RSWM Limited (RSWM) Q4 FY23 Earnings Confcall Transcript

RSWM Limited (NSE:RSWM) Q4 FY23 Earnings Concall dated May. 29, 2023

Corporate Participants:

Avinash Bhargava — Chief Financial Officer

Analysts:

Abhijeet Waghmare — Value Growth Advisors — Analyst

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Vinita Kapoor — — Analyst

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Naitik Mohta — Sequent Investments — Analyst

Saket Kapoor — Kapoor & Co. — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the RSWM Limited Q4 and FY ’23 Earnings Conference Call. We have with us today from the management, Mr. Avinash Bhargava, Chief Financial Officer; Mr. Surender Gupta, VP, Legal and Company Secretary. [Operator Instructions]

Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference call. Today’s discussion maybe forward-looking in nature based on management’s current beliefs and expectations. It must be viewed in conjunction with the risks that the — our business faces that could cause our future results, performance or achievements to differ significantly from what maybe expressed or implied by such forward-looking statements.

I now hand the conference over to Mr. Avinash Bhargava for opening remarks. Thank you, and over to you, sir.

Avinash Bhargava — Chief Financial Officer

Can I start now?

Operator

Yes, sir. Please go ahead.

Avinash Bhargava — Chief Financial Officer

Good afternoon, ladies and gentlemen, and thank you all for joining us today for the RSWM Limited Q4 and FY ’23 earning conference call. We appreciate your presence and are grateful for your time. We kindly request that you take a moment and familiarize yourself with our investor presentation, which can be accessed conveniently on our official website as well as through stock exchanges. Throughout our conversation during the call, we may refer to this presentation. So, we encourage you to review the accompanying is Safe Harbor statement included within it.

First, we would talk about textile sector outlook. Allow me to provide you with a brief overview of the current state of the Indian cotton market. The Indian cotton market has demonstrated resilience in the face of lower global cotton prices, maintaining marginally higher prices in the fourth quarter of FY ’23. With an average price of INR174 per kg, this can be attributed to lower arrivals and revised downward estimates of India cotton production. In the same period, the premium of cotton over U.S. cotton reduced INR26 per kg compared to INR17 per kg in the previous year, primarily due to increased arrival and a correction in global cotton prices. Presently, Indian cotton is trading at premium of INR4 per kg.

As I pointed out [Phonetic], there is an anticipated improvement in cotton arrival. However, cotton prices are expected to remain within a certain range, with a stronger inclination towards [Technical Issues] at lower prices. Notably during so Q4 FY ’23, there has been a YoY decline of 20.3% in cotton prices and 18.7% in yarn prices. Additionally, the cotton-yarn spread has declined of 15.9% on YoY basis and 13.3% on QoQ basis, reaching INR105 per kg. This decline in prices is yet to have positive impact on the overall textile value chain as cotton prices gradually correct, resulting in increased demand.

The spinners margins are also anticipated to expand in the upcoming quarter due to the introduction of lower cost inventory and prices nearing parity with global rates. Consequently, we can expect improved margins across various segments, including yarn, fabric, garments and home textiles. This gain — these gains will be driven by enhanced operating leverages and sequentially improve gross margin due to increased utilization.

Recently, cotton has impacted with 11% import duty from 1 April, 2022. Area under cotton increased this year 124 lakh hectares to 130 lakh hectares. Total crops, likely to around — to be around 320 lakh days [Phonetic]. Cotton price has dropped by almost 20% from the last year and 40% supply of cotton is yet to come. China has appealed the Finance Minister to exempt from 11% duty on imports. This is a promising quarter going forward. During the fourth quarter, January to February, there was a significant improvement in the export of cotton yarn, while there was a YoY decrease of 47.9%. It is important to note that this was mainly attributed to factors such as weakening demand and India’s cotton feeding at a premium over global prices, making exports less viable. However, there was a noteworthy sequential increase of 51.3% in cotton yarn on exports during Q4. The growth was primarily driven by spinners benefiting from a relatively favorable cost structure and an earthquake in Turkey.

At the end of fourth quarter, India’s cotton prices have become more competitive as they have softened, leading to increased arrival. Although demand across the value chain remained subdued, these price adjustments provide opportunities for improvement. Additionally, post COVID-19 pandemic, data reveals a decline in U.S. imports cotton sheets and towels during January-February ’23. Nevertheless, India’s market-share has shown remarkable improvement in both categories, with a significant rise of 769 basis points in cotton sheet and an impressive increase of 688 basis points in cotton towels. As a result, home textile funds can anticipate higher volumes and enhanced utilization. This positive trend can be attributed the recovery of export demand and U.S. retailers optimizing their inventory.

Going forward FY ’23, the Indian textile sector experience a challenging, yet promising fiscal year 2023. Despite geopolitical tensions and rising raw material costs, the industry demonstrated resilience and achieved stability. RSWM, a multi-product company, remains partially optimistic and continue to pursue its strategic expansion plans. With this strong financial position, diverse product offering and the dedicated workforce, RSWM is well prepared to operate efficiently, even in challenging environment. The Company’s commitment to adding value to all stakeholders, employees and investors, is unwavering. By prioritizing sustainable practices and maintaining a customer-centric approach, our RSWM strives to deliver the strong results and establish itself as a trusted partner in the textile industry. Just for a minute.

Moreover, the Indian government initiative to position India’s textile Hub and pursue-free trade agreements, with major economies have instilled confidence in the industry. These efforts highlight a favorable business environment and provide opportunities for growth and expansion. Recently, we have organized Ignite 2026, paving the path to go for RSWM Limited. RSWM Limited recently hosted Ignite 2026, a two-day leadership program aimed at shaping our path to success. The program brought together our esteemed Chairman and Managing Director, Joint Managing Director, Business Heads for all businesses, Chief Operating Officers of all plants, CFO, CHRO, Chief Information Officer and Marketing Heads for fruitful discussion, problem solving and strategic brainstorming.

We are thrilled to announce the development of a robust progress tracking system. This system will enable us to measure and monitor our quarterly progress on agreed action plans. We have made action plan for each operational head, each business head, the Chief Financial Officer, CHRO, CIO, marketing, CMD and JMD and all, ensuring that we stay on track even during challenging times, like financial year ’23. By leveraging the system, we are confident in our ability to optimize resources, enhance performance and achieve our strategic objective with our dedicated leadership team at the helm. We are poised to grow, overcoming obstacles and propelling RSWM Limited towards a prosperous future filled with success and innovation. During this Ignite 2026, we had invited Arun Govil of Ramayana as business motivational speaker.

Financial performance highlights. For RSWM, in FY ’23, our global income remained stable at INR3,789 crores, despite weak demand in the later half and subdued export market. We successfully managed these challenges. Consolidated EBITDA for the year was INR340 crores, reflecting our focus on cost management, although down 27% from FY ’22, which was amounting to INR464 crores. We effectively mitigate the impact of higher raw material prices and lower export demand. EBITDA margin stood at 9% in FY ’23, indicating our ability to sustain profitability, while lower than 12.2% achieved in FY ’22. Our diligent cost optimization and pricing strategies helped maintain a strong margin.

In regard to the FY — Q4 FY ’23, results on YoY basis, we achieved a consolidated total income of INR997 crores, representing a decrease of approximately 12%. Similarly, our EBITDA stood at INR89 crores, representing a decrease of approximately 37.5%. The EBITDA margin of Q4 FY ’23 was 9.28% compared to 12.67% in the corresponding Q4 FY ’22. We operated in a thriving business environment, characterized by increased demand and the ability to successfully offset higher raw material prices.

In terms of segment performances, on QoQ basis, Q4 FY ’23 demonstrated an impressive 15.3% growth in the total income and remarkable three-fold increase of approximately 3.1 times in EBITDA compared to Q3 FY ’23, indicating positive signs of revival. Furthermore, as part of our ongoing efforts to strengthen our balance sheet, we have maintained some of that equity ratio for FY ’23 with a modest increase in overall debt by INR1,151 crores to INR1,103 crores compared to FY ’22. Alongside our operational achievement, we are thrilled to announce that Board has approved a dividend of INR5 per share, pending shareholders’ approval.

In closing, I would like to highlight that Q4 FY ’23 showed encouraging signs of recovery and we are optimistic that this positive trend will continue throughout FY ’24, leading to further improvement in demand. Now, I am available to answer any questions you may have. Please feel free to ask and I will be more than happy to assist you. Thank you so much.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]

Our first question is from the line of Mr. Abhijeet Waghmare from Value Growth Advisors. Please go ahead.

Abhijeet Waghmare — Value Growth Advisors — Analyst

Good afternoon, sir.

Avinash Bhargava — Chief Financial Officer

Good afternoon.

Abhijeet Waghmare — Value Growth Advisors — Analyst

Congratulations on the decent sets of numbers.

Avinash Bhargava — Chief Financial Officer

Thank you so much.

Abhijeet Waghmare — Value Growth Advisors — Analyst

Sir, I have a couple of questions. Firstly what is our plan of action for knits business in FY ’24? And also how is it progressing currently? My second question is — what is our plan of action for knits business in FY’ 24?

Avinash Bhargava — Chief Financial Officer

Okay. Actually this knit business, we could not stabilize in this financial year ’23, but we are targeting that we should be able to produce 400 metric tons production, which is the planned capacity of this knitting plant.

Abhijeet Waghmare — Value Growth Advisors — Analyst

Okay, sir. My next question is, what has helped you to sell more in quarter four versus quarter three? And how are you seeing this demand shaping up in the next one to two quarters?

Avinash Bhargava — Chief Financial Officer

Please, repeat your question.

Abhijeet Waghmare — Value Growth Advisors — Analyst

What has helped you to sell more in quarter four compared to quarter three? And how are you seeing this demand shaping up in the next one to two quarters?

Avinash Bhargava — Chief Financial Officer

You know that — last quarter, always, in textiles, impact remains very good. That’s why all marketing persons try to reduce their stock levels to the minimum. That was the only reason. And we, as a team, tried a lot to maintain our profitability to the level of at least Q1 ’22, ’23. We could not, but yes, we could achieve in a big way.

Abhijeet Waghmare — Value Growth Advisors — Analyst

Okay, sir. Thank you, sir.

Operator

Thank you. Our next question is from the line of A.M. Lodha from Sunmati Consultants. Please go ahead.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Hello. Good afternoon, Bhargava, sir.

Avinash Bhargava — Chief Financial Officer

Namaskar, Lodha sir. [Foreign Speech]

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

[Foreign Speech] I have got three questions. Number one question, you have got two divisions, one is man-made fiber division and another is denim division. So, [Foreign Speech] what is the capacity utilization of man-made fiber division and denim division?

Avinash Bhargava — Chief Financial Officer

You know that, till December, we, including all textile players, do not able to utilize fullest capacity. But we are [Technical Issues] that from January ’23, we internally decided that we will use our fullest capacity of [Technical Issues] servicing, whether denim, whether knit. We could not able to reach at the desired level of this knitting business. But in all other businesses, like denim and yarn, we are running at full capacity.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay.

Avinash Bhargava — Chief Financial Officer

There is no shutdown of any plant.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

I’m not talking about shutdown, sir. I am talking about the capacity utilization — percentage of capacity utilization.

Avinash Bhargava — Chief Financial Officer

Our capacity utilization is full, 100% capacity utilization.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

In March quarter, it is running — March, it is run — and looking through the order position of the next financial year, how it looks like?

Avinash Bhargava — Chief Financial Officer

In textile, no one can run on order booking position. We — in these plants, approximately in 60%, 40% ratio, 60% is based on order booking and 40% is based on commodity.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay, sir. My next question is regarding expansion. Last year, we had — we did some expansion in the one of our unit. And in current year, we are also doing the — further expansion. So, what is the position of the expansion in current year? When it is likely to be completed?

Avinash Bhargava — Chief Financial Officer

I will talk to you location wise.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay.

Avinash Bhargava — Chief Financial Officer

First location under expansion was Kharigram plant, where we invested for 30,000 spindles. These 30,000 spindles are running at its full capacity.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay.

Avinash Bhargava — Chief Financial Officer

These additional 30,000 spindles are running at full capacity. And we expanded in denim business. The expansion was sheet dyeing as well as spinning also. This had made operational in 2023 and these also — this expansion also has been done at full capacity.

And knitting was our the third expansion. Expansion in knitting is operational, but we have some initial issues and we hope that in this H1, we will be able to run it full capacity at knitting plant. Last expansion at was Lodha plant. This was about INR315 crores, 51,000 spindles at the plant. This — the production this plant is yet to come.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

When it is likely to be completed, sir?

Avinash Bhargava — Chief Financial Officer

Likely period must be somewhere in the month of September or you can say from 1st of October, then — that is as planned.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

We have raised the — right issue money raised being used in this expansion, am I right? Right issue money…

Avinash Bhargava — Chief Financial Officer

Not like that. Yes, we have used the money as per the time given for right issue.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

[Foreign Speech] So, what is the purpose of doing the right — how that money has been utilized?

Avinash Bhargava — Chief Financial Officer

It is very — it is very clear in the document itself. And again your first question is related and I will explain you. We have repaid our long-term borrowings, which is reduced our term loan interest, number one. Number two, we have taken this money for long-term working capital, and third, used it for the margin money for some of that expansion, not exactly for these — all these expansions.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay, sir. I will be in queue. A small request, sir. This — Mr. Sharma — I think Managing Director is Mr. President or Managing Director is Mr. Sharma, somebody is there.

Avinash Bhargava — Chief Financial Officer

Joint Managing Director is Mr. B.M. Sharma.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

He is not attending the con-call. He should be the on the con-call. When the Company is doing all manthan and chintan [Phonetic] and all, calling the [Indecipherable] and all these people. Why — is he afraid of — last time, he was not well. Therefore, he left — he is not attended the con-call. Normally, in case of VCM [Phonetic] industries and all other [Indecipherable], they are attending the con-call and giving the reply to the questions. At least MD of the Company should be on the con-call. This is my request. You tell the management that he should be on the con-call.

Avinash Bhargava — Chief Financial Officer

There we no issues — there was no issue. If the — JMD would have been able to join this, but there are certain [Technical Issues]. Because of that, he could not join. And if you have any questions for Mr. B.M. Sharma, you can raise these questions on email also, I will give you his email ID.

Abhay Mal Lodha — Sanmati Consultants Pvt. Ltd. — Analyst

Okay. Surely, sir. Sir, thank you very much. Thank you, again, for the good set number of numbers. I wish you very, very best of FY ’24 and FY ’25, sir.

Avinash Bhargava — Chief Financial Officer

Thank you, Lodha sir. Thank you.

Operator

Thank you. Our next question is from the line of Vinita Kapoor, who’s an Individual Investor. Please go ahead.

Vinita Kapoor — — Analyst

Thank you, sir, for giving me the opportunity. Sir, I have two questions. There is an other income of INR41 crores for quarter. Is this for the full year or the quarter? And out of which INR13 crores is insurance. So, can you give me the balance amount? And my second question is, the un-allocable expenses, there is INR42 crores — INR42.77 in the segmental P&L. So, if you can give me the breakup of the INR42.77 crores?

Avinash Bhargava — Chief Financial Officer

Okay. First — I will explain you one by one.

Vinita Kapoor — — Analyst

Okay, sir.

Avinash Bhargava — Chief Financial Officer

This INR13.60 crores, I think, the amount is okay. INR13.60 crores is related to insurance claims.

Vinita Kapoor — — Analyst

Correct.

Avinash Bhargava — Chief Financial Officer

It is related to damage of — damage because of fire at denim. And the book value of the effect damage was much lesser than this amount and therefore, the differential amount is classified or accounted for in other income. This is the differential amount of claim and WDV of the machine.

Vinita Kapoor — — Analyst

Okay, sir. And for the segmental P&L?

Avinash Bhargava — Chief Financial Officer

You can write this question.

Vinita Kapoor — — Analyst

Okay.

Avinash Bhargava — Chief Financial Officer

Because this explanation will be detailed more. And therefore, I would prefer to reply you on mail. I will give you a detailed reply for that.

Vinita Kapoor — — Analyst

Sir, one more question. The yarn, 30,000 spindles, which were supposed to be cotton melange yarn. So, are you running all 30,000 spindles in as melange or grey yarn?

Avinash Bhargava — Chief Financial Officer

Okay. It’s a very good question. This — nowadays, this melange yarn business is getting [Phonetic] like anything. Melange yarn across country is not able to perform well, whether — any company, you can put any company, they are not doing well. They — because of this prudently, we opted for using these 30,000 spindles initially for a polyester cotton melange. And now, we have decided that these 30,000 spindles will be used for cotton melange now.

Vinita Kapoor — — Analyst

Sir, one last question. In the cash flow — consolidated cash flow, there is an interest income of INR22.48 crores. So, can you please give the breakup of the same?

Avinash Bhargava — Chief Financial Officer

This interest income is from customers as well as refund of income tax, interest on income of — interest on income tax refunds. This is the…

Vinita Kapoor — — Analyst

Okay. Can you just give the breakup of that, sir?

Avinash Bhargava — Chief Financial Officer

You want numbers?

Vinita Kapoor — — Analyst

Yes, sir.

Avinash Bhargava — Chief Financial Officer

It is about 40%, 60%. 40% is related to this income tax refunds and 60% is related to interest from customers.

Vinita Kapoor — — Analyst

Okay, sir. Thank you for your time, sir.

Avinash Bhargava — Chief Financial Officer

Thank you so much, Vinita.

Operator

Thank you. [Operator Instructions]

The next question is from the line of Avinash Nahata from Parami Financial Services. Please go ahead.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Hi, thank you for the opportunity. Am I audible?

Avinash Bhargava — Chief Financial Officer

Yes, Avinash. Fortunately, identical name.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

So, my question relates to the spread. Give us a sense on the spread of a typical grade — base grade of yarn as far as cotton and yarn spreads are considered? What was the exit quarter, what was the average for the quarter, [Foreign Speech]? If you can give us a sense as of now in the month of April-May, what has been the spreads and slightly historical data also, what has been the peak spreads and what has been the worst spread and what is the average spread?

Avinash Bhargava — Chief Financial Officer

Okay. You’re talking prices of yarn?

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Yeah, yarn and cotton spread.

Avinash Bhargava — Chief Financial Officer

We would not be able to talk about the spread. We will be able to talk about average realization of grey, dyed.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Which is there in the presentation.

Avinash Bhargava — Chief Financial Officer

It is not there in the presentation, I think. It is there? Okay. That is what we can give you. It would not be okay, if you — if we would be able to give you the spread for our Company.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Sir, industry [Foreign Speech] when the spreads were good, what was the average spreads industry enjoyed? What is the — on an average spread, you can talk about the industry spreads?

Avinash Bhargava — Chief Financial Officer

We can we can talk about prices in the market of polyester-viscose yarn. In Surat market and cotton or polyester-viscose yarn in Ludhiana market and export market we can discuss. But spread, we would not be able to discuss here.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Okay. What is the reason of lower arrival of cotton and what has been the price movement of — I mean, we have heard that the prices have come below INR60,000? So, if you can comment on the arrivals and prices of cotton.

Avinash Bhargava — Chief Financial Officer

We also are trying to understand that what is the reason, but what I could understand is, these trade platforms are playing a lot.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Sorry?

Avinash Bhargava — Chief Financial Officer

These trade platforms [Foreign Speech], but those are [Indecipherable] and farmers, this could be one reason. So, the farmers were able to hold or you can say, mediators have hold these stocks by getting finance from these trade platforms, that could be one reason. And really, it is unpredictable, cotton prices are unpredictable. These are came down even below INR60,000 number. And if we will take the market feedback, it may go down further for INR1,000 or INR2,000, and then we feel that these prices should stabilize around INR57,000 per candy.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Sorry, your voice cracked, what are the prices now and what was the exit quarter, March quarter?

Avinash Bhargava — Chief Financial Officer

INR59,000 per candy.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Okay. And you’re saying that chances are that it could soften further by another INR1,000 or INR2,000 per candy.

Avinash Bhargava — Chief Financial Officer

Little — it can soften little, but it is very unpredictable. Earlier we were expecting that this will not go below INR62,000, but still our predictions were — went wrong.

Avinash Nahata — Parami Financial Service Private Limited — Analyst

Okay. Thank you.

Operator

Thank you. Our next question is from the line of Naitik Mohta from Sequent Investments. Please go ahead.

Naitik Mohta — Sequent Investments — Analyst

Thank you for the opportunity, sir. Sir, my first question would be regarding yarn prices. So, what were the average cotton yarn prices in quarter four and what kind of prices are we seeing now, if you could help me with that?

Avinash Bhargava — Chief Financial Officer

Average yarn — average cotton yarn prices were INR364 per kg for domestic and INR366 or INR370 per kg in case of export, around INR15 delta in export and domestic.

Naitik Mohta — Sequent Investments — Analyst

And sir, what is the yarns prices right now, like in April-May?

Avinash Bhargava — Chief Financial Officer

This is the reduction of — recent reduction of polyester price — sorry, you are talking about cotton only?

Naitik Mohta — Sequent Investments — Analyst

Yeah, cotton.

Avinash Bhargava — Chief Financial Officer

Yes, because of fall in — further fall in cotton prices, it will go down further.

Naitik Mohta — Sequent Investments — Analyst

Okay.

Avinash Bhargava — Chief Financial Officer

Customers are not ready to place their orders and they are expecting more reduction in cotton prices, so that they will be in a better negotiation power.

Naitik Mohta — Sequent Investments — Analyst

You mean they are expecting more reduction in yarn prices as well?

Avinash Bhargava — Chief Financial Officer

It may go further, but — further down, but by several thoughts [Phonetic] of this June, we feel that as things should stabilize, it should not go down further.

Naitik Mohta — Sequent Investments — Analyst

Okay. And sir, regarding this supply of cotton…

Operator

Sorry to interrupt, Mr. Naitik. May we request that you use your handset please for optimum audio quality? Thank you.

Naitik Mohta — Sequent Investments — Analyst

Yeah. So, my question is regarding this late deliveries on the market for cotton. And everywhere, we are reading about farmers were trying to hold cotton for a long period of time so that they could enjoy the prices, that they did last year. And in your opening remarks, you somewhere commented that 40% of supply is yet to come. So, could you just elaborate a little more on that?

Avinash Bhargava — Chief Financial Officer

Yes. 40% supply is yet to come in the market. It may it may lead to further reduction in cotton price. But we feel that it should not go for more reduction than this INR1,000, INR1,500, or INR2,000.

Naitik Mohta — Sequent Investments — Analyst

Okay, sir. Thank you. I’ll get back in the queue.

Avinash Bhargava — Chief Financial Officer

Thank you.

Operator

Thank you. Our next question is from the line of Mr. Saket Kapoor from Kapoor and Co. Please go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

Yes. Namaskar, sir.

Operator

Yes, Mr. Saket. you can go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

You can hear me, hello?

Operator

Yes, sir, we can hear you. Please go ahead.

Saket Kapoor — Kapoor & Co. — Analyst

Yeah. Thank you for the opportunity.

Avinash Bhargava — Chief Financial Officer

Your voice is…

Saket Kapoor — Kapoor & Co. — Analyst

Now is it clear, sir?

Avinash Bhargava — Chief Financial Officer

Not clear. Your voice is not clear.

Operator

Mr. Saket Kapoor, there is disturbance from the line.

Avinash Bhargava — Chief Financial Officer

There is disturbance from your line.

Saket Kapoor — Kapoor & Co. — Analyst

Am I audible now, sir?

Avinash Bhargava — Chief Financial Officer

Yes.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. May I continue, sir?

Avinash Bhargava — Chief Financial Officer

Yes.

Saket Kapoor — Kapoor & Co. — Analyst

Yeah. Thank you, sir. Sir, sorry, sir, I joined late, so I need repetition. So, please pardon me. So, when we look at for this quarter, if we exclude the other income component, that includes I think the reversal from the insurance part and two-line item, then operationally, the numbers are — we have not done exactly well for — operationally. So, that understanding is correct, sir, for this quarter also?

Avinash Bhargava — Chief Financial Officer

Yes. To some extent, it’s correct. But after all, you have to consider all income.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, but INR40 crores is a big amount, sir. If we remove the INR13.6 crores and INR20.6 crores, that is around…

Avinash Bhargava — Chief Financial Officer

If the income is coming, we have to [Indecipherable].

Saket Kapoor — Kapoor & Co. — Analyst

No, sir. My point was only regarding the operational income. It is not an operational income.

Avinash Bhargava — Chief Financial Officer

Obviously, the difference of this one-time income and total income will be the operational income. Operational income is not as good as it was.

Saket Kapoor — Kapoor & Co. — Analyst

Right. Sir, also, if you could explain, sir, our — yeah, please.

Avinash Bhargava — Chief Financial Officer

But it is much better than INR2 crores [Phonetic].

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Coming to the point firstly on the business environment. Sir, when you look at the slide, wherein you have mentioned about the prices for the different varieties of yarn, where — yeah. [Foreign Speech]

Avinash Bhargava — Chief Financial Officer

No, it’s not clear.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir, then…

Avinash Bhargava — Chief Financial Officer

You have to repeat your question.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Sir, what I was referring to is the average price realization chart, which you have mentioned on Slide number 11, wherein you have mentioned about the prices and the trends in the prices. So, when we look at the trends from Q3 to Q4, prices for grey yarn, prices for dyed yarn, prices for denim, cotton grey yarn and melange yarn, everything has declined for the fourth quarter. So — hello?

Avinash Bhargava — Chief Financial Officer

Except this cotton yarn. It has gone up from INR241 to INR253.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Cotton grey yarn.

Avinash Bhargava — Chief Financial Officer

Cotton grey yarn.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. It has gone up from INR242 to INR244, INR2 change is there.

Avinash Bhargava — Chief Financial Officer

INR241 to INR253.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. So, sir, what are the current realization, sir, if you could give us some color there?

Avinash Bhargava — Chief Financial Officer

Current realization of various [Speech Overlap] I can discuss with you. In Surat market, the polyester-viscose yarn prices have been increased by INR2 to INR3 on 30s count, it is INR142 to INR143 and INR142 to INR143 plus GST, and 40s count is INR157, INR158 plus GST, right?

In Ludhiana, 30s count polyester-viscose yarn is INR153 to INR162 per kg including GST, at 40 count, PC count so 48 by 52, it is around INR217 to INR230 including GST. And at 30 count PC card, 65 35, it is around INR200 to INR212 including GST.

Saket Kapoor — Kapoor & Co. — Analyst

Hello?

Avinash Bhargava — Chief Financial Officer

Yes, please.

Saket Kapoor — Kapoor & Co. — Analyst

And sir…

Avinash Bhargava — Chief Financial Officer

There is a mix trend in Ludhiana cotton yarn market. At 30s count cotton comb, it is INR278 GST included, 20s to 25 count, it is INR268 to INR278 rupees per kg including GST, and at 30s count, grey yarn [Phonetic], it is around INR278 to INR287.

Saket Kapoor — Kapoor & Co. — Analyst

Sir, if you could just give me the ballpark for understanding of how the realizations have moved, that would work and then I’ll take the details separately from you? But if you take the mix, which we have for the yarn part, how — post the exit of the March quarter, how have the realizations shaping up?

Avinash Bhargava — Chief Financial Officer

Actually the price realization depends on geometry impact, all types and markets are depending on raw material prices. When the raw material prices go down, the realization will go down. When it is the upward trend, the price realization will go up. That’s the whole story of this yarn market.

Saket Kapoor — Kapoor & Co. — Analyst

Right, sir. Sir, so, coming to my next question, sir, when we look at our investment for BG Power for a five — for a consideration of INR5 crores, if you could explain to us how is this investment going to benefit and what was the rationale? It was already a company in our pool, so why was this initiative taken?

Avinash Bhargava — Chief Financial Officer

Actually, there will be — you know that, there is a circular of the state government that certain benefits are allowed on captive if we have the captive power plant.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir.

Avinash Bhargava — Chief Financial Officer

So, to take these advantages, we have taken this acquisition of BG Winds. And with this, we have some incentive in power rates. That is the rationale of acquisition of BG Winds.

Saket Kapoor — Kapoor & Co. — Analyst

Okay, sir. Because, sir, with this acquisition, we will also — the debt also — the debt on the book of BG Power will also get consolidated. So, if you could give us some color with INR5 crores acquisition, how is the balance sheet going to change with — in terms of the debt profile also?

Avinash Bhargava — Chief Financial Officer

Okay. The repayment doesn’t — it will — this agreement between two companies, the repayment of loan is in waterfall mechanism. In consolidation, there will be [Indecipherable], but in — when we will prepare standalone balance sheet of RSWM, it will not affect. It will not affect the ratio.

Saket Kapoor — Kapoor & Co. — Analyst

When we’ll go for consolidation, sir, what will be the impact?

Avinash Bhargava — Chief Financial Officer

Actually, this company has not been merged.

Saket Kapoor — Kapoor & Co. — Analyst

Okay. No, it is not about merger, sir. When it will be a subsidiary, we will be consolidating it, I think so. We have acquired 100% of sales in BG Power.

Avinash Bhargava — Chief Financial Officer

Yes, 100% shares.

Saket Kapoor — Kapoor & Co. — Analyst

Hello?

Avinash Bhargava — Chief Financial Officer

Yes, this is 100% subsidiary company.

Saket Kapoor — Kapoor & Co. — Analyst

That is the reason — yeah, so that is the reason, then we will be consolidating their debt also in our book. So, I was just trying to understand what would be the impact.

Avinash Bhargava — Chief Financial Officer

There will not be any impact, because there are the effects also.

Saket Kapoor — Kapoor & Co. — Analyst

Sir — and lastly, two more points. We the Group went for Ignite 2026 conference, wherein the growth strategy for the Group as a whole was discussed. So, if you could give us some highlights of what have been envisaged for RSWM and also sir, there is an understanding — in the press — in the investor presentation about sustainable fashion has been mentioned. So, what kind of opportunity are we eyeing? Sustainable fashion.

Avinash Bhargava — Chief Financial Officer

Okay.

Saket Kapoor — Kapoor & Co. — Analyst

What I’ll do, sir, I’ll join from the other number so that I would be much audible. I’ll just disconnect from here.

Avinash Bhargava — Chief Financial Officer

If you will see this one magazine Apparel Views, you are able to see this, otherwise I can send you the — Page number 46 of this [Technical Issues] Mr. Brij Mohan Sharma, Joint Managing Director, RSWM Limited, has talked about textile industry, the title — he’s talked about sustainability and the title is textile industry goes green, sustainability becomes a new black. I will send this note. I will try to explain that how we are doing sustainability in RSWM.

When you will this RSWM balance sheet, you’ll see that BRSR report within this, right? You will — you can you can see a lot about sustainability in previous year balance sheet and this year balance sheet also, and you will kindly appreciate that we had adopted this BRSR one year prior to this implementation, so in a way there was a pre-adoption of this BRSR. And about sustainability, we are doing a lot for waste management, like we are purchasing the PET bottles from the market and we are converting the same into the fiber. And then, with this fiber, we are manufacturing around the 3,000 — 3,200 metric tons of polyester fiber and we are consuming within RSWM, then we are manufacturing the polyester of PC yarn or PV yarn business recycled fiber and then we are manufacturing — we are using this fiber in our fabric also to some extent, not fully, to some extent.

And about sustainability, we are doing a lot for this — because zero discharge efficient treatment plants, we are seeing a lot of things for this water conservation, we are doing for around 25% to 30% women recruitment within RSWM in workers — workforce and in staff also, that is how we are doing sustainability throughout textile value chain.

Saket Kapoor — Kapoor & Co. — Analyst

Right, sir.

Avinash Bhargava — Chief Financial Officer

Sustainability is not a function, it’s a kind of strategy, and it’s a concept it’s a concept that how you want to take this — take your organization forward for future and how much you are concerned with the society, that is how the sustainability within RSWM. Our senior management are very much concerned with this sustainability within RSWM. And if you want to understand more for this, you can refer our Annual Report for ’21-’22.

Saket Kapoor — Kapoor & Co. — Analyst

Correct, sir. Sir, last two points. Firstly, we have made an investment in properties to the tune of INR30 crores, if you could give an understanding on the same and also on the capacity addition that we have done for FY ’23, the capital work in progress of INR183 crores, when is that going to get capitalized, and how — what kind of incremental turnovers we expect?

Avinash Bhargava — Chief Financial Officer

You’re talking about investments?

Saket Kapoor — Kapoor & Co. — Analyst

Yeah. Two points to it. First is the investment in property at — for INR30 crores, if you could explain — yeah.

Avinash Bhargava — Chief Financial Officer

See, actually, this is reclassification of property. There is no new investment in property. This is — there was an office for us at Mumbai, which was used — which was being used as our office since the — the space for surplus, finding it in excess capacity, we opted for letting it out. And therefore, this is classified in investment property. That’s it. We have not purchased any new property.

Operator

Thank you, sir. Due to time constraint, that was the last question of our question-and-answer session. That brings us to the end of the conference. [Operator Closing Remarks]