KPR Mill Ltd
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Earnings Call Transcript

Earnings Call Transcript
2023-Q3

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Operator

Ladies and gentlemen, good day, and welcome to the K.P.R. Mill Limited Q3 FY '23 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. Abhishek Nigam from Batlivala & Karani Securities India Private Limited. Thank you, and over to you.

A
Abhishek Nigam
analyst

Hello, everyone. Good evening, and welcome to the Third Quarter FY '23 Earnings Call for K.P.R. Mill. Today, we are joined by Mr. Murugappan, who is the CFO; and Mr. Kandaswamy, the Company Secretary for K.P.R. Mill. Mr. Nataraj, who is the Managing Director, was supposed to join us today, but unfortunately, we have to cancel it the last moment because of some urgent travel plans.

And now without any further delay, I will hand it over to Mr. Murugappan for any opening remarks.

P
P. Murugappan
executive

Good afternoon, everyone. I am Murugappan, Chief Financial Officer of K.P.R. Mill Limited. I welcome you all for the K.P.R. Mill's third quarter earnings call for the financial year 2023. With me is our Company Secretary, Mr. P. Kandaswamy, also.

The brief background of the industry. The Indian economy is reported to continue its fast-growing economy status. The Indian textile industry is optimistic of repeating growth in financial year 2023 also. Despite adverse factors like global recession, Ukraine war, volatility in cotton prices, higher inflation, et cetera, the FTA [indiscernible] we can market like UAE, Australia of FTA with the U.K., Canada are likely to create market opportunity for the entire textile [ valuation ] in India. The government is also focusing on policies to make industry globally competitive.

K.P.R. is happy to announce a good performance in the third quarter of financial year 2023 also, overcoming the challenges the industry is facing. The fluctuation in cotton prices has been putting pressure on yarn margin. With the garment order position continues to be encouraging and the cotton prices have been started stabilizing, we hope to have a better performance in the current quarter also. To improve its performance further, the company is contemplating into certain modernization and expansion plans, which the Board has approved in the recent Board meetings.

The expansion of ethanol capacity in K.P.R. Sugar Mill Limited. We propose to increase the ethanol production capacity in K.P.R. Sugar Mill Limited from 130 KLPD to 250 KLPD at a project cost of INR 150 crores. This project will be funded through internal accruals and term loans. The project is expected to complete by financial year 2023, '24. The project is eligible for [ India subsidiary ] under the ethanol augmentation scheme also.

Second, the Vortex spinning mill. The company proposed to set up the Vortex spinning mill for viscose yarn production with an estimated project cash of INR 100 crores. This target is expected to complete by the financial year 2024, and the entire budget cost will be made through internal accruals.

Three, solar power plant. We propose to set up a 12-megawatt solar power plant [indiscernible] construction, with a total cost of about INR 50 crores. This project cost will be met through internal accruals. The project is expected to complete this year. That is [ Q3 ] 2023.

The expansion of processing and the printing division. The company plans to increase the production capacity of its processing and printing by debottlenecking the process, which will increase the production by about 20%. The total project cost of INR 50 crores will be met through internal accruals. With this expansion, we hope that the next year's increase in turnover and the profitability will be improved.

Now the floor is open for questions.

Operator

[Operator Instructions] We have the first question from the line of Kapil Jagasia from Nuvama Wealth Research.

K
Kapil Jagasia
analyst

Sir, my first question is on the demand environment. How is that shaping up?

P
P. Murugappan
executive

Demand is comparatively better, only the margins in yarn is a little skewed. So otherwise, demand wise both the yarn and garments is doing well.

K
Kapil Jagasia
analyst

Okay. So like how much margins yarn would have made this quarter?

P
P. Murugappan
executive

It's above 14%.

K
Kapil Jagasia
analyst

Okay. And sir, in terms of garment segment volumes, they have increased by around 10% on 9M FY '23 basis. So my question is, even with the increased capacity, the increase is only 10%. So are we facing any export slowdown here in the garment or the order book has shrunk? Like what would be order book position also over here?

P
P. Murugappan
executive

Order book currently is about INR 1,000 crores. The garment turnover is in line with the estimates because the new factory ramping up is done in the first 9 months. So we hope that it will improve in the current quarter, and it is in line only.

K
Kapil Jagasia
analyst

Okay. And can you please help me with the sugar and ethanol sales breakup for this quarter?

P
P. Murugappan
executive

Sugar and ethanol sales, you are asking?

K
Kapil Jagasia
analyst

Yes.

P
P. Murugappan
executive

It's about INR [ 619 ] crores.

K
Kapil Jagasia
analyst

For this quarter?

P
P. Murugappan
executive

Yes. Excuse me, sir. Sugar and ethanol sales number is INR 252 crores. For the year, it's INR 619 crores.

K
Kapil Jagasia
analyst

Okay. And the breakup would be -- for that would be, between sugar and ethanol?

P
P. Murugappan
executive

Yes, I'll tell you. Sugar sales is INR 600,063,000.

Operator

We have the next question from the line of Muthu Kumar from [ Fidelity Venture ].

U
Unknown Analyst

I have 3 questions. Yes. First, most of the CapEx you have told, but in your annual report, you've mentioned the CapEx is [indiscernible] at Chengappalli garment unit. Could you please clarify what is the quantum of CapEx in that Chengappalli garment unit?

P
P. Murugappan
executive

The Chengappalli garment unit expansion is completed in the last -- 2022 March itself. The total project cost is about INR 250 crores.

U
Unknown Analyst

Okay, sir. Okay, what are the steps taken to tackle the cotton volatility...

Operator

Mr. Muthu Kumar, sorry to interrupt you, but your audio is not very clear. I request you to kindly go off the speaker phone.

U
Unknown Analyst

Okay, sir. The second question is what are the steps taken to tackle cost and volatility on prices? And then you can expect the demand momentum for cotton and spinning picks up?

P
P. Murugappan
executive

Demand-wise, there is no issues. The movement of goods is good only. Only the margins are fluctuating. That's why we are keeping a very low inventory, say, 2 to 3 months start, we are maintaining to avoid the high fluctuation impact.

U
Unknown Analyst

Okay. In the preceding season, what will be your major focus, sugar or garment export or cotton yarn?

P
P. Murugappan
executive

In the?

U
Unknown Analyst

In the forthcoming session, what is your major focus, that is in sugar or in garment or in cotton yarn?

P
P. Murugappan
executive

All are part of the business only.

U
Unknown Analyst

Okay, sir. And what is expected integrated EBITDA margin?

P
P. Murugappan
executive

Sir, currently 9 months is about 23%. We hope that we will be doing around that level.

Operator

We have the next question from the line of [indiscernible] from Unique Portfolio Managers.

U
Unknown Analyst

Sir, earlier, you had mentioned that by quarter 3, we intend to completely ramp up the new capacity, which we have put up. But if you look at the numbers, we have manufactured about 32 million units. And if we ramp it all up, it should have been 38-odd. So is there any reason for this?

P
P. Murugappan
executive

There is none. Currently, the production capacity is more or less reached. We hope that we will be doing somewhere around 33 million garments per quarter.

U
Unknown Analyst

Sorry, how much? 35 million?

P
P. Murugappan
executive

35 million to 36 million garments per quarter.

U
Unknown Analyst

Okay. And sir, what would be your margins in garment for this quarter?

P
P. Murugappan
executive

This quarter is about 21%.

U
Unknown Analyst

Okay, okay. And you said the excess inventory -- the high-priced inventory that we are carrying in yarn and fabric, that is done now and the margins are back from, say, this quarter.

P
P. Murugappan
executive

Still fluctuation is very high in cotton. So the margins are scarce only, but we hope that it will stabilize this quarter.

Operator

We have the next question from the line of [ Chinmayee ] Shah, an individual investor.

U
Unknown Attendee

Yes. Sir, we plan for new CapEx by the next year, right? So what will be the approx revenue being targeted for the same? What would be the approx revenue generation from the new CapEx?

P
P. Murugappan
executive

Sir. Actually, the sugar division, there would be an increase in revenue of about INR 50 crores because sugar will be converted in the ethanol, but the margins will be very good. And over time, we expect a revenue of about INR 100 crores from 2024, '25 onwards because it will be completed in 2024 only. So our solar power plant will give a cost saving of around INR 12 crores per annum. And the processing division capacity will increase by 20%. It will be internally consumed.

U
Unknown Attendee

Fine, sir. Okay. And sir, one more thing, sir. I think from January onwards, our yarn margins are staying as of December like 14%, or it has been started in upside?

P
P. Murugappan
executive

January, more or less in the same kind of 14%, 15% only. We hope that it will improve in the coming months.

U
Unknown Attendee

Fine, sir. And sir, how about our Europe and U.S. order book for garments?

P
P. Murugappan
executive

Garments order book is healthy only. We are currently running with order book of about INR 1,000 crores.

Operator

We have the next question from the line of Yashvardhan Sinha, [ MIBL ].

U
Unknown Analyst

Yes, I basically wanted to understand what the impact on the business would be with the FTA with the EU that's upcoming?

P
P. Murugappan
executive

Sir, EU FTA is not expected now. We are expecting FTA with is U.K.

U
Unknown Analyst

Okay. And what would the impact on the business be with that?

P
P. Murugappan
executive

We hope that the interest -- the business in the U.K. will improve by about 10% to 15% immediately. In the long run, it will give a benefit.

Operator

We have the next question from the line of Aman Agarwal from Carnelian Capital.

U
Unknown Analyst

I had a few questions, starting first on the depreciation. So like if I see a depreciation charge for this quarter has declined by around INR 21 crores, like for last quarter, it was INR 50 crores, but for this quarter, it is INR 29 crores. So any reason why that has happened? Because when I look at the stand-alone numbers, it has remained more or less similar, right, around INR 19 crores in stand-alone for last quarter as well as this quarter. But in consol, it has declined around INR 21 crores. So why is that?

P
P. Murugappan
executive

It's basically, sir, some of the assets in the sugar business has completed its life, where there is some capital subsidiary also standing there with some underlying conditions. Both are met, so that has been -- the subsidy has been written off and the depreciation also will be over from this quarter.

U
Unknown Analyst

Okay, sir. So going forward, we should see a INR 30 crore kind of depreciation run rate for all the quarters, right, sir?

P
P. Murugappan
executive

From this quarter onwards, there will be some more depreciation in some of the capital expenditure incurred during the year, not exactly, maybe some more depreciation will come from this quarter, around INR 40 crores.

U
Unknown Analyst

Okay. Got it, sir. Sir, my next question was on the sales volume. Like in this quarter, we have done somewhere around 29 million pieces in garments volumes. And when I look at in 9-month basis, we have done somewhere around 91 million. But when I look at the production number, we have been producing around 32 million for the last 2, 3 quarters. So in terms of production, we have been producing more. So what is impacting the overall sales volume pieces for us? That was number one.

And second, given the prices of cotton has now come down, like, so when we have this garment inventory with us. So like going forward, will it realize at a lower price? Or will we be able to sell it at a higher price, like given the contracts we have with our customers?

P
P. Murugappan
executive

Sir, garments are produced based on the orders only. Prices are all already fixed and at that price only, it will be supplied. As well, most of the garments are produced with higher cotton cost only because during the period, we confirmed fabrics are all the manufactured and dying also done. So we may not get much of the price benefit out of it because already orders are confirmed, [indiscernible] have also been booked further.

U
Unknown Analyst

Right. So -- and the reason for this lower sales volume compared to production volume, sir?

P
P. Murugappan
executive

Some small [indiscernible] when the quantity goes up, there will be some stock. Generally, fourth quarter volumes, generally, it's higher, we expected it will be.

U
Unknown Analyst

Got it, sir. In terms of the new plant ramp-up, sir, how much capacity utilization have we achieved in the new garment facilities, if you can talk about that?

P
P. Murugappan
executive

Yes. More or less, we have achieved the full capacity, sir. We are expecting a production from this quarter onwards. Full production will be from next year.

U
Unknown Analyst

Got it, sir. And sir, in terms of new CapEx, like we were talking about ramping up the full capacity of the existing plant before going for a new CapEx. So since it is now almost fully ramped up, so how are we thinking about the new CapEx and when we could decide about putting up another garments facility given our focus is to shift towards garment in future?

P
P. Murugappan
executive

Garment production is expected to be full in the coming year. We are just watching the market because of this Ukraine war and the slowdown in Europe and all. And also, we are looking at the new government policy for this Mudra Scheme and all. Yes, we are waiting for some time to take a call on garment expansions. We are expanding the other businesses, as I spoke about it in the earlier comments on this call.

Operator

[Operator Instructions] We have the next question from the line of Sanjay Dhanuka from KPR Mills.

U
Unknown Analyst

This is regarding the stand-alone business. I see one item in quarter 2, that is purchase of [indiscernible], INR 137 crores. But there is no such item in last year as well as this quarter. What is that one? And what is the purchase, whether that has been disposed or sold or not? Or is still in the stock?

P
P. Murugappan
executive

It has been sold as well, some of them. It is some of the [indiscernible] and the garment when the ramping up was a little slow. It is not there now. We are -- our factory is fully running now.

Operator

We have the next question from the line of Prerna Jhunjhunwala from Elara Capital.

P
Prerna Jhunjhunwala
analyst

Sir, just wanted to understand the cotton procurement policy. Given the volatility in the cotton prices, what will be your strategy for this season?

P
P. Murugappan
executive

We are trying to keep as low as possible in the cotton inventory unless the prices are getting settled. Now we are getting only 2 months start. We hope that we will be doing it for some time from now. If the prices reaches to a certain level, somewhere around 60,000, we may go for a little higher stock.

P
Prerna Jhunjhunwala
analyst

Okay. And sir, my second question is on sugar profitability. This quarter, you did 33.5% EBIT margins in the sugar segment. What should we assume for full year? Or what should be the sustainable margin in the sugar business going forward?

P
P. Murugappan
executive

See generally, during the season the margins will be higher because of the higher power production in the sugar unit. It is -- on a full year basis, we are expecting somewhere around 22% to 25% kind of a margin rate.

P
Prerna Jhunjhunwala
analyst

EBIT margins or EBITDA?

P
P. Murugappan
executive

EBITDA.

P
Prerna Jhunjhunwala
analyst

EBITDA. Okay. Sir, this quarter, could you just give me the sales breakup between sugar and ethanol? I missed that number, been asked earlier.

P
P. Murugappan
executive

I'll tell you. Last time also I have informed. Sugar sales is INR 115 crores. The ethanol is INR 102 crores.

P
Prerna Jhunjhunwala
analyst

Okay. And rest would be power?

P
P. Murugappan
executive

Yes, power.

P
Prerna Jhunjhunwala
analyst

Okay. Understood. And sir, in terms of garment business, this quarter, we had seen a little lower margin at 21%. What should be sustainable margins for the garments business as well?

P
P. Murugappan
executive

So 9 months rate, if you look at, it is about 24%. We hope that it would be somewhere around 22% to 24% would be [indiscernible].

P
Prerna Jhunjhunwala
analyst

Okay, okay. And sir, in your presentation, Australia, revenue share has been declining since FY '21. Could you give some color on that geography, how we are faring and what are we doing there?

P
P. Murugappan
executive

Since the revenue from the garment business is growing because of that, it's showing a little less in the percentage wise. Otherwise, the business is more or less equal only.

Operator

[Operator Instructions] We have the next question from the line of Prerit Choudhary from Green Portfolio.

U
Unknown Analyst

Yes. So I have some questions. So the first one is, so for the last 2 quarters, we have been seeing some negative changes in inventory. So are we seeing some big orders in the next quarter that we are going to fulfill?

P
P. Murugappan
executive

In the garments?

U
Unknown Analyst

Yes. Overall. In the consolidated results, we are seeing negative changes in inventory for last 2 quarters. So I just wanted to understand are there any big orders that are coming up that needs to be fulfilled in the Q4?

P
P. Murugappan
executive

Not like this. There are regular orders only. Because of the inventory prices are going up in the last 2, 3 quarters, the inventory -- the negative inventory is showing. Otherwise, the regular stocks we are getting because earlier the cotton price used to be some INR 40,000, INR 50,000. Now it's actually somewhere around INR 105,000. Now it's trading around INR [indiscernible] now. Because of the higher inventory costs, it shows a higher inventory negative.

U
Unknown Analyst

All right. And also in the textile segment, if we see the raw material prices have started pulling down, but our margins are still affected in the profit EBITDA level. What has been the reason for the same?

P
P. Murugappan
executive

So it is -- even though the prices of cotton has come down substantially, the demand also more or less in line. But the price is not going up because the export demand is not. So all the yarn manufacturers are coming to domestic market. Otherwise, India is a yarn surplus country. We used to export about of 40 to 50 percentage of the production. Now everybody is coming to the domestic market since the export market is very slow.

U
Unknown Analyst

Okay. All right. So the next, so in Russia, what has been the impact of the Russian-Ukraine war? And also the economies like Bangladesh and China have been taken a hit in the textile industry. So are we seeing any benefit that we are getting new customers or more orders from the international company?

P
P. Murugappan
executive

There is no such things are happening. We hope that it will happen, but still we are waiting for the -- some changes in the international markets.

U
Unknown Analyst

Okay. So there is no currently any impact that the company is seeing from it.

P
P. Murugappan
executive

Yes. There is none.

U
Unknown Analyst

And what is the current capacity utilization of our ethanol plant?

P
P. Murugappan
executive

Totally utilized?

U
Unknown Analyst

Yes.

P
P. Murugappan
executive

Ethanol plant is fully utilized.

U
Unknown Analyst

Okay. Fully utilized. And what was -- what has been the reason? I mean our EBIT has grown significantly compared to the previous quarter for the sugar and ethanol. So what has been impacting that?

P
P. Murugappan
executive

Can you come again?

U
Unknown Analyst

Our EBIT margins have significantly grown compared to the previous quarter for the sugar...

P
P. Murugappan
executive

This third quarter, the sugar season starts. In the first and second quarter, it's our season. Third and fourth quarter is the sugar season.

U
Unknown Analyst

All right. And if you can just give guidance what kind of top line or margins that we can expect for the next couple of years with all these capacity expansions that we are doing and ramp-up of our garments facility.

P
P. Murugappan
executive

So we tried to achieve a growth of [ 10% ] on a year-on-year basis.

U
Unknown Analyst

Okay. 10% total. And for the margin?

P
P. Murugappan
executive

Same way.

U
Unknown Analyst

Can you repeat that? I was not able to hear you.

P
P. Murugappan
executive

Yes. Same way, we are expecting the margins also.

U
Unknown Analyst

All right. And are we expecting any planning, any demerger, as our sugar and ethanol businesses also growing? Do we plan to demerge the business in the future?

P
P. Murugappan
executive

Immediately, we do not have any plan. Anyway, we will take up this to the Board for this question.

Operator

We have the next question from the line of Vikas Jain from Equirus.

V
Vikas Jain
analyst

Sir, can you please give a break up between our yarn and fabric sales for this quarter?

P
P. Murugappan
executive

Yes. I'll tell you sir. Yarn sales quantity is 15,000 tonnes. Fabric sales quantity is about 1,700 tonnes. Okay. You want the value also?

V
Vikas Jain
analyst

Yes, sir, value also, please.

P
P. Murugappan
executive

Yarn value is INR 450 crores. Fabric is INR 55 crores.

V
Vikas Jain
analyst

INR 55 crores. Okay. Sir, I want another color with respect to the demand from the overall Europe and North America markets. What are the trends that you are witnessing with respect to any signs of any slowdown or any market share gains that we are witnessing from any other competing nations? Just some more color with respect to the order side that we have -- order book that we have, what is the comfort level and your long-term visibility with respect to the order book and the demand from these markets since the conditions are quite volatile as on date.

P
P. Murugappan
executive

As you said, there will be some volatility in the market, but we are operating in a different segment. We are operating in a regular garment and the basic garment segment. We are not seeing much of a fluctuation in the demand for the product. We are operating with an order book of about INR 1,000 crores, maybe somewhere around for 5, 6 months kind of order book, we are maintaining continuously. We are not seeing any drop in the order. We hope that it will not have much of an impact.

V
Vikas Jain
analyst

Got it. But any down trading or shifting in lower the ASP or any such trend visible? Or it is just as normal as it was earlier?

P
P. Murugappan
executive

It is normal as it is earlier.

Operator

[Operator Instructions] We have the next question from the line of Pratik Tholiya from Systematix.

P
Pratik Tholiya
analyst

Sir, just a couple of questions. Firstly, on the sugar side, can you help the sugar sale volumes for the quarter and whether there was any exports also in sugar this quarter?

P
P. Murugappan
executive

Yes. Sales volume is about 42,000 tonnes, out of which 20,000 tonnes is export.

P
Pratik Tholiya
analyst

20,000 tonnes is export. And sir, what is the average realization in the domestic and the export market for us?

P
P. Murugappan
executive

Sir, we have consolidated average realization only. It's about INR 33.5 per kg.

P
Pratik Tholiya
analyst

INR 33.5 per kg, that's a concern -- realization. Fair enough. But sir, the export will be higher than this, I'm sure.

P
P. Murugappan
executive

A little higher because we are exporting raw sugar, it will be a little higher.

P
Pratik Tholiya
analyst

Okay. And sir, what is our total export quota this year that you've got?

P
P. Murugappan
executive

It's about 27,000 tonnes. 7,000 tonnes will be done during this quarter.

P
Pratik Tholiya
analyst

Okay. 7,000 tonnes in this quarter. And you can -- has it been contracted? And if yes, then at what price?

P
P. Murugappan
executive

Contract has already been done, somewhere around INR 35 per kg.

P
Pratik Tholiya
analyst

INR 35 per kg. Sure. And sir, what was the ethanol volumes for the quarter? And if you can give the split -- sorry?

P
P. Murugappan
executive

It is about 15,800,000 liters.

P
Pratik Tholiya
analyst

1 lakh?

P
P. Murugappan
executive

15,800,000 liters.

P
Pratik Tholiya
analyst

15,800,000 liters. Okay. And sir, if you can split it between what -- how much was from [indiscernible] and how much from juice?

P
P. Murugappan
executive

It is juice. During the season, it will be juice.

P
Pratik Tholiya
analyst

Okay. So we are doing only juice during the season. And sir, are we putting up any grain-based facility also? Because after the season, how do we plan to run our ethanol capacity?

P
P. Murugappan
executive

After the season, the capacity will be run through molasses.

P
Pratik Tholiya
analyst

Through molasses, okay. And sir, what will be our average days of operation for the distillery?

P
P. Murugappan
executive

300 days.

P
Pratik Tholiya
analyst

300 days. And how much would be -- so a season typically -- I mean, 3 to 4 months will be juice and remaining will be molasses.

P
P. Murugappan
executive

Yes, yes. It's about 4.5 months to 5 months will be juice, and the balance segment will be molasses.

P
Pratik Tholiya
analyst

Molasses. And sir, no plans for getting into grain as of now?

P
P. Murugappan
executive

No, no, because our capacity is more or less equal to the molasses production and juice conversion.

P
Pratik Tholiya
analyst

So sir, the expansion that you're doing, what is the feedstock for that?

P
P. Murugappan
executive

It is, again, same, juice and the molasses only. As I told you earlier, in the first plant, we have set up only 130 KLPD ethanol plant. Whereas in the second plant, we set up about 220 KLPD ethanol plant. Now we are expanding the first plant, from 130 KLPD to 250 KLPD, more or less equal to our capacity only.

P
Pratik Tholiya
analyst

Okay. Okay. So post this expansion, we will be fully utilizing our molasses?

P
P. Murugappan
executive

Fully utilizing. Molasses now is being sold, that will be usefully utilized.

P
Pratik Tholiya
analyst

That will be internal used. Understood. And sir, just wanted to understand what are the recovery rates for us because our margins seem to be much superior compared to the companies, especially in the UP belt. So whether our recoveries are higher because I think even Karnataka Government had announced some INR 100 per quintal increase in the FRP. So despite the higher cost, just wanted to understand on the margin front, what has led to this margin expansion?

P
P. Murugappan
executive

Basically, power and ethanol is giving more margin to us because we are one of the few companies where the company having a full ethanol capacity. Because of that, the margins are higher, and also we have a higher power capacity. We have about 90 megawatts of co-gen power. So both are giving advantage to us.

P
Pratik Tholiya
analyst

Okay. But sir, how is the recovery rate right now in our catchment area?

P
P. Murugappan
executive

It is somewhere around 10.5 to 10.75 point something.

P
Pratik Tholiya
analyst

That is gross recovery?

P
P. Murugappan
executive

Yes, gross recovery.

Operator

[Operator Instructions] We have the next question from the line of Jinesh Shah from Congo Commodities.

U
Unknown Analyst

I just had one question regarding what would be the yarn, which is cotton and manmade, what would be the percentage of cotton yarn versus manmade yarn that we have?

P
P. Murugappan
executive

So presently, manmade yarn is very negligible, very small portion. It's about 95% is cotton yarn only.

U
Unknown Analyst

Right. Okay. And sir, one more question regarding FASO, sir. How are we ramping up the distribution? And what is the future prospects for FASO? What have we planned?

P
P. Murugappan
executive

Now the ramping up is good, going well. We hope that we will reach a breakeven level in the coming year, 2023, '24.

U
Unknown Analyst

All right. Most of this distribution happens via online or by offline channel, sir?

P
P. Murugappan
executive

Mostly offline, online also there.

Operator

Thank you. As there are no further questions, I would now like to hand it over to the management for closing comments.

P
P. Murugappan
executive

Thank you very much for attending the K.P.R. Mill's Quarter 3 Earnings Call. Thank you once again for attending the call.

Operator

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

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