Sutlej Textiles and Industries Limited (SUTLEJTEX) Q4 FY22 Earnings Concall Transcript

Sutlej Textiles and Industries Limited (NSE: SUTLEJTEX) Q4 FY22 Earnings Concall dated May. 11, 2022

Corporate Participants:

Bipeen Walame — Whole Time Director and Chief Financial Officer

Updeep Singh Chatrath — President and Chief Executive Officer

Analysts:

Yash Agarwal — JM Financial — Analyst

Prerna Jhunjhunwala — Elara Capital — Analyst

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Ritesh Poladia — Girik Capital — Analyst

Dhaval Shah — Svan Investments — Analyst

Yogansh Jeswani — Mittal Analytics — Analyst

Niraj Mansingka — White Pine Investment Management — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Samarth Singh — TPS Capital — Analyst

Amit Agarwal — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen. Good day, and welcome to the Sutlej Textiles and Industries Limited Q4 and FY ’22 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Bipeen Walame, Whole Time Director and CFO. Thank you, and over to you, sir.

Bipeen Walame — Whole Time Director and Chief Financial Officer

Good afternoon, everyone and welcome to the Earnings Conference Call of Sutlej Textile Industries For The 4th quarter And Full Year FY 2022. I hope all of you and your family are in good health. Joining me on the call today is Mr. Updeep Singh ji, President and CEO of Sutlej Textiles and Industries Limited and Stellar IR Advisors, our Investor Relationship team. We are already uploaded the investor presentation and I hope everybody had an opportunity to go through the same. Let me take you through the financial highlights, after which I request Shri. Updeep Ji to run you through the industry and business highlights for the quarter and the full year FY ’22. The year gone by saw the impact of COVID in first quarter of FY ’22. Despite this, Indian economy began bouncing back from the pandemic and Indian yarn players experienced a strong demand amid healthy export, pent-up demand in domestic market with resuduing impact of COVID 19. Global demand also saw renewed buoyancy and at Sutlej, backed by healthy sales growth both, in domestic and export market. With better realization and demand, capacity growth utilization stood at 94% to 95% during quarter four FY ’22. Coming to the income statement, our consolidated total income for the financial year 2022 was at INR3,112 crores which has jumped up 63% against INR1915 crore for the previous financial year. In Q4 FY ’22, the consolidated total income was INR901 crores, which is 31% increase year-on-year basis. We attribute the performance in the last quarter to overall improvement in our product mix, better efficiencies. better geographical reach, with positive economic sentiments, as well as improving global trade notwithstanding geopolitical situation and the challenges. We saw a significant increase in export and for FY ’22, the total export stood at around INR1300 crores against INR660 crores in FY ’21. For FY ’22, our consolidated EBITDA stood at INR414 crores, which is 13.31% EBITDA margin, with 624 basis points higher than the previous year, where it was 7.1% with total amount of INR135 crores. This growth of EBITDA was primarily driven by volume and higher realization and better product mix. For quarter four FY ’22, our EBITDA was INR133 crores which translates into margin of 14.7% with just 282 basis points higher than the previous year which was at 11.9%. On the profitability side, for the full year our consolidated PAT was around INR150 crores against loss of 4 crores in previous year. For the quarter, we earned net profit of INR52 crores, which is higher by 86% year-on-year basis. The Board has declared a dividend of INR1.85 per share, which is around 20% of PAT. As you also know, the Board has approved setting up of greenfield project of 89,184 spindles comprising of Cotton Melange Yarn and PC Grey Yarn along with Dye House at Jammu Kashmir with estimated project cost of INR914 crores, which will be funded with a mix of internal accruals and debt and will be implemented by around Q4 FY ’25. Shri. Updeep Ji, President and CEO will update you about the project. We also got long-term credit rating of ‘A+’ by India Rating with outlook of stable signifying adequate degree of safety regarding timely servicing of financial obligation and short-term and bank funding of ‘A1+’ by India Rating signifying very strong degree of safety regarding timely payment of financial obligations. On balance sheet front, our total debt saw a marginal decrease of INR35 crores to INR942 crores, at the end of the year. This incremental date was on account of increase in working capital, which was mainly on account of higher raw material costs attributable to quarters. The debt to equity ratio has continued to remain below one, since last few years and has improved further to 0.86 times in FY ’22. With more than 25% headroom still left in our working capital facilities, we believe we are in a comfortable position as far as the liquidity is concerned. That is all from my side. Now, I would request Shri. Updeep Ji to share business outlook and industry scenario and then we can open the floor to question and answers. Over to Shri. Updeep Ji. Thank you.

Updeep Singh Chatrath — President and Chief Executive Officer

Thank you very much, Bipeen Ji and very good afternoon to all of you and thank you for taking time off and joining this investor call for Sutlej Textiles and Industries Limited. Let me begin the call by reiterating our outlook on industry. We believe that there are some very positive tailwinds for textile sector in spite of the fact that cotton is riding high. With the pandemic having altered global supply chains for textile companies and more importantly, given the current geopolitical situation in the world, we are witnessing a gradual shift from single source country and the efforts targeted at diversifying the supply chain. Since India’s textile and apparel value chain has underlying strengths in form of country being huge source of raw material, India being one of the largest producer of raw cotton, presence across value chain, quality of products, and ofcourse, the phenomena is being considered as a huge opportunity for Indian textile industry. Indian spinners and home textile players are being considered as the key beneficiaries of this favorable trend. With the second largest spindle capacity in the world, Indian spinners are seeing full utilization of the capacities, superior margins as yarn business remains strong. I am talking basically in terms of dyed yarns, a blend of synthetic and cotton dyed yarns. The unprecedented growth and improvement in profitability over the last few quarters has been on account of China Plus One policy and U.S. ban on Chinese textile products made from Xinjiang cotton. With expansion in capacities, consolidation and export demand for Indian yarn still at reasonably good level. Indian spinning business is witnessing growth. In this, I would say that Government of India has also played a role. I mean the policies of Government of India with PLI, with Mega Textile Parks, and overall impetus to the industry. I mean, this industry is bound to grow with, at the moment on the Gray Yarn, I understand there are certain pressures. And Sutlej Textile being a trusted brand in Yarn segment has been able to capitalize on the opportunities, which is evident from the results. However, we are not present in the gray product segment in a big way, which is needed to complement to dyed and melange offering in view of increasing demand of blends.

Various blends in terms of manmade fiber and cotton, polyester viscose. Across multiple categories of end use, there is market potential for gray blended yarns both, in domestic and export markets. This has given us confidence to launch a greenfield project of almost 89,000 spindles comprising of cotton and blended Melange Yarns and PC Gray Blended Yarns along with the Dye House in Jammu and Kashmir at an estimated cost of INR914 crores, which will be implemented around Q4 for the financial year 2025. The project will be funded through internal accruals and debt and any more sort of questions we’ll be able to take in our question and answer session. And we believe that with all these positives going for us, Sutlej textiles is well placed to continue its strong performance and add value to stakeholders. Thank you very much.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]First question is from the line of Yash Agarwal from JM Financial. Please go ahead. Yeah, good afternoon, sir and congrats on very good set of numbers. I just wanted to check, how the demand situation is panning out going forward obviously, you reported 95%-96% capacity utilization. What do you feel would be the capacity utilization in the first half of the current financial year? And also, we’ve had very, very good quarter on quarter expansion in EBITDA margins, so was this led by inventory gains or it is better spreads and are these spreads sustainable? Maybe not at these current levels, but at elevated levels.

Updeep Singh Chatrath — President and Chief Executive Officer

So I’m sorry, I couldn’t get to the name.

Yash Agarwal — JM Financial — Analyst

I’m Yash Agarwal from JM Financial.

Updeep Singh Chatrath — President and Chief Executive Officer

Okay, thank you very much, Mr. Yash Agarwal for a good question on this.

First, to answer your first question that was on the demand over the quarters in the next 6 months and the capacity utilization thereof. See in the last quarter, we have achieved a capacity utilization of almost 95% and which has shown significant improvement over the earlier quarters which were hit a little bit by pandemic. So in this quarter also, we should be able to achieve around the similar capacity utilization and going forward, I think we should be hovering around 95%, which is good enough for a dive looking into — I mean the aspect of being in dyed segment. So where the lot sizes are getting a little smaller and we should be able to achieve 94% to 95% utilization throughout the year.

Yash Agarwal — JM Financial — Analyst

So what is this demand? Where is this demand coming from?

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah. So —

Yash Agarwal — JM Financial — Analyst

It’s more export-oriented, the export share is going up, but is it sustainable at 47%-48%?

Updeep Singh Chatrath — President and Chief Executive Officer

Right. So in this, if you look at there was little bit of pent-up demand and mainly in the synthetic yarns, see the export market has been good and we expect that at least for a couple of quarters, this is going to sustain very well. So, we expect that our exports in terms of synthetic yarns would be good enough in the coming 2 quarters as well.

Yash Agarwal — JM Financial — Analyst

Sure, sure, sure. Got it. Also, how are the yarn realizations panning out, what is, I mean I can see that there has been some increase quarter-on-quarter on yarn realization. So, are we sustainable and coming back to the spreads question, how are the spreads currently and the outlook?

Updeep Singh Chatrath — President and Chief Executive Officer

See, if you look at cotton. In case of cotton melange yarn, yes. I mean the realizations have not grown in the same percentage value if you look at the Kubao cotton, but we are able to recover almost 70% to 75% of the increase in the cost. Whereas in case of synthetics, I think this was little higher — the recovery was little higher than the cotton. So I would say that depending on the fiber prices, we were able to recover realization to the extent of almost 92% plus.

Yash Agarwal — JM Financial — Analyst

Got it and what has been the escalation — the raw material escalation on the synthetic side in the last three to four months?

Updeep Singh Chatrath — President and Chief Executive Officer

If you look at raw material escalation on synthetic side, in the last three months the polyester fiber has gone up by almost 12.8%.

Yash Agarwal — JM Financial — Analyst

Okay.

Updeep Singh Chatrath — President and Chief Executive Officer

And viscose has gone to the extent of almost 2.6% and acrylic fiber by 6.5% and recycle by almost 6.5%. And we’ve been able to pass on this, the cost associated? Yes. Yes, yes, we have been able to do that. It is not only the fiber, it is other costs in terms of dyes and chemicals as well.

Yash Agarwal — JM Financial — Analyst

Sure, sure.

Updeep Singh Chatrath — President and Chief Executive Officer

So, dyes and chemicals input cost as well as the fuel cost — see in the last quarter, the fuel costs was also riding high and still. Now again, they are little higher. I think we were able to pass on a good part of that to the consumers, because of the pent-up demand as well.

Yash Agarwal — JM Financial — Analyst

Sure. And on your EBITDA margin. So, are double-digit low double digit margins is something which you feel is sustainable for FY ’23 given the fact that there is 95% utilization that you are targeting?

Updeep Singh Chatrath — President and Chief Executive Officer

Yes, we are confident of doing that and we have taken certain steps also, so that we are able to sustain these margins.

Yash Agarwal — JM Financial — Analyst

Got it. And on your CapEx, when is it coming on stream and how much will it add to the turnover on full utilization?

Updeep Singh Chatrath — President and Chief Executive Officer

See, depending on the couple of things. One, the delivery of the machines, because nowadays the delivery of machines are little erratic. So we will book our machines well in advance. We’ll do that now since this project has been approved by the Board. So, we should be able to add a turnover of almost, you can say INR850 crores.

Yash Agarwal — JM Financial — Analyst

Sure. On an annual basis, that is?

Updeep Singh Chatrath — President and Chief Executive Officer

On annual basis, which has been estimated. And I mean with good margin as well.

Yash Agarwal — JM Financial — Analyst

And —

Operator

Sorry to interrupt you, Mr. Agarwal. May we request that you return to the question queue?

Yash Agarwal — JM Financial — Analyst

Yeah. Just follow up on the CapEx only I add is that, will this commissioned by maximum by end of FY ’23 or it could spiral over to FY ’24 also?

Updeep Singh Chatrath — President and Chief Executive Officer

No, it will go to FY ’25 depending on the size of the project and also delivery of the machines.

Yash Agarwal — JM Financial — Analyst

Okay. I’ll come back in the queue, sir. Thank you for answering my questions.

Updeep Singh Chatrath — President and Chief Executive Officer

Our pleasure.

Operator

Thank you. The next question is from the line of Prerna Jhunjhunwala from Elara Capital. Please go ahead. Thank you, sir. Congratulations on strong set of numbers. Sir, I just wanted to understand your improvement in profitability on a QonQ basis. What really drove the margins, gross margins, as well as EBITDA margins for you from the product mix perspective and from the demand perspective.

Updeep Singh Chatrath — President and Chief Executive Officer

Thank you, Prerna Ji. Good question. And I would say, quarter-on-quarter, we have been able to be little agile in shifting our product mix as — I mean answering to the market demand on immediate basis. For example, when we increase our exports, so the particular market of export and what sort of yarn is required, may it be on the Cotton Melange side or on the synthetic dyed side. So we were able to shift our product mix, I mean within the least possible time. Thanks to our manufacturing units that we could have that flexibility. If you recall, I think in one of my earlier calls, I had said that one of the things which we are implementing now is the flexibility to shift wherever we need, Cotton Melange to dyed synthetic. Then within the dyed synthetic, the count range. So these are the flexibilities we created. And another flexibility we created was on the lot sizes because the market demands lot sizes, smaller and we also pay the premium for that. So, that is the flexibility we created in our manufacturing units that helped us, number two. Number three, we explored certain new market and new — I would say market segments. One is the geography, we explored such new geographies and also, we explored new market segment in terms of little bit moving away from apparel. So we moved towards home textiles, where we could supply yarn for different applications. So, these were a few reasons, all major reasons that we could, I mean get profitability quarter on quarter riding on, also our efficient purchase of raw materials. So that was — I must compliment my team there that we could exercise a very professional approach and very well thought market researched approach in covering our quarter and also, other raw materials for that. So these are the major reasons which led us to this level of profitability quarter-on-quarter.

Prerna Jhunjhunwala — Elara Capital — Analyst

Then how much cotton inventory now you would have and if you can share what will be the cost for the same which you will be using for the next 6 months or 12 months — 8 months?

Updeep Singh Chatrath — President and Chief Executive Officer

Prerna, these are the certain numbers. If you look at the inventory, I think we should be carrying close to about 90 days, but move little more even, I would say in the extent of say 100, 100 plus, but the cost would be almost a little less than the prevailing price — the market price of the cotton.

Prerna Jhunjhunwala — Elara Capital — Analyst

Okay. Okay. So in the current product mix, how would you — could you give us a bifurcation between melange yarn, PC and if at all, you have sold any gray just to help us understand how these mixes have moved over the last one year to two years.

Updeep Singh Chatrath — President and Chief Executive Officer

See the mix has been see in our — if you look at our capacities, we have almost 55-45, sometimes 50-50. That is what I said. We have kept our flexibility of almost 10% on 50-50, so we could go either way. So I can say that as per our capacities and our product mix, we are 50-50 on the cotton and 50% on synthetic with 10% buffer to go either way, depending on the market.

Prerna Jhunjhunwala — Elara Capital — Analyst

Okay. So flexibility of 10% odd is what you’ve created.

Updeep Singh Chatrath — President and Chief Executive Officer

In terms of the product, yes.

Prerna Jhunjhunwala — Elara Capital — Analyst

Okay. Okay. And sir, could you just help us understand the demand side on the apparel segment because you are largely catering to the apparel segment. So, how is the demand panning out? Which key markets are doing well in terms of woven knit and key export markets which are doing well. Some color on how the demand is panning out?

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah, see if you look at within domestic in India, the market in terms of the [Technical Issues] this cluster has done well in terms of sootings. Similarly, certain corporates, I mean there the sooting segment has really moved on over the last quarter. In terms of exports, the biggest market in the last quarter had — over the period of time had been Turkey and in addition, I think the markets like Brazil has also helped us to grow in this.

Prerna Jhunjhunwala — Elara Capital — Analyst

Okay. Understood, sir. Sir, I’ll come back in the question queue for more

Updeep Singh Chatrath — President and Chief Executive Officer

Thank you so much, Prerna. Thank you, sir.

Operator

Thank you. The next question is from the line of Vikram Vilas Suryavanshi from PhillipCapital. Please go ahead.

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Yeah, good afternoon, sir. Most of the questions were answered, but if you can comment on the benefit of this green fibre plant for us in this rising cost structure and then your outlook on home textile business.

Updeep Singh Chatrath — President and Chief Executive Officer

Mr. Vikram?

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Yeah, Vikram from PhillipCapital.

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah, thank you so much for this question. So first of all, I’ll tell you about the green fibre project. This green fibre project now is on full stream. I mean we clocked almost 97% machine utilization of the plant utilization and most of the product goes in our spinning — our own spinning units, wherein we have got benefit after the stabilization. So, it took it took about three to six months to stabilize the plant because it is a continuous process and the quality of raw material has also — little bit deteriorated. So, we have to have a balance between the productivity, production, utilization, and raw material yield as well. So, I think now we are at a stage where we are fully utilization — utilizing the plant and also, making some value addition in our product mix. So that has helped us in our spinning units and we have now taken full benefit of this and we can see this in terms of the quality of our yarn, based on the quality and the consistency of the raw material. So this project has really helped us to further our yarn business. In the markets which are sensitive in quality and also with the consistency of the raw material, we are able to achieve a little bit better productivities.

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

And are we importing any raw material for this plant?

Updeep Singh Chatrath — President and Chief Executive Officer

No. As of now, no. Because the flakes import was opened, but still the licenses are to be granted. So we have applied for that and that would be only to the extent of 20% of the capacity of the plant. Raw material is all — I mean it is the bottles which is collected in India only.

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Got it. And sir, outlook on home textile. How we’re seeing the demand panning out and our opportunities to grow from current level.

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah. See our home textile is one business where the category we are in, that is upholstery and drapery, that has given us good opportunities this year. See in the last couple of years, we have been making products and launching products, this being a little longer cycle, product cycle or the order cycle I would say, category. So, now this year, we are fully — I mean we have already on the — we are on the launch point or even we have launched products. We are getting good traction in the export market, especially in UK and U.S., which are little higher-margin markets as well.

See here, once you submit the sample, it takes you about eight to nine months to get the first thousand-meter order. So, we have crossed that stage and I think in this year we are going to do much better and be positive in the home textile business. In addition, in domestic market, we have launched a cut service under the name Nesterra. We have been able to clock to almost 300 stores across Pan India, and also we have got good traction. Our eight collections are already out with almost 1100 SKUs. And we have been able to launch another seven to eight collections by July this year. So, this will increase our reach within India and on the brand product as well.

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Okay. Okay, got it. And last question from my side, sir. About the way cotton prices have increased and the gray yarn prices have also increased significantly. Are we seeing some demand shift to a blended yarn because of that or how that parity would typically was. Your view on that.

Updeep Singh Chatrath — President and Chief Executive Officer

See today, keeping the cotton prices, I mean these are writing very high today. If you look at cotton prices, they have touched INR1 lakh per candy. So people are shifting to some extent to go towards the blends more, where the percentage of cotton is being replaced by either polyester or viscose. It will be difficult to replace whole of cotton. I mean I can’t think of that, but yes. Today, if you look at on an average, I would say 10% of the cotton in the blends have given way to viscose and increase in polyester and most of the raw mills are trying to make blended yarns or 100% polyester yarns for particular applications. So, definitely yes. Cotton is giving part of its blend to viscose and polyester.

Vikram Vilas Suryavanshi — PhillipCapital — Analyst

Okay. Thank you very much, sir.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ritesh Poladian from Girik Capital. Please go ahead.

Ritesh Poladia — Girik Capital — Analyst

Thanks for the opportunity. Sir, on greenfield expansion, what would be the debt component and over 3 years, would you go up in higher of garment’s debt to quity?

Bipeen Walame — Whole Time Director and Chief Financial Officer

Ritesh Ji, the debt component would be to the extent of INR594 cores, to 65-35 ratio.

Ritesh Poladia — Girik Capital — Analyst

Okay, 65-35, so your debt-equity on peak basis can go up from 1x debt equity, right?

Updeep Singh Chatrath — President and Chief Executive Officer

Actually, Ritesh, it is moving up only in one of the years when the project is actually just getting launched, and then it comes down. But actually, frankly, in our all financial models considering the benefit in this project, we are seeing it just touching to 1 percentile point at one year but then it comes down. So overall, we are expecting it to remain one or lower.

Ritesh Poladia — Girik Capital — Analyst

Okay. One more question before I join to the queue. Is your production now optimum to the pre-COVID levels because during COVID there was higher demand of low-margin products than higher margins. So is that production on optimum basis or still, there is a room of improvement in this 95% utilization?

Updeep Singh Chatrath — President and Chief Executive Officer

See, I would say that in terms of — I mean during COVID we changed our product mix. If you say the capacity utilization, yes, it is 95% plus. And in dyed, we can go, say, a percentage more if at all depending on the lot sizes, again I’m coming to that. Because the lot sizes are reducing day by day, so I think we are at the optimum level, but there is always scope for improvement as far as the internal efficiencies are concerned, so I won’t deny the fact.

Ritesh Poladia — Girik Capital — Analyst

No, sir, I get that 94% to 95% is this, but your product mix is optimum now?

Updeep Singh Chatrath — President and Chief Executive Officer

No, this is average changing because what sounded optimum to us three years ago or two years ago is suboptimal now. So I won’t say it, but our new product development teams, they are out in the market to develop new product and new segments. So — I would say is, yes. Today what we can manufacture, we’re doing one of the best things. But yes, going forward, we might have to change our product mix, depending on the market demand. Whether it is more of towards the home textile, more on say other segments that even for technical textiles. So, I would say it will be ever evolving product mix.

Ritesh Poladia — Girik Capital — Analyst

Sir, that would have a good margin or lower margin?

Updeep Singh Chatrath — President and Chief Executive Officer

No, it will be a good margin, of course depending on the market. Post there is something which crushes the demand and we have to run the spindles, there margin could reduce but more or less I would say it would be margins up north. That is why we are developing new products.

Ritesh Poladia — Girik Capital — Analyst

Sure sir. I’ll come back to the queue, sir. Thank you very much.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome.

Operator

Thank you. The next question is from the line of Dhaval Shah from Svan Investments. Please go ahead.

Dhaval Shah — Svan Investments — Analyst

Yeah. Hello, sir. Great set of numbers, especially when the peers have been seeing a drop in the margins. Sir, just want to understand on one thing. So from a near-term perspective, are you seeing pressure on the spreads. A, because of the cotton prices and also pressure on your EBITDA margin because of the other cost. So I mean you mentioned, you’d be able to maintain margins at the lower double-digit, also and so the volumes are at 95% utilization. But wanted to get a sense that what is happening in terms of the spreads in the near term? And also, this higher demand, you said it has shifted to non-cotton but because of these geopolitical issues which are happening, what is your sense on the demand side?

Updeep Singh Chatrath — President and Chief Executive Officer

See —

Dhaval Shah — Svan Investments — Analyst

Because we just saw, it looks like just — because like some of the research I read is mentioning about some stress to the Indian textile mill.

Updeep Singh Chatrath — President and Chief Executive Officer

Yes, yes. That’s right. See, there are 2 different segments. Number one, if we look at cotton, so the cotton there has been a pressure on the cotton prices, especially on the gray cotton yarn prices because the spread in gray quarter yarn is now very much reduced. So that is one and when the spread increased, the gray cotton spread increased exponentially last year if you all recall.

Dhaval Shah — Svan Investments — Analyst

Yeah.

Updeep Singh Chatrath — President and Chief Executive Officer

Whereas the spread in case of dyed melange yarn did not increase to that level and that faster. So, it went up slowly. So, in case of dyed and cotton melange yeans, so similarly I see now, I mean the spread in dyed and cotton melange yarn would be impacted, but not to that extent because these are all value added products and the brands have to buy these.So, little bit of tweaking the product mix, I think we do understand there will be a pressure on the spread, but not to that extent as we are witnessing in the gray yarns.

Dhaval Shah — Svan Investments — Analyst

So if you could elaborate in terms of the percentage terms, what sort of pressure do you see between both the categories?

Updeep Singh Chatrath — President and Chief Executive Officer

See, I see a little bit in terms of percentage if you look at, I see little bit more pressure on the cotton side because of the cotton prices and we, I mean in India — I mean the polyester fibre being available fresh as well as recycled good capacities, I think there’ll be less pressure. If I have to say on a scale of zero to 10, I see pressure on cotton to the extent of almost 30% or 40%. And then on polyester to the extent of 20%, even less. So, I don’t see much pressure on the polyester side.

Operator

Thank you. The line for the current participant has got disconnected. We’ll move onto the next question from the line of Yogansh Jeswani from Mittal Analytics. Please go ahead.

Yogansh Jeswani — Mittal Analytics — Analyst

Hi, sir. Thanks for the opportunity. And most of the questions have been answered, just couple of follow-ups. So, sir, the greenfield CapEx that we are planning, will the entire 89,000 spindles capacity come in a single phase or is this spread in two or three phases?

Updeep Singh Chatrath — President and Chief Executive Officer

See, it is a single phase project. The only thing is that depending on the machine deliveries, for example, 90,000 or 89,000 spindles cannot be installed in a single day. It will be spread over a period of say, six to eight months. So, but it is a single phase project.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. And sir, we are not planning to add any fabric process to it. This just the yarn as of now, or is there a scope for adding fabrics as well?

Updeep Singh Chatrath — President and Chief Executive Officer

In this particular project, we are only looking at the yarn and dye house.

Yogansh Jeswani — Mittal Analytics — Analyst

Sorry?

Updeep Singh Chatrath — President and Chief Executive Officer

And dye house, the dye capacity for the yarn, yeah.

Yogansh Jeswani — Mittal Analytics — Analyst

I was just looking at the announcement that couple of other industry peers have made. So, the INR950 odd crores — the INR900 plus crores number that you have highlighted for 89,000 spindles seems to be a bit on the higher side compared to what others are doing. Couple of them have announed Brownfield CapEx and that is typically lower, but still your CapEx plan seems to be on a very higher side. Any specific reason for that or am I missing something here?

Updeep Singh Chatrath — President and Chief Executive Officer

No, no, I mean there is a reason, which I can tell you. Number one, part of this capacity is melange yarn capacity, so it is a double process. So what others might have announced is only spindleage. So, for example if you say 50,000 spindles in melange and 50,000 spindles in grey yarn, in melange it is almost a double process. That is one reason for additional cost, number one.

Number 2, here we are also considering 40 tonnes dye house, a very modern 40 tonnes fiber dye house, so which is adding to the CapEx. So if you remove the cost of the dye house then, we are in line with the industry.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay, so and out of these 89,000, how many are we keeping for melange and how many for the other?

Updeep Singh Chatrath — President and Chief Executive Officer

We are reconfirming this but these costs are based on almost close to 40,000 spindles of melange.

Yogansh Jeswani — Mittal Analytics — Analyst

So roughly 50%-50%, we are keeping.

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. And sir, last question from my end. Couple of participants have already asked you this. But, in terms of the demand and from what we’ve been hearing from other players like home textile players and garment players. They are seeing a lot of push back and a lot of friction when it comes to passing on the prices and a lot of them are seen limited utilization going forward at least for the next one, two, three quarters.

So in a situation like this, where cotton is so insulated and the demand from your end consumers is getting push back, are you still confident of passing on the price hike, or are you also seeing some pressure now on some friction from them coming in, and do you hope to maintain such margins going forward in say Q1, Q2?

Updeep Singh Chatrath — President and Chief Executive Officer

See, as I said, there is a push back, especially if you look at on the cotton side, because the cotton prices are really riding high. So in case of melange, I think the prices could be observed to the extent of 60% to 70%. There is a push back, no doubt about it and we are with the industry. As in synthetics, there is little bit of less of that because there is a high demand of that, especially in the export market. So, I would say if there is a push back, but not to that extent in synthetics. So Q1, we expect that we should be able to get — I mean, close to the similar margin if not almost — if not exactly the same. So — in Q1, we are not expecting anything really drastically low.

Yogansh Jeswani — Mittal Analytics — Analyst

Okay. Fantastic, real good, sir.And sir, could you share the average realizations for melange yarn, grey yarn, synthetic yarn? What are they currently and what was in previous quarter?

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah, so there has been some increase. I can — We can always share with you offline if you’d like. So you can get in touch with our investor handling team, so they would be able to give you that.

Yogansh Jeswani — Mittal Analytics — Analyst

Sure sir. That would be helpful. So, I’ll get back in the queue.

Operator

Thank you. The next question is from the line of Niraj Mansingka from White Pine Investment Management. Please go ahead.

Niraj Mansingka — White Pine Investment Management — Analyst

Thank you for the opportunity. Only two questions. One, margin from the greenfield would be how much sir? Once it starts because can we ascertain it for less than 1?

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah. If you look at the greenfield project, our margin on sales would be to the extent of almost 20% – 23% —

Bipeen Walame — Whole Time Director and Chief Financial Officer

Almost in the double-digit above 17%-18%. Here, actually what we have considered is the, basically the state benefit. Jammu Kashmir is having a special scheme and that’s the reason we have decided to have the project there. So, we see that there is a good benefit of GST and also some interest subventions, on EBITDA we will get a benefit in terms of the GST benefit.

Niraj Mansingka — White Pine Investment Management — Analyst

So the margin’s in the 22%-23% or 17%-18%?

Updeep Singh Chatrath — President and Chief Executive Officer

So you asked overall because we have to take out the cost of buyouts, so it will be on the yarn it will be on the extent of 17% to 18%.

Niraj Mansingka — White Pine Investment Management — Analyst

No, sir. What I’m asking is, whatever the revenues you said INR850 crores, on that what percentage margin would you get?

Bipeen Walame — Whole Time Director and Chief Financial Officer

In case on the total revenue, the percentage margin would be in the — to the extent of almost 18.2% or 18.3% as projected buyers.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay, got it. You said, sometime back that the cotton inventory is holding at a similar size. But then it means that you’re — you’ve got most of the cotton in the month of April — March or April mostly because the prices have also spiked lately in the later half of April as well. So, can you just clarify what on the holding cost of the inventory of cotton.

Updeep Singh Chatrath — President and Chief Executive Officer

I think, yes, I mean the cost of cotton has gone up by almost 29% over the last 3 months. So. we have been holding some inventory even before and exact figures can be given by our investor team. I can’t, I don’t have it here — the exact numbers as to what is the number we are holding and what is the price of the cost of cotton we are holding.

Niraj Mansingka — White Pine Investment Management — Analyst

And sir, on the home textile, what is the utilization and when do you see the utilization going into higher numbers. And how do you see the margin trajectory for the home textile side?

Updeep Singh Chatrath — President and Chief Executive Officer

See, home textile utilization in quarter four had been close to 70% and we expect that we should be able to increase this year to the extent of about 80% – 82%. 85% is something in this business because of the various designs and all that. So I think we should be able to achieve this within this year.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay. And how will the margins move if the centralization go to 85%. Can you just give some color on that as well?

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah. So if you look at the margin because the costs are also increasing. Today fuel costs — I mean the coal costs are increasing, the chemical costs are increasing. We see that we should be able to — I mean, have a good margin to the extent of EBITDA levels in exports to the extent of about 14% to 15% and in domestic, it will little remain under pressure in single-digit.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay. And this would be more heavy on the exports?

Updeep Singh Chatrath — President and Chief Executive Officer

Yes. Yes, this is what we plan to, yeah.

Niraj Mansingka — White Pine Investment Management — Analyst

So you’re talking about 14%-15% EBITDA margin on the home textiles once utilization picks up?

Updeep Singh Chatrath — President and Chief Executive Officer

Yes.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay, great. And sir, last question is on the PV Yarn. I think others have also asked and he has also answered still been harping on that topic. Do you see PV yarn prices have been impacted because of slowdown or do you see just discontinued margins for the next six months or one year?

Updeep Singh Chatrath — President and Chief Executive Officer

I think PV yarn prices in the coming months may see little bit of correction, not that much. But, that has been a good segment over the last one quarter or so, even little more than that. So we don’t seem too much of pressure on that, but yes, there will be some pressure, at least.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay, sir. Last question, you said that there is almost 10% of cotton demand is finding it’s way polyester and viscose. If that would be the case, then we would continue to see high utilization for the PV yarn side, is that right assumption?

Updeep Singh Chatrath — President and Chief Executive Officer

Yes.

Niraj Mansingka — White Pine Investment Management — Analyst

Okay, got it. Thank you, sir.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome.

Saket Kapoor — Kapoor and Company — Analyst

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead. Yeah. Namaskar, sir and thank you for this opportunity. Sir, firstly, sir, if we take the cyclical nature of the business, where are we in midst of the cyclicality that needs to be factored with the yarn prices, with cotton and the other component and how are we incubated from the vagaries of the cyclicality playing adversely on the business environment.

Updeep Singh Chatrath — President and Chief Executive Officer

See, you mean a cyclical industry?

Saket Kapoor — Kapoor and Company — Analyst

Yes, sir. Yes.

Updeep Singh Chatrath — President and Chief Executive Officer

So, textile business is really cyclical worldwide. So, as far as we are concerned, we are looking into this based on couple of things, one, our product mix. That is why if you see we have a product mix both in cotton and good base and higher base even in synthetics. So this is one I would say mitigation in terms of cyclical nature because sometimes — I mean It’s not that always both the product line would go down. So, this is our assumption and this is what we have seen even in the pandemic. That is number one in terms of the fiber substrate.

Now in terms of the product, yarn, that is in case, for example, we have been earlier mostly concentrated towards weaving. Pandemic taught us to go a little bit more towards on the knitting side as well. So, today we have balanced our product mix of yarn in terms of raw material, both for knitting and weaving and we have a created our capacity in terms of what you call the flexibility, in terms of interchaning the two product mix. So, that is another way of mitigating this risk.

Third, also in terms of export and domestic market, see earlier we were almost, I think over the years we have been at about 30% or little less of exports. Now pandemic and thereafter, today our export percentage has increased and there we have fixed the capacities with the flexibility. That this much of capacities are for that for domestic and this much for export and the balance we have given the flexibility to our teams to work on. So this is a third flexibility we have created in terms of the market, domestic, and export.

The fourth one is the market outside India. That is rather which continents, which countries we are serving and with what product mix. So these are a few flexibilities we have created within the company so that we are insulated to the extent possible on the cyclical nature of this business.

Saket Kapoor — Kapoor and Company — Analyst

Right, sir. And sir, currently taking into account the high cotton prices, they are bound to correct going forward. So, that will have a rippling effect also on the yarn prices and the spreading and then the destocking nature, as the cycle plays on the downward. So, sir what would be — what would be our take on how are we going to manage the downtrend — that may come in a quarter — or because of 2 times going forward.

Updeep Singh Chatrath — President and Chief Executive Officer

Yeah, that’s a good question. In the sense that, as I’ve said before, when the prices go up, so dyed yarn prices, they follow a steady path. Same would be the case in case when the prices come down because as — I mean as being different from grey, because grey is something which happens immediate. In case of dyed, there are long-term orders and there are commitments even to the brand and of the brand. So in that case, the impact would be there, but it won’t be that steep so it takes time to bring it down. So, for that we are prepared to, I mean, both in terms of our raw materials as well as in terms of our market. So, it is a little different than grey yarns.

Saket Kapoor — Kapoor and Company — Analyst

Right, sir. One more point, if I may ask. What has been the amount of growth there benefit which we — benefit from the government, which we factored for this year and how much is still receivable? Are we holding onto any credit position?

Updeep Singh Chatrath — President and Chief Executive Officer

So okay. So, just to give you answer that, if you remember that RoDTEP, the government added cotton in the RoDTEP, which was earlier not there and in synthetic, the government dropped the RoDTEP benefit. So, overall in operating income, we must be factoring around maybe 20 crores – 25 crores on account of RoDTEP benefit. Now RoDTEP is 100% converted into the scrips. So we have done, actually, we all started selling the scrip and there was a demand also. But there was always a discount part on the on RoDTEPs. So, the discount was earlier holding at around 18% which got reduced to around 14% to 15% which has been already factored into the number. So, as we get the scrips, we are — actually now, it is a seamless process online on the portal, so as we are realizing the scrips, we are selling the scrips.

Operator

Thank you, Mr. Kapoor. May we request that you return to the question queue for follow-up questions. Thank you. The next question is from the line of Samarth Singh from TPS Capital. Please go ahead.

Samarth Singh — TPS Capital — Analyst

Thank you for the opportunity. I just had one question. Do you have any commentary on the effect of the economic crisis in Sri Lanka on the Indian textile industry and our company.

Updeep Singh Chatrath — President and Chief Executive Officer

Okay. So the crisis in the Sri Lanka because Sri Lanka is one of the big customers from Indian textile industry for apparel business. So do we see? Yes, there would be some impact, but I think that won’t be too large to impact the whole industry itself. So basically, maybe some sectors, which are catering definitely to apparel, because that is more of on the apparel side with 2 giants present in Sri Lanka for the apparel business. There could be some impact, but not to that large extent and that I think that would be tied over very soon. I don’t expect too much of impact of that on our industry, on our company as well.

Samarth Singh — TPS Capital — Analyst

Would there be any benefit on the apparel side for Indian player?

Updeep Singh Chatrath — President and Chief Executive Officer

See for Indian apparels, yes, there could be benefit, but then we have to — I mean scale up on our garmenting. Basically Sri Lanka is the garmenter. So we need to scale up our capacities and efficiencies on the garmenting to get all the benefits, what we can achieve from this situation in Sri Lanka and I don’t know what could be a time lag in case of garmenting to ramp up these capacities.

Samarth Singh — TPS Capital — Analyst

Appreciate it. Thank you so much.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome.

Operator

Thank you. The next question is from the line of Amit Agarwal, Individual Investor. Please go ahead.

Amit Agarwal — Individual Investor — Analyst

Good afternoon, sir. My question is regarding the Nesterra brand. So if I’m right, this is catering to the consumers and not to the store owners. So how is this brand shaping up and is there any expansion in the margins, because of creating your own brand and who are we competing with in this particular segment? Thank you.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome. So on this, I would say that yes in Nesterra is a cut service brand where we are catering to the retailers. We are not directly going to the consumers, so it is at the retail point. So, today we have reached a retail points of almost 300 retailers and we are slowly progressing because here you need, lot many of collections and SKUs. So, we have ramped up that and over the last 6 months, we have added almost 150 retailers in our fold. So, we see that this brand, today we have reached the service of almost say 300 — I would say 400 meters to 500 meters a day. So, we expect this to ramp up to plus thousand in the very near future with adding of more what you call SKUs and the collections.

Amit Agarwal — Individual Investor — Analyst

Do you think there is an — scope of expansion of margins because of trading on brand?

Updeep Singh Chatrath — President and Chief Executive Officer

Yes, there is, but then at the same time there is a cost involved. So, we are going little cautious on that, but definitely, yes, there is an expansion of what we call, the profitability based on the brand. But that would come a little later because we can’t expect a brand to perform well within a one year or two years of service.

Amit Agarwal — Individual Investor — Analyst

So, the consumer doesn’t know the brand. For consumer, he’s just buying the cloth, whereas the store owners that were asking for the Nesterra brand, if I’m right?

Updeep Singh Chatrath — President and Chief Executive Officer

No, here the — See, that is what I’m saying. To create consumer awareness, we need to invest in brand in terms of advertising as well. So, today we have done that in little limited way. But as it picks up, we will be going aggressive in the market. So it is a consumer — there has to be a pool of brand. While you go to a store, I was asked, there is a Nesterra. So I would say, as of now 30% to 40% is that and 60% is what retailer sells as Nesterra.

Amit Agarwal — Individual Investor — Analyst

And are there any other brands in the market right now because —

Updeep Singh Chatrath — President and Chief Executive Officer

So here we are at — we have — I mean positioned ourselves in one of the higher-end brands. Otherwise, if you go to market, this market is more on the unorganized sector. So here we have couple of good brands whom we are competing with.

Amit Agarwal — Individual Investor — Analyst

And my second question is regarding the cotton prices and the yarn industry. Sir, I have been reading the articles where you mentioned that the yarn industry is shutting down because of the high cotton price in the last two- three months.

Updeep Singh Chatrath — President and Chief Executive Officer

Right.

Amit Agarwal — Individual Investor — Analyst

Your conference is saying there is hardly an impact. Could you throw the exact reason or we supposed to find a pinch in the coming months if not right now?

Updeep Singh Chatrath — President and Chief Executive Officer

No, I’ll tell you. The industry you’re saying shutting down the spindles where they are grey spindles basically, number one. These are small mills because if you see the cotton prices today require a higher level of working capital as well. So, these are the small mills on grey and now on grey, the spreads have really come down. So I would say, in our case being dyed, it will take little more time because when it went up, if you recall last year. Last year, cotton — grey cotton yarn people earned EBITDA to the level of — I mean, more than 20%. Right? So because they went very steep. Now it has come down also very steeply.

So, there is a little bit of lag between the dyed and the grey. And because dyed goes basically to the brands and brands have a continuity of business and they are long-term business, long-term orders. So, I think at least for this quarter, we don’t see too much of a downside on our cotton melange sales.

Amit Agarwal — Individual Investor — Analyst

But in the future, it can happen? It will have an impact.

Updeep Singh Chatrath — President and Chief Executive Officer

This is a cyclical industry, I mean these cotton prices nobody nobody could predict. I wish we could.

Amit Agarwal — Individual Investor — Analyst

And my last question is regarding the PET bottles. Sir, two-three conferences back you said the PET bottles were running very high, prices of the PET bottles. Have they come down and what is the future of this particular segment, as people are shifting more from PET bottles to the glass bottles?

Bipeen Walame — Whole Time Director and Chief Financial Officer

Good question on this. I’ll tell you. The PET bottles today are hovering in the range of INR55 to INR56, a kilogram. See they are not come down too much as was the earlier expectation. The highest I think, PET bottles have touched, I think in the low INR70s. INR60 – INR65 to INR72, I think. Today they are ranging between INR55. So I think this is some sort of a stabilized rate as far as I see in next one or two months.

As regards to your question on the availability of PET bottles. Yes, definitely there is little bit decrease but on the other hand, the good thing is number one, the collection rate in India is quite good. If you compare to some other countries, our collection rate is good, so that we are able to collect more bottles. Even if there is less percentage of — I mean there is a reduced demand or reduced usage of PET bottles. The collection being good, we are able to maintain the deliveries, number one. Number two, Government of India has taken a good step that they have allowed 20% of the capacity as import for individual manufacturers for imported flakes, washed flakes. So that would help us to contain these prices and to sustain these productions.

Amit Agarwal — Individual Investor — Analyst

So, sir, is this a one-off project or are going to new expansion in the near future because — and how is this industry doing in the rest of the world?

Updeep Singh Chatrath — President and Chief Executive Officer

See, in the rest of the world, I would say, to answer your question. First, I answer your second question. The rest of the world if you look at, except India and China. I mean this part of Asia, rest of the world, there is a premium on the product. If you go to U.S., the recycled fibre sales are almost $0.10 more than the fresh fibre. Whereas in India and China, there is other way around. So, I think it will take some time as the sustainability this — I mean the awareness of sustainability and that demand of sustainable product, little bit of value addition increases, I think we will also arrive there but it will take us some time, it won’t happen immediately. So there will be a difference between recycled product and fresh product with recycled being little higher, but not immediately. I don’t expect this to happen in the near future. As regards, the expansion of this project is concerned, today we don’t envisage anything because this is catering to our own requirement. So, our requirement is almost a similar thing. So, I don’t think we see any expansion in this in a very near future.

Amit Agarwal — Individual Investor — Analyst

Okay. Okay. Thank you, sir. Thank you.

Updeep Singh Chatrath — President and Chief Executive Officer

Welcome.

Operator

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

Saket Kapoor — Kapoor and Company — Analyst

Yeah. Thank you, sir, for this opportunity again. Sir, for the RoDTEP part, which you were answering, INR25 crore was our receivables and we have received certificate of INR25 crores for the same and now they are renewable at a discount of 15%. This is what sir —

Updeep Singh Chatrath — President and Chief Executive Officer

No. Let me just repeat it. See, it’s not like this. What happens in case of us, that we are having a significant exports, so we keep on getting RoDTEP scrips. Okay, as you know, and everybody knows now. As I mentioned to you, if you asked me the last quarter or last year, whatever RoDTEP we have recognized, which is around INR20 crores. Okay? Next question I answer is that, the rates for the cotton and the synthetics. So, there is a cap on which we can actually go on a higher margin basis also. There is a limit to which we can go up to RoDTEP. Then I just gave you second situation when we are getting the scrips and when we tried to sell the scrips because we need to encash those scrips. If we don’t have any other import and we don’t have any import to utilize those scrips. There, we see a discount, and then that discount gets accounted for. Is it clear, sir?

Saket Kapoor — Kapoor and Company — Analyst

No, sir. The discount part only I missed the link of —

Bipeen Walame — Whole Time Director and Chief Financial Officer

Okay, okay. The discount part is what happens, that whenever you try to sell the scrips considering the market demand-supply situation that there is a — see if you remember that RoDTEP came suddenly in the month of September, then it started coming in December and March. So the demand was lower and the supply was higher. Demand-Supply anomaly created the discount. If you remember in EMEA, this EMEA has got resume consumed in two RoDTEP. So EMEA has also we used to get the discount of 4% to 5%. So in RoDTEP, that discount got expanded. So, I said that we consider the receivable after considering the discount.

Saket Kapoor — Kapoor and Company — Analyst

And what is the maturity period of this certificate, if you allow them to —

Bipeen Walame — Whole Time Director and Chief Financial Officer

You are — you can immediately sell them. For us, it is immediately sell and I think the maturity period of utilization will be 6 months to 1 year.

Saket Kapoor — Kapoor and Company — Analyst

No, what is the maturity —

Bipeen Walame — Whole Time Director and Chief Financial Officer

The buyer acutally has to utilize it.

Saket Kapoor — Kapoor and Company — Analyst

No, I was just trying to understand, hold to maturity period is how much? Suppose, we don’t have to meet the requirement to redeem —

Bipeen Walame — Whole Time Director and Chief Financial Officer

We don’t — we don’t keep it with us, we resell in the market.

Saket Kapoor — Kapoor and Company — Analyst

That is correct, sir. But if we held it to maturity, what is the maturity period or how long —

Bipeen Walame — Whole Time Director and Chief Financial Officer

Okay. So there is no held to maturity because what happens is that as we start getting the export, we keep on getting generating the scrips. The moment we generated it, If we don’t have a requirement, we sell them.

Saket Kapoor — Kapoor and Company — Analyst

Okay.

Bipeen Walame — Whole Time Director and Chief Financial Officer

Why we will hold it? Because that’s the cash. We encash the cash, right?

Saket Kapoor — Kapoor and Company — Analyst

Yes, sir and I was just trying to understand, who is benefiting from the 15% arbitrage?

Bipeen Walame — Whole Time Director and Chief Financial Officer

No. No. Okay. So the benefit — the beneficiary in that arbitrage is the importer of the machinery or somebody who wants to import and use the RoDTEP.

Saket Kapoor — Kapoor and Company — Analyst

Okay.

Bipeen Walame — Whole Time Director and Chief Financial Officer

He is the beneficiary.

Saket Kapoor — Kapoor and Company — Analyst

Whoever is doing CapEx?

Bipeen Walame — Whole Time Director and Chief Financial Officer

Yes, you’re right.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And sir is this company’s working capital requirement which you are mentioning, just a previous — the answer to the previous question that the working capital requirement has gone up significantly.

Bipeen Walame — Whole Time Director and Chief Financial Officer

No, it has not gone significantly. What I’ve said is that, it has not gone significantly, if you got that. So what actually happened is that last year if you see, overall our turnover was also less. In current year, the actually the utilization has gone up, our revenue has gone up quite substantially. So working capital, I said that working capital, we still have the margin. We have a headroom of more than 25%, so our — within our sanction. So working capital utilization on an average increased on account of the cotton purchase. So even if I hold a number of days same because of the cotton prices went up, the utilization has gone up. Does it answer your question, sir?

Saket Kapoor — Kapoor and Company — Analyst

Yes. And the net debt level, if you could give us and what —

Bipeen Walame — Whole Time Director and Chief Financial Officer

900 — Okay. The term loan plus working capital together is around INR920 crores to INR930 crores — 940 crores. We took both, term loan plus working capital.

Saket Kapoor — Kapoor and Company — Analyst

For FY ’23, what is the guidance, how much it will be when the CapEx comes out?

Bipeen Walame — Whole Time Director and Chief Financial Officer

No, that CapEx — Okay. So FY ’23, also it will remain in the same zone because we also have the repayments. We — I also have the lined up repayment of INR130 crores.

Saket Kapoor — Kapoor and Company — Analyst

Thank you. Thank you, sir, for all the answers.

Operator

Okay —

Bipeen Walame — Whole Time Director and Chief Financial Officer

Thank you so much.

Operator

Thank you.

Updeep Singh Chatrath — President and Chief Executive Officer

So, I can conclude now. Thank you very much, ladies and gentlemen, for taking this time off and also asking very pertinent questions. I really appreciate each of your questions, and I hope that my team and myself have been able to answer all the questions. With this, I wish you a great rest of the rest of almost 3 quarters ahead for this year and wish you all the best and your families, good health. Thank you very much for joining us today.

Operator

[Operator Closing Remarks]