Pearl Global Industries Limited (PGIL) Q4 FY23 Earnings Concall Transcript

Pearl Global Industries Limited (NSE:PGIL) Q4 FY23 Earnings Concall dated May. 17, 2023.

Corporate Participants:

Pallab Banerjee — Managing Director

Sanjay Gandhi — Group Chief Financial Officer

Analysts:

Keshav Kumar — RakSan Investors — Analyst

Vishal Prasad — VB Capital — Analyst

Aditya Sen — RoboCapital — Analyst

Faisal Hawa — H. G Hawa and Company — Analyst

Pulkit Singhal — Dahlman — Analyst

Chinmay Kabra — Emkay Global — Analyst

Rishi Gupta — Goldstone Capital — Analyst

Naitik Mota — Sequent Investments — Analyst

Amit Kumar — India Capital Fund — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY ’23 Earnings Conference Call of Pearl Global Industries Limited. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Pallab Banerjee, MD for his opening remarks. Thank you and over to you sir.

Pallab Banerjee — Managing Director

Hello everyone, good morning. Welcome to our Q4 ’23 and full financial year of 2023 earnings conference call. Along with me we have our Group CFO, Mr. Sanjay Gandhi; and SGA, our Investor Relations Advisors. I hope all of you have had a chance to go through our Annual Results and the Investor Presentation uploaded on the exchange and our company website. Outstanding performance of fiscal 2023 year is a testament to our [Indecipherable] advantage. Our financial year ’23, the company has declared an interim dividend of INR5 per share at the end of the fiscal year, resulting in a total dividend payout of INR7.5, 75% of our face value for this year of — financial year of 2023.

Our core strengths of multinational presence, design team, gift towards the asset-light model and strong customer relationships. To achieve this sustained growth, which is primarily driven by incremental orders from our existing customers and with better realizations and the orders for value-added sales from the customers that we acquired in the last year three to four years. Our presence across the global textile chains, value chains in Asia has helped us cater to our global clients effectively. Utilizing our global capacities and mitigating uncertainties by leveraging our facilities in different markets.

The global operating environment continues to remain challenging amidst the higher interest costs and the inflation rate, which are high, especially in the western economies. We expect revenue to be remaining at the same level or to show some growth as of last year during the quarter one of financial year ’24 and throughout the H1 of financial year ’24. However we are putting all our efforts and we are confident of achieving 15% to 20% revenue CAGR over the next three to four years. Having said this our margins could remain under pressure for the industry and we at PGIL are confident of maintaining our margins between 7% to 8% on full year basis.

Our efforts will be to improve the same which we are confident of achieving by — once the macro factors stabilizes and definitely we would be in a very, very healthy position. That’s something we are confident of. To navigate challenges pertaining to the uncertain business environment we are setting up very stringent risk governance framework to hedge against the sudden increase in raw materials or poor performance financially, of some of our overseas brands and customers. And of course, the rising interest cost that we have seen hopefully like no more interest cost in the U.S. but we never know. This shall help us in keeping our profitability intact.

We incurred a total capex of rupees INR48 crores financial year ’23 and we intend to incur a capex of anywhere between INR50 crores to INR60 crores again, in the financial year ’24. With this, I would like to give you some information of key developments in each country that Pearl Global has its operations in. In India, the management has taken steps to address inefficiencies in partnership factories operating in India during the current quarter. We have ended up the partnership and brought the factory under Pearl’s umbrella. So we are now completely managing that operation. Furthermore, the company remains committed to excluding opportunities for expansion of its capacities in India.

We’re supported by various government initiatives such as the PLI scheme, state incentive schemes for expansion. Going through all the details these initiatives incentivize the manufacturing within this country — within our country of India, making it favorable for this opportunity and for the growth in India. The company has successfully added two to three new customers in India. The strategic move is expected to contribute the growth of the company’s order book in the coming years. Moving to Bangladesh [Indecipherable] started generating positive returns in the first year of its commercial operations you have heard, in our last calls. It has now generated a healthy ROCE and cash flow.

Further, the recently acquired company or the factory that we did in the last year has proven to be valuable asset to our company. The integration of the brownfield acquisition with PGIL has been quite seamless [Indecipherable] increased revenues and improving our profitability. The positive and the green ROCE further reinforces the success of this acquisition. In Vietnam, factories that we have, have achieved higher levels of productivity thanks to an improved product mix and an expanded range of offerings for customers. Consequently, this has led to a higher realizations and significant enhancement in the operation efficiencies. Our partnership model is successfully evolving in Vietnam and it’s giving us good results.

In Indonesia, company has successfully expanded its operations by constructing a new facility on the land acquired in 2021. With the capital expenditure of INR10 crores, two facilities, this is the old one and also, it offers 25% increase in our total capacity in Indonesia. Its enhanced facility enables the management of more complex processes, allowing the company to deliver value-added products to the clients resulting in improved per piece realization. This higher capacity is expected to drive increased revenues for Indonesia, in the next fiscal year of 2024-’25.

Other offices like in Europe, our company has [Indecipherable] an office in Spain as well. This strategic move positions the company closer to the European textile value chain facilitating the acquisition of [Indecipherable]. And since the collaboration with existing clients [Indecipherable] development — next to the operations or their design offices in Spain. With Europe boasting a robust value chain the company anticipates continued growth through its presence in this region. In USA, the company has set-up a separate division branding and licensing opportunity. We have hired a new CEO who has good number of years of experience to develop similar kind of business in his previous streams [Phonetic].

This opportunity will take time, but we believe this will be another growth engine for us. Of our U.S. customers in the pandemic and post-pandemic when the logistics challenges were there [Indecipherable] production began important. And so most of our customers are talking to us to explore these nearshore opportunities. That means manufacturing happening in the [Indecipherable] region of the Central America region. This nearshore manufacturing opportunities and we expect it should be finalized in the next couple of months.

The customers’ assurance of doing business is a very good opportunity for us. With this I think I’ve given you more or less what’s happening in our company. Now I would like to hand over this call to Sanjay Gandhi. Mr. Sanjay Gandhi, our Group CFO to run us through the financial performance.

Sanjay Gandhi — Group Chief Financial Officer

Thank you Pallab. Good morning, everyone. It gives me immense pleasure to report another successful year for our company with regards to breaking financial and operational Group level performance. I’m pleased to announce that for FY ’23 on a consolidated basis our revenue has increased by 16.4% year-on year to INR3,158 crores versus INR2,713 crores in FY ’22 primarily due to increased orders from existing customers and improved realization from new customers who have been acquired during the year, integration of Alpha acquisition and improved operational efficiency at Bangladesh and [Indecipherable].

[Indecipherable] FY ’23 stood at INR255.5 crores, a growth of 81.8% year-on-year versus INR140.6 crores in FY ’22. While our margin improved 290 basis year-on year from 5.2% in FY ’22 to 8.1% in FY ’23. This improvement in margin is a result of better product mix, improving operational efficiencies, consistent improved profitability in Vietnam and Bangladesh operation and integration of new acquisition which is Alpha in Bangladesh. PAT for the year stood at INR153 crore versus INR70.1 crore in FY ’22. EPS is INR68.9 in FY ’23 versus INR31.46 in FY ’22. For quarter four FY ’23, our consolidated revenue declined by 18.5% to INR730 crores versus INR896 crores in FY ’22.

EBITDA grew by 55.9% to INR62.8 crores compared to INR39.7 crores in the same quarter last year. Margin improved from 0.4% in FY ’23 to INR8.6% in FY ’23. On a standalone basis revenue for the year stood at INR1,103 crores versus [Indecipherable] in FY ’22, a growth of 18.2% year-on year. This growth was a result of increasing business from our existing clients and addition of new strategic clients. That is product mix on account of increase in our product range offered to customers resulting in an increased realizations. Operational efficiency improved by employing best-in-class packages.

EBITDA margin improved from 4.4% in FY ’22 to 6.3% in FY ’23. PAT for the year stood at INR53.8 crores in FY ’23 versus INR27.2 crores in FY ’22. EPS doubled from INR12.54 in FY ’22 to INR24.84 in FY ’23. For the quarter ended quarter four FY ’23 revenue declined 21.5% to INR274 crores. Margin improved from 4% in FY ’22 to 7.8% in FY ’23. PAT for the quarter grew 119.3% to INR27.9 crores versus INR12.7 crore in FY ’22. Our strong performance is reflected with our strengthening balance sheet. On a consolidated basis, our net growth for FY ’23 stood at INR723 crore versus INR599 crores in FY ’22. Gross debt declined to INR448 crores in FY ’23 versus INR564 crores in FY ’22.

Net gearing ratio improved to 0.21 times from 0.67 times in FY ’22. Return on capital employed improved from 12.4% in FY ’22 to 24.2% in FY ’23. INR42.5 crore of margin money earmarked as healthy payments is excluded from capital employed calculation. Net working capital days improved from 63 days in FY ’22 to 38 days in FY ’23. Receivable days declined to 24 days in FY ’23 from 49 days in FY ’22. Inventory days decreased to 59 days in FY ’23 from 73 days in FY ’22 and payable days declined to 45 days in FY ’23 from 59 days in FY ’22. Debt service coverage ratio improved from 1.95 times to 2.3 times. Net-debt-to-EBITDA stand at 0.65 times. On a standalone basis our [Indecipherable] for financial year 23 stood at INR381 crores versus INR344 crore in FY ’22.

Gross debt declined to INR206 crore in FY ’23 versus INR260 crores in FY ’22. Net gearing ratio improved to 0.31 times from 0.57 times in FY ’22. Return on capital employed improved from 10.3% in FY ’22 to 16.2% in FY ’23. Net working capital days improved from 63 days in FY ’22 to 40 days in FY ’23. Receivable days declined to 37 days in FY ’23 from 45 days in FY ’22. Inventory days increased to 87 days in FY ’23 from 45 days in FY ’22. Payable days declined to 42 days in FY ’23 from 70 days. Debt service coverage ratio improved from 0.8 times to 2.3 times. Net-debt-to-EBITDA stands at 0.6 times for FY ’23.

With this I would like to open the floor for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Keshav from RakSan Investors. Please go ahead.

Keshav Kumar — RakSan Investors — Analyst

Hi, good morning, sir. Sir, this nearshoring opportunities you spoke of in the opening address would that be on partnership basis or we are planning to set up our own facilities?

Pallab Banerjee — Managing Director

The joint venture we are looking into the existing factories which are already operating in that region.

Keshav Kumar — RakSan Investors — Analyst

Okay sir. And sir, what’s your sense on, on what kind of products can really be nearshored to LatAm in the medium- to long-term.

Pallab Banerjee — Managing Director

See, the cost of manufacturing in this region is higher compared to our Asia. But there is a duty-free advantage also because of the [Indecipherable]. So we will be using that benefit and despite the cost being higher, manufacturing cost and the raw material cost to a certain extent, but as you land into USA, it’s similar to what’s coming from Asia. So that’s the objective, that’s the goal that we’re working on. The products that you asked about, we will be starting with most probably more of [Indecipherable] product because that’s where we’re seeing the demand coming back in this region because that’s the volume driver and the retailers want to keep a leaner inventory on certain products. So that’s something the discussion that we’re having with most of our customers. And, sir, other question, sir.

Keshav Kumar — RakSan Investors — Analyst

Yeah, yeah. Yes, yes, certainly. Just one thing. So is that more of a derisking strategy from our clients or we see longer-term negative impact in Southeast Asia or India come back?

Pallab Banerjee — Managing Director

I don’t see it will be a long-term [Indecipherable] Asia in general because this particular region doesn’t have that much of capacity.

Keshav Kumar — RakSan Investors — Analyst

Okay, alright, sir. So secondly, so the way we’ve built our business, we’re playing to the strength of different countries that have their own differentiators for instance, high-volume, low values cotton stuff you have Bangladesh, more value-added India can do, Vietnam would have synthetics and for the past two years a sizable quantum of growth for us has come from clients less than five years old. This year, 50% of our growth was led by new clients, but now the macros are right for bigger place to see benefits of consolidation. There have been reports of Indian government is going for partial shutdowns because of weak Christmas booking. So are we seeing the benefit of having a broad-based manufacturing base getting more inquiries from our existing clients to transfer more share to us?

Pallab Banerjee — Managing Director

Our endeavor would be always to have a better market share of our key clients, so that’s — all the efforts is in that direction. And in my previous calls — in the previous quarterly calls also I’ve always mentioned that we at Pearl believe in having a presence in all the supply chain of our Apparel Garments, Fashion Garments in the world. So there are about four or five big supply that we can talk about like I have mentioned earlier also, like there is Southeast Asia, South Asia, Mediterranean region [Indecipherable] that means Europe buying from Europe and U.S. buying within U.S. So that’s how like most of our customers and most of these big retailers, either in Europe or in U.S., they source from all these channels or all these locations.

At Pearl we always had that endeavor to be presence in most of these supply chains. So if you look at it, we are already supplying to our customers from Southeast Asia, we are supplying from South Asia. Now we would be supplying to them — we are adding Central America as well, so very close to it. And then the only two areas, which are not there would be more I would say the Mediterranean region and maybe onshore [Indecipherable] our clients. So these are two things that will be left behind. So when you talk of the complete sourcing for these customers or for these customer partners, so they use all these five channels. Us, we would always try to grab their market share by [Indecipherable] our presence in maximum number of these channels. So that’s the way that we’ll continue to operate.

Keshav Kumar — RakSan Investors — Analyst

Sure, sir. I have more questions, but I’ll come back in the queue. Thank you.

Operator

Thank you. [Operator Instructions] Our next question comes from Vishal Prasad with VB Capital [Phonetic]. Please go ahead.

Vishal Prasad — VB Capital — Analyst

Hi, good morning. So in our industry usually clients engage in two ways. Either they directly outsource to the manufacturer or they outsource through a middle-man like [Indecipherable] and some other companies. And there are some clients who engage in both these models. So could you please share when does the client directly outsource us to a manufacturer and what cases they go through a middle-man?

Pallab Banerjee — Managing Director

In my experience what I have seen is that organization who are much well organized and much more evolved in their sourcing strategies they do have their own offices, global offices where they source from. For example, if I speak of companies like GAP [Indecipherable] sourcing offices. They don’t engage any middle-man or any agents in between. There are other brands who are — who may not have such a matured supply chain organization within their organization. So they would like to take the benefit of some of these evolved partners like [Indecipherable] which has got a very extensive sourcing base across the globe.

Similarly, there are other companies like MDF [Phonetic], there are companies like Newtimes. So these are the agents like who are playing a big role in [Indecipherable] definitely go through some kind of middlemen, like the Mitsubishi of the world and [Indecipherable] there are others. So they do definitely have a way or a process of working in which they rely quite a not extensively on this kind of network. So yeah, it depends on the market, it depends on the customer’s maturity level in terms of how they’re sourcing the garments. Does that answer your question?

Vishal Prasad — VB Capital — Analyst

So let’s say we take Walmart, for an example. I don’t know if we work with them, but that’s a general example I’m taking. They take both the routes, where they partner with a manufacturer and they sometimes they partner with the middle-man as well. So they are very capable, I mean Walmart in terms of their own supply chain and they’re a huge company, but what I’m trying to understand is what goes behind taking the decision on this is the part of the business which should go to the manufacturer directly? And this is the part of the business which should go to middle-man. Is this something that you have noticed or is that generic?

Pallab Banerjee — Managing Director

Okay, so if you like, when you talk of a middle-man like when you talk of a specific agent, the retailers would go to that agency or to that middle-man for a host of services. Service like finding a manufacturer in that particular country, maintaining the communication, the quality inspections, supervision so those are the services that is middle-man provides. For a company like Walmart and all also work with lot of direct importers. So most of the big retailers, the large-format retailers in U.S., they source from two — even if they don’t go to an agent they would have vendors who directly do FOB shipment and their company for example, Walmart will have their own logistics team who will be bringing in the goods.

Or they may have — they may be buying from suppliers who are based in USA. That supplier might be going to a manufacturing unit, and placing a business, but in Walmart’s record, that’s a direct supplier. So they’re not acting as a middle-man. I’m just giving this example. So there are three things that means like if you’re talking about there is the agency business. There is the direct business. Agency business are the people like for example, there are very many brands, let’s say, middle level brand like a J.Crew, Chico’s or [Indecipherable] who are not very big, but they do rely on this kind of middle-man, lot a business that happens through this middle-man agencies like I already mentioned [Indecipherable] in our industry.

And then there are other people make U.S., a big chunk, I would say the people who are importer on-record that means they would be buying the goods from China, from India, from Bangladesh and all. And they would warehouse it in U.S. that means they would be importer on records to bring the goods into U.S. and then supply to the retailers. So broadly, there are three. So if you are mixing the group, the second and third together so I was trying to say that, okay there is also in that way there are two groups if I’m making sense to you.

Vishal Prasad — VB Capital — Analyst

Okay sure. The second question that I have is do we engage directly with our clients in all engagements or sometimes we also work through a middle-man?

Pallab Banerjee — Managing Director

Our preference is always to have a direct engagement. So most of our business is through rue direct engagement, of course, there could be a middle-man like who would be doing kind of service to the customer. And these services will come through. For example, like we have a [Indecipherable] do certain, take certain services from the [Indecipherable]. But our engagement with the cost management is direct.

So we speak to them direct the business planning, the standardization that happens over for a longer period of time those kind of conversion would be happening directly with the customer. But operationally certain activities, it’s done by the agent. Same thing is for customers like [Indecipherable] in Japan. Our relationship is direct, but they do have certain activities they do through. The agency business I think we have would be quite insignificant like you know I think the entire group less I would say 10% of the business would be happening. We are looking through an agency or on an agent who is dealing with the customer.

Vishal Prasad — VB Capital — Analyst

Okay and sir, do we get our orders to competitive bidding or usually it’s through relationships and negotiations?

Pallab Banerjee — Managing Director

Again, that depends on the strategy of the customer. There are certain products which is the core basic items. Most of the customers want to have some kind of bidding process. It may be open bid or it may be a bid between only a handful of vendors who do this product for them. So that generally is a practice, which is quite equivalent especially in the western markets.

Vishal Prasad — VB Capital — Analyst

So bidding would be L1 whoever quotes the least it gets the business?

Pallab Banerjee — Managing Director

Not necessarily. They generally look at the price, the delivery speed and also in some cases, the design and capability. So maybe like, of course, the endeavor would be to place it to an L1. But there could be certain other parameters, which supersedes in their decision-making. Now this I’m talking more from my experience in the past. But that’s generally the trend that I have seen and even as a manufacturer also we see that sometimes.

Vishal Prasad — VB Capital — Analyst

The price is not the only criteria. I mean, your relationship and your ability to deliver definitely comes into picture.

Pallab Banerjee — Managing Director

Delivery performance is definitely important. Very important, in fact.

Vishal Prasad — VB Capital — Analyst

Sir, last question, last call, when I asked you mentioned that 10% to 15% of our revenue comes through partner.

Pallab Banerjee — Managing Director

If you see that certain matured markets like Vietnam and to certain extent Bangladesh also we do have partnership factories where we do source from. So it helps us mitigating some of our resources, sometimes the fluctuation of the quantity, and some quantity is required in a bigger number in a smaller amount of time there are capacities along with partnership capacities can be used and in certain cases like the flexibility that we get by working with the partner factories for certain clients of us also is helpful. So yes, that remains in our strategy and will continue to be there. Certain percentage may not be a big chunk. Would be we do this kind of partnership from factories where we source from.

Operator

Thank you. [Operator Instructions] Our next question comes from Aditya Sen with RoboCapital. Please go ahead.

Aditya Sen — RoboCapital — Analyst

Hi, good morning. I wanted to understand about the acquisition that we made in Bangladesh. Earlier we were in the partnership model and now we are shifting to the self-owned model. Am I right on this, sir?

Pallab Banerjee — Managing Director

This particular case, like you know one of the partner factories that we worked with for some time, and then we decision to acquire that company. That’s the case, [Indecipherable]. It may not be the only formula that will work in future, so there will be certain partnership factories, will continue to be partnership factories. And for example that we are seeing in Central America like we are in exploration and [Indecipherable] so we haven’t worked as yet, but yeah from the beginning itself we will be acquiring shareholdings.

Aditya Sen — RoboCapital — Analyst

Okay, so all-in all, we will proceed with the partnership model if we see a good partnership?

Pallab Banerjee — Managing Director

And as I mentioned that it will not be the majority of the percentage of our business. But it will play a role.

Aditya Sen — RoboCapital — Analyst

Okay. One more — in the initial comments you mentioned that we are expecting our revenue growth of 15%. So what will be the growth drivers for this? Will it be only macroeconomic or the acquisitions that we’re looking-forward to make and the capex?

Pallab Banerjee — Managing Director

Yes, like we as a company I would say a site on a continuous growth. Anyway, between 15% to 20% and CAGR level year-on year. Of course, there are certain times, certain quarters where the market is fluctuating because of war or because of inflation or because of interest, rates going up or sometimes like we saw at least half the year, last year was a huge concern over, over-inventory position in markets like U.S. and all so like we will continue on our strategy to have this growth of about 10% to 20%. So that’s what I can foresee in the near future over the next five to seven years if we talk about in that horizon. So we will be exploring.

If you look at our mission vision statements like we are working in this particular field of providing fashion and manufacturing and supplying apparel products to our customers and doing a supply chain service that means trying to be more end-to-end. So in our statement today like what I mentioned about the licensing part of the business in U.S. so that’s a part of our supply chain. So that means like we for a particular licensed brand like we as a company will do the entire designing, manufacturing and then selling it to the retailers and by this new division that we’re creating. So those kind of opportunities we will continue to explore as various regions of manufacturing, partnerships in manufacturing.

Sanjay Gandhi — Group Chief Financial Officer

And to this mind, which Pallab mentioned, if you look at our current capacity utilization, which is the blended capacity utilization, we are now at 55% plus. I think there is enough headroom for at least a couple of years to really keep on adding within the existing capacity while we are looking for an opportunity for expansion as Pallab mentioned.

Aditya Sen — RoboCapital — Analyst

Okay, thank you for this. I would like to know the taxes, outlook on tax. Until when are we going to sustain this range and are we expecting 25% of tax in the coming years?

Sanjay Gandhi — Group Chief Financial Officer

Sorry, there was some noise on the background. I could not hear you. Are you talking about the tax rate? So see the tax — you’re talking about corporate tax rate, just to clarify, right? Yeah, so the tax rate is applicable in all the country at a different rate. The Hong Kong we have a different combination of nil, 0% of corporate tax and then there is a 16.25%. Bangladesh is a combination of tax on the turnover or 10% of the deal, profit, and Vietnam is 10%, Indonesia has 22% plus, India is 25%, so it all depends on which part of the geography the maximum profit is getting generated and our blended tax rate will be applicable. So I do not see that we’ll be following the 25% bracket at all because there are — in the India’s contribution on the top line is only 35% over the last three to four-year time period. Well, the other part of the profit is getting in overseas country which will be lesser than 25%, so the blended rate will be, let’s say, between 15% to 18% is something which we can look at.

Aditya Sen — RoboCapital — Analyst

Okay. This was great. Thanks a lot. I’ll fall back in the queue.

Pallab Banerjee — Managing Director

Thank you.

Operator

Thank you. Our next question comes from Faisal Hawa with H. G Hawa and Company. Please go ahead.

Faisal Hawa — H. G Hawa and Company — Analyst

Sir, you mentioned in your initial comment that of the funds given as margin for LC are not being taken into ROCE calculations. So what if it does it have on our ROCE going up by what percentage does it go up and what is the reason for doing this?

Pallab Banerjee — Managing Director

Yeah, so it’s a 1% impact, the ROCE will improve by 1%. The reason for including [Indecipherable] its funds were really — when you look at the capital employee point-of-view, these are earmarked for making the payment against the trade creditors, which are sending imports. So we thought it is appropriate to follow a conservative think appropriate that was [Indecipherable] rather than it from a long-term and short-term borrowings per se. So that’s the reason — otherwise [Indecipherable] by 1%, so it will become 25% plus against 24%. We’re calling this a conservative on that.

Faisal Hawa — H. G Hawa and Company — Analyst

So are we saying that the ROCE has gone up from 12% the previous FY to now 24% in this FY? In the sense you’re almost — you’ve more than actually fulfilled your promise given in the previous con-calls that the ROCE will go up.

Pallab Banerjee — Managing Director

Absolutely. Thank you for reminding. Yes, we were looking at close to 20% and we were happy that we could deliver on that much above that time period. Overall, we were always targeting that any new projects, which is taken in the company, whether it’s a brownfield acquisition and even the capacity enhancement at the existing factory, if any capex is coming from any country when the CFO that everybody has to look at return on capital employed has to be close to 20% to start with — overall, in any period of two, three year time period that project have conveyed. Initial six or eight months can be lower, but eventually these projects would have the capability of reaching a 20% growth rate. And that is a yardstick for approval at a Board level also this cadence has actually been setup up in the last 12 or 14 months of multiple deliberation.

Faisal Hawa — H. G Hawa and Company — Analyst

Sir, do we still hold on to our target of almost going 20%, 22% every year in volume terms for the next three, four years? It may not happen like every year I can understand that, but generally you have a CAGR of 20% three, four years in volume terms? And also sir, what is our ROE for FY ’24, FY ’23 rather?

Pallab Banerjee — Managing Director

FY ’23, so if you look at our effective tax rate, it is coming to be around 10% because of the distribution of the profit in line with that, so I think we should be close to 18%, 19% of return-on-equity, given this kind of a spread across the countries.

Faisal Hawa — H. G Hawa and Company — Analyst

And you feel that this will be now maintained over next three, four FYs ROCE and ROE, those metrics are now very much in place as a very big foundation. It is not due to any yearly seasonal factors or anything?

Pallab Banerjee — Managing Director

Yes, yes, you’re very right. I don’t think there is not any seasonal or one-time impact is coming in ROCE improvement. Now the ROCE target as I mentioned, we are targeting very clearly, in all our capex or any other decisions which is financial capital allocation is between 18% to 20%, so we should be able to maintain that. There can be a certain period when you’re incurring a capex that is in a particular factory and before it starts generating the incremental return it may take a while, you know, maybe couple of quarters before it starts generating. But overall when we you look at it, the incremental capital requirements should be able to generate 16% to 20%, so net-net we should always close to 20%.

Faisal Hawa — H. G Hawa and Company — Analyst

Consolidated basis what is our capacity utilization in all the factories?

Pallab Banerjee — Managing Director

So the blended capacity utilization is around 65%. This is what in response — as an answer to the earlier question I was mentioning that within the existing capacity partnership and our own factory, there is a potential for us to really grow for at least for the next couple of years to utilize that and these two years we’ll be also looking at more opportunity for collaboration whether with the partnership or a joint-venture or maybe the brownfield acquisitions.

Faisal Hawa — H. G Hawa and Company — Analyst

And sir, we are also seeing the emergence of three or four very big groups in garments, like Reliance Trends and even Aditya Birla Group, so are we making any kind of efforts to become like a choice contract manufacturer for them also very early into their evolution?

Sanjay Gandhi — Group Chief Financial Officer

I don’t think so. I would request Pallab if he can just mentioned about it.

Pallab Banerjee — Managing Director

Yeah, our focus has still been a global manufacturing. Yes, India would be one of the country. But yes, as of now current focus is still the opportunities to encash upon.

Faisal Hawa — H. G Hawa and Company — Analyst

Okay. Thanks a lot, sir.

Operator

Thank you. [Operator Instructions] Our next question comes from Pulkit Singhal [Phonetic] with Dahlman [Phonetic]. Please go ahead.

Pulkit Singhal — Dahlman — Analyst

Thank you for the opportunity. Congrats on a great set of numbers. Am I audible?

Pallab Banerjee — Managing Director

Yes, you’re audible. Thank you.

Pulkit Singhal — Dahlman — Analyst

Yeah, thank you. The first question to Pallab, I mean, if you could just help us understand qualitatively how like — how the discussions are going on with potential brands or existing customers? I mean, have these conversations — number of such conversations picked up to what you say last year and what is the nature of those conversations? How has that changed? What is their focus like versus last year and currently?

Pallab Banerjee — Managing Director

Yes, conversations are happening at a full pace I would say. In fact, I’m taking this call from U.S. only. So that’s why I think there was a delay because we had some technical snag for connecting. So we apologize for that to starting this call a little late. There have been a huge amount of conversation and interaction with most of the customers. So either they are visiting us or they are asking us to visit them. Various strategic conversations are going at this point of time. Market is in that influx. What happened in the last 12 months I think will have a long-term repercussion on the industry as a whole how the retailers would think and build-up their strategies. So that’s evolving and undergoing. So there could be certain risks. We are seeing certain customers becoming [Indecipherable] and certain others like who have a very strong strategic vision and are strengthening themselves quite a lot. So yes, there is mover and shaker kind of activities on in this market of U.S. especially.

So yes, like the holiday season like another gentleman also mentioned there were numbers were quite low because that’s because most of the U.S. retailers had inventory and they have been not been buying for those products. So as we get into spring-summer goods of 2024 so that means for the retailers of Q1 and Q2 of 2024 when they’re buying, how they will be selling so that season, there still like most of the retailers are conservative. I’m hearing that they would be buying anywhere between 15% to 25% conservatively and keep some budgets open to see. So that’s why for them options like near-shore and all will be more important when they want to see like how the customers are reacting and consumers are reacting. What is the kind of buying trend that is coming up in the consumers? So that wait-and-watch also is happening in the market.

Pulkit Singhal — Dahlman — Analyst

Okay, okay and the guidance, you mentioned 15% to 20% on a CAGR basis for revenue growth, what is it that you expect for next year? Will it be in this band, or we expect lower?

Pallab Banerjee — Managing Director

Compared to their normal sales that was like pre-pandemic or after pandemic there was definitely a couple of quarters when there was a lot of pent-up demand. So from those high levels if you calculate, then they are projecting almost 25%.

Pulkit Singhal — Dahlman — Analyst

No, no, my question is on the revenue guidance for the company, you had mentioned a 15% to 20% revenue growth CAGR is what you’re striving to achieve over that few years. The question is, for FY ’24 will our revenue growth be in this band, or will it be lower?

Pallab Banerjee — Managing Director

Our strategy and planning and implementation is more towards the same to have this growth. Unless and until like — what we know today is what is the current situation of the market. So if the dynamics changes further till the bad or to becoming getting much worse then maybe it will be more challenging for us. But with the current challenges that we have in our hand, we have planned this way.

Pulkit Singhal — Dahlman — Analyst

Understood, understood. Just last question is on better days it has come down significantly by — I mean, you used to have 48 to 50 days average better than it did in 41 last year and now 33 have [Indecipherable]. Is this is also reflecting your cautiousness while dealing with customers and therefore as things pick-up these better days also goes up or is this sustainable? Is this some level of customer mix which allows you to operate at 33 days?

Pallab Banerjee — Managing Director

That’s something like Sanjay and me have been mentioning in our earlier calls also, like, we definitely do a huge amount of focus is on the risk mitigation. So our customers are still working with 60 days or 90 days kind of terms. We do organize ourselves in such a manner so we avoid that risk of 60 to 90 days. And some of our customers are definitely reducing their time. The people like who have done well, better — their financials have improved they have improved their payment terms. So it’s a combination of both, but Sanjay’s policy has been very clear like we have not been taking that risk and we have the various means of either factoring [Indecipherable] and taking it earlier. So that’s something that’s Sanjay if you want to add.

Sanjay Gandhi — Group Chief Financial Officer

No Pallab you have captured it right. So, our policy remains intact. I mean I think our strategy of focusing on getting the — bringing the liquidity into the system and also do the risk mitigation from the [Indecipherable] shipment perspective, it remains intact. Any new customer who’s coming in goes through the same scrutiny. And yeah, this is how the process normally does. So we’d like to liquidate our receivable at the earliest, whether through supply-chain financing, it is non-recourse factoring or from the receivable factoring with the bank offer us without any recourse. Those revenues and efforts will always be continued.

Pulkit Singhal — Dahlman — Analyst

So clears out, Pallab [Indecipherable] higher? I’m just trying with the bank I mean because there’s a huge fluctuation.

Sanjay Gandhi — Group Chief Financial Officer

Competition of the customer which is there, some customer the shipment time may take a little longer. We may say 10, 15 days and we added depending upon the mix of the customers, which is coming in that revenue or that particular quarter.

Pulkit Singhal — Dahlman — Analyst

Okay, got it. Thank you. I’ll come back in the queue.

Pallab Banerjee — Managing Director

Thank you.

Operator

Thank you. Our next question comes from Chinmay Kabra with Emkay Global. Please go ahead.

Chinmay Kabra — Emkay Global — Analyst

Yeah. Hi, sir. I just wanted to understand what percentage of your production comes from the partner factories and how much is it from the capacity that we have in here?

Pallab Banerjee — Managing Director

We have given breakup between percentage of partnership factory, we said 13% to 14% is coming from the partnership and the rest is our in-house manufacturing as we close this financial year.

Chinmay Kabra — Emkay Global — Analyst

Okay, sir. And I just wanted to understand what do you think the impact on the margin, and does it in the partner factory [Phonetic] and production being done in our own factories?

Pallab Banerjee — Managing Director

I mean, we will not share that in terms of the separation, but it’s a part of our strategy. Some style will go to the partnership, some will come here. If a bouquet of style which are offered to the clients — for the buyer, and accordingly the rationalization takes place in line with that. So let’s look at a blended margin which is existing because both co-exist.

Chinmay Kabra — Emkay Global — Analyst

Thank you. In the blended, capacity of 65% is driven [Indecipherable] utilization, which is done at our factories, right, not into the partnership factories if I’m not wrong?

Pallab Banerjee — Managing Director

Including of partnership factories.

Chinmay Kabra — Emkay Global — Analyst

Okay. And just another question regarding the demand scenario. You have — I just wanted to confirm that the holiday season approaching, you not seeing that as a little conservative in terms of orders, which have been traded by these retailers. Am I right?

Pallab Banerjee — Managing Director

Yeah. For the final decision, definitely the over-inventory situation of US played a significant role. So, the retailers have — they contributed, because they had inventory from the earlier years. That’s general in the market. That’s the situation was. And I think that’s right. You must have seen in the news also right now, a lot of capacities are open, a lot of vendors are not doing well. That was the main reason.

Chinmay Kabra — Emkay Global — Analyst

I understand that. Going ahead like in the month of Jan, Feb, we have seen that the inventories, so the retailers have started coming down. And new orders have been started — new orders are being placed by them. So, isn’t that the scenario currently or are you still facing issues with the retailers placing orders?

Pallab Banerjee — Managing Director

Definitely as I’ve just mentioned, from spring onwards, the inventory situation will not play any significant role in terms of the bookings. So most of the retailers are talking of exhausting that inventory — over-inventory that they had. Going forward, whether they will buy 100% or they would buy conservatively as they’re waiting for the market to pick-up and they don’t go back into an over-inventory situation. So, as a retailer, like if I had bought 100 pieces last year to sell, so this year my planning would be to go with [Technical Issues] and then see like how the market is. And then by this balance 10 to 15, close to the season. We’re seeing the consumers’ response. That’s where like nearshoring, that means the lead-time.

Chinmay Kabra — Emkay Global — Analyst

Yeah. Those were my questions. Thank you.

Operator

Thank you. Our next question comes from Rishi Gupta with Goldstone Capital. Please go ahead.

Rishi Gupta — Goldstone Capital — Analyst

[Technical Issues]

Operator

Hello? Sorry, Mr. Gupta. You will have to pick-up the handset.

Rishi Gupta — Goldstone Capital — Analyst

Can you hear me?

Pallab Banerjee — Managing Director

Now it’s better.

Rishi Gupta — Goldstone Capital — Analyst

[Technical Issues]

Operator

Mr. Gupta, we are not able to hear you clearly.

Rishi Gupta — Goldstone Capital — Analyst

[Technical Issues]

Operator

Gupta, we are still not able to hear you.

Rishi Gupta — Goldstone Capital — Analyst

Okay, okay. I will connect again. Let me connect again.

Operator

Thank you. We’ll move on to our next question from Vishal Prasad with VB Capital. Please go ahead.

Vishal Prasad — VB Capital — Analyst

Hi. I have two more questions. When we think about our industry, originally what comes to our mind is what happened in Bangladesh few years back. So, we as a company, how do we ensure that Rana Plaza doesn’t happen to us?

Pallab Banerjee — Managing Director

You have to answer a question two aspects, one from what’s happening from our own regulations in India and how the vendors are approaching that business. And the second is, there are certain regulations which are followed by the customers also. So there have been [Technical Issues] where we are looking at on the building structure strength, so that kind of procedure of certifications are prevalent in India also now. And the key customers, the big ones are asking for that, whether it’s a GAAP or [Indecipherable] and all. Any big customers or any customers and they’re working with us, so they are definitely asking for that kind of certification of the building and the infrastructure, structural strengthen and all are being checked.

So, yes, there were a lot of focus on Bangladesh today. Fortunately, Bangladesh is in a very strong position. Most of the buildings engaged in our industry is following all [Technical Issues]. Same thing has started in India as well, I would say. So any new construction that is going on, definitely the specifications are very important. I’m not sure about the domestic market and the domestic brands as yet like because from Government of India also, I think there are a couple of conversation that I had in which they’re trying to formulate this process as of now. But for international clients, it’s already existing.

Vishal Prasad — VB Capital — Analyst

Okay. And sir, what percentage of our revenue comes from fast fashion? And given that the turnaround time is probably three, four weeks or six weeks in fast fashion. So, how do we deal with this scenario? Because usually our contracts would be — we have to turnaround in three to six months, but in fast fashion, it’s different. So how do we do that?

Pallab Banerjee — Managing Director

Fast fashion has not been termed in the last decade, because it’s generating too much — to the environment, what’s happening to the environment and all. So that’s why, if you see, most of the retailers are not using the term fast fashion, like even the biggest ones like Inditex Group, their brands were ready into fast fashion product, and some of the other European retailers. So, they have also taken a different strategic route. So they have become much more sustainable. We are definitely talking about renewable energy, recycling of the products, so that definitely is the new trend.

In terms of quick reaction to the demand situation, so that various solutions are being looked into and various strategies are there among the retailers. So, just like from concept to design, if they have to do in three weeks or four weeks, so that’s where like nearshore and onshore is playing a very important role. They don’t have the transportation timeline. So, yes, European retailers are buying a lot of goods within Europe, and so is the trend that I’m seeing in the American market as well. So, how you produce that good, whether it’s quick lead time or long lead time. So there the supply chain has to be established, so whether it’s the raw material part as well as the manufacturing part. So that’s been now looked into by most of the retailers, so that it continues to be sustainable, even with the short duration of time.

With us, yes, we are looking at that book. We do a significant amount of production for Inditex Group order for Bangladesh. So, their initial orders where we are talking about establishing the raw material design and everything. So that would give us at least about three months kind of time that when the new — the replenishment. So once that the raw material fabric and how the government has to be manufactured and all the approvals. But once that is in place, then they look for a quicker turnaround, which is maybe like five weeks in case of 12 weeks. So that’s something is in place. But, yeah, whatever is happening now is very, very sustainable approach has been taken by all the retailers.

So, yeah, when you are asking the question about big turnaround versus long turnaround, if it’s from sustainability point of view, it is definitely been taken care of. So, the planning is also much more clearer now. So, the customers who are looking for quick turnaround book their capacity in advance with us. So that means, our planning, and take that into consideration and then do it.

Vishal Prasad — VB Capital — Analyst

Sir, when we look at our partner factories, they would be having some capacity. So, have we put a cap on — from our side that we will not book more than a certain percentage of their capacity available, so that they’re not 100% dependent on us? Is there a number that we have thought off?

Pallab Banerjee — Managing Director

There will always be a [Technical Issues] processes because, see, like we take pride in that process, how we are sourcing our raw material and how we are manufacturing the goods, the proper good manufacturing processes, our ethical practices, so that’s something is our USP to our customers. Naturally, like the kind of customers that we are being strategic to and how we are coming across to them, it cannot be 100% on sourcing order. So it will be always manufacturing.

Now within that, a certain percentage, we can say like partner factories can be there where we set it up as per the request of the customer and our own SOPs. So like whatever is the Pearl SOP, so whether you are taking the goods from our 100% own factory or the dedicated lines and dedicated capacity that they have in a partner’s factory, so for the customer, it will be the same service and same approach. So that is our endeavor. I’m not saying that we are 100% out there, but we are whatever 70% to 90%, we are in that journey. The capacity percentage to our overall turnover will always be limited to this lower number that you have been hearing consistently from us.

Vishal Prasad — VB Capital — Analyst

Let me resize doubly as I’m not clear, so what I was asking is, we have partner factories. And there would be having some capacity with them. So, do we go and say, okay, we will take your 100% capacity, have we put a cap that we will not take more than 50%, 60% of the capacity from the partner, so that they are not fully dependent on that from a risk management perspective?

Pallab Banerjee — Managing Director

Yeah. So, yes, certain factories we have an arrangement of, learning their X percentage of their lines, so like if the factory — the partnership factory may have 30 lines factory. So, if our commitment is for the 10 lines, so we will take care of the 10 lines. Generally, we are not in 100%, so maybe like only one or two in some cases. Best example, the Alpha acquisition when we were very clear that we will go in that part, so we started taking 100% capacity management of theirs. Otherwise, it’s a part only, we don’t want to be 100%.

Vishal Prasad — VB Capital — Analyst

Thank you.

Pallab Banerjee — Managing Director

Want to be more specific? Yeah, I would say, in cases what we are — I’m aware of is not more than 30% to 50% of our partner factory.

Operator

Thank you. Our next question comes from Rishi Gupta with Goldstone Capital. Please go ahead.

Rishi Gupta — Goldstone Capital — Analyst

Yeah. Hello, are you able to hear me, Pallab and Sanjay?

Pallab Banerjee — Managing Director

We can hear you.

Rishi Gupta — Goldstone Capital — Analyst

Yeah, congratulations on an excellent set of numbers, and you guys have made a very formidable business model. And I understand that you’re giving — that you will be growing 15% to 20% every year in the top-line. So what will be the profitability? Your business is on the profitability part also, like we can see in this quarter. So, at the same time, you will be maintaining the profitability or would it be higher since you are in great mix right now — and your product-line went into the blended and high-end projects — products right now?

Pallab Banerjee — Managing Director

Our decision-making is the basis of the profits. So we definitely want to take the decision where we are more confident of the range of 7% to 8% at least to start with as soon as possible. In some new projects, maybe take couple of quarters to achieve that, but unless until we see that very clearly as a minimum.

Rishi Gupta — Goldstone Capital — Analyst

Sure. What about the — you will be taking some debt also, like you have decreased the debt level — or like Sanjay said about the current capacities, you can grow for four, five years — three, four years in the current capacities only. Because that will be…

Pallab Banerjee — Managing Director

Our current infrastructure that we have with minimum investment, we can grow our capacity. That means the factory, the locations, the area that we have, maybe we may add a couple of additional production lines, do a little bit more automation, maybe add an extra shed — working shed for us. So that’s — with that kind of thing, we can definitely do capacity growth from 54 million pieces to almost 74 million pieces, that much runway we do have in front of us. Of course, it doesn’t mean that we will not go for a greenfield project, because with the Indian government, the initiatives that they’re talking about, and we are also closely watching and looking into the opportunity if something comes up, we will go for that as well, so — which may be a greenfield project where we would be needing capital to do something. But, yes, not majorly looking into — like only greenfield or big projects or…

Rishi Gupta — Goldstone Capital — Analyst

Okay.

Sanjay Gandhi — Group Chief Financial Officer

Just to add, Mr. Gupta, to be on [Indecipherable], one is that the 15%, 20% CAGR is in three to four-year time period. So we’ll have, as Pallab mentioned, there’ll be some quarterly volatility could be there, but eventually this is what we should be able to — we are targeting it on the margin side. We definitely are heading towards the double-digit EBITDA. That’s our target. Once the macroeconomic environment Pallab mentioned in his earlier speech also said, I think we should be heading towards the double-digit EBITDA kind of margin. And depending on the [Indecipherable] higher FOB customer and the product side, we should be targeting there.

On the debt side, there will be some debt taken for that, but is it more of a capacity augmentation, it’s debottlenecking of existing like, say, in one of the factory, we have land which is available, and there is already a factory already established. So we have to extend it to make it, add 35%, 40% more capacity by making an extension there. We will be looking at those opportunities which Pallab mentioned about those things. So, yes, there will be mix of debt and equity. But as I mentioned, overall return on capital employed has to meet the threshold level what we have said.

Rishi Gupta — Goldstone Capital — Analyst

Definitely. What is the dividend policy? Because I saw some document that 25% of the…

Operator

Could you please join the queue for follow-up questions? Thank you. We move on to our next — we move on to our next question, which is from the line of Naitik Mota with Sequent Investments. Please go ahead.

Naitik Mota — Sequent Investments — Analyst

Congratulations on the good set of numbers. Sir, just two questions from my side, both on the Bangladesh units. So, since the last few quarters, you have been growing low double-digit margins in Bangladesh. And what we see — are these margins sustainable and some picture on margin that we expect in FY ’24, also what are the power costs like in Bangladesh in quarter four and quarter one right now?

Sanjay Gandhi — Group Chief Financial Officer

So, you’re mentioning about the — first question is about the margin in Bangladesh and its sustainability, right? So, the margin in Bangladesh, yes, it has been double-digit for us. if I look at return on capital employed for all the three factories, which we have, the greenfield [Indecipherable] and then the brownfield, and then there is an existing factory which we’re running over there have been a good healthy margin. With efficiency and operating leverage kicking-in, I think we should be able to continue to maintain those healthy margins.

As I mentioned, Pallab has also highlighted that given the uncertainty around the — little bit on the demand-side, inflation and interest factor, there may be one or two quarters which is showing as challenging, But overall, as a company, we are well set in terms of achieving those set of margins, which we have already achieved. So, in a way, that’s a sustainable barring macroeconomic environment, which may impact the situation for one or two quarters at the most. That was one.

Second, you mentioned about the — so, if you can?

Naitik Mota — Sequent Investments — Analyst

Yeah. So, some color on EBITDA margins for FY ’24 and the power cost scenario in Bangladesh?

Sanjay Gandhi — Group Chief Financial Officer

So, EBITDA margin, I think Pallab has covered that, we are looking for sure to maintain the margin what we have achieved in this year. Of course, we always like to, as I mentioned that, our target is to reach the double-digit EBITDA. Now, we all understand the macroeconomic environment, the interest cost, the inflationary challenges which are there in the near-term. So despite that, we feel that we should be able to maintain the margin once the situation stabilizes and things are really normalizing [Indecipherable] and inflation eases. I think we should be able to improve the margin on a sustainable basis from there on. But first and foremost is that what we have achieved, we should be able to sustain it and improve from there on. It can happen in this year, it can happen in the next year — early next year also as the situation eases on the demand-side.

Third is on the power cost, and power cost in Bangladesh has definitely gone up. Now, the exact number and all, I can give it to you later, you can connect with me. But yes, power cost has gone up, and accordingly we have done the costing of the products in line with that. But I was mentioned, so it’s linked to the margin and everything what the cost is going up. And inflation is — I think from part of the inflation, we are able to bring in the costing. However, considering the demand scenario, you have to give a certain portion, and bear those costs with us. So that may have a little bit of influence on the margin.

Naitik Mota — Sequent Investments — Analyst

Thank you. That’s it from my side, sir.

Operator

Thank you. Our next question comes from Amit Kumar [Phonetic] with India Capital Fund. Please go ahead.

Amit Kumar — India Capital Fund — Analyst

Hello. Many thanks for the opportunity and great set of numbers, sir. I just wanted to learn two things. First, basically, your debtor days have gone up — gone down drastically to 45 days. Is it a one-time affair? And what kind of demand trends are there, especially from Europe and US? And what are the cost competitive advantage your factories have got in Bangladesh and Vietnam and Indonesia? Because you know the tax structure is just 3% margin what I understand. So, anything additional you can put a light on that in detail, or we can do it offline also, if you can explain.

Pallab Banerjee — Managing Director

On the debtor days, I would just like to mention that, as I was replying to earlier queries as well, the debtor days has been achieved through the combination of getting this financing from the same supply-chain financing and the factory financing, and that we will continue to have it. However, as for the number of days and in particular year end, it’s been a function of customer mix in that month, number of shipments which has taken place in the last month of the year and we believe they are distributed in the last quarter. But overall, we look at — we should be in the range of plus 10 days, can’t be reduced from there, 25 to 35 days kind of debtor we should see here. So it’s not a one-off phenomena, it’s the result of the full-year exercise of ensuring the liquidity and the risk management, which is really reflecting in the number right now.

And for detailed questions on the other part of — I think we can have one-on-one discussion also as may be comfortable or convenient time.

Amit Kumar — India Capital Fund — Analyst

Thank you.

Operator

Thank you. Our next question comes from the line of Rishi Gupta with Goldstone Capital. Please go ahead.

Rishi Gupta — Goldstone Capital — Analyst

Yes. Just one question. The document that 25% of the net profit will be given as dividend somewhere, what will be the future policy on that?

Sanjay Gandhi — Group Chief Financial Officer

The dividend — Mr. Gupta, we have policy, which is very clearly defined that we will be — after doing a careful evaluation of the growth opportunity, the working capital requirement in the business, the dividend will be given. We definitely have a consistent policy of sharing certain percentage of profit as dividend. However, while we’re evaluating it, there are two key factors which you have to look at, every geographies have their own expansion plan and it may or may not have been fructified, as they are work-in-progress. We would like to just evaluate them carefully before going for a dividend. However, we are — given the profit getting in place, we definitely have a policy of increasing the dividend rate also as we go in coming financial year.

Rishi Gupta — Goldstone Capital — Analyst

So, will there be final dividend in this?

Sanjay Gandhi — Group Chief Financial Officer

So, as I said, we are evaluating the various opportunity in each country. That decision will take two, three months time period. By the time, the AGM happen, we will be knowing what is the opportunity and how do we want to go for internal accrual funding or what is the best in the interest of the shareholder and what maximize the return for the shareholder.

Rishi Gupta — Goldstone Capital — Analyst

Definitely. Congratulations once again. That was my question. Thank you.

Sanjay Gandhi — Group Chief Financial Officer

I see definitely an important part. So, it’s not that it will be only growth. So it will be a balance always.

Rishi Gupta — Goldstone Capital — Analyst

Okay. That finishes my question.

Operator

Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Pallab Banerjee — Managing Director

Thank you, everyone. I hope we have been able to answer all your questions satisfactorily. However, should you need any further clarification or would like to know more about the company, please feel free to contact our team or SGA, our Investor Relations Advisor. Thank you, once again, for taking the time to join us on the call.

Operator

[Operator Closing Remarks]