Good morning everyone, and a very warm welcome to the Arvind Limited earnings call for the quarter and full year ended March 2026. The financial results for the quarter and related presentations were uploaded to our website.

Hope you had enough time to go through it. Before we begin the call, let me introduce the leadership team that I have with me.

We have Mr. Punit Lalbhai, the Vice Chairman; Mr.

Jayesh Shah, Whole-Time Director and Group CFO; Mr. Nigam Shah, Executive Director and CFO of Arvind Limited; Mr.

Gurpreet Singh Bhatia, CEO and President of AMD Business. I'm very happy to inform you that the journey of Arvind Limited has taken a defining turn to become a truly global organization.

We intend to continue this in the foreseeable future and expand our horizons beyond the boundaries of India, while being deeply rooted in our place of origin. We remain optimistic and upbeat about India's long-term growth story, and are fully aligned to capture the opportunities in the world's largest population center.

Over the long term, our well-diversified business model with an equal contribution between exports and domestic markets positions us strongly and helps us insulate the company from macroeconomic volatility. Walking all of you back down the memory lane, let me remind you all that we have started the financial year 2025-26 with a severe disruption in trade due to imposition of tariff by USA.

However, Arvind has started the fiscal year 2025-26 on a stable footing, proactively absorbing tariff-related pressures, and realigning its businesses to navigate the challenging macro environment. A disciplined approach led the foundation for a strong second half, highlighting the agility of our operating platform.

Despite multifront disruptions, we remain focused on execution excellence, cost optimization, and deepening customer engagements, enabling us to deliver consistent growth. Coming to the operational performance during the quarter and the full year, we witnessed strong volume growth across all core segments during the quarter, in line with our guidance.

Denim volume grew by 19% to 17 million meters, with full year volume at 60 million meters, up 15%. Woven fabric grew by 5% to 35 million meters, taking full year volume to an all-time high of 136 million meters.

The garmenting business continued its strong trajectory, crossing 10 million mark for the third consecutive quarter in a row. For the full year, the volume reached 42 million pieces, which is up 12%.

Advanced Materials delivered a robust performance, with growth in line with our guidance of 18% to 20% growth in this year. This was supported by a favorable product mix, operating leverage, and reversal of earlier expense provisions made during the year to take care of tariff.

EBITDA margins improved by 200 basis points in Quarter 4. On a full year basis, the business continues to maintain a sustainable margin profile of 15%.

Coming to the financial performance, for Quarter 4, consolidated revenue and EBITDA stood at ₹2,553 crores and ₹327 crores, reflecting a growth of 15% and 19% respectively. For the full year, revenue grew by 12% to ₹9,303 crores, with an EBITDA of ₹1,061 crore and a margin of 11.4%.

Important in this to note that the EBITDA for the first time has crossed ₹1,000 crore mark. The textile segment reported revenue was at ₹6,897 crore for the year, up 12% with EBITDA margin of 10.3%.

The garmenting segments delivered strong growth of 21%, with revenue crossing ₹2,000 crore mark. Advanced Materials division reported a record performance during the quarter and year, with a revenue of ₹1,839 crores, up 21% and EBITDA margin of 15.1%.

Full year profit after tax grew by 21% to ₹444 crores, with return on capital employed improving by 120 basis points to an all-time high of 14%. The number is 15.7% if we remove capital work in progress from the calculations.

Net debt during the similar period reduced by ₹112 crores to reach ₹1,172 crores, supported by a strong free cash generation. In terms of capital allocation and balance sheet, we continue to maintain a disciplined approach to capital allocation.

During the year, we invested approximately ₹486 crores in growth capex. Our balance sheet has strengthened meaningfully over the past few years, driven by a prudent capital structure, rationalized debt profile, and consistent free cash generation.

In line with our dividend policy, the board has recommended a dividend of ₹4.5 per share, translating into a payout of 28.5% of profit after tax reported. This is subject to shareholders' approval.

During the previous month, we have announced the acquisition of 61% stake in US-based Dalco GFT through our wholly owned subsidiary of Arvind Advanced Materials Limited, marking our entry into world's largest technical textile market. This is a strategically important step, strengthening our presence in specialized nonwoven segment and expanding our global footprint.

The acquisition is expected to be margin and EPS accretive from the first year. In subsequent years, it is expected to unlock meaningful synergies over time.

Looking ahead, the global environment remains uncertain, with ongoing disruptions, including evolving situations in the Middle East, impacting input costs, supply chains, and currency movements. While the near-term risk persists, demand across textile and Advanced Materials remains resilient, and key sourcing destination continues to be stable for now.

We are entering FY '27 with a healthy order book position and a strong inquiry pipeline. We expect to maintain the growth momentum, to grow at a double-digit, with high double-digit growth in Advanced Materials and mid-teens growth in garments.

However, there may be disruptions in demand, especially in second half, due to increase in inflation and other global uncertainties impacting discretionary consumption. Input costs across product lines have risen sharply, which may exert margin pressure in first half of FY '27.

While the margin recovery is expected in second half, this is subject to easing of geopolitical tensions. We will continue to invest in growth, with planned capex of ₹450 to ₹500 crores in FY '27.

This will be funded through internal accruals. At the same time, we remain focused on aligning stakeholders' interest and enhancing long-term returns.

Please note that the outlook that I have given earlier does not include the financial impact of acquisition of Dalco and its consolidation into Arvind's books. We will provide a detailed update on that in coming quarter.

Let me close by reiterating that the company is well positioned to navigate the current environment and deliver sustained profitable growth. Our diversified portfolio, disciplined execution, and capital allocation underpin the margin improvement and stronger return ratios, and superior cash generation capability, while managing near-term uncertainties with agility.

We remain firmly focused on long-term value creation through targeted investments, portfolio premiumization, and balance sheet strengthening. Thank you, we can now open the floor for questions.

Thank you very much. We will now begin with the question and answer session.

Anyone who wishes to ask a question may press star and one on the touchtone 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. Before we proceed, ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participants in the question queue, we request you to kindly limit your questions to two per participant.

If you have a follow-up question, please rejoin the queue again. We will now wait for a moment while the question queue assembles.

Hi, thank you for the opportunity, and congratulations on the good set of numbers. A couple of questions.

First on the garmenting business, if you could just help us understand what are the growth levers in the garmenting business which gives us the confidence that we'll be able to achieve the mid-teens kind of growth. Like is it on the back of the recent capacity expansion that we've done, the new client additions that we are getting, better utilization, realization?

How should one look at the realizations going ahead, because if we see the last two, three years, the realizations were not growing, but this year there's been an increase in the realizations, high single-digit kind of realizations growth. What would be the growth levers in the garmenting business which gives us this confidence?

A second part to this question is if you could also highlight what is the current margins that we are making in the garmenting division, and is there any cost or operational efficiencies that we are able to bring in in the garmenting side of business which can help improve the margins? That's my first question.

Sure, thank you for the question. The growth in garmenting is almost automatic.

The demand to buy from India is very high with pretty much every global buyer needing to de-risk Bangladesh and Vietnam, particularly. India will always be a preferred destination to source garments.

The challenge is India is a supply-constrained geography. Our garment industry is not growing because we don't have capacities.

The moment we create capacities, growth will come. We don't have to really work very hard to fill order books as far as garments is concerned.

If you're a good garmenter with integrated capabilities, diversified product portfolio like us, the order book should not be the hard part. The growth will come from the capacities we've already created.

We have moved capacities from high 40 million range to mid-50s already. This year we should be somewhere in that ballpark.

For us, garmenting is just a vertical integration. It's the same customers that are buying fabric from us that want to now, sort of be having a one-stop-shop type of situation with us.

It gives them a lot of ease of operation, not having to connect the dots between multiple suppliers. As far as realizations go, it is, of course, product mix linked.

We have knits, which is slightly lower realization, and then we have shirts and denim which have higher realizations. Even within product category, depends on [cough] excuse me, the product mix.

Realization will be product mix led. I would say things are on track, and we should be able to grow this in the high teens going forward.

As far as margin is concerned, because we are still in investment mode, there are certain factories that are at lower margins, there are certain factories that are higher margins. I would say our average blended margin is in the high single digits EBITDA, which over a period of time we will want to get into the mid-teens.

That's the journey that is still going to take a couple of years to go through. We are continuing to further expand into garments.

That's one of the ways in which we will grow—Advanced Materials, garment expansion, and now third pillar of globalization of footprint. I think these would be the avenues that will allow us to grow.

Sir, is there any labor issue that we would be facing because of the inflation and the West Asia war-related issues at our garmenting facility right now, or do we foresee that in the near term?

See, garmenting business is people management mostly. It is always about managing people.

Our strategy is to automate so that we can have the highest productivity per person, and we are constantly innovating and automating to ensure that happens. Meanwhile, we have to have very people-friendly HR practices that lead to higher retention of skilled manpower.

These are all day-to-day sort of activities as a garment manufacturer. I don't see anything specific to the West Asia conflict that is going to impact the garmenting industry.

If inflation goes up, people will be in more need of stickiness of jobs. I don't see that as a negative.

Overall labor management is the main sort of value driver in garments. If you are able to have high productivity, if you are able to have good retention, then the business becomes successful.

Understood. My second question is on the AMD division.

What are the—

Arvind Advanced Materials Limited, now it's no longer a division, it's a company. Sorry to interrupt you.

Please continue with the question.

Sure. What could be the lead indicators that one should be assessing the Advanced Material side of thing?

Like from order book perspective, should we be looking at order book visibility that should give us confidence in that particular segment of yours? That and how long as a tenure do we have the order book visibility for, like is it for 3 months, 6 months that we are sure that we have an order book visibility, or is it for the longer period?

How many new client additions would we be doing on a year-to-year basis? If you could also give some guidance on the EBITDA side of thing, that now that the Dalco division will be integrated into us, how should we look at the EBITDA margins?

Because this quarter itself, we've seen a 200 bps improvement. Can we expect that to be on a steady-state basis?

Again, I understand that it is because of the product mix driven by that, but going forward, what should be a steady-state EBITDA margin for the AMD division? See,

this is a rather complex question, and Arvind Advanced Materials is a complex business, the answer varies from product category to product category. The way to think about it is that we have the visibility to grow at 18% to 20%.

The margin is likely to be around 15% to 16%. That's the sort of range that we are targeting.

Quarter in, quarter out, some quarters there could be higher, some quarters there could be lower, just as a result of product mix. It's basically 18% to 20% growth and 15% EBITDA margin, with hopefully a ROCE that will keep growing to very interesting levels.

With Dalco, Dalco is a margin-accretive acquisition. It is also in the high teens in terms of EBITDA margin, it doesn't dilute our margin profile, but it increases our avenues of growth and our global reach.

That's how you should look at the business.

Understood. Thank you.

I'll join back the queue for follow-ups.

Thanks for the opportunity. Sir, my first question is broader on macro terms.

Considering the current geopolitical tension and the volatile environment, how the industry is realigning? If you can call out certain specific measures which the industry as a whole are taking to mitigate such risk?

That's a good question. I think this is the question on all of our minds as well.

So [laughter] it seems like to deliver a good performance, we're having to work harder and harder, and in that context, I would like to place on record the fantastic job the team has done in navigating what already was a very challenging environment in Q4. As far as the year that we have just entered is concerned, it's a tale of two halves, if you ask me.

The first half is very deeply characterized by both strong demand, but very, very erratically and fast increasing input costs. Cotton has gone up, yarn has also gone up disproportionately.

All petroleum-backed inputs like energy, we use a lot of gas for our textile processing, that's gone up. Dyes and chemicals have gone up.

Polymers have gone up, polyesters, nylons, elastanes, all have gone up. It's a question of being able to, sort of manage in this inflationary environment when we have already locked in long-term prices.

We've also locked in a good chunk of raw material, we are able to manage, but there is going to be margin pressure in the first half. The second half, the worry is will this robust demand environment actually hold?

If the oil stays at between $100 and $120 a barrel, it is conceivable that people will not have enough disposable income to drive the demand that we are seeing today. All of this needs to be factored in, and it's too early to have an answer on some of these.

I think what we have shown is that our business model is quite resilient. We've seen shock after shock since COVID.

We've seen the Ukraine war, then we have seen tariffs, now we are seeing this environment. In all these environments, we've found a way.

I believe in our team that they will continue to find a way. Yes, there might be some quarters where some of these pressures lead to a slightly muted performance.

There may be some quarters where we will soldier through and deliver very, very good set of numbers. I think overall, medium term, our thesis around our growth model, pushing garments, pushing Advanced Materials, driving efficiency, automation, digitization, globalizing our manufacturing footprint, all of these, I think, is a winning strategy.

I'm very bullish about, sort of the medium term, but the short term is characterized by a lot of these challenges that are uncertain by the very nature. We don't have enough information to predict the future, and it's challenging to manage day to day, but the team is doing a good job.

That's how I'd like to respond to this question.

Sir, just a small follow-up to this. When we see the first half of FY '26 vis-a-vis second half, we have relative lower base on annualized basis.

When the management is seeing some margin pressure into the first half, it is more to do with the annualized comparison, or you are sensing pressure compared to the first half of FY '26?

No, I think I'm just seeing pressure. Now compared to FY '26, I think we should still be okay.

We shouldn't be worse than '26. That's at least my feeling sitting early in '27.

There will be some margin pressure. My observations are always indexed to what could have been or what was in the very recent past.

I think compared to Q4, we are facing more margin pressure, and maybe Q2 will face even more margin pressure. Compared to last year, maybe there will be other factors that will, sort of allow us to do not worse than last year, at least.

Understood. Just last follow-up on one bookkeeping question.

Sir, can you elaborate the current installed capacity into the each subsegment and how you are looking to expand over next two to three odd years?

I'm sorry, can you repeat that?

Can you, sir, just highlight what are the current installed capacity into the each subsegment, be it your denim, woven, or garmenting, and how you are trying to expand over next two to three odd years considering the capex plan which we are having?

Fabric will expand marginally. Maybe 5%, 7% expansion in capacity is coming.

After a very long time, we have gone ahead and we've done some expansion in our knitting capacity because our verticalization percentage is quite high in knits. If we want to grow, we also will need to grow the fabric.

We are putting in fabrics this year. We are growing denim in an asset-light model a little bit because the demand environment is very good.

The last bit of sort of capacity that we had added in wovens, maybe two years ago, is now almost reaching 100%, there could be some volume growth there as well. On the fabric side, it is sort of very strategic volume growth.

In garments, we will grow capacity by about 20% this year. Advanced Materials also, we are putting in capexes in the India business to grow at 18% to 20%, and, of course, Dalco also has capex plans to grow in the mid-teens.

Understood. That's it from my side.

Thanks a lot.

Thank you for the opportunity, and congratulations on strong set of numbers. Just wanted to understand, it's been a fantastic year amid headwinds for you.

Could you help us understand what went right for us, any strategic-level initiatives that are sustainable that could cushion us from the coming headwind of input cost inflation that is coming in? Just some strategic-level initiatives that could highlight the strength of strengthening business model.

That's my first question.

I think, I would see this performance as a validation of our strategy. We've always believed we can perform well, I think it's just following through on that belief and delivering what we can.

Of course, the results could have been significantly better had it not been for some of those headwinds. The headwinds do have an impact, but one must have a business model that is resilient to to these impacts.

I think the growth of Advanced Materials is one such factor which is less affected by, some of these these global headwinds. There is the fact that we have focused a lot on on efficiency and cost takeout and and and productivity.

I think some of those those efforts are are are kicking in. We are also trying to have, a manufacturing footprint that takes advantage of pockets of opportunity and and relative competitive advantage from a geopolitical perspective.

Products starting to go from Egypt is one such example. Having, a factory in in the US now with the Dalco acquisition is is there.

We have a very diversified business portfolio. We have, within fabric, we have wovens, denim, knits.

We have the vertically integrated piece around garments. We have a ₹1,000 crore B2C, ₹1,000 crore-plus B2C business, which is totally domestic-focused, and the domestic market was very strong last year.

We have, the Advanced Materials business. When something is hit disproportionately, something else, hopefully is making up the slack.

Having this diversified portfolio and the focus on efficiency, responsiveness, and productivity, I think have have seen the last year have have been big success factors in the in the performance we've delivered last year. I feel this, along with globalization of manufacturing footprint, should also be an advantage in, the new uncertainties that we are seeing as we go into the new year.

Understood. Sir, second question is on input cost inflation that you've been highlighting that first half could have input cost inflation and could impact margins.

We just had to understand how big that hit could be at this point in time. It can change with time, I understand, but how garments, Advanced Materials, fabrics are getting impacted and what should we really expect in terms of impact going forward in first half?

As you only mentioned, it's rather early in the piece, and a lot of the moves have still to be made. Very difficult to give a very definite number, but as of now, I can see easily 1%, 1.5% of EBITDA coming off because of input costs in H1.

Volume growth will be very strong, but margin may come off by 1%, 1.5%. If demand environment stays strong, we might have an opportunity to make up in H2.

If the conflict keeps going on, there is a chance that demand might not be very strong. I think it's just too much uncertainty to give a very definite answer.

Rest assured, the team is equipped to sort of see these complexities through and still deliver a decent performance. Sir,

just to follow up on this, how is rupee depreciation and how can it help us?

It definitely helps. It will partially offset many of these input costs.

If rupee depreciation wasn't there, then we'd be in a very challenging environment because input costs have risen very sharply.

Are we getting price hikes from customers on existing contracts?

Price hike is always difficult, and it always takes time because what you've just finalized, you can't go back and revise. You'll have to wait for the next order to get the price hike.

There's always a lag effect, and the price hike is never 1:1. There is always somebody more desperate than you, especially in fashion textiles where there is a lot of capacity globally that has got created over the last five years.

We are getting price hikes, but they take time, and it's not 1:1. I think volume growth, our cost focus, currency depreciation will all be sort of used in concert to try and mitigate the impacts on input costs.

We have levers to pull. It's just a question of timing.

Given time, we can recover, but then demand needs to be strong in the second half.

One more question if I can squeeze in, on debt—

Jayesh, do you have anything to add on input costs? Yeah.

I think more than the input cost, there was this discussion around whether we will do better or worse than what you did in the last year first half. I think contextually, as you rightly said, Punit, we are seeing what we could have done, and we are seeing a 1%, 1.5% going down from there in terms of margin.

It may not be that percentage bad when you compare it with the H1 of the last year.

Taken, sir. That I understand, sir.

Just last question on debt. Given the acquisition, the debt has almost doubled on a consolidated basis.

How do you plan to reduce it going forward, and any timelines that you would like to give?

Yes. Prerna, as we had spoken during the call a week ago on the acquisition, we are clear that we would like to bring down the debt back to where we were and at a comfortable level.

Just that the opportunity was so compelling that we had to finance immediately with the debt. We are working on a plan, but our philosophy, as and we have been consistently following that, we would bring down the debt over a few years.

It may be one or maybe two years, and we are working on various levers to try and bring it down. It's a bit too early to say what we will do, but maybe when we meet again in the first quarter results, hopefully we will have a very clear idea as to how we are going to do.

Also, Prerna, the $50 million debt which is on the Dalco parent is completely non-recourse to India. To that extent, the risk on the India balance sheet is not to the full extent of the debt we've taken.

Understood, sir. Thank you, sir, and best wishes for this upcoming challenging year again.

Thank you.

Hi. Good morning, and congratulations on continued strong set of numbers that you've been delivering.

My first question, sir, would be on Advanced Materials side. We've recorded around 19-odd percent growth FY '26.

We continue to guide for 18% to 20-odd percent. If you could give some color subsegment-wise, what's kind of driving this strong growth, and your visibility, what it is, and thanks.

Morning, this is Gurpreet. As you would know, we've got three key segments in our business: Human Protection, Composites, and Industrial, with a very diversified portfolio meeting several end-use applications and solutions.

We are seeing growth across all the three segments. There is not a particular segment which is growing faster than the other.

When we look at Human Protection, it's also growing in high teens and a huge opportunity in the coming year to expand and continue the growth through regional expansion into some of the underrepresented geographies. Also, hunting for new customers is a big drive on the Human Protection side, and we are moving in that direction over the work done over the last six, eight months.

Innovation is also a critical pillar where we have now developed new products for defense and other critical applications to drive growth on the HP side. In Industrial, which is predominantly our filtration business and where this acquisition also comes, we have new investments that we made over the last year for more advanced technologies for high-temperature filtration applications, and also have a significant capex expansion plan for growth this year to again drive an 18% to 22% kind of growth in Industrial.

Composites is again diverse, from mobility to building and construction to renewables. We are seeing good demand on the renewable side, which is the wind energy sector.

Building and construction, again, is seeing very robust demand from Europe and the US market. In mobility, where our presence with Indian Railways we've got now reasonably good outlook for the next 18, 24 months with an order book from our Indian Railway customers.

Overall, pretty secular in nature across all the segments. Your question on margins, we did see a margin expansion in Quarter 4 by about 200 basis points.

As Punit said, anywhere from 15% to 16% is what we retain as an aspiration for the business. Overall, driving an 18%, 20% revenue growth with an equitable, profitable EBITDA growth is clearly the objective.

Sir, just a follow-up here on HP. You said that you are increasing presence on underrepresented geographies.

Would it mean that we are also increasing our domestic defense kind of share here?

Yes. It's a clear direction that we have to support the India growth story and make it more self-reliant in all the sectors that we operate in, whether it's infrastructure build or filtration solutions for emissions in the Indian market, and also our defense services.

That's a critical segment, and we have now not only expanded our footprint with the Indian Army, but also expanded to the other forces and paramilitary forces. We are now going up the ladder to reduce and help the Indian forces to reduce import dependence of certain high-value and high-solution products to enable indigenization, working with some of the core agencies in the Indian ecosystem and conclusively coming to solutions for the Indian forces.

Defense clearly is a critical growth sector for us.

Great. That's helpful.

As I said, Europe, on a geography point of view, is a critical geographic expansion where, over the last couple of months, we've focused on the GTM, the business development activity, and have a very good pipeline getting established to build the business in Europe over the next two years. Of course, as you would know, the UK, EU FTAs are key enablers to support our investments and strategic focus in these geographies.

Sure. Thanks.

Just on this, Punit, just wanted to get your sense on where we are in terms of implementation of these FTAs?

We are pretty advanced, so, hopefully, UK should happen any moment and EU should be towards the end of the year is what the current consensus is. Of course, this is a complex, bureaucratic process.

There's no doubt on whether; it is only when that is the question. Our sources tell us that this would be the timeline that we should see this happen.

How are you seeing your responses from EU clients, especially EU, UK clients currently on the textile side? Extremely good.

See, the challenge there is our garment capacity. They will want to buy way more [laughter] from us than we have capacity to offer.

In fact, we're starting a studio in London, where our entire collection will be available, and we are sort of tying up with a lot of partner facilities. We have plenty of fabric capacity.

We have a capacity-constrained environment in garmenting, because our existing customers also want to grow with us in garmenting, they get first preference. Then when we have to offer capacities to new clients in these FTA geographies, we're trying to partner and build virtual vertical supply chains, and that will be fueled by this new studio that we're creating.

Sir, just lastly, we have on fabric side been operating at more than the rated capacity, which we kind of disclose. How are we managing to grow there, and what's your growth outlook on the fabric side of business?

How will we fulfill that, given that we have been operating at close to—

This year, we are expanding capacities in fabrics too, especially in knits, where we are expanding capacity quite significantly. We're almost doubling, because that's the efficient way to build capacity.

You can't have half a line of production. Knits will have significant capacity, almost 60% more than what we are having right now.

In denim, we are doing an asset-light model. A lot of debottlenecking capexes have been happening and are happening, machine speeds go up, we add some finishing technology, we can buy undifferentiated product from third parties and then value add on it.

All those opportunities are there. We are adding printing capacity as well.

Capacity will grow this time on fabric as well.

So 5% to 7% would be the growth to go forward with on external things?

Yes, I think that's a good number to keep in mind.

Thank you. Thanks a lot, and all the best.

Thank you.

Hi, good morning, sir, and congratulations for good set of numbers. I just have questions on the garments.

As you have rightly pointed out that the capacity is constrained in India, and we are having the EU and the UK FTAs, and lot of clients are looking towards the sourcing and de-risking from Bangladesh, right? What I wanted to understand is when you talk about the partnership factory, what's the timeline that you're expecting in this?

Just wanted to also understand the timeline for our internal capacity and the garment shipping numbers going forward.

Garment shipping numbers will go from low 40 million to above 50 million. We should add more than 10 million full garments this year.

We should also grow significantly in our essentials business, that will also grow by 20% this year, which is another 35 million. Of course, it's undergarments, so much smaller in value, but that should also cross 40 million this year.

Capacity addition in our own garmenting is very very strong, which is a ongoing process. Every year we've been investing behind.

Then partner facilities, we already partner with quite a few strategic vendors, some of which we've been working for decades. We will dial up our engagement with these people, and maybe add one or two more relationships like that to be able to cater to the additional demand once these FTAs are in force.

Perfect. On this, sir, as you have rightly said that right now we are also partnering with our other players.

I just wanted to understand this is specifically only in India. When we talk about the diversification, are we also looking at geographical diversification?

Might be partnering up with partnership factories in Bangladesh, Vietnam, or something like that?

We already have strong partnerships in both Sri Lanka and Bangladesh. These are historic partnerships.

We are adding one new partnership in Bangladesh, and we are adding a new partnership in Egypt. Advanced Materials, we have leased a factory, and that's working quite well in Egypt already.

Three, four cycles of orders have been dispatched from there. We are adding, for fashion textiles, particularly denim, some partnership factories in Egypt.

Sir, on this, when we say that as we are an integrated player, and I rightly understand that we are also having partnership factories in Bangladesh. Just on this, when we talk about garments, specifically do we think that we are going to have our own facilities as well in Bangladesh going in the future?

Because after this FTA is done, I think so still the cost-effectiveness of Bangladesh because of operating cost, still Indian textile will be 5% to 7% higher FOB. What do you think about that?

Are we thinking of adding new facilities in Bangladesh, internally, not with partnerships?

We want to go with an asset-light approach, investment-light approach.

Sure.

We're trying to go in with an asset-light or investment-light model, where we invest, but invest in very strategic debottlenecking assets or capability enhancement or quality control equipment. We are investing in people.

That's the form of our investment. Should that succeed, then we can think of dialing up investment as we go forward.

If it works well with an investment-light approach, we can just do more of it, right? I think, in a sense, the next 18 months will teach us a lot as to what final mode or form should this partnership approach take.

We will evolve as we keep learning. We are quite excited by the opportunities.

We are finding good meeting of the minds with many people whom we can come together with and grow our business. Managing risk by being investment light is also an important criteria going forward, because not all geographies are easy to operate in with owned assets.

We have to use

other people's capabilities to manage those environments.

Just a question on this, sir. Just a clarification on capacity of garment and the shipping number.

We are saying that by end of FY '27, we should have approximately 60 million the capacity and 50 million of shipping is what you're saying?

No. End of '27, our capacities, we should be in the mid-50 million range in terms of our manufacturing capability.

By the end of the year, the capacity should reach 60 million.

Okay. You are saying that it is going to be 55 to 60, and then we are going to have the shipping numbers that's going to be above of 50.

Got it. Perfect.

Thank you so much, sir, and all the best for your future endeavors. You're doing great.

Thank you.

Thank you for the opportunity. Sir, just continuing with the previous participant's question.

Do we see any upside risk in the Human Protection segment in growth numbers given that West Asian crisis is there, countries are ramping up their defense budget, and we have the EU and the UK FTAs in place? This kind of balances out if there are any downside growth risk in the garments or the textile division, sir?

This is my first question, sir.

I think the demand environment in Human Protection is good. There is also a capacity ramp-up that is there ongoing.

You can't really do much more beyond capacity. I think we will be at full capacity.

There's an efficiency unlock piece also that will enhance capacities. Whatever opportunity we get to dial up our capacity utilizations, we will ensure that we take it.

You're right in pointing out that all Advanced Materials sales are not as discretionary as fashion textiles is. To that extent, there we have buffers against demand destruction that are relatively stronger compared to fashion textiles.

We do expect the demand for this to be more robust compared to even in the face of inflationary environment, and especially since defense and conflict is going up in the world. Europe needs to indigenize its defense.

The Middle East is procuring more. Yes, demand environment, I don't expect in Human Protection to be weak.

Just to add, demand realization into revenue in Human Protection takes some time because of the whole certification and validation process. While we may see an upsurge of global demand on defense, for us to realize that would take a couple of months to go through that process.

Sir, my second question is on the margin. You alluded to that in the first half, there may be some 100 to 150 basis point shave-off in the first half.

Is this a net-off of the cost-efficiency measures do we take, or we have some efficiency measures which kind of negates this hike in the costs?

Sorry, come again? I couldn't quite understand that.

Sir, you alluded to the thing on margins dilution of around 100 basis points in the first half. Is this a net-off after you taking the cost-efficiency measures which already you are working on, or there are some efficiencies measures which kind of buffers this or negates this 100 basis points cost inflation?

I'm taking 100 basis points from what it could have been and what the current trajectory was when we locked in the orders basically. Compared to that, it shouldn't be 1% from last year's numbers.

Okay. Sir, my last question is on the capex.

The ₹500 crore capex mentioned earlier in the call, does it include the Dalco capex as well, or is it ex of Dalco?

Basically, this is the ongoing capex that we are doing in the non-Dalco part of the business. Dalco is over and above that.

That we believe should be around ₹50 crores in Dalco, and which makes a total of ₹550 crores?

Something like that. Maybe a little less, little more depending on the environment and opportunity set.

We can sort of ratchet that up or down.

Sure, sir. Thank you.

These were my questions, sir. Thank you.

Good morning. Two questions.

One is in Advanced Material, we also had a tie-up with a Japanese company for carbon fiber. Can you throw some more light on that?

Second one is on our sustainable measures like renewable energy, we are shifting to that, and recycling of garments, which I think has a very bright future in the coming years.

Can you— Japanese joint venture is not in carbon fiber. It is in this needle-punched nonwoven space for filtration materials.

We make the roll goods for hot gas filtration with the Japanese joint venture. Textile-to-textile recycling is a big theme.

We are participating in that theme. We already have a good product range there, and that's only going to go up going forward.

This renewable energy, we had tied up for some briquettes and then one solar venture was there. How is it—

Yes,

there is one

wind-solar hybrid venture. As of now, if there are no surprises, it should come at the end of Q2.

Okay. This briquettes, we are doing something on briquettes?

That also should come towards the end of Q2. It's a new experimental technology, fingers crossed that it'll work.

If it'll work, then it'll dramatically speed up our decarbonization journey. It's a partnership with Peak Ventures for a technology called torrefaction.

We will reach 80% renewable electricity with this last PPA that we are signing,

which

will come in, hopefully, end of Q2.

Okay. Thank you.

Thank you.

Am I audible?

Yes.

Thank you, Punit, for giving the opportunity, and congrats for the good set of numbers in a turbulent period. Just to understand the current garment verticalization we are operating in considering the expansions in the R&G underway, what kind of scope we are having for a long-term vision of 2030, because we are not expanding majorly in fabrics and we are trying to verticalize more, and that could be increasing our margins.

What run rate we are currently on and what is our expectation?

No, I think medium-term plan is, even with this 60 million, we are 300 million meters of fabric, and 60 million garments is still a very small percentage. There is a lot of opportunity to grow garmenting.

We're not saying we won't grow fabrics. We will grow fabric slower.

This year is case in point where we've seen the need to grow knits because our verticality has crossed 50%, 55% in knits. To keep all our customers serviced and then to sort of prepare for EU and UK business, we have chosen to also expand our fabrics there.

We will take such decisions when it is strategically right for us to do that, but the percentage of verticalization should keep going up, and hopefully by 2030, we reach 30%, 35% verticalization. Then, some more virtual verticals as well so that we're not very dependent on fabric nomination-based business, which is a risk.

Okay. Secondly, there is a lot of opportunities are coming from the European side.

There is a mandate from the European textile associations to have the textile-to-textile recycling. Are we doing anything currently in the chemical side of processes or any other processes we are actually indulging in?

We're doing all three. We are doing mechanical, we are doing chemical, and we're doing hybrid also.

We have a constellation of partners that we work with that have several technologies for different types of polymers and for cellulose as well. We are quite active in this space, and we are working with a lot of these innovators to be the first point of sort of piloting, doing capsule collections, proving the concept, giving them feedback on the fiber.

We are quite active here.

Currently, have we invested anything in the textile-to-textile area recycling?

No. We have created one joint venture with PurFi, which is still not operational in India for a variety of reasons, but beyond that also, we work with a lot of innovators on a buy-and-sell sort of basis.

Our work actually starts where their work ends, right? They are an input into our manufacturing.

Unless there is something that we can value add, we would much rather like to work with multiple people and buy their product.

Mostly it is pre-consumer side you are focusing as of now?

We are also looking at post-consumer.

Okay. Is there any timeline you have set to scale up that joint venture into a bigger scale?

Because globally some of the companies in the European side, they are actually developing capacity to the tune of nearly 1 million ton. Like that, the demand is coming from the brands to have more recycled fiber to be in their stream.

Is it the opportunity we are also seeking? We would

look to partner with this kind of ecosystem rather than It's not our core business to be producing fiber. We will evaluate all options, but my first response is we would like to partner with this ecosystem and be an early adopter for all these technologies.

Okay. Sir, lastly, recently there was some labor unrest happened in the Noida side, and the UP government has set some higher price for the labors.

Are we also revising anything on the Varanasi side plant?

No, we will comply with all the labor regulations, we operate in multiple states, we go above and beyond compliance with labor norms and good employment practices. We don't see any challenge.

In that case, the wage inflations are to be accounted for the R&G going forward?

That we do every year in our budgeting. It is a fact in India that India is going to be a high cost inflation country, high wage inflation country.

That's built into our model.

Okay. Thank you.

Thanks a lot.

Hi, sir. Thanks for giving me the opportunity, and congratulation on good set of numbers.

My first question is on the outlook on the export trajectory of the AMD, given that the export currently around 60%, 65% of AMD revenue. In particular, do you expect this proportion to rise?

This is my first question.

The Advanced Materials business, which is now called AAML, We are pretty happy with the current domestic to export ratio, and it'll kind of remain constant there because India for us is also growing, and India is a very important market where we would like to continue to operate at with deep penetration. In fact, the largest right to win for us is our home market, we don't want to underserve it.

I think 60%, 65% export for the moment is the right export figure. The rest will be in India.

Okay. Sir, how much is from the US?

US would be about between 35% and 40%.

Okay. Sir, my second question on the Human Protection segment.

Could you please give a bifurcation like what percentage of order or the revenue come from defense versus industrial safety, given that India's defense indigenization push?

Defense currently contributes to about 15% of our Human Protection business, and as I shared, there are several programs to diversify through the forces and also paramilitary forces, and I see this anywhere within Human Protection. If you look at the total Advanced Materials business, it'll be about 8% to 10%.

Okay. Sir, just one last question, a bookkeeping question.

A recent disclosure indicated pledge of security with Bajaj Finance. In addition, the existing promoter pledge is around 7%, 8%.

Could you please elaborate or provide the rationale behind this incremental pledging and offer clarity on the broader pledge trajectory?

There is no— Can I answer?

Yes, sir.

There is no extra pledge by the promoters that has been done. In fact, pledge levels over last two years have been brought down.

I'm

not sure. I can check and talk to you separately, but we are very clear that there has not been any extra pledge.

Maybe it has shifted from one to another, but there is no extra pledge that the promoters have done.

Okay. Great, sir.

Thank you. Thank you so much.

Once again, thank you everyone for joining today's call. We trust that the discussion has addressed most of your questions.

Should anything remain unanswered, or if any queries arise going forward, please do not hesitate to reach out to me and my colleague, Himanshu. We are just a phone call or an email away.

Looking forward to engaging with you in upcoming events of the company. Thank you, and wish you a good day ahead.