Indo Count Industries Limited (NSE: ICIL) Q4 2025 Earnings Call dated Jun. 02, 2025
Corporate Participants:
Unidentified Speaker
Mohit Jain — Executive Vice Chairman
K. Muralidharan — CFO
Analysts:
Unidentified Participant
Raman K.V — Analyst
Aditya — Analyst
Rajesh Kothari — Analyst
Vineet Bansal — Analyst
Jatin Damania — Analyst
Surya Narayan — Analyst
Vaibhav — Analyst
Bhavin Chheda — Analyst
Resham Jain — Analyst
Prerna Jhunjhunwala — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Indo Count Industries Limited Q4NFY 25 earnings conference call. This conference call may contain forward looking statements about the company which are based on beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict. 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 Star then zero on your touchstone phone.
Please note that this conference is being recorded. I now hand the conference over to Mr. Mohi Jain, executive Vice Chairman. Thank you. And over to you sir.
Mohit Jain — Executive Vice Chairman
Good morning and a warm welcome to all of you joining us for the Indo Count Industries Limited Q4 and FY25 earnings call. I’m also joined by our group CFO Mr. Molidhara, Mr. Manish Bhatia, our CFO and strategic growth advisors are Investor Relation Advisors. We hope you had the chance to review the financial results and investor presentation available on the stock exchange and on our company website. I’m happy to share that 20 years ago we ceded the thought of entering the home textile business. Since then we have grown to a global leadership position with approximately half a billion in revenue.
Marking a significant milestone in our journey. FY25 has been truly transformational for our company. We achieved substantial growth reflecting the continued trust and confidence our customers place in us. We recorded highest ever revenue reinforcing our leadership position in the global home textile industry. Revenue grew by 16% to approximately 4,200 crores, the highest in the company’s history and outperforming the peer group on the volume front. We surpassed the 100 million meter mark achieving 106.4 million meters. While this is a marginal shortfall versus our guided range, it represents a healthy 10% year on year growth. An important achievement was the improvement in our DJSI score which increased from 45 in 2023 to 66 in 2024.
This position’s indo count among the top 10% in the textile, apparel and luxury goods sector. Significantly above the industry average of 30. We also received several ESG related recognitions during the quarter. Some of them are winner of the Best Sustainable Retail Practices Award winner winner of the Excellence in Wastewater Reduction and Circular Innovation Leadership Award, first runner up in Best Cotton Farming Practice category on the EBITDA for 25 FY25 we reported EBITDA of rupees 574 crore with a margin of 13.7%. EBITDA margin was slightly lower due to the impact of strategic investments made in our businesses and weaker than expected Q4 performance of our end markets.
We will cover the same in our speech in detail. Now coming to Q4 performance, FY25 was a stable and overall positive year for us. However, Q4, particularly February and March presented significant challenges. We saw a decline in offtake drop driven by reduced consumer confidence largely due to uncertainty surrounding potential tariffs. The shift in sentiment altered our product mix with increased demand skewed towards lower to mid priced offerings as opposed to our typical sales profile. Across our end customers we experienced low confidence as they grappled with creating the right assortment of products on the back of potential tariffs and low consumer confidence.
This resulted in both volume and value down trading which impacted our average selling price by approximately 6% compared to the average of the previous few quarters. This change in product mix affected our Q4 revenue and in turn our profitability due to lower absorption of fixed costs, especially our US business which is an investment phase. We continue to witness similar volume and value trend in Q1FY26 and expect subsequent quarters thereon to improve gradually. Given the fluid nature of the current tariff situation with a 90 day pause period set to conclude by early July, we believe it is prudent to refrain from volume and margin guidance for FY26.
At this point of time we are actively evaluating a broad range of potential scenarios while closely engaging with all our end customers. Our focus remains on maintaining maximum operational flexibility while safeguarding business volumes and ensuring we retain if not grow our market share. In this financial year, we embarked on multiple capacity and capability enhancing projects by venturing into new businesses. Our efforts were focused on expanding into value added segments such as utility and brand building initiatives, a transformation we now refer to as Indo count 2.0. I will share some key highlights. 1. We successfully acquired one Suta brand in US.
This is a legendary home textile brand and we expect to launch this as a direct to consumer brand shortly with a strategic brand positioning in the US market. To start with, our strategy to enhance contribution from licensed brands has gained momentum with the addition of Fieldcrest and Waverly to our portfolio in Q3 FY25. Both are well established consumer brands in the US market. Although it’s been only 2/4 since the intrusion, they are already gaining consumer traction and are expected to support our growth in the US market. 3. The utility bedding segment in the US presents a significant opportunity representing a USD 4 billion market within the bedding category.
To accelerate our growth and strengthen our presence in this space, we have strategically expanded our manufacturing capabilities for pillows and quilts through targeted acquisitions, the first one being Fluvitex, a leading manufacturer of pillows and quilts with an annual revenue potential of USD 50 million. Second, we did Modern Home Textiles, a specialized pillow manufacturer with an annual revenue potential of USD 35 million. Both facilities are currently operating at approximately 50% capacity utilization. We expect to gradually ramp up utilization levels over time, which will further enhance operational efficiency and support our efforts to capture a larger share of the US Utility bedding market and drive meaningful revenue growth.
This encouraging performance of Fluvitex and Modern Home Textile has reinforced our confidence in the US Utility bedding market and encouraged us to set up a greenfield project in North Carolina focused on pillow manufacturing. The first phase of investment is expected to be completed by September 2025. We expect peak revenue potential from this phase to be at USD 85 to 90 million. This expansion marks a significant step towards strengthening our manufacturing footprint and accelerating growth in the US Market. With these three facilities, we’ll be able to cater to all the geographies of the US market. 4.
Recently, we also acquired a licensed brand, Beauty Rest from Serta Simmons Bedding, a renowned global sleep company with a 100 year legacy in delivering industry leading sleep solutions and a commitment to improving lives through better sleep. This strategic partnership is set to harness Indocount’s strong manufacturing expertise and expansive distribution network combined with BeautyVest’s innovative product portfolio. Over the past 12 to 15 months we have invested approximately 460 crores in brand acquisitions, capacity expansion, brand building and talent acquisition, thus laying the foundation for a future ready diversified product portfolio. These strategic investments will deliver substantial growth, reinforcing the company’s path to becoming a dominant industry player.
As of FY25, Indocount has achieved revenues of approximately 500 million and we remain confident and committed to our goal of doubling our revenue by 2028. This growth will be fueled by the full scale ramp up of our branded and licensed offerings, optimal utilization of our utility bedding business in the United States, and continued strength in our core bedsheet operations in India with these initiatives will secure while Sorry While these initiatives will secure long term premium growth, there may be a short term impact on growth and therefore margins. Despite the challenging environment, we successfully maintained the revenue contribution from each segment for FY25 compared to the previous year.
Moreover, in absolute terms, each segment has posted positive year on year growth Coming to Industry Scenarios One of our most significant recent developments for the textile industry and for us at Indo Count is the signing of the India UK Free Trade Agreement. This agreement eliminates duties of approximately 10 to 12% on nearly all Indian textile and apparel exports to the uk, making Indian products far more competitive in that market. With this fta, India is now on an equal footing with countries like Bangladesh and Pakistan which have long benefited from duty free access. This landmark agreement is expected to significantly boost India’s textile exports, with some projections indicating a potential doubling by 2030 as global supply chains increasingly diversify away from China.
Under the China plus one strategy, India is strategically positioned to capture a larger share of global demand at Indo count. We are well prepared to capitalize on this emerging opportunity. Currently the UK market contributes approximately 10% to our overall business and with the advantage of this trade agreement, we are optimistic about significantly expanding our presence in the region. On the EU front, India is currently engaged in free trade agreement negotiations with the aim of concluding discussions within the next two quarters or by the end of this calendar year. If successfully finalized, particularly with favorable terms for our segment, it could unlock significant opportunities for Indian home textile exports by providing a level playing field in the EU market.
Also, this development has the potential to further accelerate our growth. Turning to our largest market, US specifically regarding the recent tariff developments, while a 90 day pause has been announced, an additional baseline tariff of 10% is currently in effect for all countries except China. For China this is compounded by an additional tariff on top of the baseline. While China’s direct presence in the batsheet segment is relatively limited compared to India, the impact on US is more indirect. All major retailers source a significant portion of their overall product range from China. As a result, the additional duties on Chinese imports affect their broader sourcing strategies which in turn influence their buying behavior across categories.
There are encouraging developments on the trade front, with recent reports indicating that India and the US may finalize the first phase of a bilateral trade deal before July this year. We remain optimistic as recent updates suggest that India has been actively advocating for preferential treatment for exports in key labor intensive sectors including textiles. Such a development could significantly strengthen the global competitiveness of the Indian textile industry and create new opportunities for growth. As we move into the next financial year, we anticipate short term demand to be impacted by consumer confidence and overall sourcing strategy of our end customers.
From a long term perspective, we remain optimistic about our growth prospects across our key end markets. That is from my side. Now I request Mr. Moulidharan, our group CFO, to share the financial highlights of the company.
K. Muralidharan — CFO
Good morning to everyone. As for volume, sales volume for Q4FY25 stood at 25.6 million meters versus 28.7 million meters in Q4FY24 down by 10.8% year on year. Sales volume for FY25 to that 106 versus 96.9 million meters in FY24 a growth of 9.8% year on year. Total income of Rupees 1029 crores in Q4FY25 versus 10.93crores in Q4FY24 down by 5.9% year on year. Total Income of 4191 crores in FY25 versus 3601 crores in FY24 a growth of 16.4% year on year. EBITDA for Q4FY25 stood at 88 crores versus 166 crores in Q4FY24 lower by 47% year on year.
The Q4 impact on EBITDA was an account of lower sales due to weak market demand. As alluded in our opening remarks Earlier, EBITDA for FY25 stood at 573 crores versus 603 crores in FY24, marginally lower by 5% year on year. EBITDA margin for FY25 stood at 13.7% versus 16.7% in FY24 down by 300 deaths. As for PAD, PAD for Q4FY25 stood at 11 crores versus rupees 92 crores in Q4FY24 PAD for FY25 stood at 246 crores versus rupees 338 crores in FY24. It’s important to understand that currently we are in investment phase which has resulted in higher depreciation and interest costs to the tune of approximately 150 basis points.
As we scale our volumes and revenues, we expect better flow through from EBITDA to PAT over the next two years. EPS for Q4 FY25 is Rupees 0.56 EPS for the whole year FY25 he’s R 12.42. Net debt to equity is 0.42 as on 31st March 2025 as against 0.32 for the previous year. I’m happy to say that the board of directors has recommended dividend of Rs. 2 per equity share of face value of rupees 2 each. That’s 100% subject to the approval of shareholders at the ensuing annual general meeting. With this I open the floor for Q and A.
Thank you.
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 their touch. Don’t telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow up question, we request you to rejoin the queue.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Raman from Sequent Investments. Please go ahead.
Raman K.V
Hello sir, can you hear me? Yes sir. My question is with respect to the phase one in North Carolina, can you provide the details with respect to the capex spend on the course B or the company planning to spend the rest of this? And can you also estimate it time of this capex being completed and the potential revenue from the first day?
Mohit Jain
Morning Raman sir. Total investment we’ve invested so far 31 crores. You know the total investment is 130 crores in first phase. So 99 crores is pending which will be done between April of this year to September.
And the phase will get over by the first phase gets over by September which is 18 million pillows capacity. So our total pillow capacity across three locations will go to 31 million pillows. And for the North Carolina specific facility the revenue Expectation is between 85 to $90 million US dollars and for the utility bedding business all put together 175 million. Okay.
operator
Sorry to interrupt you Raman. Can you please use your handset? Your voice is bit muffled. Yes, now we can hear you.
Raman K.V
Yeah. My last question is with respect to pre agreement, India has recently signed a deal with uk. So is there any plans to increase the company presence in the UK market? Because it will be or the FDA will be advantage for in Indian players when compared to other countries as well. And follow up on that that what is if India signs FDA with European Union, what will be the additional benefit? I just want to know in terms of you know how I said percentage? What is the average difference between other player existing players, how at how much percent cheaper they are able to sell and how will that be beneficial for the company?
Mohit Jain
Sure. You know, our current exposure to the UK market stands at approximately 10%. With the India UK Free Trade Agreement on the horizon, we believe that this development will provide a significant boost to bilateral trade. The FTA will allow us to operate on a level playing field with other competing countries enhancing our competitiveness and opening up new opportunities in the region. This is a positive and strategic development for us for future growth. Also keep in mind that we’ve been doing business in the UK for over 15 years now. And we have an office, active office in Manchester and a team there with warehousing designing all capabilities.
So all of that gets leveraged. So we are already in active conversations. We’ve been selling to a lot of the customers already. And as we speak we are already in active conversations on how we build on this for the future. And just to add on our current product, specifically there’s a tariff of 12% of 12% from India at this point of time.
operator
Thank you. A reminder to all participants, please restrict yourself to only two questions per participant. We have our next question from the line of Aditya from Synergy Investments. Please go ahead.
Aditya
Yeah, good morning.
operator
So you need to be a little louder.
Aditya
Yeah.
Mohit Jain
Okay. I have. My question is regarding the interest also I find there’s a lot of interest for. So is there any plan in the future to reduce it? How do we go about.
K. Muralidharan
As you know, compared to the previous year the interest costs were a little high because you know, we had built inventories which are required for production, higher production. You know, we have stabilized our inventory levels at this point of time. So we feel that the event, you know, the interest cost should be more or less stable around this place, you know. But we need to know that, you know, in our US operations we are still increasing our utilization levels. So there will be, you know, some inventories build up there. So overall I think you know, the interest costs will be around 120, 130 crores annually.
Aditya
Right. So we are going to go with this in the next year also, right?
Aditya
Yes, yes, answer. I just heard in the commentary that we expect similar performance in the quarter one also of next financial. Of the financial year. So what is the guidance for revenue in this year? I understand that we are doubling our revenue by 2028. But what is the guidance for the next financial year? One year.
Mohit Jain
Aditya, as I mentioned earlier, in such volatile times, we are refraining from giving any guidance, of course. Our objective is to maintain our market share and then grow it even in this year.
Okay. All right. Thank you.
operator
Thank you. We have our next question from the line of Rajesh Kothari from Alpha Advisors. Please go ahead.
Rajesh Kothari
Hi, good afternoon sir. Thanks for this opportunity. I have two questions. One, I just wanted to understand that this tariff actually came into place late March. Actually implementation is of course starting from April. And also if I look at most other companies results which are announced, I think by far everyone has announced their results. Nobody reported deep in revenue and even if there is say moderate deep, which I can understand why there is so much significant decline in gross profit margins because no other companies have reported this kind of a decline. So it would be great if you can just give some details on this.
Mohit Jain
Yeah. Morning, Rajesh. In our case, it is an impact of change in product mix on both our raw material and fixed costs. Roughly the split is 3070 between raw material and fixed cost which includes both employee and other expenditure. You want to keep in mind that overall if you look at the full year, our growth, growth has been 16%. So that is higher than our peers. It’s in the quarter four that we’ve seen a down trading within our product mix and that’s what kept the volumes to approximately 25 million-plus. But our average selling price came down.
And that’s the reason there’s an impact across the board up to EBITDA level.
Rajesh Kothari
So basically are you trying to say that the customers with whom you are supplying to, before even tariff implementation there was a significant downtrending because tariff got implemented much later and not in month of January and February, maybe say March, I can understand some effect probably in month of March, but otherwise why is that drastic impact? And you know, because if I look at on full year basis, consumer cannot shift that rapidly. Am I right?
Mohit Jain
We’ve seen the impact of this, you know, lower price products in early February. However, we were not sure if this is a one off situation or a continuing trend. It’s only towards the end of February that it was confirmed in our customer mix that this could be a continuing trend based on the order pattern from our customers. So everybody knew that tariffs are coming. So customers started and I mean our retail customers started reacting and we saw that from our product mixer. Understood.
Rajesh Kothari
So do you think, you know, in terms of your investments, what you are doing in US this can also pose some challenge in terms of your guidance for next two, three years because a lot of investments you are planning in U.S. do you see any significant change in that?
Mohit Jain
As I’ve been very clear that, you know, we are yet comfortable with doubling our revenue by 2028. Most time investment in the US is more or less done. It’s only our North Carolina facility that needs to get completed. So we’ve invested 460 crores plus what we’re investing in the North Carolina facility as we speak, which is approximately 99 crores of spending. So those should reap good benefits to the organization as we move forward. So we are very comfortable with where we are.
Rajesh Kothari
Okay, thanks. I’ll come back in queue.
operator
Thank you. We have our next question from the line of Vineet Bansal from Pinnacle Securities. Please go ahead. Hi.
Vineet Bansal
Thanks for posting the results. I wanted to understand a bit more about the tariffs because the previous person who asked the questions mentioned that the tariffs came in a bit late around the end of March. So given whatever tariffs are there and the kind of uncertainty because you mentioned in the comments, because there was a lot of uncertainty because of the China tariffs and all that stuff. So I wanted to understand on that front what actually happened, what led to such a decrease in margins. I mean you mentioned about the cost, but actually from the tariff viewpoint and if the deal occurs between US and India then how that might shape the prospects going forward.
Mohit Jain
Sure, Vinny. So basically I was explaining what we’ve seen is a down trading of products. So basically our lower end to mid end product offtake has increased compared to the higher end products. So that’s why our product mix portfolio in Q4 has undergone a change pre tariff and we are seeing the same mix continue even in Q1. So our customers are not investing right now in higher end products because of course for them the retail price increase would be even more substantial. And in a tough US environment which we are in right now, I mean there’s a better offtake for more affordable products if I may say so.
Vineet Bansal
Got it, got it. But I fail to understand why would the price increase for your products because you are making them. In the US the tariff was 10% reduced to 10% in a few days, but Chinese products were selling at much higher tariff. Am I missing something?
Mohit Jain
Yes. This is all manufacturing that we are doing in India. So I mean our maximum revenue is currently being manufactured in India. We’ve only got into US manufacturing of pillows and tools very, very recently from October of 2024. So that’s very recent and that’s a very small part of the overall business at this point of time.
Vineet Bansal
But even if you were manufacturing In India then the tariff was around 10%.
Mohit Jain
Right.
Vineet Bansal
Or was it more.
Mohit Jain
The tariff first for Indian India? India was implemented at 26% which was changed to 10% additional tariff from whatever import duty we have over and above that there was a 10% put in. It’s not about only India. You see today if you’re a customer, you’re a retailer in the United States, you’re not looking at only what you’re buying from India or XYZ countries. You’re looking at how is this tariff affecting your whole product profiling because from China it was 146% the additional tariff. So it just put everything, it put the whole business on hold and that’s how the customers started picking up more value driven products than higher end products.
That was the change.
Vineet Bansal
So this is what I’m trying to understand. So the Chinese or other tariffs were much higher than the tariffs that were labeled on your products and the customers in logical sense would pick your products because they were coming at much cheaper rates. Right.
Mohit Jain
It’s not. You’ve got to look at the total basket of what they’re selling within the retail store. Not only home textiles or bedding or one category of products. They’re looking at everything across the board and seeing how they want to manage their inventory and their order flow.
Vineet Bansal
Okay, thanks.
Mohit Jain
Thank you.
operator
Thank you. We have our next question from Lionel Jatindamania from Swan Investments. Please go ahead.
Jatin Damania
Good morning sir. Thank you for the opportunity. Sir, continue the same question. In terms of the revenue and the gross margin decline, can you help us in understanding the overall change, changing the product mix? In terms of the low, I mean how much did the fashion utility and Contributed during the Q4 and what was the contribution of the branding in Q4?
Mohit Jain
Sure. So Jatin specifically, you know I might not be able to give you the numbers right now but our new segments, which is utility bedding and our new brands which is Fieldcrest Waverley, had not started in Q4, you know, contributed to 125 crores in revenue. Out of the revenue of 1,029 crores. 125 crores has come from there. In Q3 that was 100 crores.
Jatin Damania
So sir, I mean we have seen an increase in the revenue in the branding business. Definitely comes with a higher margin. And Vam sukta, we are expected to launch shortly. Probably we can probably see a launch in Q2. So the sharp deterioration, the gross margin is it attributed largely to a higher cost associated with the pillow and quilt business which operated at 50%, how should one understand the sharp deterioration in the margin front?
Mohit Jain
Sure. So of course you know, for our utility bedding and brand business we’ve created a full infrastructure in the U.S. you know, whether it’s showroom, whether it’s talent, of course all these manufacturing facilities which we have said even in our previous call that that has 150 to 200 basis point impact, you know, for the next 12 to 18 months that will continue this year and after that we expect that to go away completely, you know. So that investment is of course on the India side. We’ve seen a sharper product mix downtrend which impacted our gross margin due to lower selling prices, you know, and under absorption of course.
Rajesh Kothari
But sir, if you look at the.
Jatin Damania
Indian business contribution to overall revenue is only 2.5%.
Mohit Jain
Right.
Jatin Damania
And the negative deterioration was, I mean that was highly unexpected given the pillars who have recorded the numbers. So if you can help, help me in understanding what was the pillow and quilt contribution during the queue and the margin that we had on pillow and quilt in Q4.
Mohit Jain
So the pillow and quilt as I said is 125 crores out of 1029. So that is approximately 11%, you know, is coming from that category. And those categories are losing money as we speak because I mean the investment in those categories in terms of talent overhead cost is much higher than the revenue we are going to generate at this point of time. So that over a period of time like in any business, this is not a very large capital intensive business but it’s a very large, very high investment on human talent and other infrastructure including branding that we are investing in as we speak.
And we’ve been very categorical and transparent about it.
Jatin Damania
So sir, what is the incremental investment we will be doing in the employee and the infrastructure in FY26? Because definitely last year we did quite a few which impacted the margin. So in current year what is the incremental investment that we are going to do it?
Mohit Jain
So more or less most of the investment has been done. Even if you see our Q3, Q4, you’ll see our salary cost as stable. Now as these new third location comes up and as the utility bedding business ramps up in terms of utilization level, we’ll have blue collar workers come in and you know, that expense will go on but that will be in turn with the revenue going up too for that business. But otherwise on the baseline we’ve already created our team, our team is in.
Jatin Damania
Place and on the greenfield expansion you indicated the first phase will come in September 25th. Now the 99 crores is pending so I mean for second phase what will be the capacity and how much we’ll be spending and when we’ll take that.
Mohit Jain
Decision for that too early to say anything. We have a very large facility of over 300,000 square foot at that location. So we first and our focus is only utilizing the three manufacturing locations. As we complete that we have enough infrastructure to expand further.
Jatin Damania
I’ll come back in a few with a couple of more questions. Thank you.
operator
The next question is from the line of Surya Narayan from Sunidy Securities. Please go ahead.
Surya Narayan
Yeah. Thank you for giving me opportunity. Am I audible clearly?
operator
Oh yes sir, you are.
Surya Narayan
Okay. So Moisha, just one question is that a couple of questions have. One is because we have expanded substantially in the brands and you know even one Suta is yet to come. So in that scenario we understood that from the January of calendar this year the consumer sentiment in the US has declined. So it has quite. It has been running quite weak. So so how. How quick you see the consumer sentiment improving in this calendar A and number two is that. No because most of the brands are native to US and when the US FTA and UK sorry US UK and U FTA will be opened up so do you think the native brands of US that will be well accepted in the those markets with that kind of let’s say margin profile.
So and secondly and second point related to this only just to understand whether the material margin in the pillows in the pillows and quilts are lower than the beards bidding products what we were having.
Mohit Jain
Sure. So you know you’re asking me a multi billion dollar question. Can you hear me? Yes.
Surya Narayan
Yes.
Mohit Jain
As to when you know things in the US will turn around or when demand. So our objective is very simple as an organization is to maintain our market share, you know and to grow the market share. That’s the objective. These are small hurdles that come along the way. We as an organization have gone through such whether it’s supply chain, whether it’s Covid times. So this is one of them. These are of course testing times. We will get through these two. On the brand side of the business the brands that we’ve spoken about have taken last year from a licensed brand and acquired and we own that brand right now.
Focus is more on the US side once we launch Wamsutta. The idea is to launch it at first with the halo effect which is a direct to consumer on the luxury side and then we have a lot of interest from all the retailers in the US market to take it to them in some shape and form which we will. We are putting the marketing strategy around that as we speak. But our endeavor is to make Wamsuta global home textile brand as we’ve also been saying after we acquired it. But we’ll take one step at a time on your question of margins on raw material cost.
I guess in the pillow business and the quilt business is similar to our existing business. So they’re the raw material is pillow shelves and as well as your fiber that goes into making a pillow or a quilt.
Surya Narayan
Okay. And regarding the weeks scenario or consumer sentiment scenario, so are you facing any kind of jitteriness from the your customers in keeping the branded goods and it is very difficult to sustain that kind of products and rather they are happy with only affordable utility segments. And that is the trend will you hope will continue for another quarter or two or maybe first half of this year.
Mohit Jain
I mean the trend will continue but we’re not seeing any jitteriness when we are taking our brands to the customer. In fact, they are very receptive because they also want to differentiate their floor, their retail space. So if it’s a meaningful brand, if it enough consumer data and traction, then they’re happy to take it up. So there’s no jitteriness. And of course we all are strategic what to wear. It’s not like one size fits all.
Surya Narayan
So where can we improve in the FY26? It is difficult to at the moment say about the guidance on the, on the volume and the top line guidance. Maybe. So where can we improve? Is it the material front? Because the staff. You are saying that the staff expenses are more or less stabilized. So we will be believing that no, we will be freezing the staff half cost here. And other expenses are also similarly so. And depreciation may also go off a little bit because you know, post Carolina facility it may also go. So where we see improvement in other line items.
Mohit Jain
Sure. So a couple of things. So of course on our core business, which is the bed sheet business, you know, from India that we’re exporting, the objective is to maintain the market share. You know, there are some ups and downs in the product mix which we’ll have to go through. There’s really not much we can do about that. Our endeavor again from the India bedsheet exports is to grow other markets. It’s not only the U.S. the U.S. comprises approximately 70% of our revenue. So other markets, geographies like EU like UK, Japan, Australia, the Middle east, these are all markets that are growing for us.
India now has a free trade agreement as we know, with the Middle east, with uae, specifically with Australia, Australia and Japan also. When these free trade agreements, it’s not a switch on and off that you know, it happens. And then tomorrow you start shipping. Right. It takes some time. So you’re starting to see those benefits come in. On the US business which was US manufacturing of pillows, we expect capacity utilization, which is currently at 50% to start improving also as the quarters go by. So we are in active conversations with all our customers to grow that business.
And as the new facility comes up also that will help us grow the capacity utilization. It’s impossible to put a number or to say that which quarter it will happen. But we need to have the facility and infrastructure first and then attract the business.
Surya Narayan
Just if I last question, if I can, can we expect that FY24 gross margin with the help of Wamsworth and other branded products, we can get better than the FY24 gross margin in FY26, FY27 at least at this point of time.
Mohit Jain
You would not like to comment on any volume or any guidance on any numbers. It’s too fluid a situation, as I mentioned earlier.
Surya Narayan
Okay, thank you. I’ll come later.
Mohit Jain
Sure.
operator
Thank you. We have our next question from Lino Weber from Athena Investments. Please go ahead.
Vaibhav
Good afternoon, sir. My question pertains to the brands that we’ve acquired and the ones that have been reviewed in the usa. What sort of long term margin expectations and targets have we set over the next two to three years when investments and expenses stabilize for non branded businesses?
Mohit Jain
So we’ve been saying that, you know, I mean once these businesses stabilize, we expect from our regular margins to do around 15 to 20% higher margin and specifically the brand segment of the business. And overall we maintain that as an organization you like to do between 16 to 17% margin across the board.
Vaibhav
So you’d recommend that the branded businesses would be 15 to 20% higher than the 16 or 14% that you do.
Mohit Jain
Because the branded business, the target is 100 million. But know the revenue if it’s going to double to a billion. So it’s going to be 100 on a billion. Right, Right. So you want to keep that factor into mind.
Vaibhav
And then the expected revenue I think previously has been guided between FY26 and 28 as 275 million to be the total incremental revenue. Sorry, come again please. I didn’t follow. Is going to be around $275 million incrementally.
Mohit Jain
For here. Right. What we are saying is two things. Our revenue for FY25 is 4200 crores approximately. We expect to double that by 2028. Out of that increase in revenue, 275 million will come from two new businesses. Which is the utility bedding business, approximately 175 and 100 million from the brand business, the new brand and the like.
Vaibhav
Thank you. And the last question I have is, is there any room to improve the working capital for the cash cycle without compromising on margins?
Mohit Jain
Sure. So we right now at approximately 130 days roughly. So at this point of time I think we should be at similar levels.
Keeping in mind the new businesses also. And we are always evaluating this, keeping in mind what’s the supply chain security? How do we need to service our customer? There was some increase in our Q1, Q2 which we have stabilized and brought it back.
Vaibhav
Right. I think we’d be a bit stretched for cash since we have high interest payments and high expenses over the next year or so.
Mohit Jain
Yes. I mean our view is very clear that as we able to, we’ve created the infrastructure. So that’s why the interest and the depreciation is on the higher side.
We feel comfortable that over the next 24 months these should get stabilized. So we should have a better pass through from EBITDA to PAC by 150 basis points which was, let’s say if you go back a year ago, you’ll see roughly, you know that number. So it’s a matter, it’s a little bit of a. It’s a part of the game, you know that we need to go through.
Vaibhav
Okay, thank you.
operator
Thank you. A reminder to all participants, please restrict yourself to only two questions per participant. Should you have a follow up question, we request you to rejoin the queue. We have our next question from the lineup. Bhavin Chera from NM Holdings. Please go ahead.
Bhavin Chheda
Good morning, sir. First, regarding the.
operator
Sorry to interrupt you, Mr. Bhavin, so can you please be a little louder?
Mohit Jain
Hello?
operator
Can you hear me now A bit better? Yeah.
Bhavin Chheda
So regarding long term guidance and the slide number eight, what peak revenue potential from new brands and the utility bedding, the 275 million dollar increment, is it the incremental number or over the current number? And what’s the current number there? Utility bedding and new brands contribute how much right now?
Mohit Jain
Correct, Subhavin. The Overall increase is 275 million. In FY24 25, that number is roughly 32 million which is the 225 crores yeah, sorry, it’s 26 and a half million. Roughly 26 million.
Bhavin Chheda
Roughly 26 million. So another 75 you will add. So basically.
Mohit Jain
No, no, no no no no Bhavan, the total is 275 million from a zero base. From a zero base in 2025 out of the 275 million we’ve done 225 crores out of which 100 crores came in Q3, 125 crores came in Q4 which translates to roughly $26 million roughly. So you can say 250 million will be further.
Bhavin Chheda
Yeah, second question, can you give us over three years? Yeah, FY25 on fiscal basis what was the geographical mix like US, UK, Europe and rest of the world you mentioned 10%. If you can give Europe and rest.
Mohit Jain
Of world US is approximately 70% for us, you know and then 20% is Europe, Australia, Japan, Middle east all put together and all those European figures separately.
Bhavin Chheda
X of Australia, Japan and all that.
Mohit Jain
We can take that offline and give it to you should be 6, 7%.
Bhavin Chheda
Non Europe should be 6, 7% you’re saying?
Mohit Jain
Yeah, we can check and give it to you offline if you don’t mind.
Bhavin Chheda
And my sir, last question. We had a quarter three call in February where you were expecting 110 to 115 million meters for full year but you ended with 106. So I’m assuming Jan was over. Jan was fine. So whatever decline you would have seen was a sudden decline in the month of June, March and probably some in Feb. And continuation of that question also is since you have mentioned in the earlier part of the call that the gross margin pressure was probably due to downgrading of product mix to the lower and the medium end. Was that a client specific issue? Your across US portfolio is seeing a down trading because I have not seen such down trading happening just suddenly in one or two months.
Tracking home textile for more than a decade. So is this a client large client specific issue or across the market?
Mohit Jain
Sure, sure. So you know we have started seeing offtake of lower priced products bhavin in early February. However we were not sure if this is like a one off situation or a continuing trend. As I mentioned it’s only towards second half of February did we start realizing that this seems to be a continuing trend and this is across the US landscape It’s not all specific to a retailer or a customer.
Bhavin Chheda
Okay, thank you sir, I’ll come back later.
operator
Thank you. We have our next question from the line of Resham Jain from DSP Asset Managers, please go ahead.
Resham Jain
Hi Mohiji. So I have three questions. First one is you explained about the ASP thing, but is there any differential in terms of the buying pattern between the big box retailers versus more fashion led or those kind of retailers. In. Terms of the overall demand conditions?
Mohit Jain
So Rashan, of course, every today we sell to a direct to consumer company in the US Their product mix would be different. A big box retailer’s product mix would be different. I mean if you’re a purely luxury store like Bloomingdale, it would be different. So each customer is different from their product profiling standpoint?
Resham Jain
No, sorry. My question was are the demand conditions right now in us Are you experiencing different behavior right now where big box retailers are doing much better and that is pulling down the overall ASP versus the the more high end or fashion led home textile customers.
Mohit Jain
Understand? Understand? No, at this point of time you’re seeing it across the board. You know, it’s not specific. Luxury store is suffering and versus the big box is gaining traction right now.
Resham Jain
Understood. Okay. And also between the two sites of Home Textiles, VAPI and Kolhapur, how are the overall economics right now? Because you have turned it around after taking it over. But now is the situation very different in the operating condition of both the sites? Because VAPI had its history of the past when GHCL used to manage it.
Mohit Jain
Correct. But you know, after six to nine months of us take it over, we had both facilities got to a similar margin profile number, you know, so for us it’s that there’s two separate manufacturing units, you know, servicing clients. So it’s, there’s no differentiation. Even their cost patterns are very similar.
Resham Jain
Okay, got it. And my last question is with respect to the US facilities and there are like you’re putting up Greenfield also. Generally we have seen most of the Indian companies in the past who have put up facilities in us. They typically face lot of challenges in operating and making money. So according to you, let’s say if you have to give two, three pointers, which gives you confidence and these are large investments which you are doing there. So the history is very patchy for most of the not just exile players, but most of the other industries.
Mohit Jain
Sure. So of course we are also privy to those, you know, and we’ve also gone through, you know, the data. But what we’ve done is we’ve of course invested in a very, very strong team, you know, some of the best in the industry. You know, we’ve handpicked them, chosen them, got them on board, you know, where both organize us and you know, their thought process is completely match and tally. We’ve invested in three strategic locations. Got it. Of course, two acquired and the third one is a greenfield project. We have great customer traction. That’s how we got into this business.
A lot of feedback from our customers to get in and add value here. And that along with getting into some licensed brands that will all help build these new categories of businesses for us. We are pretty comfortable with where we are at this point of time.
Resham Jain
Okay, perfect. Thanks Mohiji. And all the best. Thank you.
Mohit Jain
Thank you.
operator
Thank you. We have our last question from the line of Prena Junyanwala from Ilara Capital. Please go ahead.
Prerna Jhunjhunwala
Thank you for the opportunity. My first question is whether, because the down trading in the US started only from February and it accentuated only in the later half of the quarter do we see a sharper decline in ASPs or any further margin expansion than Q4 margin contractions in Q4 then we in Q1 then we witness in Q4.
Mohit Jain
So Preena, we would not like to give any specific comments on Q1 margin or overall. But we have seen and because the environment is extremely volatile so it would not be correct to give a margin for Q1. However, our endeavor will be to maintain if not grow from Q4 levels.
Prerna Jhunjhunwala
Okay. And are we seeing additional volumes being sourced from India because the tariff post July would, if there is no bilateral agreement with various other countries as well in you know, we see a little more volumes in Q1 as compared to the rest of the year largely. I’m just trying to understand the consumer behavior over here that whether they are trying to protect their inventory or try trying to protect the profitability, what are, how are they behaving right now in terms of volumes and what are they asking you to share in terms of margin over the period?
Mohit Jain
Can you come again? Because I didn’t follow you completely. So I don’t want to give you a.
Prerna Jhunjhunwala
Okay. So the whole point, what I want to understand is how a consumer, how are retailers behaving in terms of their procurement cycle during this tough period? Because one, at one end the consumers are down trading so their profitability also gets hit and that the other end, the tariff situation is also not at their side. So are they trying to procure a little higher amount of volume initially because they don’t know what happens beyond 90 days or the procurement remains as usual as in Q4.
Mohit Jain
Understand. So you know, there is no knee jerk reaction, you know that somebody’s, that the retailers are thinking that after 90 days, something will happen and then let’s stock up right now and then, you know, keep our warehouses full. So we are not seeing any of that. There are absolutely no conversations because this is such a dynamic and evolving volatile situation. So they’re also just going through it. As, you know, as time is moving along, I’m hoping that everything will settle down in the next two to three months. But there’s no knee jerk reaction from their side.
And even if it’s products that are sourced from China, it’s not that they’re knee jerking and saying that, okay, now we want to flip it to India. China was 145% and now it’s to 30%. So finally we all are hoping that, you know, there’s some equilibrium across the world, you know, that everybody knows on what terms can you do business with or at. That’s the objective. We’re not trying to say that India should be better or worse or it just has to be just some level playing field for everybody to understand. We all need to understand what’s the new normal.
Prerna Jhunjhunwala
Yeah, I agree. Thank you. And third, last question on the launch has been delayed by a quarter almost in current scenario when we are seeing down trading happening in the US how do we see Bam Supta’s product mix because it’s more of a premium brand than low end brand. So how do we see the launch and the success initially there?
Mohit Jain
Absolutely. So interesting question come up in our internal discussions. Also this. So at the end of the day, we are in this business for the next 10 years, if not longer to come to make this good, successful brand. So the way it is positioned and you can go to wamsuta.com and now sign up. So we expect to launch it within the next 30 to 60 days as a direct to consumer brand. So it’s an affordable luxury brand and there will be learnings. Direct to consumer is an interesting space. There are a lot of successful companies now doing it in our home space.
So there’ll be some learning. So this is the best time we thought, as a team, you know, to get into it and get through the learnings, you know, in this environment. So we are moving ahead.
Prerna Jhunjhunwala
Okay, understood sir. Thank you. And all the best in this talk.
Mohit Jain
Thank you.
operator
Thank you ladies and gentlemen. That was the last question for today and I now hand the conference over to the management for closing comments.
Mohit Jain
In conclusion, while macroeconomic uncertainty remains, we are excited about the launch of our direct to consumer brand Wamsuta shortly. As I just mentioned, our continued efforts to broaden the reach of our portfolio across end markets are now strongly reinforced by the recent additions to both our branded and licensed offerings. This strategic initiative underscores our commitment to growth and position us for even greater success ahead. Furthermore, the UK FTA presents a valuable opportunity to further grow our market share and strengthen our position as a global leader in the home textile industry. Thank you for your ongoing support.
As we move forward on this exciting path of expansion. I hope we’ve been able to answer all your queries. In case you have any more queries or require any clarifications, please feel free to connect with us or sga. Our Strategic sga, our Investor Relation Advisers. Thank you for joining the call.
operator
Thank you, sir. On behalf of Indo Count Industries Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.