RSWM Limited (NSE: RSWM) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
Unidentified Speaker
Nitin Tulyani — President and Chief Financial Officer
Rajeev Gupta — Managing Director
Analysts:
Unidentified Participant
Saket Kapoor — Analyst
Tanush Mehta — Analyst
Presentation:
operator
Ladies and gentlemen, good evening and welcome to the RSWM Limited Q4M FY25 earnings conference call. We have with us today from the management Mr. Rajiv Gupta, Joint Managing Director, Mr. Nitin Toulyani, President and CFO Mr. Rakesh Jain, General Manager, Corporate Finance Mrs. Surendel Gupta, VP Legal and Company Secretary. As a reminder, all Biospin lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone.
Please note that this conference is being recorded. Before we proceed with this call, I would like to take this opportunity to remind everyone about the disclaimer related to this 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 risks that our business faces that could cause our future results, performance or achievements to differ significantly from what we may express or implied by such forward looking statements. I now hand the conference over to Mr. Rajiv Gupta for the industry outlook post which Mr.
Niven Toliani will take it over for the financial overview. Thank you. And over to you Sir.
Rajeev Gupta — Managing Director
Thank you, Richard Good evening everyone. I hope you and your families are safe and in good health. It is my pleasure to welcome you all to quarter four and FY25 earning conference call. I hope you had opportunity to review our financial results and investor presentation which are available both on our website as well as on stock exchanges. I am pleased to share the quarterly performance has been encouraging reflecting our sharp focus on execution, diversified business portfolio and initial results of the transformative journey started under RSABLiam 2.0. We have seen positive momentum across our yarn and fabric business supported by improved operational discipline, innovative initiatives and the efforts enabling us to deliver better products at right quality at right time.
With the greater alignment with the evolving customer needs, our exports have continued to perform well. There has been significant increase in the revenue from Middle East, Africa, Southeast Asia and other markets in FY2425. India’s favorable tariff position remains a strategic strength especially compared to the competitors like Vietnam and China. This advantage is helping deepen engagement with global brands particularly from US and Europe where our market share continues to grow while US enforced tariffs still being not clear. For India at this moment, we are closely monitoring this and we understand the partners to prepare any potential change in trade policy or the cost structure thereafter.
On the industrial front, cotton yarn spread remained under pressure impacting the spinning margin across the sector. Despite these external challenges, we have stayed focused on improving our realizations, optimizing our product mix and enhancing process efficiencies as explained in the last investor call. Also, these internal measures have partially offset the margin pressure and supported the overall profitability of rfwpm. Looking ahead, major strategic development that has happened recently is very progressive in nature, that is India UK Free Trade Agreement beyond its diplomatic significance, the FTA could be transformative for Indian exporters. Apparel industry currently is exporting to UK, yet the share of Indian export is only 6% in the overall 24 billion parallel industry of UK.
We are expecting with these changes in the policy FTA we have an opportunity to unlock almost 1 billion additional exports from India to UK and taking our share from 6% to maybe 15 to 20% driven by favorable sourcing and supportive policies. At RSWM we are particularly well positioned to capitalize on this opportunity. Our strengths like the categories that we are operating to UK demand of these categories in trousers, shirts, T shirts, dresses, especially the denim and the knitting segment that we have where the wires are particularly diversifying away from the traditional sourcing countries. Our integrated manufacturing ecosystem, strong design capabilities and trusted relationship with the global brands give us distinct edge.
Furthermore, as international customers are increasingly prioritizing, sustainability, compliance and traceability are ongoing efforts under RSWM 2.0 transformation and proving to be both timely and impactful. RSBM 2.0 is not just a transformation plan, it represents the cultural shift across the organization. We have adopted the new mindset which is rooted in agility, cost effective effectiveness, smart manufacturing or product developments, sharper execution and the timely response time to our customers needs. The early impact of this journey RSVLT 2.0 is already visible in the areas like productivity, client satisfaction and cross functional alignments. The energy and the commitment within our team is inspiring and it gives us confidence that we are building a future ready organization capable of creating long term value in the dynamic global environment.
Now for more detail the financial for this quarter and for the year. I’ll request my colleague Nitin to take over.
Nitin Tulyani — President and Chief Financial Officer
Thank you Mr. Gupta for the introduction. Good evening everyone. I will now be sharing the RSWM financial and strategic highlights from financial year 25 and how they are preparing us for the coming financial year 26. Despite external challenges, RSWM reported a FY25 revenue increase of 18.9% year on year reaching to a new height of 4825 crore. This was driven by improved order visibility, a balanced product mix and a focused sales and execution efforts. Coming to the full year 25 financial performance, gross profit rose 19.4% to 1729 crore compared to 1448 crore in FY24. Gross profit margin moved slightly from 35.7% in FY24 to 35.8% in FY25.
EBITDA increased by 76.8% to 233 crores up from 132 crore in the FY24. EBITDA margin improved from 3.2% in FY24 to 4.8% in FY25 which is clearly reflecting the better cost management. Our PAD stood at a loss of 41 crore mainly due to the elevated finance and depreciation cost. The finance cost increased during the year primarily due to the higher working capital requirement and the addition of the term loans for the unit we acquired from Gimme Filaments at Chhata location last financial year. Depreciation rose mainly on account of the commissioning of the new capacity which is located at Baswara Lodha.
As highlighted in our Q2 and H1 FY25 earnings call, we had a built up of finished goods inventory which was subsequently liquidated during the year which has resulted in decrease of our inventory standing in the balance sheet at the end of the financial year. Now coming to the quarter four financial year 25 financial performance revenue rose 7.2% year over year to 1256 crore. Total income increased to 1265 crore. Gross profit for the quarter was 432 crore with a margin of 34.4%. EBITDA rose 44.8% year over year and 36.2% quarter over quarter to 79 crore. Also EBITDA.
The EBITDA margin improved to 6.2% from 4.6% in quarter four FY24 reflecting a year over year increment of 163 bids. TAG turned positive at 1.6 crore in Q4FY25 recovering from a loss of 8 crore in Q3FY25 we were giving questions in lot. Many earnings call that when we are turning PAT positive. So this year with the theme of RSWM 2.0 the management has been able to turn PAT positive in current quarters. On the strategic front we made significant advances in innovation and sustainability. The Panchkatwa initiative based on the five elements Fire, Earth, Water, Air and Space combines Indian tradition with a textile innovation it attracted strong interest at Bharat Tech 2025 that was conducted at the Bharat Mantran location in New Delhi and it was attended by many industries and government stakeholders.
We also signed a development agreement with the Birla Cellos and TACC limited to produce graphene based textile. This enabled us to venture into emerging segments such as technical fabrics and smart snowflake. Graphene, a product that is developed by tacc, represents a promising innovation for the textile industry offering multiple performance enhancements in a single application including antibacterial properties, anti static behavior, thermal regulation, UV resistance, abrasion resistance and improved inside strength. We remain committed to prudent capital allocation and aligning every investment with our long term strategic goals. While FY25 presented challenges, the structural improvement made during the year have strengthened our foundation.
As we enter FY26, we do so with a major optimism. Our focus on financial discipline, operational efficiency and a sharper product approach position us well to deliver steady progress and improved outcomes. With this, I would like to conclude and open the floor for any questions you may have.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on the Touchstone phone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press Star and one to ask questions. The first question is from the line of Saket Kapoor from Kapoor company. Please go ahead.
Saket Kapoor
Yeah, Namaskar sir, and congratulations to the team. We have turned the corner at least the last quarter and the first point would be, sir, the efficiencies and the support from the market. If you could just give us some more color. What factors actually attributed to this profitability and whether these factors are now consistent or you see reversal of any of the same. How are things shaping up in terms of the margins or the spread? If you could give us some color on spread and also on the utilization level and then thank you very much.
Rajeev Gupta
First of all Mr. Poole, for your compliments. If you look at the performance in fourth quarter, there is a mix of things which are consistent and few things which are one time, as Nitin also shared, we had reduction of stock in various businesses, especially our synthetic yarn business. So that is one time thing which has happened during this quarter. Now couple of other things. One, working on the internal efficiencies both in terms of consumption norms and utilization is something which has helped Us if you look at the various businesses within rswm, the cotton yarn spread is more or less same.
The markets have been good, especially in Bangladesh, market demand has been good and overall consumption levels are same. The margins were more or less similar in this. So focus on internal efficiencies helped us in selling slightly better. If I talk about dining segment industry is still passing through the same challenge level of low utilization across but within that of industry performance there was an option to capture good orders and improve utilization for rfwm. So that is something which we build on from last year’s or last quarter’s working towards acquiring the customers, working closely with the brands and thereafter improving our efficiency.
The third thing is more working on the consumption levels within knit and denim and try to see that our cost is optimized. And we are working on. Last time we discussed about theory of constraint application to various business models and making ourselves more efficient and more effective for cost management. I think these things are sustainable and the way we have been positive in this quarter, I am 100% sure and confident that we will now retain ourselves in this positive arena of profitability.
Saket Kapoor
Correct. And on the utilization level, sir, can you give some color on how our various verticals level for the last year.
Rajeev Gupta
Average inflation has improved. If you say in yarn particularly we were already in high 90s so we continue being there in knitting and denim. Our utilizations have improved by 5 to 7% in both the businesses and we are in now post 90s in denim and mid 80s in knitting. So that that’s the trend level. There is still a little bit of possibility of improvement in utilization but broadly they are slightly better than the average industry.
Saket Kapoor
Okay, just to come to the strategic collaboration for the graphene part and also the investment in. If you could just elaborate the significance of these two and yeah, yeah from these 2.0.
Nitin Tulyani
So with respect to the investment in Vilwada Energy, the overall objective was that we are able to get the renewable source of energy at competitive prices. So we are able to get sufficient wind power from this company. And coming to your question around graphene. So graphene is still under development and it is in very early stages. So we are still working on development of a master batch and accordingly we will be able to communicate you later on the same. So just to conclude here for the investment in Binwara Energy, I think so the fund mentioned here, the Singularity Fund that has made an indefinite 250 crore so that is fresh issuance of shares or have we or other promoters have tear down their investment In Boulevard Energy. So we have liquidated on our share. So that is a investment coming from Singularity has been shared in our investor presentation on the same and also on the stock exchange. The information is available in detail.
Saket Kapoor
I’ll go through the same, sir. Now coming to the other development especially for the pre trade agreement with the European nation. How has that affected the has benefited or affected the sector especially? I think so the forward integrated pairs are getting will be more beneficial. So if you could just give some more color on the same thing.
Rajeev Gupta
You’re absolutely right. If you look at as a country, India stands to gain with these developments both for US and UK. As I shared, India has around 6% share in UK’s parallel industry which as a country we should move towards 15 to 20%. The American tariffs are yet to be settled. We saw the development with the China tariff being, you know, discussed with the us. Similarly I also expect that India US tariff will also settle for the times to come. But overall the expectation is that India stands to gain with these challenges coming to rslm.
As a company we are not directly exporting largely to us. We are doing indirect exports either to our customers who are then exporting to us or we are supplying to other countries which in turn are exporting to say Bangladesh or Sri Lanka which in turn are exporting to us. So I cannot say we are isolated but at the same time we are less impacted. Even this fall period of 90 days.
operator
Thank you so much sir. A reminder to all the participants that you may please press Star and one to ask questions. The next question is from the line of tanush Mehta from GM Financials. Please go ahead.
Tanush Mehta
Hello. Yeah. Mr. For the opportunity. First of all sir, congratulations on the good set of numbers.
Rajeev Gupta
Thank you.
Tanush Mehta
And sir, my first question is on market expansion. That which new market that RSWM is targeting and what. What steps are being taken to establish a presence in this region?
Rajeev Gupta
Can you repeat your second question please?
Tanush Mehta
New markets. What are the steps we are taking to establish a presence in the new market?
Rajeev Gupta
Okay, so you know, we intend to consolidate our position in the market more as a player which offers quality and the value added product. So we are consolidating both in our existing markets and also try to penetrate in the new markets. All the businesses are trying to explore possible new customers and new markets. We are able to add better product and with the better level of contributions or the value generation possibilities. We have been trying to go direct to the customers. Customers which are looking for sustainability and environment friendly products. We also would like to work on the brand which gives you better visibility in the market and better profitability in the market.
So Middle East, Europe, America, in fact all the countries we are trying to penetrate more but our concentration is not on geographical things. Our concentration is more to spread to the value added customers and value added products.
Tanush Mehta
Okay, talking about the sustainability, what practices are being adopted to align with the global environmental standard?
Rajeev Gupta
There are a couple of things when you look at sustainability it is relating to. First, the use of water. RSWM is a liquid zero discharge company. All of our manufacturing facilities are using recycling and we do not discharge water to the environment. That’s the one responsibility we have now. Second is shifting our normal boilers to biofuel boilers like from traditional fossil fuel. We are now converting all our boilers to biofuels. Most of the conversion will happen within the current financial year which is started from April and we will become a compliant company in terms of biofuel boilers.
Third, in terms of power consumption, we are currently in mid 20 percentage of our green power which is from solar and gilt and we continue to work on this area and become more and more green power in terms of. So these are three things then waste management is in the fourth area and the biggest thing we are doing for sustainability is using the PET bottles as a raw material for converting this into Lister staple fiber. We are currently consuming 60 lakh bottles a day and thereafter ensuring that we, you know, become, recycle or contribute our bits in terms of sustainability.
In addition to that, all social compliances, working for female, taking care of our employees, all welfare activities, all those things are standard RSWM practices and we continue to do that.
Tanush Mehta
Understood sir. And sir, can you share us with the debt level of the company and how will it impact the future financial stability?
Rajeev Gupta
I’ll request NITIN to respond to this.
Nitin Tulyani
So with respect to the debt management including our working capital we are at 1700 crores which includes 700 crores of term loan and balance being a part of a working capital. Cash credit facilities and discounting facilities we have taken from different banks. So our focus remains on improving our debt profile by refinancing the high cost borrowings, prepaying connected loans and enhancing the cash flows. With the working capital optimization, we are also working on the blocked current assets so that we are able to improve the flow of the working capital. Apart from that, with the improved capacity utilization and the better product mix, we are targeting to lower the debt to equity ratio and improved interest coverage.
So the ultimate target is to strengthen our balance sheet and support future growth with A more sustainable capital structure.
Tanush Mehta
Understood, sir. And is RSWM working on product innovation or investing in IT to stay ahead of the market?
Rajeev Gupta
You are absolutely right. We are investing in product development centers and co with our customers for design trends, line collections innovation are focused on blends and functional like antibacterial or moisture wicking or UV protection. All those things are something which we are continuously doing at this point of time. There is no particularly new investment that we are proposing for the new product development at this point of time. But all existing businesses are focused more on new product and trying to see that we work on sustainability and delivering more value to customer and more functional capabilities to our product.
Tanush Mehta
Okay sir, that was helpful. Sir, I will be in the queue for further questions.
operator
Thank you. Thank you so much. Participants, you may please press Star and one to ask questions. We’ll take the next question from the line of Marshall and individual investor. Please go ahead.
Unidentified Participant
Yeah, hello, my question is that this quarter our turnover has definitely increased by 5% but margin is still lower. Whereas so far what we said in the commentary that our utilization is good code stable. So why our margin under like under pressure? What steps the management is taking to improve the margin? This I want to show on the background of something I think our CEO CFO seems to be new persons. A couple of years back the company has given hefty dividend on which all the shareholders paid a hefty amount of tax. At the same part company floated the right to 100 rupees.
So whenever we sell at 150 at whatever price again we have to pay tax. So we have been suffering from both sides. This was a very very very inaccurate decision. So now we need to like see that now since the cashew market is good UCFC is done so like what are the riders or you could say what are the growth drivers in the next couple of years and how this is apparel and apparel and mail so. Far have pan out.
Rajeev Gupta
Thank you very much. First of all for very open and clear views. Let me admit that you know last two years for textile industry overall has been tough and particularly RSWM being a player in predominantly synthetic yarn market has suffered poor performance. For the financials coming to the quarter under concern which is the fourth quarter for financial year 2425 our EBITDA margin stood at 6.2% from the last quarter of 4.6% and last year with a margin of 4.7%. So if you look at there is improvement from 4.6 to 6.2% which is around 1.6% EBITDA margin improvement.
So whatever we are discussing is a development which is recent and we have a promising future. If I share with you the quarter one for next financial year working as of today, things are operating either equivalent to quarter four or slightly better than that. So we likely to expect similar kind of maybe slightly better performance for the current quarter. But this is uncertain times and you never know what is going to happen the very next day. So let’s keep our fingers crossed and I can only show you the new management, including my cfo, myself and the other team members who are now working on RSWM 2.1o are focused, more agile for customer needs and for investor needs.
The pain that you have expressed yourself in terms of, you know, not perceiving as a stakeholder your dividend for last couple of years, we fully appreciate and new management definitely take note of that and we’ll try to work on that.
Unidentified Participant
No, like actually I was referring to gross margin, not the EBITDA margin. So if gross margin would have been better, EBITDA would have been even better. So if you see on Q3 versus Q4 versus Q3, our gross margin has gone down.
Nitin Tulyani
So yes, we are definitely working on the cost optimization part and raw material. Raw material optimization. So that’s in our radar and the team is definitely working on it.
Rajeev Gupta
If you look at particularly this quarter, we have liquidated good stock for synthetic yarn. So we are beta out of the different five products that we work is comparatively lower. So that is why your gross margin reflection is not there in terms of percentage. But if you see, you know, overall improvement in businesses other than synthetic yarn business, it has been reasonably good. Now we focus more on the value added segment which probably will give better margins.
Unidentified Participant
Good. Regarding dividend, I was not referring to that. The company didn’t give dividend like that. You fully understand what I was referring. TO that in 2022 the company has. Given 25 rupees dividend which was not. Required because on the one hand company gave dividend. On the other hand company made right. Issue of cases, 100 rupees for means. On the one hand company gave dividend. So. So the seller got money on which like in the tax, you have to pay the tax 30% tax on the dividend. So dividend so tax return. And again the same money the company took back, I I’m thinking generally took back by making right issue 100 rupees. So when the sale price is floating 150 at that 190. So again there’s a difference so whenever we sell those sales which are like issued on the allotted on the right issue again we have to pay the capital tax. So what I’m saying that decision was. Not a financial prudent decision because there. Was no need to give 25 rupees dividend at the same time because on the one hand by giving dividend company had made cash outflow. Then to recoup that the company made right issue. So again it was case inflow. So so there was no need to give the deputy dividend and again to make right issue. So instead of 25 dividends company could have given 2,3,4 dividend for this balance 20 rupees could have been offset with the proposed rate issue. So what I’m saying the shareholder have burned their fingers first by the bad performance of the company the last couple of years due to the overall texture market issue cash and this issue number two, what could have been avoided was that there was no need to give that hefty dividend of 250% 25% and take the money back by your credit issue.
So my point was that now RSWM new management is in the double pressure so that the shareholders are compensated in a way by your better performance so that whatever loss, whatever tax laws they have suffered due to none of their fault can be recouped in the near.
Unidentified Participant
Twitter admin this was the point and.
Rajeev Gupta
I once again express my thankfulness for being so frank.
Unidentified Participant
Thank you sir. Thank you.
operator
Thank you sir. You may please press star and one to ask questions. The next question is from the line of Saket Kapoor from Kapoor company. Please go ahead.
Saket Kapoor
Yes sir. If you could just outline to us the capex number for the current financial year and Mrs. Sir, you mentioned that lot of effort has gone into the lowering of the finance cost as a percentage of sales. So what should be the reduction in absolute number or a percentage of sales going ahead especially for finance costs.
Nitin Tulyani
So currently we are at roughly 2.5% in terms of the overall sales number. But definitely we are working on restructuring of the debt. That is since we have suffered losses from the last two financial year. So we tend to take the financing to repay our high debt so that overall finance cost is balanced. Plus we are also exploring some other options of going towards the vendor bill discounting as well as the debtors bill discounting.
Saket Kapoor
Any color you can give about this initiative would translate if you take the 160 crore number for this year visa vis 153 for last financial year, how should what should be the landscape whether in absolute terms or as a percentage of sales.
Nitin Tulyani
Okay, so the one reason, the one reason why the finance cost has rose is on account of the guinea filament capital expansion that we did last year. So for the current financial year we are going for the normal capital expansion only and there is no huge capital expansion planned as of now.
Rajeev Gupta
So during this year capital expenditure would be limited only to normal maintenance capital expenditure or some balancing equipments for enhancing the utilization. Otherwise we are not committing ourselves to any major capex for this year.
Saket Kapoor
Okay, but we will be able to quantify for other cost efficiency or finance for what kind of reduction we can see. And also on the power and fuel front also.
Rajeev Gupta
There are two functions. One is the consumption knob and second is, you know, the price of per unit power cost. So there are two ways to work on that to reducing the per unit power cost. We are continuously working more for green power which is comparatively giving us advantage. So that is one thing. And second, in terms of reducing consumption of power, we are working more on the power saving and more efficient machines which are energy efficient. And whatever the normal capex we are doing at this point of time, majority of them is step towards improving our power efficiency and reducing our power consumption.
So this remains one focus area in all exile working in all the, you know, years.
Saket Kapoor
Right. My concluding question will be on the guinea filament acquisition, what have we, how much have we totally spent on the. On the equation and also on the modernization aspect? I think. So the machines were old which we alluded earlier. So what. What have been the maintenance capex of the same? And what has been the contribution from the Gini acquisition for last financial year and the current financial year taking into account the current how as a percentage of the total revenue pile contribution from guinea pilot acquisition?
Rajeev Gupta
Okay, so guinea acquisition actually had two parts. One was the spinning division and second was the knitting division as a part of Guinea. So we had around 80,000 spindles in that acquisition. Part of them was good, part of them was very old generation of machines which were highly inefficient in terms of running the acquisition. To best of my knowledge or memory, at this point of time it was around 160 cr. Now if I share with you the working of these two verticals of giving acquisition in Chaka, which we did, I’m happy to share that the knitting working has been really good.
We have been able to sort out all the teething troubles that initially, you know, cropped up because of the changeover or change over the management, the delays in shipment or Stabilizing the working. All that is taken care. The current quarter has been reasonably okay. And I expect better performance in the coming quarters to come. Spinning, of course, remained a challenge because of the age and the health of the machines. Looking at our own financial commitments and the interest burdens, company did not decide to go for any major modernization in Chakra in, you know, the last couple of quarters, even next year.
Also, we are not proposing any major restoration package for Chaka. We’ll try to minimize, you know, loss in terms of efficiency and try to strike a balance in terms of right product mix and right utilizations.
Saket Kapoor
Correct. Right. We’ll join with you. And all the best to the team. Thank you.
Rajeev Gupta
Thanks a lot.
operator
Thank you. Ladies and gentlemen. We’ll take that as the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you. And over to you, sir.
Nitin Tulyani
So, thank you. Listen to Nani this side. In closing, I extend my sincere gratitude to our employees, stakeholders and partners for their unwavering support. With collective efforts 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 we are confident in our ability to grow and succeed in the years to come. Thanks once again.
Rajeev Gupta
Thank you.
operator
Thank you, members of the management. On behalf of RSWM Limited, we would like to formally conclude this Q4FY25 earnings conference call. We sincerely appreciate your participation in this event and we kindly request that you may now disconnect your lines. Thank you for your time and engagement. Thank you.