Sportking India Ltd (BSE: 539221) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Devansh Dedhia — Investor Relations
Sandeep Sachdeva — Chief Financial Officer
Munish Avasthi — Chairman & Managing Director
Analysts:
Madhur Rathi — Analyst
Saransh Gupta — Analyst
Sahil Vora — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sportking India Limited Q3 FY ’25 Earnings Conference Call hosted by Orient Capital. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr Devansh from Orient Capital. Thank you, and over to you, sir.
Devansh Dedhia — Investor Relations
Thank you. On behalf of SportKing India Limited, I extend a very warm welcome to all the participants on the Q3 and 9 M FY ’25 financial results discussion call. Today on the call, we have with us Mr Munish Avasti, Chairman and Managing Director of the company; Mr Sandeep, the Chief Financial Officer; and Mr Lavelesh Sharma, who is the company’s Secretary.
With this, I now will hand over the call to Mr Sandeep for the opening remarks. Over to you, sir.
Sandeep Sachdeva — Chief Financial Officer
Good afternoon, everyone. First of all, I would like — I will take you through the financial performance of the company for the quarter and nine months ended 31st December ’24. For quarter three FY ’25, Sports India Limited achieved revenue penetration of INR610 crores, up 2% Y-o-Y. Share of export in revenue was approximately INR341 crores for the quarter, representing a 57% contribution from export business to revenue for the quarter. Gross profit stood at INR148 crores with an increase of 10% on Y-o-Y basis. Gross profit margin expanded by 183 basis-points Y-o-Y. Gross margin for the quarter stood at 24.3%. EBITDA stood at INR57 crores, increasing by 17% on Y-o-Y basis. EBITDA margin expanded by 1 to 3 basis-points Y-o-Y to 9.4%.
Profit-after-tax INR16 crores seeing an increase of 18% Y-o-Y. Profit-after-tax margin was 2.7%, experiencing a margin expansion of 37 basis-points on yearly basis. For nine months FY ’25, Sport to India LMT achieved revenue from operation of INR1895 crores, up 7.3% Y-o-Y. The gross profit stood at INR441 crores with an increase of 19.1% on Y-o-Y basis. Gross profit margin expanded by 230 basis Y-o-Y. EBITDA for nine months FY ’25 was INR189 crores with EBITDA margin of 9.9%. EBITDA increased by 36.6% Y-o-Y.
EBITDA margin improved by about 213 basis-points Y-o-Y. Profit-after-tax was INR73 crores, seeing an increase of 54% Y-o-Y. SAT margin was 3.9%, experiencing a margin expansion of 117 basis-points on a yearly basis. The company had an exceptional quarter in export funds with an overall mix of sales from export increased to 57% in Q3 FY ’25 from 48% in Q3 FY ’24 and 46% in Q3 FY ’25. Capacity utilization remains more than 95%.
So thank you all. Now I will hand over the call to Mr, the CMD of the company for his remarks on the results and the outlook.
Munish Avasthi — Chairman & Managing Director
Thank you, Sandeep. Good afternoon, ladies and gentlemen. I hope you have an opportunity to go through our press release and the investor deck. The textile industry continues to operate at a steady pace. The exports saw an uptick in-demand since last quarter, led by an impressive growth in shipments to Bangladesh. Domestic market saw uneven demand by the festive season, but at the same time restricted to some extent by continued imports from China of synthetic fibers and yarn. Cotton prices continue to slight lower also albeit at a slower pace and continue to be higher than the normal differential to the imported cotton. Due to MSP operations by CCI and the import details, which have been since last two years.
We expect similar conditions prevailing over the next few quarters as margins continue to stay under pressure because of the government policies on cottons. At the same time, we see the overall demand as very satisfactory and we continue to work on improving our efficiencies and believing all these ongoing efforts will help us in improving margins by 100 to 200 bps going-forward.
So I pass-on the call to Devansh and request the moderator to open the floor for question-and-answer session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles the first question is from the line of Madhur Rathi from Investments. Please go-ahead.
Madhur Rathi
Hi, good afternoon, sir, sir. Thank you for the opportunity. Sir, I wanted to understand, we have acquired two businesses in the last quarter. We are going to most new businesses in the last quarter. So how do we plan to pay for that or how — are we going to do a share swap or are you going to upfront give them money? So if you could help us understand that?
Munish Avasthi
Thank you for the question. That — that it’s still under consideration. So we are still not ready with the proposal as I think in couple of months as we are ready with the proposal, we’ll share the details.
Madhur Rathi
Yeah. Okay, got it, sir. Sir, can you please give me the current cotton, yarn realization and spread for Q3?
Munish Avasthi
Q3, the spreads were around in cotton — cotton yarn was about INR95 to INR100 rupees and just slightly better right now this quarter, we see a slight improvement this quarter.
Madhur Rathi
Okay. So the you are around INR95 200.
Munish Avasthi
Yeah, around INR95 yeah.
Madhur Rathi
Okay. So in last quarter, our spreads were very low around INR60 rupees, but still we did kind of a 50% increase, but margins were almost on the similar. So why is that?
Munish Avasthi
No, I think right now, the spreads I’m giving you is between the raw-material cost and the — and the sale price that INR60% about the clean cost. So there is a difference. There is a difference between the two sets of numbers.
Madhur Rathi
Okay, got it, sir, got it. So I have another question. Sir, what is the steady-state spread that we can expect going-forward?
Munish Avasthi
Sorry.
Madhur Rathi
So steady-state that we can expect going-forward over the next two maybe two to three years.
Munish Avasthi
I don’t know about two to three years, because see first of all the government policies which are, you know, are making Indian cotton a little expensive than what is available to other countries is putting a pressure on — so that the government policy can change anytime. So if it changes in our favor, which we expect, then the margins can go up by 300, 400 points. So other than that, we expect the margins to stay where they are, maybe from improved by a couple of 100 — about 100 to 200 points by the ongoing efforts we are making in making debottlenecking and modernization.
So otherwise, until the government doesn’t change the policy, I think there will be some pressure on the margins and it will stay at these levels or maybe 100 to 100 points plus-minus.
Madhur Rathi
Okay, got it. Sir, also a few quarters back we had mentioned that with a slight uptick in this business, we can easily achieve 15% to 16% kind of margin. And so it seems like one of our competitor has said that because of Indian cotton prices being higher than the international market, the land prices will be under pressure. Sir, what kind of cotton prices can we expect to reach these 15% margin over —
Munish Avasthi
So the demand scenario is not bad. Demand scenario is pretty good right now. The only the only problem is, you know the prices the Indian cotton prices are higher-than-usual. They are — they generally Indian cotton prices are at 500 to 700 points higher than the near futures, which are right now prevailing at about 1,000 to 1,100 points higher. So there is a clear, you know a difference of by 3% to 4% or 5% in the international prices and the potential Indian prices where they should be.
So that continues. So I won’t say — I think the demand-side is very good. The only is this anomalies till it goes. Then of course, you know, it will keep on putting the pressure on the potential margins which this industry deserves or which we can have.
Madhur Rathi
So the three to four point correction would initially like improve our margin to 15.16% or maybe 1.2% higher.
Munish Avasthi
Say if the till this policy go you know this anomaly goes away. I don’t see any reason for margins to go up to 15%, but I, of course, I can see the margins going up to 12%, 12.5% with all the efforts we are doing on our cost rationalization and the other measures. But to really get beyond 15, I think then this anomaly has to go.
Madhur Rathi
We so we have taken this to — we have taken a more into our consideration and their margins at present are margin-accretive to our current business. So we have highlighted that due to that 12%, 12%, 13% margin from there and our like 9%, 10% margin currently what we are doing, it’s margin-accretive. But when I look at what we are saying that we would like with internal efficiencies, our margin will improve to, 12%, 12.5% over the next three, four quarters. So can we expect the merged entity to make even higher margins by like maybe 1% or 2% higher, so as we scale-up this capacity?
Munish Avasthi
No, we are not scaling up any capacity. As I told you that we — you know margins right now we are at about 10% for the whole first-nine months. So we can expect these margins to improve to 11% or 12% in the demand and the scenario which is right now, which prevail for next couple of quarters. Other than that, you know going beyond that, it all depends on the demand and the differential and how to get even better, it depends on the government policy as I reiterate.
Madhur Rathi
Okay, got it. Sir. Thank you so much and all the best.
Operator
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Sharanj Gupta from Swan Investments. Please go-ahead.
Saransh Gupta
Hello.
Munish Avasthi
Hello.
Saransh Gupta
Thank you for the opportunity.
Operator
Sorry to interrupt. MR. Gupta, can you please use and speak?
Saransh Gupta
Yeah, is it audible now?
Operator
Yeah, better.
Saransh Gupta
Yeah. Sir, my first question is that the SPV that we are commissioning in Battenda for the solar power plant, how much will it be captive after this capacity is.
Munish Avasthi
I think it will be — we are still in the process of getting the approval from the government. But once it happens, I think right now we are at about 12% to 13% to 14% and I think it will be another 13% 14%. So I think in totality this will be one-third of our capacity will be dependent on solar. We get from our own solar.
Saransh Gupta
Sir, post this commissioning of the power plant, what will be the cost that we’ll be saving compared to the power cost that we are incurring currently?
Munish Avasthi
I think it will be around INR20 crores per year.
Saransh Gupta
So answer one more question, like what is the current capacity for fabrics and garments?
Munish Avasthi
So we don’t make any fabric or garment in this company.
Saransh Gupta
So just wanted to on that. Yeah. So just, this? This? Currently we are operating at almost 95% of the utilization. So just wanted to understand what will be the revenue growth drivers for our company for two or three years down the line.
Munish Avasthi
Right now, there are no revenue drivers for next one year, but we are of course, now as for last couple of years, we are working at 95% and all our new capacities which have been put years back are on upstream and they are doing well. So we are in the process of looking at how the further expansions and which way to go. So I think we’ll be able to share the details maybe in next two to three months. We are right now working hard on that to what product and what line-of-business in textile is also growing. So we’ll share it once we are going to confirmed with it. So those will be the drivers for next two, three years.
Saransh Gupta
Sure, sir. I appreciate that. But sir, in your presentation on the Slide 20, since you have mentioned the setting foundation for the forward integration where we have got an approval for the merger. So just wanted to understand, I mean, how is the fabrics and the garment business out there and what are the sorts of facilities that we will be merging into our business?
Munish Avasthi
So these are two companies which we are proposing to merge with our company. One is the purely garment company, which right now makes around 10,000 garments a day, 15,000 garments a day with a revenue of around INR120 crores INR130 crores. And the other one is that finishing process fabric finishing company, which has a revenue of around INR70 crore INR80 crores. So these — so once this proposal is done, so we have the plans to, you know with a very minimal investment to almost triple these capacities. So yeah, once the merger is formalized, then we can start looking at those numbers.
Saransh Gupta
Yeah. So till the time we announce the next phase of expansion that means this — post the post the merger gets approved, there will be an incremental revenue of INR200 crores with a minimum of investments, right?
Munish Avasthi
Yeah, of course. So it will take some time because these mergers, I think the period is almost 12 to 18 months, it takes from the NCLT and all. So I think it will all come into effect from ’26-’27.
Saransh Gupta
So for the next 1.5 years or two years because we have not yet finalized it and even this merger will take some time. So in terms of the profitability or the cost-efficiency, how do one look at in terms of the improvement in the operating efficiency or the improvement in the margin from here onwards, what are the steps taken by the company to improve it?
Munish Avasthi
Yeah, definitely. We have implemented some modernization plants, a lot of debottlenecking plants where we are increasing our capacity by 4% to 5% without really increasing our capacity. So then there are small changes we are doing like we are putting up a small solar plant right now. It will be operational by next month, four to 5 megawatts. So there’s incremental changes which we have made in last couple of years, which as you know now the things are settled and the markets have settled because we — we grew by 40%. So we are more confident and our demand for our product is more widespread. So we get some incremental gain in better marketing of those products. So all these I think will help us in improving our margins going-forward. The market stays as it is?
Saransh Gupta
Sure, sir. So sir, last question. So with the current capacity, it is fair to assume that the peak revenue, if we assume the currency situation in terms of pricing and costing prevailed, the peak revenue will be INR2,500 crores for us and with a margin of 11%, we can do INR275 crore INR80 crores of peak EBITDA with on the current capacity.
Munish Avasthi
Yeah, that’s almost — that’s about right. Yeah.
Saransh Gupta
Sure, sir. That’s all from my side. Thank you and all the best.
Operator
The next question is from the line of Sail Vora from MNS Associates. Please go-ahead.
Sahil Vora
Good afternoon, sir. Am I audible?
Munish Avasthi
Yes, yes. Please.
Sahil Vora
Hi, sir. My first question is regarding the export. Your export contribution has come to the highest-level at 57%. So just wanted to know these were the key countries that led to such massive growth.
Munish Avasthi
So the major — our basic market continues to be Bangladesh and the demand in Bangladesh has been pretty robust for last three, four months. Every month, every last four months, every month has been a record month for Indian Myan exports to Bangladesh. So there Bangladesh of course has been the key driver for us for last three, four months for this performance?
Sahil Vora
That question. Can the contribution be attributed to dealers stocking up their inventory after a slowdown phase or has the export demand market in general? And also if you could elaborate about the current situation in Bangladesh, how that market is picking-up and how do we see — and do we see any near-term challenges on the export front?
Munish Avasthi
No, we don’t see any challenges in export front actually Bangladesh there was a slight hesitancy by buyers and everybody in last July and August, but it continues to grow and I think they are already achieving numbers which were — which are higher than their export numbers to USA and Europe
Operator
Sorry to interrupt. The line for the management has been disconnected. Please wait while we reconnect them back. Thank you ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go-ahead.
Munish Avasthi
Yeah. So as I was saying that Bangladesh market we don’t feel that any challenges are there, it’s working as it used to and we don’t see any challenges there.
Sahil Vora
Okay, sir. And sir, on the financial front, while depreciation has remained relatively stable as guided. Both employee costs and finance cost has jumped on both quarter-to-quarter and year-to-year basis. Can you share reasons for both of these changes?
Munish Avasthi
So the finance cost actually has been impacted because of, you know, Mr I would request Mr to elaborate on that.
Sandeep Sachdeva
The finance cost increase in mainly due to the differences at least exchange fluctuation to the extent it pertains to the same in interest cost of foreign currency term-loan as well as term-loan as per accounting spend. This is a notional entry. This includes around INR5 crores of that.
Munish Avasthi
So what we mean to say is that our actual interest cost stays around INR10.5 to 11%, but because of the regulations, we have to consider some end-to-end and differences. So it is higher by INR5 crores because of that. And the depreciation, our depreciation has been pretty steady for last seven, eight quarters and it stays the same.
Sahil Vora
Understood. Understood. That’s it for now. I’ll rejoin the queue if I have further questions. Thank you. Thank you.
Operator
Participants who wish to ask a question may press star and one. The next question is from the line of Shakshi from NV Capital. Please go-ahead.
Unidentified Participant
Hi, sir. On the same lines asked by Sahil previously, I would like to know-how do you feel on Bangladesh plus one tailwind for the Indian textile industry given it is a substantial market for you.
Munish Avasthi
Bangladesh plus one I think is pretty overrated concept you know people just jump to the bandwagon but I we don’t see people shifting from Bangladesh. I think that we see the customers — all our customers are reporting us a pretty hefty order book going-forward. And yeah, we saw some orders coming from India and from — in the last two quarters. But we don’t see a huge shift with paradigm shift in Bank to really look for Bangladesh that’s one kind of a strategy. But overall, yes, the market, the buyers keeps — keeps their search on for good vendors. So there are the big vendors in India who are you know they are getting some positive orders and they are — there is some positive traction here, not only because of Bangladesh plus one, but I think China plus One is still continues to be the main theme and you know China still is exporting almost $200 billion against what we do like about $15 billion and Bangladesh is 40 billion.
So I think before getting into Bangladesh, I think Chinese share is what we are in what we are getting right now. Bangladesh, I don’t see — I don’t see Bangladesh going down. I see Bangladesh steadily improving from ahead and keep on growing by 10% to 15% going-forward for next two, three years.
Unidentified Participant
Right, sir. Now my next question would be, what is the mix of cotton yarns and synthetic yarn for the Nine-Month FY ’25? And how do you see the share of value-added yarns evolving in your portfolio.
Munish Avasthi
So our value-added earn both proportion remains the same as it has been for last couple of years. So we are working on it to increase it by 3%, 4% maybe next year. So we are working on some debottlenecking and capacity — small capacity additions. About the composition amongst cotton and synthetic, so our cotton, 100% cotton is around, I can say around 60%, 62% and cotton blended is about 30% and the synthetic 100% synthetic is about 3% to 4%.
Unidentified Participant
Okay, sir, noted. Just another last question. It would be, what are the triggers of margin improvement for you? I understand the parity of domestic and international prices is one of the factors. By when do you feel that the prices will converge? And is there any government policy and subsidies that helps with this?
Munish Avasthi
No, actually, you know, and this is the major trigger and the differential you know what used to be pre-COVID, you know, the prices, as I told you that Indian prices used to be about 500 to 600 basis-point up than the ICE features, which have been now consistently above 1,000 points. So this is the major trigger and we see some array of hope as CCI is — CCI has accumulated a lot of spots this year, which are like I would say right now they are sitting at about 8.5 million bills and by the season — by the time the season ends, the procurement season ends, it might go up by another to 20 laks 30 lakhs.
So the government has to take that decision whether they want to support the industry and provide us a cotton at reasonable rates or they want to you know not because they will be taking a loss. We have — they sell at a price which is which they have actually sold this year also. So we have — we feel that the government this year will have to sell lower going-forward. But ultimately, this is again until they don’t address this elephant in the room of import duty and direct subsidy to the farmers and these will be this will remain a challenge. It is a long-term challenge for sure for the industry.
Unidentified Participant
Thank you, sir, for answering my questions. Thank you so much.
Operator
Thank you. The next question is from the line of Keralas Samarthia from Investments. Please go-ahead.
Unidentified Participant
Hi, sir, good afternoon. Thank you for the opportunity. Sir, my first question is related to one scheme, that is by remission of duties and taxes on exported products. Since the scheme has got over as of December, will we — are we hoping it get extended and what will be the financial impact of the scheme currently? And also how much benefit do we receive from the scheme?
Munish Avasthi
So I think your information is wrong, that scheme is not ended. It is valid up till 30th September 2025.
Unidentified Participant
Okay. And sir, how much benefit do we receive on the same?
Munish Avasthi
So it is about 3% of our exports — FOB prices of our exports.
Unidentified Participant
Okay. Sir, second question would be on-demand. So in my opinion, the 3rd-quarter is marked with high domestic demand in lieue of the festival season. What was your experience of the demand during Q3 and how has demand seen shaped up during the end-of-the quarter now that January is almost over. Are we see — are we seeing any slowdown in orders from fabric or apparel manufacturers?
Munish Avasthi
No, the demand — demand actually in the — in export demand was very good last quarter and domestically also the demand was okay. But as I said in my opening remarks that Indian domestic demand has been constrained by a lot of flooding of Chinese cheap imports because of Chinese market not doing that well. So there is a lot of slam down which has happened recently on Chinese illegal or this imports. So we see a certain small bit of improvement in domestic demand actually since last one month. In exports, generally well this quarter. So we continue to see a good order book in our export orders for this quarter as well.
Unidentified Participant
Okay. And sir, how much cotton inventory do we typically carry? And is your fresh procurement ongoing at the moment?
Munish Avasthi
Yes. Right now we are in the middle of the harvesting season of cotton in India and we continue to buy cotton as we need. So this year, of course, we are still working at slightly lower stocks than what we have generally at this time of the year because of higher immune prices as compared to international prices and a lot of stocks which are there with the government, which will come into sale post March. So we are taking a little bit of conservative view this year and stocking a little less than normal.
Unidentified Participant
Okay. And sir, just sir, in the previous quarter, you had mentioned that the cotton prices have started to correct from the high of INR58,000 to INR54,000 crore INR55,000. So cotton Futures also indicated that price fell in November-December. However, with this recently hiked MSP on cotton, CCI buying and outlook of Cotton Association of India of 7% lower production, where do you see the cotton prices for you and what’s the likely impact for you in terms of inventory you are carrying?
Munish Avasthi
Yeah. So most of the inventory we are carrying, it is presold because we all — we generally have an order book of two to three months also. So there is not major impact on that. Of course, beyond that, of course, there is a couple of months cotton we have, which is always priced. Going-forward, we see the — actually Indian cotton prices have come down even further. So from 54, they have come down — slid down to around INR52,500 now as we speak. And they continue to be under pressure in-spite of the huge operation by — by the CCI.
And about the cotton crop, we actually see the cotton crop higher than last year. We don’t — we don’t agree with the numbers CEI has put on. So we see, you know the market and the cotton crop slightly higher than last year. So we expect — we think that last year the crop was around 325. So we expect the cotton crop to be more closer to 340 this year than 3005 or 10. So we see cotton prices continuing to be under pressure going-forward for next six months.
Unidentified Participant
Okay. And sir, with that, do we foresee any inventory gains in the future given current procurement is at a lower level?
Munish Avasthi
No, because we don’t see prices going up, so there won’t be any inventory gains. I don’t foresee that. Only if there are some black events, but as the condition is today, we don’t see cotton prices going up in a hurry.
Unidentified Participant
Okay. And sir, just lastly, one more, like since this Maharashtra election got concluded and we have seen that these largely have created a labor shortage and due to that the production has deep in the Maharashtra last year also. So do you see currently the harvesting season is going on? So are you seeing any impact on the same.
Munish Avasthi
Impact on what on the harvesting of cotton?
Unidentified Participant
Yes.
Munish Avasthi
So I think cotton arrivals are pretty robust and we don’t there was of course some arrivals were little late to come because of the election and everything. But since last one month the rivals have been very robust and we don’t see any slowdown in the arrivals right now.
Unidentified Participant
Okay, that’s it from my end. Thank you sir.
Operator
Thank you. Ladies and gentlemen, if you wish to ask a question to the management, you may press star and one. The next question is from the line of Gaurav, an Individual Investor. Please go-ahead.
Unidentified Participant
Hi, sir. Thanks for this opportunity. Really appreciate this. My question is regarding the — in the last con-call, we talked about Marvel about entering into the knitted fabric and we had some growth plans regarding that. If you can throw some more light on how do you plan to do more about it and how are we entering into the garment side of things. So that will be.
Munish Avasthi
Yeah. Yeah. This is — I mentioned in an earlier question that the — it is — the merger has still not been formalized and we have certain plans in our place. So once it has happened, we will surely share all the details with you. But right now, we are still under process to get the merger formalized.
Unidentified Participant
So sir, just to add to that, are we looking into domestic segment here or we are looking for exports targeting exports segment.
Munish Avasthi
We are looking at — we are looking at both the segments. So we have a — we are looking at export segments, which is, you know, something which we already do. We are in touch with all the brands who all be nominated to buy and we already supply them yarn. And of course, Indian domestic market now is being more-and-more dominated by organized players. So we are in touch with them also. So it will be both double prongs, so we’ll go for domestic as well as in exports.
Unidentified Participant
Thank you. Thank you. All the best.
Operator
Thank you. The next question is from the line of Mossam Agarwal, an Individual Investor. Please go-ahead.
Unidentified Participant
Hello. Am I audible?
Munish Avasthi
Yes, right.
Unidentified Participant
So I would like to know we have been running on average at 94% to 95% of capacity utilization, which I’m assuming is the highest as to where utilization level can be achieved. So with no capacity expansion announcement currently, where does the revenue growth come for the company now?
Munish Avasthi
We — because you know textile is a very capital extensive business. So we had invested a lot of capital two years, three years back, which was almost the tune of 40%. So now we are feeling settled with our increased capacity. And right now we are — all our team is on the drawing board looking at what to do next. And I think very shortly we’ll be sharing some future plans with the — with all our investors.
Unidentified Participant
Okay. And also, I would like to know that this quarter, the competitors have announced large capex on yarn and fabric front. So which indicates that industry is getting ready for a demand uptick for — for both domestic and international regions. So what is the time it takes for you from planning to production?
Munish Avasthi
Yeah. So I think the more time we take is in planning. You know, once we declare it, I think we will be able to deliver within one year.
Unidentified Participant
So, like what are your criteria for evaluating capex requirements? Is there any criteria?
Munish Avasthi
There are different criteria we look at right now, what we are into yarn segments, what areas geographically we want to expand and the kind of yarns we don’t make and our customers want that yarn from us. There are different criterias, we are exploring where we can get the best return on capital. So it’s just a matter of few couple of months. So we are evaluating because this new announcement will be, you know will pave way for our next series of investments. So we just want to be the pressure on what we want to do.
Unidentified Participant
Thank you, sir. But I would also like to know, is there any area for brownfield expansion or in our existing facilities or will new expansion be necessarily from greenfield initiatives? So could you just throw some light about this?
Munish Avasthi
So we have enough space for a brownfield expansion. But we might go for greenfield. So that is what the evaluation is happening right now because we are — all our plants are in Punjab. So geographically, we might like to diversify and get-out of Punjab and you know, and go closer to the port and closer to the more abundant regions in cottoon. So all these things are take some time to evaluate. So this is a brownfield we would have — if we would have just planned on brownfield would have started by now. So this is a new challenge and we want to be 100% sure where we want to go.
Unidentified Participant
Okay, sir. Also one more question. So you have highlighted to price difference between domestic and international prices. Can you throw some light on current price difference between synthetic yarn and cotton yarn? I read somewhere synthetic is lower than this cotton yarn. So I just wanted to understand the basically price parity between two given you manufacture for both.
Munish Avasthi
No, the synthetic yarn is always cheaper than cotton yarn. It has always been cheaper and so the price disparity which we were talking about was the cotton prices, the raw cotton prices in international markets and in India. So about the yarn, I think yarn generally is, you know, sold at the same price as it has sold internationally because we are in an internationally competitive market. We are competing with different countries like Vietnam, Indonesia, Turkey. So the export prices and domestic prices are almost similar everywhere where there are no duties, of course, like country like Pakistan and Bangladesh prices are little higher there domestically.
But synthetic fibers are slightly more expensive in India than other countries because of certain duties and BIS restrictions. But that’s a very small part of our business. But of course, it is being hurt a lot recently by dumping of fabric, yarn and fibers by China which is really suffering domestically across the world.
Unidentified Participant
Okay, thank you sir. Thank you for giving me this opportunity. Thank you.
Operator
Thank you. A reminder to all participants that you may press star and 1 to ask a question. The next question is a follow-up question. It’s from the line of Madhu Rathi from Silical Investments. Please go-ahead.
Madhur Rathi
Sir, thank you for the opportunity once again. Sir, our margins in the export as well as the domestic yarn would be similar or because of the US and other countries discouraging Chinese cotton the Indian yarn would be at a better pricing.
Munish Avasthi
No, the current prices the difference in the prices
Madhur Rathi
Hello.
Operator
Hello. Ladies and gentlemen, the line for the management has been disconnected. Please wait while we reconnect them back. Thank you ladies and gentlemen, the line for the management has been reconnected. Yes, sir, please go-ahead.
Munish Avasthi
Yeah, I think I finished answering the last question about the prices across the world being almost the same.
Madhur Rathi
Okay, there is the new margin differential that we can get from export versus the domestic it will be similar only.
Munish Avasthi
Yeah, it’s almost — it’s similar level. Yeah.
Madhur Rathi
And sir, just a clarification, sir, the cotton prices are, I think from 54 to INR50 to INR500 to 2.523% kind of a reduction. Sir, even after that, there is a 5% margin differential to the international prices that was apart from the whatever interaction wasn’t in general this, right? Or that is where the differential has reduced?
Munish Avasthi
Sir, your voice is not. I cannot really understand what you’re trying to ask.
Madhur Rathi
Okay. So I’ll ask my question again. Sir, the two — the cotton prices declined to INR50 INR500, so I think a 2.5% to 3% reduction. So when we compare it with international parity, is it still a 5%, 6% differential that was there or this 2.5% has reduced or.
Munish Avasthi
I get your question. So the international prices in last six months in last three to four months, the differential has stayed the same. So if the Indian prices have come down, so have the international prices at a similar pace. So there is not much change in the differential in last three, four months.
Madhur Rathi
Okay, got it. So thank you so much and all the best.
Operator
Thank you. Participants who wish to ask a question may press star and one at this time as there are no further questions from the participants, I now hand the conference over to the management for their closing comments.
Munish Avasthi
Thank you,. Thank you everyone for being a part of this call and we appreciate. And if you have any questions or any queries, you can direct it towards the company Secretary of Orient Capital. See you all next quarter. Thank you. Thank you.
Operator
On behalf of Orient Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.