Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
GHCL Textiles Ltd (NSE: GHCLTEXTIL) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Marshal Rajendrakumar Sonavane — Chief Executive Officer
M. Parasuraman — Chief Financial Officer
Ravi Shanker Jalan — Non-Executive Director
Analysts:
Mehal Gogia — Analyst
Riddhesh Gandhi — Analyst
Unidentified Participant
Param Vora — Analyst
Lakshminarayanan Kalpathy Ganapathi — Analyst
Saransh Gupta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to GHCL Textiles Limited Q4 and FY26 earnings conference call hosted by Goindia Advisors. 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 0 on your touch tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms.
Mehal Gogia from Go India Advisors. Thank you. And over to you ma’. Am.
Mehal Gogia — Analyst
Thank you. Good morning one and all. It’s my pleasure to welcome you on behalf of GHCL Textiles Limited. Thank you for joining us today for the Q4 and FY26 earnings con call today. On the call we are joined by Mr. R.S. Jalan, Non Executive Director Mr. Raman Chopra, Non Executive Director, Mr. Marshal Sunawane, CEO Mr. M. Parsuraman, CFO and Mr. Manu Jain, Senior General Manager, Finance and Accounts. Please note that today’s discussion may include certain forward looking statements. Therefore they must be viewed in conjunction with the risks that the company faces.
I now invite Mr. Marshall to present his opening remarks after which we will open the floor for Q and A. Over to you, sir.
Marshal Rajendrakumar Sonavane — Chief Executive Officer
Thanks, Mehal. Good afternoon everyone and a warm welcome to GSCL Textiles earning conference call for the fourth quarter and full year ended March 31, 2026. Our detailed results and investor presentation are available on the stock exchanges. Let me begin with the operating environment before turning to our performance and the road ahead. The global backdrop represents a case of cautious optimism. Challenges remain in terms of ongoing U S Iran conflict which has disrupted traditional trade routes resulting in shipment delays and elevated logistics cost.
Energy markets are under pressure and higher fuel prices is main on the cost. Economics of our synthetic portfolio and fabric manufacturing markets remain volatile and we are monitoring these developments closely. Despite this external turbulence, there is optimism about the overall market. Domestic market conditions improved meaningfully during Quarter 4 FY26. I am pleased to report that the quarter was a strong month for us across both volume and pricing. Demand strengthened across our knitting and knitting segments.
On the cotton front, prices moved upwards rising from approximately rupees 55,000 per candy in December 25 to around rupees 62,000. Currently, Global Cotton markets have reflected similar trends. Importantly, domestic cotton availability remains comfortable for US and overall supply conditions provide reasonable visibility for the year ahead. On trade policy, the resolution of reciprocal directs with US and the signing of India EU Free Trade Agreement represent meaningful structural tailwinds for the Indian textile value chain.
As additional FTAs with the UK, New Zealand and other markets are executed, new export avenues will open up for Indian manufacturers. GHCL Textiles is well placed to capture these opportunities. Turning to our operations, we have maintained optimum utilization across our units and continue to advance our operational Excellence Agenda. Our new 25,000 spindle unit has stabilized and is operating at optimum utilization. We have also successfully completed the installation of initial batch of knitting machines and early customer response has been encouraging.
Rooftop solar capacity commissioned during FY26 is now contributing to our energy cost efficiency. Together, these investments represent a meaningful uplift to our productive base and FY27 will be the first full year in which we will realize their complete benefit. Our business has delivered robust performance and same is reflected in reported financials. In quarter four, revenue increased to rupees 375 crores, up by 31% on year. On year basis, EBITDA came in at rupees 52 crores and packed at rupees 28 crores for the full year, FY26 revenue came in at rupees 13.
35 crore which is an increase of 14% over last year. Also full year EBITDA came in at rupees 156 crores which increased significantly by 34% over last year. Further, our balance sheet remains strong with net debt of rupees 118 crores which represents 0.1x net debt to equity ratio. We made a deliberate and considered decision to increase our cotton procurement ahead of anticipated price rises. This has resulted in a temporary increase in working capital, but we expect this to translate into a tangible cost advantage in the coming quarters as that inventory flows to production.
In FY27, we plan to install additional knitting machines and expand our rooftop solar capacity. I’m also pleased to share that we have received approval for land allocation and PM Mitra Textile park in Virudanagar, Tamil Nadu. This is a strategic development for GHCL Textile and positions us well for the next phase of scale growth and product integration. We’ll share more details on our plans for this facility as they develop. The momentum from quarter four appears to be carrying forward and the current quarter is shaping up well.
That said, global macro conditions remain fluid. Energy prices are unpredictable and geopolitical development can shift market dynamics quickly. As I said before, we are cautiously optimistic. Our strategic priorities remain clear Broadening our value added portfolio, deepening vertical integration and sustaining operational excellence. We are committed to creating long term value for our shareholders and we thank you for your continued confidence and support. We are now happy to take your questions.
Questions and Answers:
Operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to withdraw yourself from the question queue, you may press Star and two participants are requested to use handset while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. First question is from the line of Ritesh Ram Gandhi from Discover Capital. Please proceed.
Riddhesh Gandhi
Hi sir, just congratulations on your numbers. So just wanted to understand a little bit as to, you know, have spreads in Q1 of F27 are they in line or higher than where they were for the average of Q4? And just wanted to understand what the drivers are of these spreads right now. Is it because of the MMF sort of increasing in price because of of the oil prices and the runoffs?
Marshal Rajendrakumar Sonavane
Yeah. So I believe from quarter three to quarter four onwards definitely there is an increase in spread. This seems to continue in quarter one as well. So whatever spreads we have received in quarter four at least it seems to continue in quarter one. Beyond that, as I said, it is depending on how the global geopolitical situation evolves there could be an impact over it. But at least for quarter one we have a visibility that the spread looks to be continuous in terms of drivers for this spread increase primarily I think in quarter four we saw a lot of demand tailwinds both from export markets and domestic markets.
Also in quarter two, quarter three, the prices of cotton were more benign than what they are right now. I think these two factors led to a lot of spread increase for us and also in general for the market.
Riddhesh Gandhi
Understood so and the incremental benefit of our renewable capex will kick in this quarter or the next quarter.
Marshal Rajendrakumar Sonavane
So we did two renewable investments. One was 3 megawatts for our solar that as we have said in previous house also the incremental benefit would be about 2 crores. I think that we will realize for the full year. The other 10 megawatt investment on ground solar which we are doing, the expected full year benefit is going to be at 6.5 to 7 crores depending on the generation this year the commencement will be around July to August so probably we’ll get about seven to eight months of benefit. Primarily your summer seasons would have gone.
The benefit would be in the range of about four and a half crore is what we can expect.
Riddhesh Gandhi
Got it. So and, and the last question was that you know given sort of the extremely low leverage you have despite the level of like capex that you have done, what is the future plan for the deployment of bit of free cash flow because obviously have an under leveled balance sheet which to an extent might be impacting your roe. So are you guys either looking at some form of buyback given the regulations have recently changed or any other capex that you are looking to do to sort of have the appropriate capital structure?
Marshal Rajendrakumar Sonavane
We are as of now we are not looking at a Barbara but we are looking to deploy this cash what we generate. And also see earlier we had a plan of about 1000 crores of investment. Out of that about 675 crores is already deployed. The remaining 200350 crores odd is pending is to be deployed in next three years. Primarily as I said in the opening remarks also we have taken a. We have species land in Tmitra park, that land itself, it is about 50 odd acres of land and there will be significant capital investment towards that.
And as we have said in earlier calls also our vision remains to become a ready to cut fabric supplier. I think the further investment spending on our side about 350 crores is going to be more towards fabric and projecting. Okay. I think most of it will be deployed and we are not looking at buyback right now.
Riddhesh Gandhi
Okay, understood. So thank you. That’s all for me and all the best.
Marshal Rajendrakumar Sonavane
Thank you.
Operator
Thank you. Next question is from the line of Prerna Janjanwala from Ilara Capital. Please go ahead.
Unidentified Participant
Hello. Congratulations on good set of numbers. Just wanted to understand the demand scenario in domestic and in export markets. What is the driving factor in both the geographies and what has been the increase in prices and spreads over the last three that is being realized in this quarter and is yet to be realized in the in Q1.
Marshal Rajendrakumar Sonavane
So Prena, if I understood your question correctly you were asking about what were the drivers behind the demand tables. Right. And the second part is on the spreads quarter to quarter momentum spreads. Correct?
Unidentified Participant
Yes.
Marshal Rajendrakumar Sonavane
Yeah, yeah. So in terms of demand payment I think one big factor was the overhang from the US residual price and the penalty tariffs which was on India. I think subsequently India US saving got agreed and squashed the direct itself. Right. Sort of smashed, unleashed a lot of demand factors and that was main Trigger by demand in the US market went up and India, as you know, is primarily dependent on us for a large part of its exports. So that definitely benefited. The other part was this improved market sentiment in the Europe part when the FTA was signed.
So a lot of inquiries started to come in and demands got as in demands are concretized in that part of the market as well. Even the domestic market has behaved well before that. I think there was a lot of demand from China. So in the last quarter there’s a lot of yarn demand which came from China as well, so which was not there earlier. So that also helped utilize a lot of excess capacity that India has in yams. And last part, I think even the domestic markets performed well. So there has been a consistent increase on a quarter and quarter and year on year basis in domestic market demand as well.
So I think these are some of the reasons why we saw a lot of demand tailwind on the spread side. I think the spread has gone up. Just to give you a number, our spread in quarter three was about 123 rupees per kilo. It has gone up towards 148 rupees per kilo in quarter four.
Unidentified Participant
Okay, so do you. Are the purchases from China continuing even now? And what would be the reason that China is purchasing now again, which is not happening earlier? Any factors that you can attribute it to?
Marshal Rajendrakumar Sonavane
So I think we have seen a tapering down of demand since March ending, at least in our set of customers and channel partners. We have seen a tapering of demand there in quarter three ending. I think the yam prices in India were very low compared to the overall scenario. I think that was one reason. And second, there is an acreage reduction in China with respect to cotton. So I think these two factors primarily sort of led to a lot of demand uptake from China. But as I said, at least I have seen it differing down right now.
Unidentified Participant
Okay, understood. The demand is tapering down from China. Okay, understood. And the second on this spread part, is the increasing spread fully utilized in Q4 or there is going to be some improvement that we can see in Q1 as well.
Marshal Rajendrakumar Sonavane
So at least in Q1 I believe that it will continue what spread we have received in quarter four. It would continue at least in Q1, but beyond that I think a lot will depend on how global situation evolves. A big overhang definitely remains on fuel prices and sort of gas availability across Indian market.
Unidentified Participant
Okay, are there any disruption at your end with respect to gas availability or labor availability which could impact your Q1 numbers.
Marshal Rajendrakumar Sonavane
We do not utilize gas in our processes. Right. So we do not have a direct impact from gas availability. In terms of labor. We did not. Of course that remains a challenge across the industry. But till now we have been able to manage our labor situation very well.
Unidentified Participant
Understood, sir. Thank you, sir. And all the best.
Marshal Rajendrakumar Sonavane
Thank you.
Operator
Thank you. Next question is from the line of Sanvesh Gupta from Swan Investments. Please go ahead.
Marshal Rajendrakumar Sonavane
Hello sir. Congratulations on a great set of numbers. Hoping that we continue on the same line. I have few questions. Firstly, as you mentioned that the spreads in this quarter were 148 which went up around 25 rupees a kg since the last quarter. So was it for the whole quarter or it we saw that post being bought. So I think this is an average for the whole quarter. I am not giving an ending number but this is an average for the whole quarter.
M. Parasuraman
When you consider an average for the whole quarter.
Marshal Rajendrakumar Sonavane
But
M. Parasuraman
Then the improvement,
Marshal Rajendrakumar Sonavane
The numbers look quite on the higher side. So. Are you missing something? Sorry, I could not hear you. Your voice. Mr.
Operator
Saran, may we please request you to use your handset? Sir, your voice is not clear.
Marshal Rajendrakumar Sonavane
So now it’s audible.
Operator
Yes, please go ahead. Yeah.
Param Vora
So when you. When you look at the SP compared to the Q3 and Q4, the improvement. The gross margin improvement is not that significant as compared to the. That we have seen the Q3. So are we missing something out here?
Marshal Rajendrakumar Sonavane
I’m not able to understand why we’re saying there is.
Param Vora
On the. Which is 126 to 148 which you indicated you want to increase.
Marshal Rajendrakumar Sonavane
So I think at an absolute level this is sort of unitized. Right. On an absolute level it will depend a lot on what volume was also generated. Right. So in quarter four our volume is slightly lesser than quarter three as well. So I. What I understand is that on a gross margin absolute level the improvement is not as much as it is in your real time level. Right. On a continuum basis.
Operator
Sir, again your voice is not clear. Mr. Saranj,
Param Vora
If you look on the overall volume also on the yarn, there is hardly any drop in the overall volume in the yarn. There’s a decline from 10,800 to 10,400. And most look bit on the lower end at this point of time. The gross margin perspective. So basically we are unable to understand that thing.
Marshal Rajendrakumar Sonavane
As. As I don’t have the percentage number. But what I can tell you that our cost has remained more or less similar between quarter three and quarter four. So whatever EBITDA improvement has happened actually has happened because of improvement in gross margins as well on a per kilo basis versus a quantum basis. There could be a difference and that I do not have readily available now. But what I can tell you that our EBITDA margins went up about 10% to 11.7%.
Param Vora
Let me answer this question. If you look at our number Q1 Q2 basis, basically the increase in the EBITDA is approximately around 29%. So the number which you are talking about the value means spread,
Ravi Shanker Jalan
It matches. This
Param Vora
Matches. Okay. 123
Ravi Shanker Jalan
To 148 this percentage. So
Param Vora
If you look at that way, the the EBITDA has gone up and if I’m reducing even the one time income which we have, that also have reduced after that also the increase in the EBITDA is around 29%. That is message with the what Marcel is saying 1:23-1:48. Okay,
Lakshminarayanan Kalpathy Ganapathi
I take offline
Param Vora
And offline. We can always give you any clarity on that. We are not missing anything.
Lakshminarayanan Kalpathy Ganapathi
Sure. And
Param Vora
Second thing. Hello, Second thing I want to understand now for the full quarter you indicated the SP at 148. Definitely the major benefit came in the month of March. So how are these spreads in the starting of. I mean in April you can say something.
Marshal Rajendrakumar Sonavane
We actually good improvement in spreads from December onwards itself. In fact, in the first two months of quarter three the spreads were very low. Right? So if you see between quarter two and quarter three the situation worsened a lot. But the spread at least in our case drop was marginalized. Right? That was primarily because from December onwards we started seeing good uptick. And that is what we had also recorded in our statements in our last investor call as well that from December onwards we are seeing a good increase in our spreads.
And that is what continued between January, February, March. Of course there was a gradual improvement on a month on month basis, but it is not correct, at least in our case that majority of improvement came only in March.
Param Vora
Okay,
Marshal Rajendrakumar Sonavane
I was just answering your second part of. So as I said earlier also that in quarter one of FY27 we at least from a visibility perspective, we are There’s a high likelihood of this spread of 148 rupees kilo continuing. Of course it can go up. But at least on the conservative side, we are pretty certain that this will continue.
Param Vora
I think Marcel, this is what you have rightly made the statement on the conservative basis. This number actually we are going to maintain. So that means basically what he’s saying is there is no possibility that this state might increase in the first quarter.
Ravi Shanker Jalan
So that’s helpful. And one last question is on your fabric. Now definitely the contribution
Param Vora
Has moved up from 8% to overall 12% in the for the full year. So how shall we see the contribution of the fabric for FY27? And probably once you deploy entire 375 crore for the processing fabrics, what will be the contribution by in next two to three years?
Marshal Rajendrakumar Sonavane
So definitely fabric has gone up to 12%. And that is what we have been saying that we are building a market for this further investment which we will do in fabric and processing this year. Of course there will be an increase of this fabric percentage. We are targeting almost 15% of our revenue to come from fabric. A large part of our native fabrics would be in house. Because 15 machines are already in house and another 25 machines. At least from quarter three onwards we should start receiving. So a large part of our knitted fabric will be in house.
Woven fabric will continue to be on an outsourced model. Only then we have, we are completely ready with our ready to cut fabric. With processing capacity, 40% of the product yarn will continue to be sold as yarn and the rest 60% will be vertically integrated either in form of fabric or in the form of process fabric. Thank you. Thank you. Thank you.
Operator
Thank you. Next question is from the line of aradhana Jain from 361 Capital. Please proceed.
Saransh Gupta
Hi. Thank you for the opportunity and congratulations on the big set of numbers. I have two questions. Just wanted to understand that in general, what are the inventory levels that we maintain of cotton? And given that the cotton prices were favorable prior to the 11% import duty again getting reinstated from January, how much inventory were we maintaining during that period of time? And like how much inventory do we have right now of the cotton that we would have procured at lower prices? The reason I’m asking is that now if we see the cotton prices have started to inch up, right?
You also mentioned that in your opening remarks that from 55,000 per candy, it’s now to around 62,000 for candy. Right? So how much inventories have we, you know, built up?
Marshal Rajendrakumar Sonavane
So we have sufficient invitation to enable us to continue till the next season. Okay. So I think this is what we have been maintaining in between. Then there would be a replenishment of the consumed inventory because we don’t know how the next season would be. So there will be a continued investment in or purchases of cotton. But now onwards I think our cotton purchases will start to taper down a bit because we took a strategic decision to buy our Inventory early and maintain it for the season. That is what we have done.
Param Vora
Sorry, let me give you a specific answer to this. We have approximately around 120 days of inventory as on 31st of March. Okay, so that is almost around four months of inventory. But March rightly said now the purchases will be tapered down and this four months along with some few interest purchases will be consuming over the period of till now.
Saransh Gupta
Understood. The second thing I wanted to understand is that given that the spread has been improving in terms of, you know, price absorption at the downstream levels, have you seen any issue that, you know, we would be facing in terms of passing those prices on to say the fabric or garment manufacturers? Because ultimately from demand perspective, do you think that this kind of increase in the spreads would be easily absorbed in the market? Given the kind of inflationary situations that we are in, would it be sustainable the pass through of the increase in the spreads?
Marshal Rajendrakumar Sonavane
That’s a very good question. And that is what our risk also is. At least for quarter one. We see this at the cotton price levels the spread will continue and the price would continue to get absorbed. But the big risk is particularly from an inflation point of view. So the cost in processing and fabric making would continue to rise. Whether that at that cost level at which other participants in the value chain would operate at whether the yarn prices will continue to rise. That’s a big question mark.
We don’t have a ready made answer right now. It is a situation we continue to watch.
Saransh Gupta
Understood. Thank you. Thank you so much and all the best.
Operator
Thank you. Next question is from the line of Rehan Syed from Trinitra Asset Managers. Please go ahead.
Marshal Rajendrakumar Sonavane
Majority of the. You. Am I audible right? Yeah, I can hear you but if you could speak a bit louder, it will help.
M. Parasuraman
Yeah,
Operator
Sure, sure.
Marshal Rajendrakumar Sonavane
Like my majority of questions have been answered. I just. I want a bit clarification regarding your export market.
M. Parasuraman
So
Marshal Rajendrakumar Sonavane
Yeah, for your key export market like US and Europe, so
M. Parasuraman
What has been the y demand decline or growth percentage in FY26 and and what is the right move you are seeing for a hat to 7?
Marshal Rajendrakumar Sonavane
So on a quarter, on quarter basis our exports have increased. So this quarter it was almost about 14% of our top line from exports. I want to clarify one part in your question. We do not export directly to us. We basically give to fabric manufacturers who sell intern to us. But we definitely export to Europe directly or multiple countries in Europe and also Bangladesh. So at least in our priority markets with respect to exports, we have not seen any decline. Europe has been on a Muted demand basis for almost, I think one, one and a half years now and probably longer.
And I think that level of demand is continuing in between. We see a bit of an increase here and there, but largely it has remained steady. Bangladesh, we do not see any, any slowdown. The employees, at least for us, remain very strong. And even the export data shows that India overall exported a larger quantity in quarter four, particularly in January. The February March numbers are still coming or at least in January our exports from India for yarn were healthy compared to what is the usual average.
Param Vora
Okay.
Marshal Rajendrakumar Sonavane
Okay. And last one keeping question that wanted to ask like is there any demand guidance you want to prepare for coming quarters, like two, three quarters or the full year? So for the full year what we do not give exact numbers or guidance, but what I can sort of tell you that we expect the growth what we have delivered this year to continue. It would be near about that level. Exact number, it is like plus minus 2% delta sort of thing. Right. But that is what we are expecting. It will continue given the situation in geopolitics, does not worsen from what it is right now.
And we see a quick closure or quick resolution on the West Asia conflict which is going on. Okay.
M. Parasuraman
Okay. That’s it for myself and good luck for the coming quarter. Thank
Marshal Rajendrakumar Sonavane
You.
Operator
Thank you. Next question is from the line of Lakshmi Narayan from Tonga Investments. Please go ahead.
M. Parasuraman
Thank you. Just want to understand, there have been any inventory gains for us in the last one year?
Marshal Rajendrakumar Sonavane
No, there is no inventory gain to report. We have been at least for the last year maintaining minimal amount of cotton inventory which has since only recently. And in terms of our fdm, there is no inventory gauge.
M. Parasuraman
And in terms of our consumption of
Marshal Rajendrakumar Sonavane
What is the mix of imports and what is the
M. Parasuraman
Indian cotton units.
Marshal Rajendrakumar Sonavane
So a mix of Indian and imported cotton fee, it varies. But on a. On a. At an average level we have almost about 30% of our requirement from export as an imported cotton. 25 to 30% and less is all domestic.
M. Parasuraman
And in terms of selling to the brands, what has been the. Actually, you know, there are two ways of selling. One is to agents and then one is to the brand itself. So the yarn selling to the brands, what was it for the last for FY26 and what was it as
Marshal Rajendrakumar Sonavane
A percentage in FY25? Let’s say we have a very concentrated portfolio of strategic customers there which consume almost 40 to 50% of our volume. And these are all large top brands. Beyond that also there is almost 25 to 30% of people or maybe around 30 25% number which is given through brand but through intermediaries or traders. But their communication is directly with the brand and GHC and textiles. The rest 20, 25% is through small and medium customers who typically would be focusing brands but more the brand in themselves.
M. Parasuraman
Got it. And in terms of spindle, what is the current spinlage we have because we reported a very high utilization. What is this? And the extra spindle when it will get
Marshal Rajendrakumar Sonavane
Only utilized. I missed the first part of your question. Can you please repeat?
Lakshminarayanan Kalpathy Ganapathi
What is the current spin
Marshal Rajendrakumar Sonavane
Plate we are operating. Is what we have. The 25,000 symbols which we sort of commissioned in June is included in this.
Lakshminarayanan Kalpathy Ganapathi
Okay. And the utilization is that far on the entire thing?
Marshal Rajendrakumar Sonavane
Yeah, in quarter four we achieved 98% plus utilization.
M. Parasuraman
And what is the CapEx plan for FY27?
Marshal Rajendrakumar Sonavane
So FY27 CapEx plan will be between 100 and 120 to 120. Primarily there is one large investment on our on brand solar. So the cash out go and the commissioning will happen this year. The second part is on a strategic investment. Another part is about 15 odd crows in our meeting machines which will happen. And there is a large specific investment which we are doing in PM Mitra park which I sort of outlined in my opening remarks as well. That is primarily for line. Thank you so much. Thank you.
Operator
Thank you. Next question is from the line of Ahmed Cheddar from Banyan Capital Advisors. Please go ahead.
Marshal Rajendrakumar Sonavane
Thanks for the opportunity. So this 25,000 spindles peak revenue is around 300 crores, right? So in Q4 we did 70, 75 crores. Is that understanding correct? So that 300 crore number is basically includes. Actually it’s a range depending on the price of the product and it is between 250 to 300 crores including both knitting and spinage. Okay. So I think that is what it is per quarter only spinning would be about 50 to 60 crores. And I think that is what we sort of achieved in a way in, in point four.
And what was the contribution from this in Q3? Q3 was lower. I think Q3 was almost 80% of it. So it would be about 35 odd crores is what it would be.
Lakshminarayanan Kalpathy Ganapathi
Okay,
Marshal Rajendrakumar Sonavane
So I’m just trying to understand where will the incremental growth in this financial year come from? The, you know we did around 1300 crores this year. So if you can decide on where the incremental growth will come from. So one, number one is actually we sort of operated for two quarters. Right. The new 25,000 what we operated for this quarter. I think the full benefit we will receive next year also. Now the products are getting stabilized. Of course there is benefit which will come from unit price as well.
The second part is knitting machines. We have 15 knitting machines which got installed only at the end of January. So their full benefit will come also. We are putting another 25 machines. Large part of it almost, I think 60% of it will come in quarter two, quarter three. So we get a benefit from those knitting machines as well. The other part is that we are putting up our solar investment. So rooftop solar got commissioned only in March and our on ground solar will get commissioned around quarter two.
Right. So there will be a benefit from that angle which will help our profitability. The fourth part is that we did a lot of investment in the last three, four years, right? So we first installed almost 40,000 spindles for synthetic, then another 25,000. Now it has reached a level where we sort of can optimize on the product mix and stretch our both top line and margin from that front. So this will be the revenues of growth for FY27. Got it. And we are still holding to the 2000 growth revenue guidance in the next three years, right?
Yes, yes, we. We are sort of putting an anchor on that. We are holding on to that. Okay, thank you so much.
Operator
Thank you. Next question is from the line of Madhur Rati from Countercyclical Investments. Please go ahead,
M. Parasuraman
Sir. Thank you for the opportunity. Sir, I wanted to understand regarding the 15 to 18% EBITDA margin guidance. So what will drive this? Will this be driven by premium product mix in yarn segment only or will it be driven by the fabric portion increasing overall? If you could help us understand that.
Marshal Rajendrakumar Sonavane
I think if you see our 10 years, last 10 years EBITDA, right? We have delivered 15%. So number one, I think our normal EBITDA for the current set of products itself is about 15%. And I think with the market environment getting better, we would be able to drive towards this EBITDA margin as well. Second part is we are going towards vertical integration. So this 25,000 spindles is actually integrated project with fabric. Our fabric woven fabric revenue also is going up right now. It is on an outsourced model, but we sort of have plans, we have plans to invest in both fabric making and processing.
I think that would add another incremental edit on margin. And the third part is on our product product portfolio getting more optimized towards higher margin product. I think that is the continuous journey which we have been doing. There is a continuous bottom slicing of products where we think margins are shrinking and we sort of move to a new product. And the fourth part is maintaining our utilization levels. We have been able to maintain 98, 99 utilization levels. I think if we continue to maintain that, definitely this 15 to 18 margin is achievable within the next three years.
M. Parasuraman
Right, sir. So I’m trying to understand, sir, our aspirations have been always. So one of our competitors, Ambiga Cotton, they do close to 60. Sorry, close to. They do close to 35% odd EBITDA margins over a long term period and we do close to 30%. So how will we bridge this gap? Because we have. They are only a yarn player and we are a yarn plus fabric player still. We are doing 70. So how will we bridge this gap? If you could just help us understand.
Marshal Rajendrakumar Sonavane
So primarily vertically integrated or a very well recognized name in metric fabric. So they are vertically integrated. They are not a standalone one manufacturer. Second, they have been running this business of vertically integrated fabric for a much longer time and they have been able to optimize their products or maintain a quality which will fetch them higher margin. We are on that journey. I think we have just started our vertical integration journey now and within not a very long time, but in a short period of time you will be able to get better on our quality, customer selection, market selections and definitely you’ll be able to stretch your margins on vertical integration as well.
M. Parasuraman
Got it. So just a final question from answer. With this 40 machines that we have added on the netting side, how much, what percentage of our revenue should come from fabrics going forward through this?
Marshal Rajendrakumar Sonavane
See, I think with this 40 machines installed, we would be somewhere between 16 to 18% of our fabric revenue coming from. Sorry, our total revenue coming from fabrics, almost 50% of it will be some fabric. So at, at part machines we’ll be able to do about 15 to 16 tons per day. Right. Which would on a tonnage basis itself would be about 12% of our overall volume.
M. Parasuraman
Right. So not much because currently we are doing 15% of our revenue is coming from fabric. So sorry,
Marshal Rajendrakumar Sonavane
That is 12 only. But that is primarily an outsource model. So on outsource model we are focusing more on volume buildup and not on profit maximization when it is in house, while the volume would remain similar, but it would be more a profit maximization story.
Operator
Thank you ladies and gentlemen. In order to ensure that the management is able to address questions from all the participants in the question queue, please restrict yourself to two questions only. Should you have A follow up questions, please rejoin the queue. Next question is from the line of Varun Gajaria from Omkara Capital. Please proceed.
M. Parasuraman
Thank you for taking my question. Just wanted to understand. So out of the, out of the 25,000 spendings that were, that were only recently inaugurated and for that 40,000 pending, so off track of the incremental revenue that we’ve made this year, what portion of it will be attributable to these, this new capacity? Hello.
Marshal Rajendrakumar Sonavane
Sorry, I was, sorry, I’m sorry, I was in blue. Okay. Our revenue because of this 65,000 spinbait increase has almost gone up from 900 crores to about 13. Right. So particularly with respect to this 25,000 spindles, almost I think 120 odd crores or 125 odd crores. Revenue this year has come from the new spindle.
M. Parasuraman
Okay.
Marshal Rajendrakumar Sonavane
And this is 25,000 spindles. I’m talking not the 40,000 spindles. For 40,000 spindles what I have told you is that our revenue has gone up from over thousand 950 odd crores to about 1335 crores.
M. Parasuraman
Okay, so, so 24, this 25,000, they’d be working at what 60 capacity
Marshal Rajendrakumar Sonavane
As of now
M. Parasuraman
The contribution,
Marshal Rajendrakumar Sonavane
You can take it about 70, 75%.
M. Parasuraman
70, 75. So, so I suppose you will have 15% more Runway.
Marshal Rajendrakumar Sonavane
Another benefits from price maximization.
M. Parasuraman
Right? Right. So probably in 27, do you have a revenue guidance for 27, the growth guidance, something that you are you know targeting this year
Marshal Rajendrakumar Sonavane
To put a number on what would be revenue. I think it’s difficult because a lot will depend on how the prices move. But what we are sort of internally guiding towards is maintaining our current growth rate. What we achieved this year.
M. Parasuraman
Okay, so 14%. To get to the 2000 figure that we are, that we are alluding to this current capacity. What are the other triggers to drive our growth? Because I suppose you spoke on the margins that there’ll be solar capacity and all that coming in, which is a different thing altogether, which will have more impact on the margin. But what will really drive our growth revenue growth from here because the 25,000 that we are installing, they’ll mature this year. So what, what is the plan for this then?
Marshal Rajendrakumar Sonavane
So you are absolutely right. I think there is a limited room for top line improvement right from our current set of assets. That’s why we said that we have almost 350 crores of investment to be done from the agreement which we had and commitments which we have. I think those investments are going in Processing and fabrication. I think these investments typically have a much better asset turnover ratio. I think that would enable us to bridge the gap towards 2000 crores.
M. Parasuraman
Okay, so as it turns the one and a half times because. Yeah,
Marshal Rajendrakumar Sonavane
Okay.
M. Parasuraman
Got it. Okay. Okay. Thank you so much for taking a question. All the best. Thank you.
Operator
Thank you. Next question is from the line of Dheeraj Thakur from Ilara Capital. Please proceed.
M. Parasuraman
Congratulations sir for the such a nice set of numbers. So most of my questions have been answered but the last question which I would ask is what is the mix of cotton and blended yarn in the current yarn volume?
Marshal Rajendrakumar Sonavane
Mix of cotton and blended yarn. You mean synthetic blended?
M. Parasuraman
Blended in the pure cotton.
Marshal Rajendrakumar Sonavane
Okay. Okay. So see our mix is almost 65% towards 100% cotton and red 85% is on synthetic blended. That is the next thing called synthetic blended. There are various versions. There is a polyester rich, cotton rich. Right. So I’m not including that pattern here. So 65%. Almost 65 to 70% is almost 100% cotton.
M. Parasuraman
Understood, understood. Thank you sir. That answers my question.
Operator
Thank you. Next question is from the line of Saket Kapoor from Kapoor and company. Please go ahead.
Lakshminarayanan Kalpathy Ganapathi
Yeah, hope I’m audible.
Operator
Yes, please go ahead.
Lakshminarayanan Kalpathy Ganapathi
Yes, yes, yes. And thank you for the opportunity sir. Sorry I was just late to the call. So my question may be repetitive sir. Firstly you alluded to the 120cr capex for the current financial year. So if you could just explain where, where this money will be invested and how will the asset turnover we will expect from the same. And then how sir, rupee depreciation to 90 closer to 96 now to a dollar. How will this help businesses like us which we are, we are getting and in the other income component we have seen a substantial jump to 10 crore rupees.
So if you could just explain the nature of the sale.
Marshal Rajendrakumar Sonavane
Yeah. In our capex I think almost 35 crores is going towards our on ground solar 10 megawatt capacity. What we are putting up there is an investment of almost about 15 crores in our nitted machine. And we have another land allocation in Pmitra Park a strategic land allocation where a substantial portion of capital is going to and the remaining is our replacement capex and infrastructure capex which is as part of our process which we build to maintain. We have a healthy mix of spinach in our unit.
In terms of rupee depreciation I believe it impacts us in both ways. So definitely we get a better money or realization on exports the quantity which we export. But at the same time it impacts the up in our cotton guys because we have almost 30% of our cotton. Come on, an imported mode, right? We buy a lot of imported cotton. I think that becomes expensive for us. Also across the textile value chain lot of imported spares are used which sort of becomes expensive with this rupee depreciation. The third part is rupee depreciation also impacts, let’s say people who buy chemicals for processing and other operations.
So overall in general there is an inflation in the textile ecosystem. But at the same time your exports fetch you higher realization. From our point of view particularly the effect is neutral. So it is both ways. It is benefit also it is a challenge as well. In terms of your third question about other income, there was a sale of non strategic or non core land parcel which we have done and out of that about 8, 8 point something crores of profit has been realized.
Lakshminarayanan Kalpathy Ganapathi
Hello. Yes sir,
Marshal Rajendrakumar Sonavane
Hope I answered all your questions.
Lakshminarayanan Kalpathy Ganapathi
Yes, you did, you did answer to them. Sir, when we look at our dividend payout this time, although we have up the dividend with the improved profitability but the dividend distribution is less than 10%. So if you could just outline to us what what is the thought process management in terms of distributing cash to the to the investor committee. And secondly if you could just give some more color of how the current business environment scenario is saying or I missed your opening remark. In terms of the type of vision we are seeing in the crude prices, logistic issues and then inflation, inflationary trends emerging in almost every aspects of day to day living.
How is that affecting the business in particular for us in terms of the spreads. So if you could just outline towards these two aspects.
Marshal Rajendrakumar Sonavane
So Apunji, I will take your second question first on the business environment and I will request Jalanji and Ramanji to take up your question on dividend payout. In terms of current business environment. We feel that the case of cautious optimism. So there is a lot of demand tailwind which is happening because of the FTA is getting signed and even the domestic market doing better. There is definitely a risk on the side of fresh Asia conflict and impact from that. You definitely said there is an inflationary pressure across which will come in all commodities and also as an availability of critical raw materials and volatility in that that are some important risk which will impact.
And that’s why as I said in the opening remarks, we see it as a case of cautious optimism. We are optimistic and yes, there are cautions also emerging in terms of spread. Our spreads have gotten better from Q3 to Q4 at least we see that continuing in quarter one. Beyond that a lot will depend on how global situation is evolving. Hope I have answered your second question. Then I’ll ask Mr. Jalan or Mr. Raman to take up your first question.
Ravi Shanker Jalan
Yeah. Yes. You know as you know that our policy of, you know allocation of our cash flow is very I would say committed towards the growth capex as well as the reward to the shareholders and also our loans. So these are the three areas that we look at as Marshall has been talked earlier that we are continuing our journey towards the vertical integration which will require around another 350 crore of kind of capex spend spread over a period of couple of years or two to three years time. So therefore to meet those requirements of growth.
So the requirement of whatever cash flow we are generating is more toward the growth capex. So therefore we are adhering to our policy of 8 to 12% payout. So last year the payout was 8%. This year also we have retained our payout of 8% and overall percentage is around. Instead of 25% there is a 30% dividend so we are retaining that and we will be utilizing our cash flow towards meeting our growth needs. So it is both reward to the shareholders as well as the growth needs. That is what we are aiming.
And as. And then you know we have surplus cover capex whenever it is there beyond the capex or the growth requirement will definitely increase over here. I hope I’ll be. I have answered your question.
Lakshminarayanan Kalpathy Ganapathi
Yes, thank you for the answer that only on the non correct. I’ll join the queue. Thank you to the team for answering here and for elaborate discussion.
Operator
Thank you sir. Next question is from the line of Harshit from Robo Capital. Please go ahead.
Marshal Rajendrakumar Sonavane
Hi. Thanks. Opportunity. I’m audible.
Operator
Yes,
Marshal Rajendrakumar Sonavane
Yes, thank you
Operator
Sir. I’m saying on page number 10 of a PPT we are saying that we will more than double the revenue, right? So are we implying a revenue potential of 2600 crores upwards of that?
Marshal Rajendrakumar Sonavane
No, I think this revenue doubling is from our initial base when we started this commitment of doubling which was about thousand crores so our anchor is about 2000 crores at least for the short time, short journey of about three years.
Operator
Okay. I just wanted to clarify that sir and my second question is regarding the volume growth that you are seeing. So what kind of volume growth can we see in let’s say next year or you know in FY28.
Marshal Rajendrakumar Sonavane
So volume growth from our new spindleage which is there we utilize Only for two quarters. Right. So definitely a benefit of about four to five months is coming and also that is the maximum. Beyond that I think it will, it will be dependent on the kind of product mix which we, which we will sort of operate in our units. The volume growth could come from that. But primarily I think next year the volume growth is going to come from this quarter. 2/4 of Meenakshi 25,000 and also maximization of our as in stretching of prices, better product mix.
Right. I think that is where the growth will come from, but not only from value.
Operator
Are we seeing good impact from fta with the UK and Europe?
Marshal Rajendrakumar Sonavane
So FTA in the FDA’s aren’t yet executed but we have seen supply chains reorienting towards India. Right. So a lot of the new customers which are there in UK and Euro have started approaching governments in India and started placing some prior orders. That is the reorientation of supply chain which is happening of course with the view on a long term basis the volume will go up.
M. Parasuraman
All right sir, thank you.
Operator
Thank you. Next question is from the line of Sagar from Australia Investments. Please go ahead.
Marshal Rajendrakumar Sonavane
Yeah, hello, I’m audible.
Operator
Yes,
Marshal Rajendrakumar Sonavane
Your operating cash flow has decreased a lot in year on year. I understand that inventory comes as well. But what about receivables? They have also increased like 43%. Yeah. So receivable increase is primarily for two reasons of course. One is large part of it is because of revenue increases. So once your sort of top line starts to go up then definitely the receivables will also go in time. Second is in terms of payment discipline. Right. Because quarter to quarter three was particularly challenging for the industry.
So payment discipline was not there. And certain in certain cases higher credit limit was extended but that number will now start to shrink because overall market has started to perform better and the payment decision is coming in fair enough for the long term, you know, long duration. So the cotton yarn industry globally is not grown much in the last 10 years, but India has grown because you know, we are the second largest cotton production. So how do you see the long term trajectory of cotton considering the synthetic yarn growth is much faster.
So what would be the industry growth that you can expect and how would you, you know, grow faster than the industry? So in terms of. Yes, I think globally there is a shift towards synthetic. But India of course has inherent benefits and advantages when it comes to cotton. I don’t see those benefits going away. Except India maybe. The cotton production is growing only in Brazil and India of course is at a much lower yield. So Definitely there is a very high likelihood or potential of cotton production itself growing in India.
That will sort of put the Indian cotton industry and has a very good situation. Second, the technology upgradation in India has happened a lot particularly when it comes to cotton spinning. So I think because of these two things, Indian cotton industry will always be in a good at least looks like to be in a good situation for a considerable amount of time. Locally, yes there is a shift towards polyester. But the way we are adjusting is we are mixing cotton with NMS product and giving a solution to our customers whether it is cotton cellulose and cotton polyester.
Right. So our strength primarily comes from cotton and that is what we are banking upon and creating products which will satisfy customers needs. As per that, how do we grow higher than the industry? I think we have, we have spoken about it for almost an hour now. I think we are investing towards going towards ready to cut fabric. We are positioning ourselves as a premium yarn supplier and going forward a premium fabric manufacturers working with the top global brands coming across more as a solution provider for their raw material needs for particularly the vendors and brands.
I think this is how we are positioning and believe with this positioning will definitely be able to grow better in the industry. Okay, and your working capital it was around more than 135, 140 days around. Right. And I was looking at some of your competitors, they have a working capital days of around 90 days. So what is our sustainable working capital? Because this is impacting your ROE rop. Right. So what’s your working capital days expectation in two, three years down the line? So I think the ideal number of working capital will depend a lot on the business model as well.
But currently we are at an elevated working capital level primarily because we preempted a lot of these cotton price increases and build our inventory. Definitely there is a scope for optimization of it and you will see this inventory tapering down as we sort of reduce our cotton purchases. In terms of our other FG and wip, they are pretty at lower level than what we were last year. So primarily the increase in working capital is alluded is primarily because of your cotton. What is an ideal working capital level?
As I said, it depends on model to model but it has, it usually has been between 110 to 120 days for us also. And I think that is the level what we are planning to maintain this 2000 crore guidance that you have guided for what is the year that you can achieve that and also this 15, 17% EBITDA margin at what year you can expect to achieve that. So as for our internal guidance, we are sort of aiming for FY29 at least for the top line, maybe around FY30. So you can say between 29 to 30 is when we are planning to achieve this.
Both for your top line guidance as well as margin guidance. Fair enough. Okay, that’s it. Thank you sir.
Operator
Thank you. Ladies and gentlemen. We will take this as the last question for the day. I now hand the conference over to the management for the closing comments.
Param Vora
Hi, good evening to everyone. I have been given the responsibility to give a closing remarks. So first and foremost, Marshall, I think you have very well articulated the whole position of the textile and I think you have been able to give that how the how outlook we have and what is the ultimate objective, what we are going to achieve in 29:30? I can only say three things. First and foremost, you remember the last time in our call I said that. Now I’m clearly seeing a visibility of the optimism in the business.
I would say that the headwind has been for pretty long and the last quarter I said and that we have been getting reflection now and what our CP master has said. Now we are seeing this optimism in going forward in 2627 as well. The second point, we are on the right track of moving for our ultimate objective in 2930. Like we have done a strategic investment into the PM Mitra Park. That’s going to be a big what you call advantage out of that PM Mitra Park. We’ll be able to establish our processing without much of the difficulty along with the ready to cut fabric vision so that we have got the land allotment and we are going to make an investment in that.
Overall we are on the right path of achieving this 2000 crores of objective with a 15% of 15% to 18% kind of a EBITDA margin. Someone very rightly said ROC. Now our focus is also on the ROC. Yes, this year some rock improvement has happened around the percentage 1%. And our ultimate objective, by optimizing the working capital, by optimizing the margins, we have an objective to go to a double digit of the ROC going forward. That may take some time but that will happen. Now the complete team is aligned with that and definitely we are going to achieve these three objectives.
Thank you all of you for your support and we’ll continue to deliver our performance as desired by you all.
Operator
Thank you sir. On behalf of Goindia Advisors. That concludes this conference. Thank you all for joining us and you may now disconnect your lines.