Kajaria Ceramics Limited (NSE: KAJARIACER) Q1 2026 Earnings Call dated Jul. 22, 2025
Corporate Participants:
Unidentified Speaker
Ashok Kumar Kajaria — Chairman and Managing Director
Chetan Kajaria — Joint Managing Director
Analysts:
Unidentified Participant
Sneha Talreja — Analyst
Shaleen Kumar — Analyst
Riddhesh Gandhi — Analyst
Monish Ghodke — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Kajaria Ceramics Limited Q1FY26 earnings conference call hosted by Nuvama Wealth Management Limited. 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 pole. Please note that this conference is being recorded.
I now hand the conference over to Sneha Talreja from Nuwama Wealth Management. Thank you. And over to you, ma’. Am.
Sneha Talreja — Analyst
Thank you, Vishakha. Good. Good evening all. We welcome you to Kajaria Ceramics Q1FY26 conference call. We are today joined by the senior management of Kajaria ceramics represented by Mr. AshokaJariaji CMD, Mr. Chetan Kajaria, Joint Managing Director, Mr. Rishi Kajaria, Joint Managing Director, Mr. Karthik Khazaria, Mr. Sanjeev Agarwal, CFO and Mr. Praveen Gupta, DVP Finale. We will now start with the opening remarks with the management followed by the Q and A.
I will now hand over the call to Mr. Ashokji for his opening remarks. Over to you, sir.
Ashok Kumar Kajaria — Chairman and Managing Director
Thank you Shreya. Everyone, it gives me great pleasure to welcome you to the quarter one F26 earnings conference call of Kajera Ceramics Limited. Joining me on this conference call is the senior management team of Kajeria ceramics. In Quarter 1F26, overall market demand continued to remain soft. Our consolidated revenue for the quarter stood at rupees 1,104 crores indicating a 1% year to year decline compared to the corresponding period last year. Mainly due to low growth in tiles volume and decline in place sales due to closure of this division. However, the margins have improved in quarter one 26 to 16.72% as compared to 15% in quarter one of 25.
During our last interaction, I had mentioned that we had initiated certain measures to optimize our sales and marketing resources but had not detailed the roadmap. Having covered some ground in implementing our strategy, I would like to take a moment to elucidate our marketing blueprint. When we entered the vitrified tile segment through trading, our ceramic wall and floor tile segment was already an established business vertical. To accelerate growth in vitrified tiles, we created a dedicated marketing channel and team. That plant worked well and our vitrified tile business scaled rapidly. Times have changed which mandated a rethink product.
Differentiation between ceramic and vitrified tiles is Marginally best ceramic tiles are more for wall and vitrified tiles, as they can be made in bigger sizes, are more relevant for flow, though they can be used interchangeably. Considering these realities, we are in the process of integration our three tile divisions into one. Our unified teams will drive efficiency and scale volumes. Our combined distribution network will showcase our entire range of tiles which is beneficial to our customers. This integration will enable us to streamline resource development, optimize costs and enhance organizational agility in responding to evolving market dynamics and customer preferences.
In this quarter, we initiated this transition in some states and have received encouraging feedback. Although the overall sales volume was muted due to external factors and the adoption of this unification strategy, we are confident that the complete adoption of this strategy will result in making Kajaria a lean and thin organization.
With this, I take the opportunity of thanking you for joining us today. Thank you, Sam.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to take a question may press star and one on the touchstone pole. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Shailene Kumar from UBS Securities India. Please go ahead. The first question is from the line of Rahul Agarwal. Please go ahead.
Unidentified Participant
Yeah, hi. Am I audible?
Ashok Kumar Kajaria
Yeah, yeah.
Unidentified Participant
Okay, perfect. Good evening sir. Thank you for the opportunity. Sir, basically three questions are something you want to share on the current trends of the time market. You didn’t touch upon that. I just wanted to know what is the outlook for this year on both on domestic as well as export market for times. That’s the first question.
Ashok Kumar Kajaria
Now you can repeat. You can tell all. I will reply. I’ll try to reply all together.
Unidentified Participant
Okay, sure. Secondly, on the cost side, when I look at your P and L for first quarter looks like gross margin expansion is actually flowed through to ebitda. When I look at staff cost and other expenditure they are flat yoy. So all three line items. On the cost side I think there is a fair bit of optimization. If you could elaborate a bit more. How do you see the full year in terms of cost and what kind of margins would you expect that will be helpful? And thirdly, just wanted to know based on now the plywood division is now short bathware.
I think this quarter reflects only bathware revenues on the other segment. So that business looks, you know the EBIT is about four And a half crore. So some outlook on that. And what are the total savings would you expect from, you know, plywood and bathware being profitable for fiscal 26 as compared to 25? You know, if you could just highlight that, that will be helpful. That’s all. Thank you.
Ashok Kumar Kajaria
Okay, three questions you asked. The first one is regarding the domestic and export market. The domestic market is still muted. But I think things should be slightly better as we go forward for two reasons. One, the export which was 20,000 crores in 2324 has come down to 16,000 crores in 2425. Because of high freight rates and external circumstances like the problems in Israel, Hamas and all that, things are basically getting neutral. So this year exports for the first three months is about 4,500 crores. And going forward, it seems that the exports will definitely be between 18,000 to 20,000 crores.
The moment exports pick up, the domestic market should also improve. I think the kind of government spending which was muted last year because of various reasons. Because of. Mainly because of the election year should also pick up. If the government starts investing in infrastructure more, which they will, things at the domestic level should also get better. As far as the cost scenario is concerned, we have. Since this process has started from April, we have let down few people left few people. We are optimizing our costs Also. The promoters are not taking any salary this year.
As for the third part is concerned, we have three divisions right now. Tiles and adhesive also Adhesive. Last year did 75 crore. This year we are looking at a scenario where it should do about 120 crores. Or this bathware division which did last year about 400 crores. We are looking at about 480 crores. So this will also generate additional value. And last year Batware lost our money. This year it will definitely be profitable.
Unidentified Participant
Got it, sir. Got it. Is it possible to quantify the plywood loss for last year which will be saved this year? Just to know the change. Why?
Ashok Kumar Kajaria
I think if you look at the numbers, you’ll get all the things. Plywood also, everything has been spread off last year. This year for the first three months we have had a salary expense about 2.2 and a half crores. And it will also be there in July and earth as to about 1 crore and that’s it. Everything otherwise has been taken care in Australia.
Unidentified Participant
Got it, sir. Thank you so much. I’ll get back in the.
Ashok Kumar Kajaria
Thanks. Thank you.
operator
Thank you. The next question is from the line of Shalin Kumar from UBS Securities. Please go ahead.
Shaleen Kumar
Hi, Am I audible?
Ashok Kumar Kajaria
Yes, sir. Good evening.
Shaleen Kumar
Good evening, Sir. Good evening. Mr. Kajaria. Congratulations on a very good set operating profit and earnings. Sir, I just want to little more understand what you talked about. You know in terms of your strategy of optimizing your marketing. So did I understand clearly that you had earlier different marketing people for different product and now you are bringing them all together under one roof.
Chetan Kajaria
Correct. Hi, this is Chetan here. As you said correctly earlier we had three teams. They were respectively selling ceramic PVT and GVT tiles polished and glazed. Now we have started the process of unification. Meaning we are combining the teams together under a common head statewide and getting more cost efficiency out there. And a single guy will go to a dealer and sell all the three products in that basket. So dealer doesn’t have to deal with three people in the long run. He just deals with one guy who sells the entire product basket when he. Goes to a shop.
Shaleen Kumar
So earlier there were three people going to the same. Same distributor.
Chetan Kajaria
Correct. And no distributed dealers. We don’t have distributor policy. And our company was mainly dealers.
Shaleen Kumar
Right. All right. And so how has this like what was the thought process to for behind unification of this bringing them together?
Ashok Kumar Kajaria
You see, this dialogue has been going for a long time. And I am happy to inform you that our CFO Mr. Sanjay Goal. He insisted. We had a lot of meetings sometime in February. He insisted that we should follow this. And I’m thankful that the dialogue led us to this path. And I think going forward we’ll be lean and very solid company as we go along.
Shaleen Kumar
Right? Right. Right. No, sir, sounds like good. Just one or two questions more to it. So sir, any initial distributor feedback that you have got from when you’re doing this. Can there be a concern that you know because distributor may be dealing with multiple people. Now he’s dealing with one person. Is one person adequate to offer all the products? What’s the initial feedback you’re getting,
Chetan Kajaria
Shalin? It depends on these garment. For Vardaman directly nothing can be exported to the usa. Because USA doesn’t do much of garmenting or home textile. They buy the final product only which is not our line. But yes, if the business increase in India Vardaman will have the great opportunity to serve to the Indian players. So that the final products could go to us.
Shaleen Kumar
Okay. Okay, that’s it. From my side. Thank you so much sir for taking my questions.
operator
Thank you, ma’. Am. The next question is from the line of Ritesh Gandhi from Discovery Capital. Please go ahead.
Riddhesh Gandhi
Hi sir. You know this said difference between Indian cotton and the nt. American cotton obviously has been continuing for a number of quarters now. And you know we’ve been cautiously optimistic that it’s going to turn around and obviously it isn’t in our control. Just wanted to understand from your perspective how do you know are there any triggers which you potentially see that can help to rectify this and bring us back to our, you know, normalized margins?
Chetan Kajaria
Yeah. So the industry has been requesting the government to. To allow the duty free import of cotton. And we understand the textile ministry is trying for the same.
So that seems to be the only option as of now. If they allow the duties to import probably one we will also be in a position to import the cotton at a. At an international parity. True. I think that will also bring down some parity for the domestic selling prices also. So government now government Textile ministry has written to the Finance ministry but we are not sure where. It’s been almost two months now. I think that’s the only way where the long tail cost could come to the. Could be normalized in India and the industry may start looking at the normal margins again.
Riddhesh Gandhi
But are there any potential implications on the Indian, the farmers if they reduce their duties and also you know, in case of we do reach a trade agreement and the duties are removed, would it help us? Just wanted to answer these are two separate questions. Sorry.
Chetan Kajaria
Two different. Both the aspects are absolutely different. Yes. So the government has to support the farmers that processes through the minimum support price that in any case and it’s not only for cotton. Wherever the government has committed the minimum support price they’ll keep buying those products from the farmers at the minimum support price and they’ll keep selling in the market at the market related prices.
So that’s one mechanism be it wheat, be it rice, wheat, cotton. That mechanism is on. The second is the import of raw cotton duty free which was implemented only in 20 for budget 2-21-21 this was imposed. It was never there before. So we are asking the government to. It’s important for everyone to support the farmers so that the cotton crop is there. At the same time industry should be given an opportunity or should be allowed to import if the local prices are higher. So both mechanism are separate. Farmer is 100% secured by a minimum support price which is the, which is what the government is doing through the CPI and they’ve not impact on them with the, with the duty.
Riddhesh Gandhi
Got it. So what risk. Okay. Okay, I’ll come back in.
Unidentified Speaker
Thank you.
operator
Thank you sir. The next question is from the line of Van Saloni from RSP and Ventures. Please go ahead.
Unidentified Participant
Hello sir. Very good sets of numbers. So first of all my question thing on the yarn demand and pricing like our GP margin is increased a little bit from March quarter. So does this mean that the demand has also started going up and is there on ground demand for yarn setting? And also I want to understand the prices of the yarn are they are stable or going up? What kind of scenario is there on ground?
Chetan Kajaria
So on the demand side there is not any improvement but at the same time not any deterioration also. So it’s almost on the prices also last almost six months the price ban has been in the range of -5G either on the demand side or on the pricing side.
Our only concern is since the margins is not very good going up in India the situation can actually occur as in the third quarter which is written to the government under duties being posted on foreign. The raw material price to us is comparing international prices Margin can actually come under more.
Unidentified Participant
Okay sir. And the second one is that our margin also improved very much from the March quarter Because the international issues of the Red Sea and all may be going to stable. So can we assume that the 14% margin is now range and this can come through the full year 26.
Chetan Kajaria
It’s very difficult because you know today the market is absolutely very dynamic. What happens to the beauty structures? What what happen whether they are cotton will continue or not. So anything on spinning side today is the more since strategy was to move stability is relatively right except if the. If the different major things hit. So I think we’ll have to wait for some more time. One uncertainty of tariff. If it is clear we can monitor like I told you the concern looks at how do they want to have the raw material of parity in India. But we are going by today’s situation. I have much more volatility uncertainty as of now for maybe couple of weeks.
Unidentified Participant
Okay. Okay. Thank you sir. I will come for a follow question is needed. Thank you.
operator
Thank you sir. The next question is from the line of Prerna from Elara Capital. Please go ahead.
Unidentified Participant
Hello. Congratulations sir on improvement in margins. So just wanted to understand what how much cotton would you have in inventory now and what would be the average cost and how much of it would be important it.
Chetan Kajaria
But I can only say normally our season starts in the month of October or November. And generally we have the cotton up to that period. But this time definitely we have a little longer cotton compared to that both Indian and together.
Unidentified Participant
Okay. And sir, how much of this will be imported and if you have hedged any. I just wanted to understand that. Okay, okay. And sir, in this Q1Q improvement in gross margins what really helped actually is it cotton better cotton price in the system or yarn better mix of yarn like more value added yarn being sold. I mean just trying to understand what helped improvement in gross margins on a Q1Q basis.
Chetan Kajaria
Of cotton were lower. [Foreign Speech] That can continue at the same time any case second quarter will have to buy cotton from the market also because for the future requirements requirements now that’s a concern that even though the margin was a little better in the first quarter company as a whole but if this continues the way prices have moved in last three weeks in India I’m sure unless the R pricing improves the margins cannot sustain at these levels.
Unidentified Participant
Okay, okay, understood. And so if I just want to understand the trade right now you’ve spoken that there is lot of. There’s no much clarity but what we hear from the trade community is that you know these tariffs are being asked to be shared by the supply chain partners. Has any of sharing being done by you for your partners or any such thing has come to you which could also strain margins in future.
Chetan Kajaria
So on the spinning side we got a couple of requests but considering our margins we could be. We could explain to our partners that it’s really not possible for us to share in the spinning the fabricide some static customers. We have done some small adjustments but that really may be very very insignificant compared to the overall size of the organization. It was about one time request we accepted that since our customer was in trouble. But I can surely say that amount was so small that it’s not likely to impact that particular part is not likely to impact the overall margin going forward.
Unidentified Participant
Okay. Okay, understood sir. And the last question from my side on power hazard. Power started coming down because of green investments being done in the last one year. And what would they be? What kind of benefit would have been occurred in this quarter for the same.
Chetan Kajaria
So there are a couple of aspects of the power. One, we have put in some small capacities on our roofs in the package. That capacity by and large is operational. But that’s a very minuscule capacity. So that advantage is started coming in. We also entered into an agreement for with a third party where we created the SPV and that power has to be supplied to us. That advantage will start coming in maybe next to next one or two months it starts and I think we’ll keep building it up in next one years. But as of now that advantage is not coming.
Third is we are also Looking at the possibilities for some initiatives within, for our, for our energy conservation within the operation both spinning and on the fabric side. So we’ve taken lots of initiatives on their side also which I think will complete in next six months time. And fourth is we are going in for the biomass based boilers where the cost of steam and the cost of power should come down. Those things will be applicable only once we complete the project which will be closed about a year from today. So the major benefit is not coming.
Those investment has started happening but the major benefit, I think we’ll start growing it next three, four months and it will take us about a year or so to start taking the full benefit of that.
Unidentified Participant
Okay, understood, Understood. And any capex that you see, any cost, incremental cost that has come in P L instead of balance sheet in this, in this quarter?
Chetan Kajaria
No, not really.
Unidentified Participant
Not really. Okay sir, thank you sir. I’ll come back to the question. Okay, thank you.
operator
Thank you ma’. Am. The next question is from the line of Falguni Dutta from Mansourovar Financials. Please go ahead.
Unidentified Participant
Yeah, good evening sir. I missed your answer on the cotton y spread in absolute terms what are. They now and what kind of a decline of do you see in the coming quarters?
Chetan Kajaria
So the yarn sizes are almost 3 US dollar as of now and it was the same earlier also. So considering this price, considering the the New York future of 67, 68 cents, the international spread for caudry yarn is in the range about 85 to 90 US cent since the Indian cost is higher. So the Indian spinner margin as of now is close to about 70 cents. But the way Indian cotton prices have increased last three weeks we have seen the price increasing by almost 2,500 rupees to 3,000 rupees a candy. So I’m sure unless yarn prices improve this will come down by another 8 to 10 cents for. For the young spring.
Unidentified Participant
Okay, and I have one more question. Which is on what is the landed cost of cotton now for us in India from us
Chetan Kajaria
so the landed cost normally US cotton is available on a basis of 1200 to 1300. 1200 to 1400 basis points over New York future. But India is importing region cotton which is at about 800 to 900 basis points over New York future.
Unidentified Participant
And so we would import. We would be importing cotton from us.
Chetan Kajaria
No, we are importing from US we are importing from Australia, we are importing from Brazil also. We are importing from all three countries.
Unidentified Participant
Okay, could you just clarify what was. It that you said it’s 1200 basis. Point higher was this is.
Chetan Kajaria
The New York Future is at 68 years as of now. So the the cotton which we buy from anyone buys it covers the trade cost. It covers the cost, the local transportation. It also covers the commission and the trade partners cost. So US Cost generally is available in India on a basis of 1200-1400 basis points over and above the New York future. Since the New York futures today is 68 cents, the cotton will be available in India at about 80, 81 cents or so.
Unidentified Participant
Okay.
Chetan Kajaria
The Brazilian cotton is available on a basis of about 800 basis points. So if 68 is the new York future will be available in India at 76 US cents. Okay. Okay.
Unidentified Participant
Thank you sir.
operator
Thank you, ma’. Am. To ask a question, please press Star and one Now. Participants who wish to ask questions may please press Star and one at this time. Before we take the next question question, we would like to remind participants that you may press Star and one to ask questions. The next question is from the line of Prerna from Elara Capital. Please go ahead.
Unidentified Participant
Thank you for the opportunity. So just wanted to understand the order book position and the demand in both yarn and fabric businesses given the uncertainty in our customer today.
Unidentified Speaker
A little lower. I say not significantly can be lower, but definitely a little lower because all the brands they are talking to us for the business at the same time they want to place the business only once the tariff flat. That is there because they are still nobody knows that which country will have what kind of parrots. So though everyone is talking about the business because the retail sales in US is good and the pipelines are not being built up. So there could be a possibility of a sudden demand rising. But again, since the tariff is not clear which country will have what. So the brands are trying to go only hand to mouth. So to that extent the future audit position is a little lower compared to what it used to be.
Unidentified Participant
Okay. And the same goes for fabric. I mean any different. Okay. And sir, how much would be our exposure for US, Europe and uk? I mean in terms of customer to whom we are supplying to the product that is going to us, Europe and UK. So that you know at least we know that if Europe is uncertain, if US is uncertain, at least uk, UK or Europe could still be better off from our.
Unidentified Speaker
There are two parts of the business. One is the direct business with the US brand. Second is the our business in India or other countries where we are supplying the armor fabric. And they could be they would be doing the US which we would not be knowing. So I can have data only of the, our direct sales to the US brands which we know where the material could be going to Vietnam or Bangladesh or wherever where the business has been done by us directly with the brand. And then the governmenting would be happening anywhere they want, be it India, be it other countries, be it Sri Lanka, be it Bangladesh or be it.
So I think on the spinning side, whatever export we do, almost 30, 35% is to lead US brands. Finally of course if I’m supplying, I mean there’s lots of that material will be going to Vietnam or to Bangladesh. And, and now the in the trade tariffs, eventually whatever tariff is for those countries that will be applicable on them, not on us.
Unidentified Participant
Correct.
Unidentified Speaker
On the.
Unidentified Speaker
On the fabric side, our sales to us is about 40, 45% of total fabric.
Unidentified Participant
Okay, and what would be Europe and uk? Will it be a balance or balance of exports?
Unidentified Speaker
So like I can tell you that it’s, it’s in the single digits as of now. But given the situation, I think we are now making significant, we are taking significant steps to more diversification so that we have a more well balanced portfolio. So US historically has been the largest consumer economy. It’s also been one of the most profitable markets, which is why of course, you know, we had a lot of opportunity there. That being said, our domestic sales continues to be about 30% so that is our geographical mix up as of now.
Unidentified Participant
Okay. And how has been the demand in India, whether that also facing some entrances or is it still stable?
Ashok Kumar Kajaria
The Indian demand? I don’t think there’s any impact. The local demand is normalized. There’s no issue on that.
Unidentified Participant
Okay, is it improving, sir? Just to see whether it’s offsetting some of the impact from us.
Ashok Kumar Kajaria
So it’s just going as normal.
Unidentified Participant
As normal. Okay, thank you so much sir. With this clarity, this really is really helpful. All the best, sir.
operator
Thank you ma’. Am. The next question is from the line of Dina Kashyap, an individual investor. Please go ahead.
Unidentified Participant
Yeah, hi, thank you for taking my question. I actually have a couple of questions I wanted to ask. Can you help me understand what is the spindle capacity for 25? This is 17,000 spindle being completed. The expansion of that included in FY25. And how do we see it like what do we see the capacity to be like in FY26 and 27? The second question, sorry I missed earlier because of the audio quality. You an earlier participant asked about margin expansion, like is it likely to continue? Could you just repeat that or Help me understand that. Do we see that trend to continue going forward? Thank you.
Ashok Kumar Kajaria
So on the spinning side, our capacity today is close to about 1.3 million spindles. And there’s not much of expansion happening except some two small projects of 17 18,000 spindles each. So but at the same time we are doing some deep bottlenecking on the business outside also. So I hope our overall production, which used to be about 7001020 tons, would increase to about 750 tons or so. So that means a total about 6 to 7% growth on the production side. On the sales side.
Unidentified Speaker
On the fabric side, we are currently at 145 lakh meters per month process capacity. And in the next three to four years this will go up to about 210. 210 lakh meters per month. So this will include expansion of existing lines and also addition of our new synthetic line which is coming up. Okay, thank you. Just approximate number on FY2627 capacities. It will be a little difficult to comment on this right now because there are different timeline also it will take some time for us to achieve 100% capacity like 90% plus capacity utilization. So it will be difficult for to give the exact breakup. I think next three to four years is the horizon we are seeing.
Unidentified Participant
Okay, understood. And and on the margin price, do you see the trend to continue?
Ashok Kumar Kajaria
I mentioned on the margin side that going by the normal situation, probably the margins can continue. So we have two uncertainties as of now in our hand. One is the trade barriers or the trade tariffs which we are not sure of most likely to happen. And then we. So if we like to wait till the time the US decides finally which countries has what, which kind of a tariff and then accordingly the margins are could be differentiated. In India, on the spinning side the margins could actually come down as our cotton prices have started increasing in last two, three weeks and the next year going by the next year msp the prices are likely to increase only.
So unless the government looks at allowing the cotton to be poted duty free, I think the margins are likely to come down only in this situation. Or the CPI wants to preserve the cotton and sell it at on the international parity, which they are not doing as of now. So we are not very sure how their what their policy will be the next year. As of now they are selling cotton at a much higher prices than the international prices. So which is, which is the reason the Indian spinners are not in a position to make money.
So I think all this side going Back to today’s situation. It’ll be more challenging to maintain the margin unless the government comes to the rescue where they decide that the local spinner should get the cotton at the international parity, which is not a case. As one today,
Unidentified Speaker
but company overall. As we increase investments in the textile part of the business, the margin of the company will certainly improve from our current current.
Unidentified Participant
Okay, understood. Thank you so much. Thank you.
operator
Thank you. Ma’. Am. The next question is from the line of Lakshmi Narayan from Tunga Investment. Please go ahead.
Unidentified Participant
Thank you. You mentioned that there is a. You know, import and local cotton places are different. Now in case you import and if you have any get any set of benefit in case you actually export. So is it, I think you. If you import around 20% of your total yarn, I mean cotton requirement. And in case you actually. Is there a benefit you get in case you export more.
Ashok Kumar Kajaria
So in case the normal duty in case of import of cotton is 11%. In India, we can import the cotton under advanced license for export of yarn. But it has two disadvantages. One we lose on the duty drawback which is about 1.9%. And also the rotted amount is lower than the normal rotted. So in totality the effective duty engagement of advanced license will be about four and a half percent. But that’s only in case of you want to export the yarn. So our Yarn export is 1/3 of the total production we do remaining 2/3 is sold in India both to the market as well as to the fabric division.
So over there for the domestic consumption, we can’t import cotton under advanced license. So practically best case scenario for us to import cotton with a concessional duty of 4, 4 and a half percent would be about 25, 30% in the best case scenario.
Unidentified Participant
This is helpful and you’re actually adding capacity. And you also talked about capacity utilization. Question is that are you seeing enough demand for the. For the. For the yarn and usually what is the organic. You know what kind of growth you are actually expecting from a yarn output which you can actually sell in the market.
Ashok Kumar Kajaria
There’s absolutely no issues in terms of the demand of the yarn. It’s reasonably good. And we never had the issue for selling of materials the yarn market. So is there enough demand to that extent?
Unidentified Participant
Because what I also hear is that there are suboptimal units that are willing to close the down or they want. They are unable to run it because of power cost, availability of manpower, slash availability of raw material. Is that. Are you taking market share from smaller players who are maybe top 2 lakh spindles, etc.
Ashok Kumar Kajaria
So there are different reports which are compiled by the industry, different organizations, different, different associations. We understand as of now that the total last two two and a half years. Almost nine, nine and a half million spindles have been stopped permanently, especially the smaller ones. So the effective spindle available in India today is estimated, it was earlier about 54,55 million spindles, which now is estimated close to about 44,45 million spindles. But these are all industry estimate. There is no authentic or a government data which supports it. But yet the studies done by the private players or by the different associations.
I think the information, information seems to be quite reliable and good that In India almost 9 and a half, 10 million spenders have stopped permanently in last 2, 3 years. As of now the demand in India is not increasing because the export viability, because of the cost, etc, it’s not increasing. At the same time there is definitely indirect consolidation happening in India and I think the long term players may get an advantage in the long term healthy capacities of the system. Amount of consultation surely is happening.
Unidentified Participant
Got it. And one question related to the yarn profitability, how you are actually optimizing on yarn profitability. Have your mix of counts have actually code fine count has actually changed and if you can just throw a light on in the last 3 years how your yarn mix has changed towards higher profitable yarn versus lower profitable yarn.
Ashok Kumar Kajaria
So in terms of count etc, I don’t think there’s any major change happened. Our average count used to be about 28, it is still 27, 28 only. So there’s not much of change in last two, three years. But definitely our customer profile has changed significantly in last four, five years. So just to give you an idea, we used to have about 8 to 10% business which is was the direct brand business which today is on the yarn export side which today is increased to maybe about 35, 40%. So I think on the customer profile definitely there’s an improvement and all those customers which are coming in, they are bringing in the more value added products also.
So that’s the only way, that’s the only area where the margin could still be managed even in this kind of difficult times. But yes, on the overall, overall the count wise or the yarn count, et cetera, there’s not really much of change.
Unidentified Participant
That’s an interesting thing which you talked about brands directly soliciting from you. So in general when you actually sell through the agents versus selling directly to the brand, what is the margin difference you actually get?
Ashok Kumar Kajaria
So two Three things. One is the margin. Second. Second is the stability of the business. So first I’ll say the stability of the business remains far better. Because these brands generally will not change the vendor base only for 2, 3, 5 cents. Whereas for the trader every 1 cent is important. And whosoever supplies them 1 cent half cent cheaper they’ll move on to that. These brands have their lots of issues, concerns, audits, ESG and their compliance issues. So normally these brands will never change the vendor base for you know, two, three, five cents or so and so on.
So one is the stability of the business. Two, when these brands come in, definitely most of the time the margin will be a little better compared to on the basic products. A little better compared to the tailed business. But more important, third, which is more important is that they bring in lots of specialized products. Be it a particular cotton, be it a particular value added products where the margins can be significantly higher. So I think looking at all these three aspects we try to move more and more towards brand business. The stability of the business, profitability and the overall reliability of the system definitely improves in a big way compared to a trade business.
Unidentified Participant
Thank you, sir. I’ll get back in queue.
operator
Thank you, sir. To ask a question please press star and one now. Participants who wish to ask questions may please press Star and one at this time. The next question is from the line of Falguni Dutta from Mansoor Financials. Please go ahead.
Unidentified Participant
Hello.
Unidentified Speaker
Yes, ma’. Am.
Unidentified Participant
Hello. Yes, I just wanted to check on this. What is our total export of yarn? You said.
Ashok Kumar Kajaria
Total export is almost 30% of our total capacity.
Unidentified Participant
30%. And export of fabrics to us was. How much was also mentioned
Unidentified Speaker
around 40, 45%.
Unidentified Participant
Okay. And so just wanted, just a request. This audio quality for since a few quarters is not that great. So if you could just do a bit about it then many repetitive questions can be avoided.
Ashok Kumar Kajaria
Sure. We’ll ask the organizers to relook at that. Because I think it’s organized by bnk. I’ll definitely BMK Roshan kindly look at it for the future call.
Unidentified Participant
Okay. Thank you sir.
operator
Thank you ma’. Am. The next question is from the line of Vaishnavi from Craving Alpha Wealth Fund. Please go ahead.
Unidentified Participant
Hello. Hi sir. Thank you for taking my question again. My question was regarding the capacity utilization. What was the capacity utilization for this quarter and any ballpark figure you can give for the estimated capacity utilization for FY23.
Ashok Kumar Kajaria
On the spinning side we were running full capacity. Even on the fabric side we were practically running the full Capacity. So there’s not much of expansion except some small expansion on the spinning stage where we feel as and when it comes in, we should be in a position to utilize it 100%. The market comes in the fabric side mentioned whenever we add a new capacity. Because in the fabric side we do only make to order kinds of products. So it may take us maximum 2 to 3/4 before the 100% capacity utilization comes in. Especially this is a period where we will be adding the synthetic fabric also which is a new product line for us.
Though we are hopeful that we should be in a position to utilize it very fast. But at the same time there’s always some learning curve. We have to understand the business, we have to understand the customer, their requirement and needs. So generally our experience is on the fabric that whenever we add marginal capacity, we are in a position to fully utilize it in about 3 quarters maximum.
Unidentified Participant
Sorry to interrupt sir, I did not get your answer due to audio quality issue. Can you please repeat? The f yarn and fabric capacity is full.
Ashok Kumar Kajaria
So the yard as of now the both the businesses the capacity utilization is full. And then future going forward, whatever is on the spinning increase, we will be in a position to utilize in the first month itself. On the fabric side, normally it takes 2 to 3 quarters before we are in a position to utilize full capacity. So generally fabric requires two to three quarters.
Unidentified Participant
Okay, and what was the reference capacity for this quarter?
Ashok Kumar Kajaria
It was all 100% utilized for
Unidentified Participant
both yarn and fabric.
Ashok Kumar Kajaria
Yeah.
Unidentified Participant
Okay. Thank you. Thank you sir.
operator
Thank you. Ma’. Am. The next question is from the line of Nagraj Chandrasekhar from htfo. Please go ahead.
Unidentified Participant
Hi, good evening. Good evening. Can give me a sense of.
operator
Sorry to interrupt you, so can you please use your hand?
Unidentified Participant
Hello.
operator
Yes sir, you are loud and clear now.
Unidentified Participant
Hi, good evening. Could you give me a sense of global cotton prices and your view on on how they might be likely to move given global acreage changes yields in the major cotton exporting countries and given this view that you would make in the next few few months or so before November, how would that make your cotton buying decision? Are you likely to buy a lot of inventory from what is available or. I like you to buy through the year.
Ashok Kumar Kajaria
So the overall area in the there’s not really much of change and we are likely to look at addition of stock in the next financial year, in the next cotton season also by half million tons, about 1 million tons.
So which means the possibility of increasing the cotton price in a big way doesn’t look like possible because There will be net net addition of cotton in the bird stocks unless some dramatic change happens on the consumption side. So going back into this situation, all three agencies, USDA or the other two agencies are showing an increase in the projected increase in the cotton stocks next year. Now on the procurement for us, we are looking at the international markets, we are looking at the domestic markets also. And depending upon whichever makes us more sense commercially, we will be buying that.
But just for the information for all of you, normally we used to import about 3% to 4% of our total consumption of cotton from outside India, which this year I think we have already done close to about 20% or so. And unless the Indian prices comes down, we may continue to buy more imported cottons.
Unidentified Participant
Understood. Thank you.
operator
Thank you, sir. Then next question is from the line of Lakshmi Narayan from Tunga Investment. Please go ahead.
Unidentified Participant
Yeah, thanks again. Just wanted to understand how do you, what is your, how do you look at profitability on various segments, Yarn, fabric and, and other. You know, because some, some of them look at cash profit, some of them look at ebitda, some of them look at EBITDA spindle for yarn. So just want to understand how as an organization they will look at. How do you define the unit of profitability in gsp?
Ashok Kumar Kajaria
So for us we look at EBITDA per spindle per shift and we also look at EBITDA to sales as a percentage and EBITDA to capital employed. These are the three terms which is used for the spinning business. For the fabric business it is EBITDA per meter, EBITDA percentage to save and EBITDA percentage to the capital import.
Unidentified Participant
And if you look at EBITDA per spindle, how it has actually moved in the last five years.
Ashok Kumar Kajaria
So it used to be in the range of about five rupees a spindle shift. As a benchmark, it is still in the range of about five rupees per spindle per shift.
Unidentified Participant
Okay. Okay.
Ashok Kumar Kajaria
It is still in the range of 3 to 4 rupees for the value added or 5 rupees for the value added products. For the basic products, definitely it is much lower. But EBITDA as a percentage to sale used to be about 14, 15% in the spinning business which as of now is in the range of about 10% or so.
Unidentified Participant
And the EBITDA per spindle for, for, for the branded business would be, you know, much higher than the five rupees.
Ashok Kumar Kajaria
No, not from the five rupees from the normal, from the cake related business.
Unidentified Participant
Sorry, from the, Sorry, I didn’t hear it.
Ashok Kumar Kajaria
From from the normal cage related business it will be higher so 5 rupees including the brand, businesses etc. Etc. But otherwise, if you go by the basic products today, there would be hardly any beta cost shift on the basic products.
Unidentified Participant
This is very helpful, sir. Thank you so much.
operator
Thank you sir. Ladies and gentlemen, to ask a question please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Jayat from Valuequest. Please go ahead.
Unidentified Participant
Hi, good evening, sir. Hello. Am I audible?
operator
Yes, sir.
Ashok Kumar Kajaria
Yes.
Unidentified Participant
I just wanted to ask and how has this changed over the past couple years? So it is a rather large. Understand a bit more about that.
operator
Sorry to interrupt you sir, your voice is very low. Can you please use your handset?
Unidentified Participant
Sure, I am on my handset. I just wanted to ask a bit about the power and fuel expenses for the business in FY25 and how it has been for this last quarter as well.
Ashok Kumar Kajaria
Sorry, I’m not clear on the question.
Unidentified Participant
Yeah, I just wanted to understand more on the power and expenses for the business for the quarter and for FY25 as well.
Ashok Kumar Kajaria
For power. I already mentioned that there is some small advantage which has come to us by the internal solar power we had on our rooftops. But the major advantages of power will be available.
It will start coming in next one quarter or so and it will take us maybe about 1.5 years to have the full advantage of whatever initiatives have been taken till now. We are further looking at some more arrangements and agreements to be done so that our power cost keeps coming down. So I think every quarter we will find some improvement on the power cost for next one one and a half years.
Unidentified Participant
Got it? Thank you sir.
operator
Thank you, sir. The next question is from the line of Mohnish Gor from HDFC Mutual Funds. Please go ahead.
Monish Ghodke
Sir, could you share average realization per kilogram for yarn and for fabric per meter in Q1?
Ashok Kumar Kajaria
Normally international parity is 3, $3 for a 30 count as the average realization in this period.
Monish Ghodke
Okay. And sir, you said the yarn margins were sent in Q1, so what were the fabric margins?
Unidentified Speaker
17 to 18% is usually around 17 to 18%.
Monish Ghodke
Okay. Okay, thank you.
operator
Thank you sir. Ladies and gentlemen, due to interest of time, that was the last question. I now hand the conference over to the management for closing comments.
Unidentified Speaker
Thank you all for your participation and continued trust in the company. We’ve been very transparent about the challenges that we are facing, especially over the last two years, which has been extremely difficult for the textile industry globally. However, within what is controllable, we are fully focused on driving modernization, refining our product mix, launching new product lines, optimizing costs and improving operational efficiency. And the improvements we are seeing in our results are a reflection of these efforts. We believe that policy anomalies and trade barriers will eventually correct, so our goal continues to be to be well prepared so that we can fully capitalize on the opportunities once the external environment improves.
Looking ahead, we remain cautiously optimistic. Despite certainties in the US market, we are strategically well placed and we will continue to diversify geographically further and we also are excited and enthusiastic for our new synthetic line which will be upcoming in quarter three. We will continue to focus on profitable growth, agile customer servicing and innovation led offerings. Our strong market presence, emphasis on our operational efficienc efficiency and unwavering commitment to quality will remain the pillars of our business and future growth. Thank you for joining us. See you next time.
operator
Thank you ma’. Am. On behalf of Patliwala and Kirani securities India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.