Arvind Ltd (NSE:ARVIND) Q3 FY23 Earnings Concall dated Jan. 25, 2023.
Corporate Participants:
Samir Agrawal — Chief Strategy Officer
Jayesh Shah — Executive Director and Chief Financial Officer
Analysts:
Nihal Jham — Nuvama Wealth Management — Analyst
Abhishek Nigam — B&K Securities — Analyst
Biplab Debbarma — Antique Stock Broking — Analyst
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Miten Lathia — HDFC Mutual Fund — Analyst
Saket Kapoor — Kapoor Company — Analyst
Unidentified Participant — — Analyst
Nirav Savai — Abakkus Asset Management — Analyst
Surya Narayan — Sunidhi Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the conference call for analysts and investors for post results discussion for Quarter Three Financial Year ’22-’23 for Arvind Limited. [Operator Instructions]. I now hand the conference over to Mr. Samir. Thank you and over to you sir.
Samir Agrawal — Chief Strategy Officer
Thank you. Good afternoon to you all and thank you for participating in this call to discuss the third quarter FY ’23 results of Arvind Limited. Joining me is our usual team, Mr. Jayesh Shah; Mr. Swayam Saurabh; and Kaushal Shah. I would like to start by sharing our observations and perspectives on the macroenvironment in the market before we get into the specifics of the results. Copies of which you already have.
If you follow the US data, it suggests that inflation has come down, but it’s still higher than the target of 2%. Having said that, the commentary right now is a much more milder as compared to what we had heard about three months back. So most brands have delivered better results and this is true for both here, as well as Europe for the quarters ending around October, November of 2022.
Having said that, people are still concerned and hence, what we’re seeing is that, some of the key customers are not going ahead and making large orders, but postponing their purchases and ordering lot sizes which are smaller and expecting us to create more frequent inventory drops.
Closer to to the home, in the domestic markets, also, there are a few trends which are playing out. First is that the Diwali was a bit muted compared to what was expected. And the winter season started a bit late. So a lot of winter merchandise, which was there in the retail shelf did not move in November and early December. It only started to move now. Right?
Further, in case of fabric retail, because we are seeing falling cotton prices. The distribution network is stuck with inventory, which is high-cost and because the retail demand is not good and there is an expectation of price correction. There’s a lot of working capital, which is long into the supply chain and that is impacting the volumes absorbed by the wholesale channel in case of fabric business as well.
On the cost side, we did go through a softening of cotton prices, which were INR1 lakh of canby and upwards now quoting between INR60,000 to INR70,000 rupees a canby. As of now, it appears that cotton prices will move in this range only. On the other input cost side also, we’ve enjoyed lowering of costs, including that resulting from the lower shipping costs for imported items.
So in summary, the business environment is continuing to be quite volatile and the uncertainty is kind of driving the behavior of — on part of key customers in terms of leasing large orders. So in this context, you see our results, our portfolio has had both good news and lots of great news. AMD continued its robust growth and margin improvement. Woven had good volumes result and closed the core profits. Denim and Garments certainly saw volume reduction, because of the demand postponement and softening.
In terms of specific numbers, our overall topline for this quarter stood at INR1,980 crores. It was lower by about 13% compared to the same period last year. EBITDA was lower by 23% and stood at INR186 crores.
In terms of margins, EBITDA margins stood at 9.4% for the quarter compared to 10.6% for the same period last quarter — last year. And if you see a nine-month picture, it is kind of comparable. This is 9.3% for the nine months ending this quarter compared to 9.5% for the same in the last year.
Profit before — profit after tax before exceptional items stood at INR75 crores, and the reported PAT was INR84 crores. And there are a one-time adjustment. Our note clearly explains those.
In terms of segments, the textile revenues were up — were lower — I’m sorry, they were lower by 19% at INR1,549 crores. Volumes did decline across the segments and higher realizations, partly offsetting the impact of the volume decline. But this volume decline was specifically pronounced in case of Denim where the last few quarters, we have seen that 11 million to 12 million meters kind of volume, which is significantly small compared to our earlier number. Having said that, we feel that this volume at this level is kind of getting stabilized. So we can take this with the normal cost for the time being.
Textile margins reduced from 11.3% last year to 10.4% in Q3 of FY ’23, largely on account of lower volumes. AMD continues to do extremely well. The revenues were up 26% for this year — for Q3 as compared to same quarter last year. And on a nine month basis, we are up 23%. So our products are clocking 20% plus growth on our annual basis continues. AMD margins also have continued to improve while they are now pretty close to 14%. Actually, 13.8% as input cost pressures increase and businesses scale up.
ROCE for this business has touched 26% plus. And overall, across the board, we continue to maintain fairly tight operating discipline. And we have been kind of having tighter and tighter working capital situation as well. So our net working capital turns, which were 5.6 turns in Q1, rose up to 6.1 in Q2 and now we did 6.3 in Q3.
During this quarter, we reduced our overall debt by INR214 crores and the long-term debt was lower by INR135 crores. This important priority for us continues to be on track as we maintain strong discipline around capital expenses. We are broadly on track for INR300 crore of reduction on long-term debt by March 2023.
Looking ahead, we continue to remain cautiously optimistic about the demand revival in both export and domestic segments. And I would reiterate the word cautious as things are still a bit uncertain. On cotton prices and currency exchange rates as well, we are seeing wide fluctuations.
AMD continues to maintain its momentum on revenue growth and margin expansion, and we expect the same to continue in Q4 as well. As we have discussed in the past, we have made calibrated investments in this business and some of the debottleneck capacities in AMD have started to now go-live, which is starting to reflect in our growth.
I’d also like to share that we have made strategic investments in expanding our renewable energy capacity. And there is a 24 megawatt hybrid solar wind installation, which is expected to get commissioned in the next month. This will help us strengthen our best in industry for [Indecipherable] and also reduce energy costs.
So while the short-term outlook is a bit uncertain, we continue to invest in the growth areas, mainly AMD and Garments. We will be investing about INR250 crores in the next financial year, which will go into expanding the capacities in these two areas. We are preparing more details of this capex and growth plan, and we share some of that with you all in the next call.
So in summary, as I close down this opening remarks, we remain optimistic about our ability to navigate these uncertain times in coming months and quarters. We expect our gross contribution will start showing improvement from Q1 of next FY as we get further benefit of lower input costs and rupee depreciation. We will continue to reduce our long-term debt further during the rest of the current year and coming financial year.
So with that, I wrap up my opening comments and invite you to ask questions. Thank you.
Questions and Answers:
Operator
[Operator Instructions]. We have the first question from the line of Nihal from Nuvama Wealth Management. Please go ahead.
Nihal Jham — Nuvama Wealth Management — Analyst
Yes. Thank you so much. Sir, just one question, which was on the Denim business that currently, we are seeing Denim volumes go down significantly. And in earlier cycles also seen hardly when you see the part of the Denim business seeing a bit of a deceleration. It does end up lasting long and generally even the margins that impacted significantly. So if you could just give a sense of what is your outlook for the Denim business over the next 12 months and where the margins this business could go in the same period in time?
Jayesh Shah — Executive Director and Chief Financial Officer
Right. So let me take this question. Denim as a business, and let me also give you a view on textile because in the overall context, it’s easier to appreciate. Denim as a business is calibrating and we have been maintaining this for the last few quarters, because of extreme volatility in cotton prices, where our focus has been to curtail the bottom end, primarily focused on managing or working with deals where margins are, let’s say, above a threshold, and/or with strategic customers.
I think right now, the 12 million meters a quarter is the volume we foresee also going into future quarters. That’s roughly 60% of where Denim historical used to operate. But what is important to understand here is Denim at this level remains profitable. We expect further benefit in margin coming in from rupee depreciation, as well as a number of cost optimization initiatives we are working on. We want to optimize ourselves in terms of fixed-cost to be optimum in terms of margin at these levels. ROCE is positive. Other focus for Denim is improving verticalization with our garmenting business, which we — things will create value for the entire chain. And we strongly believe that with the cost optimization in-place. holding margins well even at lower levels, as you see right now, when the volume returns in, let’s say, two, three, four quarters from now, this business is well poised to grow and go back to the whole level of profitability.
Maybe take a little bit continuing on this question with about other part of textile as well. And what we have not been stressing enough is our Woven business, which in quarter three has recorded absolutely report performance, both in terms of volume and realization. I mean we don’t see that on revenue numbers, but our profitability level at this moment are highest ever. I also remember hearing a question around our total contribution for textiles, which used to be about 30%, went down to 25%. That contribution level is coming back, even with the lower volumes of Denim where it has reached about 27%.
We are running Woven on almost full capacity. We are booking some capex to bottleneck some additional capacity, our quarter four order books looks very, very healthy. And we think that this trend should continue, which also, if you look at the numbers which we reported, despite Denim coming down, our total EBITDA level for textile was 10.4%. And that means as a unit textile, unit businesses as the Woven is performing exceedingly well.
We are also holding despite Denim volume drop of 15% kind of ROCE, which will just shoot up given some currency positivity we expect in the coming quarters. Also, when the future Denim volume picks up. So all in all, we are very confident about — of course, demand is a question mark on the Denim side right now. But going into future quarters, we are very confident that we will come out and be a clear winner.
If I can maybe take a minute to talk about Garments as well, because I’m sure there’ll be a question here as well. I mean you would have seen Garments volume sort of flattening at about 8 million Garments for last two quarters. And we have been saying, it is some customer order that’s [Indecipherable]. We have been sort of realigning our manufacturing base. We are rebuilding the machineries, which have come from Ethiopia in additional capacity.
What we are also focusing in garmenting over the last two, three quarters is gradual improvement of margin. While volumes will come up and we are confident going into quarter four and next year. Our margin profitability in garmenting are improving quarter-over-quarter. Garmenting is a very high strategic priority for us. I mean we have been talking about AMD and garmenting as key areas where capital will get allocated going into future quarters.
We are looking to, for example, Government is looking to announce PLI2 — we are actually looking forward to that. Once those will come, you will see far more investment from our side going into garmenting,because not only garmenting as a business support naturally our textile side of business, but we strongly think that if I take a two year view, other than AMD, that’s going to be the next driver of growth and would deliver EBITDA, which are above our current threshold.
So this is how we see an overall, let’s say, Arvind, although AMD, we have not covered. But Samir, you want to talk about AMD?
Samir Agrawal — Chief Strategy Officer
Yes, sure. I think it’s probably will be a bit of a preemptive kind of information because I do expect questions have got to practically every call. So like I said, AMD is comprised of three major clusters. Protection industrial fabrics and product and composite. And overall we’ve been maintaining that, this is primary growth engine in many ways for the company. It’s been growing at 25 — 20 plus percent consistently, in fact, in FY ’19 and ’20, AMD used to contribute less than 10% of the company’s topline.
In current financial year, we see increase over 15% and that increasing portion of AMD in our overall continues to have the momentum. So the growth is powered by a combination of like-to-like growth, which is getting larger and larger share of wallet in [Indecipherable] accounts. And then AMD is an innovation and IP driven business. We continue to allocate part of our capacity and energy and investment in experimenting with newer areas. So we also have some new growth engine, which we’ll be firing on it. So that you have the broader commentary on AMD.
Margins, as you saw, have reached about 14%, and they were 13% just about two, three quarters back and they continue to expand. We expect this to reach 15%, 16% level in a reasonably kind of comfortable pace in the next few quarters. ROCE for this business is around 26.4% in this quarter. We expect it to grow to about 13% level reasonably soon. And because of this whole momentum and success and clarity, we have practically planned about 40% of our overall capex to this business in the current year, and even for next year, it will continue to enjoy our lion’s share of our capital spend and leadership potential. So on AMD and of course, ask further questions, I’m happy to answer those. Thank you.
Nihal Jham — Nuvama Wealth Management — Analyst
Just one question with cotton prices moderating. What would be the expectation of margins in the coming year? Historically, we’ve done 14%, 15% also and has been around 10% for the last three years, just with cotton now moderating, what’s the expectation for this year? Thank you.
Jayesh Shah — Executive Director and Chief Financial Officer
Your voice not very clear.
Nihal Jham — Nuvama Wealth Management — Analyst
Sorry, just I was asking on the margin expectations now that cotton is moderating. Considering historically, it touched 15% also, and it has been at around 10% for the last three years.
Jayesh Shah — Executive Director and Chief Financial Officer
Right. So cotton prices moderating, definitely already, if you see, we are gradually inching towards the targeted 30% contribution. And part of this is coming from cotton. We expect margin to further improve as cotton stabilizes.
Nihal Jham — Nuvama Wealth Management — Analyst
Thank you. I have done. Thanks.
Operator
Thank you. We have the next question from the line of Abhishek Nigam from B&K Securities. Please go ahead.
Abhishek Nigam — B&K Securities — Analyst
Yeah. Hi. So my first question is what kind of demand momentum are you seeing in January? Have things sort of improved a bit versus December?
Jayesh Shah — Executive Director and Chief Financial Officer
Is this for a specific business or overall?
Abhishek Nigam — B&K Securities — Analyst
I think overall across Denim, Woven and garmenting.
Jayesh Shah — Executive Director and Chief Financial Officer
The demand momentum for this quarter is good overall, and it’s kind of similar, particularly, we expect Q4 to be broadly similar to what we have reported, maybe slightly improve. Certainly, AMD continues to do exceptionally well. And I think we do expect some improvement in even Denim and of course as woven. But not a significant change but from where we were in Q3, we expect Q4 to be slightly better.
Abhishek Nigam — B&K Securities — Analyst
Okay. Fair enough. And I was looking at realizations. Were remain fairly stable, resilient despite — coming out. So is it fair to build a similar realization going forward? Or should we will slightly [Indecipherable] the number? Hello.
Operator
Yes, the management had dropped. We have reconnected them back again. Go ahead.
Abhishek Nigam — B&K Securities — Analyst
Yeah, so my question was, if I look at realizations in this quarter, there have been fairly stable clearly resilient despite cotton prices coming off. So could we expect utilization to largely failure or should we expect them to sort of just lower?
Samir Agrawal — Chief Strategy Officer
We did see some reduction in the realization between last quarter and this quarter. And quite obviously, it’s a set of B2B businesses where prices realized do reflect the underlying raw material or costs, however, is a lag. So the trend, as cotton prices continue to soften, you will see even the next quarter. So there will be some softening just like we have seen some softening between last quarter and this quarter.
Abhishek Nigam — B&K Securities — Analyst
Fair enough. And last question for me. Any capacity expansion, which is planned for ’24, ’25? Or will you rather wait for PLI2 clarity before you make announcement?
Samir Agrawal — Chief Strategy Officer
Right. So for garmenting, obviously, we are waiting for PLI2. We will have more clear guidance on what capital gets allocated to AMD and garment perhaps in the next call. But additionally, we are looking to invest and build capacity in AMD and garmenting, about INR200 crores to INR250 crores at company.
Abhishek Nigam — B&K Securities — Analyst
Okay. Perfect. Thank you so much. Thank you.
Operator
Thank you. We have the next question from the line of Biplab Debbarma from Antique Stock Broking. Please go ahead.
Biplab Debbarma — Antique Stock Broking — Analyst
Good afternoon. Thank you for taking my call. First question is on the — your investment plan, sir. Earlier also, you have indicated that we would be investing around INR200 crore, INR250 crore in AMD and garmenting. This INR150 crore of investment, you mentioned, this is parallel to the same time that you mentioned earlier. All right, great.
Jayesh Shah — Executive Director and Chief Financial Officer
Our capex this year should exit north of INR200 crores which would be slightly better than what we had indicated earlier. Next year, we expect to be in a similar range actually better. We are targeting to invest about INR250 crores, but we will have more clear plans perhaps in the next earnings call.
Biplab Debbarma — Antique Stock Broking — Analyst
So this year the capex that you did, is it some augmentation of capex. Will you be seeing that capacity off AMD in the environment has increased on this that a common maintenance sort of remaining bottleneck kind of capex.
Jayesh Shah — Executive Director and Chief Financial Officer
Yeah, but at a very high level, about 40% of our total capex this year has gone into AMD and in building new capacities. About 20%, 25% would be towards cost optimization in businesses like Denim, GOWELL [Phonetic], power costs, etc and the rest of it is scattered. The capital which has been allocated for garmenting, sort of is deferred simply because PLI 2.0 has been delayed a little bit, but we are looking to invest back in garmeting as well once this thing gets announced.
Biplab Debbarma — Antique Stock Broking — Analyst
Okay. My second question is on the denim business. Just trying to understand sir, actually what is this business or this sector because we have been saying that we have been momentum, some good numbers coming from this segment, but in general time and again we see then I think challenges. It’s not the first time we are seeing some challenges in denim business. So what is this denim business and what is your future projections about this business?
Samir Agrawal — Chief Strategy Officer
Right. So let me give me a shot, and I will invite Jay Bhai to pick up ads. See, Arvind denim if you take and you are talking about last few years and this is where the cycle, you have seen play-out. It’s a combination of demand and supply with side factors. In a little of past what has happened is that especially in the Indian context, the capacities have continues — to continue to get augment especially in India and as we have shared in this call two times the installed capacity in India for denim fabrics is close to two billion meters, which is almost 2.5x to 3x, of the total demand, domestic and export combined. So there is a over-supply chain, which continues to be an overhang across the board over any period of time in the recent quarters.
On top of that in recent two or three quarters, as we have been sharing what is laid out is that post-COVID, there was a buying surge in almost same time last year, and as demand surged many of our global brands and retailers were forced to do air shipments and all to fulfill their immediate needs. That in turn prompted them to prepone the buying. So if you see our Q3, Q4 results last year they were sort of super-normal because the buying, which used to happen, let’s say, in April, got to January-February and so on, which naturally meant that at some point when the buying cycle went back to normal, there would be a crop.
So what’s happened this year is that we are seeing that trough layout in parallel with the softening prospects for the retail demand because of all the macroeconomic factors playing out in the global market and you all have heard about the consumer confidence going down, inflation, and so on so forth. So all these have kind of together hit the volumes. As we speak, the reasons why global brands are not buying is because of the uncertain consumer demand and hence, they are not wanting to take long positions and that’s really what is happening from my perspective and I will give to Jay Bhai to maybe add a bit more. Sure. Good afternoon, everyone. I think very well the sector in denim is unlike what you see. which is related to cotton. So if you see cotton has been at historical high levels and in the interest of denim this is somewhere around 750 terabytes of cotton. And so when you guys see a garment with our fabric, which is almost selling like we are selling cotton, which is at a very high level the final retail setup that is price compared to any other product category. So it seems that our mills, which is also yielding cotton is reducing almost six meters, millimeters out of one kilo and denim is almost like 1.3 meters out of one kilo. So. It is very, very sensitive to cotton, and looking at where we are in cotton, the current market price is, the minimum support price in India, the 10% import duty that India has, Indian denim is more expensive than global denim. For example, today if you see cotton, Indian cotton is more expensive than the international price of cotton. So unless this equation changes and India earlier used to be always more cost-competitive as far as cotton is concerned. There was a 10% increase in cotton [Indecipherable] always it is resolved fully and this won’t change. Till that time Indian denim will find it difficult in the marketplace to contact. So the right strategy, for now, is to scale down capacity, maintain and do some profitability, and do not deploy excess capital into the business till the situation works out in our favor.
Biplab Debbarma — Antique Stock Broking — Analyst
No, sir, that means that two factors, one is that our product like cotton prices has to come at par with denim prices or a bit lower than the internal prices –international prices, that’s the first one. Second is overall the environment from exports as to come back to the normal level, right these two factors affected. My understanding is correct, sir.
Samir Agrawal — Chief Strategy Officer
I think in this manner, that there may be slight changes in demand globally some postponement, particularly a company which is very close with one brand and that brand gets into oversupply and all that situation but the fundamental is going to be cotton. Is cotton revenue correct because there is always net income now, whether you can sell or some other company or a country can sell will depend upon what is the cost competitiveness of many, and today as we speak, India is not competitive in the denim market?
Biplab Debbarma — Antique Stock Broking — Analyst
So the cotton prices are INR60,000 or INR65,000 even then it is not competitive. Am I correct?
Samir Agrawal — Chief Strategy Officer
We have to see it whether it is at that price that cotton denim are expensive, and if we are 10% more expensive as a country compared to, say, just to give you an example, Pakistan and obviously Indian denim will find it difficult to make a profit.
Biplab Debbarma — Antique Stock Broking — Analyst
Okay, sir. And my third and final question is on environment. So as we mentioned that we have been flat, the year focuses on environmental business besides AMD and this business has been plateauing at around eight million pieces for some time. And sir, what could be sudden in plateauing and if my understanding is not correct is wrong then the garmenting business is one segment of the textile where still India is doing well when we see export. Just trying to understand why it hasn’t been plateauing at eight million for some quarters.
Samir Agrawal — Chief Strategy Officer
Right. One reason why the garmenting volume came down in last quarter is deferment, customers bought both COVID restrictions were taken out in larger quantities and that created some inventory build-up, especially in the US, partly Europe market, that basically created one impact where in orders moved out. Others was a bit of Russian war which is sort of impacting emotions and consumer, let’s say buying demand cycle in Europe but this is a business we are very confident about and we have been saying that we are focusing on building capacity, we would have committed some capex by now. I mean, we are waiting for the scheme to get announced. Strategically, this is as important a pillar as AMD for us, and in coming quarters, you would definitely see improvement, we have been focusing right now on improving margins. Although we don’t share the garmenting margin’s standalone margin numbers, but the margins have been improving. Our focus is on getting volumes back and you should see that coming back in future quarters.
Biplab Debbarma — Antique Stock Broking — Analyst
Sir, what gives you the optimism in garmenting and not so much in maybe denim?
Samir Agrawal — Chief Strategy Officer
I mean, a number of factors. The customers who had deferred orders are coming back to us. We have a view of our order book and we also, we have used the time to develop some new key accounts. Also, we are aggressively more aggressively participating in domestic markets. A number of these factors are helping us believing that this indeed remains a very strategic area from a priority perspective for us.
Biplab Debbarma — Antique Stock Broking — Analyst
And we see that impacting this financial or next financial year, the impact of all this.
Samir Agrawal — Chief Strategy Officer
You should see a gradual improvement already going into quarter four but the full impact would be visible going into next year.
Biplab Debbarma — Antique Stock Broking — Analyst
Thank you, sir, thank you for your patience, and all the best. That’s all from me.
Samir Agrawal — Chief Strategy Officer
Thank you.
Operator
Thank you. We have the next question from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Thank you for the opportunity. Sir, wanted to understand the investments that has gone into your renewable energy capacity that commences next month and how much energy cost-reduction can we expect from this.
Samir Agrawal — Chief Strategy Officer
Right. So, we have made some investment needs and we are expecting an annualized basis saving of about INR25 — INR20 crores to INR30 crores, depending on what gets delivered. This should start to be available to us starting from April.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. And this year’s capex was expected to be around INR150 crores and INR200 crores and in this, it was garment as well. So now you are saying that government will not be a part of this year’s capex. Is my understanding correct?
Samir Agrawal — Chief Strategy Officer
No, we, so, Prerna we still think, of course, it will all depend on fast the government moves, but this is our discussion. We anticipate PLI should get announced very quickly. We are prepared with part of capital in garmenting and we think some part of garmenting investment, hopefully, should already happen this year. This is part of our INR200 crores buildup. But for sure, garmenting investment was not as large as we anticipated when we started the year.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. And actually, I’m also having the same question that the earlier participant asked because garmenting for us earlier was a business which was derived from your fabric business but now it is becoming a growth engine. So what has led to this change in view for us, be it, customer interactions who are ready to from you and they want more capacity from you, or is it the sheer opportunity numbers from the global data points that we see? What is the actual trigger which has led to this optimism in the garment opportunity and can we have a structural review on where we want to take this business over the next three to five years?
Samir Agrawal — Chief Strategy Officer
So, Prerna, I think there is a, let me clarify this. So garmenting as a role is a strategic enabler of the fabric business stays the same. I don’t think that we are saying that anything has changed on that thought process or that role of garmenting. All we’re saying is that a much smaller portion of our fabrics used to be delivered as a vertical product as we call it and as we scale up our garmenting capacities larger and larger portion of our fabric business kind of becomes vertical and gets secured in the process, of course, it has expanded the top-line as well. So that’s the limited point, we are making when we say that we are putting garmenting as one area of focus for the growth investments.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. And any indication from the customers who are, with whom you are dealing with giving you more confirmation on using garment capacities, a little higher than earlier or more higher than earlier which is helping you scale up on your garment business.
Samir Agrawal — Chief Strategy Officer
Right. So, Prerna, there are two things. One is a little bit of change after COVID, the world is seeing and how garment gets what. A company like GAP historically used to have their own fabric team, a nomination team who would deal with fabric manufacturers, and then a separate team who was working with government manufacturers. I think companies more and more taking garment backward, so they want to. They actually prefer people who put takeaway the translation risk on fabric getting converted or fabric quality issues which one sees or delays. So they are preferring more and more, and this is what they are hearing from a number of customers, people who can deliver end-to-end garments to them and companies like us who are vertically integrated have deep relationships. It becomes the natural choice because they also know we have complete control over the value chain including quality. So this is one change we are seeing from a couple of our large customers and this is also a conversation we’re having with some new customers, which are in the process of developing, but this is a direction, a lot of large garmenting companies, large brands taking as we see last six to 12 months.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. Any color you could give on structurally, where you want to take this business in for three to five years.
Samir Agrawal — Chief Strategy Officer
Three to five years, I mean, this business should double in terms of revenue and that’s directionally where we are working on. You will see next year’s capital allocation also going into this business and perhaps we can throw a little bit more light once we are clear with next year’s plans.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. Understood. Congratulations on your debt reduction efforts where you have reached INR1,500 crores at the end of this quarter. I just wanted to understand this INR300 crores that you mentioned on your slide on long-term debt reduction for this year, how much of this has been done already and how much can we expect in the fourth quarter?
Samir Agrawal — Chief Strategy Officer
So we have, I think we repaid just over INR200 crores so far and expecting close to INR100 crores in quarter four.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay, okay, understood. And, sir, one more thing. Interest cost has not started declining despite the debt reduction. Can we see that coming in from the fourth quarter?
Samir Agrawal — Chief Strategy Officer
So what is happening Prerna is while our total debt is coming down, the cost of debt is going up, and that sort of nullifies each other. So perhaps next year, I mean, we have no control on where the interest cost will be but we are confident that it will start to gradually go down going into next year.
Prerna Jhunjhunwala — Elara Capital Plc — Analyst
Okay. Understood. Thank you and all the best.
Samir Agrawal — Chief Strategy Officer
Thank you.
Operator
Thank you. We have the next question from the line of Miten Lathia from HDFC Mutual Fund. Please go ahead.
Miten Lathia — HDFC Mutual Fund — Analyst
Hello, sir. Thank you for the opportunity, sir. Sir, what is the capex, which we have done in this wind solar installation?
Samir Agrawal — Chief Strategy Officer
The question is how much capex?
Miten Lathia — HDFC Mutual Fund — Analyst
Yeah.
Samir Agrawal — Chief Strategy Officer
The total capex is around INR29 crores.
Miten Lathia — HDFC Mutual Fund — Analyst
So on INR29 crores you are saying that there will be annual saving of INR20 to INR30 crores of costs.
Samir Agrawal — Chief Strategy Officer
Yes, it’s an SPV and yes, about INR25 crore arbitrage saving we should expect to see versus our current big box.
Jayesh Shah — Executive Director and Chief Financial Officer
So what actually we attribute to the total investment is much larger, but it is done by a power company with 5% of the capital. As a result, what you said the equation is correct. that is about it yet.
Miten Lathia — HDFC Mutual Fund — Analyst
So okay, great. And so in terms of denim sales, you are saying that there is a slowdown in the world that I understand, but even your domestic denim volumes are significantly down. And also one reason could be higher cotton prices, but if I say that cotton prices have corrected now, should we expect domestic denim demand to go up?
Samir Agrawal — Chief Strategy Officer
So actually the demand does exist even today. But at this price of cotton, it’s not profitable. So we could sell more, but it will be the return from that investment of selling will not be lucrative enough right now. So the approach we have taken is to scale down the cost for some time. so that we can remain profitable and returns are better on capital employed.
But quickly go back to capacity enhancement or capex or invest — I mean fixed cost enhancement as and when the market conditions improve. I think at this price of cotton are the threshold of certain value for the, what you call, INR999 or INR1,499 or INR1,999 pricing is not working out for most of the brands. And that is why there is a demand — INR10, INR20 of reduction can make a material difference, because you come at a level of psychological price for the Denim garment in the market. So right now demand does exist. You will see all textile mills, which are in Denim must be selling in India, and they are selling in India. But none of them will be able to make substantial profit, if at all there in any profit.
Miten Lathia — HDFC Mutual Fund — Analyst
Okay. And sir Denim export, you said that India as a country, we are in — we are not competitive because of the duty which we have to pay, 10%.
Jayesh Shah — Executive Director and Chief Financial Officer
Correct.
Miten Lathia — HDFC Mutual Fund — Analyst
But that is true for Garments also. I mean Garments, we are not competitive as compared to other countries. So I mean, is there any risk in our garment capex over medium-term?
Jayesh Shah — Executive Director and Chief Financial Officer
No. So when you look at garment, the element of cotton in garment goes down substantially, right? Other costs come into play.
Miten Lathia — HDFC Mutual Fund — Analyst
Okay.
Jayesh Shah — Executive Director and Chief Financial Officer
Unlike fabric, which is pure bit of a valuation and balance sheet all cotton. So cotton will constitute, say, 65% or thereabouts of — sales price. It will constitute about 25% to 29% of our garmenting price. So that makes the difference. You can say a slightly lower margin by Denim garment, but when it comes to fabrics, you will find it difficult to make money.
Miten Lathia — HDFC Mutual Fund — Analyst
Okay. Thank you sir.
Jayesh Shah — Executive Director and Chief Financial Officer
Thank you.
Operator
Thank you. We have the next question from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor — Kapoor Company — Analyst
Yeah. Namskar sir and thank you for this opportunity. Am I audible, sir?
Jayesh Shah — Executive Director and Chief Financial Officer
Yes. Please go ahead.
Saket Kapoor — Kapoor Company — Analyst
Yes. Sir firstly for the capex part, what have been our capex for the nine months? And for the balance part of the year, what had been planned and then for the next financial year along with in this segment we will be put spending demand?
Jayesh Shah — Executive Director and Chief Financial Officer
So we’ve answered this question already, we said that, this year we are totaling about INR200 crores, INR210 crores by the end of this financial year. And next year, slightly higher, somewhere around INR230 crores to INR240 crores is what we are talking about. So we’ve answered this question earlier as well.
Saket Kapoor — Kapoor Company — Analyst
And which segment sir?
Jayesh Shah — Executive Director and Chief Financial Officer
So we’ve said we have — it’s going to focus around growing our capacities in AMD and Garments as the primary focus.
Saket Kapoor — Kapoor Company — Analyst
Okay. And can you give more color on what has been the utilization levels, especially for the Denim segment. You spoke about woven, I think, so at 100% if I’m not wrong. But what has been the capacity for Denim for this quarter and for the nine months?
Samir Agrawal — Chief Strategy Officer
So capacity is a little bit irrelevant, simply because we are choosing to sort of cap the volume which we want to produce, because of the external reason, which Jayesh just explained. So we are operating right now at 60%, 65% of earning capacity, but that’s what we have chosen to do. [Indecipherable]. Our focus is on profitability and Denim as a business still remains EBITDA positive and with a positive growth.
Saket Kapoor — Kapoor Company — Analyst
Correct. That means we have the flexibility to produce — we have flexibility to have to be in either of the category, If not to be in the value chain, Denim needs to reproduced, this is what you’re are trying to convince?
Samir Agrawal — Chief Strategy Officer
Sorry, Your question is.
Saket Kapoor — Kapoor Company — Analyst
Sir, I was saying to — yes, sir.
Jayesh Shah — Executive Director and Chief Financial Officer
No, I just saying that our capacities in wovens and denim are interchangeable. Is the question, what’ the question?
Saket Kapoor — Kapoor Company — Analyst
Yes sir. And as you mentioned that we can, whichever is profitable or as the market condition demand weekends, it interchange that’s my understanding. How does that work?
Jayesh Shah — Executive Director and Chief Financial Officer
No. Denim is a different product right from skilling stage is required for different headcount and help the capacity between Denim and Woven are not interchangeable. What we said is that we have right now recalibrated our Denim capacity and fixed costs to reflect the volumes which we have seen in recent quarters and the near future. If and when, if our demand scenario improves significantly, we will scale things back up to service the market. That’s what we said.
Saket Kapoor — Kapoor Company — Analyst
Right sir. Sir can you give more color on the order booking status. As in your presentation, you have mentioned about the US and the European market, your customers, I’m not in the best of health and the demand is on the lower side. So..
Jayesh Shah — Executive Director and Chief Financial Officer
As of now in the Q4 situation looks very similar to what we saw in Q3. It is starting to improve a little bit. But as you know, as things kind of unfold in next few weeks, we will know what Q4 has a involve for us. But I would say broadly similar, but somewhat positive as compared to Q3.
Saket Kapoor — Kapoor Company — Analyst
Right sir. And two more questions. The first is on this green energy part, the investments we are making. Of course, this investment, what would be our energy mix the conventionally and non-conventional part?
Jayesh Shah — Executive Director and Chief Financial Officer
Our renewable power will improve to about 45% of our total consumption.
Samir Agrawal — Chief Strategy Officer
No. So I think our consumption will improve from about 7% to about 26%, 27%, 28%. 45 [Indecipherable].
Jayesh Shah — Executive Director and Chief Financial Officer
Okay. So — and that’s the maximum which current hybrid lot permit, but we are also looking-forward possible regime change where perhaps enhanced ceiling could be allowed. When that happens, that would create further value because we will be looking to participate.
Saket Kapoor — Kapoor Company — Analyst
Okay. So out of the total energy requirement 28% would be derived from the green energy, that being — this is what you have conduct?
Jayesh Shah — Executive Director and Chief Financial Officer
That’s correct. Right.
Saket Kapoor — Kapoor Company — Analyst
Okay. Sir,– and you spoke about the interest construct fund also moving up. So can you provide what is the blended cost of fund for us separately for long-term and short-term borrowing?
Jayesh Shah — Executive Director and Chief Financial Officer
Blended cost for us is 6.5% in this quarter and that has, let’s say, gone up over the year by almost 1% and 1.2%.
Saket Kapoor — Kapoor Company — Analyst
Correct sir. And what is the growth receivables sir, we have in our books currently and what percentage of our sales export denominated [Indecipherable] to export?
Jayesh Shah — Executive Director and Chief Financial Officer
Yeah. So road tape, we have as the value of road tape started to improve, we have started to liquidate. In fact, as a matter of fact very recently, there is a road tape amendment announced, which should provide, let’s say, additional margin opportunity for us. And — but road tape as a value, I mean, total pool, which we had is largely liquidated.
Saket Kapoor — Kapoor Company — Analyst
Okay. And you’ve mentioned that, the discount has narrowed. So can you give the comparisons? Just speaking about the..
Jayesh Shah — Executive Director and Chief Financial Officer
The accounting is 97%, 98% to-date.
Saket Kapoor — Kapoor Company — Analyst
Right sir. Two line items that I have, there is — for the employee benefit expenses, I find that to be on the higher side and also in common service to the revenue, what should be the number as a percentage of sales should we look ahead as the employee benefit expenses this quarter, it is at around INR218 crores?
Samir Agrawal — Chief Strategy Officer
I think you should look at YTD and that should be factored in, let’s say, if you have projecting future quarters.
Saket Kapoor — Kapoor Company — Analyst
Sir Q-on-Q, was it the mix that led to the lower employee benefit at 200, 500, topline of 2,107?
Samir Agrawal — Chief Strategy Officer
See as it was also explained earlier, our revenue is a factor of volume and price and price has a large underlying element of cotton. So these percentages quarter-on-quarter, might not give you a right reference but using YTD number and employee cost as a percentage would be a good reference to plot future growth.
Saket Kapoor — Kapoor Company — Analyst
Correct. And about the other expense part, sir, that has also fluctuated by 10% because the revenue decline is there, but how should one look at this line item of other expenses at INR512 crores?
Samir Agrawal — Chief Strategy Officer
It should be, again if you sort of take an average up YTD number, this is what we should look to plot.
Jayesh Shah — Executive Director and Chief Financial Officer
YTD revenue means within nine months versus nine months. That’s important.
Samir Agrawal — Chief Strategy Officer
Right. What we can also do you can get in touch with us and our Investor Relation team can provide you more insight.
Saket Kapoor — Kapoor Company — Analyst
I will definitely get in touch. And sir, lastly on the — this purchase of stock trade part also. How should what factors led to this change in number?
Samir Agrawal — Chief Strategy Officer
Noted, noted, since there are other people in the queue.
Saket Kapoor — Kapoor Company — Analyst
I’ll get in the queue sir and thank you for the opportunity and all the best to the team.
Samir Agrawal — Chief Strategy Officer
Thank you.
Operator
[Technical Difficulties] Thank you. We have the next question from the line of Vikash Shradda [Phonetic] from NP Asset Management [Phonetic]. Please go ahead.
Unidentified Participant — — Analyst
Yeah, hi, good afternoon. It will be quite helpful if you can comment on the change in CEO. The resignation and the reappointment of Mr. Jayesh Shah.
Samir Agrawal — Chief Strategy Officer
Sure. So, Jayesh has only joined us about a year plus back. He is looking to get into some profit center opportunity within the accruals starting and that was a conflict. So has a call, as a policy, the audit committee recommended that we shouldn’t be having a conflicting role. So he will be part of, immediately he will start with the largest item purchased item which is cotton, which is at INR1,100 crores to INR1,200 crores today as a first job and then, of course, is really sometimes growing dynamics.
Unidentified Participant — — Analyst
Sir, your last part was not clear.
Samir Agrawal — Chief Strategy Officer
What last part is not clear?
Unidentified Participant — — Analyst
That he will look into the cotton or.
Samir Agrawal — Chief Strategy Officer
That’s correct. Last part I said that but he will immediately start looking at the purchase of cotton we are already in that season. And he wants to kind of throw in more on the business side than on the controller side from us.
Unidentified Participant — — Analyst
Okay. So would you be actively looking for another replacement or what is the plan now?
Samir Agrawal — Chief Strategy Officer
Right now, I have an agenda, I mean, I have been with the company for some time, and I have an agenda role as such.
Unidentified Participant — — Analyst
Understand. And another question is on the tax rate. So this year, it appears to be low, what is the full-year expectation and how should we’d be for next year?
Samir Agrawal — Chief Strategy Officer
I think so if you ignore the one-time which is currently in beta in Q3, which is there as a part of a net to our interest costs, our tax rate will be around 22% to 23% for the year. You could assume around a similar percentage next year.
Unidentified Participant — — Analyst
Understand. And finally, just one more question on this GST cess write-off, which is in the notes at INR14.5 crores.
Samir Agrawal — Chief Strategy Officer
No, it is part of the GST write-off. The balance is a contribution by way of electronic.
Unidentified Participant — — Analyst
Okay. Sir, how much is the political contributions?
Samir Agrawal — Chief Strategy Officer
It’s about INR9 crores out of INR15.5 crores.
Unidentified Participant — — Analyst
Understand. Thank you very much.
Operator
Thank you. We have the next question from the line of Nirav Savai from Abakkus Asset Management. Please go ahead.
Nirav Savai — Abakkus Asset Management — Analyst
My question is regarding the AMD segment, we have done some debottlenecking during the first nine months, what can be the optimal revenue which we can achieve from the existing capacity?
Samir Agrawal — Chief Strategy Officer
Capacity augmentation through debottlenecking is ongoing process. And if you remember what I explained about the portfolio itself is three clusters and within each cluster, there are multiple product market lines. And hence, I can’t give you a specific number. As and when we keep expanding our volume and the run rate with your part comes in the way of further growth we go ahead and debottleneck that with two additional investments in some cases ourselves or in some cases through partners.
Nirav Savai — Abakkus Asset Management — Analyst
Right, sir. The order book we have is it long-term that we get visibility of 20% plus growth, let’s say for next two, three years, well if clients will give us a long-term end of matter which as duplicative in nature.
Samir Agrawal — Chief Strategy Officer
No, so the way the business works is that it’s not as if we have order books which are locked in for the next several quarters, but somehow it works, but what happens in a business is that you develop a set of customers and accounts who have a long gestation period, which typically involves clearing a lot of certifications and compliance requirements. As such, it’s a slow and steady build and hence, typically it’s hard for anybody else to come and knock you off. So what we are having confidence in is the basis of the accounts where we are continuously seeing improvement in the share of wallet and also gradual addition of new accounts and that’s the basis for us to say that the business is robust and growing and we don’t see any problem taking this business grew at 20% plus for next few quarters.
Nirav Savai — Abakkus Asset Management — Analyst
Right. The second thing is for the strategic customers in the textile business that we have customers which give us sort of lock-in a plan for capacity for eight to six months or two to three quarters where we have visibility of orders in our hand, and do we have those kinds of strategic customers and how do you which kind of customers exactly classify strategic customers.
Samir Agrawal — Chief Strategy Officer
So even in textile business, the nature of how that relationship is built and the kind of where the buying happens is not that different from what I found what E&P. These are accounts which have worked with us as key partners for several years, maybe, in many cases more than a decade. The buying cycle traditionally has been two seasons spring-summer and autumn-winter and the process starts about 18 months earlier with buying till the merchandise hits the shelf. So you have different stages of design alignment, sampling, pre-production, and then the bulk production.
Now obviously, what’s happening is that over time brands are wanting to shorten the cycle and limit their exposure because their confidence that if you kind of forecast, they are buying 12 to 15 in some cases 18 months out. That confidence is getting lower, the world is going to fast fashion. So our buyers also are asking as to kind of export sooner and hence at any point, it’s not as if will have a 12, 18-month kind of order book but yes, we have conversations and discussions as a matter of routine in different stages.
Nirav Savai — Abakkus Asset Management — Analyst
Right. And that is subject to change, but they want to ensure the supply side issues should not be the case in case the demand comes.
Samir Agrawal — Chief Strategy Officer
Absolutely.
Nirav Savai — Abakkus Asset Management — Analyst
And then on the real-estate monetization side, I understand that we were about to get some INR150 crores this year. So this would be the forest project, right or this would be the last phase of forest project, and when do we see this recognized in P&L?
Samir Agrawal — Chief Strategy Officer
So this year should see us not about INR150 crores, you should see us get around slightly below INR100 crores. This is largely coming from the forest project, we should see another INR75 crores to INR100 crores coming in the next financial year and after that, maybe either end of the year, next year in the first few quarters of the following year is then we could be recognizing the profit on build a platform would have come in earlier stages.
Nirav Savai — Abakkus Asset Management — Analyst
Right, right. Great. And we are also classified some assets.which we were planning to liquidate on price.
Samir Agrawal — Chief Strategy Officer
So this is the last leg of the government approval, and I think that’s done over next, in the next financial year.
Nirav Savai — Abakkus Asset Management — Analyst
So in FY ’24, there might be another tranche of land which you would like to sell it out or develop it.
Samir Agrawal — Chief Strategy Officer
That is correct.
Nirav Savai — Abakkus Asset Management — Analyst
Right. That’s it, sir. Thank you.
Samir Agrawal — Chief Strategy Officer
Thank you.
Operator
Thank you. We have the next question from the line of Surya Narayan from Sunidhi Securities. Please go ahead.
Surya Narayan — Sunidhi Securities — Analyst
Hi, sir. Thank you for giving me the opportunity, sir. Just wanted one clarity from Jayesh Bhai regarding the cotton purchase. What is actually currency was expected in November-December, that the prices should come down as the arrival increases, but that is not happening. So are we going except that, this is the new normal in the cotton setution and cotton only dropped from the currently around hovering around INR170 – INR180 per kg. So are it all going to have it in prices for below INR150 anytime this year?
Jayesh Shah — Executive Director and Chief Financial Officer
So unfortunately, very difficult for us to predict where the commodity prices will move, because of that combination of fundamental factor we should ssay, where the demand is sluggish globally, the prices should come down. But there are counter factor that China market is open up, their consumption can grow. Yes, cotton is not particularly production and not particularly as much as we expected to be.
So as we said in the earlier comment. It is similar to cotton we exchange itself is moving between 83 and then it’s come down to below 81, it’s back between 81 and 82. So they are very volatile. And in that situation, currently we are avoiding picking of view and we are doing with this purchase.
Surya Narayan — Sunidhi Securities — Analyst
Okay. Understood. And secondly, sir, regarding the renewable side. We have around INR560 crore of expenses towards the [Indecipherable] last year. So just to understand, one of your colleague told that, this is the maximum of capacity we can think of purpose of renewable is concerned. So what do — what is the SPV retail channel business deals so that I thought understanding that only 5% of investment has gone in SPV. So what sort of capacity that is and if you can give some clarity on that?
Jayesh Shah — Executive Director and Chief Financial Officer
No. As we said, we have invested INR25 crores as an investment into a power SPV created by a power generating company, which gives us certain power as we mentioned earlier. That will give us an annual saving of INR25 crores.
Now to the question whether we can further reduce the power cost. There is a representation and I would say, active discussion going on with the government. So remove the cap of 25% and if and when it happens, we will for the client invest or renewable — share of renewable increase, which anyway is our aim that we want to become more sustainable. So – but it is currently, as we speak, we should take only just, because that’s what the reality.
Surya Narayan — Sunidhi Securities — Analyst
Okay. And sir, from from the US market side, are we seeing any kind of good, I mean, demand returning for the summer season? And..
Jayesh Shah — Executive Director and Chief Financial Officer
So my colleague mentioned that, there has been a reasonably good uptake in the US as well as in Europe, much better than what was expected. It has to translate into putting an order as of today, everybody is that cautious having bond — having inventory pile up and everything. So we believe, market will start to respond back in terms of demand maybe it’s — if not three months, maybe within six months. But it is difficult to say how things are moving, Indian market and everything.
So for now, we are just playing a conscious gain for months — few quarters. Let’s see what happens, I mean, it’s — there are definitely the upticks are under so much of pressure as we are hearing, which is good thing. But has it translated into demand renovation so far now, but possibly when we speak this time, we could give you more update on what’s happening with our customers.
Surya Narayan — Sunidhi Securities — Analyst
So how the company is looking to accommodate the elevated cost year-on-year. So when we — when you talk to the B2B customer.
Jayesh Shah — Executive Director and Chief Financial Officer
If you look at. The question is that whether the demand will never come back there near — that may be a challenge for three months. That may be a challenge for one year. But since we said, year-on-year that’s why I’m responding. It’s not a year-on-year demand problem. Otherwise, there is no point in remaining in textile business, right? So we believe that this is a phase which we have to pass-through through — and we are strong enough as a company with debt reduction, with bridging fungibility and our flexibility to reduce capacity as and when we need to. We’ll be able to pass-through this short-term period, but we are continuing to invest. That shows that we are believing in the long-term or medium-term prospects of industries.
Surya Narayan — Sunidhi Securities — Analyst
And regarding sir AMD business. Just to understand, what is the total addressable market we are attracting? And how that addressable market could be growing and where we are placed, I mean, broad figure of our market share, because I understand that it is not possible to detailed out. At least sir, if you can give some idea as to what kind of addressable market?
Samir Agrawal — Chief Strategy Officer
See, I can explain, this AMD is the collection of two set of businesses. Each of those sets have got multiple underlying line. And hence, it’s very hard to put a market size for AMD. Having said that, I think the intent of the question is to understand what’s the headroom? Suffice to say that we are still quite small in the global scheme of things. I don’t think that we should bother about headroom for growth for next several quarters in each of those lines.
Surya Narayan — Sunidhi Securities — Analyst
Correct. So any idea, because my guess is that — my calculation is that, we could be — I mean, on the net-to-net basis we could be heading towards INR100 crores and bottom-line in the AMD business itself. So are we seeing to demerge the business SMBs consolidated one. So..
Jayesh Shah — Executive Director and Chief Financial Officer
Proposal before the Board as of today.
Surya Narayan — Sunidhi Securities — Analyst
Sir, can you repeat.
Jayesh Shah — Executive Director and Chief Financial Officer
There is no such proposal that has been considered by the Board as of today. So if there is anything on capital or business restructuring, it will happen only when the Board picks it up as agenda.
Surya Narayan — Sunidhi Securities — Analyst
And Jayesh bhai, regarding the Denim business, it it because the textile garment generally has longer — really longer life. So is it the — it is the long-term cyclicality competitively..
Jayesh Shah — Executive Director and Chief Financial Officer
I spoke about it length. Did you come just now into the..
Surya Narayan — Sunidhi Securities — Analyst
No. I heard you, this aspect actually and just asking about the cyclicality you have got concerns. So to understood.
Jayesh Shah — Executive Director and Chief Financial Officer
Long-life of Denim has been for 100 years. It’s not that the Denim has now become long-lasting. I think as I explained earlier, there are challenges in the market and there are challenges on the cost trend, particularly in cotton. I think that is equation that needs to be corrected for Denim to become profitable.
Surya Narayan — Sunidhi Securities — Analyst
I understood you cited supply side challenges rather than demand. Understood sir. Thank you sir.
Operator
Thank you. Due to time constraints, that was the last question. I would now like to hand it over to the management for closing comments.
Jayesh Shah — Executive Director and Chief Financial Officer
So thank you, everyone, for taking interest and taking our time and joining our call. We hope to see you again in Q4 investor call. And hopefully, by then, we would have formed up our capex plans and next year plans, and we will be able to share some more detail on the outlook for the company. Thank you.
Operator
[Operator Closing Remarks]