Gokaldas Exports Ltd (NSE:GOKEX) Q2 FY23 Earnings Concall dated Oct. 28, 2022
Corporate Participants:
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Analysts:
Atul Mehra — Motilal Oswal Asset Management — Analyst
Pulkit Singhal — Dalmus Capital Management — Analyst
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Mohit Khanna — Banyan Capital Advisors — Analyst
Gunjan Kabra — Niveshaay — Analyst
Gunjan Kabra — Niveshaay Investment Advisory — Analyst
Maneesh Chawla — Shawn Chawla LLP — Analyst
Guneet Singh — BCIPS — Analyst
Samrin Omkara — Omkara Capital — Analyst
Jignesh Kamani — GMO — Analyst
Rishab — RBSE Investment Managers — Analyst
Simrat — SS Capital — Analyst
Chirag Sethua — Icici Securities — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Gokaldas Exports Q2 FY ’23 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Binay Sarda from Ernst & Young. Thank you and over to you, sir.
Binay Sarda — Ernst & Young — Analyst
Thank you, Lisa, and good afternoon to all the participants on this call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future results, performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. Please note that we have mailed the results and the presentation, and the same are available on the Company’s website. In case if you’ve not received the same, you can write to us and we’ll be happy to send the same over to you.
To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited represented by Mr. Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director, and Mr. Sathyamurthy, Chief Financial Officer. We’ll start the call with a brief overview of the quarter gone past and then conduct Q&A session.
With that said, I’ll now hand over the call to Mr. Siva. Over to you, sir.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you. Good afternoon, everyone. Happy to have you at our earnings call for the second quarter of FY ’23. We continued our exceptional growth trajectory, delivering a resilient performance in a seasonally weak quarter for the Indian apparel industry and despite the challenging macroeconomic business environment. We reported a revenue of INR576 crores, up by 29% over the corresponding quarter of the previous year. The 6% reduction over Q1 FY ’23 is due to seasonal effect. Our strong focus on operational excellence and exceptional service continues to endear us to the customers. During this quarter, we reduced the operating expenses and managed working capital well to generate adequate free cash flow to support our growth ambition. The net cash surplus, which is cash and cash equivalents less gross debt was INR369 crores at the end of this quarter.
Our entire team worked hard to deliver exceptional product quality and service to our customers. We continued to outperform on various customer delivery metrics. In this quarter, we earned that exceptional income on account of sale of building amounting to INR6.05 crores. Excluding this exceptional item, we generated a net profit of INR39.8 crores. Our EBITDA margin of 12.5% in Q2 is above that of the previous year as well as Q1 FY ’23.
We faced supply chain challenges from China as we are heavily dependent on imported fabrics and prints in Q2, but we work with other suppliers to ameliorate such. U.S. monthly apparel store sales have been on the rise consistently crossing the pre-COVID level. YTD August sales in 2022 is 8.3% higher than in 2021 and 7.9% higher than 2019 pre-COVID level. YTD 22 e-com clothing and accessory sales also witnessed a modest growth of 7.5% compared to calendar ’21. India’s share of U.S. import has increased to 6% in this — YTD August ’22, compared to 5.1% in ’21. So, overall we can conclude that the U.S. market has thus far been quite resilient and the sales growth has been strong. We hope that the U.S. market continues its growth trajectory through rest of ’22 as well. The coming holiday season sale will indicate the continuance of the strength. Higher inventories and pricing inflation may pose a challenge in the near-term. We are closely watching the macroeconomic environment for any development that may be adverse to the business in the short run. The continued military conflict, the extent of global monetary tightening and the trajectory of China’s economy are causes for concern. In the short run, our response is to further strengthen the relation with the customers and ensure impeccable delivery. We view the long-term macroeconomic factor as very favorable for the growth of that business. With this in mind, we are progressing with our capex plan. We incurred a capex of INR51 crore over the first half of the year and expect to continue spending in the second half as well. The unit in Madhya Pradesh is expected to come on stream in this financial year and the knits fabric processing unit in the next financial year. Our growth trajectory for the financial year is intact, and we continue to build a firm foundation for strong growth in the years ahead.
With a view to strengthen the ability of the Company for the next phase of growth, the Company has inducted three new independent directors subject to approval by shareholders. They are Rama Bijapurkar, a well-recognized thought leader on marketing strategy and consumer behavior; George Varughese, a New York-based private-equity and investment banking veteran; and Shiv Dalvie, a private-equity and technology professional with global experience. In addition, the Company has also elevated Poorna Sreenivasan, an Executive President leading business operations of the Company, to the Board as an Executive Director. With Mathew Cyriac moving into the chairman’s position, the Company has balanced change with continuity. The induction of independent professionals with deep experience and global reach will help the management as we chart an ambitious growth plan for the Company while transitioning Gokaldas Exports into a truly professionally managed and board-run company.
I thank you all for listening and would be happy to address any questions that you may have.
Questions and Answers:
Operator
Thank you. [Operator Instructions]. The first question is from the line of Atul Mehra from Motilal Oswal Asset Management. Please go ahead.
Atul Mehra — Motilal Oswal Asset Management — Analyst
Yeah. Hello, sir. Good afternoon and thanks for the opportunity. And congratulations on the good results.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Atul Mehra — Motilal Oswal Asset Management — Analyst
Sir, just thought to get your thoughts on how are you really seeing outlook from here on. Obviously, things are quite mixed globally. So, could you like talk a little bit more about like how long [Technical Issues] and what are you hearing from clients and how are you preparing the business from the perspective that if at all, there are any client referrals, there are any cancellations, yeah, and it doesn’t like maybe impact our performance, so how are we really going about business in this fairly uncertain global environment?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Sure. Thank you for the question. This is a question that — this is an issue that is uppermost in all of our minds. The global macroeconomic situation continues to be uncertain, and I believe that our task as leaders is to navigate these uncertain times with a great degree of focus and a great degree of operational excellence and execution. So, the way we’re going about it is to ensure that the customers that we believe and we have excellent relationships with, the execution parameters are continuously met. And we focus on markets where we believe that there is growth potential for us. The product category also is equally important and we are — thankfully have the depth in our manufacturing capability as well as design capability to produce products, which are in demand depending on the circumstance and the situation. So, if you look at the woven fashion products, we haven’t seen as much of an inventory problem or a demand problem in comparison to, say, commodity products like knit. So, we have seen a reasonable traction, which is the reason why in the second quarter, we had a 29% growth while the Indian apparel industry actually had a decline of 6.3% in exports. So, you know it all depends on which market you focus and what product categories you focus. We’ve also had the good fortune of having a diversified set of customers, which allowed us to pivot to — from one customer to another to make sure that our order book is reasonably intact. That said, we’ve seen that Q3 could be a time of challenge given that the inventory overhand in the U.S. market is the highest for spring ’23, which is where — which is when we produced for — which is what we produce in the third quarter. Also, the European market is exceptionally weak given the high inflation and war scenario there. And the markets in China are also quite weak from a demand perspective. So, given all of this, our choice of market which is the United States which has been reasonably resilient has been good. We have an order book, which is reasonably good for the third quarter. We are confident of coming at par with last year’s revenue for the third quarter and hopefully start growing post that even better in the fourth quarter. When I looked at Europe the quarter ahead, which is the fourth quarter, that is when we would be producing for summer of ’23, which is almost a year away. And if you look at this summer, that is summer of ’22, it was warm and it was long. So, the sales were good, especially for woven products and I believe that if the global warming is here to stay, then next summer would also be long and warm and we would have — the retailer could have low inventory, which would mean that — reasonably good demand situation for us. So, I’m encouraged by certain seasonal cues, weather cues, etc. Global macroeconomic instability is beyond our sales and the hope that we will be able to navigate whatever uncertain times that come in front of us. We have done that hitherto and we are confident that we will do our best to handle any situation or any adverse situation that may come our way. We are usually exceptionally prepared well ahead of time and are ready to take any countermeasures if required.
Atul Mehra — Motilal Oswal Asset Management — Analyst
Right. Thank you, sir. Thanks for the very comprehensive answer. Just one small follow-up, sir. In the sense that given that our share of business with the clients, obviously a lot of our clients are large in size, is still quite small from the perspective of the clients’ revenue, would you say that this macroeconomic environment while it is true for the economy and broader level numbers, from our complete perspective given our share is still quite small in these clients, we would be more insulated on a more ongoing basis than the broader environment is suggesting or like those kind of risks remaining even with us?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, that allows us some reasonable degree of cushion, but it isn’t completely protective. So, for example, if the macroeconomic headwinds are too strong and like I say there is a huge drop in buying volumes, it may affect all the suppliers. But we don’t anticipate that sharper drop either. On the contrary, for the products that we make, we will probably see some growth and given that not all suppliers are held equal by the big brands and well-performing suppliers are usually rewarded, we think that what you said would mostly come through and a good supplier like us should be able to consolidate the other suppliers and still be able to perform.
Atul Mehra — Motilal Oswal Asset Management — Analyst
Got it. Got it, sir. Thank you. One other question on the Bangladesh, like, are we going ahead in Bangladesh as manufacturing destination or are we looking at other alternatives [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No, no, no. So, we are — still definitely Bangladesh is in the radar, Bangladesh status to Europe because of the duty-free access to Europe that Bangladesh enjoys. European market is weak, but we have not yet stopped our focus on Bangladesh. In fact, we are working on a factory, which we hope will come up in FY ’24, early FY ’24. Somewhere during that time, we should be able to get the factory in our control. We are working with our partner in Bangladesh on this.
Atul Mehra — Motilal Oswal Asset Management — Analyst
Great, sir. Thank you very much and wish you and everyone [Technical Issues]. Thank you.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.
Pulkit Singhal — Dalmus Capital Management — Analyst
Thank you for the opportunity and congrats on an excellent set of numbers. My question is just a follow-up on the demand environment. Are we — do we have size to say that this is just a one- or two-quarter issue and beyond that, we can continue to grow at 20%, 30% kind of growth rates or are we not yet sure from the demand perspective?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
See, I am not — I don’t — I can’t predict some of these macroeconomic events, especially the war in Europe. These are [Indecipherable] way beyond our prediction capability. But having said that, I don’t think the demand problem will be more than two-, three-quarter problem. Beyond that, we should start seeing see solid traction as apparel demand has to happen year-on-year. Inventories are already coming down with most of the American buyers and if you get started soon, so they will come back to buying, people will have to buy garments, so I don’t see this as a more than a couple of quarters or at best three-quarter problem.
Pulkit Singhal — Dalmus Capital Management — Analyst
Right. And spot-in [Phonetic] pricing going up, there is an underlying inflation that has also helped the regrowth over the last two, three years, do you take that next one or two years in that aspect will evolve and therefore impact the neighborhood?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, see, at the end of the day, raw material pricing for us is a pass-through. So, we’re not excessively perturbed by raw material prices going up or down because when it goes down we pass on to the customers. Obviously, it may have some impact on the FOB pricing and marginal impact on revenue growth, etc. But from a margin standpoint, we tend to offset all of that with the kind of pricing that we do and with the kind of execution that we do. So, I don’t see that as a big factor at play.
Pulkit Singhal — Dalmus Capital Management — Analyst
Great. Last quick question. Just margins [Indecipherable] maintained at 11% plus last two, three quarters. Now, given this issue, do we have to give away some bit of this, so the next two, three quarters revenue cycle through this issue?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, what happens is when the revenue comes down a bit, there will automatically be a margin pressure because of the fixed cost that we had. Having said, we have taken a lot of measures to tone down our fixed cost as well in order to protect our margin. So, our effort will be to maintain the margins as far as possible, but we may come under pressure for a quarter or so as said.
Pulkit Singhal — Dalmus Capital Management — Analyst
Understood. Got it. Thank you and all the best.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Aashish Upganlawar from InvesQ Investment Advisors Private Limited. Please go ahead.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Yeah. Am I audible?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Yes. You are.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Yeah. So continuing on the question on the due diligence probably of the customers, I mean I just wanted to have some feel of — while we can see that the your receivables have come down quite a bit, I mean if I look at the September balance sheet, so is there kind of strategic kind of initiative where we want to keep receivables lower in the current scenario and adjacent to that, how would be our customer composition in terms of the kind that we are extending to our customers? Are there any weaker set of clients where we would want to be a bit cautious in the upcoming — I mean, the scenario when the macros are weakening, would your thought process be like on that or [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Okay. So, we are closely watching all the customers and I don’t believe that there is any customer who is financially weak and we don’t want to work with them. So, we are constantly monitoring their financials. As far as receivables is concerned, it is also a timing issue. We had a lot of shipments go much earlier to the end of the quarter opinion, which resulted in collections happening sooner and the receivables as we show at the end of the quarter turned out to be a little lower. I don’t — I wouldn’t read way too much into it. As far as focus on customers is concerned, all the customers that we work with are large and are having a good potential and showing growth trajectory., we are not concerned. On the contrary, we draw confidence from the customer base that we have.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay. Another thing is if I want to look at the gross margin trajectory, I mean if you look at the last three quarters versus the three quarters before that, there is a stock kind of decline in the gross margins, though we have made up with other scale related efficiencies on the margin. So, is it possible to just throw some bifurcation as to what has impacted gross margins in the last three quarters versus the three quarters before that? From a — because currency has been favorable, the raw material has not been, I mean not been favorable at all, [Technical Issues]. Some color on that would be helpful for us to understand the feature.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Certainly. So, see, the price of the garment, the way we price our garment is material cost plus the cost of manufacturing and plus our margins. That’s how we price the garment. So, when the material costs go up, the — notionally, the gross margin will increase — will decrease because our cost of making remains what it is, the profit margin expectation remains what it is, so effectively the gross margin notionally comes down because the under — the embedded [Phonetic] material, raw material which goes into making the garment has gone up in pricing. So, it’s only that. I wouldn’t read way too much into gross margins because we still manage to make — get our returns regardless of that.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
So, you mean to say that it’s a unit pricing rather than a percentage margin that is the target typically.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
That is correct.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay. Okay. And nothing comes to us from the currency perspective since it’s weaned so much, so it should be beneficial somewhere?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No. So, what happens is most of the brands have — they are also well aware of the currency movement and have started asking us for the [Technical Issues] currency benefit to be passed on to them. So, it’s always a negotiation that we have between us and them.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay. Okay. And one final [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
[Technical Issues] also that when currency moves very fast and sharp the way that moves now, we hedge our currency. So, whenever we place — we secure an order, we tend to determine what is the exchange rate and then we will do our pricing based on that. So, our hedges have been at a certain rate and the spot rates [Technical Issues] spot Rupee has actually weakened even further than the hedge rate. So, we have that issue. So we will have to deal with it. But these are momentary aberrations. We don’t indulge in any speculation currently at all. When we book orders, we naturally go and hedge our [Technical Issues].
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay and one last thing, I wanted to understand, is it good time to expect some guidance on the maybe next six quarters or is it too hazy for you to even spell that out in [Technical Issues] to give some direction as to the numbers, how things could go?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
I don’t know how many quarters you said, six quarters?
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Yeah. Adding the two quarters left for this year and the next year’s financial year, FY ’24.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Sure. As I said, the quarter ahead is going to be the most challenging for us, that is the third quarter, the quarter that we are going through at the moment. And we hope to come at least at par with last year’s revenue. And we’ll try to see if we can do slightly better than that, but that’s the kind of situation we are in. We hope that post that, that is the fourth quarter onwards, we should start again looking at growth, growth in revenue further. I anticipate FY ’24 to be reasonably good. We will still have decent growth over FY ’23, notwithstanding these macroeconomic events, which are within our visible range. Now, anything, which was completely out of kilter, is not something which we can plan on. So, I’m not sure how the war will lend, I’m not sure what kind of economic — severe economic recessions that could happen in the western world. Based on what we can see now, I feel that next year we should see — we should start seeing growth again.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay. Okay. Sir, I have a few more. I’ll come back [Technical Issues]. Thank you.
Operator
Thank you. The next question is from the line of Mohit Khanna from Banyan Capital Advisors LLP. Please go ahead.
Mohit Khanna — Banyan Capital Advisors — Analyst
Yes. [Technical Issues] congratulations for the very strong set of numbers. I just wanted to have a little bit more clarity on the CAPEX numbers, so INR51 crores, you have done for first half and the yearly target remains at INR160 crores, so — I mean what is the expectation? Do you want to change that or [Technical Issues] this year?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No. We are continuing with our capex plan. So, we’re not sending any of that. INR160 crores will continue.
Mohit Khanna — Banyan Capital Advisors — Analyst
So, basically, you’re confident that you would meet that.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
That is correct.
Mohit Khanna — Banyan Capital Advisors — Analyst
All right. And any changes or addition to the next year or FY ’25 capex plans, anything, addition — any additions over there?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
See, FY ’24, we have a capex plan of about INR125 crore. For now, we are holding it and we will calibrate it as we go forward closer to date. For now, we should — we have it in our plan and we’ve been doing it. So, we will take a look at how the macroeconomic situation evolves and if — let us assume that growth returns and market stabilizes, then we will need the capex to get back to growth. But, if there is a very severe headwind, then we will take a call accordingly, but that is for FY ’24. FY ’23, we are on track to do this because we see that we should be able to need that capacity in the next year.
Mohit Khanna — Banyan Capital Advisors — Analyst
Fair enough, sir. And second question would be you would definitely give a very comprehensive answer on the expectations on the revenue line, quarter three and going-forward. Is — the expectation would be the same on the margin of EBITDA line as well, which is around 12.3%?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, see, when the revenue declines, there will be a little bit of a pressure on margin, right? So, our hope is to come closer to these numbers and we are putting in every bit of effort to come at this 12% odd level. And hopefully we should be successful.
Mohit Khanna — Banyan Capital Advisors — Analyst
Fair enough. Best of luck for that. Thank you so much.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Gunjan Kabra from Niveshaay. Please go ahead.
Gunjan Kabra — Niveshaay — Analyst
Sir, congratulations for a very, very good set of numbers. Sir, my question is, there are two things right now happening from the company point of view like we are having — witnessing a resilient U.S. market, but on the other hand, like one of the major customers if I say [Technical Issues] in the con-calls also [Technical Issues] assortment and balance and size issues. They have a lot of inventory tied up with them. So is it like as this issue is being resolved and how are you seeing the order book to build up going forward if the issue has been resolved with respect to this?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Okay. Which customer are you referring to when you said about inventory problem?
Gunjan Kabra — Niveshaay — Analyst
Wool Knitting [Phonetic].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Wool Knitting. Okay. See, the inventory problem that the brand has is, it is sorting itself out as we speak. So, they are bringing down the inventory and the peak was I think about three, four months earlier and now their inventories are also coming down. They are also aggressively trying to liquidate inventory as old stocks do have a limited shelf life. Second, most of the inventory that they have are in the mix or commodity kind of garment, which is not where we are majorly present. So, for us, whilst there has been an impact and we have tried to address these issues, it has not been as serious because of the product types that we produce and the focus of our marketing has also been such that we have bid for businesses, which are very difficult for others to produce and hence held down to our revenue share.
Gunjan Kabra — Niveshaay — Analyst
Okay. Sir, also I wanted to understand that you guided [Technical Issues] Madhya Pradesh plant will commence this year, so are we like initially, I think two, three con calls that we were planning to do it in two phases, so what would be the total capacity of that or are we doing it in phases or the 2 million capacity will come online altogether?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No. No. No. It will be two phases. As of now, the work is happening only in Phase 1 with certain common utilities being built for both the phases, but what will come in production in the fourth quarter will be only Phase 1 of the Madhya Pradesh unit, and in the fourth quarter, we will be running pilots. We will be running trial orders, etc., with real commercial production more or less happening in the first quarter of FY ’24.
Gunjan Kabra — Niveshaay — Analyst
Okay. Sir, and this would have the capacity of how many pieces, Phase 1?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
[Technical Issues]. About 2.5 million to 3 million per annum.
Gunjan Kabra — Niveshaay — Analyst
Okay. Sir, and what would be the second phase? When will the second phase come online?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, we will take a call on the second phase as we go forward. It’s part of our FY ’24 capex in this. We will take a call once the first phase comes on board; how fast we are able to ramp up and stabilize, we will take a call. More likely, we will start the second phase by end of FY ’24.
Gunjan Kabra — Niveshaay — Analyst
Okay. Sir, and the knitting fabric plant, which is coming online next year, so when is that expected to commence?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
At the moment, we are looking at the Q1 FY ’24 plan.
Gunjan Kabra — Niveshaay — Analyst
Q1 FY ’24?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Yeah.
Gunjan Kabra — Niveshaay — Analyst
Okay. And, sir, this is — these are the two capex, which is expected to come online for the next year, right [Technical Issues], right?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
That’s correct.
Gunjan Kabra — Niveshaay — Analyst
Okay. Sir, next, I wanted to ask is, sir, generally Q4 is expected to be — sir, Q3, you guided it is a little challenging and expected to remain flattish, but Q4 is expected to be a little higher on account of, a, sales would be higher on account of high average price because of the product mix that we cater to. Sir, can we expect a better run rate in Q4 and Q3 a bit?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, Q4, I don’t think the product mix will change much because Q4, summer products, summer products are all casual, I mean the fashion garment and these are not outerwear, which are high value garments, which we typically tend to produce in Q1 and Q2. So, it is not from that, but in general, summer volumes are higher and that’s why Q4 should be better and also last summer, that’s summer ’22, the retail sales were [Technical Issues] in the U.S., which is our primary market. So, we are hoping that by Q4, we should start seeing some traction redevelop for us. So, it’s not from product mix change or peak growth, but it’s really just the volumes, which will drive Q4.
Gunjan Kabra — Niveshaay Investment Advisory — Analyst
Sir also when you say — when we say that the European markets are not doing well, the Chinese market is not doing well, Sri Lanka is having a problem in [Technical Issues], so in this kind of a scenario, we have a lot more suppliers. The customers would have a lot more suppliers because the demand is not that high. So, how are we seeing that kind of a scenario because it’s becoming — it will become a little more very, very competitive in terms of for the brands to source their garment. So how are we doing that?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
100%. That is definitely an issue that all of us are dealing with. If — as long as there is excess of supply over demand, it will result in price pressure and [Technical Issues] in the market. The only way to counter that is twofold. One, try to specialize in product types, which — where you can still hold on. And number two, trying to become as efficient as possible so that, you know, what you lose in pricing, you try to make up in lower production costs. So we are working on all these fronts. There is a pricing pressure. You know, it is out and out, across the whole market. This is actors all industries as well. We are trying our best to counter it. A weaker rupee slightly helps us in that direction as well.
Gunjan Kabra — Niveshaay Investment Advisory — Analyst
Okay and how many customer comprises of 70% of our revenue and how many customers comprises of that revenue?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
About five.
Gunjan Kabra — Niveshaay Investment Advisory — Analyst
About five is 70% of the revenue comes from [Technical Issues]. Okay, thank you so much and good luck.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Maneesh Chawla [Phonetic] from Shawn Chawla LLP [Phonetic]. Please go ahead.
Maneesh Chawla — Shawn Chawla LLP — Analyst
Sir, good afternoon and heartiest congratulations on a good set of numbers. Just to continue on the previous question, sir, how are we booked before quarter three and quarter four? How does it look like?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
As I mentioned for quarter three, we did have challenges to book — on the order book front and most of the brands are facing considerable overhang from excess inventory in the U.S. European customers were not really buying because they were worried about the market sentiment, retail sentiment. So we did have challenges. Despite all of that, we’ve — we feel somewhat confident that we should be able to still come at par with last year’s Q3 number in terms of top line. So, we have worked on it. We are still working on it to make sure that we are able to bring that kind of revenue.
Our order book has reached those levels for third quarter. For fourth quarter, it is still work in progress. The orders will — orders are still coming in, early to predict how, things will go. I think the sentiment in the holiday season with this — which will start sometime mid November post-Thanksgiving in the U.S., will drive the brand. If this holiday season, sales are good, I think more and more brands will come back to buying vigorously in the market.
Maneesh Chawla — Shawn Chawla LLP — Analyst
Okay, okay and sir, you have mentioned one of the main aspects in the capex as new initiatives. Can you throw some more light on what do you include as new initiatives?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So new initiatives are entry into the knit business. So currently we are focused only on the woven side. Starting next year, we will also have a knit processing unit. So, we’re building that up and that cape is the way as we speak so the factories under construction, which we should hopefully get it commissioned sometime in the first quarter of next year.
Maneesh Chawla — Shawn Chawla LLP — Analyst
So, basically that knitting garments, which we are planning to manufacture, so it is capex related to that facility?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Yes.
Maneesh Chawla — Shawn Chawla LLP — Analyst
Okay, and with your improved working capital, we have good cash-on-hand. So, is there any specific plan to use those cash or you will use it for the growth of the business?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So at the moment [Technical Issues] is to use it for the growth of the business. You know some more capex is planned. We also will take stock on how the macroeconomic situation unfolds in the next — second half of the year. If things start correcting itself towards Q4, then, I think India will start seeing tremendous tailwind of growth coming from China, Vietnam, etc., where the costs have gone up by geopolitical reasons, means that the brands have to buy more from other geographies.
So we have to prepare ourselves for capex growth as and when the current macroeconomic problems resolve. So we are hoping that we will get some clarity and visibility by the second-half of this year.
Maneesh Chawla — Shawn Chawla LLP — Analyst
Okay, okay, that’s all from my side. This is helpful and wish you all the very best, sir.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Guneet Singh [Phonetic] from BCIPCS [Phonetic]. Please go ahead.
Guneet Singh — BCIPS — Analyst
Hello, yeah, hi, sir, new to this company. So pardon me if I am asking some repeat questions. But you mentioned about setting up two new units, which I guess are coming up in Q1 of FY24. So I just want to understand how will this these two units add to the revenues for the coming years. And what are the projections like when these two units are fully operational? How much top-line and bottom-line can the company achieve with this with full utilization and at what time?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So see the expectation is that between these two units and there will be some downstream units to be fabric processing unit as well, which will come up as and when the fabrics [Technical Issues] unit is commissioned. We are talking of about INR500 odd crores of top-line, which will be delivered by these two — these capexes and that’s the work, which is going on.
Guneet Singh — BCIPS — Analyst
All right and do we expect this to be fully utilized as soon as it commissioned or?.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No, no it will take easily a year — this whole year to year-and-half before it reaches that state. So, it will be about INR500 crores to INR600 crores of top-line you can expect from these.
Guneet Singh — BCIPS — Analyst
All right, okay, thank you.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Samrin Omkara [Phonetic] from Omkara Capital. Please go ahead.
Samrin Omkara — Omkara Capital — Analyst
Yeah, thank you for giving me opportunity. Sir, I just want to ask from you that you know how you see the textile industry going forward, means on the macro side. Because — I just want a view on that because textile has faced lot of problems in the past, previously on account of the supply chain constraints, freight costs, low demand in the year. So, how you think textile industry geared to perform in the upcoming one or two years down the line. Your personal view on that because you are in the textile [Technical Issues]. So, can you give some points on that [Technical Issues] something on that?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Sir, I am very bullish. If you take a one to about, say, two years — one to two years kind of timeframe or longer, then I am very bullish. I feel that the government is extremely supportive of manufacturing in India and textiles in particular because this is job accretive to the economy. The incentive regime, which the government is providing, especially certain state governments, to encourage capacity creation is exceptional that allow India to still remain amongst a low-cost producers globally. So that’s encouraging. I’m also finding that the macroeconomic situation at least as far as China is concerned or even U.S.’s resistance towards China is concerned, it’s not going to go away anytime soon. And actually — I also China’s cost structure, for instance, which is very high. So if China is exporting about INR120 [Phonetic] billion of garments. That will come down and that has to probably be absorbed by Cambodia to an extent, Bangladesh, and India, and maybe Indonesia as well to an extent. Vietnam is also getting very expensive these days. And Vietnam is also pivoting to higher-value electronic manufacturing.
So, the way I see it is that the confluence of several events is leading to reliance of more and more output from India. The big brands globally have also experimented with Central America, Africa, and all of that. But for now, the volumes have not really kept pace with their expectations, and only big players in India who can actually step up and deliver to that requirement.
The Indian industry also has to mature and start delivering asset quality, which is equivalent to that of East Asia and also at volume levels, which both countries can deliver. Some of the upstream industry which is the fabric, etc., also has to evolve to keep pace with it, especially in the synthetics area, especially in fabric processing areas, but those areas and all will develop in phases. But, I feel quite strongly about how things are shaping up over the next few years.
The other factor, which can we very favorable to India would be there FCA with UK and EU. Now U.K. FCA could be resurrected with the current Prime Minister in U.K. indicating that he is in favor of getting it done and there has been exchanges with the current government in Delhi as well. So that’s encouraging and if that happens and we take up the [Technical Issues] after that and let’s assume that by end of FY24 or early FY25 and FCA with EU happen, that will up a big shot in the arm for the country because the duty advantage or duty arbitrage that we get will result in a massive inflow of orders for Indian apparel producer.
So, overall I would say, pretty bullish if I take a long-term view.
Samrin Omkara — Omkara Capital — Analyst
Great sir, great, thank you. All the best to you and your team.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Arpit from Adecco. Please go ahead. Arpit, your line is in the talk mode. Please, go ahead. As there is no response from the current participant, we’ll move onto the next that is in the line of Jignesh Kamani from GMO. Please go ahead.
Jignesh Kamani — GMO — Analyst
Hi, sir. Congratulations for good set of numbers.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Jignesh Kamani — GMO — Analyst
How is the competing position of other player in other countries like Pakistan, Cambodia, Vietnam because we are hearing that like Pakistan [Technical Issues] associate mentioned that electricity cost has gone up drastically and not viable now and they need to shut down the manufacturing.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, Pakistan’s volume is not too high that I wouldn’t say that gives us the edge. Same goes for Sri Lanka and some of these countries, their currencies have also depreciated quite drastically. So even though their cost may have gone up in dollar terms, the currency offsets also helps them. So I’m not so bullish about business coming from Pakistan or Sri Lanka there for certain reason. But, we know, the business that comes out of China and Vietnam, that is — that is geared to say and that’s more structurally viable long-term and that’s what will drive growth in India.
Jignesh Kamani — GMO — Analyst
And second thing about more about the entire supply chain initiative, how do the client [Technical Issues] sourcing of the raw-material costs because from the portion of the Puma cotton and other issue, [Technical Issues] now much more serious and associated with the client on the supply chain where you buy the cotton in the entire supply chain. And on the stability part, to what level we are [Technical Issues] supply chain [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
See, at the end of the day, if a price of fiber goes up drastically, blends will start. The fiber choice is based on seasons and the weather backdrop. So, in the autumn and winter, people will want synthetics. In the summer and spring, they will want breathable fabrics, so they will prefer cotton or viscose. So, automatically viscose blend [Technical Issues] will increase. Even polyester blends may happen just so that the brands can keep the cost reasonable. So when cotton prices were going through the roof, we were seeing actually blends share increase quite a bit. So there are ways to mitigate raw material prices and fiber substitution that happens as and when you know certain fiber prices go up you know exceptionally out of sync with the other fiber.
That said, you know for us, we have been an apparel manufacturer and the rest of the value chain, we just depend on fabrics from our fabric suppliers. We tend to price that in, based on the orders that we secure from our customers. The high cotton prices may not translate into proportionate price increase or decrease on the fabric side because there are several other value addition also involved. So let’s take cotton prices goes up by 40% doesn’t mean fabric made out of cotton will go up by 40% [Speech Overlap].
Jignesh Kamani — GMO — Analyst
The stability of the cotton — origin of the cotton in the entire supply chain, customer wants a particular cotton or particular variety or EAC compliant or they can say other aspect.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
That’s okay. Then they’re willing to pay the price for it. That’s fine.
Jignesh Kamani — GMO — Analyst
No, sir. Are we — where we are right now versus the [Technical Issues] and can we get some sort of market-share there from the customer which are more you can say conscious in the entire supply chain, the stability part.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So it’s not — we don’t play too much of a material part except to the extent that India has a cotton base. We have a good fabric base etc. Our focus is more on design, the quality of our manufacturing, the outerwear, which is very difficult for many other players to emulate our manufacture. So our competitive strength comes from those areas and that’s how we differentiate.
Jignesh Kamani — GMO — Analyst
Sure, sure. And my last question is what are the issues right now, which led to delay in the FTA between India and U.K. If you can say –expectation over that earlier — it might come in June, then might delay, now it might looks like March. So what are the — any issue which you think.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
I think the issue is very evident, right, the frequent government changes in U.K. is what is the reason. So, we need stability on the bureaucracy on that side for us. Most of the work has been concluded. It’s just that we need stability on the government so that it can be taken to brochure.
Jignesh Kamani — GMO — Analyst
Okay, thanks a lot and all the best.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Rishab from RBSE Investment Managers. Please go ahead.
Rishab — RBSE Investment Managers — Analyst
Yeah, hi sir. I just want to understand since you are also getting into knitting, in the current scheme of things, if you were to compare woven versus knitting, which business is more attractive in terms of say challenges or you know competition, if you could help us understand?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So, so, you know, each business has its own challenges and the challenges will vary from time to time, right. If you look at globally post COVID, the knit business started growing much more. So it was almost fifty-fifty and then especially if you look at the U.S. market, knits became almost 55% in terms of knits versus woven ratio. It may correct and woven may get its share back, but the point here is that there is a synergy between the two. Brands sell both the products. So, if you go to a shop, you will get a shirt and the T-shirt. There is a woven and the knit product there. And we can cross sell to our existing customers. That’s the reason and logic for going into knits [Technical Issues]. The business challenges will vary. At the moment, we are finding traction for woven. Knits unit will come up next year. By then, hopefully this will start stabilizing in the knits as well. And we will — ideally our knits revenue share as a percentage for us will be very small compared to the woven. So for us, it will be — it will be a start and it can allow us to get a growth engine for us going.
Rishab — RBSE Investment Managers — Analyst
And then from a longer-term perspective, since we are not currently fully-integrated, does it make sense for us to get into spinning or other evaluated first to enable better customer service going forward, say, five to six years down the line or being asset light in a better way.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So in the long-run, some degree of integration is good. We will have to think about it and work on it and we don’t have to go necessarily all the way back to spinning, which is commodity in my viewpoint. But fabric processing maybe, you know, anything above that, we will have to take a call.
Rishab — RBSE Investment Managers — Analyst
Okay, okay, thank you.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Welcome.
Operator
The next question is from the line of Simrat from SS Capital. Please go ahead.
Simrat — SS Capital — Analyst
Hi, thank you sir, for giving the opportunity.
Operator
Sorry, Simrat, so, your audio is not clear.
Simrat — SS Capital — Analyst
Is it better now.
Operator
Sir, we request you to use handset mode while speaking and not the speaker phone.
Simrat — SS Capital — Analyst
Sure, is it better now.
Operator
Much better. thank you.
Simrat — SS Capital — Analyst
Yeah, I just wanted to ask on the employee management side. So what are some of the steps that we’re taking so that employee management is in place as we scale?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Hi, I am not sure I got the question.
Simrat — SS Capital — Analyst
Yeah so I just wanted to ask like so when we scale our business, so how do we make sure that we are able to handle large number of employees.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No, that — we have demonstrated that over the years. So we have had many employees. Currently, we have 32,000 employees. We’ve been handling them and these employees are spread across multiple factories. Clearly, they have a strong HR system in place to handle all these employees. We are considered one of the better quality employer and with the systems and processes to manage all of these. So, I don’t see that as a big problem.
Simrat — SS Capital — Analyst
Okay, thank you, that’s it from my side.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
The next question is from the line of Aashish from InvesQ Investment Advisors Private Limited. Please go ahead.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Yeah, thank you for the opportunity. Sir, on a longer-term basis and beyond the near-term headwinds that the macros present, how do you see the overall — I mean the journey of this company given the fact that before you came on-board, there was a period, which was really painful and the growth was all lost basically and some of the competitors liked to be [Technical Issues], which is still 3x of our size may be
So is there a potential to reach to those levels and do you see that journey enfolding for Gokaldas at all, maybe three, four, five years down the line.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Sure, just the correction. Shahi probably is 4x of our size.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
So, it would be now, yeah. Yes.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
They have done well for themselves. And I really admire that company. There is a huge opportunity. Shahi has just shown the way, right. They are grown and that clearly means that there is hope for well-performing company to grow. So, there is enough latent demand. At the end-of-the day, India last year exported 16 billion out of 500 billion of apparel trade, which is nothing. So, there is enough opportunity out there which the country can capture. And it will be best captured by larger players who have got the ability to invest in quality, invest in sustainability, invest in compliance management, and all of that. So, bigger players like us will definitely see disproportionate growth opportunity for ourselves and there is a demonstrated capability by Shahi where Indian players can grow. So I’m sure there is a lot of opportunity here and we will also capitalize on it.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
So is your customer set seeing similar and how do they recognize you versus Shahi in terms of the qualitative parameters that you might want when you are on that journey to may re-create somebody [Indecipherable]. Is it similar?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
They view us very favorably. They view us as one of the strong supplier, high-quality supplier and a very strong competitor to Shahi in that sense. And I think if I were to ask the brands, they would like to see more of people like us, players like us, that us meaning both Shahi and ourselves. There is room for many more such players to exist in the country. And they would welcome it because then they can source more from India. And as far as either to answer [Indecipherable] to your question, maybe you are as good as anybody in the country and they even compare us with international players. So we even come very favorably with respect to players in other countries like Bangladesh, Vietnam, China, Combodia and all that.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Okay so to ask bluntly, as investors maybe from a longer-term arrangement, maybe three, four years, we should be expecting that kind of a journey from Gokaldas if this were to go fine or I mean that’s the endeavor of the management to go that way and creates from the current size.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
See, if opportunity is there, why not, right. And somebody has to do it and I’m sure if more people do it, the better because there is room for everyone to do it and I’m hoping for the good of the country and good of the textile industry. There’ll be lots of players who will participate in that opportunity.
Aashish Upganlawar — InvesQ Investment Advisors Private Limited — Analyst
Great, sure, thank you so much for that.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Mohit Khanna from Banyan Capital Advisors. Please go ahead.
Mohit Khanna — Banyan Capital Advisors — Analyst
Okay, thank you for taking up my follow-up question. You had mentioned in the call right now that you are — you have bid for some products, which is difficult for your competitors to manufacture. So, I think that was specifically for [Technical Issues] maybe or maybe other customers as well. So could you just elaborate what are the — competitive advantage that you have as compared to your competitors and what would be your strategy to consolidate both market share and wallet share for you [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
See, it’s about outerwear where the company has a strong pedigree there. Capability of producing complicated outerwear. These are cold weather governments, which are usually produced in huge quantities in Vietnam, China, and to an extent in Bangladesh, but not to a great extent. So we do have the capability. We import fabrics, etc., for this, but we do have capability for some of those. Even our design capability stands in good stead. Some of the smaller players may or may not be able to invest that much in design engagement with our customers whereas we could. So some of these differentiators do help us in securing certain types of orders, which others can’t.
Mohit Khanna — Banyan Capital Advisors — Analyst
And so that would be your strategy for the growth and to become 4x just like Shahi?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No, growth will come from multiple segments. This will be a strategy to really try to see how much we can protect our margins.
Mohit Khanna — Banyan Capital Advisors — Analyst
So this is a model scheme, product and Product mix, [Technical Issues].
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Do not got me wrong. It is scalable, right. But that’s not the only segment we can grow and we will grow in various segments as well. It has to be a balance between growth in outerwear and growth in the other segment as well. Outerwear is not a year round product. So it’s more like a cooler clime product. So, we have to factor in all of these when we plan our product categories.
Mohit Khanna — Banyan Capital Advisors — Analyst
Fair enough. Thank you so much.
Operator
Thank you. The next question is from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead.
Pulkit Singhal — Dalmus Capital Management — Analyst
Thanks for the follow-up. Just look at the slide, which talks about U.S. apparel imports and apparel exports. I mean if you will — CY18 CY19 until now, it’s all flattish in those Indian apparel exports in fact. And U.S. has probably gone up a bit. So if the opportunity really China plus one or is it the consolidation largely playing out where we have been [Technical Issues] other Indian players or is it that for your particular segment, you are witnessing model China or other country plus one.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No if you look at India share in U.S. imports, this year, right, YTD August, for this calendar year2022, we are 6% versus 5.1%. That’s our share of import. Last year, in ’21, it was 5.1%. This year, it is 6%. So, almost 1% up. Now, where are we’re getting that 1% incremental market share? We are taking — China has lost about 2% in last one year. So we have picked up some slack from there. Bangladesh is more or less flattish, very marginal growth. So, India is the one which is picking up share. So there is an opportunity for India to pick up more share and 1% or 2% to one percentage point share is just huge. So, it is going in the right direction in my viewpoint and FTA comes, there is an opportunity to pick up share in Europe as well. So there is considerable opportunity that we see.
Pulkit Singhal — Dalmus Capital Management — Analyst
Actually, I was comparing to CY19 and CY18 the absolute revenue of exports. It’s flat. It’s [Technical Issues] that’s almost 38, which is similar right now. You know, so I’m not comparing to last year. I’m just looking at the entire tap, that means looking at it over three years. So I’m just wondering whether there is consolidation happening from an Indian supply standpoint as well for the larger player?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Yeah, yeah, so that’s the point at play where you know some degree of consolidation will also happen. See, there are two, three things that play, right. In the last three, four years, and especially just before COVID started, there has been a move to — move by the Americans to reduce their reliance on China, and it started with Trump, continues with the current Biden administration. Strategically, things are going more and more in that direction. So there is that move, which is what we are seeing in the most recent highs ’21, ’22 etc. The other thing is within the country itself, there is a degree of concentration of orders amongst the bigger suppliers.
So, [Technical Issues] country’s output is 16 billion. The bigger players are the ones who may be delivering a bulk of the growth as opposed to all other players. So there may be a bit of a stagnancy amongst the others. So that also helps us.
Pulkit Singhal — Dalmus Capital Management — Analyst
Sure, sure, and lastly, what is the peak revenues you can do from your current capacity and based on the current prices for the full-year?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
I think what we delivered in Q1 would be our peak revenue based on current capacity. [Speech Overlap] incremental capacities, which are coming on board, right. I mean those will give additional revenue.
Pulkit Singhal — Dalmus Capital Management — Analyst
[Technical Issues]
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
I’m sorry, say that again.
Pulkit Singhal — Dalmus Capital Management — Analyst
INR2,400 crores annually is what you can do from your current capacity?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
That is correct.
Pulkit Singhal — Dalmus Capital Management — Analyst
Okay, got it. Thank you. All the best.
Operator
Thank you. Ladies and gentlemen, we’d be taking the last question that is in the line of Chirag Sethua from ICICI Securities. Pease go ahead.
Chirag Sethua — Icici Securities — Analyst
Yeah thank you so much of the opportunity. So, just clarification on the incremental revenue part. So, the INR500 crores which you mentioned, I correct me if I’m wrong, INR230 crores will we be from your two units sold in Karnataka and one in Tamil Nadu. They contribute around INR460 crores. And then [Technical Issues] say contribute around INR160 crores. So, INR390 crores from there and INR100 crores close to from knitting capacities. Is that correct percentage?
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
No, no, no, so, your voice was not very, very clear to me. I’ve mentioned there between the Madhya Pradesh unit and the fabric process units, that is the revenue. From the last units which have come up in Karnataka and Tamil Nadu, which have already come up last year, both revenues maybe captured separately, yeah.
Chirag Sethua — Icici Securities — Analyst
Okay, okay, and sir. On the INR80 crores [Technical Issues].
Operator
Sorry to interrupt. Excuse me sir. There is a lot of disturbance from you, Chirag?
Chirag Sethua — Icici Securities — Analyst
Yeah, is it better now, sir?
Operator
Much better.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Yeas.
Chirag Sethua — Icici Securities — Analyst
Yeah sir, the knitting capacity which is close to around say INR80 crores to INR90 crores, which we are planning to invest. That is purely for the commissioning of fabric processing or it also includes some of the downstream garmenting units, which will be utilized to produce the garments. So, that will be separate of this INR80 crores, INR90 crores.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
.That will be separate. That will be separate. It is only the fabric process units.
Chirag Sethua — Icici Securities — Analyst
Yeah, okay sir, thank you, sir.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
Welcome.
Operator
Thank you ladies and gentlemen. That was the last question. I now hand the conference over to the management for the closing comments.
Sivaramakrishnan Ganapathi — Managing Director & Chief Executive Officer
So thank you very much for supporting Gokaldas Exports. We’ve been — are committed to seek growth within the constraints that we have of the macroeconomic environment. We are working hard — working with our customers, working on improving our operational excellence and that’s the journey, which continues. We peg ourselves with some of the best players so that we are able to compete with some of the best to deliver to our customers. We will continue to seek growth even in this hard macroeconomic environment. We are reasonably confident of a strong tailwind in the year ahead when the dust settles on the current macroeconomic situation where the opportunity for India is strong given our cost structures, given the government support and FTAs that are coming up. So I’m confident that the prospects for the industry is strong. We are focused on execution as always, and we will keep delivering to the best of our ability.
Thank you.
Operator
[Operator Closing Remarks]