kind of debottlenecking of a capacity so that is something we would be exploring as you go forward.

How much time this would take for debottlenecking, you are mainly looking on the bath linen side right?

So we would be exploring it , looking at the demand and there could be an opportunity for little investments that could be explored and that could be on the cards but we are just exploring that looking at the prudence on ROCE and IRR.

Second on the flooring side you mentioned in the opening remarks there were some orders I think mostly from US or UK so were they one -off type of orders or they are going to continue going forward and we will see the sales momentum going up as well as margin sustaining, so the question was these were not short -term orders like only in the quarter the same run rate would continue going forward?

Yes, the run rate will continue in fact we are going to be looking at kind of our capacities will be maintained at the same and it is al so on the back of the China +1 one strategy I think we are seeing an opportunity there, the whole traceability and being the most modern plant in this part of the world actually gives us that advantage and definitely that is something owing to that we will continue to see this kind of capacity utilization and orders and this is not one -off this will be consistent.

The last one on the balance sheet side, there were some receivables outstanding from government on the incentive part and the other how much has been received in the quarter and as on the closing balance sheet date how much receivables are pending now?

So we have been consistently getting Bhavin the incentives due from the government and it is at the same level that we had in Q1 or Q4 of last year so there has not been any increase.

Thank you.

Thank you . T he next question is from the line of Tarang Agrawal from Old Bridge Asset Management. Please go ahead.

Good evening, couple of questions from my side one on the flooring and the second one on the domestic B2C textile business, so on the flooring business your unit realization seem ed to have fallen substantially what is driving this, is it a consci ous effort to gain market share, utilize the benefits of additional operating leverage so that is one and the second one on the domestic B2C business I am not sure but did I hear it correctly is this business b urning any cash on a quarterly basis that is number one and number two how are you managing the supply chain to sell your MBOs?

So flooring business the UVR is a factor of many things so we have hard flooring , soft flooring and then within th at also there are various categories so it is a mixed change that we have been seen. There has been higher capacity utilization and higher sales, so of course there has been a mixed change and that might have impacted it slightly not to a large extent, so UVR is not an issue. On domestic B2C as Dipali mentioned we are into positive EBITDA so we are not burning cash, we are investing in marketing consistently each quarter about 9 % to 10% which we are continuing to do but we are not burning cash there.

For the supply chain , for the MBOs, we have a distribution network that we have across the country and we have over 200 sales staffs that help the distributors to reach to the dealers, so that is the way we work with the M BO network. Along with t hat we have a technology support to reach out on the beat plan and the whole reach out plan as well, so from Kashmir to Kanyakumari from West to the East we have a complete n etwork plan and it is all supported by technology here Tarang.

Madam if I may you spoke about distributors what is the number of distributors right now which are helping MBOs?

We have around 125 distributors here Tarang right now and they are growing stronger.

Just a follow up on the floori ng business, Sir you did mention that we have not seen a realization yet but if I look at the March 2023 quarter we were at about 1.5 million square meters which gave us about ₹ 210 Crores of revenue and if I look at September 2023 we are at about 2.8 million square meters and the revenues moved up from ₹ 208 to ₹ 240 Crores so that was the source of my question?

So as I said mix has changed so in March 2 023 quarter the mix was different and in this quarter the mix is different in terms of hard and soft tiles. We can give more details offline.

Sure I will do that. Thank you and all the best.

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

Good evening and congratulations on the excellent performance Madam. My first question is on FDA so how do you see the impact of UK FDA on home textile especially on Welspun India and typically what do you think from ratifica tion of FDA to finally getting orders from UK typically how long will it take and do you see this UK FDA extending to EU FDA?

I think UK FDA is a great opportunity and as you know UK contribute s around 10% of the home textile demand and definitely this opportunity is going to be good for us in the terms of not only just towels but sheets and I think that is going to be a kind of a clear upside and when you talk about the orders kicking in it is a matter of when it kicks in and when the FDA is approved we will see a matter of 6 months when this starts coming in.

Do you see EU FDA following through or this two would be two different ballgame altogether?

It is not something that we see right now but I think UK is something that we are seeing and that is something is definitely is kind of top on the cards and also it consumes the highest consumption after United States of America.

My second question is in the beginnin g you mentioned you maintain 11 -12% growth guidance now if I see the number operating revenues already ₹4,693 Crores and we are facing the second half we will do the same as first half then automatically the growth will be more than 15% if m y calculation is correct, so are we seeing second half degrowth or if second half is better than first half then the growth should be operating re venue would be more than 15% am I missing something?

No, I actually will still maintain the gro wth target that we are talking about 10 to 12% and the EBITDA of 15% let us looking at the kind of overall global scenarios here and you do not know with the kind of the Israel -Palestine conflicts and the other conflicts that are happening what comes on staring at our face but amidst all this kind of scenario that we are we are going to maintain what we have committed that is 10% to 12% topline and 15% EBITDA.

The third thing is Madam if it does not have direct impact on Middle East war and if FDA comes through your capacity utilization is at elevated level and if we maintain the same kind of growth say 14 % - 15% let us be optimistic and say 14% -15% do you think we may have to put up incremental capex or what would be the key trigger when y ou will take that decision whether to increase capex and if it is to increase capex how will you increase capex you r own or you use some subsidiaries or associates capex?

There three things on this one is debottlenecking, second is also optimizing our ancillary network that we have near our factories, third is as we see the growth kicking in and the utilization kicking in over 95% we definitely feel that we are exploring capex but yes there is something that we are very, very clear about the prudence on IRR and the ROCE and if there are opportunities owing to the displacement of different countries across where India will hold a very good opportunity here so definitely that could be something on the cards we are definitely exploring that and we will look at the prudence of ROCE and IRR are here.

Thank you Madam.

Thank you . T he next question is from the li ne of Prathamesh Sawant from Axis Securities Limited. Please go ahead.

Yes Australia has been a very interesting market, there two things that have worked for Australia and India one is the FDA, the other is the relationship of Australia and China, so that actually has put India at an advantage and for Welspun of course we have seen an opportunity here not only in home textiles but in the retail segment but also in the hospitality segment a nd also in the flooring segment, so yes there is something which we see as an upside there.

Do we have any demand traction or any leads over there working for us?

Yes absolutely we have a retail relationship that we have, we have a h ospitality relationships and the flooring relationships also that are there and Australia FDA will be an advantage and has been an opportunity for us and as well as India.

Secondly Madam with the current flooring segment doing really well so just wanted to understand on the granularity of the US orders is it from like two or three big customers o r it is more granular than that?

It is a mix of all actually s o the opportunities first of all the mix is hard flooring and soft flooring and it is a mix of the distributors and now also the retail channel that we are talking about and that is going to continue to evolve and also o wing to the whole China opportunity we definitely see an upside here.

My question was with respect to the current significant ramp up in the US export revenues especially in the flooring so was it particular to one or two big players or was it more granular?

Yes it is owing to not just one or two play players it is a mixed bag and it is more granular here, it is not just one or two who are contributing to this customer and also going forward there will be more newer customers adding to our kitty.

Are we focusing B2C over there for flooring?

No not yet. The B2C will not be something it will be purely B2B that we are going to be focusing and actually let us face it flooring is basically primarily a B2B kind of a segment.

Lastly one last question from mind is your outlook on the cotton prices are we expecting any margins gross margins to remain stable over here?

We are maintaining our margins that we have already spoken about and cotton prices tha t we are looking at where we are today we are going to be around 61, 62 000 and that is what we are looking at an outlook at the moment.

No, not at all, not right now. We are seeing the weather has been a little inc lemental, there has been pink bollworms that we have seen but it is also the supply and the demand and we are looking at an outlook which is looking at around 61, 62000.

Thank you.

Also Prathamesh we have cotton in sto ck with us for next four months, we are keeping a close watch on the cotton prices , and we have systems in place to take steps necessary to ensure that we are not caught off guard on this so no worries on that front as of now.

Sounds great Sir. Thank you.

Thank you . T he next question is from the line of Iqbal Khan from Nuvama Wealth and Investment Limited. Please go ahead.

Firstly congratulations for a very good set of results. J ust one question I have on the export front I wanted to know how is your export mix between US and Europe obviously your large chunk of the export from these two countries just want to know the mix of it and also currently we are catering to Australia so Australia is also a part of the export mix so how would you divide your export mix in these three geographies?

Let us face it here US still continues to be a bigger chunk and will be b ecause USA consumes 34% of the global home textiles so for Welspun Living Limited it is around 70%. N ow when we come to UK and Europe , we will say the next 20% will be from UK and Europe and UK consumes around 10% of the global consumption of h ome textiles. Australia, New Zealand and rest of the world will be say around 5 to 7%.

Thank you very much.

Thank you. T he next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Thank you for this opportunity. M adam what sho uld be our net debt number for FY’24 what should be the closing number and currently what is our cost of fund?

We closed Q2 at ₹1,573 Crores, we have stated our objective to reach less than ₹1,000 Crores by FY’24 end and our cost of debt is currently in the range of 6.5.

In the cash flow we have found that ₹158 Crores is attributable towards government grant so how should this number shape up for the second half and what should be for the year as a whol e what factors attribute to this number?

Is it the RoDTEP part Sir or any other category?

It is RoDTEP and duty drawback.

For the flooring segment we found that for the H1 our utilization levels have reached 63%..

Q2 is 63, H1 is about 54%, and overall year should be around 60%.

What should be for the next financial year?

We will continue to grow our capacity utilization I can not give you a number at the mo ment but it will grow from here.

One more point was mentioned for asset held for sale so if you could throw some more lights what are those and when are we going to realize what should be the value?

We are moving more and more away from traditional energy and hence we are offloading those assets so we have sold our 12 megawatt power plant and we have so ld our boiler for the plant so this will be done within this year because some approvals are required from the government whoever purchases it so those approvals are pending so once those approvals are in place we will effect the sales, so we have taken the Board approval.

Madam in your opening remark and also to your reply to earlier participant you did mention about a cautious o utlook but still maintaining the topline growth of 10% and with the EBITDA number that 15% so if you could just out line to us what are the factors that give you the confidence when we look at the US economy as a whole the inflationary trend, the yields at 5% the top of liquidity crunch so what are the key factors that are attributing to this growth and the and the continuity of the same if you could throw some more light?

So here I think for us we have seen that the retail has been a little resilient here and also o wing to a replenishment programs so for Welspun Living Limited our 70 to 75% businesses are replenishment businesses so that gives us the confidence here and with the order portfolio that we have we will maintain a commitment that we have put across.

So interest rate scenario remaining at say 5% or at higher level would not this lead to a dent in demand and going ahead that may lower the demand output for even for the rep lenishment segment, how this higher interest rate scenario going to affect the segment as a whole?

The challenges are there we have already seen the economy the way it is but I can just tell you for Welspun Living Limited the opportunities that we have seen is that we have worked very , very focused last year on getting the share of shells so whether it is in the terms of private label, in the terms of our licensed brand as well along with the kind of mix of the product whether it is towels, sheets, beddings and drugs so that is the opportunity that we have and also in the different channels of growth that we are talking about here, so whether it is a discounter so we see an opportunity here in that terms. To look at our t opline growth of around 10 to 12% and EBITDA of 15%.

Thank you M adam for the answer and it is really commendable on the set of numbers and the guidance which provided by th e team and all the best an d uh congratulations and Happy Diw ali to the team.

Thank you . T he next question is from the line of Prerna Jhunjhunwala from Elara Securities Private Limited. Please go ahead.

Madam I wanted to unde rstand the flooring business o utlook with respect to markets especially in terms of export s and domestic and B 2B domestic how things are shaping up and in the branded space how flooring business should shape up going forward, what is the kind of traction we are getting in this segment on the branded front as well?

First of all when I look at the global landscape in the terms of private label and branded so America is going to be the private label one and when you talk about branded it i s going to be the Middle East and India and it is primarily B2B. N ow when I talk about USA the opportunity definitely is there and that again I will reinstate that looking at the opportunity that Welspun has it is one of the green facilities and one of the most modern plants this part of the world which actually is a great opportunity for us along with that the indigenizat ion of the supply chain for Welspun will be a great criteria to get the businesses in America and the businesses will be a mix of soft and hard flooring and the whole tr aceability is something that Welspu n has an advantage against the other countries which actually are challenged because of that . Now when I come to India, India is something that we are seeing a great opportunity in the term s of t he B2B businesses that means more than the residential right now we are looking at the institutional and the hospitality segments that again is a great opportunity and we see that growth going forward as well and that is where it is at the moment.

When do you think we have already reached a run rate of around 1000 Crores do we see this run rate reaching 1500 to 1600 Crores in the next two years?

I will tell you one thing let us share this with you I think we have a great opportunity in this flooring business. H aving said that the 1000 Crores is the first stop and then 1500 Crores and I think sky is the limit for this flooring business because I think India has a great opportunity towards growing this so ye s definitely Prerna we are exploring a very ambitious goal towards here which we will share when we need.

In terms of festive season sales that we would have seen during e -commerce sale period and the Navaratri period any color that you are getting in domestic market, how home textile branded demand is moving in India?

I will tell you one thing here so till August and September the businesses they were running at a very tepid space the charades were on and the interesting thing Prerna this time has happened the Diwali is coming a month later usually we would say that the Q2 would actually have the sales because Diwali would have been in October right now this time the Diwali is 1 m onth later so now the sales have picked up and we are seein g the weekends now giving a growth of over 50% here so yes now the momentum has come in and the festive season has started kicking in . Earlier it was slow.

This is helpful. Thank you. I will come back to the question queue.

Thank you. The next question is from the line of Resham Jain from DSP Asset Managers. Please go ahead.

I have just one question so if I look at the numbers historically it seems that the o pex has been controlled quite well but if I look at th e gross margin profile it used to be 50% plus minus, in good times it has gone above 50% as well, but now let us say last two quarters we are seeing your gross margin anywhere between 46, 47% which is 400 basis point s lower than what you used to do before COVID, obviously it has improved compared to last year because last year had lot of challenges so how should one look at your gross margin profile going forward because 18 , 20% used to be the gro ss margin profile earlier, there is a mix of kind of flooring also coming in but even if I adjust your gross margin or your overall EBITDA margin seems to be lower t han what you used to do earlier?

You see more and more our emerging businesses are growing, so this is a blended margin of our home textile core business and the emerging business so as the emerging businesses will reach a certain size and profile the margin will of course increase, so currently they are giving lesser than the core home textile margin and hence the consolidated margin is com ing lower, but as they start contributing more and more as we are seeing in flooring as well as in domestic this margin profile will go up.

The home textile will maintain a number of around 17% 18%.

Home textile business because it has a contribution from the domestic piece as well which I think it is in the building phase so probably m argins must be lower there so if one looks at the export home textile business would the margin be similar to what you might be doing let us say three, four years back 18% to 20% range?

Almost in the same range so about 17% - 18% currently because as I said cotton is at an elevated level we had cotton at 40 , 45 earlier now it is at 60, so of course if cotton at such an elevated level the margin on the denominator numerator basis it gets slightly a ffected but we are in the same ballpark.

Understood. Thank you so much and all the best.

Thanks for the opportunity. M y question is regarding the flooring business so just wanted to understand what is the addressable market size which US has right now and when we look at the global supply chain how much China would be contributing in flooring part of it?

The total size of flooring in US is $90 billion but our addressable market is about 10 billion out of that 10 billion China would have 50 , 60% market share currently. W e have just started so we are relatively smaller but we will continue to eat into the other shares and hence we are seeing that the market opportunity is very large.

Second question is when we look at cotton prices the last 6 months they have co me down so do we see price cuts coming from customers negotiating lower prices for forward contracts?

No, the cotton price has remained now stable to some extent and prices with c ustomers are also stable so on cotton basis there is no price change happening at the moment.

That is it from my side. Thank you very much.

Thank you . The next question is from the line of Iqbal Khan from Nuvama Wealth and Investment Limited. Please go ahead.

Thank you for allowing me for the second question. Just wanted to understand the sensitivity part current cotton price is around 61, 62000 so what is the fluctuation or what is the pricing where you take decision on the price cut or p rice hike and how doe s it impact your volume as well, so just wanted to understand sensitivity part of this?

Iqbal it is not a simple cut and dry so lot of discussion it keeps on happening with the customers and customers are also in the know of what is happening.

Here I will tell you one thing Iq bal I think this is a very clear visibility the way we work with customers in collaboration and the cotton prices are absolutely visible to everybody here and that is what we work very closely with our customers so the cotton pric es are around 61, 62000 and I think this is what we are seeing even going forward and there is a way that we work where we constantly are in touch with our customers on a regular basis on anything in the commodities whatever it is.

so w ith higher cotton prices the negotiation power of the customer increases and because of which there is some kind of price cuts that can take place and which can potentially impact your markets this is what I want to understand, what kind of negotiation takes place and to what extent the negotiation takes place?

Thank you so much.

Thank you. This was the last question and I now hand the conference over to the management for closing comments.

Thank you every one. I t is heartening to see the fruits of our hard work reflected through the highest ever quarterly revenues and increase d market shares in all our business vertical s, home textile exports to US, flooring exports, domestic and advanced textiles. N ew and increased order flows from marquee retailers shows their trust and confidence in us which is further strengthened. Our global brands continue to give us an e dge through i nnovative products and alliances. F looring business has started pulling its rate slowl y but steadily . D omestic bus iness continues to scale newer peaks through cementing its leadership and reach, distribution and brand identity which augurs very well for opening of doors for high sustainable growth in market share. In ESG our commitment is u nparalleled and a move towards achieving renewable energy targets by 2030 will further strengthen our leadership in this area. Along with substantial cost savings we continue to be cautiously optimistic on the back of the disturbed global economic sentiments that we are witnessing and are committed towards the revenue and profit guidanc e we have already provided for FY’24. Welspun is also committed towards reaching a healthier sustainable ROCE to create substan tial value for our stakeholders. T hank you for your continued interest in Welspun Living. For any other queries please feel free to connect with Salil and Sanjay.

Thank you. On behalf of Elara Securities Private Limited that concludes th e conference. Thank you for joining us. You may now disconnect your lines.

Note

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 the 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