Thank you, team. On behalf of Motilal Oswal Financial Services, I would like to welcome all the participants to Q1 FY '27 conference call of Raymond Lifestyle Limited.

Today, we have with us from the senior management of Raymond Lifestyle: Mr. Satyaki Ghosh, Chief Executive Officer; Mr.

E. C.

Prasad, Chief Financial Officer; and Mr. Sumeet Dayal, Head Investor Relations.

Without taking further time, I would like to hand over the call to Mr. Satyaki Ghosh.

Over to you, sir.

Good afternoon, gentlemen. Thank you for sparing time to come to our results conference call.

Before we discuss our quarterly performance, it is vital to contextualize the current macroeconomic environment. We are operating within a complex landscape marked by both global headwinds and domestic challenges.

Geopolitically, the collapse of peace talks between US and Iran has pushed the Brent crude back to $100 per barrel within this quarter, though it is now settling at $80, exerting pressure on energy costs and freight. Coupled with the anticipated Federal Reserve rate hikes, this has contributed to significant currency volatility.

Domestically, we continue to navigate climactic and inflationary pressures. Persistent El Niño conditions have led to record-breaking heat waves and a potentially subpar monsoon, which we are monitoring closely as a factor in discretionary spending.

On the inflationary front, the RBI has adjusted its FY '27 growth outlook to 6.6% from 6.9% amidst these headwinds, and CPI projections have been revised to 5.1%. Furthermore, we are seeing steady upward pressure on key commodities, including wool and cotton, driven by supply constraints and high demand.

However, against this backdrop, Raymond Lifestyle has demonstrated remarkable resilience. Our strategic focus, anchored in premiumization, casualization, and geographical diversification, is yielding results.

While some segments faced base effects and scale deleveraging, our international growth is gaining strong traction. Specifically, the US-India tariff rationalization and our proactive expansion into the UK and EU markets, helped by the free trade agreements, have created a robust demand recovery in our garmenting segment.

This foundation, combined with a debt-free balance sheet and improved operational efficiencies, allows us to remain agile. We are successfully executing our strategy to capture value in high-potential markets while remaining disciplined in our cost and working capital management.

Let me walk you through how these initiatives are driving our path forward towards sustainable stakeholder value. Let me come to financial and operational highlights.

Top-line: our first quarter FY '27, we recorded a total income of ₹1,560 crore in Q1 FY '27 versus ₹1,475 crore in Q1 FY '26, representing a 6% year-on-year growth. Profitability: our EBITDA for the quarter rose to ₹135 crore, a 11% year-on-year growth, resulting in an improved EBITDA margin of 8.6%, a 40 basis points expansion over the same period last year.

We sustained our debt-free status with a net cash surplus of ₹154 crore in June '26, a marked improvement from a net debt position of ₹55 crore in June '25, which is a ₹209 crore swing within the year. Net working capital days improved by 15 days to net 75 days in Q1 FY '27 versus 90 days in Q1 FY '26.

We continue to optimize our store footprint to enhance store productivity and margins. Since June 2025, we exited 133 underperforming stores and strategically opened 85 new high-yielding locations, bringing our active network to 1,627 stores across 600 cities.

We also have seen high double-digit growth in the more modern channels in branded apparels, like e-com and LFS. As promised in our previous call, we have officially instituted a segment reclassification.

To provide complete transparency on our core operations versus growth bets, we have carved out emerging businesses, comprising of Ethnix by Raymond, Raymond Home, innerwear, sexual wellness, and the newly launched Chairman's Collection, into a standalone reporting segment. This now breaks up our portfolio into five segments: branded textile, branded apparel, which constitutes only the four core brands, garmenting, high-value shirting, and emerging business.

Coming to the segment-wise results: in branded textiles, revenue stood at ₹684 crore in Q1 FY '27 compared to ₹699 crore in the same quarter FY '26, primarily due to the base effect from the previous year. EBITDA was at ₹95 crore in this quarter compared to ₹107 crore in FY '26, with an EBITDA margin of 13.9% due to scale deleverage.

You would remember that last year's first quarter for fabric business was a large quarter because the fourth quarter had IT issues, a large amount of invoicing had moved to the first quarter, especially in the fabric business last year. That is the scale deleverage that we are talking about.

Despite inflationary pressures in this business affecting raw material prices, the overall product mix remained resilient. In branded apparel, revenue grew 4% year-on-year to ₹349 crore, supported by high double-digit growth in LFS and online channels, with casual brands witnessing double-digit growth.

EBITDA for the segment was ₹18 crore with an EBITDA margin of 5.1%, impacted by an adverse channel mix, though partially mitigated by reduced markdowns and store rationalization. Garmenting business: this segment reported a stellar performance, with revenue of ₹296 crore versus ₹197 crore in same quarter last year, reflecting a robust growth of 50% year-on-year.

This growth was driven by strong order book execution following the US-India tariff rationalization and the onboarding of new global clients from Europe and UK. The segment achieved an EBITDA of ₹22 crore versus negative ₹8 crore last year same quarter, with an improved EBITDA margin of 7.3% versus -4.1% last year, which is a 1,100 bps jump.

In high-value cotton shirting, revenue was ₹194 crore compared to ₹205 crore in the same quarter last year on account of the same thing, the base effect of last year. EBITDA for the segment remained steady at ₹19 crore, with an improved EBITDA margin of 9.7% versus 9.1% in the same quarter last year due to favorable product mix despite high raw material costs.

Emerging business, comprising of Ethnix by Raymond, Raymond Home, Park Avenue Innerwear, Chairman's Collection, and sexual wellness: this segment reported a revenue of ₹79 crore, reflecting a growth of 9% year-on-year. We continue to execute our tactical investments in these segments to drive long-term growth.

Moving to our marketing strategy, I'm pleased to highlight the launch of our 2026 Garment Exchange Program, GEP, themed "Refresh Your Style with Perfect Tailoring". This was the key strategic initiative designed to drive brand awareness and retail footfall by offering value-added tailoring services in exchange for pre-owned garments.

The program incentivizes customer engagement, promotes a circular fashion ecosystem, and strengthens the brand's connection with consumers. Furthermore, our loyalty ecosystem now reached 12.4 million members, providing a data-led consumer insight engine to drive repeat visits and lower marketing acquisition costs.

As we navigate through what we have designated as our year of consolidation, Raymond Lifestyle Limited is actively shifting its focus towards restoring sustainable profitability. While we face short-term macroeconomic pressures, such as extreme heat waves domestically and elevated energy, raw material, and freight costs internationally, our four strategic pillars remain highly resilient.

The exceptional growth we witnessed in our garmenting segment this quarter demonstrates the strength of our global positioning as we capture trade tailwinds like the US-India trade deal, leverage our vertical integration, and diversify geographically. As we move forward, our priorities are clear: number one, premiumization, shifting product mix across textile, apparel, and garmenting towards high-value wool, poly-wool blends, and pure linen collections.

Casualization is two, expanding smart casuals, polos, chinos, knits, corduroys, and denims, with fabric innovation like AirShield, FlexTech, TechnoClean across ColorPlus, Parx, and Park Avenue remains a big priority. Number three is GTM expansion, expanding distribution depth for branded textile and apparel through multi-brand outlets and large format store channels.

Geographical diversification is leveraging vertical integration, fabric to garment, and incoming UK-EU FTAs to expand market share in European markets and de-risk export concentration. Holistic marketing, driving sharper brand positioning, differentiated omnichannel campaigns, and prudent media selection to maximize footfalls and brand equity.

We are actively exiting underperforming stores to ensure a lean, highly profitable, and high-performing retail footprint. The growth would come in the next phase of our EBOs.

Future-ready ESG execution remains our commitment. We remain fully on track to achieve our target-driven 2030 ESG goals.

Backed by a structurally debt-free balance sheet and a robust Q1 FY '27, a net cash surplus of ₹154 crore, we possess the operational flexibility required to navigate this consolidated phase. We are entirely committed to making this company deeply consumer-centric and building a resilient, future-ready institution that delivers sustainable value for all our stakeholders.

Thank you, and we are now open for our questions.

Hello, can you hear me?

Yes.

Hi, sir. Good evening.

My question is regarding the RM cost. You highlighted in your opening remarks that you are seeing inflation in the RM cost.

My question is two parts: one, in that fabric and the textile business, are you seeing any input cost pressure and how are you going to tackle it, whether through price hikes or inventory efficiencies? Point number two, I'll follow it up after this question.

Okay. Cost pressures are real in today's world.

I think cost pressures are coming from raw material costs, wool prices are high, flax prices are high, cotton prices are high, the other costs like dyes and chemicals are going up. We have had a two- three-pronged approach to this: number one, for our vendor bases, we have diversified our vendor bases and we have looked for new vendors who are willing to come in and do business with us at more competitive rates.

We have taken trials, we have done samples, and without compromising quality, we have introduced a few new vendors. We've also worked on a little bit of Make in India.

A lot of these components, dyes and chemicals have a lot of Chinese impact on the price. We have tried to work with vendors who can make equivalent products with less Chinese participation and hence can give us better rates on those.

On the freight side, for international especially, as the freight rates went up, we went the opposite direction. We consolidated our vendors, and we tried to work with one or two shipping lines where we gave higher volumes and hence rationalized our freight costs of going international.

We've worked on all of this, plus we are working on a transformation project where we are trying to look at every cost in the organization and trying to find out what is a good cost and what is not such a good cost, and trying to rationalize them. It's like taking a fresh guard, Avinash.

The company is 100 years old, and we are getting ready for the next 100 years. The job here is to take fresh guard, not to hit the ball out of the park and do all the right things, that is what we're trying to do.

We are trying to recalibrate our costs, and some of those have started falling in place. We've been able to control costs largely.

The balance from Q2 onwards, we would start passing on a little bit of price increase because normal inflationary pressures also demand that, and we will pass on as little as possible, but enough to cover our margins.

There shouldn't be any gross margin impact in the textiles part, at least?

Individually in each SBUs, no. If you see a gross margin drop in first quarter 35 bps points, then that is the business mix.

The business mix is last year I said suiting, shirting fabric, which is our highest gross margin, actually the highest gross margin business is suiting because we have dominance there and our products are unique, that had a big quarter. Now, when you have a lesser quarter than that, but you have a bigger quarter actually, and garmenting has grown, garmenting comes at a lower gross margin than suiting domestic.

Garmenting is export. Now, when that mix changes, the gross margin has changed 35 bps.

If you see EBITDA, that has grown 40 basis points. Individually, if you look at SBUs, then gross margin is healthy everywhere.

Okay. Understood.

The second question is regarding the garmenting segment. This quarter, garmenting segment actually has seen a very good top-end and a much better EBITDA growth.

How should we read this going forward? The second part is that given the inflation in this RM cost that you are facing, does the contract offer you a chance where you can take those price hikes within the order book, or how should we see the margin for the segment going forward?

There are advantages and disadvantages. First, let me talk about the order book.

We have closed taking orders for December on 31st July. From 1st August, we have started booking for fourth quarter, that is January onwards, which means my garmenting capacity is full from now till December.

The orders that I take are January onwards. My order book is looking very good if you want that as a forward guidance.

In terms of margins, generally when we take order, we work on a costing module and we take it cost-plus. Ideally it should not affect unless it affects in the next 2-3 months.

Like now I'm taking orders for January, if something dramatic happens in September, October, then that can happen. A lot of our customers in export are long-term customers, and they understand.

If there's a little bit of here and there, we can always adjust, and hence that works. Because our productivity is going up, because the plant utilization is going up because of this full orders, the cost versus last year, we are being able to rationalize.

This year, at least we have that advantage over last year, where our plants are now running at full capacity, and hence the capacity utilization advantages we will get. This year going forward, there is no risk on the margins, and we take it on cost-plus basis in any case, and our order books are looking quite solid.

Okay. Understood.

Assuming that things doesn't worsen from here and given the healthy order books, should we see a historical kind of EBITDA margin in the garmenting segment? FY '24 was the peak phase in FY '24 was the peak in garmenting business, which seen a 10% kind of EBITDA margin.

At least in the next 2 years, if not immediately, can we see the margins inching to those kind of levels?

Avinash, the international headwinds now come without warning. A Truth Social message comes and things change in your life.

It's very, very difficult to predict, but we've hit 7.3% at one change, and if we can keep our combination right, which is the suit versus shirt versus trouser, this combination, the product mix there, then there is no reason why we shouldn't go to double-digit EBITDA, actually. It may not take 2 years.

If it stabilizes, then it can be faster. International business today is very, very, very unpredictable.

That is why I don't want to give a guidance on that, but the endeavor is that. Important piece is that if you sell more shirts, where casualization starts working, and you sell more shirts, it's a much more competitive category and works at a lower margin.

If you can sell enough number of suits and your mix doesn't change, then your margins will come. Good news is, I was recently in US and UK and Europe meeting some of these big customers because this is a very important SBU for me this year, and the suit usage, I felt, is coming back.

The product mix is changing a little bit from 100% pure wool suits to a little bit of poly-wool to manage the cost, but at least the suit-wearing piece is coming back in western world, which I think is a welcome news. That's only a consumer trend; it has not resulted in any orders right now.

Okay. Understood.

The last question, a bookkeeping question. This quarter we have seen the depreciation has gone up by 25%.

How should we see the depreciation and what's the reason for this? Yeah.

Depreciation has two elements to it: one is your lease accounting because of the store depreciation. There was a bit of an error which happened last year, because of which there was a ₹11 crore depreciation which has come in one time.

That won't happen in the quarters going forward. You can actually eliminate ₹11 crore from the overall depreciation.

This quarter's depreciation has a ₹11 crore of one-off?

One-off, yes, yes.

Okay. Understood.

Thanks, I'll join the queue.

Yeah. Hi, thank you for the opportunity.

A couple of questions: firstly, on garmenting. If you can provide more color on the new global customers added during the period and how will be our geographic mix now?

Chetan, thank you for the question. The geographic mix pre-Trump era was 65% US, 10% UK, and about 5-6% Europe.

That was the geographic mix pre-Trump tariffs. During Trump tariffs, the 65% had fallen to 55%.

Firstly our business also went down because you cannot change 10% of your business suddenly in a seasonal item, you have to sample, etc., etc. All the hard work that we did started getting us clients from Europe and UK.

Today, because the US tariffs got rationalized, some of our old clients have come back, but some have still not come back because they placed orders on Vietnam, Cambodia, Turkey, some other factories, and those orders will take time to come back. We have gone back to 59-60% in US, but our UK has moved from 10 to 12, and Europe has moved from 6 to 7-8.

The Europe orders are yet coming, because the FTA has just been announced and it will take about 6 to 9 months to come into force. Right now it is largely inquiries, sample orders, etc.

Not many of them have come through in Europe, but they will come through. UK, some of the bulk orders have started coming through because the FTA is live from 15th July.

The orders came in the first quarter, but most of them are getting made, and Q2 and Q3 you'll see UK material really moving. I'll give you some clients' names: from UK, new client is Next.

Next, Next is a big client in UK. From Europe, I'll give you different countries: from Spain, the biggest departmental store, El Corte Inglés; from Italy, OVS; and from Germany, Carl Gross.

These three are new orders that we are already processing in our plant. Next is from UK.

There's another client from UK called T.M. Lewin, which is a shirting client.

Shirting after this duty rationalization, actually that's why I talked about the mix in the earlier question, shirting, our neighbor countries were very competitive on shirting always. As UK-India enter FTA, and if we get zero tariff, then we can fight these companies, and we are starting to get shirting orders.

T.M. Lewin is coming to us for shirting, which is a good news because that runs different lines in our factory apart from our suiting lines.

Got it, sir. That was helpful.

Secondly, on store addition: so, are we close to completing the rationalization phase of underperforming locations, or should we see any further net store closures during this year? Also on Ethnix, we have seen here net reduction of around 29-30 stores since last June.

We have mentioned that we are focusing on aspirational locations now. What kind of store additions should we expect in Ethnix for the next couple of years?

On the EBO terms, firstly, the store closure is not over. It'll take time.

It does not get over in a quarter, because there are some FOFO stores, there are other partners involved, and everybody has a business to run and commitments to keep, and there are notice periods and such things like that with landlords. It takes time.

There are negotiations that go on. It'll take another 2-3 quarters.

That is why we call this year as the year of consolidation. Our net openings in branded EBO stores will be negative this year.

For example, we've opened 8 stores this quarter, but we've closed 24, there's a net of -16 in branded EBOs. If you look at our TRS format, The Raymond Store format, where the whole company comes in to retail, we are +6 in this quarter.

Ethnix, we have opened 1 store actually, and we've closed 18, you're seeing -17 over there in Ethnix. Ethnix, we will close a few more stores where it is not working.

In Ethnix, the big project is changing the business model a little bit. The business model change is at the top end where you have structured products like sherwanis or bandhgalas, top-end bandhgalas, etc., anything that costs upwards of ₹50,000, let's say sherwanis from ₹75,000 to ₹1 lakh, ₹1.5 lakh, we are going to made-to-measure model from made-to-stock.

Because we feel from a consumer point of view, a person who spends ₹75,000 plus for a sherwani for his shaadi day does not want to wear something that the next dulha can wear. He wants some customization, either in embroidery, or in the color, or in the fabric, or in the collar, or something or the other, and they are willing to wait 14 to 21 days to get their choicest sherwani.

That will go on MTM, because we also have very good MTM exposure, we have garmenting factories, we have the tailor masters, we have the know-how, we'll go there. For more basic products like kurta, kurta sets, bandis, etc., we will go to other channels other than Ethnix EBOs, like we'll go to TRS.

For example, 50 to 100 TRS which are in the shaadi areas of the bazaars, we will start putting these kurtas and the basic products over there, which is no extra cost for anybody in the company, we just place the products and we try to sell from there. We also go on e-commerce.

We have already started on our D2C. Our agreements with the big marketplaces are in the final stages for this product, and it'll go live over there this quarter.

First quarter, we are already live on D2C, and it is starting to see traction. We will start selling in channels other than EBOs to get better ROCE.

To get the full range and the full dulha collection, we will start opening high-impact stores. High-impact stores will be in high-impact territories.

For example, in Bombay, it could be Linking Road, it could be Santa Cruz where shaadi shopping happens, Borivali where it happens, shaadi shopping is a big place is Borivali, and so on and so forth. In other cities also, it will be similar areas where we will try to have flagship stores over there.

It'll be a combination of high-value sales from EBO and higher ROCE sales from other channels, so that we steadily bring the brand towards profitability.

Got it, sir. Thank you and all the best.

Thank you.

Thank you.

Thank you for the opportunity. I just have a few questions.

Could you give brand-wise revenue growth rate rather than segments, as casualization is a strategic pillar, which brand is leading the casual mix shift?

Deepali, we are not able to hear you. If you could just repeat your question, please, and speak up a little bit.

Could you give a brand-wise revenue split rather than segments, as casualization Hello?

Yes, Deepali. If I hear you correctly, you're asking for a brand-wise revenue split, is it?

Yes, sir, and which brand is leading the casual mix shift. Yeah.

Let

let me try and answer you on your question broadly. Our large growth is coming from casual brands.

This quarter, our branded apparel growth is about 4%. Now, the 4% is also because 4% is also because we are closing EBOs, and we lose some sales when you take a transformational journey like that, you start losing that business.

Your growth is coming from e-commerce and LFS as channels. Those are growing in high double-digit.

In fact, in fact, e-commerce is growing high double-digit, and LFS is growing upwards of 25%. That's very, very good.

From the casualization point of view, ColorPlus and Parx, which are our casual brands, are growing at double-digit. Also, the casual part in Park Avenue and Raymond Ready-to-Wear have grown up by 200 bps points over last year.

From about 15-16%, they are all 18% in casualization now within those brands. The problem in this branded apparel business has been this first quarter.

The first quarter has had a 1 month of what is called Adhik Maas in India, where people think that it is not auspicious to buy new things, and you don't have any celebration dates during Adhik Maas. You'll see aftereffect of that that all the celebration dates have gone back by 20-25 days.

For example, Ganpati is mid-September, Durga Puja is mid-October, and Diwali is early November, which means it is at least 25 days delayed, and that purchase did not happen, the summer weddings, the dates were just not there. What happens in this is the more expensive products that we sell, because Raymond largely is a formal brand which is trying to do casualization, our main business is suits, blazers, etc.

In summer months, if there are no shaadis and no celebration dates, the suit business becomes more difficult in terms of offtake. When that happens, value sale drops, margins drop, etc., etc., for us peculiarly.

Our casualization has worked, premium products are selling, but the product mix has been adverse to us for these various reasons. We are very hopeful that in the second half, all those shaadi dates are going to come back, and they're going to come back during winter.

Winter shaadis actually much better than a summer shaadi for our kind of product portfolio, and we think that the festivities which are spread over from Onam to Ganpati to Puja to Diwali are in 4 different months. The festive period is over a longer period than last year, and hence we think purchases would continue to go on.

My guess is that our half two will be very, very strong, but in the first quarter as well, given all these headwinds, we are ahead of our budget phasing, which we had done for the year. We are ahead of last year, and we are doing decent in Q2, we should end up having a very good year, and we would have good casualization, and finally, the premiumization would also happen.

Got it. Sir, when can we expect recovery on the retail side, and also on the export side, what can be projected for upcoming years, if it will be same like Q1 FY '27?

Can't hear you, Deepali, can't understand what you're saying. It's all getting cut.

I'm sorry. Am I audible now?

Okay. Sir, I am asking when we can expect recovery on the retail side?

Retail side, the TRS stores, which are also part of retail, are +5, +6%, and the EBOs are +3% like-to-like. You can understand that we are closing EBOs, we are losing some sales over there, which is a conscious decision, because loss-making stores over a period of time, nobody wants.

We will do calibrated opening there, but this year is about consolidation, we will consolidate stores, and we would try and be rational about it. We will open some stores for sure.

We are now 34 net EBO down, and 9%, that is 9% of my overall network. You are seeing 4% growth despite 9% of EBO closure.

Meanwhile, I'm growing in e-commerce, I'm growing in LFS, which are the more modern channels, though they are margin-dilutive a little bit. Once I'm ready and I'm okay with this LFS and e-commerce channels, when I press the button on EBO, opening is very easy.

You say, "Go open," you can open 100 stores. Can you open 100 good stores is the question.

We will keep the good stores, we will eliminate some of the bad ones, we will work on some of the medium ones, and once we are ready, then we will press the button. It's not going to be a 3 to 5 year phenomenon, but we will need 3-4 quarters still to get this rationalized and then go for the next bit of EBO growth.

That is when you will see margin recovery, that is when you will see huge amount of sales recovery, because that is the main channel.

Got it. What's your assumed raw material cost inflation and EBITDA guidance for FY '27, and how much ASP will hike, without hurting any volume growth?

In Q1, we have largely sold without individual ASP hikes because we work on forward booking, and we had forward bookings, which we have honored. You are seeing margins with honored prices.

In Q2, we will take some prices up, and we will see how the situation goes in Q3 and Q4. My guess is between 5 to 7% in apparel, and between 7 to 8% in fabric, because fabric will need between 7 to 9 depending on the quality, because a larger proportion of a fabric business is raw material price.

In apparel, a lesser portion of raw material is part of your COGS. Apparel 5 to 6% should suffice, and maybe fabric 7 to 9%.

It will be calibrated. We will keep watching our volumes, because also what is very important, we make our own products, right?

We have 11 factories, we have a very good reason to run our factories, and hence volumes are important for us. We will keep a rational line between volume, productivity, efficiency, capacity utilization, and the price that we have to take, where the consumer does not start rejecting the price point.

Having said that, I'll come back to the answer that I gave in the first question, that we will mitigate this raw material price rise through better vendor negotiations, larger base of vendors, like I said, a little bit of Make in India, and cost-cutting measures elsewhere in the system, which is a 100-year-old system gathers dust over a period of time. We are going through a transformation project with a big consultancy firm, and we're looking at every cost, from media buying cost to product buying cost to manpower cost to factory productivities, and we will find this moneys without too much price pass-on to the consumers.

Deepali, one more thing is you asked about what is the quantum of cost increase. If you look at wool, it is almost increased 100% over the same quarter last year.

Cotton and flax is almost increased by about 20% over last year. Your chemicals have increased by about 30%, and in spite of that, we have delivered the same amount of gross margin.

As Satyaki mentioned, we have not taken much of a price increase in this quarter. Going forward, we'll also be taking the price hikes in a calibrated way.

You can expect better margins going forward.

Unless

the raw material prices go further north. Yes.

On the export side, you said you have order books. Can I know the split between geographies-wise, from which segment how much order you are expecting, and export will be the same in line with Q1 FY '27 in FY '27 or '28?

FY '28, Deepali, I tried to explain that one Truth Social announcement changes everything. We are not even looking at FY '28 that minutely right now.

I talked about my order books. My order books are filled till December by last month only.

This month, I'm already booking Q4. If my order book runs, if nothing dramatic happens in the US-India relationship, nothing dramatic happens in this war in the Middle East, we are looking good at this point in time to deliver the full year.

Somebody else asked, "Can you go to double-digit?" I said that is the endeavor.

The endeavor is the same, to keep improving on this till the tailwinds persist, and then we get back to the grind. Till the tailwinds are there, I think this year is looking very, very good.

Okay. This order book is from US and UK both?

It's across Europe, US, Japan, Korea, Asia, all places.

Sir. Thank you so much.

Hi, sir.

Hi.

I completely understand that at least in the near-term perspective, the things remain quite volatile from the global trade perspective. If I take a let's say 3 to 5 years time horizon, what would be your revenue guidance for each of the segment?

Each of the segments 3 to 5 years is difficult, but let me tell you that we are doing this transformation project with Kearney India, and we are building a strat plan for the next 3 to 5 years. If you ask me directionally, I want to at least double or more than double the turnover and grow EBITDA faster than top-line without doing the project, I'm telling you.

Once they come out with the project, there could be some dropouts in the business, some mergers and acquisitions, I'm not talking about that. Business as is, the aim in 5 years to at least double the business and grow EBITDA faster than that pace.

Got it. Let's say your medium to long-term guidance remains of mid to high teen kind of EBITDA margin, what would be the levers for those?

First is the pillars that I talked about. First is premiumization, because we strongly feel that the recovery across the world has been K-shaped, and if you're in the middle, you get stuck in anything that you do.

In any category that you are, the top end is growing and the mass market is growing because people are continuously becoming urban and the average income is going up, but the sticky piece is the big mid-piece. Anything that is a little premium starts growing and unless you hit luxury, etc., then the growth is quite robust.

Premiumization is going to be a key theme going forward in every business that we do. Second piece is casualization.

More and more youngsters are not wearing very formal dresses, formal shirts to office, trousers. We need to be casual, we need to be in knitwear, we need to be in denims, we need to be in t-shirts, we need to be polos, chinos, etc., and we will try to be there.

The third piece is where it'll come from is geographical expansion, and this is what I said that from a garmenting perspective, we had a huge dependence on US, and once we got this US jhatka, we are quite sure that Europe, UK, and the other suit-wearing areas of Japan, Korea, etc., have to become viable and substantial markets for us. These three are there.

Another piece internal is, which I have been trying to say throughout this call, is we are doing this project, we are looking at every cost area, we're challenging everything as the new management team, not because it was wrong, because when you run a company for 100 years, you gather inertia. It is good sometimes to stand back and say, "Where do I stand and where do I want to go?"

We are sure that we can take some chunks out of the cost, which can help profitability, which can help margins, etc. The final piece is, I think, through governance.

We intend to do very good governance and guidance in our activities like community development through CSR, through our ESG activities, and every time you do that, I think your value increases. It may not directly link to your margins, but sometimes it does.

For example, renewable energy, last year we had 8-9% in our factories. This year, we are close to 12%, and we intend to get to 25% by 2030, but my guess is we will reach that much before time, and renewable energy today gives you cost saving while becoming more sustainable and more acceptable as a company.

We're working on all these fronts, Dhiraj.

We'll

also work on working capital. Some of it you have started seeing actually, the 90-day last quarter last year same quarter coming to 75 helps us in releasing cash and becoming more agile, and that is another piece that we're working on.

Got it. Sir, third question is on let's say what would be the potential benefit or let's say the order book you expect incrementally from India-UK and India-EU whenever it has been implemented?

Like I said, US has gone back to 59-60% now. If you ask me to reduce dependence there, I should think I should be able to restrict US at 55% and still run my factories full, and be able to be ready to put in new lines and add capacity.

That's the endeavor, that the rest of the world has to grow faster than US in my business portfolio for exports. Now, the India business is also growing.

Our garmenting business, we also produce for other Indian brands, which you will go in and speak to them about their earnings, but when you speak of shirts, trousers, and suits, we are one of the best factories in the country, we sometimes make for so-called our brand competitors also if we get orders.

Got it. Sir, last bit on this: what would be the ROCE you would like to target and let's say what kind of utilization what you are right now, what can be the sustainable ROCE for this business?

The ROCE is improving, but the ROCE will take some time to improve because we are still in investment mode. See, a lot of people are asking me when will stores come.

As soon as the stores start coming, ROCE gets a hit. People are asking, "When will you put new lines and new factories because your garmenting demand is going up so much?"

Moment I put that, ROCE is sometimes a output metrics and it's not a metrics that you chase. It is good for the market to chase that, but when you run a business, you think what can I do to make this business sustain for the next 50 years that it has done for the next 100 years and not be short-sighted.

I will work on my operational principles, and I'll try to do what is best for the company and the ROCE that comes out of it comes out. If you ask me, I have done enough businesses in my life to know mid-teens is a good ROCE to have for a manufacturing-driven business, so that will be the endeavor, but that is not the target that I'm chasing.

That should be the outcome of what I do.

Got it. Thank you very much, sir.

Thank you.

Thank you for the opportunity. Sir, wanted some color on the outlook for the garmenting business.

Are we seeing an improvement in overall demand from UK and US markets? If you could just elaborate on the visibility of the business over the next few quarters, it will be helpful.

I have three factories in Karnataka. I have set up a new factory in Andhra.

We have a factory in Ethiopia. My five factories, I have no capacity to give till December.

I'm booking for January and my bookings are going well. That's the guidance.

We have orders from everywhere and we are seeing demand. I was in UK in July.

I was in US in July personally. I have met customers.

I have met CEOs of big brands that you can think of. I met the CEO of Tommy Hilfiger, Calvin Klein, Brooks Brothers, Charles Tyrwhitt in UK.

I have met Tailored Brands, Men's Wearhouse, I have met Tommy Hilfiger in US. Everybody is bullish about the business.

Everybody is seeing good offtake growth. I'm saying, at the premium end of the market, offtake in first quarter doesn't seem to be an issue.

Consumer sentiment seems to be okay across territories, India as well, by the way.

That's helpful. Sir, my next question is on the retail network.

The company has been optimizing its store network, overall portfolio over the last few quarters now. Should we expect our store productivity and profitability from the existing network to improve going forward?

Should we? We should, the answer is yes.

Lastly, on premiumization, this is a strategy which the company has been following for some time. Over the medium term, do we believe this strategy can support our revenue and margin expansion?

The answer is again yes. Premiumization, I think I started talking about a quarter back, but maybe the company was following for quite some time, I don't know, if you're a regular investor, then you would know.

It should work on both ASPs and margin, because if you get ASP growth via premiumization and you don't get margin growth, that may not also be worth it.

That's it from my side. Thank you so much.

All the best.

Thank you.

Okay. I want to ask is there was some news related

Hello?

There is a trade agreement with Australia or New Zealand announced by Indian government. Does it have any advantage to us related to the raw material cost as far as the wool is concerned?

Actually, wool never had so much taxes coming from Australia to India, it was always zero. The FTA done by Indian government is most welcome, but it doesn't affect us so much.

It doesn't positively or negatively.

Okay. The second question I have is the tailwind in the garmenting business for the whole of the country, the other business are also showing good results.

Does it have any advantageous impact on our fabric business also? Does other garmenting businesses source from us?

Two pieces to your answer: number one, we get a lot of orders, especially from top-end brands like Tommy, like Calvin Klein, like Brooks Brothers, because we are vertically integrated, because we can say, "Kapda bhi mere mill mein bana hai, designer bhi mera hai, garment bhi main banata hoon, and kyunki mere paas khud ka brand hai, toh mujhe samajh mein aata hai brand ke liye kaise banana hai." The whole piece is called vertical integration, and that works in our favor.

Second, you're asking that do you make it for some Indian brands? Short answer is yes.

You will not even get to know you'll wear somebody else's garment, but I do B2B fabric also, it could be my fabric, they have made it in another factory. It could be my fabric and my factory, I've made it for them.

It could be somebody else's fabric, my factory, I've made it for them. All three are possible.

Yes.

What I'm saying is do you see any in the textile business because of this garmenting tailwind?

No, anybody who has garmenting stands a better chance of doing textile business, especially in B2B, because when you go and sell the fabric, the brand still has to make the garment somewhere. If you can give a integrated solution, it always helps in your pitch, whether it is in India or abroad.

Thank you.

yes.

Thank you to everybody who attended the call. We thank you for your time and interest in our business.

We are really bullish about the year. We have done a good Q1, we are ahead of our budgets, and we hope that we'll give you good returns at the end of the year.

Going forward, please do come and ask us as many questions as possible, it really helps. Thank you very much.