Finolex Cables Ltd
NSE:FINCABLES
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
838.8
1 666.5
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
Finolex Cables Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the Finolex Cables Limited Q1 FY '21 Earnings Conference Call hosted by PhillipCapital (India) Private Limited. [Operator Instructions]I would now like to hand the conference over to Mr. Deepak Agarwal from PhillipCapital (India) Private Limited. Thank you, and over to you, sir.
Thanks. Good morning, all. On behalf of PhillipCapital, I welcome you all to Finolex Cables Limited Q1 FY '21 Earnings Call. Today, we have with us management represented by Mr. Deepak Chhabria, Executive Director and Mr. Mahesh Viswanathan, Chief Financial Officer. We would like to thank management for giving us the opportunity to hold this call.Now I would like to hand over the call to management for their opening remarks, post which we will open up for Q&A. Sir, request you to please give opening remarks. Thanks.
Good morning, everyone. This is Mahesh Viswanathan. Thank you for joining us on this call this morning. I'll have brief opening remarks. The presentation is already on the website, and I'm sure you've also seen the -- seen the press release as well as the results released both in the BSE and NSE websites. So without taking too much of time, the opening remarks, I'll just get into that.As you all know that the quarter was substantially impacted for most people by the ongoing COVID pandemic. And so were we. As we mentioned in the last call, we had to shut down the plants, all our operations, in fact, on 22nd of March. And subsequently, sometime around 19th, 20th of May, the plant started reopening in a gradual manner. Branches, again, depending on which states they were in and how the lockdown positions were there, started reopening shortly thereafter. But not everybody opened up on the same day, it was a gradual opening up over the second half of May and parts of June.Effectively, for the quarter, we had approximately, let's say, 30% of the 90 days was what we were able to transact and operate. And so the results should be looked at in that perspective. Overall, against a revenue of INR 807 crores in the corresponding quarter of the previous year, we did about INR 377 crores in the current quarter. So that's about a 54% drop in value. There was a slight drop in margin as well. When I talk about margin here, I'm just talking about the revenue less cost of material. That's used to be around 27%, 28% in the past. This quarter, it has dropped to about 25%. There is a reason for that.The basic reason is that our terms with our customers include discounts and scheme-related payments, which are paid at a subsequent date. So there could be targets, there could be scheme-related performance requirements. And depending on the achievement at 100% level, certain payments are made out. Those costs used to approximate about 8% at 100% achievement levels, whereas actual payouts used to be somewhere around 6%. What we did in the current quarter was looking at the pandemic scenario, looking at the market requirements, we have given the entire 8% on the invoice itself as a straight reduction. So in that sense, the cost has gone up.What I believe it has done is to ensure that and pass on the message to the trade that we are with them in this time and that their wellbeing is as important as our wellbeing. So I think that is -- so to that extent, we have taken a higher cost. We believe that in the long run this will pay off.Beyond that, in the period during the lockdown, we have spent considerable time in looking at what are the ways to reduce or contain costs. We have come up with several measures, which will yield results over a period of time, not every experiment that we are doing there is going to result in a result immediately, but it will take over a period of time the benefits to come in. We estimate that we will save close to INR 40 crores, INR 45 crores from our cost base over a period of time once all these programs are completed. So some impact of those cost savings have come in, in the current quarter. More will come in the future as we go back.The one other point that I would like to mention here is that during this period of lockdown, we made sure that employee safety was taken care of. We also ensured that not one single employee, whether they were permanent or contractual were laid off. Everyone was paid their entire entitlements through the lockdown period. There was no deduction. There were no layoffs, there were no reductions. Post the lockdown and reopening, there have been difficulties in the contractual labor coming back into work because many of them were migrant people, and they had gone back to wherever they came from. So availability of people post reopening has been a struggle. What has also been a struggle post reopening has been the transportation and supply chain bottlenecks. They are slowly easing, but I wouldn't say we are yet at the same level as we were in, let's say, December or January. So those are issues that are ongoing.What do we see in the future, we -- as long as the risk of infection remains, there is a possibility of additional lockdowns as we saw in Maharashtra in Pune in July, depending on which way the infection is contained or not? So we do see potential disruptions going ahead. But one is not able to predict as to what exactly will happen or how it will happen or where it will happen. So we will have to face those as they come up. All we can say is that we are prepared. Having gone through 2 lockdown experiences, we are now clear as to what needs to be done. And I think the government is also making some announcements earlier so that some preparations prework can happen.So with these remarks, I'll open the floor. So any questions that you all have, we are very happy to take them.
[Operator Instructions] We take the first question from the line of [ Ankur ] from HDFC Life Insurance.
A couple of questions from my side. One, you spoke about this higher incentives, which we paid out during Q1. So this was in your opening remarks of close to about 2%, if I got that number right, is that continuing into Q2 and onwards? Or have you kind of rolled that back?
As of now, it continues.
Okay. Okay. So we could see that impact, at least for this quarter, if no longer?
This is Deepak Chhabria. Maybe I would like to add something over here. What Mahesh was trying to explain earlier was normally for all the customers, I mean, the channel partners, we have schemes based upon our incentives based upon targets. So because of the lockdown and the way things were opening all over the country, some states are opening or districts are opening earlier, shutting down again. So if you kept target for them, they would not be in a mood to purchase because no one knows whether he can reach the target. It was not a stable environment. So what we did was we removed the targets and so whatever schemes or incentives, which were planned for them based on targets were passed on in the invoice itself. So what Mahesh was saying is, normally, we would have saved 2%, because not everyone reaches the target, here, we have passed on all the incentives in the invoice, so there was a 2% gap. It's not an additional incentive which was given. No additional money was going out in that sense.
I got it. Okay. So even if they would not have reached their targets, you would have still paid them 8% given lockdowns would have been there across regions...
Yes. Yes, exactly. Because you cannot tell them that you can reach the target. So unless stability comes, we don't want to start putting the targets on them because it would be uneven based upon how long he is able to operate in his district based on lockdowns which get put over there, suddenly.
Sure. I understand. Sir, second question would be, for us, obviously, the south and the western parts of the country are the 2 critical regions in terms of our regional distribution, geographical reach also. So where are we as we are getting into August, so what are your utilization levels at your plants at this point based on the kind of demand you're seeing? And I know it's a difficult question but by when do you think you can reach back to normal sales as last year? Would it be Q3, Q4, if you had to take a guess?
See, there are certain issues which are still pending, which means like Mahesh said earlier, we were facing manpower issues. So we still are facing manpower issues. For example, when -- in the lockdown, people left us and went away to their homes. And these are trained operators, which takes a few years to train them. They are skilled operators who run the machines. Many of them didn't come back because their families don't want them to go back because they are scared of the disease, catching COVID. So there are still certain people to come back and some machines are unmanned. So even if there is a demand, we may not be able to fulfill it because of not having sufficient people, and we are trying to train more people.The contract labor hasn't come back because the migrant labor was gone. So there is a deficiency in all the plants in terms of manpower even today. So the sooner that is resolved, we can be at full capacity. I don't know how long that will take. It may -- I mean, of course, in the last 3 months, you've seen the percentage going up. People have come back. We have even arranged for people to get picked up at some places. For highly trained workforce, we have even paid for their flight tickets to come back. But we are not at full capacity as yet. And really, we will reach full capacity when the fear of the person coming to work will go away.
Also, you -- one can't really -- like I said, one can't really predict which way the infection is heading. Couple of days, it seems to be on the downward trend. And then suddenly, again, it spikes up again. And regionally, also, if you see there are spikes and changes quite often. So even in quarter 1, if you recall, Chennai was shut down for almost all of June. Then we had this problem in Maharashtra in July. And then you keep hearing some parts of Bengal are now shut. So I think as the disease spreads, it peaks at different places at different times, so the quicker that a solution is available, and that is not in anyone's hands, I mean, none of our hands, I think then stability will come. Now to be able to guess is actually making a wild guess at this point in time. We hope that it will be sooner than later, but that's about the best that we can do.
And sir, any number you can share where you would be on utilization levels at the plant at this point? Any numbers you can share?
Quarter 1 was slightly around maybe 40% if I take all the 3 months put together, and maybe now we are just crossing the halfway mark.
Okay. And just on the end market. So for us, I guess, 70%-odd of the cable business or the -- is wires for us, which primarily will be going on to the real estate sector. And obviously, what we hear is that both because of labor issues on the construction residential real estate, commercial real estate are under stress for these reasons and of course, because of the demand also being sluggish. So I just wanted to get some sense because what we heard from some of your peers is that June did see some pent-up demand because developers wanted to kind of complete work before the monsoon set in. So there was some revival -- some demand coming in for wires especially and then it kind of gone down again. So just wanted your sense because, obviously, you will have a better insight into this segment. If you could tell us what are you hearing, what are you seeing in terms of demand from -- for sort of wires?
Well, you're right, when we opened, there was a pent-up demand. And another factor also has been that copper has been climbing. And because of that, prices have been going up. And sometimes, that also creates demand for stocking in the pipeline. That pent-up demand is not there now. And what others are -- what you're hearing from others is probably right that there will be a little bit of slowdown in terms of offtake. But as far as we are concerned, we've done well in these months. And there hasn't been a reduction for us. But going forward, I think there will be.
Okay. Okay. And you would expect some weakness to set -- obviously, monsoon also, it's a seasonally weak quarter as well. So that's one, but okay, you're saying that even beyond that, it would be obviously given the sector that it...
Yes, the real estate sector position, you know and actually, the way I look at it is construction activities may slow down in the monsoon. But wiring activities don't necessarily slow down because when the building is up and its casting is done, inside work can carry on. But overall, there is a little weakness in the sector.
Understood. Understood. And just lastly, on our -- especially the fan, lighting business, the Other segment there where clearly, the de-growth has been much lower than the other segments, I'm assuming you would have done better there. So what's the outlook there on the other segments? I would assume fans' demand would probably have been a little more stable than the others. So just some sense, what are you hearing, seeing there?
So in these other sectors, our numbers are much smaller than the competition because we are new entrants, right? So in that sense, we are not affected as much as, let's say, the competition who's having large volumes in there. We have done well in those segments. We could have even done better had we been able to source some of those products. For example, fans are not manufactured, we source them. And they have had issues with the companies who would supply. And so we had issues getting the product. To that extent, we were affected. So we can't compare ourselves to those large manufacturers of fans in that sense. So I mean compared to why are these other products are still growing, and we have been working through the last few months to ensure that our sales network is growing what we've always maintained. And every month, we are adding more distributors and more retail points to our network. So we see good progress based on that.
Actually, but for the supply chain disruptions, like you mentioned, we probably could have done better than what we did last year, same quarter. And in fact, in water heaters and lighting, our volume numbers were almost close to what we did last year. So we were able to do in 1.5 months or less than 1.5 months what we did in a 3-month period in the previous year. So that was good. But for this disruption, we probably would have done much better than that.
[Operator Instructions] The next question is from the line of [ Sudeep Gandhi from Astute Investment. ]
Yes. Sir, one question for -- copper prices are hitting -- are rising quite a bit. And it is one of the important raw material for us and the industry in general. So if you could give any numbers how much margin compression could be because of this for us also and maybe for industry as a whole?
See the copper has been rising, and it's at about $6,500 level now. We normally have a policy that there is no compression of margins. We normally pass on the copper price increase or a decrease when it happens to the customer. So in this last 2 months, we've increased prices by 3x. Normally, there would be a slight lag. We wait for the copper to stabilize before we give a price increase and pass it on. But other than that, there is no margin compression that takes place.
The lag is slightly longer when the prices are going up and quicker when the prices are coming down. But it also depends on what the fall or rise is. If it is a $50, $60 change, one way or the other, maybe there may not be a change in the prices. But when the change is $200, $300 in a shorter period of time, then, of course, we will need to take those corrective actions immediately. So barring that lag, our policy has always been to follow the market, so we don't lose out on the margins.
Okay. But my question is due to current sluggish demand, there might be issues in raising, I think, the prices as the demand itself is low. [Technical Difficulty]
Okay. I mean it is not inelastic. There is a certain level up to which we can increase. And beyond that, if there is no demand, there's not much you can do. In which case, all we have to do is to look at our inventory levels and start monitoring -- and control the inventory at our end. So you will be able to increase prices to the extent the market will bear it.
Mr. Gandhi, does that answer your question?
Yes, yes.
We take the next question from the line of Sonali Salgaonkar from Jefferies.
Sir, my first question is regarding the performance of communication cables during this quarter. We understand that over the past few quarters, we are seeing a weak offtake in communication cables as the investment cycle of telcos is largely behind us. But I just wanted to understand your thoughts because this time, I think even on the margin front, we have had a slight negative in the EBIT margin?
Correct. Because the plants were reopened in -- towards the end of -- second half of May. And as I mentioned, we have paid out everybody's salaries. And so the fixed costs remain. And there is no revenue. So obviously, it is going to impact your margins. So that's broadly the issue there.
Right. But from the demand perspective, how are we seeing the offtake? Forget about Q1, which was a disruptive quarter. But especially in communication cables, how do you see the demand panning out over, say, the next 2 or 3 quarters?
I think, let's say, who is the largest spender in this space? The largest spender is the government. Okay. And in the last 1.5 years, there has been a lot of talk about investment, but really, no money has flowed in from the government. So that's more than 50% of the market?
Bigger, maybe 70%...
Okay. So 70% of the -- player that has an impact on 70% of the market is only talking at this point in time.
Okay. I'll add. On the government side, the biggest buyer is BSNL or BBNL and BBNL also purchases their products through BSNL. So that is the largest buyer. There were tenders in telecom, which came out, they have been finalized, and then they have been closed. Yes. I mean, no order placed and they're coming out with new tenders. So there's been no buying taking place. There has been tenders from different states in the past 1 year. And in the recent past, also, let's say, in Tamil Nadu, there was a big tender and it was stopped again. And the ones which -- so not everyone's placed orders, which would -- state and center plan for telecom rollout where the center was supporting with partial money and the state has to come up with their own money. They have problems in terms of payments, and so the rollouts are not happening.So we've got some order booking positions where we could supply, but the customer doesn't pick it up because he is not getting paid forward. There are issues with our company payments also from BSNL, where I think there are certain outstandings for close to 3 years where BSNL has not paid the money. And including the -- during the lockdown, Finance Minister did mention that the PSUs will pay out money to all the companies. We've been following up, but we haven't gotten paid. So there are issues of -- while the demand of telecom is there for the country and in the long term, that demand will be there and the country needs those cables and the rollouts will happen, but there is a funding issue, which is causing particular slowdown. And our plants are not loaded in telecom the way it should be.
I understand. Sir, my second question is regarding the CapEx. Last quarter, we said that we stick to our outlook of spending about INR 2 billion over the next 18 months, though it might be deferred by, say, 1 or 2 quarters. Do we still stick to that guidance?
Yes. We stick to that guidance. We -- those projects are on. They did slow down because of the lockdown and no manpower for construction. But they are on right now. The work has started.
Understand. Sir, my third...
The construction work at Urse has started and the new plant in Goa for conduit pipes is practically ready. We need -- we are now waiting for the machine builder to come and prove it. And so travel restrictions are an issue at this point in time. So as and when that happens, then that plant can also become operational.
Understand. Sir, my third question is regarding new products. I mean we have seen better performance, as you also mentioned to one other participant's earlier question. So what -- generally for breakeven of this segment, what is the kind of revenue that we need to target?
I think annual revenues of somewhere around INR 150 crores, INR 160 crores, should -- we should breakeven.
Okay. Understood. Sir, again, going forward on margin front, electric cables margins have generally been steady-state at about 15% for almost so many quarters and years right now. So barring Q1, which was a disruption, any thoughts on where the margins could stabilize for the coming few quarters, both in electricals and communication cables?
I think communication will continue to be depressed. It depends if you are able to get a few more offtakes, that could improve slightly, but it will be depressed until the funding issue is clearer there. As far as electrical cables is concerned, I think what you saw in Q1 should be something that is there as long as the COVID-related disruptions are there. Once we are back to normal, then I think we should be back to our previous levels.
Understand. Sir, also, I wanted to understand about our raw material procurement, if at all, any supply chain in China? And also what was the quantum of price increases in the Finolex product that you mentioned earlier that you have taken in the past 2 months due to rising copper prices?
I didn't understand the second part of your question?
Sir, the quantum of price increases over the past 2 months.
Okay. So on the raw material -- the first part on the raw material from China, I think the only raw material we used to get from China is a coating material for the fiber. And we've developed a new source in Korea and made the trials and stabilized it. So we are not dependent on China anymore for any raw material going forward. So that risk is not there.In terms of price increase, I think the 3 price increases would have been -- roughly, I don't know the exact number offhand, but I think roughly 10%.
Cumulative?
Yes, cumulative.
Understand. Sir, what about the distributor and retailers expansion as of now? Because you mentioned that we have been focusing on expanding that.
Yes. The thing is we had done quite a bit of work until March, right, when people were able to travel and move and talk to and attract new distributors. Post that, it has been more about how do we improve their reach in the market. How many retailers are they able to effectively sell on a daily basis or on a monthly basis? I think once a semblance of normalcy returns, we will -- we have -- our target of reaching the 500 distributors and reaching potential retail population of 150,000 is still there. But the last 3, 4 months have been quite disruptive in our ability to reach people to various markets and do development work. I think that should now start coming back on track. So maybe another 2, 3 months, you will see that numbers going back again.
Okay. Sure. Sir, my last question is on the demand resumption. So as of now, probably compared to similar period last year, what is the kind of demand that we are seeing overall? That's it from my side.
So demand is different for different product lines. We haven't seen -- we've seen a demand for electric wires for housing sector still strong. Maybe I'm guessing it could be because of the unorganized sector being impacted and not being able to supply. Otherwise, the real estate sector is a little weak, but we haven't weakness as yet. Price increases, as I have mentioned, also could cause certain weakness, which we know as we go forward in that part.In terms of the second product line, which is strong for us, is 3 Core Flat Cables, which is normally for the agriculture sector. The demand was strong in the summer. Now with the monsoon, it drops off, and that's quite normal for it to drop up and reemerge post monsoon. So that's happening right now.The other bigger products are also auto cable, there, the demand is weak, the auto sector is weak. And initially, when we started and opened up, we were only at 10% of requirement, which has climbed now to 30%, 40%, but it is still weak. It hasn't come back in auto cable.In other product lines like flexibles, there is an impact, so these products go to OEMs for panel building and all that. So there is an impact there in terms of demand maybe by 50%.If you come to telecom products, LAN cable is still in demand. Whatever we make gets sold off. Coaxial cable, there is a strong demand because I think more and more people are at home, and they need connectivity, data transfer, and so those products are in demand. We are not able to make full capacity because of manpower availability. But whatever we make is getting sold off.In telecom products, which is for actual networking, the demand is weak even from the private sector. We talked earlier about the government sector, but even if you go to the private sector, there are 3 big players and their purchases are very low. Tenders have happened, but orders haven't flowed. And everyone knows their issues of payments and everything, what they're facing, what we keep reading in the newspapers. So there is a demand impact on telecommunication products as such.Even in companies like Jio, for example, they are buying, but they are buying cables with low fiber count because like we mentioned about more demand because of work-from-home kind of requirements. So low-count fibers are going for the last mile connectivity. So -- but then that doesn't add value to your [ purchase... ]
They're not laying the long-distance product. Their network is complete. They are looking at fiber-to-the-home products, which are just 1 or 2 fiber. And these are newer products we've developed, and we are also supplying to them, but it doesn't take the volumes up.
Understood. Sir, would it be -- would you be able to quantify the demand as in percentage as compared to last year overall I'm saying?
For the company?
Yes.
Less than half...
No, half [Foreign Language].
About half.
It's about half, roughly.
So 50% as of last year, right now?
Yes.
The next question is from the line of Ajay Sharma from Cycas.
I just had 2 questions. The first question was, if you could just comment a little bit about the industry landscape. Have you noticed there's any consolidation that's happening among cable manufacturers or among the dealers? And do you see any opportunity to increase the company's market share?
I haven't heard of any consolidation in the -- from the cable manufacturers. One or 2 companies I know have gone into liquidation like Shilpi, and there was one more, I don't recall their name. And normally, we don't see any consolidation which happens at the dealer level. Very rarely have we seen those, and we haven't heard of any major ones in these last 3 months. What is the other part of the question?
Yes. The company's market share, do you think there's any room to increase it in the next 2 quarters?
Yes. So I believe that looking at the impact of the pandemic, there would be an opportunity for us to increase market share. Because the unorganized sectors may feel the pinch in terms of money for purchasing raw materials and manufacturing and selling it in the market. And once we are able to move in, maybe the consumer will get attracted and will stay with our brand, and we should be able to get some market share increase. So that's why...
As of now, have you seen any of these players leave the market?
As of now, we know the unorganized sector is impacted we cannot compare market share because the whole market is not there. So how do we compare it to earlier? We are all guessing the percentage of market what is operating right now. It's quite distorted, and it's very different in every state, the way it is. But I do see on the sales side, when -- even in this pandemic, when we are trying to improve our network and our reach, we are able to do it. And we are tracking, let's say, we may appoint a lot of retailers, but how much do these retailers buy, how many are active retailers per month because not everybody buys every month. These are even small, small retailers which come in there. We are seeing those numbers climb. So when things will stabilize, I believe we will see that impact in the market share at that time.
Okay. Okay. So I see, that's pretty good news. My last question was I understand that the company has a broad policy of not extending any credit to its dealers and distributors. I can't help but wonder, is that an optimal policy if the company were to extend some credit, wouldn't the offtake of the company's products be a little bit higher?
Yes. So over the -- I mean, from the time I've been in this company, and it's more than 30 years, the company has had a policy of selling the light-duty cable products through a distribution network on advance payment basis. We have got programs where we are arranging credit from banks for these customers through channel finance. So company wants to have advance payment so that we don't get into a position wherein the dealers are always owing you money. But when you are looking at certain sectors of the company's product profile like power cables or telecom, we have to offer credit. So there is credit given on those product lines to OE parties as well as to government customers and private customers buying those larger products. So it's a mixed bag for the company. And that's the policy we've adopted and been successful in there.
But what's the rest of the industry doing for these light-duty cables? Are they also collecting advance payments? Or are they extending credit?
Well, Havells is now into advance payment following us. I understand Polycab also is now trying to do that. And they faced a lot of difficulty. Some of these companies were doing credit when the pandemic started. Then those customers don't have -- are not making payments. And then you don't want to lend out more because there is an outstanding. So it stops and creates a problem in the cycle. So we stayed clear of that by not having that issue because only one who pays in advance or goes through a channel finance system where the risk is taken by the bank do we supply the material to him. So it's worked well for us that we don't get into an issue of holding back material from a channel partner.
Okay. Okay. I understand. So extremely helpful. One last side comment that I have is one of your competitors Polycab has fantastic Q1 disclosures. Their Q1 statement reads like a mini-annual report. It would be nice if the company's management decided to copy a similar form and provide a little bit more disclosure. It would provide a bit more confidence to the investor community, just saying.
Okay. We will think about it. Not an issue.
The next question is from the line of Kamlesh Kotak from Asian Market Securities.
I just wanted to, sir, have some insight about how much is our dealer distribution network for both wires as well as the consumer products, as of now we have in the last year March, if you can just share some details on that?
We have, as on date, I think, 388 distributors. And the retailer reach is around 112,000. Now that doesn't mean all 112,000 have bought from us. That's the retailer population that these 388 people can address at this moment in time. I think number of people that have made purchases is around 40,000. Beyond this, we also have channel partners. The regular people that they used to exist in the past.
Okay. Okay. And this was for wires, right, sir? So how about the consumer...
This is for wires, this is for fans, lights, everything, maybe not all of them sell all products, but the channel is coming.
Okay. And this, we target to take it to 500, right?
Yes. Our plan was that we would have -- we should have achieved 500 by March, April this year and giving a potential coverage of 150,000.
Okay. And sir, any geographic color in terms of where we need to expand further in terms of our range vis-à-vis the other regions?
I think the coverage in North and East can still expand. It is much different than before, but we still can expand. There is potential there.
Okay. Secondly, sir, can you just share some insights about the extra high-voltage cable segment, how the order book has been, how's the execution there and what's the outlook there?
The execution in the EHV segment, unfortunately, because of COVID has not changed much since March. Because all our project sites are under some form of lockdown or the other. We won quite a few projects in Tamil Nadu. And we still haven't gotten permission from the civil authorities to reopen and restart the laying operations. We had 4 projects running there, out of which for 3, the material is -- the cables have been manufactured. For 2 of them, the cables are at site. But I'm not able to lay them because we still haven't got the permission to start the digging and trenching. Once that happens, then we can complete those 2 projects. The third one, is the material is made, it's in Pune. We need to ship it out there. As soon as they give us the permissions, we will start moving it out.What it means is in terms of revenue generation, there would be a time delay because these are composite orders and we can recognize revenue only when the job is completed. Beyond that, there are -- inquiries are happening every day. Tenders are being floated, we are participating in tenders. But decision-making on tenders has gotten delayed over the last 3, 4 months. Even earlier, there were delays, but now because of pandemic, nobody is looking at these items. So I think there will be some delays this year also. I think maybe second half, we can expect some decisions to come out, and then things could go back on track.
Okay. And lastly, sir, when you say CapEx of INR 2 billion plus, so does that also include part of the greenfield plant which we are proposing? Or is it still other than this? And what is our status of that?
So, for that INR 200 crores, we had said that we will invest money in the conductor plant -- sorry, in the conduit pipe plant at Goa, that's almost finished, when we talked about investing in an e-beam facility in Urse and additional facilities in Urse for filling and copper-clad steel, so the civil construction for all these 3 items are on. They've been delayed because of the lockdowns. It has restarted now. So it will probably take us about an year to complete the civil work, and then the equipment can come in. The only thing that has got pushed out for the time being is the expansion on the optic fiber cable, we were wanting to add another building and another line at Urse. That will probably now happen only when the situation in the optic fiber cable telecom market starts improving.
The next question is from the line of Achal Lohade from JM Financial.
Yes. I just wanted to check, if I heard it right, you said the overall aggregate run rate for the electrical cables is about 50% even as of now.
Yes. We talked about capacity utilization.
Yes, capacity utilization is still 50% you're saying?
Right.
Understood. And pardon me if I'm asking a basic question, if you could help us for FY '20, a broad breakup in terms of the consumer wires and the cables mix in our electrical cables?
See, on the electrical cables, approximately 60%, 65% is wires, right? Then we have 4 broad -- 4 other broad categories. So there is wires meant for agricultural applications. There's wires meant for automobile applications. There are wires meant for industrial applications. So these are the flexible wires. And finally, the power cables. Power cable is slightly under 10% for us and all the other 3 are more or less the same size. So if you say 65% in wires, about 10% in power cables at 75% and the other 3 make up the 25%.
Understood. And with respect to the new product categories, where are we on that in terms of the run rate?
Like I mentioned, first quarter, we actually did very well, except for the fact that the first 1.5 months to 2 months was a washout. Had that time also been available, our numbers would have crossed definitely what we did in the corresponding period last year, probably also what we did in the last quarter of '19/'20.
The next question is from the line of Anurag Patil from Roha Asset Managers.
So sir, afterwards of demonetization and GST implementation, did we witness any credible increase in our market share, specifically for electrical cable?
Post demonetization, the market actually went down. Because quite a few of the unorganized space disappeared. And whereas our numbers were steady. So from that perspective, yes, we gained some share. The difficulty here is there is no credible data available in terms of saying what was the market in X year or Y year and that is primarily because of the very large presence of the unorganized sector. At one point in time, demonetization or GST time, prior to GST, estimates were that the unorganized sector was close to half the overall market. It has still not completely disappeared, but it has got half now. So where is it at this point in time is anybody's guess? It could be 30%, it could be 25%, it could be 40%. We really don't know. So there is no credible count there.
The next question is from the line of [ Vineet Prasad ] from Investec Capital.
Just 1 clarification from my side. Was I right in understanding that current demand levels are roughly 50% versus last year?
We're requesting participants to please stay connected. We are just trying to reconnect the chairperson back to the conference. Requesting you all to please stay online. Thank you.[Technical Difficulty]Sir, you are reconnected to the call. Please go ahead.We have a question from the line of [ Vineet Prasad ] from Investec Capital.
I just wanted 1 clarification whether my understanding was right. Is our demand levels roughly at 50% versus last year now?
Yes.
[Operator Instructions] The next question is from the line of [ Atman Shah ], individual investor.
Yes. Sir, this is -- the question is specifically for Mr. Chhabria. Sir, I'll be glad if you can answer.
Sure.
The company is now sitting on substantial cash and cash equivalent. And our free cash flows are also growing by the day. So -- and CapEx is also very much under control. INR 200 crore CapEx over 18 months or 24 months, we can even meet some of our yearly free cash flow. So shouldn't we be looking at some kind of a special dividend or buyback as a part of better treasury management? The company doesn't need that kind of INR 800 crores to INR 1,000 crores of cash the company is sitting at?
Yes, you're right. So it was discussed in the Board and what the Board members felt is that we need -- for growth we need to have some acquisitions. And so we are looking at options of how to expand. And so we are retaining cash for that, so we don't have to borrow for an acquisition. So if something comes along, which is in the same line or in a product line which is parallel to us, which makes sense, then we are looking at those options. If it doesn't happen, then we'll have to -- like you suggest, the Board will have to take a call on what's the best option for returning the money to the shareholders.
Okay. And my second question is with electrical vehicles. Will the demand of the wires in the vehicle go up in value and volume terms? And do we have the product to cater to that kind of a demand if it's there?
Yes. So in an electric vehicle, you will have the battery running the vehicle, but the wiring inside the car or 2-wheelers, it's still remaining the same. Dimensions may change, and that's very simple for us to change tooling. But the wire as the demand will remain, it doesn't go away. But if you go into luxury cars, per car, the kilometers of wire go higher up because there are a lot of automation, which all need to get connected through wires from which the signals will go. So if you are asking a question, how will it change going forward as India progresses and -- from a simple car, more people want to buy a high-end car, the demand for wire will go up per car. Whether it's electric or combustion engine, it doesn't matter.
Okay. But with electric, like will the volume -- so we can say, right, the volume of wiring in an electric car is more than a combustion car?
No, no. In an electric car, maybe the battery cable would be more because you have a larger battery, and you're feeding from that out. But the smaller wires will go in a harness which connect, let's say, to your window or to the rear light and front lights, all that remains the same. The basic car is the same. The drive chain is gone and the battery is feeding the power. So the battery cable is extra required and a charger cable at your home when you want to connect it to the battery to charge is an additional quantity. So -- and those are little larger cables. They're not called auto cables. They're called battery cables. So battery cable demand will go up. Auto cables will remain the same. Auto cables can only go up if the car goes to higher end, that means more automation in the car.
Well, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Deepak Agarwal for closing comments.
Thanks, everyone, for joining this call. And we would like to thank management for giving their precious time for this call and also giving us the opportunity to host this call. Sir, would you like to make any closing comments?
We just want to thank everyone for the questions, and we hope we've answered them to their satisfaction.
Thank you, sir.
Thank you.
On behalf of PhillipCapital (India) Private Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.