FILATEX INDIA LIMITED CIN No.

LI 7119DN1990PLC000091

FIL/SE/2021-22/56
15th November, 2021

National Stock Exchange of India Limited BSE Limited

Listing Department Listing Department
5th Floor, Exchange Plaza, C-l, Block-G, 25th Floor, Pheroze Jeejeebhoy Towers
Bandra-Kurla Complex, Bandra (E) Dalai Street,
Mumbai-400 051 Mumbai - 400 001
Security Symbol: FILATEX Security Code: 526227

Sub.: Transcript of Conference Call on 12th November, 2021

Dear Sir,

This is in continuation to our letter No. FIL/SE/2021-22/54 dated 10th November, 2021
on the Q2 & H I FY22 Earnings Conference Call on 12th November, 2021. Please find
enclosed the transcript in respect of the same.

This is for your information and records please.

Thanking you,

Yours faithfully,
For FILATEX INDIA LIMITED

COMPANY SECRETARY

Enel.: a/a

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 “Filatex India Limited Q2 & H1 FY22 Earnings
Conference Call”

November 12, 2021

Management:
Mr. Madhu Sudhan Bhageria – Chairman & Managing Director
Mr. Ashok Chauhan – Executive Director
Ms. Stuti Bhageria – Senior Vice President – Corporate Strategy

Page 1 of 13
 Filatex India Limited
November 12, 2021

Moderator: Ladies and gentlemen, good day and welcome to the Filatex India Limited
Q2 FY22 Earnings Conference Call. As a reminder, all participants’ lines will
be in the listen-only mode. There will be an opportunity for you to ask
questions after the presentation concludes. Should you need assistance
during the conference call, please signal an operator by pressing ‘*’ then ‘0’
on your touch tone phone. Please note that this conference is being
recorded. I now hand the conference over to Mr. Madhu Sudhan Bhageria –
Chairman and Managing Director of Filatex India. Thank you and over to you
sir.

Mr. M S Bhageria: Thank you. Good day to all of you. Once again, a warm welcome to all of you
attending this earning call for the quarter ended September 2021. I hope all
of you are safe and are maintaining all necessary precautions to contain
COVID. An old adage ‘an ounce of prevention is worth a pound of cure’ holds
good in containing this pandemic. Though the fear of the third wave has not
vanished, we are back to business as usual as the skilled workforce has
come back from their native places. Public transportation has been restored
close to a normal, in a graded manner. Restriction on hotels, flights and
leisure travels have revived after easing the restrictions. With prayers in our
hearts and COVID appropriate behaviour (CAB), we hope there is no third
wave causing disruption to our daily lives and business activities.

Coming back to business matters. I presume you would have certainly gone
through the presentation, which has been uploaded on our website as well
as on the stock exchanges’. You would have noticed that our performance
in second quarter of FY2022 has been better than the first quarter, both in
terms of top line and the bottom line. The slowdown effect due to second
COVID wave has gradually waned.

Let me quickly go through the results of this quarter. We achieved a

production volume of 88,900 metric tons, which is around 93% of our
capacity. As compared to Q1 FY22, the production is 14% higher in this
quarter. The revenue for the quarter is Rs. 965 crores which shows a growth

Page 2 of 13
 Filatex India Limited
November 12, 2021

of 38% over Q1 FY22. The operating profit EBITDA is around Rs. 125 crores,
a growth of around 24% over the preceding quarter. Profit before tax is Rs.
110 crores which is an increase of around 41%. and net profit has increased
by 42% to Rs. 74 crores. As evident from the numbers, the performance is
quite remarkable when compared to first quarter of this financial year. In
this quarter, also we are not comparing financial results on a year-on-year
basis as Q2 of last year had vastly different conditions and any comparison
as such would exaggerate the numbers.

The markets have shown good recovery ahead of the festive season. There
is some buoyancy in the sentiments of the market. The pre-Diwali business
has been good. Traders across the country are preparing for forthcoming
wedding season. In about a month from mid-November to mid-December,
more than 2 million weddings are slated to be solemnized across the
country. Textile, jewellery and service sector are looking at a bonanza by
way of wedding purchases. The demand for synthetic fibres in the domestic
market has been good. However, as they are being trend over decades, the
demand for the yarns picks up in the third and fourth quarter.

The prospects for exports are also looking good. The government having
recognized the importance of synthetic fibres for the growth of textile
business is now focusing on increasing production of manmade fibres in
India in line with international trend. Government policy initiatives have
helped immensely in reviving the sentiments in the domestic market.
Government policy initiative like PLI – Production Linked Incentives, which
is mainly to promote MMF, apparels in garments, RoDTEP, RoSCTL, Mega
textile parks, etc. These stimuli have perked up demand and are likely to
lead to fresh investments. There are some signs about shortage of key raw
materials from domestic suppliers. However, there is no global shortage
and the shipping rates, which had skyrocketed are showing some
downward trend, coming down tolerable levels.

Page 3 of 13
 Filatex India Limited
November 12, 2021

Coming back to our manufacturing facilities, we have commissioned our 30

MW captive power plant. However, as there is global shortage of coal, the
prices of coal have shot up almost 3 times. High prices, of coal, steep freight
rate and erratic shipping schedules have a strain on all coal users like steel
plants, processing houses and power plants. After having run our plant for
several weeks, we have stopped generating power and we will resume the
operations when coal supplies are stable and at affordable level. Our
proposed plan of de-bottlenecking melt capacity of 50 tons per day and
manufacturing lines of 120 tons per day of POY has moved to the execution
phase. Ordering of long delivery equipment is complete. We are targeting to
complete the installation by June 2022.

The future of textile manufacturing is at an inflection point. Global

production of textiles and apparels have rapidly increased over the last
decades, which has led to generation of large amount of textile waste.
Polyester, owing to its affordability and versatility, is the preferred and most
dominant fibre. To ensure sustainability and reduce environment impacts
in the textile and apparel industry, utilizing a sustainable and circular
economy model is of utmost importance. As mentioned in previous con-call,
we had initiated in –house research work on recycling of polyester waste in
all forms. This is based on depolymerisation of polyester and removing
colour, additives, catalysts, etc. before re-polymeryzation.

Our lab scale plant trial results after a rigorous efforts lasting over more than
18 months have given us confidence to scale up from 50 kgs per day to a
pilot plant of 1500 kgs per day. In this pilot plant we, we will be able to
revalidate our process parameters and more accurately compute cost of
production for recycling. The output from this pilot plant will also give us an
opportunity to test market the quality of recycled chips/ yarns. We expect
this plant to be ready by April 2022. Sustainability in the textile and clothing
industry has gone beyond just using organic materials and efficient
processes. Recycled fibres are fetching a good premium. The pressure on

Page 4 of 13
 Filatex India Limited
November 12, 2021

Coming back to our manufacturing facilities, we have commissioned our 30

MW captive power plant. However, as there is global shortage of coal, the
prices of coal have shot up almost 3 times. High prices, of coal, steep freight
rate and erratic shipping schedules have a strain on all coal users like steel
plants, processing houses and power plants. After having run our plant for
several weeks, we have stopped generating power and we will resume the
operations when coal supplies are stable and at affordable level. Our
proposed plan of de-bottlenecking melt capacity of 50 tons per day and
manufacturing lines of 120 tons per day of POY has moved to the execution
phase. Ordering of long delivery equipment is complete. We are targeting to
complete the installation by June 2022.

The future of textile manufacturing is at an inflection point. Global

production of textiles and apparels have rapidly increased over the last
decades, which has led to generation of large amount of textile waste.
Polyester, owing to its affordability and versatility, is the preferred and most
dominant fibre. To ensure sustainability and reduce environment impacts
in the textile and apparel industry, utilizing a sustainable and circular
economy model is of utmost importance. As mentioned in previous con-call,
we had initiated in –house research work on recycling of polyester waste in
all forms. This is based on depolymerisation of polyester and removing
colour, additives, catalysts, etc. before re-polymeryzation.

Our lab scale plant trial results after a rigorous efforts lasting over more than
18 months have given us confidence to scale up from 50 kgs per day to a
pilot plant of 1500 kgs per day. In this pilot plant we, we will be able to
revalidate our process parameters and more accurately compute cost of
production for recycling. The output from this pilot plant will also give us an
opportunity to test market the quality of recycled chips/ yarns. We expect
this plant to be ready by April 2022. Sustainability in the textile and clothing
industry has gone beyond just using organic materials and efficient
processes. Recycled fibres are fetching a good premium. The pressure on

Page 4 of 13
 Filatex India Limited
November 12, 2021

till some big capacities come in, I don't see any downward trend coming in
the year as a whole. 1-2 months can always be a little slack, but year as a
whole the performance for the textile should remain good.

Second question was about capacity. So, what we have done in this quarter,
we should be able to replicate double of that in the next half. This quarter
our production has been around 89,000 tons. So, the next half year, I think
we should be able to do around 1,80,000 tons. And the margin should
remain somewhat little better than the Q2.

Moderator: The next question is from the line of Vikrant Kashyap from KRChoksey
Institutional. Please go ahead.

Vikrant Kashyap: In the opening remarks, you mentioned there is a sign of shortage of raw
material in domestic market. Could you please give some better
understanding that how it is panning right now in this quarter and outlook
for the second half? Will we be importing more or the raw material is still
available that we will be able to meet our requirements?

Mr. M S Bhageria: See, there has been shortage because there have been sudden shut down in
the domestic plants. They had some break down and we did not plan for
things like that. The break down happened in Reliance plant, as well as in
Indian Oil simultaneously. Some slight production cuts we had to take. But
now going forward, we are making import arrangements and we will
increase our stock levels also so that we do not face such problems. Also,
Reliance has taken over some of the plants like Alok and even JBF. So, their
domestic, self-consumption has gone up quite high, almost to the tune of
65%, whatever raw material they produce now they are consuming by itself.
Then we will be importing more and keeping the stock level little higher so
that we don't have the problem of shortage of raw materials in future. We
are taking necessary steps so that we don't face this shortage.

The price parity is same as the imports and what we buy from Reliance.
There is not much difference in the prices.

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 Filatex India Limited
November 12, 2021

Vikrant Kashyap: Since the realizations for your product has gone up vis-à-vis, has the cost for
your input materials also went up in similar way because we have seen
stress on margin?

Mr. M S Bhageria: Yes, the cost of the material has also gone up, more or less similar. Some
power cost has gone up because lately power had become costly. And when
our starting of the plant was happening, we could not buy power on the
bilateral agreements, that had all finished. So, we had to buy from the grid,
which was slightly costlier. But going forward, I feel from fourth quarter
onwards, we should be able to start our power plant again because now coal
prices have started coming down and maybe in a month or so they will come
to the desired levels.

Vikrant Kashyap: So, how is the outlook for the rest of the year for your input prices for crude
related?

Mr. M S Bhageria: It's very difficult to predict that. It is a pass through, but I feel crude should
remain around the (+) or (-) $4 - $5 at $80 per barrel. So, the prices should
hover around these numbers only, but they fluctuate little bit because they
are determined from China and Chinese by nature are very speculative. So,
prices keep fluctuating 2-3% every fortnight.

Vikrant Kashyap: You talked about better prospects in exports. Will you please explain more
and how we are looking at the exports market?

Mr. M S Bhageria: So, we have a presence in export market, and we have increased our
Texturizing production. So Textured is the main product which is exported
and previously we were facing shortage of containers and freights were
high. As the freights come down, then we will be able to export more
competitively.

Vikrant Kashyap: We have improved our product mix over the years. Do you still find better
scope for further improvement because we are more focused on FDY and
DTY?

Page 7 of 13
 Filatex India Limited
November 12, 2021

Mr. M S Bhageria: Yes, there is always scope for better improvement and that is a very ongoing
process. So, I think even after 10 years there will be some scope for
improvement. So that we are continuously trying to improve and going to
different products or making different products where we can fetch better
margins. So that is a very ongoing process.

Moderator: The next question is from the line of Riddesh Gandhi from Discovery Capital.
Please go ahead.

Riddesh Gandhi: We understand the prices are up and RM are up as well. Just wanted to
understand, delta is going on at the moment and how you see this
happening in Q3 and Q4, any expectations around spreads or the EBITDA
per ton, as opposed to if not margin. How should we be looking at that?

Mr. M S Bhageria: I think in our case, EBITDA absolute is very important as I have been saying
time and again. So, we try to always improve the absolute EBITDA. By
changing the product mix our margins per ton can go down, but absolute
EBITDA can increase because if we increase our productivity by making
coarser deniers, like where the production is more, so the margin is less. But
overall, the profitability from the same machine increases, also sometimes
we are buying POY and selling certain other POY so that we can get more
value. So, I think a better benchmarking our company is to see the absolute
number of EBITDA, like we did Rs. 125 crores this quarter, Rs. 101 crores last
quarter. Going forward, I feel that we should do much better than Rs. 125
crores in the next two quarters. This is only what I can tell you.

Riddesh Gandhi: And do you see any kind of slow down at all happening in the market or are
there any initial signs of slowdown in the end market…

Mr. M S Bhageria: ...slow down, I think can only happen like if COVID third wave comes in or
something unforeseen happens. In normal circumstances, I don't think slow
down should happen.

Page 8 of 13
 Filatex India Limited
November 12, 2021

Vikrant Kashyap: Since the realizations for your product has gone up vis-à-vis, has the cost for
your input materials also went up in similar way because we have seen
stress on margin?

Mr. M S Bhageria: Yes, the cost of the material has also gone up, more or less similar. Some
power cost has gone up because lately power had become costly. And when
our starting of the plant was happening, we could not buy power on the
bilateral agreements, that had all finished. So, we had to buy from the grid,
which was slightly costlier. But going forward, I feel from fourth quarter
onwards, we should be able to start our power plant again because now coal
prices have started coming down and maybe in a month or so they will come
to the desired levels.

Vikrant Kashyap: So, how is the outlook for the rest of the year for your input prices for crude
related?

Mr. M S Bhageria: It's very difficult to predict that. It is a pass through, but I feel crude should
remain around the (+) or (-) $4 - $5 at $80 per barrel. So, the prices should
hover around these numbers only, but they fluctuate little bit because they
are determined from China and Chinese by nature are very speculative. So,
prices keep fluctuating 2-3% every fortnight.

Vikrant Kashyap: You talked about better prospects in exports. Will you please explain more
and how we are looking at the exports market?

Mr. M S Bhageria: So, we have a presence in export market, and we have increased our
Texturizing production. So Textured is the main product which is exported
and previously we were facing shortage of containers and freights were
high. As the freights come down, then we will be able to export more
competitively.

Vikrant Kashyap: We have improved our product mix over the years. Do you still find better
scope for further improvement because we are more focused on FDY and
DTY?

Page 7 of 13
 Filatex India Limited
November 12, 2021

Riddesh Gandhi: Sir, and then also just to understand that, our debt levels have gone down
materially and we are generating a reasonable amount of free cash flow as
well. How do we look at our growth plan going ahead? Is the plan to then
return some of this to shareholders in the form of buybacks and dividends
or is there a CAPEX plan to expand or is it a combination of, how should we
be thinking that?

Mr. M S Bhageria: I think it will be a combination. We do have some CAPEX plan, which are
already there, which involve a CAPEX of around Rs. 140 crores, and some
godowns and other things we are building maybe another Rs. 10-15 crores.
But rest, we will reduce our debt and certainly after the year end, we will,
reward the shareholders by a buyback or a dividend, as deemed fit by the
board.

Riddesh Gandhi: If you could just speak a little bit about the opportunity in your renewable
yarn, how large the opportunity could be and how unique our technology is
and any barriers to entry in this particular area?

Mr. M S Bhageria: See, this is a very unique technology, which we are developing and there are
very few companies in the world, they are also in the stage of developing
only. Nobody has fully developed this technology and anybody who is doing
also a little bigger project is not using every kind of waste. They are using
very selective kind of waste and are able to do it. So, we are developing a
technology, we will be able to use yarn waste, PET bottle even fabric waste
where fabric in that polyester content is more than 70%. So, this is basically
a chemical recycling compared to what other people are doing is
mechanical recycling. So, we take out the impurities which are embedded
inside the waste, not just surface impurities, and then we repolymerize and
make. And there is a huge demand for this material, these are not available.
At the moment they are being sold at around 60% premium than the virgin.
So, we expect a very good profitability and going forward our main
concentration of growth will be in this field once this technology is
established. We have already applied for the patents, and I think by the next

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 Filatex India Limited
November 12, 2021

year end the patents also would be there. We already have a go ahead to go
for commercial production.

Moderator: The next question is from the line of M S Rajasekar, an individual investor.
Please go ahead.

M S Rajasekar: Congratulations on a good set of number. In your last con-call, you

mentioned that you have developed new types of yarn. I just want to know
whether it has been launched and how is the response?

Mr. M S Bhageria: Yes, they are being launched, but it takes a lot of time to convince people
and showcase. So, it is an ongoing process. We have launched, they will
make sample, then they will go to their customers. So, it a very slow process.
There is some achievement also, some products have started, some small
sales have happened. I think it will take some time.

M S Rajasekar: These new types of yarn are high value added or high margin yarns or how
is it?

Mr. M S Bhageria: Yes. These are high margin yarns because these are some yarns which give
a very different feel and effect in the fabric, and these are quite unique to
the company, some of them.

M S Rajasekar: My next question is in your recycled polyester, in which you are

concentrating, and I am sure you will succeed. Is this going to be a game
changer for Filatex India?

Mr. M S Bhageria: I think so, it will be a game change.

M S Rajasekar: My last question is, FY19 as being your highest turnover of Rs. 2,874 crores.
This FY22 I think you should exceed that, correct?

Mr. M S Bhageria: Yes. I think FY22 we should exceed Rs. 3,500 crores. Because Rs. 965 crores
we have done in this quarter, and I think our next two quarters should be

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 Filatex India Limited
November 12, 2021

very close and around this much. So, if we add up, it should be close to Rs.
3,500 crores.

M S Rajasekar: Correct and so your margin levels also should remain the same or it could
be slightly better, correct?

Mr. M S Bhageria: They can be better.

Moderator: The next question is from the line of Naidu, an individual investor. Please go
ahead.

Naidu: Actually, I just joined a few minutes back. I am Naidu. I am the investor of
Filatex. So, I don't know whether this doubt is clarified or not earlier, in this
call. First, I just want to ask Madhu Sudhan sir, there is a news that came out
just a few days back that is the IT raids happening in Filatex manufacturing
unit. I just want to know about the clarity on this.

Mr. M S Bhageria: Yes. We had an IT search in the first week of September and our all
operations are still going on. There is no such adverse effect on the company
and there is no claims or demand from the department as of now.

Naidu: So, there is no issue at all with us, right?

Mr. M S Bhageria: Yes, their assessment is still going on. It is a long process. But I feel there will
not be any major issues which the company will face, which can hamper its
financials.

Moderator: The next question is a follow up question from M S Rajasekar an individual

investor. Please go ahead.

M S Rajasekar: I just wanted to know you were second generation of persons. Who are they,
have they joined and what is your plan for your succession planning, please?

Mr. M S Bhageria: Yes. Two people from our family have joined. One is my niece, Stuti Bageria,
and she is looking after finance now. She is also looking after purchase. The

Page 12 of 13
 Filatex India Limited
November 12, 2021

Riddesh Gandhi: Sir, and then also just to understand that, our debt levels have gone down
materially and we are generating a reasonable amount of free cash flow as
well. How do we look at our growth plan going ahead? Is the plan to then
return some of this to shareholders in the form of buybacks and dividends
or is there a CAPEX plan to expand or is it a combination of, how should we
be thinking that?

Mr. M S Bhageria: I think it will be a combination. We do have some CAPEX plan, which are
already there, which involve a CAPEX of around Rs. 140 crores, and some
godowns and other things we are building maybe another Rs. 10-15 crores.
But rest, we will reduce our debt and certainly after the year end, we will,
reward the shareholders by a buyback or a dividend, as deemed fit by the
board.

Riddesh Gandhi: If you could just speak a little bit about the opportunity in your renewable
yarn, how large the opportunity could be and how unique our technology is
and any barriers to entry in this particular area?

Mr. M S Bhageria: See, this is a very unique technology, which we are developing and there are
very few companies in the world, they are also in the stage of developing
only. Nobody has fully developed this technology and anybody who is doing
also a little bigger project is not using every kind of waste. They are using
very selective kind of waste and are able to do it. So, we are developing a
technology, we will be able to use yarn waste, PET bottle even fabric waste
where fabric in that polyester content is more than 70%. So, this is basically
a chemical recycling compared to what other people are doing is
mechanical recycling. So, we take out the impurities which are embedded
inside the waste, not just surface impurities, and then we repolymerize and
make. And there is a huge demand for this material, these are not available.
At the moment they are being sold at around 60% premium than the virgin.
So, we expect a very good profitability and going forward our main
concentration of growth will be in this field once this technology is
established. We have already applied for the patents, and I think by the next

Page 10 of 13