Arvind Ltd (NSE: ARVIND) Q3 2025 Earnings Call dated Jan. 28, 2025
Corporate Participants:
Satya Prakash Mishra — Head of Investor Relations
Punit Lalbhai — Vice Chairman
Gurpreet Singh Bhatia — Chief Executive Officer
Susheel Kaul — Managing Director and President – Textiles
Analysts:
Romil Jain — Analyst
Prerna Jhunjhunwala — Analyst
Surya Narayan Nayak — Analyst
Bhargav Buddhadev — Analyst
Unidentified Participant
Resham Jain — Analyst
Pimal Sampat — Analyst
Presentation:
Operator
Hello, ladies and gentlemen, good day and welcome to the Arvind Limited Q3 FY ’25 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the conference over to Mr Satya Prakash Mishsha. Thank you, and over to you, sir.
Satya Prakash Mishra — Head of Investor Relations
Good afternoon, everyone, and thank you for participating in today’s call to discuss the financial results for the 3rd-quarter and nine months of the financial year ’24-’25 for Arvind Limited. On behalf of the management team of Arvind Limited, let me wish you all a very prosperous and New Year of 2025 ahead. Joining me today is Mr Puneet, the Vice-Chairman; Mr Jaysh Shah, Director in the Board and Group CFO; Mr Sushil Khal, our Managing Director and President, Textile Business; and the Chief Financial Officer of Arvind Limited, Mr Nigam Shah. Also will introduce you to our new CEO of AMD Business later on. The financial results for the quarter and related presentations were uploaded to our website. Hope you had enough time to go through it. Over the past nine months of FY ’25, Arvind Limited navigated a complex landscape of challenges and opportunities, ultimately making a significant stride towards our long-term vision of evolving into a premier integrated textile powerhouse. Having fully rebounded from the setbacks encountered in first two quarters, our growth trajectory is now firmly back on-track. In the quarter ended December 2024, the company continued to build-on its strong momentum, delivering exceptional performance across its diverse business segments. These results reflect our steadfast commitment to innovation, customer-centricity and sustainability as well as our ability to navigate an evolving market landscape with agility and focus. We are proud to report a good set of performance marked by double-digit growth in revenue and profitability, reinforcing our position as a trusted leader in the industry. During the quarter, woven Fabric has achieved a remarkable milestone of reaching its highest-volume in three years of 35 million meters, driven by 100% utilization of capacity, reflecting a 7% year-on-year growth. In denim fabric, despite being a weak season for denim product, it has registered a growth of 19% on a year-on-year basis. As a true testimony of our verticalization strategy, which is visible in improving garmenting volume for past four quarters in a row and efforts of the GED team to consistently improving operating efficiency has started showing up financial performance and we are very excited that the quarters ahead are good. And I’m sure will give you his thought process in his remarks in this business. The garmenting division achieved a full garment volume of 9.3 million pieces, which is a growth of 21% on a year-on-year basis. And the current product mix is today skewed towards a higher percentage is towards knitted products in the overall basket. We continue to reinforce our people and sources capabilities, along with capacity addition in this business by doing long-term investment to take this business forward. The AMD division posted a growth of 9% in this quarter, which is impacted by change in-product mix in key protective clothing segment and realignment of mass transport and industrial segment. Order deferment also has accounted for some of its slower-growth. Now let me give you a summary of financial performance during the quarter. Consolidated revenue and EBITDA for the quarter stood at INR2,089 crores and INR237 crores, which is a growth of 11% and 10% respectively. EBITDA margin crossed 11% again and touched 11.3%. Textile division revenue grew by 11% and stood at INR1,577 crores with an EBITDA of INR177 crores, translating into an EBITDA margin of 11.2%. This is on account of volume growth in our fabric business and better performance in our integrated textile and apparel business. AMD reported a revenue of INR376 crores, which is a growth of 9%. EBITDA for the same-period stood at INR57 crores and a stable margin of 15%. After a gap of 10 quarters almost, consolidated net profit-after-tax crossed INR100 crores mark and stood at INR103 crores, which is a growth of 13% on a year-on-year basis. Return on capital employed on a run-rate basis improved by 170 basis-points to reach 14.6%. The company has spent around INR350 crores in capex, which is as per plan. With this, I conclude my remarks. I now hand over to Mr Puneet Lalbai for his remarks.
Punit Lalbhai — Vice Chairman
Good afternoon, everyone. It’s a pleasure to interact with all of you. I have — Satya has covered most things quite accurately. However, I’ll just give you one or two sort of headlines from my end. I consider this a decent performance in the difficult environment that we are operating. I think the most heartening thing is how the scale-up of the governments and how the operating efficiencies of the governments are improving. We posted the 4th-quarter in a row with above 9 million garments, which is set to now take another sort of jump-in quarter-four and going into next year. So we feel confident and well-poised on that front. I think our woven business on fabric outperformed. I think this has been the best performance of the woven division in its history. So very pleased about that and we see very good traction in that business going-forward. And finally, coming to AMD, we have, as Satya mentioned, a 9% growth this time. However, our long-term confidence around showing a 20% trajectory is very much intact. All three verticals are doing extremely well. Customer confidence and interest is high, new lines of business are scaling as per plan. And the reason for a lower quarter three performance is that there is inventory buildup in a couple of accounts in-human protection and therefore, the higher-value segments have been deferred to quarter-four and we believe that quarter-four should show again a growth in the higher teens in the mid-teens and then returning back to that 20% trajectory going-forward. So when we look at the AMD business, we should look at a few quarters in a row. It’s very hard to sort of every quarter we hit the — hit the exact numbers. There are some project parts of our business as well, but our confidence for the future is unchanged and our efforts will be to accelerate growth even further. The opportunity set hasn’t changed and we’ve only strengthened our team in terms of our ability to deliver. On that note, I would love to introduce all of you to our new CEO for the AMD business. I think it’s a — it’s a very, very important moment in our — in our trajectory. We have done well to reach where we are, but the realization came that if we are to create the next arc of growth and value-creation. We will need to create an organization that has certain set of characteristics. Those characteristics are building the best culture possible, building systems and processes, doing key account management extremely well, having the highest levels of operating efficiency and creating a team of you know, high performers that are all rowing in the same direction. And we selected and Bhatia. With that in mind, he comes with international experience. He comes with a track-record of building a company from INR0 to INR4,000 crores. It comes with building one of the most vibrant cultures. He has experience at Shell, at Castrol and at Liveguard and the last month working with him has been an absolute delight and I’m very confident that we’ve chosen the right person to create the next value-creation. So I’ll just ask Gurpriet to say hello and talk a little bit about himself and then we’ll open up the floor for questions.
Gurpreet Singh Bhatia — Chief Executive Officer
Good evening, everyone and Puneet by thank you for those kind words and introduction. It’s my pleasure and a super delight to be part of this great business. And I’m really looking-forward to building on the experience and learnings that I’ve had over my 30 plus years and really accelerating the learning agenda since I’m new to this business and contributing to the growth of the business and more importantly, creating and delivering shareholder value as we build this business over the years. My first observation over the last four weeks, every part of the business provides huge growth opportunity and we have a combination of headwinds and tailwinds. That’s the commitment that the management is working on to put in a more structural sustained growth engines behind the business. But over the last four weeks, there are opportunities everywhere. And as you rightly said, it’s a — it takes a period of time to build some of these businesses and the whole management team and the team at AMD is after delivering that growth engine for a sustained profitable growth. So thank you for the warm welcome and kind words. We can now open the floor for questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask questions may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2 N2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1 one. First question is from Romil Jain from Electrim PMS. Please go-ahead.
Romil Jain
Good afternoon, sir. Am I audible?
Punit Lalbhai
Yes. Good afternoon.
Romil Jain
Yeah. Thanks for the opportunity. I just want to understand a little bit more detail on the AMD segment more on the human protection. So I think last quarter there was one customer where we — some orders were deferred and there was some slowdown on that. So what is the status currently on that and how do we see this segment in terms of growth going ahead?
Satya Prakash Mishra
? So it’s a similar set of customers that are still experiencing a little bit of inventory buildup and slowness in actually the high-value part of the business. So that continues. However, we have not lost a single account nor have any products unsetted. So that gives me confidence that it’s just a temporary sort of blip, maybe four months, maybe six months before which this will be back. And in parallel, we are also working to build newer accounts with similarly high-value product categories. So some of the larger customers have seen some slowness, but it’s nothing to — it’s nothing to do with our performance. It has more to do with how the market is at the moment and we shouldn’t be overly concerned sort of concerned with that. What we’ve also done is that we have sort of started some new segments in the Human Protection division, especially outerwear and sort of the industrial shirts business, which is sort of not specialized fire retardant or anything like that, it is a high-volume driver and because it is the sort of first introduction of some of these products, they will ramp-up in efficiency as we go — go-forward. So they may be lower in value than some of the flame retardant products that we do and they should be quite profitable going-forward. So it’s a question of adding product lines and some of the high-value established product lines are having a little bit of an inventory buildup. And we see this inventory clearing up by the time of — by the time Q1 rolls around. That’s the feedback from most of the customers in that market.
Romil Jain
Okay. So out-of-the overall human protection, how much would be the revenues broadly in this high-value segment, which is right now seeing the are the inventory stocking and are the 15% to 20% growth guidance is broadly more in terms of revenue, right, if I just to clarify or is it in volume terms?
Satya Prakash Mishra
No, no, no. In terms of revenue. So I mean, if I will answer that question in another way, if everything had been normal, we would have had INR30 crore INR40 crores of extra revenue across these two quarters. And so that’s the extent of which there is — the slowness is affecting us. That would have brought us back to that 15%, 16% growth levels of AMD as a whole. And that should start recovering in Q4 and we should be back on-track in Q1.
Romil Jain
Okay. Okay. And in the other two segments, we are not seeing any major competition maybe from Indian competitors globally because there I think broadly the growth is in-line, but if there is anything on that segment as well, we would love to hear your thoughts. And secondly, just one question on the garment side. So I think the volume growth has been strong, but we’ve seen, I think, some realization pressure I think overall. So can you just help us understand how do we see this going ahead and probably what kind of revenue growth is where we see in the next two years on the side
Satya Prakash Mishra
So revenue growth will cross 20% there quite easily. I think we had some operational challenges in Q1 and Q2 coming out-of-the strike, et-cetera. But Q3 has been really heartening in terms of turning that around and Q4 is looking extremely strong as we as we speak. So I don’t see any challenges. I think we are on as per plan on garments. Of course, product mix keeps changing depending on, you know, as the new capacity is hit, not all garments, I mean, so we have denim versus knits. So because knits has grown faster a little bit, maybe it’s looking that way. But I think as all the capacities come on-stream in Q4, we should see — you should see a — you should see an improvement there. So I’m not — it’s — we are on plan as far as the garment plan is concerned.
Romil Jain
Okay. Lastly, sir, can you run us through the capacity expansion plans next year and when do they kick-in various segments? That would be all from my side, sir. Thanks.
Satya Prakash Mishra
So if you see we have already invested in capacity expansion. Our primary mode of capacity expansion has been debottlenecking capacities in our existing plants. So trying to make the same labor give more output. And that we feel we would have added this year, we will close at around 40 million garment kind of capacity. Next year, that capacity should grow to around 48 million, million 49 million and we should be able to deliver some 70%, 80% of that. So a jump of 8 million, 9 million garments should come next year.
Romil Jain
Okay, sir. Thank you so much and good luck.
Operator
Thank you very much. Before we take the next question, a request to participants to please limit your questions to two per participant. Should you have a follow-up question, we request you to rejoin the queue. We take the next question from Jinjanwala from Elara Capital. Please go-ahead.
Prerna Jhunjhunwala
Thank you. Just wanted to understand, I mean, most of the questions have been asked by the previous participants. But just wanted to understand this contraction in ASPs in garmenting business, you’ve mentioned net sales, but at the same time, volumes could have also gone up because it is low-value items. So I’m willing to understand why the growth would have hit so much though the volumes continue to be in 9 million pieces, ideally volumes should have been up in our.
Satya Prakash Mishra
So volume is likely to go up going-forward. Our — yeah, it’s — I mean it is a question of which customers are being dispatched in which quarter. So that may keep changing a little bit here and there. But overall, I think all our product lines have — have good profitability. So there is even the lower ASP will have a similar kind of similar kind of EBITDA margin. And going-forward, this will — this will correct. So we should see a higher top-line in Q4?
Prerna Jhunjhunwala
Yes. Okay. Understood. And in terms of AMD, sir, you mentioned that 20% growth is doable over a longer period of timeframe, but could you help us understand how should we look at growth in the near-to-medium term in the next one, two years?
Satya Prakash Mishra
No, one, two years, we should also average 20%.
Prerna Jhunjhunwala
Okay. And the drivers will be the same composite HPN?
Satya Prakash Mishra
Yeah, yeah, we would like to go deep rather than going wide now unless of course some you know we get something that is so good that we — that it sort of pushes us to start a fourth vertical that we will always have as a possibility, but as far as possible, we would like to sort of go deeper rather than broader because when you start a new line-of-business, it always takes longer than you expect, whereas we already have developed quite you know sort of interesting scale in these three verticals. Within these three verticals also there is huge opportunity. As I’ve been mentioning on previous calls, there are billion-dollar benchmarks in each of these segments. So there is no reason why we cannot grow. And we have good execution and good customer feedback in almost across-the-board. So there is no reason why you know few quarters in a row, we shouldn’t be able to grow. The growth will come from, of course, capacity expansion and we are also evaluating inorganic. So I think over the next couple of years, you will see some inorganic happening. Of course, the inorganic that we will do, we will be conservative, we will be sort of very careful. We don’t want to sort of make acquisitions that don’t go right. So we’ll be very discerning about what we do, but that’s definitely also part of the strategy to bolster our growth and to be able to cut-down the timeframe to achieve scale and leadership in those segments in which we are considering inorganic.
Prerna Jhunjhunwala
Okay. Sir, a follow-up on this, AMD, in the press release, it is mentioned that there was some deferment of orders, orders which led to a little — which impacted growth in this quarter.
Satya Prakash Mishra
So some of our business is, you know, project-based. So you — it is never possible to define to the T, what date that lifting will happen. A lot depends on the customers, our site readiness, etc. So sometimes a few days delay means that Q3 revenue goes into Q4. So some of that has happened, but it’s nothing very significant. I think the only significant thing is this inventory buildup that is that is that is impacting human protection business. I think all other businesses are on-track.
Prerna Jhunjhunwala
Okay. Understood. So there can be a bunch up of sales in Q4 is what I was coming to by asking the deferment questions.
Punit Lalbhai
Yeah. I mean it will keep going up-and-down. But as I mentioned, we should be in the see quarter-four for us last year was a fantastic quarter. So over that we see about a mid-teen kind of growth, which would also be good. It would be our highest quarter in history. So I’m not overly worried about one or two quarters of slightly slower globe growth. We are still very much on the growth path. Opportunities are good and feeling confident.
Prerna Jhunjhunwala
One more question, if I can squeeze in on other segments, others has done well this quarter and the profits have also increased. So could you highlight whether it is sustainable or
Punit Lalbhai
This is also project business phenomenon. We have our wind Envisol, which is our wastewater treatment business as part of others and that had a lot of order completions or project completions in this quarter where revenue was booked. So that is likely to be lumpy. There’ll be some quarters where it will be high, some quarters where it will be normal. So it’s — it’s not something that’s a trend. It is more a function of you know the nature of the businesses that are in that — in that group. But overall, those businesses are also doing reasonably well. So long-term trajectory is only up, but quarter-to-quarter there can be sort of lumpiness
Operator
Thank you. Before we take the next question, a reminder to participants to please limit your questions to two per participant. The next question is from Surya Narayanayak from Sunidhi Securities. Please go-ahead
Punit Lalbhai
You’re not very clear. There is somewhat of an echo.
Surya Narayan Nayak
Okay. Is it okay now?
Punit Lalbhai
Yes, much better.
Surya Narayan Nayak
Okay. So just a couple of questions. One is, in the AMD, we are already running a lag of around as you said, INR30 crores to INR40 crores of revenue. So which would have given us around 20% kind of growth and which will be — it is slipping to 4th-quarter. So just understanding that there could be some good growth possible in the Q4. So I mean, now that Q4 is more or less crystallized, so just wanted to understand where exactly the Q4 — sorry, next year, the benefits of the CapEx will definitely bring results so-far as the AMD was concerned. And as you said, the ready mid garment around 8 million to 9 million pieces will be added. So what is the kind of horizon will be kind of giving maybe is it — will it happen in the second-half or in the first-half?
Punit Lalbhai
Yes. So generally, our second-half is on an average better than our first-half. And that’s a sort of business cycle that both our textile and AMD business follows. So from that perspective, what you say is correct. I think the way to think about investment and capex is that we are investing enough to hit the 20% growth target. So that’s the sort of you know that’s already factored in. So our objective is to deliver that kind of growth. And as I mentioned, you know, quarter-four is looking like mid-teen kind of growth and next year, we will definitely aim to, on an average be close to that 20% mark and we have created all the capacity to allow that to happen or we are in the process of creating that capacity. On in terms of garments, you will — you will see that gradual ramp-up that will across the four quarters at that kind of order.
Surya Narayan Nayak
Okay. And, because in the RNG — on the Bangladesh context, it is offering a lot of opportunities and where the lot of unorganized players are present which cannot get into contact with the global retailers. So in this context, it offers a very good opportunity for acquisition of RNG units in the unorganized sector because RNG is a long-term process of educating or let’s say, giving training to levers and to have a very good outproductivity because the learning curve takes time. So in that context, it makes sense. No doubt, we are posting organic growth so of 50% over two years but at least not make sense to go for acquisition. So are you not looking at the inorganic opportunities? If not, then what are the issues we are envisizing.
Punit Lalbhai
So I think we are never ruling out inorganic opportunity anywhere. However, I think one thing is very important to understand about RMG. RMG is a very, very management intensive operation and the quality of the unit extraordinarily important. So that is why it is, you know, such a difficult business, you can only count the people who are doing well in this segment on the tips of your fingers, fingers especially in the Indian context where there is high attrition and absenteeism every month. We are building a model of garmenting that is, you know, very different. We are focusing on high-level of automation, reducing the manpower intensity of each process, making it process dependent rather than people dependent and bringing down the — using industrial engineering concepts to bring down the time it takes to make a garment. So that’s where the value-creation is. It’s not simply buying any type of capacity you have and bolting it on. Otherwise, there is a lot of scope to, you know destroying value in garments if garmenting plants are not run well. And that is why also we are very careful about how we scale-up. So every — every point of the way we are applying these principles and we want to build a garmenting culture and have our facilities to be absolutely world-class with these principles. In fact, we are — we’ve built a factory of the future, which is very — which has almost one-third the manpower intensity. We are experimenting with a lot of new technology to allow garmenting to be more predictable and more scalable. So our way of actually expansion, we want to embed sustainability in it from day-one. So from to — from that perspective, it is very difficult to just acquire something from the decentralized sector and bolt it on because it will not come with these principles. In fact, it will create dissonance in terms of managing that facility because generally these facilities don’t have the kind of systems, processes, talent and automation required to mesh with this philosophy. But any unit that actually can mesh with this philosophy, we will consider for inorganic. So inorganic is never out-of-the question. Hope that answers it.
Surya Narayan Nayak
Okay. Because we — our plan of INR40 million, 50 million or 60 million pieces was pre-Bangladesh crisis and post Bangladesh crisis, just wanted to know whether any change in the stand has happened in your case, especially through inorganic groups. So that is one. And secondly, for the
Punit Lalbhai
Desirability of India has gone up, but India doesn’t have capacity and we have to add the capacity in the right way. So I think that’s the limiting factor, not the market.
Surya Narayan Nayak
Absolutely, absolutely. So another point is that SUV continuously saying that we are getting orders from the need segment rather than the casual segment rather than formal segment. So just to understand whether the formalization or formal garments will be in-demand in next year or what is — what you are figuring? Because so long as the governments will be there, then ASR will be definitely on a side. So what is your — you understand?
Punit Lalbhai
No. So I think former governments have made a comeback since COVID when they were at rock-bottom. So we do have — especially in our fabric business, we cater to dress shirts and we also manufacture some dress shirt garments. So there is a formal component. But as you rightly mentioned, our specialty is casual and we make very differentiated casual products. So there is no issue of ASP on our casual garments. So it’s more of you know it’s — ASP is more a function of what product mix scaled in which quarter or what customer we introduced in that quarter and the proportion of that customer mix. So that will — that will on and across two, 3/4 average itself out, right? So we shouldn’t worry too much about that.
Surya Narayan Nayak
And regarding raw-material prices, as the — as we have just entered into the first-quarter or second-quarter of the cotton season, so how do you see the kind of cotton season to plan out for the — I mean this year.
Punit Lalbhai
So cotton you know is in a situation that is similar to what it was earlier. We have this sort of artificially inflated price in India because there is a 10% import duty and the MSPs are reasonably high and because of that the Indian cotton is more expensive than global cotton. So it’s unfortunately a disadvantage that we have to work hard to overcome. And — but I think because of the buying behavior of customers is also region-specific. It’s not hurting us as much and we have to capitalize on that and make the most of it. So availability is not an issue right now and prices is slightly higher than the overall market. So that’s the situation on.
Surya Narayan Nayak
Understood. And AMD, Puneigh, are we, you know, going to get any IPR related products which will be giving some sort of boost to our steady-state of revenue in the — whatever we are getting in the verticals, different verticals.
Punit Lalbhai
There are already quite a few IPR-based products. I think most things that we do, we try to add some uniqueness and we have a set of patents we have even a larger list of trade secrets where we don’t even want to disclose the patent. So there is a good amount of innovation and uniqueness that goes into our product and that is what has helped us reach the level that we have reached and we will keep doubling down on innovation. Innovation is a key pillar to our success.
Surya Narayan Nayak
And in orders, generality has emerged as a very good segment. So are we entering in a big way in expanding that segment or we’ll keep the operations at the current level only?
Punit Lalbhai
What segment? Sorry.
Surya Narayan Nayak
I mean in the — when are we in the segment zero liquid.
Punit Lalbhai
Yes, so there we have two types of business. One is the O&M and parts business, which we will continue to scale aggressively. And the project business, we are being conservative and discerning about the quality of projects we take. So we are not looking at dramatically scaling up the business because in a project business, we don’t want to take any risks of — of execution or of the quality of order or on the customer. We are being discerning about that. So we’ll have this medium level of growth there. The opportunity is of course there. Water is only going to become a more important commodity going-forward. So the momentum is there in the sector and we will keep our strategy of being conservative and growing at a manageable pace.
Surya Narayan Nayak
Thank you,. Good luck for the 4th-quarter.
Punit Lalbhai
Thank you.
Operator
Thank you. Next question is from from Ambit Asset Management. Please go-ahead.
Bhargav Buddhadev
Yeah, good afternoon and thank you for the opportunity. Sir, just wanted to know what is the plan for increasing the garment capacity from a three-year perspective. Is it fair to say that we can sort of reach a capacity of about 70 million to 80 million pieces. And if yes, is there any plans for entering into new geographies like maybe eastern part of the country where there are other government companies also who are going there.
Punit Lalbhai
So I think what we had guided earlier is to try and reach a — reach a capacity of 60 million diamonds by the — by year-after next, two years after two years. So next year 50 and year-after that 60. So broadly, capacity addition will be there. I think we are four, five months lower in our ramp-up than we envisioned at that point, but that will always happen. There’ll be parts where we are more cautious based on the global macroeconomic situation and there will be places where we will press the accelerator. So our plan should broadly follow that trajectory. And we will reassess maybe sometime midyear, what we want to do after another year and a half. So third, fourth, fifth year, we will we will reassess based on how our trajectory is going. But our guidance is that we would like to have more-and-more verticalization. So garment is going to be a long-term story for the Group. But as of now, we have the next two years planned out. Within AMD, this is — sorry, I forgot to answer the Eastern part of the country. We already have an important hub in the East, which is Ranchi, which is growing very nicely and this year it has turned the corner. So we see Ranchi becoming important in our scheme of things. We are also starting Varanashi, which is north, which is also a new area, but that will — that will probably start towards the end of next year and it will actually play a role here after next.
Bhargav Buddhadev
Okay. Secondly, sir, within AMD, railways as a vertical is a fairly small vertical as of now. But is it fair to say that maybe in the next two to three years, it can see a significant ramp-up and if you can sort of quantify like what are you looking at maybe.
Punit Lalbhai
So I think it’s a very interesting segment. But again, it is a project business, where there will be periods of time where there are — there is a burst of orders and then periods of time where there is a lack of orders in the in the market. We are in one of those slow periods. So instead of railways, we are focusing on other product categories that require the similar manufacturing technology. So we are focusing on electric vehicles. We are focusing on you know metros, we are focusing on different types of specialized industrial components. So lamination and molding as a process is going to be interesting and it will be a high-value segment in composites going-forward. So I wouldn’t, you know, I would — I would monitor that rather than just monitoring, you know very specifically railways. We should — we should — we should be broader in assessing the capacity utilization of that facility or that plant.
Bhargav Buddhadev
So sir, if you look at as of now, exports is around 80% of revenue in AMD. So maybe two to three years, hence, you believe that this mix will continue to remain 80 or you think domestic mix can actually hear ramp-up.
Punit Lalbhai
So you know, can you repeat it? I couldn’t hear most of your question.
Bhargav Buddhadev
Can you hear me now, sir?
Punit Lalbhai
Yeah. Yeah.
Bhargav Buddhadev
No, so export is about 80% of the current revenue in EMD. Maybe in the next two to three years, you believe that exports will continue to remain 80 or there is a scope for the domestic piece to see
Punit Lalbhai
Domestic is already increasing from that level. I think this year, we are even lower than 70 — this quarter we are even lower than 70 and as defense — defense type business and domestic rail and those type of businesses come in, it will — it will definitely have — there will be an important domestic component. And in fact, long-term, I see domestic being the real pot of gold because we have the highest right to win in India and the consumption of these product categories will grow faster in India than anywhere else as you know the economy develops. So for me, India is very important. And even though the volume is lower-right now, domestic, we have to spend disproportionate amount of time and effort in actually incubating and creating the market potential for India. So we look-forward to that. I think India is incredibly important. And margins, sir, in the domestic business will be similar to the export business or no. Initially export margins will be better because those markets are mature and they demand high-value products. But over a period of time, it should normalize even in India. And India is not even now what business we do in domestic doesn’t have bad margins.
Bhargav Buddhadev
To scale this business, is there a possibility that we sort of demerge this business separately so that it gets appropriate value
Punit Lalbhai
We’ve already started a process to — we’ve already filed application petition to the.
Bhargav Buddhadev
Sorry, sir, I could not hear it.
Punit Lalbhai
Yeah. So we are currently — the company is being put in a separate vehicle, which is 100% of the subsidiary of our Parent Limited. As of today, as of now, Board has considered no such plans to demerge or separately list the company. The capital required for this business, we will see if it requires larger amount, whether we need to separately fund it through a third-party equity source. But for now, we have enough cash flows within the Group to fund this AMD business. So we are not looking at any fundraise for now for — in that country.
Bhargav Buddhadev
Okay, sir. Thank you very much and all the very best.
Operator
Thank you. Participants are requested to please limit your questions to two per participant. We take the next question from Ashmita from Electrum Capital. Please go-ahead. Hello. Hello. You are really soft, so I can barely hear you.
Unidentified Participant
Hello, Arvi right now?
Punit Lalbhai
Yeah, much better.
Unidentified Participant
So I have two questions in the ALV segment. Just wanted to know the number of clients in each segment in each of the key segments in.
Punit Lalbhai
I think we can — we can give you that information. I wouldn’t know exactly the number of clients on the top of my head, but we can — Satya can send you that information.
Unidentified Participant
Okay. Also one question that you mentioned that there is an inventory buildup in the AMD. So when is the destocking in this segment expected?
Punit Lalbhai
So as I mentioned that by the end-of-the year, we expect improvement in — with those set of customers. Meanwhile, other sets of customers are also being developed.
Unidentified Participant
So are we facing any customer concentration in AMD like going ahead, what would not be?
Punit Lalbhai
Sorry, I didn’t — I couldn’t
Unidentified Participant
Is there any customer concentration in AMD like going ahead.
Punit Lalbhai
So customer concentration is always a relative term and you know in the advanced material space, there are going to be fewer and more meaningful customers than say conventional textiles. But — but I would say that I’m pretty happy with the kind of spread of customers we have. We have customers if you just take the human protection business, we have customers in the, we have customers now strong customers developing in the Oceania region, Middle-East is firing up and of course, we are doing well in India. So I would say we have — you know, in each area, there are not hundreds of customers, but we are well sort of distributed in terms of our footprint.
Unidentified Participant
Sir, my last question would be, are we facing any competition, especially from Indian — in the AMD segment? As any Indian competitor?
Punit Lalbhai
Yes, I think our success will ensure that there will be competition going-forward. But I think the — we have a good head-start of 10 years on anybody who is starting now. So our endeavor will be to always be a few steps ahead and keep sort of increasing our scale, increasing our product complexity and critical nature and going and sort of becoming more important to you know, the customers that we already have so that when that competition comes, we are in a different league altogether. So in this business, it takes very long to qualify. And once you qualify, you know it’s not so easy to displace you. So we are — we have that advantage and we intend to do everything in our power to keep that advantage. That said, of course, competition will come and we are prepared for it.
Unidentified Participant
Thank you so much for from my hand. All the best for future.
Punit Lalbhai
Thank you.
Operator
Thank you. Next question is from Dresham Jain from DSP Asset Managers. Please go-ahead.
Resham Jain
Hi, good evening, management. So I have two questions. First one is, if I look at the denim division, we are clocking close to INR1,200 crores INR1,300 crores kind of revenue trajectory. We have downsized our facility, I think two, three years back. But in the past, we have done, let’s say, close to INR1,900 crore INR2,000 crore revenue also. So from the current capacity, what is that peak denim number we can do.
Punit Lalbhai
Yes, Sushilbai, you can answer that question,
Susheel Kaul
. In denim division, we are scaling up volume. We have been — our — we have been working with the product-line to get adopted and the new collection is already in-place and we will see the first impact in Q4. Going-forward that we see definitely a trajectory in Denm. So we may not be going to the original INR2,000 crores level, but yeah, we will be seeing around INR1,500 crores INR600 crores back-in. Also, I think we are not comparing apples-to-apples when we look at the past benchmarks. I think we are changing the nature of our denim business by having more-and-more verticality. So a few more million pieces of garments will come on-stream. So it will again change the nature — and it should be seen as a vertical business rather than a fabric alone business. So, and that verticality is going to increase. So the — so there is future growth in this segment, but it is coming through a different channel than what we had used in the past.
Resham Jain
Understood, clear. The second one is on. So as you mentioned in your initial remarks that you’re already running at full utilization. So how are you planning? I think most of the other peers also are actually seeing very good traction on the side. So India as a country seems to be gaining quite well. So how are you planning further expansion in?
Susheel Kaul
We have done one set of expansion in the woven. We are — we are actually further expanding the product mix in the woven. As you know that as you said rightly, there are many players who are expanding into wovens. And if you work on the similar product segment, you will have a margin pressure. So what we do is we are trying to also diversify the product mix in the woven side and we are also adding the capacity. So we should see next year 7% to 8% addition in the capacity from this year.
Punit Lalbhai
I’ll also qualify that in a way that is — so that new capacity should hit us towards the end of this year, financial year. So it will be available for next year. But woven the platform we are adding in such a way that it also doubles up for AMD. So the type of investment we are doing will also allow us to scale AMD going-forward. So is the backbone for actually AMD expansion because the base fabrics that then get value-added on actually are manufactured in Woven. So we are not only expanding woven capacity, but we are also strengthening AMD by the investment that we have done.
Susheel Kaul
Okay. The last one is on the capex. You mentioned INR350 crore capex for FY ’25. So if you can just help with the breakup of the capex between various divisions? And also from the cash generation perspective, I could see that you can generate close to INR500 crores to INR600 crores of cash PAT. So how are you planning your capital allocation for next year?
Punit Lalbhai
Yeah. So similar kind of capital outlay. I think we have enough opportunities. I think the only constraint is our bandwidth to execute well. So opportunities is not a constraint today. And we’ll be maxing out our bandwidth and our free-cash flow so that we are at similar levels of debt. We don’t want to leverage our balance sheet. So — but there is enough cash-flow available to do everything that we want to grow MD at 20% and to hit the government targets that I mentioned earlier on the call and to do enough differentiation on fabric to remain relevant. Understood. The breakup of INR350 crores. One-third, one-third, one-third broadly with maybe a little bit higher on garment this year, but maybe AMD will be slightly higher next year.
Resham Jain
Okay. Got it. Thank you. All the best.
Operator
Thank you. Next question is from Pimal Sampat, who is an Individual Investor. Please go-ahead.
Pimal Sampat
Good evening.
Punit Lalbhai
Good evening.
Pimal Sampat
Have two questions. One is, please say something more about our joint-venture with them for recycle fabric. And do we have specific customers lined-up for that product? What is the capex for that and over what period of time? Second is our rupee depreciation, which has happened over the last three months, how is it going to affect us.
Punit Lalbhai
So let me first talk about Purify. We are a minority investor in this technology. We are investing from the perspective of bringing a new circularity technology to India and then using that fiber to sort of create value for our customers. So we are actually sort of like a steward — local steward for this technology. We believe in it. It’s a combination of mechanical and chemical recycling, which allows the fiber integrity to remain intact so that we can have a very-high proportion of recycled content in the final garment when we use the purified fibers coming out-of-the purified process. So we’re very excited about it. Of course, it’s the first time this technology is scaling to a level. And yes, we do have customers lined-up. We can’t mention their names for non-disclosure reasons, but it’s as it’s actually quite in-demand and it was required yesterday from the customer’s perspective. So from that perspective, demand is not a concern. I think it’s all about execution and ensuring that the value proposition is fully realized for our and what is the potential for this — oh, it can be very large, it can be extremely large.
Pimal Sampat
And like something like AMD and garmenting or
Punit Lalbhai
Maybe goingly technology and we will — we need to do also things downstream for it to become viable. So we will evaluate all those options. Right now, our focus is on getting the first-line up and running and producing by the by the middle of next year. So that’s the plan and
Pimal Sampat
What is the capex, sir?
Punit Lalbhai
Yeah. The capex is around our overall line is about $5 million, $6 million to $6 million of capex, of which we are only a 10% stakeholder at the moment. So we’ll be investing about $1 million currently. And having one-line and the infrastructure ancillary infrastructure put in-place. And then we will — we will see from there how we will want to take it — take it further.
Pimal Sampat
Right. So it’s a long-term story. Yeah.
Punit Lalbhai
Yes, it’s a long-term story, but it’s going to create a lot of excitement and rub-off benefit provided of course we are — we have a strong execution and we are able to produce according to plan. As far as exchange is concerned, we are waiting and watching to see how the macroeconomic landscape shapes up. Our currency has depreciated, but other currencies have depreciated and perhaps slightly more than our currency. So we have to see, but we will — we will — and I think this is going to be a global phenomenon. So we are not overly worried about it, but we are watching the space very closely to see what kind of trade blocks are developing after you know, the new administration in the US takes all its decisions.
Pimal Sampat
Right. And sorry, last one is on that renewable facility what we were planning. How is it progressing?
Punit Lalbhai
We are — we are in — it’s progressing well. So we should be — we should be — towards the end of next year, we should be in a position to sort of kick it off. So towards — end of ’26, FY ’26, end of FY ’26, is when it will come on-stream.
Pimal Sampat
Okay. So that benefits will kick-in from FY ’27 onwards mostly.
Punit Lalbhai
Yeah.
Pimal Sampat
Okay. Right. Thank you very much.
Operator
Thank you. The next question comes from from B&K Securities. Please go-ahead.
Unidentified Participant
Yeah. Thanks a lot for the opportunity. Since now, we have our expansion going-in the garmenting side. So just wanted to understand how is the labor market as of now? Is there a good availability of labor into the markets or is the — or the constraint still happens to be there in terms of labor availability
Punit Lalbhai
So labor is a nuanced subject. There are markets where labor availability is a constraint. There are geographies in which labor availability is not a constraint. I think, however, long-term, we need to understand that the cost of labor is only going to go up and the availability is only going to get tighter with more-and-more opportunities that the Indian economy is going to throw up. So we need to develop our models that are less labor-intensive. And I think we are putting in a lot of effort and thought and investment behind making our garment businesses less labor-intensive compared to our previous sort of way of working.
Unidentified Participant
Okay. That’s helpful. Also just wanted to understand your view on the outlook for the key export markets. So how are you viewing it in this year are the key export markets to perform?
Punit Lalbhai
Yeah. So I think we need to we need to — I’ll be able to answer that question much better in the next call once we know what the Trump administration is going to do. But jokes apart as of now, I think US has been strong and Europe has been weak also how the conflicts play-out will have a role. So it’s a very, very sort of fluid situation at the moment. If nothing changes, then this is the situation right now. And for us exports have done well, but we would — we would be wise to wait a few months and see what policy framework is developing before we sort of answer that question to full satisfaction okay.
Unidentified Participant
And just last question from my side. So going-forward of the expansion and garmenting maybe, so would you consider it taking it up in the northern markets because as far as I see, the Southern market kind of remains now saturated the likes of. So what is your view on that? And even in terms of labor availability, I guess there are a much better availability of labor in the northern markets. So would that to a certain extent reduce the absenteism in — so how do you see it?
Punit Lalbhai
So I think one — there are multiple things in managing labor. Broadly, yes, other areas than the South will become important. We already, as I mentioned, Rachi is important for us. We have a factory in MP and we might increase our presence there. We have factories in Gujarat and will come up. So yes, our footprint is going to diversify. But I think also how we manage labor, the intensity with which the technology that we invest in will make a difference. The HR processes and how we manage and how we manage engagement and sort of taking care of the labor. So I think all of that is built into our new model. And that new model is also equally important as-is location. So both things have to be taken into consideration, technology, location and labor processes. So all of that is baked into us.
Unidentified Participant
Okay. Thank you. I wish you all the best.
Punit Lalbhai
Thank you.
Operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr Satya Pakash for closing comments.
Satya Prakash Mishra
Thank you, everyone, once again for joining the call. I hope most of your questions are answered during the call. Me and my colleague Himansu, are just a phone call or an email away for any further question that you may still have in future. Looking-forward to meeting you in upcoming conferences. Have a good day. Thank you.
Operator
Thank you. On behalf of Arvind Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.