Categories Consumer, Latest Earnings Call Transcripts

RSWM Limited (RSWM) Q3 FY23 Earnings Concall Transcript

RSWM Earnings Concall - Final Transcript

RSWM Limited (NSE:RSWM) Q3 FY23 Earnings Concall dated Feb. 10, 2023.

Corporate Participants:

Avinash Bhargava — CFO

Analysts:

Tanuj Mehta — JM Financial — Analyst

Amit Goela — Rare Enterprises — Analyst

Amol Kankariya — Starters Technologies Private Limited — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day, and welcome to the RSWM Limited Q3 and Nine Months FY ’23 Earnings Conference Call. We have with us today from the management, Mr. Avinash Bhargava, Chief Financial Officer; Mr. Surender Gupta, VP Legal and Company Secretary. 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. [Operator Instructions] Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this conference.

Today’s discussions may be forward-looking in nature based on management’s current beliefs and expectations. It must be viewed in conjunction with the risks 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. Avinash Bhargava for opening remarks. Thank you, and over to you, sir.

Avinash Bhargava — CFO

Thank you so much. Good evening, everyone, and thank you for taking the time to join us for our Q3 nine months financial year ’23 earning call. I understand that the results were declared yesterday and I hope that each and every one of you had the opportunity to thoroughly review them. As we proceed with this discussion, I would like to bring your attention to the investor presentation that we will be referencing.

Let me start my speech by providing a comprehensive overview of the current state of textile industry and business scenario. This will give you a better understanding of the market trends and challenges faced by the industry and then we will open the floor for your questions. If you have any further questions that remain unanswered. After the earnings call, please do not hesitate to reach out to us.

Let me brief you on the industry and business scenario first in terms of the business scenario, as we discussed during the last call also. The Indian textile industry encountered a few bumps in the road in 2022, after a good start during the year. Three main reasons that hit the sector are unpredictable geopolitical events and variable raw material prices. Secondly, the demand from USA and Europe, two of our major convening markets took a hit due to economic trends, and the domestic wasn’t immune to global scenario, leading to less optimism for the rest of the fiscal year.

Thirdly, the material price difference compared to the international markets, resulting in a competitive disadvantage to most Indian textile players. In the last half in year, the world has been — has seen a significant increase in the demand for oil and gas. This can be attributed to the restrictions on Russian fuel exports, which resulted steadily of these essential commodities and the subsequent increase in their prices. The ongoing conflict between Russia and Ukraine and the general geopolitical instability…

Operator

Mr. Bhargava, we are unable to hear you at this time.

Avinash Bhargava — CFO

Yes, let me — let me repeat. Geopolitical instability in the region only added fuel to the fare and items already so reprices, leading to inflationary pressure not just locally but globally as well. This further reduced the demand for the commodity in the export market. That situation doesn’t help by the concern surrounding but spread of a new variant of COVID-19 which led to a further decline in market sentiments. In international markets, however, in recent weeks, there has been a noticable resurgence in inquiry for these commodities, across all segments like yarn. melange, denim. knits and all, indicating a potential for recovery.

In light of the aforementioned challenges, the arrival of new cotton crops has led to a decline in prices, both domestically and globally. Despite this, the prices remain higher than what is considered to be ideal. That correction of domestic cotton prices has reached around 40% from the previous peak and the difference between domestic and international cotton prices has diminished. As a result, by spinning industry has returned to a more normal level of utilization compared to the second quarter of financial year ’23.

Additionally, the demand has begun to improve due to increased retail convention and a decrease in downstream inventory levels. Overall, there has been a noticable improvement in that situation over the past few weeks. But despite the difficult economic environment, the total textile and apparel exports of India declined by only around 12% during the period from April to December ’22. The share of textile and economy for the total merchandise exports from India dropped to 8% during that period from 10% in the previous year. Prices of total yarn have increased from their peak level in May ’22, but still remain around 15% to 20% higher than the past several years average. This moderation in prices has led to a decrease in profitability and revenue for the spinner impacting their performance in quarter third.

However, RSWM remains confident that these temporary disruptions will eventually be resolved and the long-term outlook remains positive. The Union Budget 2023-2024, put forth by Finance Minister, Nirmala Seetharaman has taken into consideration the needs of India’s textile sector with a particular focus on extra-long stable cotton. Five new adjacent quotes were introduced for more precise policy, support for the segment and that’s all dependent on imports or other incentives.

Additionally, higher allocation to [Indecipherable] RoCTL and [Indecipherable] are expected to provide some relief. To further increase the productivity of [Indecipherable] quarterly [Indecipherable] revenue chain network through public-private partnerships were suggesting. This involves collaboration between farmer by state and industry for input supply. Extension services and market linkages, the textile industry await further details of the policy to move forward.

The easing of restrictions in China and return of demand from one of the world’s largest economy is indeed a positive sign for spinning industry. The pent-up demand is likely to further drive the growth of the industry as far as more people start to return to their normal routines and businesses.

Additionally, China is growing middle class and increased consumer spinning power are expected to drive demand for textiles and clothing, which will further benefit the spinning industry. However, it’s important to note that the global economy is still recovering from the impact of COVID-19 pandemic and there may still be some uncertainty and challenges in the short term. It will be important for the spinning industry to closely monitor developments and adjust strategy as needed to remain competitive and take advantage of new opportunities as these arise.

With regard to the company’s recent quarter performance, it’s evident that utilization levels have rebounded to be as usual state by spinning division saw an average utilization rate of 80% during the quarter, a large improvement from 65% recorded in preceding quarters by yarn market, experienced a drastic drop in prices, as the industry eagerly awaited a reduction in raw material cost. Despite this, the margins have remained under pressure due to ongoing volatility and weak export demand; however, the company is proud to report that domestic demand remains robust. Unfortunately, the market has yet to see a resurgence in demand on knitted fabrics and blended yarn.

Despite this, the company is steadfast in its commitment to expanding its share in the value-added segment and further from the domestic market. The recent quarter was best for the company, but RSWM remained focused what it does best, operational efficiency and cost control. By maintaining a strict expenses, the company has the resources reached to support its growth. Although the commodity and freight markets have shown improvement, global consumer demand will remain sluggish due to inflation and high inventory cost in key markets.

Nonetheless, the company remains optimistic and confident that demand will eventually pick up as the effects of price normalization and a brighter economic outlook become evident.

Coming to our quarter performance now, average sales realizations in quarter third remains subdue on a quarter-to-quarter basis for all PV grey yarn, cotton grey yarn, melange yarn, PV dyed yarn, and demin. Coming to our Q3 performance revenue, it stood that INR855 crores, down by 15% year-on-year basis and EBITDA for the quarter stood at INR28 crores down by 77%. And net profit level, the company reported a loss of INR14 crores for quarter three as against a profit of INR50 crores to the corresponding previous quarter. On the nine months of financial year ’23, performance revenue stood at INR2800 [Phonetic] crores, up 5% on a year-on-year basis, EBITDA stood at INR251 crores, down 22% on a year-on-year basis, which translates into EBITDA margin of 9%.

PAT stands at INR67 crores, down by 48% and PAT margin of 2.4%. On the balance sheet side, we have been consistently reducing our debt-to-equity ratio, and currently, our debt-equity and fixed asset coverage ratio remained healthy. On the capex side, we completed around INR410 crores in expansion of demin, cotton, melange and mixed business and modernization and balancing equipment across all units.

Additionally, capex of INR315 crores is to be invested in the expansion of spinning capacity at Lodha. The delivery of machinery will be started in April, 23 and the complete erection will be done by somewhere around 31 July, 23. The project is underway and shall be completed by ’24. Recently, RSWM has been sanctioned a special customized package by the Government of Rajasthan under which 2019 for the expansion of denim, melange unit, and 51,000 spindle Lodha, Banswara. This specially customized package has also been notified. Our team has been steadfast in delivering exceptional quality and customer service and we are proud of our ability to outperform in this challenging environment.

We would like to extend our gratitude to all of our stakeholders, who have supported us through difficulties, the long-term prospects for textile looks promising. The protect — to protect ourselves from supply chain disruptions, we are taking proactive steps and I expect to see the benefit in the near future.

In the light of current uncertainty, we don’t think it’s wise to provide earnings guidance at this time, but we are confident that our projects and plans remain on track and that the current fiscal year may be just a blip on the radar, not a hindrance. to our long-term growth strategy and anticipate a return to normalcy in that demand for our products and services in next two, three quarters.

Now, I am happy to take any questions you may have. Thank you. Thank you so much and over to you.

Questions and Answers:

Operator

Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question is from the line of Tanuj Mehta from JM Financial. Please go ahead.

Tanuj Mehta — JM Financial — Analyst

Yes, sir, good evening. I have a few questions. The first one is that, sir, can you give your segment-wise demand scenario for maybe yarn and denim and followed by the gross debt position of the company, and along with the capex requirements for the next year?

Avinash Bhargava — CFO

I would like to answer your question. In terms of the capacity utilization from the first week of January. Earlier, we were not able to use our capacity with yarn and demin and mix. Earlier, under-capacity utilization was short by 18% — around 18% in December. Now we have 100% capacity utilization. And in denim, we were able to use only 63%. Now, the capacity utilization of 178 [Phonetic] rules, it is 100% and the capacity utilization, there are challenges, there are teething problems with us and we hope that by end of March, we will be able to use 100% capacity of mix business.

So, we have the capacity of 400 metric tons in this business. And in denim business, it is around 27 lakh meters and then around 7000 metric tons to 8000 metric tons in yarn business. We have good order booking now and the market now is picking up.

Tanuj Mehta — JM Financial — Analyst

Okay. Can you share something on the gross debt position?

Avinash Bhargava — CFO

The gross debt position will be around 900 metric — 950 metric, because we have retained our loans to some extent around INR200 crores that are going to be repaid this year, and it will be around 950 only. [Technical Issues]

Tanuj Mehta — JM Financial — Analyst

Okay. So, taking all this into account, the demand scenario is something which is not clear to all as of now. What could our inventory levels be? And how are we managing that as of now?

Avinash Bhargava — CFO

We are managing — we had been managing the levels with just — just for a minute — just for a minute, we have the inventory of around 8,000 metric tons of yarn, it was used to be 6,000 metric tons, we are up by 2000 metric ton, but we have a certain plan to reduce it and we are going to reduce it to the level of 700 metric ton or 700 plus metric ton by the end of [Technical Issues]. And this was — earlier this was used to — last year, it was around 5,000 metric ton of yarn.

In case of melange yarn, the inventory levels in December, 2021, it was 400 metric ton and now in melange yarn, it is 900 metric as of now we have. So it’s not great, but not very much. It is very [Technical Issues] demand, we are pushing lot to penetrate our viscose into the market. As far as denim is concerned — as far as denim is concerned, we are at normal inventory level of around [Indecipherable] at the end of December 22.

Earlier it was, [Indecipherable] and in December 24 [Indecipherable] not very much inventory. In merchandise, we are managing both. Inventory level in the case of plan, we are high by around 30% to 32% last year December ’22 [Phonetic].

Tanuj Mehta — JM Financial — Analyst

Okay. That’s it from my side. Thank you for answering all the questions.

Avinash Bhargava — CFO

Thank you. Thank you so much.

Operator

Thank you. Ladies and gentlemen. [Operator Instructions] Our next question is from the line of Amit Goela from Rare Enterprises. Please go ahead.

Amit Goela — Rare Enterprises — Analyst

Yeah. Hi, how you guys are doing? So. I just had a basic question regarding PV dyed. I mean, recent increases, how do you think that will impact the demand scenario going forward?

Avinash Bhargava — CFO

Your voice is vibrating, Amit.

Operator

Mr. Goela if you are on speaker phone, can you please use your handset, because there’s a lot of background sound coming through.

Amit Goela — Rare Enterprises — Analyst

Okay. It is better now?

Operator

Yes sir, slightly better. Go ahead.

Amit Goela — Rare Enterprises — Analyst

Okay. So I just wanted to understand how exactly is the recent equipment of [Indecipherable] impact the demand scenario going ahead specifically for PV dyed, which is a [Technical Issues].

Avinash Bhargava — CFO

Sorry, there is a voice behind you.

Operator

Sir. I will mute Mr. Goela’s line when you’re answering the question and unmute when you’re done. So, please proceed.

Avinash Bhargava — CFO

Okay. There is a pressure on PV dyed yarn since Turkey earthquake, [Indecipherable] when Ukraine-Russia war this business — this has added to our problems and suddenly there is a pressure because of this earthquake [Technical Issues]

Operator

Mr. Goela, do you have any other questions?

Amit Goela — Rare Enterprises — Analyst

So, how as a company, are we like proceeding to handle the situation? Are we reducing the spindle exposure on PV dyed or…

Avinash Bhargava — CFO

No, no, no. We are not reducing the PV spindle exposure. We are using our 100% capacity as of now. And since the demand is good in Ludhiana market and that demand is picking up for this next season. There are orders — good order booking from Ludhiana market.

Amit Goela — Rare Enterprises — Analyst

Got it, got it. Thank you. That’s all from me.

Operator

Thank you. [Operator Instructions] The next question is from the line of Amol Kankariya from Starters Technologies Private Limited. Please go ahead.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Good afternoon, sir. Congratulations for a good set of numbers in a difficult situation.

Avinash Bhargava — CFO

Thank you. Thank you. Thank you for the…

Amol Kankariya — Starters Technologies Private Limited — Analyst

I’ve got a query regarding the power and fuel expenses. Regarding to the last quarter, the power and fuel expenses were INR99 crores. The power and fuel expenses INR103 crores and this time it is INR99.84 crores where this turnover has dropped down 15%. I consider power and fuel isn’t variable cost. So why this — the cost not coming down in that ratio?

Hello. Am I audible?

Avinash Bhargava — CFO

Please repeat your question, what do you want to say?

Amol Kankariya — Starters Technologies Private Limited — Analyst

Sir, I want to say that the last time the power and fuel cost, last quarter, was INR103.61 crores [Speech Overlap]

Avinash Bhargava — CFO

Look it down your question.

Amol Kankariya — Starters Technologies Private Limited — Analyst

And your — the turnover has reduced by INR100 crores, [Foreign Speech] it has reduced in a much higher percentage. The power and fuel cost has not reduced, but the cost should have come down. So I just wanted to know what is the reason. Sir, I wanted to know is see our nine monthly performance remains robust comparatively to the last two quarters. So, can’t we — is the management thinking of paying an interim dividend. If it is a practice, it would be great.

Avinash Bhargava — CFO

Just to allow me to brief about this power situation. In Rajasthan, you know that there are certain power cuts during this quarter. There was — there [Technical Issues] situation has improved, right?

In case IEX power. If we — we bought IEX, it was as IEX around INR12 rupees per unit against the electricity board power rate of INR7.92 rupees per unit, right. And secondly, whenever there is a situation of this spindle stoppage and all. We will find that per kg — per kg unit or per kg unit power consumption will remain high. If we are reducing — reducing our spindles. In some of the cases in PV dyed, let me — let me tell you, technical — let us — let us take — let us, let us take one same of thousand spindles, right and if the lot — lot of small size, we cannot — we cannot produce the different color of yarn — in case of different color of yarn on a single machine because of contamination and all quality issues. In that case, the machine will run fully and the production will be low. So the power costs in case of under-utilization of capacity will always remain normal.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Got it. Sir. Got it. Sir, but the situation is what, I don’t know, currently, we have raised funds. Our debt-equity ratio is good. Why don’t you go for the solar power plants or other power sources where we can reduce the cost and not depend on the uncertain power from the government department?

Avinash Bhargava — CFO

You are right. We be — there are certain things into our pipeline in our plants and we are thinking on that. And whenever the next results will come, you will find that some additional capacities of solar and solar plants have been added to the…

Amol Kankariya — Starters Technologies Private Limited — Analyst

Enhanced quarter, but we have already done it — you’ve already done it.

Avinash Bhargava — CFO

Yes. We have — we have around 27-megawatt solar plant, solar capacity with us and we are ready for others also.

Amol Kankariya — Starters Technologies Private Limited — Analyst

So, how much is our total requirement of the power?

Avinash Bhargava — CFO

In terms of megawatts?

Amol Kankariya — Starters Technologies Private Limited — Analyst

Yes, sir, in terms of megawatts.

Avinash Bhargava — CFO

I have to check it technically and I cannot…

Amol Kankariya — Starters Technologies Private Limited — Analyst

In terms of I just wanted to understand in terms of percentage, how much percentage are we covered in terms of the solar power plants or whatever other sources, our owned sources?

Avinash Bhargava — CFO

I would love to — I would love to reply to you separately. And you can, you can drop down a mail to me, I will reply to certainly with all datas and all because this information is not ready with me.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay, sir. Okay, I understand. Okay. I will do that needful. Sir, also I wanted to know about the employee benefit expenses, considering that we don’t have a variable source of employees where are all the permanent employees there if our work goes down. In spite of all the piecemeal basis, there are no employees in our team?

Avinash Bhargava — CFO

Actually, as far as — as far as this employee part is concerned, permanent employees with us.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay.

Avinash Bhargava — CFO

This is — this is — this is not on daily — daily wages basis. [Speech Overlap] Contractually worker…

Amol Kankariya — Starters Technologies Private Limited — Analyst

Contractual workers, yeah, yeah. On piecemeal basis or something of that sort.

Avinash Bhargava — CFO

These are very less — these are very less.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay.

Avinash Bhargava — CFO

But in case of capacity under-utilization, we have to pay a certain amount to them not full amount, we have to pay a certain amount to them. We can — we can reduce the manpower cost for — when we under-utilize the capacities. But certain, but yes, we have to pay a certain amount to them. We cannot neutralize entire employee costs if we underutilize capacity.

Amol Kankariya — Starters Technologies Private Limited — Analyst

In the last two annual reports, we have been — we have been hearing from the management, including the Chairman, that we are planning to rationalize the manpower and we are not going to hire up new people and we are going to use and the old people who are here, but you can see any decrease in the employee benefit expenses. In terms of your peers, what I’ve seen as a percentage of sale, large is the highest term.

Avinash Bhargava — CFO

I will reply you — I will reply you. We have — we have our internal policy that we will not regroup as regroup the persons at higher position. We are elevating internally, right? And we are maintaining the same employees with the same cost of employees [Indecipherable] started to concern, even after considering these increments and all.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay.

Avinash Bhargava — CFO

Since we are talking about this thing since the last three years, but if we are maintaining same employees, it’s good for us.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay. One last question…

Avinash Bhargava — CFO

Whenever remuneration with senior and middle level, right? We tried to fill it up internally, but as far as supervisors and production workers are concerned, we can’t control it. These are…

Amol Kankariya — Starters Technologies Private Limited — Analyst

Can I assume that even after the expansion, the employee cost will not increase?

Avinash Bhargava — CFO

Even after expansion, the production workers and production staff have been recruited. Supervisor — supervisor, let me take an example, if we are — if we are having a short load of around 20,000 spinners, and we need — we need three supervisors for three shifts. We will have to recruit them, but otherwise, we don’t recruit Manager, General Manager or Chief Operating Officer. You can say Plant Head or Commercial Head like these administrative staff is not being recruited.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Got it, got it. Absolutely. Got it.

Avinash Bhargava — CFO

We are — we are having — the proportion will be less, but the ones after considering the production, our employee cost will not include in the same [Technical Issues], right?. Managerial staff and administrative — administrative staff will not be recruited, but [Indecipherable] staff like supervisors like [Indecipherable] will be recruited.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay, got it. Sir. Last question you had taken over Cheslind Textiles and the unit. So, there is — I think probably, you are not using the unit in Bangalore. So I don’t you sell that off and reduce the…

Avinash Bhargava — CFO

Has already — has already been sold out. That has already been sold out.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay.

Avinash Bhargava — CFO

We have — we have disposed of. We have disposed of, right?

Amol Kankariya — Starters Technologies Private Limited — Analyst

But then — had they realized the money — has the money been realized?

Avinash Bhargava — CFO

Yes, when we got the money out of these sale proceeds of assets.

Amol Kankariya — Starters Technologies Private Limited — Analyst

Okay, sir. Thank you for taking my questions, Thank you.

Avinash Bhargava — CFO

Thank you.

Operator

Thank you very much. Our next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech] Hello. [Foreign Speech] If we look at the current business environment, what is our understanding, where are we in midst of the cyclical nature of the textile industry and what steps further are needed by us, so that we do all the right — correct work so that when the cycle reverses, we can benefit from this again. What — as we have seen in one year’s time sir, going from the highest ever profit, if I’m not wrong to a quarterly loss. All happening in a span of two quarters, two or three quarters. So what key changes that the management is emphasizing going ahead, whether in terms of product mix, whether in terms of cost structure. In order to — in order to glide through these vagaries of the market and also some understanding where are we in terms of the headwinds that the industry is facing? Your thoughts on this sir?

Avinash Bhargava — CFO

Valid and very good question from your side, and I would like to explain you what we are doing inside the company. If you will — if you will see the cyclical — the cyclical, you are saying that this is cyclical business and we take the example of this cotton — cotton — cotton prices or cotton volatility in the market. We have — we have our cotton committee — cotton purchase committee wherein in three, four members of purchase team and three, four members from operation side, business side, three or four Joint Managing Director and Managing Director, all review this cotton purchase on a fortnightly and monthly basis. They have a close watch on the prices of the cotton. We don’t — we don’t play with the cotton prices and because of that only we did not incur much losses on the side of trading loss in case of cotton. We have not incurred any kind of loss in this nine-month or in this period and we have insulated ourselves with this installation of this cotton purchase committee and the decisions are being taken with current price situation.

Secondly — secondly, we are — we are controlling our inventory levels, whether that’s finished goods or whether raw material in the best way. We have our internal policy of saying, let us — let us say, it’s like we will keep the 15-day stock of polyester. We will keep the 15-day stock of viscose and other raw materials. We are keeping — we are trying to keep these inventory levels within control and secondly in similar way, the consumables and store convention, we have inventory policies. We have the review system on weekly basis, on fortnightly basis, or say monthly basis. So inventory control is the one area.

And second is cost control, we have our one projection in which every stakeholder, of course, cost owner is given the presentation that what he has contributed during this week, during this fortnight or during this month. So, cost control is another area based on which we are — we have been able to minimize our losses in this current environment.

And third one is, as we have already discussed with employee costs, we are controlling that. These are the tools, which we are following and we have — we have our weekly review basis of Operational Head or Commercial Head at the level of Directors also. They all review the system or system for cost control and inventory controls and all.

Saket Kapoor — Kapoor and Company — Analyst

Sir, when we look at the current environment, what are the current utilization levels, where there be in the December quarter, if you could give the color, how are the utilization levels, and what are they currently?

Avinash Bhargava — CFO

Right, I would like to give you the brief idea of utilization of spindles or looms. The capacity of denim was being used 75% level we were using, but now we are using — we are utilizing 100% capacity. And in case of spindles around 15% of spindles were shut. Initially, these were 10% and because of low demand, the utilize — the under-utilization was gone up to 15% and now it is 100% capacity utilization in case of yarn.

As far as knit is concerned, we have already spoken that there are teething problems, but we are able to use around 65% of the capacity of knit functions.

Saket Kapoor — Kapoor and Company — Analyst

Sir, going into this, we are already for 40 days into this quarter. What could be the very likelihood that the topline and the bottom line portrayed by us is the worst over for the company in terms of profitability, being a loss for the quarter or this is the current trend or is yet to come in terms of the performance?

Avinash Bhargava — CFO

As far as the topline is concerned, we will be — it will be plus from the last year. And as far as profitability is concerned, the third quarter of this year was the worst and you will see good numbers, better numbers in this quarter.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Topline comparisons are [Foreign Speech] Q-on-Q.

Avinash Bhargava — CFO

Topline comparison [Foreign Speech].

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir.

Avinash Bhargava — CFO

I mean, I will be able to release that after this reduction of prices of yarn, denim fabric and all. [Foreign Speech] I will be able to achieve that level.

Saket Kapoor — Kapoor and Company — Analyst

Correct, sir. I think you were mentioning about the inventory part. So, for this quarter and also for the nine months, did we have to book any inventory losses or we do not carry inventories as mark-to-market as needed?

Avinash Bhargava — CFO

The inventory — the inventory valuation is always mark-to-market, but that loss AS2 loss, I think it will not be there or it will be minimized, I would say.

Saket Kapoor — Kapoor and Company — Analyst

Come again sir, last point.

Avinash Bhargava — CFO

If we will value as for AS2 cost or market price whichever is lower.

Saket Kapoor — Kapoor and Company — Analyst

Yes, sir.

Avinash Bhargava — CFO

That inventory loss you will — you will see substantial improvement in these numbers.

Saket Kapoor — Kapoor and Company — Analyst

No, sir. I still did not make it, if you could rephrase it, sir?

Avinash Bhargava — CFO

[Foreign Speech]

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech] with decline in prices.

Avinash Bhargava — CFO

No, no, no. That loss is not there — that loss is not there.

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech] Whether my question was correct or not understood, sir.

Avinash Bhargava — CFO

[Foreign Speech] Since the price improvement is there. There was a valuation losses. Valuation losses which was only accounting levels and wherein substantial improvement in that area.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. [Foreign Speech] yarn price trend [Foreign Speech] up to December what was the number for January month?

We are mentioning the slide for yarn prices for the month of December. Can you share some — some color on what the price trend is for the month of January. In your presentation, it was mentioned.

Avinash Bhargava — CFO

Yarn prices on single 30 cotton in January. It was 258 or 260 and in PV 230, these are around [Technical Issues]

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. Right, sir. And then lastly, right sir, I’ll come in the queue, sir. For this sir, if you could give some data for melange and denim prices also sir. The average for Q3 for melange was 380 [Phonetic] and denim was 262. So where are the price trend currently sir?

Avinash Bhargava — CFO

Price trend — price trend of denim?

Saket Kapoor — Kapoor and Company — Analyst

Denim and melange.

Avinash Bhargava — CFO

Denim, you can say around 250 rupees per meter in case of exports, and if we talk about domestic, then it is about 280 rupees [Technical Issues].

Saket Kapoor — Kapoor and Company — Analyst

Hello. Yes, sir. Last point, what you mentioned, sir.

Avinash Bhargava — CFO

In case of export, it is around 250 rupees. This is average price.

Saket Kapoor — Kapoor and Company — Analyst

Okay.

Avinash Bhargava — CFO

And in case of domestic then it is around 280 rupees to 285 rupees.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So, when we are quoting in our average realization for Q3, we have the blended number sir, for denim at 262 rupees. Taking into account both the domestic and the export realization, we have taken the average of the same at 262 rupees. Our slide number 11.

Avinash Bhargava — CFO

[Foreign Speech]

Saket Kapoor — Kapoor and Company — Analyst

Okay. So that is slightly higher, sir. Sir, If we take the market share sir in the yarn segment, what are the — what is the market share for the company and if we take it on India basis where are we in terms of the capacity and the market share in denim and the yarn business?

Avinash Bhargava — CFO

It is very difficult to ask to reply this question at this stage because lot of capacities are not coming in and there is…

Saket Kapoor — Kapoor and Company — Analyst

[Foreign Speech]

Avinash Bhargava — CFO

The commodity basket of RSWM is very big. And we produce — we produce all kinds of — all kinds of yarns, whereas other players are not producing all kinds of yarn. They are producing the commodity yarns. So the production — production will certainly be high in these cases and if we talk about a company if we take an example of the company. You can take — you can take the example of like [Indecipherable]. We are just to give you an example, they are not having the capacity like denim, grey yarn. These kind of capacities are not [Indecipherable].

Saket Kapoor — Kapoor and Company — Analyst

Sir, so you can provide with specific and compare product wise. With specific product wise you give for yarn. [Speech Overlap] Yes, sir. Please sir, continue.

Avinash Bhargava — CFO

We cannot compare with denim.

Saket Kapoor — Kapoor and Company — Analyst

So that is what my question was, Sir. For denim, you may have a different player, for yarn business, you may compete with someone else. So I was just trying to whom we are competing in the market?

Avinash Bhargava — CFO

Put together — if you put together all our — so that all our facilities, we cannot compare with any other industry. It would be wrong on my part. If I will take the name of any other industry.

Operator

Thank you, ladies and gentlemen, we will take that as the last question. I now hand the conference over to the management for closing comments.

Avinash Bhargava — CFO

Thank you. Thank you so much for listening us patiently and patiently and then supporting us in this tough time. Thank you so much.

Operator

Thank you very much, members of the management team. Ladies and gentlemen, on behalf of our RSWM Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.

Disclaimer

This transcript is produced by AlphaStreet, Inc. While we strive to produce the best transcripts, it may contain misspellings and other inaccuracies. This transcript is provided as is without express or implied warranties of any kind. As with all our articles, AlphaStreet, Inc. does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company’s SEC filings. Neither the information nor any opinion expressed in this transcript constitutes a solicitation of the purchase or sale of securities or commodities. Any opinion expressed in the transcript does not necessarily reflect the views of AlphaStreet, Inc.

© COPYRIGHT 2021, AlphaStreet, Inc. All rights reserved. Any reproduction, redistribution or retransmission is expressly prohibited.

Most Popular

Cochin Shipyard Ltd (COCHINSHIP) Q4 FY22 Earnings Concall Transcript

Cochin Shipyard Limited (NSE:COCHINSHIP) Q4 FY22 Earnings Concall dated May. 26, 2022 Corporate Participants: Madhu S Nair -- Chairman & Managing Director Jose V J -- Director Finance Analysts: Vastupal Shah

All you need to know about Antony Waste Handling Cell in one article

Can you guess the name of the company that was listed during the IPO frenzy in 2020 and is the second largest player in the Indian municipal waste management industry?

Demystifying the Leading Non-Ferrous Recycling Company of India

“Hey, how is the market doing today?” “Oh!, its falling tremendously since morning” I am sure news like these might be a common topic of discussion for you nowadays. Interestingly,

Top