Vardhman Textiles Limited

Neeraj Jain

JOINT MANAGING DIRECTOR, VARDHMAN TEXTILES LIMITED

Rajeev Thapar

CFO, VARDHMAN TEXTILES LIMITED

Mukesh Bansal

SENIOR VICE PRESIDENT, FABRIC MARKETING, VARDHMAN TEXTILES LIMITED

Varun Malhotra

HEAD OF FINANCE, VARDHMAN TEXTILES LIMITED

Abhishek Nigam

BATLIVALA & KARANI

INR105,000,

Specifically, to the Indian situation, the prices came down in India also. We saw a high of almost INR105,000, INR106,000 a candy, and from there we came down to as on today almost INR80,000 to INR83,000 a cand

INR106,000

, to the Indian situation, the prices came down in India also. We saw a high of almost INR105,000, INR106,000 a candy, and from there we came down to as on today almost INR80,000 to INR83,000 a candy. So, the

INR80,000

high of almost INR105,000, INR106,000 a candy, and from there we came down to as on today almost INR80,000 to INR83,000 a candy. So, the drop of almost 25%, 30%, whereas, the drop internationally is higher.

INR83,000

ost INR105,000, INR106,000 a candy, and from there we came down to as on today almost INR80,000 to INR83,000 a candy. So, the drop of almost 25%, 30%, whereas, the drop internationally is higher. So, over the

25%

om there we came down to as on today almost INR80,000 to INR83,000 a candy. So, the drop of almost 25%, 30%, whereas, the drop internationally is higher. So, over there we saw from USD1.55 going down t

30%

ere we came down to as on today almost INR80,000 to INR83,000 a candy. So, the drop of almost 25%, 30%, whereas, the drop internationally is higher. So, over there we saw from USD1.55 going down to abo

INR82,000,

is higher. So, over there we saw from USD1.55 going down to about USD0.90. The Indian cotton with INR82,000, INR83,000 today is one of the costliest in the entire world. And in terms of US cents, coming close

70%

.18 to USD0.20 higher than the international prices. There are four countries which covers almost 70%, 80% of the spinning capacity of the world. India, Pakistan, China and Vietnam. Look at the prices

80%

o USD0.20 higher than the international prices. There are four countries which covers almost 70%, 80% of the spinning capacity of the world. India, Pakistan, China and Vietnam. Look at the prices in a

75%

n do in this period, we are still at about USD1.38, and these four countries cover practically at 75%, 80% of the spinning for the entire world. So, as a result, India has a huge disadvantage which c

INR80,000,

han buying cotton at these prices. As a result of that, though, the theoretical prices are almost INR80,000, INR82,000 as of now per candy in India, there's hardly any deal happening. There is neither a buyer

INR82,000

cotton at these prices. As a result of that, though, the theoretical prices are almost INR80,000, INR82,000 as of now per candy in India, there's hardly any deal happening. There is neither a buyer, nor a se

“And in terms of US cents, coming close to about USD1.37, USD1.38, whereas the international cotton available today, the cot loom or the cotton available internationally will be in the range of maybe about, maximum will be in the range of about USD1.20 or so.”

“Look at the prices in all these four countries, the prices of Vardhman Textiles Limited July 25, 2022 raw cotton in China will be close to about, is less than USD1, that is USD0.92 as of now.”

“The Vietnam is the third biggest and the Australian cotton available to them today is a USD0.90, near future will be in range of about maybe USD1.18 to USD1.20.”

“So, on a silver lining, one, the next year crop seems to be good.”

“So, which we expect now the pipeline, the pipeline is in limited therefore.”

“And rather we will require to provide for next quarter also or that can be reversed also?”

“So, the next quarter there is not likely to be any negative loss to that extent or maybe today we have still some puts available to us.”

“But the as far as the negativity is concerned, as of now, I don't think there's any likely to be any negative in the next quarter, if the cotton goes down or those ports become in money, that could be a positive news.”

“And going forward currently in the month of July, do you think, with the prices coming down to INR82,000 to INR83,000, any further increment demand from the export side or not much like?”

“So, I think it's only it looks like maybe only October or November onwards, when the new arrival comes in and physically cotton is available, then only the prices will be aligned to the, aligning more to the overall market.”

Neeraj Jain

62

Monish Ghodke

13

Moderator

8

Abhineet Anand

8

Prerna Jhunjhunwala

7

Sandeep Baid

7

Apurva Sharma

6

Nikhil Agrawal

5

Umesh Jain

3

Mukesh Bansal

3

Neeraj Jain

Ladies and gentlemen, good day and welcome to the Vardhman Textiles Limited Q1 FY’23 Earnings Conference Call, hosted by Batlivala & 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 the conference call, please signal an operator by pressing “*” then “0” on your touch tone phone. Please note, that this conference is being recorded. I now hand the conference over to Mr. Abhishek Nigam from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir. Hi, everyone. Good afternoon. Welcome to the Vardhman Textiles Q1 FY’23 earnings conference call. And from the management team, we are joined today by Mr. Neeraj Jain, who is the Joint Managing Director; Mr. Sushil Jhamb, Director Raw Materials; Mr. Rajeev Thapar, CFO; Mr. Mukesh Bansal, Senior Vice President, Fabric Marketing, and M

Neeraj Jain

Yes. Thank you, Neerajji. Good evening, everyone. On the fabric side, if you look at, the Q1 was sequentially little slower as compared to Q4 last year. Primarily, the reason being, there was inventory correction happening in the western world, primarily in the U.S., wherein we saw a lot of pent-up demand after the lockdown opened during the Q3 and Q4 last year. There were two factors to it. One was that the offices started opening. So, people who were working from home, they had to go to the offices. So, they need newer clothing for the office wear. Whereas in the previous quarters, the demand was more for the clothing that was suitable for work-from-home. So, the brands had higher inventory of casual wear and possibly the lower inventory for more dresses or fabrics. So that was one reason where there was a demand and supply mismatch. The right kind of stuff was not available in the stores. Second is that the logistics tightening that was there before, that started easing out for the

Anil Kumar Sharma

Right. And my second question is at what capacity we are running presently sir in the yarn and fabric?

Neeraj Jain

So, on the spinning side, as I mentioned, we have stocked about 8%, 9% of our capacity, whereas on the fabric side, we are running more than about 80% of our capacity as of now. So, 80%, 85% of capacity is still under existing. So overall capacity utilization is not that bad for us.

Umesh Jain

So, I have two questions. One from an industry perspective, post the ban of Xinjiang cotton, I think that has also become an act from this month itself. From last month and a half year, since the ban is effective, are we seeing some sort of more demand from countries like Bangladesh who are procuring yarn from China? Vardhman Textiles Limited July 25, 2022

Neeraj Jain

Definitely the demand from China…from Bangladesh has been good in the previous quarters. But yes, as on today, I think all parts of the world, everyone is in a wait and watch situation and using their own inventories. So, the overall demand is less even from Bangladesh also, for the last almost, one and a half, two months. That is aligned with the world markets. Sure. So, from a structural perspective, do you think this Xinjiang ban could actually shift the Bangladeshi garment manufacturer to start procuring yarn from India also? I know, I understand Bangladesh is one of the major export partners for Indian yarn manufacturing companies. But that can accelerate from here on? If you look at last two years, the demand from Bangladesh has been quite good. They are expanding in a big way on the garmenting side. At the same time, they are not expanding that big on the spinning side. So, if they continue to do well, by taking a share from China, I'm sure the overall demand for yarn from Bangl