Gokaldas Exports Ltd

NSE:GOKEX

Earnings Call Transcript 2023-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Gokaldas Exports Limited Q4 FY '23 Earnings Conference Call. [Operator Instructions]. Please note that this conference is recorded.

I now hand the conference over to Mr. Binay Sarda from Ernst & Young LLP. Thank you, and over to you.

[Binay Sarda]

Thank you, [ Venue ] Good afternoon to all the participants on this call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risk that could cause future result performance or achievement to differ significantly from what is expressed or implied by such forward-looking statements.

Please note that we have mailed the results and the presentation and the same are available on the company's website. In case if you have not received the same, you can write to us, and we'll be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of Gokaldas Exports Limited, represented by Mr. Sivaramakrishnan Ganapathi, Vice Chairman and Managing Director; and Mr. Sathyamurthy, Chief Financial Officer. We'll start the call with a brief overview of the quarter gone past and then conduct Q&A session.

With that said, I'll now hand over the call to Mr. Siva. Over to you, sir.

[Sivaramakrishnan Ganapathi, executive]

Thank you, Binay. Good morning, everyone. Happy to have you at our earnings call for the financial year of 2023. Global markets continued to be volatile with central banks continuing to wage a war on high inflation by maintaining high interest rates, post-COVID quantitative easing, followed by quantitative tightening in the United States has unleashed a whiplash in the economy.

The supply chain disruption in CY '21 that is calendar '21 and early '22 coupled with robust post-COVID demand facilitated by governments comprising their economies resulted in brand ordering excess inventory. Higher inflation also meant that prices of goods went up while volume growth was modest. Subsequent easing of the supply chain and the tight money supply led to a reversal of the situation. Brands were stuck with higher inventory and have been working on liquidating it over the last 6 to 9 months. For Gokaldas Exports, this meant that the year started with a strong revenue and profit growth resulting from a robust order book and effective capacity utilization. The second half of the year saw muted volume in line with market conditions.

Major customers were consciously liquidating excess inventory holdings and dealing with sluggish retail market. We managed our operations very well, consistently growing our operating margin and delivered improved PAT quarter-on-quarter. Our ability to effectively balance capacity with orders on hand and execution excellence played very well in delivering 25% revenue growth and 48% net profit growth year-on-year.

For context, the Indian apparel exports for FY '23 grew by about 1%. Our EBITDA margin grew by 116 basis points over the previous year after providing INR 23 crores for ESOP charges, indicating a superior operating performance. We generated cash from operations of about INR 296 crores during the year, securing a healthy financial base for the company.

The company continues to build on its financial strength and currently has cash net of debt of INR 333 crores, while part of the reduction is due to business volume, tight business management helps the company unlock working capital. Our ROCE remains high at 27%. We continue to closely monitor potential macroeconomic risks and take measures to mitigate them by focusing on strengthening customer relationships and service excellence.

We are vigilant to concerns such as ongoing military complex, global monetary tightening and China's economic trajectory. Our immediate focus is on maintaining exceptional service delivery while navigating potential short-term challenges. We maintained a high on-time and in-full delivery metrics and gearing ourselves to customers. The long-term prospects for the industry remain intact with continuing shift of global sourcing away from China, supplier consolidation towards efficient and well-capitalized players and supply side instabilities in several countries.

Favorable currency, PLI and FTAs with key markets should drive the company to a strong future. In these egregious times the company operated with a lot of determination while constantly assessing risks and above all showing courage. As an agile, high-performance and entrepreneurial organization, we thrive on such disruptions, taking advantage of the opportunity such challenges provide us. Seizing new opportunities, grabbing market share, expanding our manufacturing footprint, investing in productivity improvements, staying razor sharp on customer delivery metrics, we emerged as an indispensable part of the global value chain.

While the global economy is anemic at the moment, the good news is it can only get better over a period of time. We expect the demand situation to improve in the second half of the year. We are committed to gaining market share and preparing ourselves of business growth when market conditions turn more favorable. Our capacity addition is also in line with this. As an organization, we are future ready.

I thank you for listening and would be happy to address questions that you may have.

[Operator]

[Operator Instructions]. The first question comes from the line of Gunjan Kabra from Niveshaay.

[Gunjan Kabra, analyst]

Congratulations for reporting such great numbers in very difficult times. I had a couple of questions. First is like when we interact with domestic players, also there is some slowdown. And in the export market, of course, there is volatility and slowdown there also. So while you have always guided H2 to be -- demand starts picking up. So how are you seeing the market price now in the near term pay for 1 or 2 quarters? Also I wanted to understand -- why have -- like we have reported steady numbers in terms of [ sale ] for quarter-on-quarter. So I wanted to understand if we have added any new customers or are they in talks with any customer that can also help increase in the revenue going forward and the business line is a little slow?

[Sivaramakrishnan Ganapathi, executive]

Okay. Thank you, Gunjan. We had always guided that the second half of FY 2023 would be somewhat new phase, right? Over the last one year, and I think it's played out as we had guided. We had also indicated that first half of FY '24 will also remain somewhat similar in terms of the market demand conditions with the second half of FY '24, when we expect growth to pick up. And I think we are maintaining that situation at the moment. We see that the economic conditions have been dramatically improved. It has remained relative. However, we've seen that some calendar 2024 should start seeing an upward trajectory because most of the inventory would have been liquidated. And year-on-year, [ France ] will see growth on a muted base of calendar '23, which itself means that they will start coming back to buying more from us.

So starting Q3, we should start seeing some upward trajectory, and we're hoping that we will stay prepared for the incremental traction that we shall start seeing from then on. This is based on what we see at the moment, how we meet the economy at the moment.

As for the next question on customer addition, we have just recently added 2 new customers, one U.S.-based and one U.K. based and we are hoping that we shall be able to continue to grow with them. These are prestigious clients and clients with good business potential going forward, and we hope that we will be able to capitalize on this addition.

[Gunjan Kabra, analyst]

So the revenues from the new customers will start coming in from this quarter, right? And not -- it was not accounted in the previous quarter?

[Sivaramakrishnan Ganapathi, executive]

That is correct. They have just been acquired, so it will start playing out in FY '24.

[Gunjan Kabra, analyst]

Also, sir, like there is inventory getting depleted or getting lower a little by -- the U.S. But anything from our customer specific point of view, what are they guiding in terms of revenue growth to you? I mean, is there -- how is that scenario only from the -- like the global data and everything, but according to that customer specific, if we have any guidance that you can maintain this growth rate from how are they telling you in terms of inventory? And is that the problem getting solved faster maybe because we supply to the rigor brand or something. So I wanted to have that perspective from our customer specific point of view.

[Sivaramakrishnan Ganapathi, executive]

So it's a mixed match, we supply to a number of customers and different customers are at different stages in their own market handling situation, inventory situation, et cetera. So there are some customers who have liquidated quite a bit, and still have some residual inventory to liquidate. Some of them are liquidate almost all of it and are hopefully they will start buying more once they start seeing the demand pick up, they are not ordering at the moment. They are maintaining a lower inventory to sales ratio at the moment. So its mixed match, at the moment, nobody is too late.

But I think the -- there -- I don't think they are very bearish either. So we will hopefully see better -- we will be able to lead things better as a few more months passed by as to how confidently they'll come back buying. The general trend seems to be that -- seems -- are seemingly bottoming out, but let us see how it plays out.

[Gunjan Kabra, analyst]

And also for this quarter, we did higher EBITDA margin, which is 13.4% around. So do you think it will hedge this to the entire year? Or is it just one quarter? Or is it sustainable?

[Sivaramakrishnan Ganapathi, executive]

Good question, it is not sustainable. What happened in Q4 was that we had made excessive provisions on certain gratuity and employee-related cost items. This is based on certain assumptions. We keep in mind that we are extremely conservative when it comes to taking up accounting provision. So we had over-provided in the first 3 quarters, which we kind of brought back after making actuarial evaluation of the employee benefit cost. So that's why there may be a bit of a higher margin being indicated in Q4. You should take the average for the year as an indicator.

[Operator]

Thank you. Next question comes from the line of Abhineet from Emkay Global.

[Abhineet Anand, analyst]

Sir, if you could just highlight the status of various CapEx that you are doing, are they on track and, when do we see revenues coming from both?

[Sivaramakrishnan Ganapathi, executive]

So your voice faded out. Was your question was when will the CapEx start playing out in revenue terms, was that the question?

[Abhineet Anand, analyst]

Yes, yes. Both for the TN and Madhya Pradesh.

[Sivaramakrishnan Ganapathi, executive]

Okay. So the Madhya Pradesh unit, we anticipate it to start commercial production starting somewhere in June of 2023, so next month. And we are hoping that it will cross about INR 50-odd crores in this financial year.

The other unit, which is coming up in Tamil Nadu, we anticipate it to go live somewhere in September, which is the early third quarter. And really, it's bigger confident to revenue shall come in FY '25. So in FY '25, both of them put together, we should hopefully see about INR 300 crores of top line being contributed by both these projects.

[Abhineet Anand, analyst]

And our thought of the Bangladesh JV, where do we stand right now?

[Sivaramakrishnan Ganapathi, executive]

So most of the work has been done. The site has been identified and everything. We are just holding -- in a holding pattern there, waiting for signals of market turnaround before we start activating that capacity. So we're just waiting to see some improved traction before we start work there.

[Abhineet Anand, analyst]

And lastly, on the margin side, you did indicate that [indiscernible] FY '23 is a better indicator. But over a 2- to 3-year perspective, our earlier type of indication that we could improve by 60 basis points every year that continues for the next year?

[Sivaramakrishnan Ganapathi, executive]

So as I had indicated earlier, that we probably have about 1.5% EBITDA improvement opportunity going forward in a 2- to 3-year time frame. So I maintain that. In the short term, based on demand-supply situation, there may be some aberration, especially when there are demand headwinds, there will be pricing pressure. There are short-term impacts like labor costs have gone up because minimum wages have gone up in Karnataka, where the bulk of our operations are and the costs have gone up by 9% to 10%. So we are offsetting that also to improve productivity. So going to have those kind of short-term challenges.

But the trajectory that we mentioned about EBITDA improvement of about 1.5% over a 2-, 3-year time frame will continue, notwithstanding short-term aberrations, which we will anyway overcome.

[Operator]

Next question comes from the line of Nishid Shah from Ambika Fincap Consultants.

[Nishid Shah, analyst]

Congratulations on a very good set of number. And I think the presentation is very informative. And on the cost structure, the advantage of India, what has been presented is really helpful. My question is, Siva, on industry tailwinds is so positive. And now that we are through with the so-called slowdown and all, can we expect over a normalized period a 20% growth for us now that you have capacities and all in place?

[Sivaramakrishnan Ganapathi, executive]

So thank you, Nishid. Normally -- in a normal period, a 20% growth is definitely possible, and that's definitely within the realm of what we will target. There will be short-term inability to do that over a few quarters because of demand-related headwinds. But in a normal period, what you mentioned is absolutely correct. That is what we are targeting. We will probably try to do better also, but trying to do 20% is something which we will always endeavor to.

[Nishid Shah, analyst]

And secondly, on the margins, with rupee having depreciated, where do you see our margins? Is there a scope for improvement over the next 12 to 18 months?

[Sivaramakrishnan Ganapathi, executive]

So in the next 12 months, I won't be very sure given the demand situation at least for the next 6 months, and whenever there is a demand headwind, there will always be an inability to increase prices, et cetera, et cetera, right?

On the contrary, there will be a pricing pressure. We are partially elevating that through better raw material prices and better production efficiencies at the moment. So improving margins will certainly happen. But I would say, if we take a 3-year time frame, I am confident that we can -- we have the ability to improve the margins by about 1.5% -- EBITDA margin by 1.5%.

[Nishid Shah, analyst]

And these new plants at MP and your other initiatives at Bangladesh, et cetera, should also help you improve margins, isn't it?

[Sivaramakrishnan Ganapathi, executive]

That is correct. However, their initial effect will be to drop the margins. But since they will be small in relation to the rest of the business, it may not be very material. But as these plants start ramping up, the cost will be higher. So they may be negative for a brief while till they reach their proficiency levels and start yielding margins.

At a steady state, those new units will be more margin friendly than our existing business, given the cost structures in those zones.

[Nishid Shah, analyst]

All the best. Thank you very much for a very good presentation once again.

[Operator]

Next question comes from the line of Rahul Mishra from [ RTL Investments ].

[Unknown Analyst]

Yes. And congratulations on a very good set of numbers in these difficult times. I have 2 questions. First, and I'm not talking about anything short term. I quite appreciate there are challenges in short term. But if I look at FY '23 results as compared to FY '22, our gross margins have actually fallen by -- gross margins have actually seen a decline, maybe also on account of prices and all. We have also had employee cost issue because of the ESOP, so that has also gone up.

And despite that, we have seen a 70 basis point improvement in margin. So if I look at this, I mean if I look at efficiency, which are there beyond the gross margin, it is almost like 400 basis points or more than that. So my question is that when things normalize, can we actually look at much more margin expansion than what you are guiding at 1.5% over 3 years?

So that is question number one. And question number 2 is, finally, when do you expect the tax rate actually to go up? Because tax rate was supposed to go up in FY '23. It's good news that it has not gone up. But should we expect normalization of tax rate in FY '24?

[Sivaramakrishnan Ganapathi, executive]

Okay. So as far as the gross margin is concerned, it is a function of the product mix. So product mix changes sometimes can have a gross margin change, gross margin is revenue minus the material cost.

So when we have high-value products being produced, quite often, we may see a lower gross margin but a superior EBITDA margin because the manufacturing efforts for that may not be as high, but the gross margin -- gross margin expresses the percentage of sales would be -- would tend to fall because the raw material costs seemingly are high. So we are judicious. We try to maximize our bottom line rather than simply gross margins, given our product mix basket. As far as your question on, is there a potential to improve our EBITDA margins more than what we have guided? So there always exists opportunity, and we will always be exploring those opportunities to go for it, let it play out.

There are several variables that we deal with, including raw material prices, demand supply, et cetera, et cetera. So it's very -- what I've given is an aggregate of various factors at play but certainly, we will endeavor to see if we can push down the envelop more. As far as the tax structure -- tax impact is concerned from FY '24 onwards, we will be having the full impact of taxes. The tax percentage should be 25% or 25.1% from FY '24 onwards.

[Operator]

Next question comes from the line of [ Ahmar ] from [indiscernible].

[Unknown Analyst]

Sir, largely, I wanted to understand if the market, what I understand is that ours is a slightly premium products business versus the rating business, which is likely at the low end of the pyramid. So -- and normally, what we see even in the tough time, the luxury or relatively -- ultra luxury kind of a business does not get impacted and it revives faster. So is this a scenario for us also, and that is why we were less impacted related to the industry?

[Sivaramakrishnan Ganapathi, executive]

Okay. Good question. See, the -- for example, our ASP will be in the dollar -- in the range of $8, $10. So we are certainly high value, but not ultra-high value. So what happens is that commodity products, like, [ mens wear] et cetera, may see headwinds depending on the economic conditions. Ultra luxury products may not see any headwinds regardless of market situation, but we don't produce those Gucci's and Armani's and all of that. We are in mass fashion, premium product out there. So we are in that sweet spot somewhere in between where volumes exist, where we can produce cost effectively, where we can drive production efficiency. The demand for our products have not been as hit. And I think the probability of it recovering a bit faster could be better.

[Unknown Analyst]

Okay. Okay. And sir, like you are indicating that second half would be significantly better than first half. But do we see that the revival should start from the -- let's say, sequential revival should start from the second quarter onwards? Or...

[Sivaramakrishnan Ganapathi, executive]

So as now it's very, very difficult to predict anything for various reasons. One, nobody is any wiser on the economy. Second, brand on whom we are dependent on demand have also started ordering closer to date, given that their ability to predict demand has also been weakened and they are unwilling to ramp up their inventory until they actually start seeing huge traction in terms of demand. So my anticipation is that we should start seeing growth, momentum pick up from the third quarter. I don't think it will come earlier than that. But it's very, very difficult to predict. Who knows if things start looking up, it may happen sooner. But I'm not going out there predicting things happening sooner. So third quarter is more likely.

[Operator]

Thank you. [Operator Instructions] Next question comes from the line of Pulkit Singhal from Dalmus Capital Management.

[Pulkit Singhal, analyst]

Thank you for the opportunity and congrats on a good set of numbers. First question is just on the nature of conversations and the number of conversations you are now having with customers. If you could throw some light as to what is the texture of that now versus how it was one year ago and 2 years ago, and whether those conversations have suddenly picked up in terms of number.

[Sivaramakrishnan Ganapathi, executive]

Thank you, Pulkit. It's a very good question. So the nature of conversations -- again, when I said 2 years ago, during COVID, was highly uncertain. Post-COVID, there was some buoyancy, but at the moment, the way the nature of conversations vary from customer to customer. There are some customers who have liquidated inventories who are quite hopeful of demand picking up from early spring '24 and are hinting that they will come back and start buying from the third quarter onwards.

Because in the third quarter, we produced a spring of '24 and fourth quarter for summer of '24. The general consensus on brand seems to be that by fourth quarter, there should be -- market should reasonably stabilized, that summer of '24. So we will have to see that. In the interim, brands are playing it close to their set, they are indicating that they will come closer to date to buy more based on demand traction and the good news is that some of the brands have actually come and follow through on it and have placed near-term orders as well, indicating that some amount of traction that they are seeing or that they are predicting.

So it's a bit all over the map, but that's how it is happening in the U.S. U.K.-based customers are actively talking -- waiting for the FDA to happen and many of them are waiting in the wings. Once the FDA happens, they would start taking advantage of it. And with that in mind, there are quite a few of them are having aggressive conversations. The market conditions in U.K. also seems to be similar, but duty delta plays a big role. So it all depends on where the customers are located. But at the end of the day, the mood, I would say, has -- it's not exuberant for sure, it was quite muted, it is slightly improving. There is a bit of an optimism, I would think. But it's yet to really translate into significant numbers at the moment.

[Pulkit Singhal, analyst]

Understood. So are there a lot more plant visits being done by various new customers now to kind of keep the work ready and then press the trigger if they choose to do so later. Is that how they're approaching?

[Sivaramakrishnan Ganapathi, executive]

Yes. We have considerable number of visits to our factories and our design showrooms.

[Pulkit Singhal, analyst]

Understood. Secondly, these 2 new customers that we added, the U.K. and U.S. I'm just trying to understand what was the individual thought process to give more orders to you? I mean, is it more driven by China plus one? Are they even willing to pay a premium to kind of source from India or they're trying to get it cheaper? So what was their individual through process now?

[Sivaramakrishnan Ganapathi, executive]

So these 2 -- both of them are a bit fashionable brands and a little premium in the market. So they have not seen as much of a negative tractions as many other market brands have. The U.K. one is motivated by FDA. So they're clearly out here to take advantage of the situation. They like our ability to handle designs and our quality of production. The American one is clearly coming here because they like our quality. And they haven't seen as much of a headwind in their sales. So they're just adding quality vendors, and we have become one of them.

[Operator]

Next question comes from the line of Apurva from PhillipCapital.

[Unknown Analyst]

Sir, my first question is on your commentary. So like as we understand the growth lever also comes from the wallets are increasing from our clients. And if I look at our clientele so like of -- GAP, Zara, or H&M. So they are very significantly large clients and our contribution of our revenue to them would be hardly significant. So I'm just wondering why that part is not mentioned in the commentary case? We are just focusing on the market outlook and the -- like whatever is happening in the broader market, but not on the wallet side, can you throw some light on that part?

[Sivaramakrishnan Ganapathi, executive]

So what happens is when the overall buy from a brand comes down by, say, 25% or 30%. The higher quality producers may not see as much of a drop because we will be grabbing wallet share from weaker suppliers in the ecosystem. Having said all of that, it is half -- so wallet share may grow. But in absolute terms, from our own ways, we may not be able to grow because the volume of buy from the brands have actually come down. So it may be inappropriate for them to have certain vendors grow while other vendors take a deeper cut. So while everybody will decline Y-o-Y, there may be a vast differential between declines across this segment. But it always accompanies with a wallet share gain.

And in such difficult market times, wallet share gains are more easier for us to attain, because if the demand is down, they typically tend to shut down a few suppliers or significantly reduce the outlay for certain suppliers. So we have actually gained wallet shares in some of our larger customers.

[Unknown Analyst]

Sir, got it. Sir, that was my point. Currently, this might be a very favorable period for us. So as a company, what steps we are taking to garner more wallet share and that would help us to sustain, so without -- we are adding a customer or not, but at least that would -- the existing customers base will give us some sort of a revenue visibility of growth because of incremental wallet.

[Sivaramakrishnan Ganapathi, executive]

So that's exactly the point I'm saying, that if you look at the buy from brands, they have fallen by about 20-odd percent or 25% in many cases, whereas our revenue in the -- let's take the fourth quarter as an example. Fourth quarter revenue has fallen by about 10%. So our drop of 10% in relation to the brand buying 25% less clearly indicates that we are gaining wallet share. The specifics will depend on the individual brands. But across the Board, we have gained wallet share. And the reason we have gained is because we have simply executed well. We have ensured on-time delivery. We have ensured quality throughout the past period and been very, very consistent in this.

Once we do that, we automatically are in a position to grab incremental orders at the cost of others. We have taken orders from China and Vietnam. We have taken orders which were either to being done by others in India and so on and so forth. So that endeavor continues and we have done that across most of the brands.

[Unknown Analyst]

Got it. And sir, final thing on the Bangladesh. So as you've mentioned, we are waiting for more clarity on the market conditions. So do we expect it start in this year? Or again, it would be linked to the market condition only because Bangladesh can open a route for U.K. so -- or maybe the entire Europe market. So that's why we were curiously whether irrespective of market, and it's a very small CapEx compared to your overall balance sheet size. So why we are slightly conservative on that Bangladesh part?

[Sivaramakrishnan Ganapathi, executive]

Okay. So the -- keep in mind that Bangladesh also has a lot of capacity. So we want the market conditions to improve and dealt with appropriately. I believe that we should be doing that somewhere -- we should initiate the work in FY '24. And it's only a matter of taking a call on the timing, we are keeping a close watch on it. And we are also talking to some customers basis that we will take a final call somewhere during the year.

[Operator]

[Operator Instructions] Next question comes from the line of [ Amrutha ] [indiscernible] from Wealth Managers India Private Limited.

[Unknown Analyst]

I have 2 questions. First is regarding the other income. So in the past 3 quarters, it has increased like a lot. So what is the reason behind that? Is it the improvement in the cash balance that we have? And my second question is regarding the [ mid-wear ] facility. So how is the -- customers -- how is it traction with our existing customers in the woven category, like even they have [ mid-wear ] products?

So how are they taking our CapEx? And are we looking to add more customers there?

[Sivaramakrishnan Ganapathi, executive]

Yes. With reference to the other income, it is primarily on account of our investment income coming from the mutual funds and the fixed deposits. On a part of our cash surplus, whatever we have, it has been deployed in the mutual fund, and that income is being reflected under the other income. Coming to the knit versus woven demand, I think the knitwear demand is some -- a bit more muted than woven demand. I'm speaking at a very macro level.

Again, situation will change from brand to brand. But at the macro level, that is the situation. For our mid-wear unit, which is expected to come by September, we are hoping that the demand situation might improve by then. And we are also in advanced discussions with several customers to facilitate uptake of those products. So all of that is going on as we speak. But at an overall level, it is doing -- going a bit slower than woven at the moment.

[Unknown Analyst]

And [indiscernible] how much time does it take for us to onboard a new customers for the whole process and for them -- actually start the ordering activity after they're onboarded?

[Sivaramakrishnan Ganapathi, executive]

So it depends on the business situation. In a weak market situation, it could take up to a year, sometimes it can take even 2 years, depending on the customer and their protocols. The -- and in a strong market condition when there is growth may of the customers may be under intense pressure to ramp up volumes and hence things may happen much sooner as well. And it can happen in 3 to -- in 6 months at least.

As far as the ramp up growth, it's usually starts small in the first 2, 3 quarters and it takes over a year before we can start really seeing meaningful revenue of anywhere between INR 50 crores and INR 100 crores. Again, in a strong market situation, things can happen faster depending on the customer.

[Operator]

[Operator Instructions] Next question comes from the line of Abhineet from Emkay Global.

[Abhineet Anand, analyst]

You did indicate that there was an extra provision during 9 months, which were written back now. What is that numbers, if you can quantify?

[Sivaramakrishnan Ganapathi, executive]

It's about INR 6 crores.

[Abhineet Anand, analyst]

Okay. And secondly, on the present raw material cost, what can be the max FY '24 revenue that the company has clocked sir?

[Sivaramakrishnan Ganapathi, executive]

Can you repeat the question? I didn't get it.

[Abhineet Anand, analyst]

So at the present raw material prices and what could be the maximum of '24 revenue that the company can clock?

[Sivaramakrishnan Ganapathi, executive]

FY '24 revenue. Is that your question?

[Abhineet Anand, analyst]

Yes. Yes.

[Sivaramakrishnan Ganapathi, executive]

I wish I have that crystal ball at the moment. Our endeavor is to see growth in financial year '24 over '23 for sure and we are working towards that. But to pin the number at the moment, maybe harder for me, 3 months from now, I maybe in a slightly better situation to predict. It's a bit difficult for me to pick a number for now.

[Abhineet Anand, analyst]

Okay. I understand that I was -- what I was trying to understand that -- and what can be the max when you had the current raw material [indiscernible] not exactly what if you are guiding for '24. Just trying to understand the current capacity that we have, what can be the max revenue for FY '24?

[Sivaramakrishnan Ganapathi, executive]

So I don't want to confirm a number given the market dynamics and situation, right? Our endeavor would be to do as much as possible. Raw material prices are not the determinant at the moment, while it helps us from a cost standpoint, it's really market demand, which is the factor and that in turn is a factor of economy and several other situations out there. My best guess is that things should start looking up in the second half and we should start seeing good traction. The pace of growth, et cetera, will determine how much we can grow in FY '24. It's a bit hard at this moment at the start of FY '24 to pin a number of percentage growth.

In a normal year, I would have been very, very confident to say that we will always do above 20%. But this year, it's a bit harder to pick a number given that most of our customers are a bit unsure of how they're going to buy in the very short term.

[Operator]

Next question comes from the line of [ Rahul Mishra from RTL Investments ].

[Unknown Analyst]

Yes. So the facility again. My question is as we -- I mean, one of the most important things about Gokaldas is the ASP's and kind of product mix we have. And I mean we are primarily in woven and then most of the mix guys, much lower ASP and product mix is really not that great. So what addition of mix, how would our product mix and ASP's would change? And would it also make our margins -- or demand slightly more volatile as compared to where we are right now? And once the full capacity ramp-up happens whenever FY '24, '25, or '26, what would be the breakdown between mix and woven in terms of revenues?

[Sivaramakrishnan Ganapathi, executive]

So let me answer the second question first. When the mix business fully ramps up, my expectedness mix will be anywhere between 10% to 15% of total revenue. Wovens will still constitute to be a majority of our revenue, and hence, may be the impact on our overall ASP may not be as much, mix will have its own set of characteristics. And remember mix, we are backward integrated as well into fabric. So the EBITDA margin percentages may look different, may even be superior because of backward integration. But that said, I would think that mix is ability to impact ASP may be lower because of its lower contribution.

[Unknown Analyst]

Okay. And I mean, I think, in woven, we have really high, I mean outerwear and probably higher-end products. So in [ mix ] also, there is higher-end products or it is more about T-shirts and all those kinds of things?

[Sivaramakrishnan Ganapathi, executive]

So of course, there are higher-end products in mix, and those are more like the athleisure product. Unfortunately, most people in India do not do that because the fabric ecosystem doesn't exist, synthetic mix are not available in India. And that's why China, Vietnam and even Indonesia are producers of those higher value mix. Since we will also be in cotton mix, it is likely to be the regular product. Within that segment, we will try to be as premium as possible given our customer base.

[Operator]

Next question comes from the line of [ Manish Segal ] an individual investor.

[Unknown Analyst]

I just wanted to understand the first dividend has been paid out after a long time. What -- do you have any policy put in place for that given the cash flows have been quite decent, and we do plan to invest, but not that much in terms of [indiscernible].

[Sivaramakrishnan Ganapathi, executive]

So we did have a deliberation at the Board about this. And we thought that since we are generating adequate cash in the business, we would like to start by giving dividends. We would -- in a normal course, we would like to maintain this trajectory. We will look at the business conditions as well as our investments going forward, but that's where we are at the moment.

[Operator]

Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

[Sivaramakrishnan Ganapathi, executive]

Thank you, everyone, for listening to us and asking questions. We are happy to engage with our investors in full transparency and discuss our business prospects, and we continue to do that. We -- while the market conditions are somewhat unknown at the moment given the macroeconomic situation, we continue to explore ways to improve our operational efficiency and thereby hold on to our margins. There are certain headwinds which challenge us in terms of cost structure, in terms of pricing, et cetera, but we are doing our best to offset it.

As I had mentioned that in a steady state, we would like to continue our 20% plus kind of growth trajectory and we would like to work on a 1.5% EBITDA improvement. This road may take a little longer given the current market conditions, but we will get back on the trajectory as soon as possible, as soon as the market permits us to do so. We are cautiously optimistic about how the market situation will improve. I believe that come in the third quarter, which is when we will be producing for calendar '24, we should start see improved traction. It's also an election year in principal markets, both U.S. and U.K. So we should hopefully, have the economy perform a bit better in an election year. We will see how things evolve.

But we are very opportunistic, and we will work with our customers and not let go any opportunity to seek growth, which become available to us. Thank you for your support to Gokaldas. We will remain committed to driving business performance as we go forward. Thank you, one and all.

[Operator]

Thank you. On behalf of Gokaldas Exports Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.