Rajesh Jain, CFO, RR Kabel, says “even in this quarter in volume terms, we have grown by 10% which is on a higher base of Q3 of previous year. We will be able to maintain our volume growth of 20% in wire and cable which is always higher than industry growth.”

Overall, your Q3 numbers have been a little bit weak, at least when we are looking at the analyst estimates. Margins have dipped below the 7% mark. What is the outlook when it comes to your overall earnings and what were the big drags and what is the margin outlook?
Rajesh Jain: Our growth, though only on a quarterly basis, seems low but overall we have achieved a volume growth of 20% in wire and cables, which is higher than the industry average when we compare nine months on nine months. Even in this quarter in volume terms, we have grown by 10% which is on a higher base of Q3 of previous year. We will be able to maintain our volume growth of 20% in wire and cable which is always higher than industry growth.Margins are down for the quarter gone by. They are down by 1% but on 8%, if there is a 1% plus drop, it is actually more than 10%.

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Rajesh Jain: When we see our yearly estimates where we have predicted that our margins will improve by 140 bps in the wire and cable business and we are on that track only. Only there are some impacts due to product mix in this quarter, but on a longer horizon or even on a yearly basis, our growth or margins will be in the range of 8%.

Here again we have to see that even in FMEG because we have both the businesses, FMEG is also contributing more than 10% in our revenue and there also we are able to have the growth of 20% on YoY basis which is a very healthy growth and in terms of volumes and margins we are on track.

Your peers had recently stated that the Red Sea disruptions have started increasing the cost and even delivery time. With almost 26% of your revenues coming in from exports, how have these issues impacted your exports and what are the challenges you are currently facing?
Rajesh Jain: This is a global crisis and definitely this will have impact on any business but since our pricing are very transparent and freight is always variable cost and we pass it on to our customers and so this will not have any impact on our margins. The good part is in spite of this blockage, we are having the strongest export growth in our wire and cable business. So, we will be able to have good growth even in spite of this Red Sea crisis.

Where is the growth coming from? Is it at the B2B level in terms of high tensile wires? Is it coming at the household level?
Rajesh Jain: The majority of the export business is distribution-led business and is coming from all geography. Earlier in our business, wire share was more but in the recent past, in the last two-three years, we were able to have higher growth in cable exports also. So, growth is coming from both the segments but more from the cable segment in exports. In domestic, almost 70% of revenue in wire and cable comes from wire only, so whatever growth we have achieved is equally from wire and cable, but slightly more in terms of cable growth we are achieving.What about your FMEG segment? I believe the revenue saw 20% year-on-year growth. In the next two to three years, is there scalable potential in this particular segment of your business?
Rajesh Jain: This industry is going through a tough phase and is still growing less than 10%, but in this scenario also we are growing at 20% and going forward also by introducing new product in our FMEG segment we are quite confident to achieve the growth more than 20% or maybe in the range of 25%.What is your share in the domestic market because when I speak to some of your peers they are also confident, they are also expanding, they also are getting business from the domestic market.
Rajesh Jain: It is 7% overall in domestic market and in that also majority of the sales comes from wire only and if you see in the last 23 years, we are the youngest company in wire and cable industry and in this very short span of 23 years, already we have gained the market share of more than 7%. So, growth is coming and we are the fastest growing wire and cable company in terms of volume in last three years or even the last 20 years. We are expecting to grow more than 20% in near future also.

Both including domestic and exports, what could be the split of export, what could be the split of domestic?
Rajesh Jain: As of now, our export is 27% of revenue and it will be in the range of 25% to 30% because we have equal focus on growing our export market as well as domestic market also. So, we will grow in both the segments and export growth may be some bit higher and this ratio can go up to 30%.

What are the top markets you export to?
Rajesh Jain: We are exporting to more than 67 countries but majority of our exports is coming from Europe where UK, Austria, Germany these are the major countries. We also have good volume of exports in UAE and Australia, New Zealand and the USA also what we developed in last three years is contributing almost 10% of our export revenues.

You do not see any problem coming from Europe or from US given that their local governments are also trying to become more atmanirbhar just like India and restricting imports?
Rajesh Jain: We still have very good opportunities in European markets, though people talk about a slowdown in Europe but we have not seen any impact. Majority of our exports is coming from Europe and in last three years also we have seen very good growth and whatever orders we have in our hand, it seems this growth will continue and not only in short term, the wire and cable industry will keep growing at least for next eight to ten years because infrastructure is coming in big way not only in India but in worldwide also. EV is a very big field. Solar cable or energy is a very big field. We are expecting good growth to come from all the segments.

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