Vardhman Textiles Ltd (NSE: VTL) Q1 2026 Earnings Call dated Jul. 22, 2025
Corporate Participants:
Unidentified Speaker
Varun Malhotra — Head of Finance
Neeraj Jain — Joint Managing Director
Sushil Jhamb — Director, Raw Materials
Rajeev Thapar — Chief Financial Officer
Mukesh Bansal — Head of Fabric Marketing
Sagrika Jain — Executive Director
Analysts:
Unidentified Participant
Roshan Nair — Analyst
Vaishnavi Gurung — Analyst
Riddhesh Gandhi — Analyst
Prerna — Analyst
Falguni Dutta — Analyst
Dinahari Kashyap — Analyst
Laxmi Narayan — Analyst
Vaishnavi — Analyst
Jaya — Analyst
Presentation:
operator
Good day and welcome to the Vardaman Textile Limited Q1FY26 post result earnings conference call hosted by Batliwala and Karani securities India Private Limited. 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 this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Roshan Nair from Batliwala and Karani securities India Private Limited. Thank you. And over to you sir. Sam. Thank you and over to you sir.
Roshan Nair — Analyst
And Mr. Varun Malhotra, head of Finance. Without further ado, I would like to hand over the floor to Mr. Neeraj Jain and Ms. Savarika Jain for their opening remarks post which we can have a Q and A session. Thank you and over to you sir.
Sagrika Jain — Executive Director
Good afternoon everyone. Welcome to the Quarter one earnings call of By Demand Textiles. We have declared the results for this quarter and I’m pleased to share with you that the operational performance has been at par or slightly better than the previous quarter. Of course, excluding some extraordinary items, it continues to be a very challenging period for the spinning industry. Indian cotton is still trading at a premium to international cotton. So it ranged between 80 to 82 cents per pound during this quarter and it has further increased to around $0.85 in July 2025 due to a higher MSP.
And the MSP for the upcoming cotton season has already been announced with an increase of nearly 8% making Indian cotton even more expensive in the future. The CPI has been the largest buyer of Indian cotton. They have bought about 30% of total cotton produced this season. While this definitely improved availability of cotton price remains a challenge. So CCI has increased cotton prices by about 2500-3000 rupees for candy in the past month alone. So this has made Indian cotton amongst the most expensive cotton in the world for if we compare it to other equivalent qualities. As a result, Indian mills have more than doubled their cotton imports.
Imports are expected to reach about 35 to 40 lakh deals in the current cotton season compared to the typical 15 to 18 lakh deals annually. However, unlike competing countries like Bangladesh, Vietnam, Indian spinners on top of this an 11% import duty which puts them at a further disadvantage. During this period. Cotton traded in the range of 66 to 68 cents per pound on the New York features and the landed cost of this is about 78 to 80 cents for mills in Vietnam and Indonesia. If we compare this to our Indian situation, that is about 82 to 83 cents, highlighting a cost disadvantage of about 3 to 4 cents per pound.
And if we put on top of this some quality variation and quality distinctions between Indian and international cotton, this disadvantage further increases. So these are some structural challenges that we are facing in the Indian filling industry. This quarter also began with what is arguably the biggest global trade disruption in the recent times, which is the imposition of new US Tariffs on textile imports. Initially, India appeared to be relatively better positioned compared to China, Bangladesh and Vietnam. However, the policy continues to shift and we are still waiting for the dust to settle and some clarity to prevail.
This has led to a lot of volatility and confusion. As a result, U.S. buyers adopted a more cautious stance, delaying new orders while working on tariff mitigation strategies and adjusting inventory levels amid softening retail demand due to inflationary pressures. So this has led to a visible slowdown in new order placements from the US market during this quarter. That said, because we are a diversified company with a diversified geographic exposure exposure, so this acted as a strong buffer for US Markets such as uk, eu, Japan, South America, Egypt, Australia and our domestic Indian market remain relatively stable, enabling us to maintain healthy capacity utilization.
I’m also pleased to report that our yarn and fabric sales during the quarter remained broadly in line with the corresponding quarter last year, which is an achievement well worth noting amid global headwinds. While external headwinds continue to persist, we remain a long term believer of growth and of the growth potential of this industry. That’s precisely why we’re making significant investments both in spinning and fabric. Our fabric expansion is progressing as per schedule and we can expect it to begin contributing meaningfully to our top line and bottom line from quarter three onwards. Additionally, our capacity expansion in our mechanical recycling plant Renova has successfully begun operations in July and also the expanded capacity of 14,000 Sindhu and Milanjan is now operational.
Thank you and we now open the floor for questions.
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 and two 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 Vaishnavi from Craving Alpha Wealth Fund. Please go ahead. Ms. Vaishnavi, your line has been muted.
Vaishnavi Gurung
Hello.
operator
Yes ma’. Am. Your Line is on mute.
Vaishnavi Gurung
Hello. Hi. Am I audible?
operator
Yes ma’. Am.
Vaishnavi Gurung
Good afternoon Ma’. Am. My first question is regarding the Bangladesh and yarn exports. So considering PTL accounts for approximately 50% of India’s total yarn exports to Bangladesh and Bangladesh currently shifting its yarn imports from India to China, what can be the potential impact of the same and how are we planning to mitigate it?
Neeraj Jain
Yes, from India there’s lots of export of yarn to Bangladesh but for us vardman, it’s about 30, 35% instead of 50% to whatever customer base we have, whatever products we have. We are not finding any shifting of that happening from China or other countries. Rather there’s a challenge and a concern everywhere that since there is a Chinese economy under question mark especially from the Europe and USA so there’s no. Apparently there’s no direct shifting of the yarn sourcing from India to China. As of now I think everyone is looking at what we. Eventually this duty structure would be 1 directly to the USA 2 for the material to be shifted from one country to the other.
I think as of now there is no. Not much of defense happened as of now in the Bangladeshi imports. But yes, we are looking at it carefully and once these things are announced only then we could look at what could be our next course of action. But as of now for Verma I don’t find any difference or any issues as of now.
Vaishnavi Gurung
Sure. Thank you. Thank you Sir, My second question is regarding the tariff that is being imposed on Bangladesh by us.
Neeraj Jain
Hello again. It’s not the tariff which has been imposed. They have only given a statement that the tariff is slightly to be earlier. They said 37% then they said 35%. But I think still the official announcements whether this is applicable, is made applicable or not is yet to be done. But yes, in case it is 35% plus whatever custom duties were there earlier in case it becomes 50% definitely the other countries wherever the tariff would be lower would be a position to take advantage. But I think we’ll have to wait for maybe another some more days before all these, the entire world situation gets cleared on the tariffs.
Vaishnavi Gurung
Right. If I can follow up on that question sir. If the tariffs takes place. So by any chance BTN is planning to take a anticipate any medium term opportunity for BTL by exporting to usa.
Neeraj Jain
USA buys final product which is either garments or home textiles. We are not into that business as of now. Our business is the yarn and the fabric. So we will be supplying the material to all the players who would be doing the garment Exports or the home textiles exports. So for example the Indian government has, if they get the opportunity and they want to export to the USA we will become supplier to these car mentors for Vadma directly. Nothing can be exported to the USA because USA doesn’t do much of garmenting or home textile. They buy the final product only which is not our line.
But yes, if the business increase in India Vardman will have the great opportunity to sell to the Indian players so that the final products could go to Europe.
Vaishnavi Gurung
Okay. Okay, that’s it from my side. Thank you so much for taking my question.
operator
Thank you ma’. Am. The next question is from the line of Ritesh Gandhi from Discovery Capital. Please go ahead.
Riddhesh Gandhi
Hi sir. This difference between Indian cotton and the NT American cotton obviously has been continuing for a number of quarters now. And you know we’ve been cautiously optimistic that it’s going to turn around and obviously it is in our control. Just wanted to understand from your perspective how are there any triggers which you potentially see that can help to rectify this and then bring us back to our normalized margins.
Neeraj Jain
Yeah. So the industry has been requesting the government to announce the duty bill and we understand the textile ministry is trying for the same. So that seems to be the only option as of now.
If they allow the duties to import probably one, we will also be in a position to import these cotton at a, at an international parity. 2 I think that will also bring down some parity for the domestic selling prices also. So government has, government text ministry has to the finance ministry but we are not sure there. It’s been almost two months now and that’s the only way where the downfall cost could come with the could be normalized in India and the industry may start looking at the normal markets again.
Riddhesh Gandhi
But are there any potential implications on the Indian the farmers if they reduce duty and also you know increase case of we, we, we do reach a trade agreement and the duties are removed.
Would it help us? Just wanted to answer these are two separate questions. Sorry.
Neeraj Jain
Two different. Both the aspects are absolutely different.
Riddhesh Gandhi
Yes.
Neeraj Jain
So one, the government has to support the partners that processes through the minimum support price. That in any case and it’s not only for cotton. Wherever the government has committed the minimum support price they’ll keep, keep buying those products from the farmers at the minimum support price and they’ll keep selling in the market at the market related prices. So that’s one mechanism, be it wheat, be it rice, be it cotton, that mechanism is on.
The second is the import of raw cotton duty which was implemented only 20 budget February 21st which was imposed. It was never there before. So we are asking the government to. It’s important for everyone to support the partner so that the cotton crop is there. At the same time industry should be given an opportunity or should be allowed to import if the local prices are higher. So both the mechanism are separate. Farmer is 100% secured by a minimum support price which is what the government is doing through the CPA and there’s not impact on them with the duty.
Riddhesh Gandhi
Got it. So what was. Okay, okay. I’ll come back in soon. Thank you.
operator
Thank you sir. The next question is from the line of Van Salonki from RSCN Ventures. Please go ahead.
Unidentified Participant
Hello sir. Very good sets of numbers. So first of all my question seems on the yarn demand and pricing like. Like our GB margin is increased a little bit from March quarter. So does this mean that the demand has also started going up and is there on ground demand for yarn checking? And also I want to understand the prices of the yarn are they are stable or going up? What kind of scenario is there on ground?
Neeraj Jain
So on the demand side there is not any improvement but at the same time not any deterioration also. So it’s almost on the prices also last almost six months.
The price band has been in the range of -5 either on the demand side or on the pricing side. Our only concern is when the margin is not very good. Second and third quarter which is written to the government the raw material price towards international prices margin can actually come under more.
Unidentified Participant
Okay, sir. And the second one is that our margin also improved very from the market quarter. Because the international issues of the SGA and all may be going to stable. So can we assume that the 14% margin is now range and this can come through the full year or 26.
Neeraj Jain
It’s very difficult because you know today the market is absolutely very dynamic. What happens to the duty structures? What happens? So anything on the spinning side today is the most. Since I think we’ll have to wait for some more time. One uncertainty of tariff. If it is clear, look at how do they want to have the raw material parity in India Going by today’s situation much more volatility, uncertainty as of now for maybe couple of weeks.
Unidentified Participant
Okay. Okay. Thank you sir. I will come for a follow question. Thank you.
operator
Thank you sir. The next question is from the line of Prena from Elara Capital. Please go ahead.
Prerna
Hello. Congratulations sir on improvement in margins. So just wanted to understand how much cotton would you have in inventory now and what would be the Average cost and how much of it would be imported.
Neeraj Jain
But I can only say normally our season starts in the month of October or November and generally we have the cotton up to that period. But this time definitely we have a little longer cotton compared to that both Indian together.
Prerna
Okay, and sir, how much of this will be imported and if you have hedged any, I just wanted to understand that. Okay, okay. And sir, in this Q1Q improvement in gross margins, what really helped actually is it cotton better cotton price in the system or yarn better mix of yarn like more value added yarn being sold? I mean just trying to understand what helped improvement in gross margins on a Q1Q basis.
Neeraj Jain
That can continue at the same time second quarter will have to buy cotton from the market also because for the future requirements. Now that’s the concern that even though the margin was a little better in the first quarter company as a whole, but if this continues the way that most in the last three weeks in India, I’m sure unless the yarn prices improves the margins cannot sustain at these.
Prerna
Okay, okay, understood. And so if I just want to understand the trade right now you’ve spoken that there is lot of. There’s no much clarity but what we hear from the trade community is that you know these tariffs are being asked to be shared by the supply chain partners. Has any of sharing being done by you for your partners or any such thing has come to you which could also strain margins in future.
Neeraj Jain
So on the spinning side we got couple of requests but considering our margins, we could explain to our partners that it’s really not possible for us to share in the spinning fabric side some strategic customers. We have done some small adjustments, but that’s really very, very insignificant compared to the overall size of the organization. It was a one time request. We accepted that since our customer was in trouble. But I can surely say that amount was so small that it’s not likely to impact that particular part is not likely to impact the overall margin going forward.
Prerna
Okay, okay, understood sir. And the last question from my side on power. Has our power cost started coming down because of green investments being done in the last one year and what would they be? What kind of benefit would have been occurred in this quarter for the same?
Neeraj Jain
So there are a couple of aspects of the power. One, we are putting some small capacities on our roofs in the package. That capacity by and large is operational, but that’s a very minuscule capacity. So that advantage has started coming in. We also entered into demand for for with a third party where we created the SPLE and That power has to be supplied to us. That advantage will start coming in maybe next two, next one or two months will start and I think we keep building it up in next one year but as of now that advantage is not coming.
Third is we are also looking at the possibilities for some initiatives within, for our, for our emergency within the operation board spinning under the fabric side. So we’ve taken lots of initiatives on their side also which I think will complete in next six months time. And fourth is we are going in for the biomass based boilers where the cost of steel and the cost of power should come down. Those things will be applicable only once we complete the project which will be closed about a year from today. The major benefit is not coming. Those investment has started happening but the major benefit I think we start doing it next three, four months and it will take us about a year or so to start taking the full benefit of that.
Prerna
Okay, Understood, Understood. And any capex that you see, any cost, incremental cost that has come in P L instead of balance sheet in this, in this quarter.
Neeraj Jain
No, not ready,
Prerna
not really. Okay sir, thank you sir, I’ll come back to the question too again. Thank you.
Neeraj Jain
Yeah,
operator
thank you ma’. Am. The next question is from the line of Falguni Dutta from Mansourovar Financials. Please go ahead.
Falguni Dutta
Yeah, Good evening sir. I missed your answer on the cotton yank spread in absolute terms what are they now and what kind of a decline do you see in the coming quarters?
Neeraj Jain
I saw the, the yarn prices are almost US$3 as of now and it was the same earlier also. So considering this price, considering the New York future of 67, 68 cents, the international spread for cotton yarn is in the range about 85 to 19 years time since the Indian cost is higher. So the Indian spinner margin as of now is close to about 70 cents.
But the way Indian cotton prices have increased last three weeks we have seen the price increasing by almost 2,500 rupees to 3,000 rupees at candy. So I’m sure unless yarn prices improve this will come down by another 8 to 10 cents for, for the young spring.
Falguni Dutta
Okay, and I have one more question which is on what is the landed cost of cotton now for us in India from us
Neeraj Jain
so the landed cost normally US cotton is available on a basis of 1200 to 1300. 1200 to 1400 basis points over New York future. But. But India is importing Indian cotton which is at about 800 to 900 basis points over New York future.
Falguni Dutta
And sir, we would Import. We would be importing cotton from us.
Neeraj Jain
No, we. We are importing from US. We are importing from Australia, we are importing from Brazil also. We are importing from all three countries.
Falguni Dutta
Okay, could you just clarify what was it that you said? It’s 1200 basis points higher versus
Neeraj Jain
68 year cents as of now. So the cotton which we buy from anyone buys it covers the rate cost. It covers the cost, the local transportation, it also covers the commission and the trade partners cost. So US cost generally is available in India on a basis of 1200-1400 basis points over and above in your future.
So the business which is today 68 cents, the cotton will be available in India at about 1881 cents or so.
Falguni Dutta
Okay.
Neeraj Jain
The Brazilian cotton is available on a basis of about 800 basis points. So it’s like 68 in the new York future will be available in India 76 year size.
Falguni Dutta
Okay. Okay. Thank you sir.
operator
Thank you, ma’. Am. To ask a question, please press Star and one now. Participants who wish to ask questions may please press Star and one at this time. Before we take the next question, we would like to remind participants that you may press Star and one to ask questions. The next question is on the line of Prerna from Elara Capital. Please go ahead.
Prerna
Thank you for the opportunity. So just wanted to understand the order book position and the demands in both yarn and fabric businesses given the uncertainty in our customer today.
Neeraj Jain
A little lower. I say not significantly lower, but definitely a little lower because all the banks, they are talking to us for the business. At the same time they want to place the business only once the tariff flat that is there because they are still nobody knows that which country will have what kind of tariffs. So though everyone is talking about the business because the retail sale in US is good and the pipelines are not being built up. So there could be a possibility of a sudden demand rising. But again, since the tariff is not clear which country will have what, so the brands are trying to go only hand to mouth.
So to that extent the future audit position is a little lower compared to what it used to be.
Prerna
Okay. And the same goes for fabric. I mean any different. Okay. And how much would be our exposure for US, Europe and uk? I mean in terms of customer to whom we are supplying to the product that is going to US, Europe and UK So that you know, at least we know that if Europe is uncertain, if US is uncertain, at least UK or Europe could still be better off from our.
Neeraj Jain
There are two parts of the business. One is the direct business with The US brand. Second is the business in India or other countries where we are supplying the armor fabric and they would be doing the US which we would not be knowing. So I can have data only of the our direct sales to the US brands which we know where the material could be going to Vietnam or Bangladesh or wherever they are. The business has been done by us directly with the brand. And then the government is happening anywhere they want, be it India, be it other countries, be it Sri Lanka, be it Bangladesh or be it now.
So I think on the spinning side, whatever export we do, almost 30, 35% is to leave US brands. Finally of course if I’m supplying lots of that material will be going to Vietnam or to Bangladesh. And now the indicate tariffs eventually whatever tariff is for those countries that will be applicable on that, not on us.
Prerna
Correct.
Sagrika Jain
On the fabric side, our sales to us is about 40, 45% of total fabric.
Prerna
Okay, and what would be Europe and uk Will it be balance or exports?
Sagrika Jain
So like I can tell you that it’s, it’s in the single digits as of now. But given the situation, I think we are now making significant, we are taking significant steps to more diversification so that we have a more well balanced portfolio. So US historically has been the largest consumer economy. It’s also been one of the most profitable markets which is why of course we had a lot of opportunity there. That being said, our domestic sales continue to be about 30%. So that is our geographical makeup as of now.
Prerna
Okay. And how has been the demand in India? Whether that also facing some hindrances or it’s still stable, the Indian demand, I.
Neeraj Jain
Don’T think there’s any impact. The local demand is not met. There’s no issue on that.
Prerna
Okay. Is it improving, sir? Just to see whether it’s offsetting some of the impact from us as normal. Okay, thank you so much sir. This clarity, this really is really helpful. All the best, sir.
operator
Thank you. Ma’. Am. The next question is from the line of Dina Kashyap, an individual investor. Please go ahead.
Dinahari Kashyap
Yeah. Hi, thank you for taking my question. I actually have a couple of questions I wanted to ask. Can you help me understand what is the single capacity for 25? Does the 17,000 being completed, the expansion of that included in FY25 and how do we see it? Like what do we see the capacity to be like in FY26 and 27? The second question, sorry I missed earlier because of the audio quality. You an earlier part of participants asked about margin expansion. Like is it likely to continue could you just repeat that or help me understand that? Do we see that trend to continue going forward? Thank you.
Neeraj Jain
So on the spending side our capacity today is close to about 1.3 million members. And there’s not much of expansion happening except some two small projects of 17,18,000 sprinkles each. So but at the same time we are doing some deep automatically on the business side also. So I hope our overall production which used to be about 7001020 tonnes would increase to about 750 tonnes or so. So that means a total of about 6 to 7% growth on the production side. On the sales side. On the fabric side.
Sagrika Jain
On the fabric side we are currently at 145 lakh meters per month process capacity. And in the next three to four years this will go up to about 210, 210 lakh meters per month. So this will include expansion of existing lines and also addition of our new synthetic line which is coming up.
Dinahari Kashyap
Okay, thank you. Just approximate number on FY2627 capacity.
Sagrika Jain
It will be a little difficult to comment on this right now because there are different timelines also it will take some time for us to achieve 100% capacity like 90% plus capacity utilization. So it will be difficult for to give the exact breakup. I think next three to four years is the horizon we are seeing.
Dinahari Kashyap
Okay, understood. And on the margin front, do you see the trend.
Neeraj Jain
I mentioned on the margin side that going by the normal situation probably the margins can continue. So we have two uncertainties as of now in our hand. One is the trade barriers or the trade barriers which we are not sure of but likely to happen and then we. So we’ll have to wait till the time the US decides finally which countries has which kind of a tariff and then accordingly the margins could be differentiated. In India, on the spinning side the margins could actually come down as our cotton prices have started increasing in last two, three weeks and the next year, going by the next year msp the prices are likely to increase only.
So unless the government looks at allowing the cotton to be imported duty free, I think the margins are likely to come down only in this situation. Or the CPI wants to preserve the cotton and sell it at on the international parity which they are not doing as of now. So we are not very sure how their what their policy will be next year. As of now they are selling cotton at a much higher prices than the international prices. So it is the reason the Indian spinners are not in a position to make money. So I think on the spinning side going back to today’s situation is the more challenging to maintain the margin unless the government comes to the rescue where they decide that the local spinner should get the cottonized.
The international parity which is not a case as on today, but company overall.
Sagrika Jain
As we increase investment in the textile part of the business, the margin of the company will certainly improve from our current current.
Dinahari Kashyap
Okay, understood. Thank you so much. Thank you.
operator
Thank you ma’. Am. The next question is from the line of Lakshmi Narayan from Tunga Investment. Please go ahead.
Laxmi Narayan
Thank you. You mentioned that there is a. You know, import and local content prices are different now in case you import price and if you have any get any set of benefit in case you actually export. So is it. I think you you import around 20% of your total yarn. I mean cotton requirement. And in case you actually. Is there a benefit you get in case you exports more.
Neeraj Jain
So in case the normal duty in case of import of cotton is 11%. We can import the cotton under advanced license for export of yarn. But it has two disadvantages. One we lose on the duty drawback which is about 1.9%. And also the ROTC amount is lower than the normal dotted. So in totality the effective duty in case of advanced license will be about 4.5%. But that’s only in case of you want to export the yarn. So our Yarn export is 1/3 of the total production we do. Remaining 2/3 is sold in India both to the market as well as to the fabric division.
So over there for the domestic consumption we can’t import cotton under advanced license. So practically best case scenario for us to import cotton with a concessional duty of 4.4.5% would be about 25, 30% in the best case in value.
Laxmi Narayan
Correct. Got it. This is helpful. And you’re actually adding capacity. And you also talked about capacity utilization. Question is that are you seeing enough demand for the. For the. For the yarn and usually what is the organic. You know what kind of growth you are actually expecting from an Yan output which you can actually sell in the market.
Neeraj Jain
There’s absolutely no issues in terms of the demand of the yarn. It’s reasonably good. And we never had the issue for selling of material in the yarn market. So is there enough demand to that extent?
Laxmi Narayan
Because what I also hear is that there are suboptimal units that are willing to close down or they are unable to run it because of power cost. Availability of manpowers like availability of raw material. Is that are you taking market share from smaller players who are will be sub 2 lakhs, spindles, etc.
Neeraj Jain
So there are different reports which are compiled by the industry, different organizations, different associations. We understand as of now that the total last few two and a half years, almost nine, nine and a half million spindles have been stopped permanently, especially the smaller ones. So the effective spindle available in India today is estimated, it was earlier about 54,55 million spindles, which now is estimated close to about 44,45 million spindles. But these are all industry estimates. There is no accounting or a government data which supports this. But yes, the studies done by the private players or by the different associations.
I think the information, information seems to be quite reliable and good that In India almost 9 and a half 10 million spenders have stopped permanently in last 2, 3 years. As of now the demand in India is not increasing because the export viability, because of the cost etc. Is not increasing. At the same time there is definitely indirect consolidation happening in India. And I think the long term players may get an advantage in the long term.
Laxmi Narayan
One question related to the yarn profitability, how you are actually optimizing on yarn profitability. Have your mix of counts, have actually coarse count, fine count has actually changed and if you can just throw a light on in the last 3 years how your yarn mix has changed towards higher profitable yarn versus lower profitable yarn.
Neeraj Jain
So in terms of count etc, I don’t think there’s any major change happened. Our average count used to be about 28, it is still 27, 28 only. So there’s not much of change in last two, three years. But definitely our customer profile has changed in the last four, five years. Just to give you an idea, we used to have about 8 to 10% business which was the direct brand business, which today is increasingly on the yarn export side, which today is to maybe about 35, 40%. So I think on the customer profile definitely there’s an improvement and all those customers which are coming in, they are bringing in the more value products also.
So that’s the only way that the only area where the margin could still be managed even in this kind of difficult times. But yes, on the overall account wise or the yarn count etc. There’s not really much of change.
Laxmi Narayan
That’s an interesting thing which you talked about brands directly soliciting from you. So in general when you actually sell through the agents versus selling directly to the brand, what is the margin difference you actually get?
Neeraj Jain
So two, three things. One is the margin, second is the stability of the business. So first I’ll Say the stability of the business remains far better because these brands generally will not change the vendor base only for 2, 3, 5 trends. Whereas the public trader every one cent is important and whosoever supplies them one cent half cent cheaper they’ll move on to that. These banks have their lots of issues concerns, audits, ESG and their compliance issues. So normally these brands will never change the vendor base for you know, two, three, five cents or so and so on.
So one is the stability of the business. Two when these brands come in, definitely most of the time the margin will be a little better compared to on the basic products, a little better compared to the case business. But more important third which is more important is that they bring in lots of specialized products be it a particular cotton, be it a particular value added products where the margins can be significantly higher. So I think looking at all these three aspects we try to move more and more towards brand business. The stability of the business, profitability and the overall reliability of the system definitely impact in a big way compared to a trade business.
Laxmi Narayan
Thank you sir. I’ll get back into.
operator
Thank you sir. To ask a question please press Star and one now. Participants who wish to ask questions may please press Star and one at this time. The next question is from the line of from Mansoor Financials. Please go ahead.
Unidentified Participant
Hello. Hello. Yes, I just wanted to check on this. What is our total export of yarn? You said
Neeraj Jain
total export is almost 30 of our total production
Unidentified Participant
30%. And export of fabrics to us was. How much was also mentioned
Sagrika Jain
around 40, 45%.
Unidentified Participant
Okay. And so just wanted just a request. This audio quality for since a few. Quarters is not that great. So if you could just do a bit about it then many repetitive questions can be avoided.
Neeraj Jain
So ask the organizers to look at that because I think it’s organized by bmj. I’ll definitely BMK Russian kindly look at it for the future call.
Unidentified Participant
Okay, thank you sir.
operator
Thank you ma’. Am. The next question is from the line of Vaishnavi from Craving Alpha Wealth Fund. Please go ahead.
Vaishnavi
Hello. Hi sir. Thank you for taking my question again. My question was regarding the capacity utilization utilization for this quarter and any ballpark figure you can give for the estimated capacity utilization for ff.
Neeraj Jain
On the spinning side we were running full capacity. Even on the fabric side we were practically running the full capacity. So there’s not much of expansion except some small expansion on the spinning stage where we feel as and when it comes in we should be in a position to utilize it 100%. The market comes in on the fabric side mentioned was whenever we add new capacity because in the fabric side we do only make to order kind of products. So it may take us maximum 2 to 3/4 before the 100% capacity utilization comes in. Especially this is a period where we will be adding the synthetic fabric also which is a new product product line for us.
Though we are hopeful that we should be in a position to utilize it very fast. But at the same time there’s always some learning curve. We have to understand the business, we have to understand the customers, their requirements and needs. So generally our experience based on the fabric that whenever we add marginal capacity, we are in a position to fully utilize it in about 3 quarters maximum.
Vaishnavi
Sorry to interrupt, sir, I did not get your answer due to audio quality issues. Can you please repeat? The XY yarn and fabric capacity is full.
Neeraj Jain
So the yacht, as of now the compared businesses, the capacity utilization is full. And then future going forward, whatever is on the spinning increase, we will be in a position to utilize in the first month itself. On the fabric side, normally it takes 2 to 3 quarters before we are in a position to utilize full capacity. So generally fabric requires two to three quarters.
Vaishnavi
Okay. And what was the recurring capacity for this quarter?
Neeraj Jain
It was all 100% utilized
Vaishnavi
for both yarn and fabric.
Neeraj Jain
Yeah.
Vaishnavi
Okay. Thank you. Thank you sir.
operator
Thank you. Ma’. Am. The next question is from the line of Nagraj Chandrasekhar from htfo. Please go ahead.
Unidentified Participant
Hi, good evening. Could you give me a sense of.
operator
Sorry to interrupt you, sir. So can you please use your hand?
Unidentified Participant
Hello.
operator
Yes, sir, you are loud and clear now.
Unidentified Participant
Hi, good evening. Could you give me a sense of global cotton prices and your view on how they might be likely to move given global acreage changes, yields in the major cotton exporting countries and given this view that you would make in the next few months or so before November, how would that make your cotton buying decision? Are you likely to buy a lot of inventory from what is available? Are you likely to buy through the year?
Neeraj Jain
So the overall area in the world, there’s not really much of change. And we are likely to look at addition of stocks in the next financial year, in the next cotton season also by half million tonnes to about 1 million tonnes.
So which means the possibility of increasing the cotton price in a big way doesn’t look like possible because there will be net addition of cotton in the bottom stocks unless some dramatic change happens on the consumption side. So going back to this situation, all three agencies that USDA or the other two agencies are showing an increase in the projected increase in the cotton stocks next year. Now on the procurement for us, we are looking at the international markets, we are looking at the domestic markets also. And depending upon whichever makes us more sense commercially, we’ll be buying that.
But just for the information for all of you, normally we used to import about 3 to 4% of our total consumption of cotton from outside India, which this year I think we have already done close to about 20% or so. And unless the Indian prices come down, we may continue to buy more imported cottons.
Unidentified Participant
Understood. Thank you.
operator
Thank you, sir. The next question is from the line of Lakshmi Narayan from Tunga Investment. Please go ahead.
Laxmi Narayan
Thanks again. I just want to understand how do you, what is your. How do you look at profitability on various segments, yarn, fabric and other. You know, because some, some of them look at cash profit, some of them look at EBITDA small of them look at EBITDA per spindle for yarn. I just want to understand how as an organization they will look at. How do you define the unit of profitability in these things.
Neeraj Jain
So for us we look at EBITDA per spender per shift and we also look at EBITDA to sales as a percentage and EBITDA to capital employed. These are the three terms which is used for the spinning business, for the fabric business, ETA is EBITDA per meter, EBITDA percentage to save and EBITDA percentage to the capital import.
Laxmi Narayan
Got it. Good. And if you look at EBITA percentage, how it has actually moved in the last five years.
Neeraj Jain
So it used to be in the range of about five rupees of spindle shift as a benchmark it is still in the range of about five rupees per spindle per shift.
Laxmi Narayan
Okay, okay.
Neeraj Jain
It is still in the range of 3 to 4 rupees for the value added or 5 rupees for the value added product. For the basic products, definitely it is much lower. But EBITDA as a percentage to sale used to be about 14, 15% in the stem business which as of now is in the range of about 10% or so.
Laxmi Narayan
And the EBITDA per spindle for the branded business would be, you know, much higher than the five rupees.
Neeraj Jain
No, not from the five rupees from the normal, from the trade related business.
Laxmi Narayan
Sorry, from the. Sorry, I didn’t hear it.
Neeraj Jain
From the normal trade related business it will be higher. So five businesses, including the brand businesses, etc. Etc. But otherwise if you go by the basic products today there will be hardy and data the basic products.
Laxmi Narayan
This is very Helpful, sir. Thank you so much.
operator
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is from the line of Jaya from Valuequest. Please go ahead.
Jaya
Hi, good evening, sir. Hello. Am I audible?
operator
Yes.
Jaya
I just wanted to ask. And how it has changed over the past couple years. So it is a rather large. I just want to understand a bit more about that.
operator
Sorry to interrupt you, sir. Your voice is very low. Can you please use your handset?
Jaya
Sir, I am on my handset. I just wanted to ask a bit about the power and fuel expenses for the business in Hydro. Right. And how it has been for this last quarters.
Neeraj Jain
Sorry, I’m not clear on the question.
Jaya
Yeah, I just wanted to understand more on the power and expenses for the business for the quarter and for FY25s
Neeraj Jain
for power. I already mentioned that there is some small advantage which has come to us by the internal solar power we had on a rate of. But the major advantages of power will be available and start coming in next one quarter or so and it will take us maybe about one and a half years to have the full advantage of whatever initiatives have been taken till now.
We are further looking at some more arrangements and agreements to be done so that our power cost keeps coming down. So I think every quarter you will find some improvement on the power cost for next one month and a half years.
Jaya
Got it. Thank you, sir.
operator
Thank you, sir. The next question is from the line of Monish Gorky from HDFC Mutual Funds. Please go ahead.
Unidentified Participant
Sir, could you share Average realization per kilogram for yarn and for fabric per meter in Q1?
Neeraj Jain
Normally international parity is $3 for a 30 count. LG average realization in this period.
Unidentified Participant
Okay, and sir, you said the YAN margins were sent in Q1, so what were the fabric margins?
Sagrika Jain
17 to 18%. It’s usually around 17 to 18%.
Unidentified Participant
Okay.
Neeraj Jain
Okay, thank you.
operator
Thank you, sir. Ladies and gentlemen, due to interest of time, that was the last question. I now hand the conference over to the management for closing comments.
Sagrika Jain
Thank you all for your participation and continued trust in the company. We’ve been very transparent about the challenges that we are facing, especially over the last two years, which has been extremely difficult for the textile industry globally. However, within what is controllable, we are fully focused on driving modernization, refining our product mix, launching new product lines, optimizing costs and improving operational efficiency. And the improvements we are seeing in our results are a reflection of these efforts. We believe that policy anomalies and trade barriers will eventually correct. So our goal continues to be to be well prepared so that we can fully capitalize on the opportunities once the external environment improves.
Looking ahead, we remain cautiously optimistic despite certain things in the US market. We are strategically well placed and we will continue to diversify geographically further. And we also are excited and enthusiastic for our new synthetic line which will be upcoming in quarter three. We will continue to focus on profitable growth, agile customer servicing and innovation led offering. Our strong market presence, emphasis on operational efficiency and unleaving commitment to quality will remain the pillars of our business and future growth. Thank you for joining us. See you next time.
operator
Thank you ma’. Am. On behalf of Patliwala and Karani securities India Private Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.