Arvind Ltd (NSE: ARVIND) Q4 2025 Earnings Call dated May. 15, 2025
Corporate Participants:
Satya Prakash Mishra — Head, Investor Relations
Punit Lalbhai — Vice Chairman
Analysts:
Unidentified Participant
Surya Narayan Nayak — Analyst
Romil Jain — Analyst
Vishal Mehta — Analyst
Vikas Sharda — Analyst
Ranjith Kumar — Analyst
Gunjan Kabra — Analyst
Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Arvind Limited Q4 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 conference call, please signal an operator by pressing start and zero on a touchstone phone. I now hand the conference over to Mr Saty Prakash Mishra. Thank you, and over to you, sir.
Satya Prakash Mishra — Head, Investor Relations
Thank you. Good afternoon, everyone. A warm welcome to the earnings conference call of Arvind Limited. Thank you for taking your time-out to participate in today’s call to discuss the operational and financial results for the 4th-quarter and full-year of the financial year ’24-’25. I am pleased to be joined today by Mr Puneet, the Vice-Chairman; Mr Jaysh Shah, Executive Director and Group CFO; Mr Sushil, Managing Director and President, Textiles Business; Mr Gupeet Singh Bhatia, CEO of AMD Business; and the Chief Financial Officer, Mr Nigam Shah.
The financial results for the 4th-quarter and the full-year FY ’25 and related presentations were uploaded to our website. Hope you had enough time to go through it. Before I speak about the operational and financial performance for the quarter gone by and the full-year of ’24-’25, let me give you a broad picture of how the timeline has panned in last past 12 months. Despite a turbulent year marked by temporary workers’ unrest in the early part of the year, demand fluctuations throughout the year, geopolitical tensions and last and continuing is the tariff-related uncertainty that has created a constantly shifting landscape in our business environment.
Arvind’s integrated business model has shown a notable resilience and adaptability in these times and shown a good operational and financial performance. The company has since demonstrated a strong recovery in-quarter four, both in its textile and Advanced Material business. Encouragingly, the Garmenting division also posted robust volume during the period, reflecting operational transformation at ground level. The beginning of quarter-four started with the new presidency in United States, which brought with it a new paradigm in the largest consumer market of the world and the new TRATARE policy was announced. Moreover, Arvind is also capitalizing on the new momentum on the China Plus One strategy, both of which is driving the supply-chain diversification and long-term growth opportunities with global customers gradually resuming orders, adding new premium brands and operational stability improving in our capacities, the company is well-positioned to navigate future challenges and sustain positive growth momentum.
Now focusing on the performance of the company for the period, the textile division as a whole has continued its volume growth journey with higher capacity utilization, which is in excess of 95%. While the integrated textile, which is fabric plus garmenting reached a volume of 37 million pieces, which is a growth of 16% for the full-year. As expected and guided in-quarter three call, the Advanced Materials division, which was impacted by the reasons said above for the nine months of FY ’25 is firmly growth — back on the growth path in-quarter four. We are seeing the inventory cycle coming back to normal and key accounts performing in-line with expectations. Puneet will talk more about the business in his opening remarks. These results reflect our step for commitment to innovation, customer-centricity and sustainability, as well as our ability to navigate evolving market landscape with agility and focus, which will cement our position as a trusted leader in the industry.
Now let me give you a summary of the financial performance during the quarter. For the full-year FY ’25, revenue stood at INR8,329 crores with an EBITDA of INR919 crores, translating into an EBITDA margin of 11%. Normalizing the impact of industrial action and the consequent loss of production and additional cost, revenue and EBITDA would have grown by 10% and 12% respectively, which was our base-case scenario at the beginning of the year. Consolidated revenue and EBITDA for the quarter stood at INR2,221 crore and INR275 crores, which is a growth of 7% and 10% respectively. EBITDA margin crossed 12.4%, which is highest in last 16 quarters. Coming to the segment-wise performance, for the full-year of FY ’25, Textile division recorded a revenue of INR6,174 crores and EBITDA of INR626 crores with an EBITDA margin of 10%. This is including the impact of quarter one strikes.
In-quarter four, textile division revenue grew by 7% and stood at INR1,614 crores with an EBITDA of INR181 crores, translating into an EBITDA margin of 11.2%. This is an account of volume growth in our fabric business and efficiency gain in our integrated textile and apparel business. For the full-year FY ’25, AMD division crossed a milestone of INR1,500 crores and registered a revenue and EBITDA of INR1,544 crore and INR234 crores, respectively, with a stable EBITDA margin of close to 15%. During quarter-four, AMD reported its highest-ever quarterly revenue of INR451 crores, which is a growth of 17% and EBITDA for the same-period stood at INR69 crores with a stable margin of 15.4%. The profit before-tax for the full-year stood at INR494 crores, which is a growth of 7%. However, if we normalize one impact during the year, the growth for the year should have stood at 23%.
Reported profit-after-tax during the period stood at INR353 crores. We have maintained the debt at similar level and the company has generated enough free-cash from operations of around INR760 crores during the year to fund the entire capex program of INR480 plus crores. Considering the invested capital in use and normalizing the profit for the year, ROCE for the period stood at 17%. Reported ROCE for the period is 15.7% on a run-rate basis. As per the dividend distribution policy, the Board of Directors have recommended a dividend of INR3.75 per equity share of face value of INR10 each for the financial year ’24-’25. The said dividend payout works out to INR98 crores, which is 28% of the reported consolidated PAT.
This is subject to approval of shareholders in the ensuing Annual General Meeting. The company’s balance sheet has significantly strengthened in recent years, driven by disciplined capital allocation strategy, our streamlined debt profile and an optimized capital structure and a consistent year-on-year cash-flow generation from our operations. While FY ’25 has its own challenges, in our view, it was a watershed year for us. We have a full team in-place and all of us have started a new journey. We look-forward to the future with new and the decades of growth ahead.
With this, I now hand over the call to Puneet to give his views on the performance of the company and the broad outlook for the next year. Over to you.
Punit Lalbhai — Vice Chairman
Good afternoon, everyone. It’s an absolute pleasure to be — be here. I’ll sort of classify my comments into two buckets on what happened in Q4 and secondly on the overall environment and how I see the future going-forward. So I think in the context of all that happening in the world today, I think quarter-four was a very strong performance. I think textile volumes were up across-the-board. AMD that was sort of struggling after the labor unrest and some demand challenges in quarters two and three, particularly is back to its more normal growth trajectory with maintained margins. And we came very close to producing 10 million garments as was our desire to do so in the 4th-quarter.
So overall, I think most of the strategic boxes were ticked in an extremely difficult environment. I think going-forward we have to speak about all the changes that are happening in the world. It’s amongst the most volatile times that we’ve seen in the recent past, especially with the impact of the tariffs that were announced. So these tariffs have a short-term and long-term impact. The short-term impact is that many of our strategic customers have seen their cost structures go up. And in the spirit of partnership, in many cases, we have agreed to pass-on some of the increased costs by partnering with them in the — on the price front.
So we will in the short-term, both in textiles and AMD see a little bit of margin pressure in the first-quarter and maybe a little bit in the second-quarter. However, I expect these impacts to mitigate because we ourselves will start expecting margin partnership from many of our supply-chain partners and it will take two, three months for all that to kick-in. So we expect our margins to normalize three, four months into the — into the new year. I think the medium-term impacts of the Trump tariffs are going to be we are quite optimistic about the new sort of re-world realignment because of this event. I think this event makes India a more attractive destination for all concerned.
We are having volume increased discussions with many of our customers. Coming to AMD, it is a similar situation. We have also partnered on pricing with some of our strategic customers. At the same time, we have also taken some of taken advantage of this opportunity by taking orders where we will be doing planned air shipment because they are required at in very short-time. And all of this will eat into quarter one and maybe a little bit of quarter two margin. However, the demand scenario is the most robust I’ve seen it in recent memory. So the overall messaging is there will be margin headwinds for 1.5 quarters, but the demand scenario looks extremely robust and this demand is here to stay.
And so as the second-half of the new financial year rolls around, we should start to see the advantages of this sort of rebalancing of the world. I think another watershed event, the signing of the FDA between India and the UK is also a very important event, especially for the textile and apparel business. I think India will become a very interesting sourcing destination for the UK and I think it will also benefit Arvind quite significantly in securing the right kind of rebalancing to the US dependence. I think we are still heavily going to remain heavily indexed on the US as all our customers even there are only talking about increasing business rather than decreasing business.
So I think that the overall impact of geopolitics. I think this is the year where we should also add significant garment volume growth over last year in the textile space. Many of our capacities that we’ve been investing in are now coming on-stream. So we should start to see some benefit of our capex cycle and there should be volume growth in garments. I think fabric also will see some growth, especially driven by the specialty fabric that we’ve invested in and it should drive the overall company. So we see stable margins in starting four, five months, margin stabilizing starting about in about four months after the new year has started and we see good growth from a very robust demand scenario.
Of course, all of this needs to be sort of prefaced with you know, the uncertainty that still remains around where finally the US tariffs will land. So what happens after the 90 -day pause and how successful we are in you know signing an advantageous BTA, the all early indications which are looking positive, but however, that needs to actually happen before the final picture can emerge. But right now, we are optimistic about the future. So I think that’s the overall commentary on both the year gone by and how we are seeing the future. Temporary margin headwinds, but very optimistic growth and demand outlook.
Open the floor for questions. Thank you very much.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to only use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Aman from PhillipCapital. Please go-ahead.
Unidentified Participant
Hello. Thank you for this opportunity. I had a question with regards to the AMD division, right. So while you do mention of there being robust demand for it. My question is, do we have any sort of order wins that we have gotten over this quarter? And we also mentioned of some orders being spilled over from Q3 to Q4, but that growth has not really come through. So what could be the reason for that?
Punit Lalbhai
No, we had guided that we will be in the high-teens. We will be actually in the mid-teens is how we had guided Q4 and we have beat that guidance. So I think I wouldn’t say that there is any growth challenge from Q3 to Q4. We are on expectations of slightly better in Q4. I think we have — as far as orders are concerned, yes, we have — order intake is a constant process and our order books in most of our divisions within AMDR are full or slightly more than full. Hence, we are actually doing some planned air freights over quarter one and maybe early quarter two. So orders — orders are quite robust.
Unidentified Participant
So if you could just give me give us a sense on what sort of order these are. So are these private orders or these government orders or some clarity on that.
Punit Lalbhai
So mostly private. I think there is actually defense is one of the segments that has seen a slight slowdown in the recent past. And I think you know quarter one might be a bit slow on defense, but we should start picking-up government orders from quarter two.
Unidentified Participant
Okay, noted. My next question would be on the textiles division, if I may. What is the yearly outlook for the entire division in terms of volumes and in terms of realizations.
Punit Lalbhai
So we’ll see both — we will see some growth in both — in both fabric and garments, but predominantly in garments and that’s a result of us more capacities coming online.
Unidentified Participant
So what would be our current government capacity?
Punit Lalbhai
Okay. So currently the capacity is around that 40 mark, which will go up, which will — which will become close to the 50 mark by the end-of-the year. Okay, noted. And of course, there is capacity and because capacity is ramping-up, you know we should we should — we will be — of course, you are always lower than the capacity. So we should be you know that 37 million 38 million garments going to about 43 million to 45 million 46 million garments.
Unidentified Participant
Okay. And what would be our capex guidance for guidance
Operator
Please rejoin the queue? Okay, ma’am. Sure. Thank you. Thank you very much. Ladies and gentlemen, we request you to kindly limit your questions to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Ran from Sunidhi Securities. Please go-ahead.
Surya Narayan Nayak
Thank you, for giving me opportunity., just a couple of questions. What is the am I audible? Audible? Yes. Yes, you are audible. Okay. So what is the capex guidance for this year? And second is that the — you will be definitely adding some capacity that will be running up to-end of the year. So shall I really consider that the second-half will be more than the fast half and another point is that need to open the ratio, if you can give from the fabric side because we I believe that the side is more heavy than meats and meat demand is rising. So what is the strategy to take on that kind of demand.
Punit Lalbhai
Okay. I think you know the capex is going to be around INR450 crores to INR475 crores that will be spent this year. In the similar ratio of equal between fabrics, garments and AMD with maybe slightly higher indexing or around AMD, which is — and we are driving towards the 60 million garment capacity in 1.5 years. So we should reach you know, each 50 million or slightly higher than 50 by the end of this year and then the next six months after that should add another 8 million to $10 million. So that will get us close to the 60 million that we’ve been consistently guiding. And your question around wovens and knits, well, I think the wovens capacity is amongst the largest in the world that we have. So yes, woven is, you know, a very large business within our portfolio. Mix is a new and emerging business where the primary growth is coming from the verticalization piece. So we are at the highest-growth in our garments is coming in the knitted category. So we will be adding not so much fabric capacity, whereas woven is a very fabric sales heavy business where we have lot of strategic garment partners that we do virtual verticals delivery to the end-customer base. Niche is going to be the thing that the segment that will grow the fastest on the garment side, which also means that average price will drop, but verticalization will increase. And as you rightly mentioned, the strategic category of knits has the highest-growth potential and we want it to be a larger portfolio of the overall future mix. So we are taking — we are taking a conscious call to grow that faster. Our activeware facility in Bangalore has come up and will scale to full capacity this year and we will be adding our Varana seed factory which should come on-stream late Q2, early Q3. So that is also.
Surya Narayan Nayak
So the spatial what we were mentioning is related to?
Punit Lalbhai
No, which special fabric are you talking about?
Surya Narayan Nayak
You just spoken in your interest. That is that is both that is — we’ve added in, we’ve added in an AMD.
Punit Lalbhai
Both we have added fabric capacity.
Surya Narayan Nayak
Okay, okay. And what would be the differential duty
Operator
That we sir. MR. Naik, may we request you to please rejoin the queue. We have other participants waiting for the turn.
Surya Narayan Nayak
Thank you. Okay.
Operator
Thank you. The next question is from the line of Jain from Electron PMS. Please go-ahead.
Romil Jain
Hello. Am I audible? Yes. Thanks for the opportunity. So the first question is on the AMD side. So just want to understand at what utilization we are and what kind of capex is going into AMD in the next one or two years? And you mentioned that you will be as certain products in Q1. So overall, for the FY ’26, what would be the margin and growth guidance on the MD side, right?
Punit Lalbhai
So we should return — I’ll answer the second question first. We should return to our 15% levels as the year progresses, but quarter one can be significantly lower than that in the 11% 12% range because of both discounts and a large amount of air-freight that we will end-up doing. So, but that will be a — I would see that as a temporary margin blip, which is — which has strategic sort of intent behind it. You know, when you get unexpected sort of opportunity to move programs from other regions to our region, you should take it. And then the capacity ramp-up may follow at the — and that may have a certain cost in terms of margin. So I wouldn’t worry about that. Because it is strategic. On utilization, on garment, we are actually at 100 because in fact, we are stealing a little bit of bit of capacity from the garment division as well to ensure that some of the strategic customers are accommodated and doing air-freight we are in the process of investing in the new garment facilities, which will take maybe three, four months-to come on-stream. So this sort of overcapacity — this sort of very robust order book situation and 100% garment capacity utilization will last maybe three, four months.
Romil Jain
And sorry, my question actually was on the AMD capacity and the utilization and the capex in AMD.
Punit Lalbhai
This is AMD Human Protection that I’m talking about. Okay. Okay. Okay. Got it. And then industrial is in the high 80s and composites would also be in the early 80s, I would say, in terms of capacity utilization. Composites is going to see some large capacity increases this quarter. So the utilization may go down for a quarter or so. But then again, once those capacities come on-stream, we will be filling those orders in. So by the end-of-the year, we should be firing at about an average of above 85% capacity across all divisions and we’ll be working aggressively to add capacity to accommodate next year’s growth.
Romil Jain
So that means in FY ’26, probably with this, we should end-up somewhere in mid-teens like 15% kind of growth and stable margins that we reported maybe this quarter or this entire year, we come back to that, right?
Punit Lalbhai
Correct. We will try and beat the 15% on growth, but it’s looking — I mean, demand is not looking like a huge challenge this year.
Romil Jain
Okay. And on the tenant situation and the UK opportunity, so I understood that we may have maybe 1/4 of issue on the — because of the tariff and the sharing of margins overall. But going ahead, we should get that benefit on the volume side in garments is the right understanding, right? And the UK business will also scale-up in the next two, three years?
Punit Lalbhai
Yes, most definitely. In fact, we will have to very quickly strategically focus on the UK and the opportunity to have another large region is definitely, definitely there.
Romil Jain
Okay. Okay. Thanks a lot and I’ll get back-in the queue. All the best.
Operator
Thank you. The next question is from the line of Akshay Kothari from Envision Capital. Please go-ahead.
Unidentified Participant
Yeah, thanks for the opportunity. Sir, just wanted to know one thing. We do have shares of Shiprocket with us. So what is the worth of those shares of shiprocket?
Punit Lalbhai
So as you know in our reported financials, we have 37,000 shares, which of course they are speaking now into more number of shares. We — in our books, we are the shares are at what their valuation which they had was $750 million, it was — that is the price at which we took the shares and they are being reported at that level right now to value it to INR200 crores in our books right now and we believe that they are going for an IPO at which point if that does happen we will we will see how we can participate in that.
Unidentified Participant
Okay. But there is no gap to the price, right. That’s it from my side. Thanks a lot.
Operator
Thank you. The next question is from the line of Vishal Mehta from IIFL Securities. Please go-ahead. Y
Vishal Mehta
Eah, hi. Thanks for the opportunity. I just actually wanted to know what is the nature of the sort of capex in fabric business that we are going to do this.
Punit Lalbhai
So capex, see in fabric, there are a couple of things that we do every year. We keep investing in some technologies to keep our fabric offering, which is still the largest part of our overall textile business are fresh and innovative. And we earn the high margins in fabric because of our innovation. So in a sense, it’s like an evolutionary arms race. Every year, you have to add some new capabilities to continue to be on-top in terms of the satisfying the customers’ requirement. So we do innovation capexes, that’s one part. And then we have such a large asset-base that we have to do significant amount of maintenance capex. There will be some portion of machines that will always require replacement, refurbishing. Your cost competitiveness is a key area to sort of monitor year-on-year. So old technology being replaced by new technology to keep our costs in check. So I think those kind of investments and just because the segment is so large, even the — this small kind of non very large — we are not adding very large capacities anywhere, but it still ends up being a significant investment, but we get good return on investment on all those investments. In fact, those are the best returns that we get as part of you know anywhere in the — for every dollar that, that would probably have the highest-return on investment of all the capex, just because it’s so stable and it’s focused mostly on innovation.
Vishal Mehta
So the return would probably mostly be flowing in through margin expansion?
Punit Lalbhai
Yes, yes. Yes, margin expansion, a little bit of volume expansion as well because when you — when you debottleneck when you when you put in newer technologies, you generally get higher efficiencies and your throughput generally increases a little bit. So we do get 5%, 6% 7% kind of volume growth also should be there.
Vishal Mehta
Okay. And last question, what happened to the industrial sub-segment within the AMD segment in 4Q?
Punit Lalbhai
So it did well.
Vishal Mehta
No, it was flat naturally, I think Y-o-Y-o-Y. No, sorry, I’m talking about the composites side, sir. Yes. So composites had you know, a very-high base in the previous year. So what happened in composites was that quarter-four — quarter-four of FY ’24 had some windfall gains. So I think you know the steady-state, you have to shave off maybe INR15 crores of extra revenue that we earned in Q4 because of some opportunistic orders that are not part of the regular plan. So composites, I would say was normal and expected. But because we are comparing against you know a very-high exceptionally high Q4, it’s looking flat.
Operator
Sure. Okay. Thank you thank you. Thank you. [Operator Instructions] please limit your question to one per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Vikas from NT Asset Management. Please go-ahead.
Vikas Sharda
Hey, hi, good evening. One question you mentioned on the margins that for three, four months, it will be weak. So could you quantify what kind of margin impact are we looking for? It’s like 100 basis-points, 200 basis-points or even more? And secondly, what will be the levers for it to normalize in the future? This year rate will be one-off, but besides that, what are you looking for normalization of margins?
Punit Lalbhai
So there are many things, so I’ll answer. So the first part of the question, I don’t want to give a very specific guidance because there is still some evolution in this. These are all ongoing discussions. So I don’t want to anchor you too firmly anywhere, but it will be, you know, reasonably lower compared to our normal trajectory. But that lower, as I said, will be temporary. What are the levers to come back to normal? There are three or four levers. One, I think we will also get good advantages or in fact, we have already got good partnership from many of our strategic suppliers. It’s just a question of old inventory then being run-out and there is a time lag between the old inventory and new inventory. Our — our discounts are effective immediately, but we also have raw-material at higher prices, which needs to be flushed out before the lower our discounted raw-material comes in. So we’ve got substantial saving that you will help partially offset the discounts we have given on our raw materials. Second, we will also, you know, have efficiency gains that will — that will mitigate some of these margin challenges, especially since the nature of some of the orders are high-volume and large runs and consistent visibility, we should be — but they are new programs. So when new programs come in, this is the opportunistic part of when — why we won some orders from other regions as a fallout of all these geopolitics. They over-time will become more profitable just because we adapt to manufacturing them more efficiently and they are very amenable to that. But that takes three, four months. Our third thing, overall economies of scale as our fixed-cost gets amortized over larger volumes. So I feel quite confident that despite discounts given, things can return to normal even if this 10% tariff overhang remains. Unless, of course, the only caveat to all of this is unless there is some further unexpectedly negative tariff actions that the US initiates. And then we are back-in uncertainty. But as of now, the expectation of that is probably — the probability of that is looking much lower, the probability of us signing a BTA and then going to an overall lower than current tariff structure is there, which would again mean margin expansion. So if that happens, then definitely we should go very quickly back to our original or better margin. But there are all these other levers also that will ensure that we come back to regular margins.
Vikas Sharda
Perfect. Thank you very much.
Operator
Thank you. The next question is from the line of Sujan Aran from Sunidhi Securities. Please go-ahead.
Surya Narayan Nayak
Yeah. Just am I audible? Am I audible? Yes. Yeah. So what would be the differential duty you are envising on both this tariff and India today also offer zero duty. So what is the situation like? And secondly, on the composite side, what are you hearing from the railway side because the passenger cargoes, those people, they were saying that the second-half would be better. So that is where the situation will be improving in the second-half. So what is your understanding?
Punit Lalbhai
So I think guessing you know the US will do on tariffs is probably the most hazardous job in the world right now so I will not hazard a guess as to where this whole thing will settle but I think you know like you’ve been also reading in the media, we’ve also been reading and all conversations with people who are close to the subject say that the negotiations are going-in the right direction. So I think we’ll just have to wait that period out till there is — there is some concrete outcome. So I think we have to just you know, be an alert and adapt to an evolving situation. Unfortunately, that uncertainty will exist the time that all this settles.
Surya Narayan Nayak
And but given India’s position as the manufacturing audiences vis-a-vis US, so are you not feeling that ultimately the status will be seamlessly?
Punit Lalbhai
No, I mean see it is difficult to say. I mean these are all feelings and guesses at this point, right? So the overall feeling is of optimism and positiveness because those messages are coming through various channels. Beyond that, I think we should just be patient and wait-and-see where — where all of this lands.
Surya Narayan Nayak
Okay. Regarding railway?
Punit Lalbhai
Okay. Will we — yes. And railways, yes, railways expanding. We are also seeing a slight uptick in our mass transportation business. And I think even internationally more than railways, the metro business, which also has an export component that is looking more, more optimistic. So overall, I think mobility as part of the composite portfolio looks to have a good future.
Surya Narayan Nayak
But the traction has been soaked due to the wheel and that is what the people are saying. So is it African news?
Punit Lalbhai
Not really. In fact, there are quite a few orders out there with ICF and there are a lot of inquiries there. Maybe from their own plan, it might be lower, but we are seeing growth overall compared to previous years.
Surya Narayan Nayak
In beginning quarter, most of the trades are happening with the MSV and are you expecting some sort of relief in the raw-material side as far as inventory is concerned in this year?
Punit Lalbhai
No, in fact, we are higher cotton is slightly more expensive than other cottons. So there is a slight disadvantage, if anything. The only way that we’ll see relief is if part of the BTA, there is some action on import duty on US cotton. But other than that, I don’t see much changing.
Operator
Mr. Narayan, may we request you to please rejoin the queue. We have participants waiting for the turn. Thank you. The next question is from the line of Ranchit Kumar from Spark Capital. Please go-ahead.
Ranjith Kumar
Am I audible? Audible? Yes. Yeah. I have a couple of questions on the AMD business. I was wondering like where do you raw-material fibers like Ramid fibers and then acrylic fibers 9 on 66, et etc for the A&D business and from which geography should you purchase? And I believe you also have technological partnerships with DuPonton, etc., right or OG Corporation, etc., right? What’s right? What’s the terms of agreement in terms of procuring raw-material from these? And second question would be on the customer mix, right? Like you mentioned about defense forming a part of your portfolio, right? So what would be defense versus non-defense exposure in terms of percentage, if you can mention that? And who would your defense customers specifically be in the AMD business.
Punit Lalbhai
Sure. So on raw-material, our sourcing footprint is quite wide. Especially for specialty fibers, unfortunately, India is not on the list of manufacturers, though we are sort of working with several, you know potential future manufacturers and for raw-material in India. Most of our fibers come from strategic partners the world over, which include you know geographies like Japan, US and Europe. So those would be maybe Korea also for some strategic fibers. There is a small China dependency, but we have mostly tried and hedged that to a great — to a great extent. Now in terms of the kind of relationships we have, we have some exclusive supply relationships with few chemical suppliers for some important advanced material chemistries. We have a joint-venture with a couple of companies like OG Corporation and Group of Germany and OGs from Japan for certain product categories. We have a preferential sort of sourcing agreements with a few. So different types of arrangements, but we work long and deep with a few set of suppliers and they are not just suppliers, but our innovation partners you could say. So that’s the way we have structured you know our partnerships on raw-material. Yeah. Defense, you had a question about defense. Defense is around 10% of the overall AMD business and of course, a large customer would be the army but you know it’s in the public domain. We have we have dealings with you know, all of the different forces many of the different components of our forces and there is also a little bit of exports.
Ranjith Kumar
Okay, okay. One more question to follow up. What would be your fabric versus garment sales in AMD? By product — by garment, I mean the end product, whereas fabric selling it to B2B.
Punit Lalbhai
One more question to follow-up. What would be your fabric versus carbon sales in AMD? By-product — by garment, I mean the end-product going, going whereas fabric idea selling it to B2B2B. It’s I think not a very useful way of thinking about our business because it’s quite complex and somewhere there is a — you know, there is fabric garment only in-human protection and what to define as an end-product and what to define as a ingredient product is quite complex and it’s subjective. So I think 18% 90% verticality is there in our human protection business or at least 70. We do sell some fabric to some strategic customers, but there it is mostly a full package sale that we have with most of our strategic customers. And then on industrial and composite, other than the reinforcement business where we do sell roll goods of glass fabrics in the composite division, most of the products we sell could be classified as as components. But of course, very rarely do we do we supply the full you know final product. For example, we supply cooling tower profiles, but we don’t go any red cooling towers, into which go our glass and carbon-based reinforcement. So we are at various parts of the overall value chain and it’s very difficult to define that by percentages, et-cetera. It’s different for each division.
Ranjith Kumar
Got it. And it’s your production process patented by any means the weaving, coating, lamination, all of that.
Punit Lalbhai
We have lot of patents. We have quite a few patents in-human protection, but more important than patents, we have trade secrets as well. So sometimes it’s almost better not to patent something because when you patent something, you tell the world how to make it. So you have to make that decision on whether legal protection will help or it’s better to just protect the know-how by not publishing it anyway. So we have a bit of both.
Ranjith Kumar
Got it. Got it. Thanks a lot. Thanks a lot.
Operator
Thank you. Thank you. The next question is from the line of Gunjan Kabra from Niveste. Please go-ahead.
Gunjan Kabra
Hi, thank you so much for the opportunity. Thank you I just wanted to know that how is the demand scenario in terms of retailers talking up in Q1 because of the tariff structure? And the second I wanted –.
Punit Lalbhai
To yeah, so I think that’s a good question because we don’t know what H2 will bring in terms, especially on US demand because there has been so much uncertainty and there has been high levels of tariffs and placed on certain geographies, is the cost for US customers going to go up and is there going to be a demand sort of softness. That’s the thing we’ll have to see. Overall trend is that we’ve climbed down from the initial very heavy tariff structures everywhere. So it seems like that scenario is becoming less likely that there is a slowdown, but we don’t know. We’ll have to see how all this plays out. Everything is still work-in progress. Nothing has, you know, reached a final conclusion. So until the bilateral trade agreements with most important trading partners come, and that question is very difficult to answer. But right now, it doesn’t seem like there is huge amount of demand destruction. And even if there is a softness in-demand, I think India as a geography will still gain because of rebalancing. So there are many, many variables in this. We’ll have to wait-and-see.
Gunjan Kabra
So because of the rebalancing that you mentioned and in the opening commentary and multiple times, you mentioned volume growth can happen very well. So do you think that this short-term,
Punit Lalbhai
We are seeing the volume growth? So there is no uncertainty there. We are — we have received orders.
Gunjan Kabra
Correct. So do you think that this volume growth and the inquiries that you received can offset — largely offset the margin impact that we can see in absolute terms in
Punit Lalbhai
I think going towards the later part of the year, we will definitely see that because we have a overall growth plan and we’ll try and come close to our growth plan despite the disruption caused in-quarter one. But I think, again, it will — you know, everything will depend on where all of this will land. So I don’t want to give a very specific guidance. But directionally, you know demand seems robust. Most of the business that has come to us is here to stay if you know if things don’t become completely different from a tariff perspective. So it looks positive at this point in time.
Gunjan Kabra
And how is the raw-material cycle right now in terms of cotton and yarn segment? Do you think there can be a little price upwards on that side?
Punit Lalbhai
No, in fact, all your things. Right now the — because global demand is muted, most of the demand coming to us is through rebalancing and that rebalancing is happening with large vertical partners such as ourselves. It’s smaller — mid-size and smaller suppliers are still finding the demand environment quite challenging at the moment. So cotton and yarn is not looking very bullish at this point in time. However, there are other commodities that because of, you know, shortages linked to tariffs, etc., are going up. So like, for example, glass fiber because of very large growth in wind energy in certain parts of the world is going through a spike. And there are certain you know mined materials that are you know, very China-based and because of you know, trade barriers, there is scarcity. So you know those kind of stuff. So we are seeing, you know, both some commodities are spiking, some commodities are soft. So it’s a complex scenario right now, but nothing very alarming in either direction.
Gunjan Kabra
Got it. And sir, on the UKSP side, you know there it was anticipate — it was being anticipated in since last two, three years and I’m right now for overall, but I think also the minimum revenue comes from UK because of the tariff disadvantage that we had. But do you think onboarding them right now would be a little easier and it will take its own time to get customer onboarded on the UK side because the talks have been initiated since last two, three years already.
Punit Lalbhai
So onboarding any customer is never instantaneous, but it will take also very long-time. So that’s okay.
Gunjan Kabra
Okay. But the supply-chain rebalance, the talks has started on the customer basis or it will?
Punit Lalbhai
It is — yes, yes, of course, we will — I mean, we will now use this opportunity to deepen our — and put more resources behind developing the UK market for ourselves. There’s no question.
Operator
Okay, thank you so much in the thank you. Ladies and gentlemen, we would request you to please limit your questions to one per participant. The next question is from the line of Vishal Mehta from IIFL Securities. Please go-ahead.
Vishal Mehta
Yeah, hi. Thank you for the opportunity again. I just wanted to know-how has your Invisol business spread this year and the quarter and what’s your outlook like?
Punit Lalbhai
So it’s fed pretty stable. It’s been stable. There hasn’t been dramatic growth, but I think we’ve been — we’ve done quality work on I mean our components and services business is quite strong this year. I think we will continue to be very conservative in this business because we don’t want to take unnecessary risk-on large projects where there is a for the — for recovery, etc. Being very selective in the kind of projects we take. Intake and we are not chasing very aggressive growth here. So steady and profitable is the way we would like to grow it. It’s in that INR250 crores to INR300 crore range.
Vishal Mehta
Okay. And one more, what is the level of the discounts that your customers are asking right now? And also, are you not seeing any order difference given the tariff confusion like for 90 days, there is a pause after that what the tariff would be like, so customers would probably be waiting or deferring their orders. So current quarter, how is the situation looking?
Punit Lalbhai
So I don’t want to comment on the exact percentage of discounts. It’s different for different customers. In that you know, whether it’s raw-material, whether it’s finished products, the percentages vary and I’m not like to put that out in the public domain but I think the deferrals are not there. In fact preponements, there are a few preponements because people want to lock-in their prices till the window of certainty exists. So in fact, we are getting lot of requests to and that leads into capacity imbalances as well. So, yes, there is — there is — there is sort of flux in — in that there is — the situation is a little chaotic compared to normal times. But I think you know things will adjust once the certainty around what’s going to happen in the future will be reviewed.
Analyst
Thank you. Thank you, sir. All the best. Thank you.
Operator
Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr Sat Prakash 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 Himanshu, are just a phone call or an email away for any questions that you may still have in future. Looking-forward to meeting you in conferences. Thank you, and have a good evening.
Operator
Thank you. On behalf of Arvind Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.