VTL - Vardhman Textiles Limted Share Price

Question: "You had indicated that you expect a normalization of spreads to potentially start from Q4 this year. What's leading us to believe that that's going to happen?"

Answer: "We're banking on US trade deals happening by November, based on media reports and governmental interactions. The two main factors are the tariffs causing concerns and raw material pricing. The recent duty-free cotton imports have helped mills, but strategies from the CCI regarding pricing remain uncertain. Our expansions will complete by early next year and should start showing impact. So, we hope to see normalization in Q4."

Question: "Sir, with respect to the yarn and cotton prices, what were the prices during quarter 2?"

Answer: "Yarn prices were in the range of $2.75 to $3 per kg for 30s count. For cotton, New York futures were about $0.65 to $0.66 per pound, with Indian prices affected by CCI's pricing being higher than market levels, leading to increased costs for Indian mills."

Question: "With the recent export restrictions to Bangladesh, is there an excess inventory building up in the industry?"

Answer: "Yes, cotton inventory has increased due to sizable imports but not solely due to restrictions on exports to Bangladesh. Cotton was supplied mainly by CCI at higher prices, allowing more imports before the duty exemption. We have sufficient cotton stock, both imported and domestic."

Question: "Can you elaborate on your capex plans and when will they commence?"

Answer: "In fabric, we are working on a synthetics plant, expected to be operational in Q3, and the second line in Madhya Pradesh will be operational mid-November. The synthetics plant has a capex of approximately INR300 crores, while the new line in MP is about INR200 crores."

Question: "What is the reason for the underperformance of Vardhman Acrylics as compared to competitors like Pasupati?"

Answer: "Acrylic demand in India has decreased, leading to Vardhman Acrylics struggling despite running at full capacity. The growing price gap between acrylic and polyester has driven demand toward polyester, causing margin pressures. Other competitors have been able to sustain their profitability by possibly operating at a larger scale."

Question: "Regarding the US cotton spread, is it contingent on favorable deals with the US and continued duty exemption for cotton?"

Answer: "Absolutely. Normalization in spreads relies on two elements: resolving the duty disadvantages and securing raw materials at competitive prices. Without these, recovering historic margins won't be feasible."

Question: "What impact do you foresee from the tariffs on business and margins?"

Answer: "Tariffs have prompted US customers to adopt a wait-and-watch approach, reducing order quantities by 20-25%, effectively impacting demand. While we support our customers during this phase, an increase in retail prices due to tariffs may further reduce demand."

Question: "Could you provide insight into the increase in other expenses this quarter?"

Answer: "Our other expenses rose by about INR30 crores, attributed to increased costs across manufacturing, administration, forex impacts, and selling expenses. Key components include added costs from new plant machinery and adjustments in administration expenses."