GHCL Textiles Ltd (NSE: GHCLTEXTIL) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
R S Jalan — Managing Director
Analysts:
Sheetal Khanduja — Analyst
Jatin Damania — Analyst
Chintan Shah — Analyst
Dhaval Shah — Analyst
Yash Khanna — Analyst
Raman KV — Analyst
Arman — Analyst
Amit Khetan — Analyst
Saket Kapoor — Analyst
Muthu Kumar — Analyst
Rishikesh Oza — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the GHCL Textiles Limited Q2 FY ’25 Earnings Conference Call hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Sheetal Khanduja from Go India Advisors. Thank you, and over to you, madam.
Sheetal Khanduja — Analyst
Good afternoon, everyone, and warm wishes for Diwali. A warm welcome to everyone attending the GHCL Textiles Limited Q2 and H1 FY ’25 earnings conference call. We have with us on the call today Mr. R.S. Jalan, Non-Executive Director; Mr. Raman Chopra, Non-Executive Director; and Mr. Manu Jain, General Manager, Investor Relations and Finance.
Please note that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces.
I shall now hand over the call to Jalan for his opening remarks. Thank you, and over to you, sir.
R S Jalan — Managing Director
Thank you, Sheetal. Thank you very much. Good afternoon and welcome to our Q2 FY ’25 earnings con call. Our results and investor presentation has been uploaded on to the stock exchange. I’m joined by my finance and the investor relationship team. GHCL Textile has established itself as a premium yarn manufacturer renowned for exceptional quality and a diverse product portfolio. Our recent initiative has been crucial in driving growth and I would like to highlight a few. Our focus on strategic customers, our expanding footprint into the export market and our entry into the fabric segment through an outsourcing model enabling us to better understand the market dynamics.
Reflecting to our Q2 performance, our plant maintained optimum utilization level. Revenue increased by 17.5% year-on-year reaching INR2,307 crores. EBITDA margin improved to 9.5% resulting in an EBITDA of INR29 crores, up from INR22 crores in the same quarter of last year. Our balance sheet remains robust with a net cash surplus of INR92 crores. This resilience despite industry headwinds and challenges in the Bangladesh textile market speaks to our exceptional operational excellence and strong customer relationship. Our expansion plans remain firmly on track. We are committed to an investment of over INR1,000 crore, of which INR350 crores have already been deployed.
The addition of 25,000 new spindle is progressing at the schedule with operations expected to commence by June ’25. We will also expand our renewable energy assets, which secures a long-term cost advantage and we strengthened our sustainability credentials. Beyond spinning, we will also invest in knitting, waving and dye fabric production facilities to offer ready-to-cut fabric solution to our end customers. Our balance sheet remains strong with a low leverage allowing ample room for future growth. Cotton prices remain steady. With favorable weather conditions, the crop outlook is positive, which should contribute to our price stability going forward.
While the style sector is poised for recovery, the precise timing remains uncertain. We are hopeful that H2 will perform better than H1, though our growth — through our growth initiatives, we aim to drive revenue growth and expand EBITDA margin with value-added products and a lean cost structure. GHCL Textile is well positioned and confident in its ability to benefit as the sector recovery unfolds.
Thank you for your continued support and confidence in GHCL Textile Limited. As we enter the festive season, we extend our warmness, recess for a celebration filled with delight, prosperity and joy.
We now welcome any questions you may have.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Jatin Damania from Swan Investments. Please go ahead.
Jatin Damania
Good afternoon, sir, and thank you for the opportunity. Sir, just wanted to understand in the opening remarks, you indicated regarding the increasing focus on the renewable energy. So over a period of time, how do we see the sourcing of the renewable energy going ahead and what will — and how it will have a positive impact on our profitability?
R S Jalan
See, I think two things. As you have been seeing in last couple of years, we have expanded our renewable energy assets. And now currently, we are almost around 62 megawatts of renewable energy. And this has really helped us to kind of in two ways. One, this has definitely contained the cost because the inflation of the cost on this sector is there, because — and particularly, if you look at Tamil Nadu, the cost of power has been consistently going up by the TMED. Our understanding is going forward, this increase of the power cost in Tamil Nadu will continue. And once we set up this project, my power cost I would say has significantly gone down over a period if I look at last five, 10 years, it has gone down percent — as a percentage of revenues has gone down significantly. We personally believe this renewable energy will help us to kind of contain our cost and to be not being impacted by the inflation with the power cost. Second, obviously that will also help us in kind of a sustainability initiative, what we are aiming for.
Jatin Damania
So sir, can you help us in terms of identify in terms of the per unit cost, what is the current per unit cost that you’re getting from Tamil Nadu? And post the renewable, what it would be?
R S Jalan
Right now, the number if you look at in terms of the major cost which is coming in the renewable energy is only 10% depreciation. The sum of the assets which has already been depreciated to a great extent, the costs are coming maybe INR1 or INR2 kind of a situation, whereas the Tamil Nadu cost maybe is around INR7 to INR8 kind of a cost..
Jatin Damania
All right. Sir, in your opening remarks, you also highlighted regarding the expanding footprint. And if you look at your numbers, definitely export have started contributing to near 7.1% of your total revenue in the first half. So just wanted to understand which are the region that we are targeting and how shall one look at the export contribution going ahead?
R S Jalan
So Jatin, two things. First and foremost, we are primarily looking at the markets which are value-added segments into the export market. So our focus will always be on those products which are premium in this segment. And for that matter, our focus is more on the European market and to some extent in the Bangladesh market. But our dependence on the Bangladesh is yes, okay? Whether — we are not expanding our export footprint into the commodity market. So if you look at our synthetic footprint, you look at our cotton footprint, all the locations we are looking at only those and our focus will — is which we ultimately want to achieve and once the market improves that we will be in a position to improve. So going between 21%, 22% to something about 40%. But that will take some time.
Jatin Damania
And this will largely be a Europe market, right, because in Bangladesh you’re not…
R S Jalan
We’re primarily into the European market, maybe some of the market will be like Bangladesh, some market of Sri Lanka also because they supply very premium products to the European customers. So those people who are ultimately exporting either from the Bangladesh or from Sri Lanka who are exporting to the European market ultimately for that.
Jatin Damania
Thanks. And how is the Bangladesh situation right now? Because definitely Indian textile industry tends to gain. But overall, have you seen any positive impact or the benefit to the Indian textile industry, either in terms of the volume and prices globally because of the situation in Bangladesh?
R S Jalan
See, I have a little different view on this — on the situation. Two, one, Bangladesh is almost getting stabilized, okay? Second, the cost structure of Bangladesh will not allow the Indian producers to kind of compete with those kind of a market in a longer-term basis. The third is currently India does not have that kind of a capabilities of that kind of a size and scale to kind of cater to the Bangladesh kind of a customer requirements. So my understanding is in the medium-term, I personally don’t see any major significant advantage coming out of the Bangladesh region. We will be good — India as you know, India will be having an advantage of supplying that yarn to the Bangladesh market.
Jatin Damania
Yeah. Sir, that’s all from my side. Thank you and best wishes for the festive season.
Operator
[Operator Instructions] We have the next question from the line of Chintan Shah from Systematix Group. Please go ahead.
Chintan Shah
Hello, sir. My one question would be just looking at the current situation when the cotton prices are very low and if the yarn prices sustain, will the spread increase for you guys? Is it a right way to say?
R S Jalan
Yeah. Two things, Chetan. One — on one side, you are right that the cotton price almost is low the global price versus the domestic prices. Still I would say that cotton international prices are slightly cheaper. However, definitely on this level, once the market is slightly improved, the demand improves, this still will definitely improve.
Chintan Shah
Okay. Thanks a lot, sir.
R S Jalan
Thank you.
Operator
[Operator Instructions] We have the next question from the line of Dhaval Shah from Girik Capital. Please go ahead.
Dhaval Shah
Question is with regards to our capacity addition of 25,000 spindles what we are doing. Now seeing this addition in light of the opportunity you mentioned about Bangladesh in yarn. So what is your — what is our strategy with regards to tapping that opportunity? Because we are — sir, we are seeing Europe as a lucrative market and we are focusing there as well as Bangladesh is a — you’re seeing a big opportunity there for Indian companies. So how should we understand with regards to what is the — where is the opportunity lying for us?
R S Jalan
Yeah. See, Mr. Dhaval let me kind of slightly give you my thoughts on this. First and foremost, this 25,000 spindle which we are adding is a very strategic move of expanding our product basket. Some of the products which we are right now not present and for any customer this segment or the complete product basket is needed, this 25,000 spindle will add to that. So that will definitely help us to kind of overall product basket expansion. And this product will definitely go both the markets, Bangladesh as well as to the European market and including the Indian market also because in all the places, there are people who are exporting the product finally to the Europe. So I would say that even in India, there are many what we call export or export units, which are primarily selling to the European market or to the U.S. market. So this will be kept into those markets.
In terms of the volume also, this will have a kind of a significant volume increase because of this 25,000 spindle. And in the longer run, our understanding as I have been saying in the past also that our EBITDA on these kind of all these projects put together will be around 18% to 20%. And beyond this, Dhaval, if I can say like I said in the opening remarks also, beyond that, we are also looking at putting a knitting, weaving and the processing capacity to make sure that ultimately we become a supplier to the garment manufactured directly instead of we are supplying only to the what we call the weaver or the knitter.
Dhaval Shah
Okay. Yes. So this forward integration is planned by what, any timeline for this?
R S Jalan
Yes, Mr. Dhaval. Definitely there is a timeline, like this year, we are completing the 25,000 spindle. Next year we will be starting the knitting investment and next three to four years of time, we will be completing the entire value chain up to the meeting what we call [Indecipherable].
Dhaval Shah
Okay. Understood. And this and this fabric will again be more for export market or domestic market?
R S Jalan
So again, like I said, we will be targeting the customers ultimately who are the premium segment of the customer, be it a domestic market, be it an export market. Like I said, in India also there are many customers are there who want this fabric, which ultimately goes into the premium segment of the market.
Dhaval Shah
Okay. So sir, how do you define a premium segment? So with regards to your net realization of your yarn or fabric, what would it be to qualify as a premium product?
R S Jalan
See, Mr. Dhaval, two things in this that you very rightly asked. Two things which are important. One is ultimately we are understanding what is the end use of that fabric or the yarn which is going ultimately, like suppose you are given to someone who is producing the branded — premium branded clothes, okay? You know it is going for the sort of high value premium segment of the market. And obviously, the second as you rightly said, this definitely gives you two advantages. One, your price volatility because there are many limited players to supply that kind of a high quality for these kind of customers, okay? Your price volatility comes down and obviously your margins will be better than the normal commodity space. But the most important in this is the volatility in the margin will get reduced.
Dhaval Shah
Correct, correct. So thus, the guidance which you have been maintaining since couple of quarters that you see a sustainable — I mean your long-term margin will revert back to 16% to 18%, if I’m not wrong. So by when do you see that margins coming in?
R S Jalan
See, for the timeline wise, Mr. Dhaval, I can only tell you that the moment this market improvement takes place, it comes to normal. As we all know that last two years has been very bad for the textile industry first phase. However, slight recovery you have seen, like our results have improved as compared to the last quarter of — quarter of last year, there is an improvement. We expect that the moment this scenario gets changed and the industry becomes a normal level, this kind of 18%, 20% margin will be there, which historically, if you look at last 10, 15 years of our data, you will find that, that kind of a margin on an average basis we have been maintaining.
Dhaval Shah
Okay. Got it. And sir, do we have any plans to get into a more specialized kind of textile non-cotton base like more of a technical textile segment?
R S Jalan
We do have Mr. Dhaval a inspiration of that and we are working on that. But at this point of a time, I don’t have any farm plan to kind of share with you.
Dhaval Shah
Okay. Okay. Got it. Okay. Thank you very much.
R S Jalan
Thank you, Mr. Dhaval.
Operator
[Operator Instructions] We have the next question from the line of Yash Khanna from iThought PMS. Please go ahead. Yash, your line has been unmuted. You may proceed with your question.
Yash Khanna
Hello, can you hear me?
Operator
Yes, you are audible.
R S Jalan
Yes.
Yash Khanna
Thank you for the opportunity, sir. My question was regarding the spreads. If you can highlight what was the spreads that you made this quarter? And since you’re saying that the cotton prices are now stable and hopeful…
Operator
Yash, sorry to interrupt, but your line is not very clear. Maybe you could change your mode — your connection mode. The current participant seems to have dropped from the queue. We will proceed to the next question, which will be from the line of Raman KV from Sequent Investments. Please go ahead. Raman, your line has been unmuted. You may proceed.
Raman KV
Can you hear me?
Operator
Yes, you are audible.
R S Jalan
Yeah, Raman, we can hear you.
Raman KV
Okay. So my question is — hello, can you still hear me?
R S Jalan
Yeah, I can hear you.
Raman KV
Okay. Sir, I just wanted to know what was the spread in Q2 and what was the cotton yarn spread in Q2? And was there any recovery seen in this October then?
R S Jalan
Sorry, it was not very audible. First, you said is spread, right?
Raman KV
Yeah. I just wanted to know what was the spread in Q2 and was there any sign of recovery in the month of September, recovery as in was the spread increased in the month of October as in like indication towards that the spread in Q3 will be better than Q2.
R S Jalan
First and foremost, Mr. Raman, I have never said that the spread in Q3 will be better. I have said that if the market is very volatile at this point of a time, we don’t know how the likely scenario will be, number one. Number two, just to specific to your this thing, our spread margins, I would say gross margin in the range of around 32%, okay, and this is kind of a last few quarters has been on this level, okay? In terms of improvement, I’ve always said that improvement will be visible once the market improves.
Raman KV
Okay. Can you highlight what was the industry — at the industry level cotton yarn spread in Q2?
R S Jalan
Industry level, I don’t have any either because everybody produces a different kind of variety, different kind of a product mix…
Raman KV
What about our company, sir?
R S Jalan
I said already, my spread percentage is around — gross margin is around 32%.
Raman KV
Okay. Thank you, sir.
R S Jalan
Thank you.
Operator
[Operator Instructions] The next question is from the line of Arman from Blue Sky Capital. Please go ahead.
Arman
Yeah. My first question is if we say like for two years, we have seen that yarn industry has been going into a — means a competitive space and the revenue space. But going forward, if we assume like that is like in FY ’26, if there is some reversal in our normalcy of that thing, then what kind of revenue potential we can see? In Q2, our capex also will get into streamline. So what kind of revenue we can clock in and what kind of margin we can assume for FY ’26?
R S Jalan
See, Mr. Arman, first and foremost, the revenue always depends on the per kilo yarn prices, right? But if I can say kind of kind of average kind of like currently, if the current price what we have right now, our estimation should be that this year we should be clocking something around INR1,200 crores to INR1,300 crores kind of a top line. Next year, since the new capacity is coming in June, so probably you can take another INR200 crores on the revenue side adding to the — on the 25 projects. But if you look at the two year or three years, once we complete our entire value chain, which I’ve just mentioned to you, this figure will be in the range of around INR2,000 crores, INR2,200 crores kind of a revenue number. I’m just talking about the hypothetical number, which will be more of a assuming that the yarn prices remain on the similar level kind of a situation.
Arman
And this INR2,000 crores number you are saying for three, four years when we complete everything, right?
R S Jalan
Yeah. And our — sorry, go ahead?
Arman
Yes, no. Yeah, just I was asking, in the normal scenario like this and if something improves right from here in Q2, we have our new capex also that also will streamline in, then what kind of margin at a conservative level we can assume that you can definitely clock in for FY ’26?
R S Jalan
I think I have already said that our long-term average margin is in the range of around 15% to 18%. So we are expecting on a normal case, this would be around in that 18% kind of a number should be possible.
Arman
Okay. Thanks, sir. That’s it from my side. Thank you.
Operator
[Operator Instructions] The next question is from the line of Amit Khetan from Laburnum Capital. Please go ahead.
Amit Khetan
Hi, thanks for taking my question. Jalan, sir, so if I compare the first quarter revenue with the second quarter for this year, our revenues have gone up, but our gross margin has declined. Now my assumption is that the cotton cost would have been fairly similar for both the quarters. So can you just help explain why the gross margin has declined? Is it because our revenues also include some raw cotton sales?
R S Jalan
Yeah, Amit, you are right. If you look at our gross margin was — gone down from 32% to 30%. And this happens because of the two reasons. One is primarily because of the — your cotton — see some of the cottons which are still in the old and all those things was in the older this thing, whereas the current prices has gone down. So these kind of implications will be there, but that’s not a sustainable drop in a way, if I can say so, okay? But this will get recovered, this 2% will get recovered.
Amit Khetan
Got it. But have we also sold raw cotton because that would also explain some of the margin decline?
R S Jalan
No. We never sell the raw cotton. We never.
Amit Khetan
Got it. Got it. And my second question would be given the outlook on stable cotton prices and a good crop going forward, what would be our cotton buying strategy for the year ahead? Like do we plan to stock up on inventory given that prices are fairly low right now?
R S Jalan
See, a very, very valid question. And let me tell you, we have a data of around 15, 20 years. We have done many kind of a thought process that how the cotton prices behave. So that’s one of the expertise we have. And based on that, we have decided that this year probably we will not be going very aggressive coverage and going for a long-term coverage. However, this will make change — is the dynamic step change because the crop side right now it looks to be good, but you don’t know in next two months or three months is what happen. Second, suppose the total industry cycle gets changed and there is a lot of bullishness in there in the market, the cotton price will also go up. All good things will play out. Currently, we are not talking about a very high level of inventory. That’s what I can say, but this can get changed anytime depending upon how we see the market scenario.
Amit Khetan
Got it. Got it. And lastly, if you look at the global demand, especially from Western retailers, if I remember correctly, last quarter you were a little pessimistic. Has that changed? Is there a little bit more bullishness in the market right now?
R S Jalan
Yeah. Amit, if I can tell you two things. If you look at some of the garment producers, you must have heard some of the calls of our customers, there seems to be some kind of a bullishness is being viewed by those people. And obviously, if the bullishness is there in their mind, obviously, that will get reflected in our business as well.
Amit Khetan
Okay. Got it. Great. That’s it from my side. Thanks and best wishes.
R S Jalan
Thank you.
Operator
[Operator Instructions] The next question is from the line of Saket Kapoor from Kapoor Company. Please go ahead. Saket Kapoor, your line is unmuted.
Saket Kapoor
Right. Namaskar sir and thank you for the opportunity. Sir, the mix which we are trying to pursue now in terms of the knitted fabric, what should then be our blended margins going ahead as Jalan sahab you were alluding to the fact that we will be then selling garments directly to the people whom we are selling today yarn and then we’ll be making additional margin. So what should be then the profile — margin profile firstly? And what should be the mix when our expense — when our capacity for the knitted site comes into flow?
R S Jalan
See Saket ji, there are two things I would like to highlight. One, definitely that will enhance our margin. So we are expecting something around like I said earlier our margin is in the range of around 15% to 17% kind of a margin. We are targeting 18% to 20% margin. But not only the margin expansion, this also helps kind of say you are directly in touch with our customers. Stability of your product into the market and you are not getting impacted by the what we call from the volatility to that extent. So probably that also helps you. So that is one advantage. In terms of the percentage, we have almost around — if my method is correct roughly around 30% will be in the range of — from the fabric side and 70% still will remain from the spinning side.
Saket Kapoor
Okay. And when we will achieve this 30% to 70% ratio sir, which…
R S Jalan
Our vision is by 2029, 2030 kind of a number, five to six years from now.
Saket Kapoor
Right, sir. And sir, you also spoke about firstly sir, the presentation has been very good this time I think so and lot of efforts have gone into it. So congratulations to the team for giving a very detailed presentation, even for outlining the client profile and other aspects in detail. Sir, if you could just outline that for the capex of INR1,000 crores, I think so we had mentioned there that INR350 crores has already been spent. So how are we going to fund this, if you could give some color? And then two more bookkeeping questions.
R S Jalan
See Saket ji, if you look at in terms of our current balance sheet, it is — we have a surplus cash on the balance sheet, right? And we have done kind of a — on a peak level, our debt will be in the range of around INR300 crores something — sorry, it will be something around — our debt equity ratio will be 0.36 and the debt will be in the range of around INR500 crores to INR600 crores. Sorry, go ahead.
Saket Kapoor
No. Sir, you are fairly complete, sir.
R S Jalan
So basically as I said Saket ji that as you know that we are very what we call committed to our debt equity ratio of 1:1. In spite of such a peak investment, our debt-equity ratio will still be around 0.36 or 0.4.
Saket Kapoor
Okay. So this is 500…
Operator
Sorry to interrupt. We request you to please rejoin the queue for follow-up questions. Thank you. [Operator Instructions] We have a follow-up question from the line of Jatin Damania from Swan Investments. Please go ahead.
Jatin Damania
Sir, thank you, sir. My question has been answered. Thank you.
R S Jalan
Thank you.
Operator
Thank you. The next question is from the line of Muthu Kumar from Destiny [Phonetic] International. Please go ahead.
Muthu Kumar
Good afternoon. And my question is that just sometime before we were discussing that we are focusing on value-added products. So our percent — what is the percentage of revenue from commodity 100% cotton yarns and what is the percentage of revenue from value-added yarns?
R S Jalan
See, percent almost — if I can tell you the definition of the value-added product is different for the different people. What we call the value-added product is the product which are the premium in quality, which same count, same product, but you are supplying to the premium customer. So we call that as a value-added segment. So if you take that percentage, roughly around more than 40% is a value-added. If you ask me what is the margin spread on that at this point of a time, the difference is not very significant in terms of the margin of both the products. So we are building this portfolio where the customer loyalty, customer preferences, stability in the pricing are the major focus area for us, our penetration into the export market, these are more important for us. And obviously in the medium-term to long-term, we will definitely have a better margin on these products.
Muthu Kumar
So do you have any plans to diversify the fiber range like moving out of cotton focusing on man made fibers like that?
R S Jalan
No, Mr. Muthu Kumar, we have two units right now and we are fully focusing on both. Our growth model like last year we invested on 31,000 spindles of the synthetic space. And this year we are spending 25,000 spindles into the cotton side. So our projects will be in both the segments.
Muthu Kumar
Okay. Thank you.
Operator
[Operator Instructions] The next question is from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh Oza
Yeah. Hi, thank you for the opportunity. Just one question. Exactly if you could explain what has to happen for our margins to go from current levels to range of around 18%?
R S Jalan
So only one thing, the market, the demand of the product should improve and come to the normal level. This is not there right now. As you know that in the last two years, lot of mills had not been able to run fully. A lot of people have run on a very suboptimal level, some of 60%, some 70%. And overall European demand, U.S. demand has been very, very muted. Now that like I said the sign of recovery is being seen better by our customers like the garment producers or the home textile producers. So once a normal demand happens, the margin will improve further.
Rishikesh Oza
Okay, got it. Thank you.
Operator
[Operator Instructions] We have the next question from the line of Raman KV from Sequent Investments. Please go ahead.
Raman KV
Hello. Can you hear me?
R S Jalan
Yeah. Mr. Raman, we can hear you.
Raman KV
Yeah. Sir, just clarification question. You said we will do INR1,300 crores top line this year and INR1,500 crores by 2026. And you also stated that we’ll do INR2,000 or INR3,000 crores top line in…
R S Jalan
Yeah, Mr. Raman, you very rightly heard that, but I have said that this year probably we will be touching around INR1,200 crores to INR1,300 crores and next year because of this 25,000 spindles, there will be additional INR200 crores addition. And in a three to four years once we complete this plant, this will be something around INR2,200 crores to INR2,300 crores kind of the top line should we do…
Raman KV
INR2,200 crores to INR2,300 crores?
R S Jalan
Correct.
Raman KV
Okay. And sir, one more clarification. In the presentation, it was mentioned that we are doing INR10,000 crores of capex, out of which INR350 crores have been deployed. What does this INR10,000 crores of capex include?
R S Jalan
I think the numbers is not INR10,000 crores, this is INR1,000 crores.
Raman KV
INR1,000 crores, yeah. Sorry, my bad.
R S Jalan
Out of INR1,000 crores, like we have — last year, we have already invested in the synthetic one line which had — we have spent around INR350 crores. The current capex which is going for this 25,000 spindles will be in the range of around INR200 crores. All put together INR550 crores balance as I said, it will be more on three segments. One is the knitting and weaving infrastructure. Second will be processing and processing segment and the third will be green assets. These are the three segments we will be making this balanced investment. This we have signed kind of a agreement with the government of Tamil Nadu to invest this into next three to four years of time.
Raman KV
I didn’t get the third part, after knitting, weaving, infrastructure processing and then the third is green…
R S Jalan
Green assets like solar and the green energy.
Raman KV
Okay. And sir, one last question, what was the cotton prices in the previous quarter?
R S Jalan
See every cotton Mr. Raman has a different scheme, has a different pricing. Indian cotton has a different pricing. But slightly, I would say that if you look at in the market terms, the Indian cotton which is being known as the Shankar 6 or the MECH was I would say that around INR58,000, INR59,000 in the last quarter, which is at this point of time, I would call it the October, November, which is the third quarter, which is ranging around in the same INR56,000, INR57,000 kind of a number.
Raman KV
INR56,000, INR57,000.
R S Jalan
Almost stagnant you can say, marginal lower. It may change in one to two months.
Raman KV
Okay. Thank you, sir.
Operator
[Operator Instructions] We have a follow-up question from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor
Sir, my question about when we will be having this peak debt of INR500 crores to INR600 crores that you mentioned?
R S Jalan
Sorry, Saket ji, can you repeat your question again?
Saket Kapoor
Yes, sir. When are we going to have this peak debt of INR500 crores to INR600 crores?
R S Jalan
It would be when we will be completing our entire project in 2028, ’29 kind of a number. At the time this peak will be there.
Saket Kapoor
Right, sir. And sir, when we look at our tax expenses line item for this quarter, there has been some reversal of tax taxes. So if you could just explain the nature and what is our current tax rate?
R S Jalan
See, Saket ji, there is a clear cut note has been given into the notional accounts, because of this change into the capital gain structured by the government in the recent financial budget, which has reduced from 20% to 12.5% removing the indexation. So because of that deferred tax liability has been reduced. So that will be a reversal of that. And current tax rates are 25%.
Saket Kapoor
Correct, sir. Thank you, sir. All the best to the team and Shubh Dipawali to everybody.
R S Jalan
Thank you, Saket ji. Thank you.
Operator
[Operator Instructions] We have a follow-up question from the line of Saket Kapoor from Kapoor Company. Please go ahead.
Saket Kapoor
Sir, one question I had regarding this — our company’s one product which we required in preparing solar panels which is soda ash. Sir, we are seeing in India, there is a shift that is happening in the energy landscape that from coal or polluting materials, we are now moving towards renewable energy and in which we are an NCD player as per my understanding. If my understanding is correct, then please throw some light on it. But what demand you are seeing? The question which I’m…
R S Jalan
Are you talking about coal — sorry, go ahead.
Saket Kapoor
Yes, sir. I was referring the use of soda ash in solar panels for manufacturing glass, which is required in solar panels. So my question was, sir, what demand are you seeing in future which can come into account that there is a gradual shift which is happening from coal, from gas now we are shifting towards renewable energy and solar in a big vehicle and keeping into account just recently in Khavda and near Gujarat and Rajasthan 6,000 megawatt project on installed — has already been installed and the success — the fruits have already been delivered. So please share some light on it, sir, what demand you are seeing in this sector and what is our company view on it? How we are viewing solar panel as our maybe tying up with any company like we have seen renewables that it is market cap to INR74,000 crores. That’s the potential of solar manufacturing company or the company which are directly into solar sector…
R S Jalan
Saket ji, this call is for textile, right?
Saket Kapoor
Yeah, but I had some view regarding sir, because this is a golden opportunity to ask that’s why I took this opportunity. And if you can share your views.
R S Jalan
I don’t think if you should mix up the two calls. You have that question. We can always talk on that other call, okay?
Saket Kapoor
Okay, sir. I will wait for it.
Operator
Thank you. We have no further questions. Ladies and gentlemen, I would now like to hand the conference over to the management for closing comments. Over to you, sir.
R S Jalan
Thank you very much. Thank you very much to all of you. As I have been saying for last couple of quarters, there are three things which are very important for us. One are the growth, which I have just highlighted in terms of our vision from INR1,000 crores to how to reach INR2,200 crores, INR2,300 crores and mainly moving towards the I would say premium segment of the product which have a better stability of the margin and better margin as well. The second, which is very important again is how do we — if we make the efficiency and the cost a kind of a benchmark for the industry to make sure that, we remain competitive and we remain. And in that, I would also like to add the third which is very important is customer serviceability.
As you know that this segment has a wider segment usage and therefore, our focus of the entire team is how to understand the demand of the customers, demand which is likely to happen because it’s a sustainability shift which is happening into the product basket by all the consumers. So how to identify those trends and to cater to those customers on a consistent quality basis so that we become — remain as a focused or a kind of a preferred supplier to them. With this and this all ultimately will lead to kind of a sustainable good margin of the number of 18% to 20%. That is our mission and we are tirelessly working on that. My entire team is working on that and we will be able to — I’m sure that we will be able to deliver those kind of a number as the market improves.
With this, thank you very much to all of you and a Happy Diwali and wish that you and your family be enjoying this festive season with a lot of rigor and excitement. Thank you.
Operator
[Operator Closing Remarks]