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Ladies and gentlemen, good day, and welcome to the KEI Industries Limited Q4 and FY '25 Earnings Conference Call, hosted by Nuvama Institutional Equities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Achal Lohade from Nuvama Institutional Equities. Thank you. And over to you, sir.
Yes, thank you, Manav. Good afternoon, everyone. On behalf of Nuvama Institutional Equities, we are glad to host the senior management of KEI Industries.
We have with us Mr. Anil Gupta, Chairman and Managing Director of the company; Mr. Rajeev Gupta, Executive Director, Finance, and CFO. We will start the call with opening remarks from the management and then move to Q&A.
Thank you. And over to you, Anilji and Rajeevji.
Good afternoon, dear colleagues. Thank you very much for joining. I am Anil Gupta, Chairman and Managing Director, KEI Industries Limited. Along with me, Mr. Rajeev Gupta is also there, Executive Director and CFO. So, I'll give a brief about the Q4 summary of the company's results and briefly about the annual results.
So you must have gone through the results by now. The net sales in Q4 achieved is INR 2,914.8 crore. We have achieved a growth in net sales by 25.1%. EBITDA is in line grown by 30.3% during this period in the Q4, and EBITDA/net sales margin is 11.61% as against 11.15% in the same period previous year.
Profit after tax in this quarter is INR 226 crore against INR 168.8 crore. The growth in the PAT is 34.2%. Profit after tax/net sales margin is 7.77%.
Domestic institutional cable sale, wire and cable, is INR 760 crore against INR 76 crore last year. And domestic export sale in this quarter is INR 492 crore. Cable and wire INR 429 crore; extra high voltage INR 24 crore; EPC INR 16 crore; stainless steel wire INR 23 crore. This is against INR 257 crore in the previous year same period. The growth in the export is around 92%.
I would like to mention that we have focused on export and earmarked a substantial capacity on exporting. Hence, the growth in the domestic sale is around 18%. But overall, we have grown by 25%.
Total cable institutional sale, that means B2B, is 46% as against 44% in the previous year same period. Sales through distribution network, that means B2C was INR 1,498 crore in fourth quarter against same period INR 1,056 crore. Growth in the B2C sale is 42%. B2C sale through distribution network contributed 51% in fourth quarter as against 45% in the previous year same period.
Overall, wire and cable segment has grown in this quarter approximately 35% over previous year same quarter. And the profitability has also improved in the wire and cable segment during this quarter.
EPC sale, other than cable is INR 72 crore as against previous year same period INR 192 crore. Due to decline in EPC sale by 63% and EHV cable sale declined by 48% during the quarter, company's operating margin also got affected by approximately 0.5%, which will improve in the current financial year because of the healthy order book of extra high voltage cables as on today.
Out of total sales of EPC, EHV, EPC sale is INR 32 crore as against INR 50 crore in the same quarter previous year.
Now I'll give a brief summary of annual results of financial year '24-'25. Net sales in the financial year '24-'25 is INR 9,736 crore against INR 8,120 crore. Growth in the net sales is 19.9%.
EBITDA is INR 1,062 crore and the growth in EBITDA is 19.9%. EBITDA/net sales margin is 10.92% for the full year, same as the previous year. Profit after tax in FY '24-'25 is INR 696 crore. So the growth in the PAT is 19.85%. Profit/net sales margin is 7.15%, similar to last year.
Export sale in FY '24-'25 total is INR 1,267 crore. In this, wire and cable is 983 crore, extra high voltage cable 72 crore, EPC 105 crore, stainless steel wire 104 crore and trading sale INR 3 crore. Against previous year same period it was INR 1,097 crore.
Growth in export sale on full year is 15%, but growth in the cable export is 40% because of the decline in EPC sale.
We are executing a contract for Gambia for EPC turnkey project. Last year there was substantial sale in that project, hence the EPC sale was high. But the growth in the cable export is 40% in the whole year.
The total active working dealers of the company as on 31 March, '25 are approximately 2,082. Sales through distribution network for full year is around 52%, against 46% in the previous year. The EPC sale other than cable is INR 343 crores against INR 562 crores in the previous year.
Out of the total sales of EPC, DHV extra high voltage EPC sale is 137 crore against INR 155 crore in the previous year.
The sale of stainless steel wire in '24-'25 is INR 212 crore against previous year INR 218 crore. Volume increase in the cable division, based on the production and for the consumption of metal in FY '24-'25 as compared to previous year same period is approximately 20% and in Q4 volume increase by still 21%.
Total pending orders including EPC as on 30th April '25 is approximately 3,839 crores, out of which EPC orders are INR 423 crore, extra high voltage cable pending orders are INR 603 crore, domestic cable orders INR 2,112 crore, cable export orders INR 701 crore. So the total cable and wire segment is INR 3,416 crore, and the total order book including EPC is INR 3,839 crore.
CARE has upgraded company's long-term ratings as AA+. Long-term ratings from India Ratings and Research Private Limited and ICRA is AA. Short-term rating from India Ratings, ICRA and CARE is A1+.
The book value per equity share of the company is INR 605 as on 31st March 25 as against 348 as on March 31, 2024, increased due to QIP issue.
Company has booked an expenditure of INR 12.91 crore in FY '24-'25 towards CSR activities. Total borrowings is INR 178 crore, channel finance -- out of which channel finance is INR 127 crore.
Acceptance creditor as on 31st March '25 is INR 246 crore as against INR 506 crore as on 31st March '24. Net cash available is INR 1,491 crore. This includes INR 1,385 crore of QIP as on 31st March '25.
QIP fund status, the company has raised INR 2,000 crore through QIP on 28th November 2024 to fund our new project at Sanand, repayment of outstanding debt and for general corporate purposes. INR 1,450 crore for CapEx, INR 240 crore for general corporate purposes, INR 276 crore for repayment of term loan, and WCDL and INR 34 crore QIP expenses. Company has utilized QIP fund of INR 621 crore up to 31st March 2025.
Now the future outlook. During FY '24-'25, the company has incurred a total capital expenditure payment of INR 618 crore, out of which Sanand INR 384 crore, Chinchpada and Silvassa INR 68 crore, Bhiwadi is INR 32 crore, Pathredi expansion INR 58 crore and Salarpur land INR 23 crore. Other plants and locations INR 53 crore.
Brownfield CapEx at Chinchpada and Pathredi have added further capacity for wire and power cables, and these expansions have been completed in FY '24-'25.
After the completion of these Brownfield CapEx, capacity utilized during '24-'25 approximately 85% in cable division, 71% in house wire division, and 89% in stainless steel wire division and 38% in communication cables.
During the current financial year '25-'26, unutilized QIP fund out of INR 1,300 crore will be invested to complete the Sanand project.
Commercial production of first phase of low tension and HT cables will commence by end of Q1 FY '25-'26, and the total project will be completed by end of FY '25-'26.
The company is hopeful to achieve 17% to 18% growth and improve our operating margins during the FY '25-'26, considering phase 1 commercial production in Sanand, and strong order book provision of domestic institutional for cable sales, export orders for cable sales, and extra-high-voltage cables, and the total order book of cables at INR 3,416 crore.
After completing the Sanand project and with the continued strong demand in domestic and overseas markets, we are hopeful to grow by 19% to 20% in next 2 to 3 years.
Now, I will explain you what are the demand drivers in the domestic markets and export markets. The major demand drivers are power generation in renewables through solar and wind energies, and also we are seeing a substantial new investment coming in coal-based thermal power projects and related infrastructure in transmission and power distribution by transmission and distribution companies of central government and state government. User industry of energy like data centers, new manufacturing projects and infrastructure projects like railways and metro rails and highways.
Apart from that, electric vehicle infrastructure and kits for electrical vehicles is also in our product range, which we are catering to EV infrastructure.
We show that we will continue to grow with the projected percentages what we have stated and we will try to improve upon it during the current financial year and subsequently.
This will be our endeavor to keep the growth momentum in the company on a continuous basis. Thank you very much, and I would like to invite you to have any further questions you may have, we will be glad to answer.
[Operator Instructions] We have our first question from the line of Praveen Sahay from Prabhudas Lilladher Capital.
Congratulations for a good set of numbers. My first question is related to the volume growth, and this is clarification. So in the Q4, you had said 21% of volume growth in the wire and cable segment you had reported. That is including domestic and international. Is it correct?
Yes.
Yes.
So if you give a bifurcation.
It is based on the production. It is based on the production.
It is based on the production.
Okay. And how is the domestic market has done in terms of volume?
Praveen, we are gauging the volume growth only on the basis of production. And you see we have the limited capacity. We have the capacity constraint. So whatever we are producing, either we are selling through export or selling through the dealer distributor market or directly selling to the institution. So it does not matter to us. In some quarter, we may sell more in domestic. In some quarter, we may sell to export market more. And in some quarter, we may sell more to the dealer distributor. So ultimately, it does not matter in which market the product is going, but the overall growth rate need to maintain according to the production capacity we are having.
Right, sir. Or if you can give some more color on your export number, because that has grown quite very strongly. Is that a one-off element attached to that? And is that -- also, if you can add, is that the benefit of a U.S. tariff you received certain things?
No, no, no. First of all this is not a -- yes, you can explain.
First of all, as I said, that it is -- sometimes we get the order from the export market. So we need to book the capacity accordingly. So from where we are getting the order first, we need to book the capacity accordingly.
These are not one-off exports. These are consistent exports from our consistent customers. This export in Q4 is not consisting of any single large order we have received. It is consisting of several orders of different territories. And these are our consistent customers.
Right, sir. Got it. Second question, sir, related to the EHV, that's INR 400-odd crore of revenue we had done. And the way forward, I believe the guidance is of INR 600-odd crore. So how you are going to see this EHV business the way forward, because your capacity at Sanand is also coming up. So in the next 2 to 3 years, if you can give some guidance related to the EHV would be helpful.
See EHV capacity in Sanand will be operational by -- in the FY '26-'27, because that EHV segment of the project, which is Phase 2 will be completed by March '26. So that means that capacity will be there for production only in '26-'27. And our focus will be mainly on domestic market as well as exports, both. We have a substantial export market of EHV cables which we have developed. But there are some technical constraints due to which we can't sell too much in the export market, because of the high freight and heavy loads, which has to be carried from the North India to ports.
So there are some technical issues with drum lengths which we need to be produced in the long -- very long lengths, which we will be able to produce in Sanand. So there are some technical issues due to which we are not able to grow the export market substantially from our existing Chopanki factory. But the moment Sanand comes, the export will see a substantial jump in the extra high voltage segment also, and as well as the other segments where we are lacking the capacity.
Okay. Okay. And just related to that, even the export has gone up more. And this quarter, we had seen that the LME prices were also up, but that's not reflecting in the margin front actually. So if I look at your margin, the gross margin has been Y-o-Y, it's quite 1% down. So what factors lead to that?
Sir, LME prices will not factor in the margins. LME prices, if they are high, they can increase the sale value. But margins are quickly adjusted with respect to the raw material cost. You can speak something about it.
Praveenji, what is your exact query?
So sir, what I believe is if there is a improvement uptrend in the LME prices, there would be some gain also you absorb. And the second is the export business, if that is increasing, that is a high-margin business. So why not our gross margin reflected these 2 factors in this quarter?
So first of all, in the past also we have guided that all the raw material pass-through, whether it's going up or it's going down. Neither we will be gaining anything, neither we will be losing anything.
Second is in the case of export, as I said, in the case of only 0.5% margin is improved in the case of export or dealer distributor margin. Otherwise, more or less, prices are similar. That's why we are not only focused for any particular each segment, as we are operating in an environment where we are catering to all type of customers. From where we are getting the orders, we are utilizing the capacity accordingly. That's why we are saying that we will be growing in future also 17% to 18%. But it does not matter to us we will grow in export, we will grow in dealer distributor or we will grow in institutional segment. Ultimately, our objective is to utilize the capacity.
And the little bit margin which got affected mainly because of the lower sale of each EHV division. So since now the current year, the EHV sale will be to the fullest capacity, so this 0.5% EBITDA margin will get improved.
The operating margin will get improved.
Thank you, sir. If you can give the CapEx number for '26-'27 would be helpful.
Around INR 1,300 crore because whatever unutilized QIP money is there, that will be invested to complete this Sanand project in the current financial year. And apart from this, another INR 100 crore is for maintenance CapEx and for the new line.
We have our next question from the line of Bharat Shah from ASK Investment Managers.
Anilji talked about 17% to 18% growth rate with improvement in margins. So is that a reference to the upcoming financial year 2025-2026 or for the longer term? Because on the longer term, I thought with the increase in capacity, we are aiming for growth upwards of 20%?
No, no. Bharatji, in longer terms, I have mentioned in my commentary that the growth will be upwards of 20%. This 17% to 18% growth I have mentioned only for '25-'26, because in this year we will be only settling the new plant in one by one, month after month. We'll be able to ramp up the production month after month even after commissioning. So this will be a challenging year for us to ramp up the capacity and bring it into -- convert it into commercial production. However, I have said that we will aim to achieve better. I'm only saying a little conservative figure, because my approach is always to say less and achieve more. We have always achieved better than what we have always said.
That you've clarified. For a moment, I thought [Foreign Language].
Growth will be upwards of 20% from '26-'27 onwards. But in this year also we will aim to achieve 20%. We will definitely not let down our investors.
That clarifies. Just one last thing. Rajeevji, the margin improvement journey over a period of time, due to variety of factors that we have discussed many times, that is intake, right?
Yes, sir, that's only after the commissioning of this plant. As I said, from '27-'28 onwards, when the economy of scale will be there and the benefit out of that will be there.
We have our next question from the line of [ Dhruv Bhatia ], an individual investor.
Congratulations on a great set of numbers. Sir, the question is around working capital. Because when you see your cash -- consolidated cash flow, your cash flow generated from operations last year was about INR 815 crores. And this year, it is down to INR 200 crores approximately. And working capital has seen some massive swing. So what exactly happened, if you can explain and whether that's going to change in FY '26?
As we earlier guided that till we are having the cash, we will be purchasing through cash. So you must have seen in the balance sheet that the payable item has reduced substantially, even though the sale has increased by 20%, but the payable has reduced. So
[Audio Gap]
that is mainly because of that, nothing else. In the normal condition, the payable will go up.
Right. And the second question I have, sir, is it a slightly more industry-wide one. You are having some new, very aggressive competitors talking about large amounts of CapEx to enter the sector in the next 2, 3 years. How do you see that playing out? Demand is obviously very strong and will continue to grow. So do you see an impact on margins potentially in this sector, once these capacities come on stream?
We are already here. And since last 15, 20 years, we are delivering the numbers. And whatever we are saying, we are delivering. Even in the last quarter, so much hue and cry was there for the industry, but the industry has given the results, not only by KI, but the other player also, the growth is there and the momentum in the industry itself is very strong. So if little bit EBITDA margin, no one can say anything, but no any major impact.
We have our next question from the line of Akshay Gattani from UBS.
So my question is on the export side of business. So how is U.S. market shaping up, post-tariff announcement? Like have you seen any temporary pause in the consignment? Also, how do you see U.S. geography from a longer-term perspective in terms of product approval and product acceptance there?
Actually, as of now whatever order we were having, we had delivered. So it will be known only after 2, 3 months when everything gets settled from the U.S. market. But as I said earlier, that for us it does not matter we are selling to U.S. market, we are selling to Middle East or we are selling to Asian market
[Audio Gap]
We are approaching so many countries. We are adding 1 or 2 countries even after a year. So, that's how we are doing the work here.
Apart from the exports, we are into dealer distributor segment, we are into domestic distribution segment. So, overall we have to grow the percentage which Anilji has just highlighted. For the current 17%, 18%.
And for the next year onwards, because of the capacity, we will be growing close to 20%.
Sorry, Rajeevji, I think we lost you for 30 seconds, last 30 seconds.
I said that for the current year, our growth rate, Anilji said 18%. And from next year onwards, we will be growing close to 20%. This is on the capacity, because market is so huge, number of customers from overseas as well as from domestic are very large number of lists we are having. So we are not dependent only on one country.
We have our next question from the line of Vidit Trivedi from Asian Market Securities.
Congratulations on the great set of numbers. Could you please tell me what's your mix -- I mean, how much do you export to the U.S. of the overall exports?
And second, coming to the EHV cable side, it has dropped sharply. What was the main reason of the contraction? And where -- when do we see the recovery happening?
Recovery has already happened. We have already order book is around INR 603 crore. So in the current year, we will be utilizing the full 100% capacity.
Some of the orders will not be executed because of the ROW issues.
Okay. And what's the U.S. share?
U.S., this year we have exported close to around INR 250 crore.
No, no. INR 163 crore exactly.
INR 163 crore, sorry. It's a very small portion of our exports going to U.S.
We have our next question from the line of Naushad Chaudhary from Aditya Birla Mutual Funds.
Just one clarification, sir. During FY '25, the key raw materials, copper and aluminum on a low base, it were up 13%, 15% in INR terms. And on that, on a blended basis, if I see our revenue was up 20%. So with reverse and very rough calculation, roughly 10%, 11% would have come from the value growth. And now as the copper and aluminum both are softening, at least for now, based on March closing, considering this fact, is there any risk to our guidance of 17%, 18% for FY '26, given the direction of the…
First of all, in last 4, 5 years in one year copper, aluminum goes up, in one year copper, aluminum goes down. But in all the last 4, 5 years or in last 15 years, we are continuously growing.
In last 15 years, so many times copper or aluminum has gone up, and so many times copper and aluminum has gone down. So it does not impact really, because we are searching for a newer market for ourselves. That's how we are growing year after year. And it is applicable to the whole industry, not only KEI, the other players are also growing, the impact of the increase or decrease is not matter for the growth.
Okay, sir. Second, do we quantify the inventory gains, if any?
Sir, as I said, we are working on a pass-on mode. Neither we are gaining, neither we are losing anything.
We have our next question from the line of Shrinidhi Karlekar from HSBC.
Congratulations on great set of numbers. Sir, just a couple of questions on export business. So the last year, we have had a INR 1,260 crore kind of export business, right? And you said INR 160 crore was U.S. Is that right?
Yes, sir.
Okay. Sir, my second question on that is, what are our principal competitors in the non-U.S. markets? Like are these local companies or are these global companies or we face more of competition? This, I'm talking about non-U.S. market.
See, mostly in non-U.S. or U.S. market, we have only global competition. And in non-U.S. market, we -- in these -- I think wherever we are exporting, I have not seen any Chinese competition to us, because we manufacture specialized tailor-made products for projects. And wherever tailor-made projects -- products are manufactured, as per the international specification and with the specified approvals, we don't face competition from Chinese companies.
Right, sir. And sir, second, I'm a bit confused on your margin guidance for the next 2 years. Would it be possible to quantify how much of EBITDA margin improvement one should build for the next 2 years?
Just we are saying that because of the economy of scale from '27-'28 onwards, when our Sanand project gets established, little bit EBITDA margin will improve, that we said.
But not in '26-'27, is it, sir?
No.
Okay. And sir, when you refer to EBITDA margin, you refer to EBITDA margin, including order income, which I think last year, we did like.
Whenever we say EBITDA margin, that is including everything.
Including all things, yes. And sir, last question I have is, sir, I want to understand the HT cable business that we have of about INR 2,000-odd crores, what are like largest end markets for that, for the HT cables?
See HT cable main customers are power distribution companies, and including the solar and wind projects, because they need HT cables for evacuating the power generated through solar farms, and take the power to the grid. So the major consumers are solar power projects and power distribution companies.
We have our next question from the line of Kunal Sheth from B&K Securities.
My question has been partly answered. This was about margin only. But sir, just one clarification. Initially, we were talking about small margin improvement every year, about 20, 30 bps. So has anything changed there, sir? Because now we are talking about margin improvement in '27 and not in '26?
Yes, we are improving the margin.
Margin, last year also, we have guided that once we settle down this new product in the new facility, only economy of scale, we will be improving. Otherwise, whatever EBITDA margin, 11% around we are operating, we will be operating at that level.
[Operator Instructions] We have our next question from the line of [ Avnish Berman ] from [ Vekaria Investment Management ].
I have 2. One, regarding the U.S. market in this industry, wires and cable industry, Mexico seems to be like a key geography which is exporting to the U.S. My question was that in the past there have been claims that Mexico has been acting as a transshipment hub for the Chinese material. So I just wanted your opinion on that. Is Mexico a key transshipment hub for China? Or do you think Chinese material gets through into U.S. through countries more like Vietnam and Cambodia and not really Mexico?
See, this Chinese material coming through transshipment, this is not our outlook to -- this is not for us to inquire, because this is for the U.S. government to see that from where the Chinese material is coming.
We are creating our own market and -- our own niche markets and niche customers, and catering to them and -- at our terms. I can't answer this question about this transshipment of Chinese products.
But sir, I would like to add here is because whether U.S. government is taking the material or not taking the material, it will not impact the industry of the India, because whatever rate we are growing, we will be growing.
Ultimately, last year, whatever exports we have done, there might be some Chinese or other Mexican companies must be in competition.
Yes. No, I was asking from the angle that if tomorrow, there is an increase, let's say, incrementally higher tariff on Chinese goods, and any goods that are sourced from China, then is there a possibility of any market share shift from Mexico to India?
Sir, as it is there is so much of tariff on China at the moment that nobody can import by paying those tariffs.
No, no. I was asking about Mexico because if -- I mean, that's why I was asking whether Mexico acts as a front for China or not.
No, we are not really aware about it.
Okay. That's fine. My second [ cost ] was -- now I understand there is uncertainty on the tariff front, but let's assume after the 90-day for the tariff settles at whatever that amount would be, let's say, 10%. Who according to you will bear the cost? Will it be the OEM or will it be the manufacturer or the distributor? Like who bears this 10% cost, whatever that number settles to be?
It will be borne by the end customer. I mean, our offers are always without duty. So whatever tariffs are imposed in U.S., they have to be paid by them. So we are not concerned about the tariff at our end.
Okay. Okay. And in your U.S. exports, do you sell through dealers and distributors? Or do you sell directly to the OEMs and the customers?
I think 50% is through directly to OEMs and 50% through distributor network.
And sir, your contracts would be FOB or like what kind of contracts would you have? And how are tariffs mentioned in those contracts?
It varies. There can be -- they are CIF or FOB, but tariffs are always -- any extra tariffs are always payable by the customer. That is our contracts are very clear.
[Foreign Language]. All cost is pass-through basis.
Who can be at 10% or 26% tariffs [Foreign Language].
We have our next question from the line of [ Disha Kodia ], an individual investor.
Yes. So you mentioned in your past commentary how you want to scale up the export and we've seen the growth. So what is the target? Like what is the target as a percentage of revenue? How much exports are you targeting as a percentage of revenue, sir?
Our target is to utilize the capacity and growth rate will be 17%, 18% in current year. It does not matter to us whether it is coming from export, it is coming from dealer distributor or it is coming from the domestic institution. Ultimately, we have to utilize the capacity. So that is our main object.
All right, all right. And where do we see -- do you see any increase in your market share? Or do you expect it to be remaining at what the current level is, given the new competitors that are coming…
Whatever capacity we are having, we are able to utilize the capacity to sell, because we cannot sell more than the capacity which we are having.
We expect to increase -- we'll try to increase our market share from FY '26-'27 when a substantial new capacity comes on board -- available to us.
We have our next question from the line of Natasha Jain from PhillipCapital.
My first question is, how does the pricing work? Is it per kg basis or percentage of raw material price?
It's a cost plus basis in terms of percentage.
Understood. And sir, my second question is more industry based. So now that most of the -- I mean, the major players of wires and cables results have been out, we have seen that there has been strong top line growth, which is warranted because fourth quarter was a seasonal quarter, but then margin expansion has not happened. So is it fair to deduce that most of the benefits that the industry is going to get is out of scale, and there may not be pricing advantage?
We are always saying that whatever EBITDA margin we are having, we will be working in this range only.
We have our next question from the line of Nikhil Purohit from Fident Asset Management.
My first question is, what is the margin differential in the domestic versus export markets for wires and cables?
Not more than 0.5%.
Got it. Okay. And additionally, do we stick to our earlier guidance of exports to the U.S. in FY '26 being around $5 billion. I think this year, it was $2...
As I said repeatedly, that it does not matter we are selling to export or we are not selling to export. Our matter to us is only how we are utilizing the capacity. We are exporting to more than 60 countries as of now. We are working with close to 2,100 dealer distributors. We are working more than 2,000 institutional customers in the country.
So we are growing in each segment, whether in exports or in dealer distributor or in domestic institution. But how much to a one particular customer or how much to a one particular country, it will not be basically easy to answer well in advance.
I understand. Okay. And lastly, just one last question. What was the EHV execution this quarter?
EHV execution in the last quarter, fourth quarter?
Yes, quarter 4 FY '25.
Fourth quarter EHV sale was INR 115 crore as against INR 220 crore last year fourth quarter.
We have a next question from the line of Priyank Chheda from Vallum Capital.
Sir, sorry, I would have missed out the volume numbers for this quarter and for the full year, if you can help me.
Fourth quarter, the volume number was 21% and the full-year volume growth was 20% for the metal growth.
Perfect. And sir, in your opening commentary, you did mention solar, coal, transmission, data centers and EV. These are the core key sectors contributing to the volume growth. Would it be possible to -- is there...
Apart from this, the infrastructure growth as well as manufacturing.
Is there any big divergence or any one particular sector contributing to a very high incremental growth versus others?
No, no.
Would it be possible to quantify anything in any way? Yes.
Each and every sector is growing, not a big sector. Power is growing.
But if I have to specify one significant sector, that is basically solar power projects, which is significantly high.
And given the installations of solar, which is likely to drop versus significant installations that have happened in this year, anything that you would think that would be compensated by some other sectors? Any view on that?
Sir, if the power availability is high, then related infrastructure of transmission and the user industry has to grow. So that -- so there has -- there is always a balance of various sectors growing side by side, because if you are producing too much of power, but there is no user, what is the benefit of generating that much of power either through solar or thermal. So the user sector also grow simultaneously.
Got it. And sir, just last thing to clarify, you did mention that you work on a cost-plus model. And when we see the gross margins slightly drifting down from 25% to 23.5% is because the copper prices are higher and the realizations are higher, and hence, the percentage margins are lower, right? Is that the way to read?
As you want to read, you can read, but the issue is the operating margin and the EBITDA margin will remain in the range -- range bound 10.5% to 11%.
We have our next question from the line of Rahul Agarwal from Ikigai Asset Management Company.
Sir, a couple of questions. Firstly, are we seeing higher employee attrition? I think the industry is going through a lot of CapEx, cable and wire is becoming very attractive for skilled jobs…
[Foreign Language]
Yes, sure. But are you seeing attrition in your company?
[Foreign Language]
Okay. Okay. Good. And then second question was on working capital. I think somebody previously asked, just wanted to clarify. Obviously, the operating cash flow generation number looks lower because you're paying payables faster. And this process actually started pretty long back, right? We've been doing that for a very long time.
My sense was that ultimately, if you pay payables faster, there has to be some savings on interest, wherein you have a lesser non-fund based credit. Is that correct?
[Foreign Language].
Agree, sir. So the interest savings should reflect somewhere in operating cash flow, right?
[Foreign Language].
[Foreign Language].
[Foreign Language].
Yes. So, when I look at consol cash flow -- I'll explain sir, when I look at consol cash flow the payable swing is about INR 314 crores and INR 130 crores -- about NR430 crores. That's the swing from the --
[Foreign Language] increase-decrease in inventory, increase-decrease in [indiscernible], increase-decrease in [indiscernible], major amount. [Foreign Language]
Absolutely right. So what is the benefit of that. We have discussed this in the past. My sense is…
[Foreign Language].
Where will that get reflected.
[Foreign Language].
[Foreign Language] So you mean that operating cash flow, whatever is getting disclosed is not the right way to look at it, right? That's what you mean?
[Foreign Language] Till the time that type of liquidity is available here [Foreign Language].
Is that the intention going forward?
[Foreign Language]
We have our next question from the line of Achal Lohade from Nuvama Institutional Equities.
Yes, sir, just a couple of questions. First, on the Wires, I think in the entire conversation, we have not really touched upon that part. It's growing very, very well, compared to the peers who are struggling with the growth. So you want to elaborate a little bit what are we doing here in terms of the distribution expansion, in terms of the growth there, any particular region which is driving growth and the outlook?
So, we are continuously focusing on increasing our dealer distributor network. So that -- it's a continuous going on process, and that will be maintained in future also. So because of that only, we have crossed 50% sales through dealer distributor. Earlier, otherwise, our target was to reach only 47% -- [ 48% ] in this year. But because of the Wire sale and our cable sale also through dealer distributor increase, we have reached to 51% also. So that is a continuous focus to increase the dealer distributor network in the Eastern and Southern part. We are already strong in North and West. So Anilji's focus is still there.
Okay. And if you could also highlight in terms of the channel financing, where are we -- how much of our sales we are able to -- of the dealer distributors are channel financed? And how do you see that trajectory moving?
Almost now we have reached to a level where 70% of our sales are covering through the channel financing. And year after year, we are increasing this sales through channel financing, because it is giving us the lower number of days of receivables.
Right. And when you say 70% of sales, you
[Audio Gap]
dealer distributors.
Dealer distributors. Yes, 70% is dealer distributor sale.
Understood. Understood. And that cash discount for those channel finance sales is obviously netted off in the gross margins, right? So gross margins are after that?
Yes, yes.
Understood. And this 70%, any target you have in mind, sir, will it be like 90% [indiscernible] or anything of that sort? Hello?
Hello. We are increasing the sales, that's how we are adding more and more dealer distributor under the channel financing.
Understood. Understood. And the second question, if I may, a quick summary of what you're saying is essentially you will utilize the capacity fully, that should drive 18% revenue growth. And the margins, while because of EHV and wires, margins should improve, but because of the new capacity-related expenses, the margins are expected to remain stable. Have I understood right, sir?
Yes, that's right.
We have our next question from the line of Ankit Soni from Sharekhan Mirae Asset.
Congratulations on a good set of numbers. Just one question from my side. So once your Sanand facility is operational, what time would we take to get on to a full optimum utilization of the facility, so that we can fetch that logistics benefit which you are right now triggering to? And what would be the margins jump after the capacity -- after reaching optimum capacity utilization?
Sir, this capacity we have created to utilize within 3 financial years, number one, because whenever any company adds the capacity, they are not adding the capacity only for 1 year. They will be utilizing the capacity for next 3, 4 years.
Second is the 0.5% to 1% EBITDA margin will get improved
[Audio Gap]
improving from '27-'28 onwards, because of economy of scale only, not because of selling price or anything else, only because of economy of scale.
So a follow-up on that would be like we'll be taking around 3 years to fully -- optimally like 70%, 80% capacity utilization from that particular Sanand facility. Am I right?
Yes.
We have a follow-up question from the line of Shrinidhi Karlekar from HSBC.
Sir, would it be possible to comment on how much of your domestic institutional business of about INR 3,100 crores comes from the power sector?
So normally, power sector on average is close to 30% to 35% directly or indirectly. You see most of our dealer distributors are also selling to the power sector. We are selling the cable to them. They are also selling to them.
Right. Understood. And Rajeev sir, the housing wire and winding wire business that we classify, is that all through retail channel or there is some bit of a direct channel in housing wire and winding wire business?
A little bit institutional sale also because not much, but small, like we are selling to L&T for a full package. So we are selling to wirealso to them.
But it will be a small number, as you said?
Yes. It will be like last year number was close to INR 178 crore to institution for the wire sale.
We have our next question from the line of [ Sravan ] from Sincere Syndication.
Congratulations on a good set of numbers. My doubt is that especially in the HV cable side, do you directly deal with these, let's say, power and T&D companies such as Hitachi, Siemens or do you go through dealers and distributors?
Sir, normally -- in the extra high-voltage power cable you are asking?
Yes, sir, in the HV cable for transmission.
HV cable, 50% we are selling directly to the power transmission companies.
Okay, sir.
And 50% through the EPC contractors.
Okay. Okay, sir. So in the latest projects that Hitachi has got, the 1,200-kilometer project and the 950-kilometer project, any idea -- have you bagged any of those orders, sir?
Sir, whenever they will be required the cable, it will be on that stage only.
Okay. Okay, sir.
Because the cable stage comes later.
Okay. Sir, this comes later in this stage. Okay.
Yes sir.
Ladies and gentlemen, this was the last question for today. And I now hand the conference over to the management for closing comments. Over to you, sir.
Thank you very much for the participants. And we are once again assuring you all that we will be growing 18% kind of growth rate. And it will not matter whether any contingencies are there or not there, any rate increase or decrease, but we will be growing 18%, because we are adding the capacity. Thank you all.
Thank you. On behalf of Nuvama Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.