Nitin Spinners Limited (NSE: NITINSPIN) Q3 FY23 Earnings Concall dated Feb. 03, 2023
Corporate Participants:
Purushottam Maheshwari — Chief Financial Officer
Dinesh Nolkha — Managing Director
Analysts:
Awanish Chandra — SMIFS Ltd. — Analyst
Abhineet Anand — Emkay Global — Analyst
Kirthi Jain — Canara HSBC — Analyst
Siddhant Dand — Goodwill — Analyst
Nikhil Agrawal — VT Capital — Analyst
Muthu Kumar — Fidelity Ventures — Analyst
Kaushal Kedia — Wall for PMS — Analyst
Chirag Sidhwa — ICICI Securities — Analyst
Akshay Kothari — Envision Capital — Analyst
Mohit Khanna — Banyan Capital Advisors — Analyst
Anik Mitra — Finartha — Analyst
Falguni Dutta — Jet Age Securities — Analyst
Aditya Khetan — AK Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day. Welcome to Nitin Spinners Limited Q3 FY ’23 post results conference call hosted by SMIFS Limited.. [Operator Instructions]
I now hand the conference over to Mr. Awanish Chandra. Thank you and over to you, Awanish.
Awanish Chandra — SMIFS Ltd. — Analyst
Thank you, Deepak. Good afternoon everyone. On behalf of SMIFS Limited, I welcome you all to quarter three FY ’23 conference call of Nitin Spinners Ltd. We are pleased to host the top management of the company. Today we have with us Mr. Dinesh Nolkha, Promoter and Managing Director of the company; and Mr. P Maheshwari, CFO of the company. We will start the call with detailed commentary on results and we will open the floor for question and answer.
Now I will hand over the call to Mr. P. Maheshwari, CFO of the company. Over to you, sir.
Purushottam Maheshwari — Chief Financial Officer
Thank you. Thank you, Awanishji. Good afternoon and one welcome to all the participants to the investor call post our third quarter and nine months and FY ’23 results. I hope all of you must have had a chance to look at our investor presentation that is uploaded on company’s website as well as stock exchanges. Before Shri Dineshji elaborates on present industry and business scenario, I am giving brief highlights for the quarter and nine months ended 31 December 2022.
Revenues for Q3 ’23 are INR537.20 crores against INR505.88 crores in quarter two FY ’23, that is an increase of 6.2% on quarter-on-quarter basis. On a year-on-year basis, revenue decline from INR704.94 crores to INR537.20 crores. Cumulative nine Month revenue for the current year is INR1,752 crores against last year’s nine month revenue of INR1,925 crores.
Export for the quarter was 52% of total revenue against 48% in Q2 ’23. EBITDA for the quarter stood at INR60.13 crores as compared to INR57 crores in Q2 FY ’23 and INR178.11 crores in Q3 FY ’22. Cumulative EBITDA for nine months period is INR226.10 crores against INR484.17 crores in last year nine months. EBITDA margin for current quarter is 11.19% against last quarter margins of 11.27% and Q3 ’22 margins of 25.27%.
We have reported PAT of INR31.58 crores during the quarter as against INR29.11 crores in Q2 ’23 and INR93.26 crores in Q3 ’22. Cumulative PAT for nine months is IRNR126.27 crores against last year’s same period INR240.67 crores. EPS and cash EPS for the quarter is INR25.62 and INR9.50 per share respectively for the quarter and cumulative for nine months EPS is INR22.46 and cash EPS is INR34.11 respectively.
That is all from my side. I now request Shri Dineshji to apprise about the industry and business scenario.
Dinesh Nolkha — Managing Director
Good afternoon, everyone and thank you for joining us for this earning call. Let me brief you with the industry and business scenario first. Indian cotton textile industry during the last six months has faced multiple challenges. Specially with regard to — number one, regard to very high price volatility, and higher absolute prices of raw materials. Secondly, relative price difference compared to the international markets and the relative competitive disadvantage to most of the Indian textile players. And thirdly, a demand slowdown due to geopolitical tensions and inflation in European and U.S. economy.
Out of these three issues, cotton prices have already started to decline in domestic as well as international markets and volatility has reduced to a large extent in last two months. The increase in cotton production in the current season will also normalize the supply situation [Technical Issues] by the Indian textile players. Domestic cotton prices have already corrected by about 40% from peak to INR63,000 a tonne [Phonetic]. The disparity between the domestic and international cotton prices has also substantially reduced. As a result of this, the utilization in the spinning industry has now been restored to near normalcy levels. Demand situation has also started to improve to increase the daily consumption and reducing inventory in the downstream channel. So overall there is a improvement in the situation which was there since last six months, in the last one and a half, two months time.
Now coming to company performance during the quarter. Utilization levels are coming back to normal. During the quarter, last quarter, the utilization of the spinning was about 80%, against 65% in the previous quarter. There has been a sharp reduction in the yarn price as the market discount, anticipated from the previous price reduction. Due to this, volatility and weak export demand, the margins continued to remain under pressure, so the top line increased by 6% due to increase in the quantity.
Although the print fabric division, continued to run on optimum capacity utilization, which helped us to mitigate the changes in the spinning division. Demand from export has started to pick up. We have seen uptick in export market majorly uptake in export market majorly from country like China. Europe and Latin American countries. However, demand of mixed fabrics and relevant yarns knitting is continuing to pick up. Our company continues to add its share in the value added segment and penetrating more in the domestic markets.
Regarding the capex, we are on track with the execution and expect to commence our project within the timeline [Indecipherable]. We are determined to have a very efficient and focused product and superior quality to our customer.
At this point of time this is all from my side and I welcome now participants to — for any questions if they have and we can accordingly discuss the same.
Questions and Answers:
Operator
[Operator Instructions] Our first question is from the line of Abhineet Anand with Emkay Global. Please go ahead.
Abhineet Anand — Emkay Global — Analyst
Yes, Sir. Thanks for the opportunity. First of all, if you can help us with the average yarn price and spread for 3Q?
Dinesh Nolkha — Managing Director
Average yarn price for Q3 was about INR303.
Abhineet Anand — Emkay Global — Analyst
And spread?
Dinesh Nolkha — Managing Director
Spread basically the raw material — average raw material cost for us during the last quarter was about INR200. So that was per kg, and then we can work out the yields accordingly.
Abhineet Anand — Emkay Global — Analyst
Okay. And second, I want to understand what is the inventory level currently with us?
Dinesh Nolkha — Managing Director
At the end of. Q3 it was about one month, could be better than this at this point of time.
Abhineet Anand — Emkay Global — Analyst
So I mean just trying to understand, inventory being around one month only. So are you expecting cotton to further fall from here, or what is a typical view in the market around that?
Dinesh Nolkha — Managing Director
First of all, cotton prices, I think have fallen substantially from the peak, and we are not expecting it to go down substantially down from there. Only thing which we were waiting was, as you all know there is a 11% duty, custom duty on the imported material. So because of this, we are seeing the prices in India also getting elevated. So we had made lot of representation with the Government of India to remove this duty. But I think nothing has come up in the budget. And then now we have to build up our inventory. So we were waiting for this so that crisis could be — become more reasonable. Now I think we will have to go in for — looking into the linked season coming up, we will have to build up the inventory going forward [Phonetic].
Abhineet Anand — Emkay Global — Analyst
Okay. But as you know some of the reports are suggesting that the amount of cotton that is needed or typically at the end of say from October to December on a YoY basis, the amount of cotton that has come up from the production or the harvest, has been less and some hoarding by farmers have been done. Is that right and how does this impact?
Dinesh Nolkha — Managing Director
Yes, this is very true. This is true picture. Farmers are holding to get better prices. Already they are getting nearly 35% to 40% more than the minimum support prices. But still they want more, because they last year they got a reasonably good price. But they have to also understand the fact that the international cotton prices have come down substantially, they are nearly at a level of nearly — half the level what it was. Whereas in India it is only down by about — the kapas prices are down by about 25%, 30%. So this is something which they will have to understand and ultimately bring the cotton.
Cotton is a commodity which cannot be stored for very long. Of course during winter season, it is quite comfortable for them to hoard the stock, but as soon as the summer comes up, they will have to bring it to the [Indecipherable] and dispose it off. We are expecting that the arrivals — they have already improved since — after 14th of January they have already improved what it was there in the last particular quarter. It has already improved and it is going to improve going further as well.
Abhineet Anand — Emkay Global — Analyst
Okay. And last one from me, you did touch upon the demand side, right. You indicated there is some improvement on the demand, right. If you can just highlight, are retailers starting to increase their inventory or you know how is it on — on the inventory of retailers side?
Dinesh Nolkha — Managing Director
See Inventory, since last six to eight months, I think from May-June onwards till November, December — till November I would say, most of the retailers were slightly hesitant to place the order, as they were looking at — when they were looking at the raw material side, they were seeing that the prices are going down. They were also having a fear in their mind that, because of the war in the Ukraine, there is a lot of effect on the sell side. So looking into both the factors, also in U.S., because of us this session — expected recession, they wanted that the inventory should be brought down. So they were not placing the order. But post the Christmas sale, most of the retailers are already coming back to — for the placement of the order.
Recently home textile players have also got very good orders in the sales and exhibitions which has happened in January this year. And also on the apparel side, the response is looking good. So this is improving. Domestic sales is already doing well. But mixed segment which is more of a summer kind of product is still to pick up. This is what we observe from the market.
Abhineet Anand — Emkay Global — Analyst
Thanks sir. Thanks for the details.
Operator
Thank you. Our next question is from the line of Kirthi Jain from Canara HSBC. Please go ahead.
Kirthi Jain — Canara HSBC — Analyst
Hello.
Dinesh Nolkha — Managing Director
Yes, hello.
Kirthi Jain — Canara HSBC — Analyst
Thanks a lot for the opportunity, sir. Sir, my question is with regard to the utilization level, sir, are we now come to the fuller utilization level or what is the situation currently?
Dinesh Nolkha — Managing Director
Currently, we are running at about 90% utilization level in our spinning business. For weaving, already we are running at full utilization, and then our knitting business, we are still at about 40%, 45% levels.
Kirthi Jain — Canara HSBC — Analyst
Sure, sir. Sir, we have earlier guided for our aspirational margin band of 18% to 20%. When will we strive to achieve our aspirational margin band, sir?
Dinesh Nolkha — Managing Director
Sir, we had guided for 16% to 20%.
Kirthi Jain — Canara HSBC — Analyst
Yeah, sorry sir, 16% to 20%, sir, sorry my bad sir.
Dinesh Nolkha — Managing Director
And it is our endeavor always to reach that level. It is the market forces and the prevailing conditions all around us that restricts us from reaching this level. So it is our endeavor to reach there, once there is a normalization. As you can see, as Maheshwariji pointed out, that export is only now 52%, which used to be 65% [Phonetic]. This is reflecting the slow demand in the international market as well. So once everything reaches normalcy, definitely margins will also normalize.
Kirthi Jain — Canara HSBC — Analyst
Sure, sir. Sir, any new initiatives which you would like to highlight sir, with regard to profitability improvement or anything we are taking?
Dinesh Nolkha — Managing Director
We are taking lot of small initiatives on the cost side. We are trying to make out make ourselves more cost efficient. Also we are trying to — means just now you asked that how much utilization we are having. So we are trying to see that the products which are having very low margin, we are not trying to produce them. This is one of the things which we are doing. The low margin products, we are not trying to increase the capacity on that side, and also trying to see where we can add value. On the cost efficiency side we are adding lot of solar power. This is already built up in our new project which is coming up. So that side also energy efficiencies we are doing it. So a lot of efforts are going on. I cannot quantify them all or cannot name them, but lot of efforts towards the constituencies are already on.
On the same side, we have products — we are trying to work on various products, already our expansion is coming up. A lot of new products will be launched. So that should help us.
Kirthi Jain — Canara HSBC — Analyst
Sure, sure. Thanks a lot, sir.
Operator
Thank you very much. [Operator Instructions] Our next question is from the line of Siddhant Dand with Goodwill. Please go ahead.
Siddhant Dand — Goodwill — Analyst
Hi. Yesterday during the budget there was some statement regarding extra long staple cotton. So could you just comment something on that on that policy, and how much of a share of our business is extra-long staple cotton?
Dinesh Nolkha — Managing Director
Actually what they have done is, they have tried to — there was one HS code for cotton imports. So now what they have done is, they make five HS codes, so that the extra long staple could be quantified in the [Technical Issues] code and going forward we assume that the duty will be removed on that part, because India is not producing that extra long staple cotton.
Siddhant Dand — Goodwill — Analyst
Okay, that’s one that’s wonderful.
Dinesh Nolkha — Managing Director
Yeah. So that is one of the issues which was also discussed in detail, that the cottons which we are not producing at least, there should be no duty on those — that kind of cotton. So now we are expecting, they have already announced that this will be effective from 1st of May of ’23. So we expect that by that time, they will let us know the new duty structure also on those codes.
As far as…
Siddhant Dand — Goodwill — Analyst
But it seems unlikely that they would increase duty on that particular cotton, right?
Dinesh Nolkha — Managing Director
No, no. In fact, they will remove it, because that is not produced in India. This is a raw material. This is a raw material for the all of the textile industry, lot of garment, lot of other home textiles is going in, are also being made out of the ELS, extra long. This is compulsorily being imported from various countries like the U.S. So to remove that factor, they are trying to do that. And as far as we are concerned, we are about 8% to 10% of our business is in the segment. So we will be definitely having some advantage, once this kind of notification comes in.
Siddhant Dand — Goodwill — Analyst
And can our existing capacity for domestic cotton be used for Pima cotton, or does it need special equipment, like extra long staple cotton?
Dinesh Nolkha — Managing Director
It needs something, some special things which we are already adding the capacity. It’s a niche market and it means lot of capability — different kind of capabilities on the side of production, as well as marketing. So we are trying to — we already have new capacity coming in which is also suitable for this kind of cotton.
Siddhant Dand — Goodwill — Analyst
Okay, that’s perfect. Thank you so much.
Operator
Thank you. I request to management have to speak a little loudly or use the handset, as the [Technical Issues].
Dinesh Nolkha — Managing Director
Okay, can you hear me now properly?
Operator
Yes Sir, that is better.
Dinesh Nolkha — Managing Director
Okay.
Operator
Thank you very much, sir. Next question is from the line of Nikhil Agrawal with VT Capital. Please go ahead.
Nikhil Agrawal — VT Capital — Analyst
Yeah. Good evening, sir and thank you for the opportunity. Sir, couple of general questions. Sir, in the budget that was announced on the 1st, we saw that custom duty on certain yarn and certain woven fabric has been reduced. So like, do you expect imports of yarn coming in and thereby hurting your sales or anything as such in next year? Any concern?
Dinesh Nolkha — Managing Director
There is no change in custom duties of textiles and agriculture. This was the first announcement which the FM made and then she announced that we are reducing their duties on other things. So there is no change in duty structure for the textile.
Nikhil Agrawal — VT Capital — Analyst
Okay, Sir. I will just have a check, Sir, like I just wanted to understand, from an industry point of view, why do we look at exports as the main figure? I mean, is the domestic market not big enough or is it because of import of garments in the domestic market that — like we are not able to make a market out here and we depend on exports?
Dinesh Nolkha — Managing Director
Basically in all the textile segments, let it be starting from the fiber itself, even the man-made fiber, even the natural fiber domain of cotton fiber, spinning to weaving or knitting as well as to garmenting. We have excess capacity, which we have to — which is being put up for the export market, for the developed markets and we have been traditionally doing this, not from now but from years now from, 20, 25, 30 years we have been exporting to. Europe and America to their various brands, and the capacity has been designed to put according to that. So that is why we are focusing on the exports market.
Nikhil Agrawal — VT Capital — Analyst
Okay, got it. And sir, just one last question. Sir, on the knitting segment, what was the reason for the capacity utilizations for the lower capacity utilization?
Dinesh Nolkha — Managing Director
Basically, the demand has been very subdued in the knitting segment. What we had seen is during the COVID time, knitting was doing extremely well for one and a half year, I must say from one year to nearly two years from April-May of ’20 to April-May of ’22. The knitting demand was extraordinary, which we had also not seen before. So I think lot of overstocking was done and that is getting destocked. As the summer approaches, we should, we should be reaching the normalized levels. So in particular, the knitting segment has not being doing — our knitting garment is not doing well. So our utilization to that extent was also affected.
Nikhil Agrawal — VT Capital — Analyst
Okay, got it. And sir, you have already started seeing improved utilizations currently right in the knitting segment.
Dinesh Nolkha — Managing Director
Yes.
Nikhil Agrawal — VT Capital — Analyst
Okay great. That’s it for me. Thank you sir.
Operator
Thank you very much. [Operator Instructions] Our next question is from the line of Muthu Kumar from Fidelity Ventures. Please go ahead.
Muthu Kumar — Fidelity Ventures — Analyst
Yeah. Good noon, sir. Sir, what are the steps have been taken to tackle cotton price volatility? And when you can expect that demand momentum can fix up?
Dinesh Nolkha — Managing Director
Pardon, can you repeat the second part of your question please?
Nikhil Agrawal — VT Capital — Analyst
Sure, sir. When you can expect the demand for cotton — that is momentum picks up?
Dinesh Nolkha — Managing Director
Yeah. First of all, as regarding this volatility of the cotton, this is something which is beyond our control. We are only trying to see that we are not speculating on the cotton part. That is all we try to manage. Yes, because of price increases you get advantages and when price decreases — sharply decreases you are a disadvantage because ultimately we have to produce and there is a time lag between the actual procurement and the actual sales. We try to reduce this time lag to the minimum possible, to mitigate this kind of volatility. That is one part.
Second is, as you said demand is definitely as I informed you in my opening remarks, the demand is — now we are seeing that the demand is improving, it was very, very low during last five, six months, due to which the utilization of the spinning industries, not only in India, but also all around the world was about 55% to 60% only, not even in India but all the competing countries as well. So now that is all coming back to normalcy levels.
Muthu Kumar — Fidelity Ventures — Analyst
Okay, sir okay. And next question is sir…
Operator
Sorry to interrupt, Mr. Muthu Kumar, may I request you to please use your handset while you ask a question, as quality is not clear.
Muthu Kumar — Fidelity Ventures — Analyst
Okay, sir. In the proceeding — Can you hear me now?
Dinesh Nolkha — Managing Director
Pardon?
Muthu Kumar — Fidelity Ventures — Analyst
Yeah, can you hear me now sir?
Dinesh Nolkha — Managing Director
Yeah, it is better.
Muthu Kumar — Fidelity Ventures — Analyst
Yeah, okay, sir. Yeah, the in the preceding season, what is your intent to focus more on export market or on domestic market?
Dinesh Nolkha — Managing Director
We are trying to penetrate on the domestic market. We will continue to focus that right. We are in an expansion mode. So we will try to retain this market — domestic market which we have grown over last five, six months and then definitely export market, which we have lost, we will try to regain that as well since we will be increasing our capacities. So the focus will be definitely on the both sides.
Muthu Kumar — Fidelity Ventures — Analyst
Okay, okay. And the last question is, could you please update on next two to three years topline PAT [Phonetic] and EBITDA margin, what is expected?
Dinesh Nolkha — Managing Director
Sir, we are not giving any guidelines for the EBITDA margin. Normally — having — already saying that normalized margin for us — company like us with the kind of product mix which we have, should be in the range of 16% to 20%. That is the normalized margin level and we still stay on that path. As far as top line is concerned, it is — definitely as we have already highlighted, that we are adding capacity to the tune of about 40%. So that will come in and the top line will be effect of this additional capacity, along with the prices. Then the prices are very volatile. If you would have asked me this question last year, I would have told maybe we will touch INR4000 crores. If you ask me this year, it will be much lesser. So it depends on the — on all the calculations of the prices and the raw materials. So definitely the capacity is increasing by 40%, that I can vouch for.
Muthu Kumar — Fidelity Ventures — Analyst
Okay sir, thats it sir. Thank you.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Kaushal Kedia with Wall for PMS [Phonetic]. Please go ahead.
Kaushal Kedia — Wall for PMS — Analyst
Hi sir. Firstly, congratulations on such a good set of numbers in a very tough environment. What I wanted to understand was, how come your volumes have grown in such a tough environment? Volumes have grown across all verticals compared to the same quarter last year when the demand was very robust.
Dinesh Nolkha — Managing Director
No the volumes was — volume has not grown over last year. Last year, year-on-year, the volumes have not — are lesser, much lesser.
Kaushal Kedia — Wall for PMS — Analyst
No, the sales volume in yarn — in the presentation, the sales volume is 14,000 metric tonnes — okay, okay, okay, sir. Sorry, it’s lesser. Sorry on that. And when you are saying that inventories are at lower levels in [Technical Issues] across Europe and U.S., do you have any data on this…
Dinesh Nolkha — Managing Director
I am not saying that inventories are on lower level. I’m saying that most of the customers who have not bought, have also sold. If you see the same numbers of most of the brands from Europe, as well as from the U.S., you see that there sale has been robust, whereas — means the sale is down only — in some cases it has increased and in some cases it is down by 2% to 5%. Whereas their sourcing has been reduced by 35% to 40%. So automatically that sale has come down — basically their inventories have come down. So we are — this is reflected to us, but because of this — the demand which is coming from the bank [Phonetic]. So there is no data relevant information on this.
Kaushal Kedia — Wall for PMS — Analyst
Okay, okay. What is the borrowing standard currently? Because last time you had guided that, we will be at about INR900 some odd crores by 31st March ’23. So currently what is the volume, as of [Speech Overlap].
Dinesh Nolkha — Managing Director
As on 31st December, the total borrowing was around INR700 crores.
Kaushal Kedia — Wall for PMS — Analyst
And what is the cost of debt currently? Because you had said last time it was 4.5%, but I think it must have gone up slightly?
Dinesh Nolkha — Managing Director
At the moment, it is more or less at the same level.
Kaushal Kedia — Wall for PMS — Analyst
But how is that possible, because there is an interest rate across board in every…
Dinesh Nolkha — Managing Director
Most of our term loans interest have been fixed by May-June for next one year. So debt part is already fixed, because they are on a one year cycle. So there, there is no cost increase. And on the working capital side, there is a marginal increase of about 0.5% or something for us. So that is still manageable. Already we have negotiated a lower rate interest rate and then it has increased by 0.5% to 0.75%. So more or less the cost remains same for us, at least for this financial year.
Kaushal Kedia — Wall for PMS — Analyst
So out of the INR700 crores of borrowing, how much is working capital?
Dinesh Nolkha — Managing Director
Working capital is about INR200 odd crores. And the new debt which is already there, that is also about INR75 crores.
Kaushal Kedia — Wall for PMS — Analyst
Out of the INR700 crores?
Dinesh Nolkha — Managing Director
Yeah, this also includes the new debt as well.
Kaushal Kedia — Wall for PMS — Analyst
Okay, this includes — okay. And this capacity utilization that you are saying, 90%, 100% and 45% for spinning, weaving and knitting is for — is currently is for like quarter four, currently? Or was it Q3?
Dinesh Nolkha — Managing Director
Q3 I have already — we have clarified. I am telling 100% for not — means which capacity I have — I have not specified 100% for any of the segment as such.
Kaushal Kedia — Wall for PMS — Analyst
No, you just mentioned 90% is spinning and weaving is 100% almost…
Dinesh Nolkha — Managing Director
Weaving is at full capacity, not 100%, because 100% normally you are not able to utilize.
Kaushal Kedia — Wall for PMS — Analyst
Half, above 95%.
Dinesh Nolkha — Managing Director
Yeah, yeah.
Kaushal Kedia — Wall for PMS — Analyst
So, this is for quarter three or quarter four currently?
Dinesh Nolkha — Managing Director
Quarter four.
Kaushal Kedia — Wall for PMS — Analyst
This is ongoing quarter, right?
Dinesh Nolkha — Managing Director
Yes, ongoing quarter.
Kaushal Kedia — Wall for PMS — Analyst
Okay. And last quarter I’m assuming it was more or less –in yarn it was more or less 75% last quarter right?
Dinesh Nolkha — Managing Director
It was 80%.
Kaushal Kedia — Wall for PMS — Analyst
Utilization was 80%.
Dinesh Nolkha — Managing Director
Yes, yes. We have also given this in the presentation, as well as also..
Kaushal Kedia — Wall for PMS — Analyst
Presentation is very easy to calculate.
Operator
Sorry to interrupt ladies and gentlemen. Mr. Kaushal Kedia, may we request you to rejoin the question queue for a follow up question.
Kaushal Kedia — Wall for PMS — Analyst
I just have one more question. Can I just go ahead, just one more question?
Dinesh Nolkha — Managing Director
Yeah, please.
Kaushal Kedia — Wall for PMS — Analyst
Yeah, sorry. Thank you very much. What is the average yarn realization currently that you are getting, vis-a-vis with the cotton rate compared to Q4?
Dinesh Nolkha — Managing Director
I can tell you for the last quarter which is about INR303.
Kaushal Kedia — Wall for PMS — Analyst
Yeah, that’s what you mentioned. Will it be okay if you share right now what is the ongoing yarn realization?
Dinesh Nolkha — Managing Director
I will not be able to share that information at this point of time.
Kaushal Kedia — Wall for PMS — Analyst
Okay, sir. Okay. Thank you, Sir. Thank you very much. Thank you.
Operator
Thank you. [Operator Instructions] Our next question is from the line of Chirag Sidhwa with ICICI Securities. Please go ahead.
Chirag Sidhwa — ICICI Securities — Analyst
Thank you, sir, for the opportunity. Sir my question pertains to the yarn realization. So for the company, our yarn realizations are at around INR303 per kg. But for the quarter, if I look at the average cost of — 40 count yarn was close to around INR3 and INR10 per kg. So historically, since the last three, four quarters, what we have seen is that, our average realization is generally 10% to 20% higher than the 40 count. So shall we assume that this quarter we have sold kind of lower count yarn, is that thinking correct?
Dinesh Nolkha — Managing Director
Yes, definitely, that is right.
Chirag Sidhwa — ICICI Securities — Analyst
Okay, okay. So that’s why say — that’s why our gross margins could have been much better, if we would have maintained our product mix what we had in the previous quarter?
Dinesh Nolkha — Managing Director
But then the volumes would have gone down.
Chirag Sidhwa — ICICI Securities — Analyst
The volumes would have gone down. Okay, okay. And so the one month inventory which we have currently in the books, is it — what would be the costing of the cotton inventory? Would it be — the current INR170, INR175 per kg or it will be the INR200 per kg?
Dinesh Nolkha — Managing Director
No. Last quarter average was INR200. Now it should be in the range of about INR175 to INR180 a kg.
Chirag Sidhwa — ICICI Securities — Analyst
Okay. And sir, the spreads, if I look at the spreads post Q3 for Jan-Feb, have the spreads kind of moved upwards from your Q3 exit levels, or is that the similar levels for the company as of now?
Dinesh Nolkha — Managing Director
It is — for us it is more or less at the similar level. Margins have not improved, margins have not improved, since the demand has improved a bit and the utilization has improved, but margins have still not improved.
Chirag Sidhwa — ICICI Securities — Analyst
Okay. This is because the yarn prices have much more corrected from your existing — what we had witnessed in Q3?
Dinesh Nolkha — Managing Director
Yeah.
Chirag Sidhwa — ICICI Securities — Analyst
Okay. Okay, sir. Thank you so much, sir.
Operator
Thank you. And next question is from Akshay Kothari with Envision Capital. Please go ahead.
Akshay Kothari — Envision Capital — Analyst
Yeah, thanks for the opportunity. Sir what would be our asset turns and spinning, knitting and weaving?
Dinesh Nolkha — Managing Director
You are talking about the fixed set turns or you are talking about the current asset turns?
Akshay Kothari — Envision Capital — Analyst
Yeah, both because I think — yeah, both if you can give?
Dinesh Nolkha — Managing Director
Yeah, at the consolidated level on the fixed asset turn, it is about 1.4 for the [Indecipherable]. Of course, it depends on the kind of raw cotton crisis and the relevant yarn prices. But on an average basis, we consider 1.3 to 1.4 as the fixed asset turn. And for current assets, it was very good last year, because the inventory was lesser. So it was about 3.4 level 3.4 to 3.5. But normally in our industry, it is in the range of 2.5 to 3.
Akshay Kothari — Envision Capital — Analyst
Okay. And I guess in knitting, your asset terms would be more than weaving?
Dinesh Nolkha — Managing Director
Yeah, normally it is. For current assets because the cycle is smaller, so current — the value addition is also smaller and accordingly asset turns are better.
Akshay Kothari — Envision Capital — Analyst
Okay and one more question, one last question. Sir I have been hearing on recent calls that farmers are holding a lot of cotton and you also — and you get to the same fact. Now this question generally comes in my mind that, why don’t companies like Nitin Spinners and you know other bigger players have some sort of backward integration on the farming side as well, to keep — because every time depending on government to take action, is also having — making a big disadvantage to us. So what are impediments which stops us to go on some sort of backward integration on the farming side?
Dinesh Nolkha — Managing Director
Definitely, I completely agree with you. This thought also comes to our mind that we should be also looking at these aspects. But the contract farming law which was being tabled in the Parliament, and was also passed once and then taken back, was one of them — is the major, one of the major impediments. So companies like us can venture into backward, into farming on a contractual basis and can have an advantage on that site. But still the law has to be cleared on that part. So that is the one of the major hindrances which we have. Otherwise, the land ceiling act and many other things comes into play, which is — the laws of the land does not allow us to do the same.
Akshay Kothari — Envision Capital — Analyst
Okay, okay. Understood. Okay. Sir. That’s it from my side. Yeah.
Operator
Thank you. And next question is from the line of Mohit Khanna with Banyan Capital Advisors LP. Please go ahead.
Mohit Khanna — Banyan Capital Advisors — Analyst
Thank you sir, for taking my question. I have a few set of questions. First, when China is opening up now and it is still facing ban on mixed cotton in the U.S., what sort of opportunities does that opens up for us, as Indian yarn manufacturers? Are you facing demand coming in from Vietnam or Bangladesh for Indian yarn at first? And secondly, what is your outlook for the next three, four quarters, especially in the Indian side, on the mixed — especially on the mixed, because we have seen that it is now currently going through a downturn after a COVID upturn. So do you see any signs of revival over there? Thank you.
Dinesh Nolkha — Managing Director
Firstly, as the China is reopening and we are seeing lot of demands coming up from the China itself. Since they have lot of large dedicated capacities for the brands in the U.S. and Europe, which is on the side of the dying, finishing and garmenting side. So that is one part of the business where they want to keep their business running which employs people and accordingly they will have to import more yarn from India. There we have an — so they will — because they need traceability. So all the companies which are able to provide the complete traceability in terms of use of cotton, the kind of — and rest of the documentations which is required by the U.S. custom, those will be benefited. So definitely there is an advantage for sale to U.S. or sale to China as well and that we are seeing that partly is coming back. That is one part.
Second part is regarding, you can say about the demand from other country, some of the sales which is being — not getting certified with China, is being sold into — sold by India, Vietnam, Bangladesh and to some extent by Sri Lanka. So yes demand from these countries is also coming. The demand was already there, but still it is getting more and more improved at [Technical Issues].
Secondly, regarding your question about — you asked about how we are going to see the mixed. Mixed side is definitely — means, this is unforeseen. We have not seen this kind of low demand for knit product in last six, eight years I would say. This is the first time we have seen that knitting production as well as the knitting yarn requirement has gone down substantially. This is partly due to the stocking effect, due to — when the COVID was there, lot of stocking happened in this part.
Secondly, also due to — this is a low — let’s say low value product and most of the retailer would like to exhaust these kind of products and they understand that these are easily replaceable and fast replacement is possible in this segment. May be that is one of the reason where the procurement has slowed down in this segment. But this cannot remain like this for very long period of time and we expect that in another six months time, this should come back to the normalcy level. China is one of the very big players in this segment. If China comes back in a big way, then you should expect the knitting segment also to come back in a reasonable manner.
Mohit Khanna — Banyan Capital Advisors — Analyst
Right, sir. Sir just one small follower on the first part of — the first question that you answered. So have you received because I — correct me if I’m wrong, my understanding is that the U.S. brands actually sell the garments manufacturers from where they can source cottons, because of the traceability issue. So have you seen qualification, have you won qualifications with such brands recently, and if you could put in you know qualitative or quantitative terms that the demand from China is up 5%, 7% quarter on quarter or something like that, that will be helpful. Thank you so much.
Dinesh Nolkha — Managing Director
So first of all, most of the brands normally — bigger brand normally have the kind of a nomination kind of culture, where they approve the various backward suppliers. So this has been there in the — not today but this has been there since last so many years. We are an approved vendor for many of the brands and most of the leading companies in India are the approved — they are approved with most of the brands. And also they specify that you should not buy the yarns made out of these cotton. So Xinjiang is banned, so that is one part. So that is very, very clearly specified.
In quantitative terms as you asked China, if you see last two quarters from June to December, since then the demand is now up by — I can say easily doubled from that side it was the demand in last six months was just miniscule from China because of COVID and many other issues. But that should not be made as a benchmark. We are yet to — means two years back China used to be nearly — India used to export about 20 million to 25 million kgs of yarn to China. Whereas in last six months, every month we were not even doing 3 million, 4 million kg. Now we are I think back to about 12 million to 15 million kg, that is my approximate in last one, one and a half month.
Mohit Khanna — Banyan Capital Advisors — Analyst
Alright. Thank you so much sir. It was very helpful.
Operator
[Operator Instructions] Our next question is from the line of Anik Mitra with Finartha [Phonetic]. Please go ahead.
Anik Mitra — Finartha — Analyst
Good afternoon, sir. Am I audible?
Operator
Yes, you are audible.
Anik Mitra — Finartha — Analyst
Okay, thank you for taking my question, sir. Sir, you told average yarn price in Q3 stood around INR303. And sir, raw material price you told that is around INR200. Sir like what is the normal spread of yarn and cotton?
Dinesh Nolkha — Managing Director
Means normal spread in terms of what? Means basically, I have been telling that it should be — the difference should be about raw cotton price to the yarn price should be in the range of about INR110 to INR115 a kg. That is the normal kind of spread that we have.
Anik Mitra — Finartha — Analyst
Okay, Okay and sir, what is the current Indian cotton in terms of international cotton? Are we still above — quoting above international cotton or it has been normalized already?
Dinesh Nolkha — Managing Director
No, we are still above the international prices. We are about 6% to 7% higher — 7% higher than the international cricket.
Anik Mitra — Finartha — Analyst
Okay. And sir, in terms of — if you can throw some light in terms of your demand export market — sorry, in terms of your export marked?
Dinesh Nolkha — Managing Director
Basically, demand is — we have been exporting to more than 50 countries all around the world. We are exporting to all the continents and all the six continents and demand has been normalized — we normally follow up policy where we do not — we try to see that we are very well distributed all around the world. So in last six months, we saw that the demand from U.S. as well as from Europe and their ancillary supplying countries have gone down substantially. So the focus had to be done on the domestic market.
Now as the things are normalizing, we are seeing that demand is coming back from Europe, as well as from the U.S. side, and also from the ancillary countries who are producing from them, like China, Vietnam and Bangladesh. So these are the kind of geographies, where the exports of yarn normally happen.
Anik Mitra — Finartha — Analyst
Okay, thank you, sir. That was all from my side.
Operator
Thank you very much. And next question is from Falguni Dutta with Jet Age Securities Private Limited. Please go ahead.
Falguni Dutta — Jet Age Securities — Analyst
Yeah, good afternoon sir. Sir. Thank you for allowing. Sir I just have one basic question, when we calculate the cotton yarn spread, it won’t be one kg of yarn less one kg of cotton, right? There would be some wastage in – so we will have to adjust for that?
Dinesh Nolkha — Managing Director
Of course you have to adjust for that.
Falguni Dutta — Jet Age Securities — Analyst
Okay, so would — so how much of cotton would be needed for kg of yarn, let’s say?
Dinesh Nolkha — Managing Director
A lot of it depends on the kind of products which you are taking and the basket which you are making. But you can — on a rough calculation basis, you should consider about 1.2 — 1.2 to 1.25, because there are various products which have been made, there are kind of carded products, home products, various different kind of products are being made. So on an average basis you should calculate at 1.2 — zero to 0.25 [Phonetic] levels depending on the product mixes of different [Technical Issues].
Falguni Dutta — Jet Age Securities — Analyst
1.2 to 1.25.
Dinesh Nolkha — Managing Director
Yeah.
Falguni Dutta — Jet Age Securities — Analyst
Sir, and one last question, what was the 30 count price for Q3?
Dinesh Nolkha — Managing Director
In the Q3, 30 count price was — in the in the Q3 the average 30 count price was in the range of about INR280 — around INR280 to INR285 that was the average level.
Falguni Dutta — Jet Age Securities — Analyst
And what would it be now?
Dinesh Nolkha — Managing Director
This is around INR270 to INR275.
Falguni Dutta — Jet Age Securities — Analyst
Okay, fine sir. Thank you. That’s all from my side.
Operator
[Operator Instructions]. Our next question is from the line of Aditya Khetan with AK Capital. Please go ahead.
Aditya Khetan — AK Capital — Analyst
Yeah, thank you sir for the opportunity. Sir my question is on to the fabric capacity. Sir, you had earlier talked about the fabric capacity getting added by FY ’23 end and spinning new capacity will come by Q2 FY ’24. So are we on track on to the same business and some guidance on business from the new capacity, if cotton price remains as it is?
Dinesh Nolkha — Managing Director
Yeah, we will be — we are on track to add our fabric capacity by the end of — already equipments have already come in and we are under erection and some of the machines, they are under trial. So we should be ready with our capacity by the end of this quarter, for the weaving segment. Also for our knitting segment as well, although capacity utilization there is less, but still the value — the addition is also going to happen there. So both these segments will be there by end of this quarter.
Spinning as rightly said, for Q2, we are heading in that direction itself. That is all [Phonetic] of course in the same direction. And for the…
Aditya Khetan — AK Capital — Analyst
And guidance sir on to the business? Like, if the new capacity comes and if the cotton price remains as it is, and any guidance on to the numbers if you can give out?
Dinesh Nolkha — Managing Director
So as I said — means, at this same level — at the same price level, you should be — once our full capacity is there, we should be doing a monthly run rate of about INR300 crores. We are at the moment — our top line can be utilized fully, is about INR210 crores, so it should be about INR300 crores as [Indecipherable] fully online, fully increase the capacity.
Aditya Khetan — AK Capital — Analyst
Okay. And trial runs, so they have been completed with the customer end, which capacity we will be adding right now?
Dinesh Nolkha — Managing Director
That will be getting completed within next two months time.
Aditya Khetan — AK Capital — Analyst
Okay. Sir, I joined the call a bit late, so I missed your initial remarks on to the demand. Sir, if you can highlight like how is the demand in the textiles now shaping up and what trend we can take at least for the next two quarters? Right now, are we witnessing the demand is going to like stay stable, or because of inventory destocking, we could see more pain? So how you see like demand at least for the next two quarters just I want to — for the short term?
Dinesh Nolkha — Managing Director
For the short term, the demand is — we are seeing course definitely last two quarters, the demand was very subdued. It is improving and most of the spinning capacity at least has come back to the normalized level of about 90%. So that is already spinning capacity all over India is also — the utilization has improved. This itself signals a reasonable demand, but it is not yet to the old levels which was there. We should expect that if nothing major happens geopolitically, we should be having — we should be back to the normal demand level in another six to nine months time.
Aditya Khetan — AK Capital — Analyst
Okay. Any guidance on the capex sir, I missed the same, if you have highlighted it again?
Dinesh Nolkha — Managing Director
Yeah, we are on the track through the execution and expect to commence the project within the timelines envisaged. Of course there are challenges on that part, but at this point of time everything is under control.
Aditya Khetan — AK Capital — Analyst
Sir capex figure, sir number if you can you can give?
Dinesh Nolkha — Managing Director
We have already announced a capex of total INR955 crores. So this was already announced I think nine months back itself, and we are still on the same path.
Aditya Khetan — AK Capital — Analyst
Got it, sir. Thank you, sir. Thanks all from me.
Operator
Thank you, ladies and gentlemen, due to the time constraint, that was the last question for today. I would now like to hand the conference over to Mr. Awanish Chandra for closing comments. Over to you, sir.
Awanish Chandra — SMIFS Ltd. — Analyst
Sir, just one quick question. We are very strong on yarn export side, now we are increasing our capacity on the fabric side also. So how are talks with new clients for fabric in the export market?
Dinesh Nolkha — Managing Director
Awanishji, last quarter we have been able to do it nearly 25% of our sales of the fabrics into the export market. So that is a reasonable achievement, considering that we are a new — relatively new player in this field. We are focusing on the export market on a consistent basis, and we have got approval from many brand internationally as well. And with the increasing capacity, definitely our focus for the increased capacity will be for the export market, and we’re quite hopeful about that.
Awanish Chandra — SMIFS Ltd. — Analyst
Okay, sir. Okay, sir thank you very much Dinesh sir and Maheshwari sir, for spending your valuable time and providing us this opportunity to host the call. Sir, any final comment before closing?
Dinesh Nolkha — Managing Director
Yeah. First of all, I would like to thank everyone for taking out time and joining us for the call. I hope we have been able to address all your queries. I also thank SMIFS and Awanishji for hosting the call for us and for any other information, kindly get in touch with our investor relationship advisors or our finance team, and thank you all once again and wish you best of luck. Thank you.
Operator
[Operator Closing Remarks]