Himatsingka Seide Ltd

NSE:HIMATSEIDE

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Himatsingka Seide Q4 FY '22 Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Roshan Nair from Batlivala & Karani Securities India Private Limited. Thank you, and over to you, sir.

[Roshan Nair, analyst]

Thank you, Peter. Good evening, everyone. On behalf of B&K Securities, I would like to welcome you all for 4Q FY '22 post results conference call of Himatsingka Seide Limited. Today, we have with us the senior management of the company, including Mr. Shrikant Himatsingka, Managing Director and CEO; Mr. K.P. Rangaraj, President, Finance and Group CFO; Mr. Dilip Panjwani, Executive Vice President and CFO, Strategic Finance; and Mr. Sachin Garg, Senior Vice President, Strategic Finance.

I would now like to hand over the call to Mr. K.P. Rangaraj for initial comments. Thank you, and over to you, sir.

[K. Rangaraj, executive]

Thank you, Roshan. Good afternoon, ladies and gentlemen. On behalf of Himatsingka Seide Limited, we would like to warmly welcome you to this Q4 FY '22 earnings call. Like in the past, I would take you through our business update and followed by a brief update on the financial performance. I'll start off the call with the business update now.

FY '22 registered a stable operating performance despite high inflationary and supply chain challenges. During the fiscal, total revenues grew by 41% and stood at INR 3,203 crores, our highest ever. Revenues from brands during FY '22 stood at INR 2,260 crores compared to INR 1,798 crores in the previous year. During the quarter, revenue streams from brands stood at INR 548 crores versus INR 565 crores during the previous year and INR 556 crores during the quarter Q3 FY '22, that is the previous quarter.

During Q4 FY '22, capacity utilizations remained stable across the plants. The capacity utilization level for our manufacturing facilities during the quarter stood as follows: Terry Towel division stood at 72%, in line with the previous quarter, 72%; Sheeting division, capacity utilization stood at 79% versus 81% in the previous quarter; and Spinning division recorded 101% capacity utilization as against 101.5% in the previous quarter. We, however, see reduction in capacity utilization levels in the near term on account of the unprecedented levels of inflation and supply chain challenges that have impacted global demand for our class of products.

Inflation on the raw material, energy and supply chain funds have had an adverse impact on the operating profitability of FY '22. This impact has been heightened during the second half of FY '22. And while we have partially mitigated this impact with year-on-year volume growth and price increases, the unprecedented levels of inflation have not been fully absorbed yet. Although we expect inflationary headwinds to continue in the near term, our outlook on our industry and our integrated business model continues to be optimistic. Considering the current demand and inflationary environment, we have deferred the organic capital expenditure to debottleneck the sheeting and the terry towel plants for an additional 6 months.

I now move on to the financial performance section on the consolidated performance. Consolidated total income for the year stood at INR 3,203 crores versus INR 2,272 crores in the previous year, which represents a 41% Y-o-Y growth. Consolidated EBITDA for the year was INR 550 crores versus INR 302 crores in the previous year. The EBITDA margin for the year stood at 17.2%.

Consolidated EBIT for the year stood at INR 391 crores versus INR 150 crores in the previous year, which translates to an increase of 160%. Consolidated PBT for the year stood at INR 210 crores versus loss of INR 26 crores in the previous year. Consequently, consolidated PAT for the fiscal year was INR 141 crores versus a loss of INR 54 crores in the previous year.

Now move on to the consolidated financial performance for the quarter. During the quarter, the consolidated total income stood at INR 775 crores versus INR 748 crores in the previous year, which translates to a 3.6% y-o-y. Consolidated EBITDA for the quarter was INR 110.46 crores versus INR 130 crores in the previous year. The EBITDA margin for the quarter stood at 14.3%.

Consolidated EBIT for the quarter stood at INR 70.5 crores versus INR 92 crores in the previous year. And the consolidated PBT for the quarter stood at INR 20.5 crores versus INR 53 crores in the previous year. The consolidated PAT for the quarter came at INR 8 crores versus INR 37.57 crores in the previous year.

Now move on to the debt profile. The consolidated gross debt as of 31st March '22 stood at INR 2,805 crores compared to INR 2,675 crores at the end of the previous quarter. The total term debt stood at INR 1,759 crores and the working capital debt stood at INR 1,046 crores. The cash and cash equivalents at the end of March '22 was INR 176 crores. Consequently, the company's net debt outstanding as of 31st March stood at INR 2,629 crores compared to INR 2,512 crores as of 31st December '21.

I would like -- this completes the short update on the business and the financial performance. I now hand over to our Managing Director and CEO, Mr. Shrikant Himatsingka, for your Q&A, please.

[Operator]

[Operator Instructions] Our first question is from the line of Anuj Sharma from M3 Investment.

[Anuj Sharma, analyst]

I have 3 questions. The first is, if we compare the current scenario with the one in 2008-2009, wherein we had just come out of a CapEx cycle, what are the similarities or differences between the 2 scenarios? I mean it took us 4 years in 2008-'09 to come out of that. So just help us understand what are the differences between then and now.

[Shrikant Himatsingka, executive]

Why don't you complete your other questions, Anuj, and then I'll answer all.

[Anuj Sharma, analyst]

Yes. Okay. The second one is, if we look at our debt, despite our intention to reduce it and that too with a modest amount, we've actually seen an increase in debt. So what has been the key challenges? And I heard you deferring one of the CapEx. So what are the other strategies you are pursuing to reduce the debt more aggressively?

And the third is, given the slow ramp-up in capacity utilization, do you think, in hindsight, we could have been more staggered in our CapEx or this you think was the best optimal strategy?

[Shrikant Himatsingka, executive]

Okay. So let me just answer all your 3 questions. So as far as -- I'll take your question on capacity utilization first. So Anuj, these plants are configured in a particular way wherein when you set them up, you sort of have a certain quantum of capacity that has to be onboarded and put on stream. One can't stagger it beyond a point because it affects other aspects of plant functioning and economics.

So to the best of our knowledge, our plant configurations are something that we are satisfied with and we do not think that we could have staggered it any further. We took up our CapEx program on a calibrated basis over a period of close to 3.5 years. That's how we've staggered the outflow. But both our plants are well configured, and we do not think that we could have staggered it any further.

Having said that, it's also important for us to keep some upside capacity. If our shipping plant at about 80% at this point, so we would like to have that 20% upside to address market fluctuations and upsides as and when they present themselves.

And as far as Terry Towel is concerned, I must remind you that this is a plant that is commissioned about a few months before the first lockdown of COVID. And we have probably ramped it up to 72% in one of the fastest ramping up periods that this industry has seen as far as ramping up greenfield plants is concerned. So we are actually happy that we have got it up to 72%. And the remaining is something we'd like to [ split ] at the earliest. There's no doubt about it. But we are happy about the fact that we've got it to 72%.

So if I see our utilization, there's nothing that's left in Spinning. We have about 20% at this point on Sheeting and 20-plus percent on Terry. As Ranga mentioned earlier, we have deferred our organic CapEx programs for further capacity expansions by an additional 6 months because we would want to wait and watch on how the global conditions and commodity prices unfold in the near future.

On a medium- to long-term basis, our outlook on both the industry and our model remains strong and robust, but we do see some near-term challenges because you will appreciate the fact that there is unprecedented levels of inflation being witnessed across raw material prices, energy costs in the form of coal in this case and supply chain and other disruptions. So that's as far as your capacity utilization question goes.

And the second point that you made was on the deleveraging piece. So on the deleveraging piece, you're right, our intent -- while our intent is to continue to deleverage because our CapEx has now come to a close, our 3.5-year program, and we have done with the bulky part of our CapEx. So we should have technically started our deleveraging exercise. But unfortunately, this year has seen us increase some of our debt, which was driven by the working capital condition, the weakness on several fronts.

The 2 major fronts were cost, the spike in inventory that we saw on account of the inflation and general situation that prevailed. And the other was emanating from the fact that there was a delay from the Government of India to ensure the reimbursements under the RoSCTL scheme, which had some of that being built up and accrued but not encashed. Subsequently, the industry had to take a hit on the realizable value of these scrips and so on. And as far as Himatsingka is concerned, we have been, let's just say, slow on offloading these scrips given the current values. So we've been cautious on that front.

So it was a combination of these factors that saw us increase our debt a little instead of deleveraging it. So therefore, yes, we are now focused on 2 things. We are focused on rationalizing working capital congestion that sort of built up during this time to accelerate deleveraging other than ordinary course repayments that we are scheduled to do. So that's my thoughts on debt.

The third question was, you had requested me to draw a parallel between '08, '09 and today. It's an interesting point that you make. Unfortunately, I didn't see much of a similarity between the 2 phases. So I don't see those kind of time frames that you spoke about and things of that nature being relevant to what we are facing today.

If you see our FY '22 -- FY '21 H2 performance and our FY '22 H1 performance, once again, subtracting the inflation part, we were sort of heading back to our normal levels of performance and going beyond before we were hit by hyperinflation and global volatility which dampened the second half of FY '22 in terms of operating performance. So I think while this inflation overhangs and supply chain disruption overhang the last -- for a couple of quarters, post which our operating performance should go back to normalcy is what I feel.

[Anuj Sharma, analyst]

All right. That was helpful.

[Shrikant Himatsingka, executive]

One more point. So despite all these pressures and challenges, Himatsingka did manage to clock record revenues at INR 3,200 crores for the year, which we are pleased with under the conditions. So I think the model is overall stable, but we will no doubt have some of this volatility hit us in the near term.

[Operator]

Our next question is from the line of Resham Jain with DSP Investment Managers.

[Resham Jain, analyst]

So I have 2 questions. So Obviously, the external environment, we see a lot of volatility there. But from the company's perspective, especially on the balance sheet, over the next, let's say, 6 months, how do you see your internal measures going to help both in terms of reducing your working capital and the debt as well? Because the inventory, if I look at, has increased significantly. Is it because of raw material or because of finished goods? And so internally, what all you can do to bring down your working capital? Or is it more dependent on external environment is what I wanted to understand broadly.

And secondly, on the demand side, how do you see the situation? If you can explain the slowness, is it related to specific customers of yours of specific product lines in terms of pricing point -- price points or any other reasons? So just to understand what kind of demand impact which we are seeing currently. Those are the 2 questions from my side.

[Shrikant Himatsingka, executive]

Yes. Let me take your second point first. So basically, you have 2 questions, one is about what we can do on the inventory -- on sort of decongestion during the next 6 months. And the second was my comments and views on the emanating global situation vis-à-vis our industry.

So as far as the demand outlook and volatility is concerned, it is not price point specific, we see it across the board, point number one. We see it across the board vis-à-vis price points, we see it across the board vis-à-vis regions. Yes, there are differences in intensity, but there doesn't seem to be a pattern as far as we are concerned.

So in every region, there seem to be some players who have, let's say, a greater need for deferrals and have slower offtake. And in the same region, we have players who are not affected at all. But overall, we seem to see, at region levels, general sort of approach of slowing a little until the inventory corrects as far as our clients are concerned.

So it's not like it's price point specific. It's not like it's region specific. We are seeing it across the board. And the essential driving factor per our understanding is the fact that they need to correct their inventories and this might take a few months. Now what is -- whether it's 2 months or 3 months or 4 months, it's a little difficult to predict. But as far as we are concerned, we think that this volatility will continue at least in the first half of FY '23.

Now to answer your other question, what we will be specifically doing, well, it's not just the inventory piece that needs to come down. [indiscernible] down to below INR 800 crore levels, and now it's back up above the INR 1,000 crore level. So we'll be focusing on bringing that down. The congestion is in WIP, it's across the board in RN, in WIP and in FG. So we will be focused on that. But in addition to that, we think there has been an updation on some of the incentives in terms of rate collections and so on. So we will probably look at accelerating that as well depending on how the market conditions unfold.

So it's not just the inventory piece, Resham, a couple of other current assets that we would like to become leaner on during this time. But we think that the next -- the couple of quarters FY '23, we'll see some demand volatility.

[Resham Jain, analyst]

Okay. Just a question, how much will be the total outstanding from government in the sense incentives and everything put together, approximate number?

[Shrikant Himatsingka, executive]

We'll take that off-line, Resham, because things could differ, so we can take you through that off-line.

[Operator]

[Operator Instructions] Our next question is from the line of [indiscernible].

[Unknown Analyst]

Congratulations on your results. I would like to ask, we can see the long-term debt and short-term debt has been increased. So I would like to ask the management how exactly are you planning to use these funds or whether you have already used it?

[Shrikant Himatsingka, executive]

Thank you for the question. So these funds have been deployed as is evident. So they are either in the form of working capital in the ecosystem or as far as term debt concerned, it's largely gone to fixed assets. So as I was mentioning earlier, we have finished our CapEx cycle. We were actually clear on our deleveraging sort of journey post completion of our CapEx cycle. But unfortunately, we were hit by the global turbulence that we've witnessed during '22 as far as inflation is concerned and other issues are concerned, including but not limited to supply chain and other aspects of volatility that we faced.

And so we basically landed up with some increase in debt during FY '22. There was also the delay that I spoke about as far as the reimbursements of export incentives were concerned and so on from the Government of India. So that also caused some spike in short-term debt. So these are the areas that we would now be wanting to decongest going forward. And so this will help us pare down some of the increases we saw.

And as far as the term debt is concerned, we will be following our scheduled repayments as they pan out. So accelerated working capital decongestion along with scheduled repayment of debt is what we will be focused on ideally.

[Operator]

Our next question is from the line of Pratiksha Daftari with Aequitas.

[Pratiksha Daftari, analyst]

I just wanted to understand that you mentioned that demand volatility may continue for H1 and given the raw material inflation, how do we look at margins in near future? And 1 bookkeeping question is could you just elaborate on the increase in deferred tax in this quarter?

[Shrikant Himatsingka, executive]

Okay. So margins, I can't be specific about it. But it's obvious that under these current circumstances of commodity prices and some fluctuation that we will see on demand, margins will be under pressure. The question on deferred tax is something we'll be happy to take off-line and take you through detail so that you are clear on that front. Do get in touch with us post this call, and we'll take you through it.

[Operator]

Our next question is from the line of Prerna Jhunjhunwala.

[Prerna Jhunjhunwala, analyst]

Sir, I want to understand your revenue mix in terms of U.S. and non-U.S. And how is the demand scenario in the non-U.S. regions? And is it equally under pressure the way U.S. is?

[Shrikant Himatsingka, executive]

So Prerna, during FY '22, Himatsingka has increased its non-U.S. revenue streams vis-à-vis '21. Unfortunately, the specific numbers are not in front of me, but again, we'll be happy to take this off-line as far as what the non-U.S. scenario looks like in terms of size.

In terms of general demand emanating ex U.S., I think it's a pretty -- relatively speaking, there's a lot of inquiries coming through. There is a lot of interest also because of our broader product offering and I intend to capture broader markets. So both aspects of strategy at player, we are offering a much broader spectrum of products to our clients globally, and we are consciously looking at tapping new markets. Himatsingka is building on its portfolio of brands constantly.

So all these initiatives have definitely made sure that our non-U.S. streams have become stronger and will continue to become stronger going forward. And we'll be happy to take you through specific numbers off-line. I don't have it in front of me at this point.

[Operator]

Our next question is from the line of [ Gaurav Jain ] from ICICI Mutual Funds.

[Unknown Analyst]

I have 2 questions. One is, sir, considering our CapEx is completed and we are not looking at any more growth CapEx, what should be the maintenance CapEx that we should be working with for the next 2 years kind of?

And second, sir, over and above what input costs we would have booked for Q4, what is the kind of inflation we should be looking at over and above Q4? And given the demand slowdown, is there a possibility that we will be able to work for new price hikes or any kind of discussion of [indiscernible] with our customers?

[Shrikant Himatsingka, executive]

Right. So normal organic CapEx levels, [ Gaurav ], in the region of between INR 60 crores and INR 70 crores is what we normally forecast. And so we expect that to continue. But as far as near term is concerned, we have pushed it out by additional 6 months as we had outlined in our update given the global volatility. So that's our organic CapEx levels in a normal year.

Second, you haven't asked a question that I'll just add on to it. So in normal situations, we would expect deleveraging in the region of INR 200-odd crores to play out, that's how we would see normal deleveraging on an annual basis. Of course, there's some working capital congestion at this point. So that would be over and above as and when that plays out.

And as far as your other question is concerned on price hikes, I think there is a constant effort that's on to be dialogue with clients for price enhancements. I think we've completed the first few rounds already -- first couple of rounds, rather. I don't see immediate price hikes flowing through because the markets are also in a wait-and-watch mode in terms of how raw material prices will behave. There could be some exceptions to it, but the dialogue is always on.

As I said, while the dialogue is on, it's not necessary that something will come through immediately because everyone is sort of waiting and watching in terms of what's going to happen to the raw material prices. There are several trigger points which are -- which may include seasons as in weather patterns. Trigger points could include regulations, as we recently saw where the government took off duties on the import of cottons. Trigger points could be, looking at regulatory, let's say, restrictions on the export of the raw cotton, which has not been announced. So it's -- but it's definitely been contemplated as is visible in certain sections of the media.

So these are examples for trigger points that could swing raw material prices. And given this, people are wanting to wait and watch. When I say people, I mean stakeholders. So that's our view. I don't see any near-term price hikes coming through in the next couple of months while the dialogue is on. I think people will wait and see what happens over the next few months to take a call.

[Unknown Analyst]

Right. But given the current prices, what you would have built in Q4, what should be the inflation over and above that, if you can help with that?

[Shrikant Himatsingka, executive]

It's a little tough one, [ Gaurav ], because it will change by product mix and so on. But I would say there is a bias for a slight upward movement vis-à-vis in the fourth quarter because prices have been consistently on the rise.

[Unknown Analyst]

Got it. Just last question on demand. I mean while we understand that the prices are abnormally high and demand is bound to come under pressure. But other than that, is there anything else that you are sensing with regard to, say, there is a lot of [ stocking ] in channel or anything of that sort? I mean -- and what should play out for us to see that the normal demand coming back kind of thing other than prices correcting, obviously?

[Shrikant Himatsingka, executive]

No, it's not just the prices that have caused demand fluctuation or that are causing demand fluctuation. It's also a supply chain glut -- there's a supply chain glut that's causing demand fluctuation because a lot of our global clients want their supply chains to be leaner and they feel the inventory levels are a little higher than desired. And so it's something that they would like to bring down. So that's also a very major factor in the demand softness story in the near term.

So I think both these aspects should be short-lived in terms of a few months, but it's difficult to predict the exact timing of this. Other than these reasons, I don't see any other major trigger as such that's something that concerns us. I think these are the 2 pieces.

[Unknown Analyst]

Got it. Last question, it is fair to expect that the net debt should have peaked out, right? I mean we should not expect the working capital going up. We should not expect CapEx. So net debt would have been down. Whatever it will be, it should be deleveraging from these levels, best case?

[Shrikant Himatsingka, executive]

That's right. That's our intent. Yes.

[Operator]

[Operator Instructions] Our next question is from the line of [ Aman Sonthalia ], an investor, please go ahead.

[Unknown Attendee]

Sir, 2 questions, sir. I've seen the presentation of Trident and recently Indo Count. For the quarter ended March, I've seen that India has lost market share to Pakistan. So is it a worrying sign? What is the reason behind that?

[Shrikant Himatsingka, executive]

[ Aman ], honestly, I haven't seen what you have seen. So I'd have to see the context of your statement. India has lost market share to Pakistan is a broad statement. So I'd have to narrow it down to products, into category and so on. But I'll be happy to take it off-line with you and brainstorm your observation.

[Unknown Attendee]

And sir, what about the demand, whether we are seeing the temporary glut in the demand or it's a demand destruction?

[Shrikant Himatsingka, executive]

No, no. It's -- as I said, demand correction in order to facilitate inventory correction with retailers. So that's the major piece of the puzzle. So broadly, we don't see any demand destruction. We're seeing a demand correction in order to right align inventories. That's the way we see it.

There could be softness in some buckets in some regions, but there could be optimism in certain other buckets in other regions. So overall, globally, we don't see softness beyond a point. I mean, yes, there is a slight bias, but the major piece is emanating from inventory correction at the point of sale or in the supply chain as the case maybe.

[Operator]

Our next question is from the line of Anuj Sharma from M3 Investment.

[Anuj Sharma, analyst]

See, we had a legacy upholstery and drapery business, and we were planning to reinvent the product portfolio to get back some of the market share. So any update on that?

[Shrikant Himatsingka, executive]

Yes. While we were working on tweaking our product portfolio and being more relevant globally, I just want to draw your attention that, that segment is a very small segment of our consolidated revenue streams. It is sub INR 100 crores. And while we're working on that, it cannot materially swing any of our numbers at a consolidated level. It's a luxury small boutique segment of ours. Although it's our legacy business, but -- and we are working on it. But from a standpoint of its contribution to consolidated financial performance is negligible.

[Anuj Sharma, analyst]

Sure. And my second question is, generally, what's the premium difference between the branded sales we do versus the unbranded or if it is a private label? And how has the premium moved in the past 2, 3 years?

[Shrikant Himatsingka, executive]

So it's difficult to quantify premium because the premium can come in the form of prices, it can come in the form of stickiness, it can come in the price (sic) [ form ] of longevity of market share and shelf space and so on. I think all in all, on a stable basis, given our strong portfolio of brands and strong portfolio private label, all put together, it is translating for us to stable EBITDA margins in the region of 20%, 22% in normal market conditions.

That's where we think we will continue to be once these global factors normalize. But other than that, for me to point out what the exact differences in branded revenues of branded products is a little difficult. It all sort of comes down to us seeing our EBITDA profile in the region of 20%, 22% on a stable basis.

[Anuj Sharma, analyst]

And lastly, we covered U.S. to 2 entities and both were merged. Now these used to be among the largest distribution companies. Do the -- the merged entity, does it retain its market share? Or how has the market share changed of the distribution merged entity over the past few years?

[Shrikant Himatsingka, executive]

So I mean, while it is a distribution entity, but do look at it -- do look at us as 1 integrated entity, right, that manufactures and distributes products. And yes, it does retain its share and its share continues to grow along with our revenue. So -- or depending on the product, of course, and product category. But overall, our share has increased because our revenues have increased.

So to answer your question, look at us as 1 integrated entity. And secondly, our market share has increased because we've had a 41% Y-o-Y increase in total revenue.

[Operator]

Our next question is from the line of Mithun Aswath with Kivah Advisors.

[Mithun Aswath, analyst]

I just wanted to understand, in terms of -- you mentioned that a large portion of our revenues comes from our own distributed sales. How much would that be? And if there is quite a little bit -- quite a bit of inventory stuck in the system, would we need to take some sort of write-offs or write-downs as well at some point? Just wanted to understand that.

[Shrikant Himatsingka, executive]

So -- I mean -- so to answer your first point -- so it's a distribution entity as in it's a wholly-owned subsidiary that carries on our business activities in the North -- basically in North America and Europe. So it's seamlessly integrated to manufacturing and it's therefore an integrated model. So please don't confuse yourself with the separate distribution entity and so on.

It's just for structural convenience that it exists. And because it operates in international jurisdictions, it has to be a separate legal entity. But the underlying model is seamless and 1 integrated thing.

The second part of your question is -- sorry, what was the second part?

[Mithun Aswath, analyst]

You mentioned there's quite a lot of inventory in the system. I just wanted to understand, would we need to take some write-off or anything on that?

[Shrikant Himatsingka, executive]

No, nothing that we foresee at this point.

[Mithun Aswath, analyst]

Okay. And just lastly, just wanted to understand how is your position in terms of raw material currently? Do you have inventory for the next quarter or something like that? Or how does that kind of move for you over the next 3 to 6 months? Just wanted to understand.

[Shrikant Himatsingka, executive]

Well, the raw material -- I mean there's inventory of course in the system. But the raw material piece is lean because we haven't gone long on it given the conditions. So we would continue to buy for our requirements in that fiscal period, whether it's a quarter or a year. So to answer your question, we are not long in any substantive way on raw materials.

[Mithun Aswath, analyst]

And just 1 last one on -- in terms of your revenue contribution from Europe, are you seeing any pressure there with the currency fluctuations? Just wanted your take on that.

[Shrikant Himatsingka, executive]

No, we're not seeing any -- we're seeing general demand fluctuation, as I outlined earlier during this call, but nothing specifically emanating out of -- emanating from currency-led insurance and so on. I think the best example of probable currency-led, let's say, polarizing our shift in sourcing [ basis ] could be jurisdictions like Pakistan, who have had severe fluctuations in their currency. But nothing substantive as such that we have seen vis-à-vis our business.

[Mithun Aswath, analyst]

Right. And looking more medium term, post these issues that you're seeing, do you see any tailwinds in the horizon in terms of these FTAs being signed with the Middle East as well as in Australia? Anything that could act as a positive surprise in this current turmoil that you're seeing?

[Shrikant Himatsingka, executive]

Yes. I think the themes that are positively playing out is the -- let's just say the trade agreements that India is pursuing with international jurisdictions. We saw it come through in Australia. We saw it playing out in the Middle East. We are now waiting and watching as to how it plays out with the U.K. and Europe and so on. It's clear that the Government of India is actively pursuing these opportunities and, therefore, that will be a positive theme for us as an industry.

The second thing that's playing out and has been widely discussed and debated is the China Plus One piece that's still active to the best of our knowledge and as what we see in the industry. So that's something that we believe is also playing out. India has a lot to offer in the textile space. Other than this, we feel that there is -- India is also offering a lot of tailor-made, innovation-led IP-led, service-led products in our industry, and that should be a differentiator that the market would want to absorb.

So these are some of the themes. Of course, I'll be happy to discuss it in more detail with you off-line. But I do think there are a lot of positives that will play out in the medium term for India. And for Himatsingka, more specifically, FY '22 was a good year for revenues. Unfortunately, it was hit on the operating profitability by the inflation that we saw.

So we continue to be optimistic about our model, as I said, for the investments we have made and the projects that we have completed. With some debottlenecking and some organic CapEx, we see substantial revenue upside and 20%, 22% stable EBITDAs, as we have seen through '17, through '18, through fiscal '19 and so on. Because the last 3 fiscals, that, for some reason or the other, have seen hits in our operating numbers. FY '20 got hit in H2 by COVID, '21 first half hit by lockdowns, then second half normalized in '21, '22 first half was working pretty smooth, then we saw the second half got hit by hyperinflation once again.

So I'm just waiting for some of these factors to normalize and we should be on our way to achieve the numbers that we just spoke about because the investments have been made, the assets are strong, and we are just awaiting normalization of some of these crisis.

[Mithun Aswath, analyst]

Just 1 last one on the balance sheet. Since our debt is quite high, have you seen maybe potential rise in rates could hurt us? And since we've not raised capital in the last 6 months to bring down debt levels, is there any thought to maybe do a rights issue or something like that to bring down our debt level? Because the next couple of quarters, if your margins are going to be lower, you may just cover your interest costs. So just trying to understand how are we positioned for that.

[Shrikant Himatsingka, executive]

So we will be focused on accelerated working capital decongestion and scheduled repayments. We have an adequate amount of cash with us, including unutilized scrips. So we don't see any short-term issues. Market conditions are volatile. So we don't have any specific thoughts on the capital raise, but we'll keep you posted if we do.

[Operator]

Ladies and gentlemen, that was the last question for today. I now hand the conference back to the management for closing comments.

[Roshan Nair, analyst]

On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.