RSWM Limited (NSE: RSWM) Q1 2026 Earnings Call dated Aug. 06, 2025
Corporate Participants:
Unidentified Speaker
Rajeev Gupta — Chief Executive Officer, Joint Managing Director, Non Independent Executive Director
Nitin Tulyani — President & CFO
Rakesh Jain — General Manager – Corporate Finance
Surender Gupta — VP – Legal and Company Secretary
Analysts:
Unidentified Participant
Majid Ahamed — Analyst
Ashwin Kumar — Analyst
Presentation:
operator
That. Ladies and gentlemen, good day and welcome to the RSWM Limited Q1FI2026 earnings call we have with us today from the management. Mr. Rajiv Gupta, Joint Managing Director. Mr. Nitin Tuliani, President and CFO. Mr. Surendra Gupta, VP Legal and Co. Secretary. As a reminder, all participant lines will be in the lesson 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 touch tone phone. Please note. Before we proceed this call, I would like to take this opportunity to remind everyone about the disclaimer related to the conference call.
Today’s discussion may be forward looking in nature based on management’s current beliefs and expectations. It must be viewed in conjunction with the risk that our business faces that could cause our future results, performance or achievements to differ significantly from what may be expressed or implied by such forward looking statements. I now hand the conference over to Mr. Rajiv Gupta for the industry outlook post that Mr. Nitin Kulyani will take over for the financial overview. Thank you. And over to you, Rajiv sir.
Rajeev Gupta — Chief Executive Officer, Joint Managing Director, Non Independent Executive Director
Hi, good evening. I hope you and your families are having good health. It is my pleasure to welcome you to this Q1 call for the year F5 2526. This is earnings and conference call for the first quarter. I hope you all had opportunity to review our financial results and investor presentation which is available both on stock exchanges as well as on the website of the company. Now if you talk about industry, these are very very uncertain times. If you look at both internal and external because of two major developments. External which has happened first being the FTA between UK and India.
So that was a very very positive development. And we understand this was a game changing shift in the global textile trade. Opening substantial opportunities for Indian exporters with the removal of import duties. Simplification of trade for Indian exporters particularly in value added and sustainability categories are now better positioned. And the UK import which is nearly 20 billion from India worth of garment annually, you know this is including India. So this agreement which removes 9 to 12% duties across various products of garments and textile to zero. So that level playing field with Bangladesh, Pakistan and other countries is with India as well.
So this reflects Growing trust in India’s manufacturing capability and definitely this will be a very strong ground for further growth in especially finished garments for supply to uk. The second element which is not so good and has been shattering the entire industry is 25% tariff imposed by us. This comes as a very strong temporary setback to all of us because we were expecting something around 15 to 20% as tariff. So this additional 5 to 10% tariff against our expectation has given us an emotional setback for the time being. We personally feel that this is a short term slowdown and it will not be very long lasting disruption for the industry as a whole.
Three years agreement with UK and the opportunities across within domestic and others will prevail. More importantly, duty structure of tariff of US on China is still to be decided and the competitive advantages disadvantages will be truly reflected thereon. The serious concern is about the penalty that US President talked about or Russia trade. So that is creating more uncertainty at this point of time. So this environment of uncertainty definitely is there for the textile as a whole. If I talk about domestic RFM is predominantly a domestic company having around 70% of revenue coming from within India.
So impact of international disruptions will be limited on us as we do not have direct finished product sales to US or to other countries. Rather our customers in turn are exporting. So if I share the outlook of raw material blister remains as very competitive for us because China having better blister prices. So international prices of blister definitely give us a disadvantage as a country and we continue to face the challenge of export of blister dominated yarns. Cotton has been more or less the same level ever since we talked about in last investors call. But the disadvantage of Indian cotton over international cotton continues as such.
So both the synthetic and cotton areas round deal remains not very competitive strength for Indian spinners or the experiment such as at this point of time. So otherwise if we share the business wise outlook in yarn, synthetic and cotton I shared already Milan has been doing reasonably okay. But this land route disruption by closing of land routes exports to Bangladesh has created an issue because most of the Milan exports are in the smaller lots and go from the road route. So that impact is there for industry as a whole. Otherwise domestic and international demand for yarn has been more or less stable so there is not very strong pull.
At the same time there is not a decline in demand. So quarter observed a reasonably okay demand for the yarn as such. Denim overall the sentiment has been reasonably good. Governmentals have been looking for lightweight more comfort wear garments which is having stretch and also giving a fashion outlook. So denim has been reasonably okay overall. India capacity utilization for DANIM has been in 70s whereas RSWM is able to clock better and around 90s is utilization levels we have been doing. Denim outlook for denim also continues to be good in the next quarter for net there’s a lot of growth is likely to happen in India.
A lot of new investments are targeted in net as worldwide. NIT is a focus area and most of the growth is likely to happen in NIT area. So RSW has gone with the stabilization phase and we are reasonably placed in this segment now and the utilization levels are also okay for this to work on. Overall the focus as we discussed last time on operational efficiencies and market position continues to be the key area for RSWM and we continue to work on that future growth in RSWM we are considering by way of consolidation in our yarn operations and largely the focus is on the value added products like this and so sustainability continues to be another area of very close focus and R has been living its philosophy of giving back to societies so we live by that area.
So overall the sentiment if I talk about it is having lot of challenges but still we have maintained a positive outlook and see the next quarter performance going to be in the same range or slightly better range of operations that we are having in terms of utilization and overall market placement of the product. So we take up questions towards end of this. Now I hand over to Nitin our CFO for financial overview and strategic highlights.
Nitin Tulyani — President & CFO
Thank you sir. So I will now share the RSWM financial and strategic highlights from Q1 FY26 and how they are preparing us for the upcoming quarters. Coming to the financial performance and talking in terms of the revenue. RSW reported a revenue of 1169 crore in Q1FY26, a slight decline of 3.2% year over year which is primarily on account of the subdued export demand. Coming to the gross profit IT stood at 440 crores improving by 1.3% year over year. Our gross profit margin strengthened to 37.3% up by 152 basis points year over year and 307 dips on quarter over quarter basis.
It’s primarily driven by the better cost optimizations and the product mix improvement. Our EBITDA reached 81 crore. It’s a robust 50.6% year over year growth and the EBITDA margin expanded to 6.9% up to 43 bids year over year and 63 bids quarter over quarter. This was supported by better operational efficiency and focusing on low profit product to improve customer mix, product mix and market mix. Most notably, our PAT came in at 7 crore compared to a loss of 13.7 crore in Q1FY25 which is reflecting our stronger turnaround. Pack margin improved to 0.6% marking an upward movement of 46 bits on a quarter over quarter basis and a swing from negative territory last year.
Additionally, I would like to share the key outcomes from yesterday’s board meeting particularly around our capital investment strategy and operational optimization initiatives. As a part of our ongoing commitment to sustainable growth and operational excellence, the Board has approved a total capex of 92 crores to modernize and enhance our letting operations and as Modi and Chapa units. This will result in a 20% increase in the lifting capacity from existing 750 metric ton to 900 metric tons per month, translating into an estimated annual upside revenue of roughly 220 crores. The project is targeted to be completed over the next nine months and will be funded through a mix of internal accruals and debts.
In addition, we are moving decisively on our sustainability roadmap. We have placed order for a 10 megawatt renewable energy product for captive use and we are in Bhava’s discussion to expand this to 50 megawatt in total capacity. With this, our green energy footprint will rise from 74 megawatt to 124 megawatt helping us significantly offset our power costs and reduce our carbon footprint. The total investment is estimated at around 50 crores and the project will be commissioned over the next eight months. Lastly, we have initiated a rationalization of the spinning operations of our CHAPA unit where the old machines which are no longer viable usable spindles will be transferred to the other plants for the modernization and the remaining assets will be one time.
Importantly, the netting operations at CHARTA will continue and we will continue to get the benefit from the plant upgrades. We have made significant strides in advancing our innovation agenda and integrating sustainability more deeply into our operations. Despite ongoing challenges, we continue to uncover promising long term opportunities. Our transition toward premium synthetic fibers, a more focused product range and the exit from the negative and the lower contribution products is helping us in improving the operational efficiency and strengthening the supply chain resilience. Under the RSWM 2.0 initiative, we are repositioning toward the high yield segment with a stronger export potential.
We are sharpening our manufacturing focus to maximize resource utilization while maintaining the fiscal discipline. Our exercise of the specialty yarn with the advanced technical attributes and a broader high value product offering aligned with the global demand trends. There are certain key initiatives we are adopting toward the digitalization to strengthen our processes further and enhancing the working capital management. We are also focusing on reducing the debt and cutting energy cost by expanding renewable energy usage across the production hubs through proper inventory planning. With the responsive production model to support the lean operations backed by the multi prong strategy, we are well positioned to generate the long term value.
Our focus on value creation, resource efficiency and disciplined execution keep us aligned with our vision for the scalable and responsible growth. These strategic investments underscore our confidence in the growth of the value audit segment, our discipline in capital allocation and our focus on delivering long term stakeholder value. With this I would like to conclude and open the floor for any questions you may have. We shall be happy to take up your questions.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touch. Don’t telephone 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’ll wait for a moment while the question queue assembles. A reminder to all participants if you wish to ask any questions, you may press star and 1. Anyone who wishes to ask a question, you may press Star and one.
Now we have a first question from the line of Majid Ahmed from Pinpoint Capital. Please go ahead.
Majid Ahamed
I’m audible Sir. Hello?
operator
Yes Majid, we can hear you.
Majid Ahamed
Yes, thank you sir for opportunity. My first question is that can you give me the numbers of the capacity that you have and the utilization numbers?
Rajeev Gupta
So you are talking about particular business or which is the area you often.
Majid Ahamed
Like of denim and fabric? Like can you give me the breakup of the denim portal metrics and capacity and its utilization and for fabric?
Rajeev Gupta
Okay, sure. So let me share with you in case of Danny we have a capacity of 30 lakh metric 30 lakh meters of processed fabric per month and against that we are clocking in this quarter an average of around 26.8. So lap meter capacity. So which works out to be almost from 90% in terms of capacity for denim and if I share with you the bit numbers mid number my capacity is on 750 metric ton and we have clocked during this quarter 625 metric ton as our per month for the purchase complete. So I’m expecting this was the question you were.
Majid Ahamed
The revenue breakup between the numbers of revenue in the denim and Fabric as well.
Nitin Tulyani
So as a part of our segment reporting we are reporting the fabric division numbers. And it’s clear in our segment.
Majid Ahamed
You have only mentioned yarn and fabric. But what about denim? Denim is it included in which part of fabric?
Nitin Tulyani
Yeah, the denim is a part of our fabric business. So our fabric business includes both denim only.
Majid Ahamed
But can you give me a breakup so that I can understand the realization that you are making across pigments. But I have clear ideas of what’s happening because you have a margins and also.
Nitin Tulyani
So denim we did around 200 crores.
Majid Ahamed
Okay. Denim is the most part. Yeah. Yes. Thank you sir. Thank you for. Yes sir. Yes, the denim is 200 crores, right. For this first quarter. Hello.
Nitin Tulyani
Yes. Right. Yes. 200 crores.
Majid Ahamed
Yes. How much is your big time? We are able to generator of that 200 crores debit margin. Like in a bit you have mentioned around 15.9 crores in figment reporting out of that how much is fabric and denim sir.
Nitin Tulyani
So in denim business we are generating in Q1 on EBITDA of 12%.
Majid Ahamed
How much is it? 12 crore, sir. How many sir, water number 12%. I am going to clear you very clearly sir. Can you repeat once again? I’m audible sir. Hello.
Rajeev Gupta
Hello. As per segment reporting we are segregating yarn and fabric. So within that we couldn’t make separate balance sheet for denim and knit as such. But for you know, broad indicators that we have shared in the industry numbers. So I think that is applicable here also.
Majid Ahamed
Okay, sir. Okay. Yes. My next question is that sir, now we are looking to break even and we are now cusp of profitability. So are we looking to improve the profit especially like because if I’m seeing the COGS as a percentage of revenue decrease significantly like 20 to a material level from 64% to 62%. And your power and fuel cost as a percentage of revenue has also decreased 100 bits. Like can we increase. Like can we see margin going up either through fixed cost rationalization or the per unit realization improvements. Like how does that work for this year?
Rajeev Gupta
This is a combination of both the things in realization. Also different businesses haven’t have behaved differently. The copper prices have improved a little bit. So some amount of realization has also improved. And there is a conscious effort in terms of improving our cost structure and thereby reducing the fixed cost and better utilization of assets. So as we use our assets sweat our assets better, your cost per unit goes down and thereby help you in improving your Overall numbers.
Majid Ahamed
Of 120 crores. Like. Like. Like what would be the Going forward, quarterly run rate will it be the same or would it be reduced? Going forward, the power and fuel cost like from a metric and perspective like one of the exams. But as you increase utilization, it could change.
Nitin Tulyani
So we are consciously investing in the renewable energy and our power cost is expected to reduce profitability. Coming from low power cost, our power will reduce.
Rajeev Gupta
We are working on renewable power cost as you know Nitin mentioned in his brief. And secondly also we are modernizing the machine part and taking action wherever the machines are there. So thereby, you know, per unit it will be going down. Overall figure may be similar or maybe go slightly better in case we are able to clock better machine utilization. But per unit consumption definitely will be lower.
Majid Ahamed
Okay, so that’s also if I can assume that as a percentage of revenue would reduce. Right now it is a 10% it can go between 8 to 8 to 9% kind of thing. It can improve at that level. Right?
Rajeev Gupta
It will be difficult to comment percentage but it will be lower.
Majid Ahamed
Okay, it will be lower like on overall basis, it will be definitely lower. Yes sir. And secondly sir, like so now currently, like as of now, how much is the borrowing? Sir, as of Q1, if you can give the number.
Nitin Tulyani
Total borrowing stands at 1600 crores.
Majid Ahamed
How are we looking to deleverage our balance?
Nitin Tulyani
So we are trying to leverage our internal accruals and through this we are planning to go with the further expansion. And whatever the new debt we’ll be taking for the nodes, the same amount of repayments will be done during the year. So there will be no impact on the debt ratios also. So we are not going with any additional debt. Our repayments will be equal to the additional debt we will be taking.
Majid Ahamed
What you mean is that. So there will be. There will be no net change but incremental debt will be then again used for debt repayment for group.
Rajeev Gupta
Yes, right.
Majid Ahamed
Okay. Now like what’s the CapEx requirements for FY26? What’s the guidance that you can give? How much you’re gonna.
Rajeev Gupta
There are three things we are doing during this year. One is the expansion in our net business where we were having a major shortfall in our product mix. We were not having printing as a product in the day. So to address that and also to balance our capability in terms of cotton subjects. So we are going for an expansion which will add around 250 ton actual production capability and 220cr of additional revenue as a result of that. So when the full project is on, we will have these numbers in place. So that’s the one CapEx which we are doing this will be to the range of 90 to 95 overall project for this.
The second thing we are doing is as a theme of sustainability and with the change in the law that now you can go up to 200% of air conditioned load as renewable energy. So we are going for 50 megawatts of additional round the clock energy through two routes. One 10 megawatt we are doing for our solar installation and the balance we are going with around the clock good captive scheme of openss power so that investment in both areas would be somewhere around 50cr. So I think these are the two major things which we are doing which are immediately the need for the balancing and for our cost structure optimization we are doing in addition to this is a normal capital expenditure that we are doing for maintenance and making our self efficient in terms of cost.
So we are very conservative for going any capex for this year. Last year we restrained ourselves and again this will help us to be you know more strong financially and this prudence of going very slow on CapEx will continue for a couple of more quarters.
Majid Ahamed
Capex would be the range of 150 crore. 150 to 200 in total including your operational. Okay?
Rajeev Gupta
Absolutely. Absolutely.
Majid Ahamed
Okay sir. Finally sir, in regards to working capital like this year you have done extremely well in managing your working capital and then generating strong operating cash flows. Would that remain same or how do you see this?
Nitin Tulyani
Yes, we target to maintain the same momentum and we are consistently keeping a track of the inventory levels specifically the raw material as well as the finished good inventory. And on the debtor side also we are strongly governing the vehicles as well.
Majid Ahamed
As the credit limits. So I can assume that it will remain same for the year at least. Yes, yes. Okay. Thank you so much for all the very best.
Rajeev Gupta
Thank you.
operator
Thank you. A reminder to all participants if you wish to ask any questions you may press Star and one. Anyone willing to ask a question you may press Star and one. Now we have a next question from the line of Rishabh Sharma from VP Advisory. Please go ahead.
Unidentified Participant
Hello. Thank you for the opportunity. First of all congratulations on the good set of numbers. So what returns do you expect from the 92 crore upgrade and when it will start to add into the profit.
Rajeev Gupta
Okay so thank you very much first of all for studying the numbers and appreciating the performance in the quarter. This upcoming investment of 90 to 95 year in our knitting modernization as well as and adding the new products which is printing into this. We expect this to you know clock around 18 to 20% of you know, ROI and as a result we be having, you know payback around the five years for this. If you see that the implementation period mentioned by Nitin is almost nine months. So I expect to have partial revenue for the year 2627 and full revenue thereafter.
Unidentified Participant
Thank you. And sir, what cost savings are expected from the Chata unit? The spinning division closure and was there any one time shutdown cost?
Rajeev Gupta
You know spinning division in Chaka came as a part of parcel of the deal from the acquisition which has two businesses that was knitting and spinning. Fortunately knitting we have been able to stabilize and it is forming, we are able to utilize it nicely and it is contributing to both revenue and GitHub of the company Spinning being old and inefficient machinery park, we were bleeding continuously ever since we acquired this. We tried to improve on the various interests but eventually it was not making much of a contribution and thereby no financial sense in cutting it forward.
So we have now decided to move out of spinning in Chata but continue to operate Chata location and business in our knitting division. Rather we are modernizing and adding certain more machines for the balancing in our knitting division. So there may be a limited one time cost but there is no major challenge for stopping us winning operations in China.
Unidentified Participant
Thank you sir and all the best.
Rajeev Gupta
Thanks everyone.
operator
Thank you. A reminder to all participants, if you wish to ask any questions you may press car and 1. Anyone who wishes to ask a question, you may press star and one. Now we have our next question from the line of Madhu Sharma from Estate Capital. Please go ahead.
Unidentified Participant
Am I audible?
Rajeev Gupta
Yeah, you are audible.
Unidentified Participant
Yes. Good morning. Good afternoon sir and thank you for the opportunity. My first question is do you plan to plan to raise more debts and how will this plan impact your current debt level?
Nitin Tulyani
So like I answered the previous question. So we are planning to use our internal accrual and the additional debt which we will be raising for these projects will be equivalent to the repayment we’ll be doing in the tn. So year over year there will be no additional burden on the balance sheet but the ratio will be maintained.
Unidentified Participant
Yes. And so second question is what shares of energy need will be made by the 50 crores green investment and will it reduce cost and also are there any carbon credits or intent to expect it?
Nitin Tulyani
Very interesting question because you know a lot of analysis was done on these things. So after this 50 megawatt of additional 50cr of investment in this power thing, we will be having 45% of our consumption through the Green energy or renewable energy. And this overall investment will bring down per unit cost by almost 30 pesos. So which in turn will be the saving per unit for the power consumption. And coming to your question about carbon credit, of course this is, you know carbon credit will be eligible for this and we are using as a result of the policy which government announced 200% of connected loan as.
So under that policy only we are doing this.
Unidentified Participant
Okay. So. Yes sir. Thank you sir.
Rajeev Gupta
Thank you.
operator
Thank you. A reminder to all participants if you wish to ask any questions you may press star and 1. Anyone willing to ask a question, you may press star in one. Now we have our next question from the line of mithil from unlisted india.com. please go ahead.
Unidentified Participant
Yeah, thank you for the. My first question was, I just didn’t hear it properly. What is the percentage of power that is captive for us currently?
Nitin Tulyani
So you mean to say first image of power that is captive?
Unidentified Participant
Yeah.
Nitin Tulyani
So currently we have 74 megawatts of the renewable energy we are using. Out of this 40 megawatt is coming from wind and 34 megawatt is coming from solar.
Unidentified Participant
Okay so that is how much percentage of the overall power that we consume.
Rajeev Gupta
So this, you know 74 megawatt which n mentioned there is a yield which is to that. So that yield is slightly lower. So you know that percentage would be to the tune of maybe around 25, 27%. So post this additional investment we’ll go up to 45%.
Unidentified Participant
So 45% will be capital.
Rajeev Gupta
Not capital, it will be renewable.
Unidentified Participant
Renewable.
Rajeev Gupta
It’s not all behind the meter. It is combination of behind the meter plus.
Unidentified Participant
It’S not called RSWF particularly.
Rajeev Gupta
This is part of it. Part of it is behind the meter which is RSWM exclusively and the group is a part of investment that we have done.
Unidentified Participant
Okay, I was asking this question because we are around 500 crores now on the fuel cost. So like how do we, how do we bring it down? Actually like by. Because solar is a very good return on investment. So can’t we spend more on it and bring down the fuel cost?
Rajeev Gupta
So I 100% agree with you. That is the thought. That is why we are making this investment for the solar pane. Now we need to strike a very fine balance between CapEx we want to do and CapEx we can do. So at this moment we are maintaining our balance sheet strong doing the capex only to the extent that we will not have additional borrowing or additional pressure on this thing. So we are doing, you know, well Appreciated your point and we agree with that. Solar definitely makes sense. That’s why we are doing the 10 megawatt of the antimeter and you know, 25 megawatts.
We are doing a good couple. So we’ll continue to do this.
Unidentified Participant
Okay, so every year you are planning to add more and more solar. Right.
Rajeev Gupta
So whatever is permissible under the law, we will intend to achieve that. And this new possibility has come because.
Unidentified Participant
Okay, thanks. And the second question is how much of our exports is currently us like and what will be the impact of the tariff on that from the gross realization.
Rajeev Gupta
So as we mentioned in my opening remarks, we are not directly exporting to us because we are not in, you know, finish good segment. We produce yarn, we produce fabric for garmenting and we produce fabric for them in garmenting. So we are operating in B2B kind of environment where directly we are not exporting to us. But if you say we are isolated or insulated with this impact, my answer would be no. My customers are impacted and thereby I am indirectly.
Unidentified Participant
So one final question. Do you see going forward yarn percentage of sales going down and like is there any target that the yarn percentage should go down?
Rajeev Gupta
RSWM has been known as yarn company and we do not want to degrow in yarn. Of course we would, you know, expand in the areas yarn as well as others. At this thing, at this board meeting we are discussing more for knit but doesn’t mean that we will not grow in yarn. So yarn remains our strength. As of today we are, you know, really focus on this as Indian government is also having very strong growth for textile. So do RSWM would like to live as you know that from 147 billion India target rose 250 billion and then 300 billion as a target.
So RSWM will be participating from our side in that growth.
Unidentified Participant
Oh, thank you. I hope. We are making a gross profit of 1600 crores but nothing is coming to the net profit. So I hope something changes. Yes. For the shareholders. Thank you so much.
Rajeev Gupta
Thank you.
operator
Thank you. A reminder to all participants, if you wish to ask any questions you may press star and 1. We have our next question from line of Marjid Aheman from Pinpoint Capital. Please go ahead.
Rajeev Gupta
Yeah, very much.
Majid Ahamed
Yes sir, I have another question that is on regards to like what type of volume growth that you’re looking to do for FY26. Like any guidance on that from the utilization.
Rajeev Gupta
So we are not getting, you know, any major expansion during this year. Rather we are consolidating and optimizing our. One of the strategy we have been following is, you know, using we are not having positive beta or making gross, you know, profitable sales. So we that we are not focusing only on revenues. The more focus has been on profitable revenues. So we are, you know, enriching our product mix and thereby trying to balance overall things. Of course we will be having better revenues than last year. But in terms of quantum jump, I do not see this year as a year of revenue enhancement.
We can expect next year as our revenue enhancement when we have a result of this net expansion giving the full advantage.
Majid Ahamed
What type of you’re looking at? Is it mid single digit or are you looking for at least low double digit like any sort of what a target.
Rajeev Gupta
I fully appreciate your, you know, concern as well as expectation in the question which is hidden. So if you look at this quarter, we have been able to clock around 6.9%, say roughly 7% EBITDA, which is, you know, 2.5% more than the corresponding quarter last year where we had around 4.5% EBITDA. So this focus on EBITDA enhancement is the sole objective that entire team of RSWM is working on. I agree with you. Double digit is the target that every company has to work on and we are working in that direction only.
Majid Ahamed
That’S the thing that you’re working toward trying to achieve by the end of this year, right? Okay.
Rajeev Gupta
No, you should rather all of us should always dish for and try for that. So let’s see that there has been good improvement in this quarter and let’s hope for the better quarters ahead.
Majid Ahamed
Okay, that’s all my question. Thank you.
operator
Thank you. Thank you. We have our next question from the line of Ashwin Kumar, an individual investor. Please go ahead.
Ashwin Kumar
Congratulations on a great set of numbers and we will be transforming things around out there. So just wanted to give you a thank you. Yeah, so I just have a couple of questions from my side. First is we’re talking about, we keep hearing the dyscotomian spread being under pressure. Right. What are you doing to counter this? Are you hedging? Is there any strategy in place?
Rajeev Gupta
So there are few strategies we need to do. One is that you don’t compete in commodities. You do more of certified or sustainable quarters business which are for organic, for fair trade, for, you know, those kind of things. And then second is you go for contamination free yarns which are on the imported cotton which will give you two advantages. One, you will be, you know, not dependent only on Indian cotton. So to that extent you are Protected and secondly, you are having a better product mix which will give you better opportunity in the market. So then machine utilization remains one of the focus.
Productivities and internal efficiencies remains the focus. Raw material optimization, as I said, they’re going to be the key driver. Innovation and product development has been the key strategies and we would like to focus to stay afloat in this tough environment internationally.
Ashwin Kumar
Okay, so the main reason is you’re saying now the spread should improve.
Rajeev Gupta
We all expect that at least we are working more on internal efficiencies and internal strategies to, you know, first reduce the impact and second to grow. So I think that’s the effort we are doing.
Ashwin Kumar
Okay, on this call you were saying you are looking at raising debt and trying to then refinance it. So then the payment of finance costs will be the same. Because that was going to be my question because the finance cost is still. But instead of doing that, because Arizona is already very highly leveraged, why wouldn’t you consider like raising funds to pay off the debt and to do more acquisitions, you know, instead of adding more debt to the company. Has that been considered?
Nitin Tulyani
Yeah, we are exploring the internal sources of the fund and we are also focusing on certain blocked assets and we are planning the liquidation of the non usable assets so that the debt burden could reduce.
Rajeev Gupta
So focus on working capital, focus on assess sweating is the first focus we are doing. Your point is well placed. And the direction that we are working is aligned to what you intend to say.
Majid Ahamed
Yeah. Because wouldn’t it be easier because you’d be reducing just because you’re already quite undervalued. By raising debt, by raising equity, we can really bring down the debt and things can really work a lot more in favor for the company. But I believe it in your generation we are all working to focus on the best results. So I also had a question on. You did mention about trade receivable discounts. Can you explain how you’ve done that this last quarter? That was something that you had discussed in the previous call.
Nitin Tulyani
So I talked about vendor bill discounting.
Ashwin Kumar
Yeah, yeah. Vendable discounting. Can you tell us what you’ve done?
Nitin Tulyani
Yeah, basically that the MSME wonders. We have done a. We have done a tie up with a platform threads, platform trade visibly discounted system. And we are discounting our MSME vendors bin payment which is giving us interest arbitrage in terms of the finance cost.
Ashwin Kumar
Okay, so how much is that benefit this quarter? Any numbers you can share.
Nitin Tulyani
Roughly around. Roughly around one to one and a half percent. We have been able to get because of the recent reduction in the repo rates announced by the rba.
Ashwin Kumar
One to one. Okay.
Nitin Tulyani
That’s the reason our overall finance cost we have been able to maintain.
Ashwin Kumar
Okay. And as. As per my understanding, I believe, you know, India has a lot of spinning capacity. If I’m not, if I’m not mistaken, we have a lot of spinning capacity. So if one of the plans like how you sold in the charter unit, the spinning machines is. Is your future plan to maybe reduce more spinning machines from your current plans and to focus more on adding methane. Is that the idea?
Rajeev Gupta
So you know, you are absolutely right. India is the second largest spinner in the world. And we have more than 20% of world spinning capacity in India. And RSWM is one of the prominent players. We have around 6.5 lakh spenders overall working with us. We want to shred these assets better. We don’t Currently overall spinning is allocated into three distinct products. One is both grade in the consumption of somewhere around 4.5 lakh spindles and other 1.25 SP are on cotton and similarly 1.1 lakh SP are on village yards. So we intend to maintain this. There is no immediate intention to grow in this area.
At the same time, there is no discouragement to the spinning existing spinning procedure. Modernization is the one thing which we plan to do in these capacities to stay efficient and upload.
Ashwin Kumar
I mean I’ve been seeing a lot of your plan visits recently and a lot of praise has been done about how RSWM plans are. I’ve seen that. One thing I believe in the previous questions you spoke about adding and spinning. You’re looking at adding more capacity, but wouldn’t it be better to add more heating capacity as compared to spinning at this point?
Rajeev Gupta
You are absolutely right. First of all, thank you very much for funding us so closely. The plant is at rather than rich measures that gives lot of encouragement when our investments also take interest in our efforts. And for the CapEx we discussed about this is only for knitting. We are not having any capex for adding spindles, only for modernization. The existing splits in terms of operational efficiencies. So the current CapEx that we are talking about is only for knitting and for solar, for power. Power and knitting are the areas for capacity. Yarn is only modernization and you know, routine capex.
Ashwin Kumar
And one final question. There was something missing. I believe that’s what you said was missing like that. Is there any other areas that you feel the VM can should look at growing apart from maybe printing Something else.
Rajeev Gupta
Yes, you are absolutely right. You know, if I look at India as a country and the opportunities the world of textile present to us, there are many areas where we should have meaningful investment. One area which was immediately missing was printing. Another area for us which is a logical offering for the market is a full, full package offering for denim. So we are doing only denim fabric. And most of the customers now look for the suppliers who are integrated supply chain and also offering denim garments, similarly knitted garments. Another direction which because of FTA is because of demand nowadays people are looking for integrated factories.
No advantage that RSWM has is we are having fiber, we are having spinning, we are having knitting, we are having dynamic fabric processing both for knitting and damning logically for full package to deliver to customer. Only missing link is garmenting. So I think that is another area which once our balance sheet becomes, you know, capable of taking this load. So we should be open for this discussions.
Ashwin Kumar
Okay, thanks. And just one last question. Sorry, there was a while back I saw the news, something about a Jammu Kashmir unit that’s. Now we’re not looking at that anymore. Is that right?
Rajeev Gupta
You know, we discussed this last time also and I was waiting that this question has not come yet. So thank you very much for bringing that point on. So you know this. We are still waiting for government approval for subsidies. We are still in the waiting list and it is expected that next time when we will have this call, probably we’ll have clearance for the subsidies from the government. Because, you know, this purely is a project which is initiated on the government subsidies approval.
Ashwin Kumar
Government subsidies. Oh, fine. Okay, that’s great. That’s all from my side. I’m wishing you the very best and the entire team. Thank you.
Rajeev Gupta
Thanks a lot.
Ashwin Kumar
Thank you.
operator
Thank you. This was the last question for today and I now hand the conference over to the management for closing comments.
Rajeev Gupta
Thank you. Nitin will have the closing views.
Nitin Tulyani
So in closing, I would extend my sincere gratitude to our employees, stakeholders and partners for their unwavering support. With collective effort and a shared vision, we are well positioned to drive innovation, strengthen our market presence and deliver sustainable value. The road ahead holds great promise and I’m confident in our ability to grow. And succeed in the years to come. Thank you everyone.
operator
Thank you. We sincerely appreciate your participation in this event and we kindly request that you now disconnect your lines. Thank you for your time and your engagement.
Rajeev Gupta
Thank you.