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Finolex Cables Ltd
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Good afternoon, ladies and gentlemen. I'm Neerav, moderator for this conference. Welcome to the conference call of Finolex Cables Limited arranged by Concept Investor Relations to discuss the Q4 and FY '21 results. We have with us today, Mr. Deepak Chhabria, Executive Chairman; and Mr. Mahesh Viswanathan, Chief Financial Officer, Finolex Cables Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the floor to Mr. Mahesh Viswanathan. Thank you, and over to you, sir.
Thanks, Neerav. Good afternoon, everyone. And from Finolex' management, a warm welcome to all of you who have made it convenient to join this call. Before we get into the Q&A session, I would like to take some time to give you a brief on how the quarter 4 as well as the whole year went. As you all know, right from August, September last year, things started -- had started looking up, and the market was beginning to come back. And that was seen in our performance in quarter 2 and more so in quarter 3. That trend continued in quarter 4 as well. We had -- in the quarter 4, our revenues went up by close to 41% when you compare it with corresponding quarter of the previous year and by about 11% when you compare it with the immediately preceding quarter, which is the December quarter.Margins remained stable. Our gross margin was about 26% during the quarter, and for the full year, also remained at 26%. This is slightly lower than what we recorded in the previous year. But I had also explained this gap in the earlier calls. This was a result of how we treated the certain scheme payments which were made in the earlier periods, basis performance whereas this year, because of the pandemic, we had decided to give those monies right on the invoice itself. So the realizations were about 2% lower, and that reflected in the margins. In the last 2 quarters, especially, we had seen commodity prices spiraling upwards, not just metals, but polymer and everything else that goes into the making of our products. And consequently, we had to revise prices upwards several times. In the full year 2020, '21, we had to change prices almost 12 times during the year. The prices were revised with a slight lag. So that also had a small influence on the margins that would mean.At expense level, we were able to contain the expenses to reasonable levels. If you recall in the first quarter last year, we had informed you that over the lockdown, we had quite a few discussions among ourselves to try and see what kind of costs we could reduce, how much could we cut down permanently. And how much of the fixed cost we could convert it into making them variable. So we achieved some measure of success, and that is also reflected in the cost lines. So at the end of the year, the net profit was about INR 392 crores. This is before taxes as against INR 501 crores in the previous year. The basic difference here is that in the earlier year, we had -- we were in receipt of dividends from FIL both for '18, '19 as well as for '19, '20 in the same year, whereas in 2021, there was no inflow from dividends. That was a major reason for the difference in the profit numbers. And the second, of course, was the first quarter, we had -- we estimated we had lost sales of approximately INR 400 crores during the first 3 months and the result in profit on that about INR 50-odd crores. So that kind of bridges the gap if you will. In the quarter, our profit was about INR 136 crores slightly higher than the profit that we made in the corresponding quarter of the previous year and substantially higher than the profit that was made in quarter 3. Profit after tax is, of course, dictated by -- partly by tax-free income that you -- that we received in the earlier years, whereas this year, there was no tax-free dividends that came in. So to that extent, the tax outgo appears a little higher, but it is not so. So that's on the income statement. In terms of individual segments, electrical cables, the revenues rose by 43% when compared to the corresponding quarter of the previous year. Of course, the previous year's quarter had a lower base because the second half of March was impacted. But compared to the immediately preceding quarter, the revenues went up by about 8%. For the total year, the revenues were more or less flat, 2,900 -- INR 2,310 crores versus INR 2,360 crores. Communication cable seems to be turning around the corner now. It is one segment which has been plagued by difficulties over the last couple of years because not much of investment was going in there. Despite a slew of announcements from the government saying that they would inject money into Bharat Network or the BBNL programs. But the effect is yet to be seen. Currently, we are seeing some tenders coming up. And hopefully, those will show up in the revenues in the future quarters. As far as margins from the segments were concerned, electrical cables, we've been able to go back to our traditional margin levels of 17% and 18%. So in the quarter, our margin was about 18%. And for the full year, was about 15% compared to 16% last year. Other items that I would like to highlight briefly are in terms of -- if you look at the balance sheet, you would see that the inventories are slightly higher. This is mainly the impact of higher input costs. As you might be aware, copper, for instance, which was trading at about 4,500 LME in September, October was trading at close to $11,000 in March. And similarly, with polymer also, the prices have -- had increased. Subsequently, they have started to come down, but the impact was felt in the month of March. So the inventories are slightly higher, and it will be our endeavor to get them back to normalcy quickly.In terms of cash positions, we are slightly better than last year. Last year, we closed the year with about INR 1,236 crores of liquid resources, and that has changed to about INR 1,341 crores at the end of March this year. Beyond this, there is not really much to talk about in the balance sheet. The numbers are fairly self-explanatory. The segment Others, we have seen substantial growth in that in percentage terms. And in value terms, we have grossed INR 114 crores at the end of the year, could have been much better had the first 2 months not been what they were. I think our efforts to improve our distribution network are beginning to pay off. And the result in the appliances and other segments that we see is the improvements that are taking place in our distribution network. At the end of March, we had 509 distributors. And we had unique billing this year of almost 90,000 retailers as opposed to 30,000 odd in the previous year. So that's showing up as we improve the distribution network and as the coverage there improves, the number of retailers we would be able to cover will also increase, and therefore, that will have an impact on the revenues and volumes for the company. So with this brief statement, I now open up for questions.
[Operator Instructions] The first question is from the line of Mr. Rahul Agarwal from Incred Capital.
Yes. Just 2, 3 questions. So firstly, on the demand side, if you could throw some color on how does the demand look for the year? Obviously, we have ended the first quarter as well. So across your segments into electrical cables, auto, agri cables, optical fiber or non-optical fiber, communication cable and FMEG. If you could just throw some light there, please? That's the first question.
You're talking about going forward, right?
Just the year, yes, fiscal '22. Yes.
Okay. I think it -- the revival of the economy would again depend on how the -- how we are able to contain the growth of corona and how quickly different sectors open up. As we spoke at least in Maharashtra, April and May were -- sorry, yes, April, May and partially June also was -- we were all under lockdown, while commercial activity was continuing, it was not with the same ease as you would have seen, let's say, in the prelockdown days. Slowly, things are returning to normal. But how long that return would take is anybody's guess. But assuming everything starts to be normal from now onwards, I think in the next 1 quarter or so, we should go back to pre COVID levels.
So broadly, in terms of growth, if I look at electrical cables, should that -- obviously, the base is low, almost flat Y-o-Y. Are we looking at more than 15% top line growth overall for the company and electrical cables in specific? Or would you -- how would you see that number?
Yes, we are planning for that. But on the ground reality is what it will be. So we will have to color it to match ground realities as time goes by. But yes, the plan is that.
Okay. Got it. Second question was on the CapEx. So we had discussed about last quarter, I think you were spending on solar -- something on solar side and on the tinned copper fire side. How is that progressing? What are the status there?
The civil work for the ebeam plant is under construction right now.
This is Deepak Chhabria. I thought just to answer your question, the ebeam civil work has been held up because the ebeam requires a special bunker to be made underground where the electronic beam equipment have to be put. And this requires the supplier side engineers to come and actually pinpoint what needs to be done at a time of casting and it's very specialized casting. And because of the problems being faced between India and China, the engineers are not able to come from that country to our country. And so that project is kind of held up till that gets sorted out. But the other projects have gone on well. And the project for making conduit pipes has gone live last year. And the sales have started, and we are seeing good movement of product today.
And for the tinned copper?
In the tinned copper plant, the plant has been ordered and the civil work has just commenced. There were some issues on getting approvals, which has just been sorted out.
Any revised time lines you want to put like by year-end, should we see both of these done?
The tinned copper, yes, but on the ebeam, I think a lot depends on the situation between the 2 countries so -- which is not in our hands, basically.
See, the whole thing depends on when visas are issued to those people to come and be here at site. So that's the bottleneck now.
Got it. Sir, lastly, on the inventory. You mentioned the raw material prices going up, that is why the inventories are higher. It looks higher, at least optically.
Yes, it is higher, it is higher.
Yes. But at INR 750 crores, INR 755 crores of inventory any more color can you throw as these numbers obviously look much higher than the past. If I look at -- if I just do simple maths on the sales, it looks like 100 days of sales of the inventory at INR 755 crores. So anything specific are we -- or is it like first quarter is already -- the number is actually driven down?
At first quarter, the numbers will be driven down. And like I said, a substantial portion of that increase is because of the price hikes that were there on both copper and polymer. And polymer, we import from Taiwan. And there is 1.5 months, 2 months lead time there because it comes by both. So what we had bought and placed orders in the month of February landed in March for consumption in April. So as they get consumed, then the numbers will go down substantially. We will revert to the traditional numbers of 55, 60 days pretty quickly.
The next question is from the line of Ms. Sonali Salgaonkar from Jefferies India.
Sir, my first question is regarding the gross margins. Yes, in the opening remarks, Mahesh sir mentioned some bit about the realizations sort of being lower by about 2%. Sir, but could you just do a little bit of more detailing as to how should we look going forward? Was this scheme a one-off? And how should we look at it in FY '22?
See, we changed the practice last year because of pandemic. We were not very sure how long the effects of pandemic would last, okay? So we have been -- we used to run several schemes in the past. Some were basis quarter performance, some were basis annual performance, some were maybe specific season related. All this put together, we used to budget for about 8%, but the actual payouts were somewhere around 6%. Whereas last year, keeping in mind the unknowns we said, okay, let us give this 8% straight away on the invoice. And that is what we've been doing the whole of last year. Even as we speak, we have continued that in quarter 1 also. We'll have to see how situation on the ground changes and whether it is possible to run a target-based scheme at some point in time in the near future. As and when that happens, we might change it. But at the moment, we are still continuing the way we have been operating.
Maybe I can just add that the way the target based schemes run is based upon past performance and the expected growth, the targets are set for the distributors or even a retailer. And the schemes are run for incentivizing them to try and sell more. So in a pandemic time, when there are a lot of changes area-wise, at different time frames, some months, some places are in lockdown and in some months, some other places have lockdown, it's very difficult to give a target, which is something which will incentivize the distributor and retailer. If we give higher targets, it may, in fact, be adverse to the company, and they may not want to buy our product and actually sell it forward. So to remove all that and to actually keep them happy, we stopped all schemes, that let the sales happen based upon actual market conditions and the demand in the market. And we wouldn't want to link their earnings on that. So once the pandemic stabilizes, we will go back into target-linked schemes.
Got it, sir. Sir, and if I may confirm, this 8% is the discount that we provide on the actual invoice?
Yes, that is given on the invoice itself. So realization gets reduced by that number.
Understand. So we have switched temporarily from the target based scheme to actual invoice-based scheme till the pandemic is in view?
So the price is reduced by that numbers, no?
Understand, sir. Sir, my second question is regarding electrical cables. As you rightly mentioned, we have gained pretty much on the margins over there. So sir, would like to understand what is our current B2C mix in electrical cables? And broadly, what will be the end-user segments? And just as an extension, are we seeing any revival in the construction or housing activity because that is where I think we have a good ground in terms of B2C wires and cables?
Our B2C composition, that has not changed much. Bulk of the sales are still through the channel, especially in electrical wires. There is a small portion of power cables, which might go directly to the end user, but large part of the electrical cables is going through the channel. There is auto cables, which goes directly to the end user, but that is maybe about 12% to 14% of the total values there.
Got it, sir. Sir and overall, our mix for B2C is about 65% to 70% is B2C?
At the company level.
And in Electrical, if I may ask?
It will be slightly higher, maybe about 70%.
Got it, sir. Sir, the third question is regarding communication cables. This year, of course, for the reasons even because of the fiber prices, et cetera, the margins were quite lower for the full year at about 2% to 3% EBIT margin. Going forward, how should we look at the margin structure? Because at the peaks, we have seen about 11%, 12% steady state levels were somewhere about 9% to 10%. So going forward, do we foresee to gain back those margin structure?
I think at the moment, if you ask me, today's prices are still depressed.
But I can add that if you are talking a little long term, with 5G, which is coming in the country, there is going to be a huge demand for fiber optic cables and fiber itself, because the cell sites will go at least 300x more in terms of deployment all over the country on such a large base. So the minute 5G starts roll out, we will see a good business in fiber and fiber optic cables.
We are also -- at least our partners tell us that they are already seeing that the fiber prices are beginning to firm up overseas. So that transmission from overseas to India, will probably take another quarter or so. But yes, at some point in time, the margins are likely to climb back.
Got it, sir. And also for the new products, I mean, we have seen now 2, 3 quarters where we are in the positive territory for the EBIT margins. So what is our vision over there? I mean, what kind of sales do we want to cater to in that segment? And broadly, the margins, what are we targeting?
Okay. This year, the margins have been positive. But then the fact is that we have not spent much on advertisement, which have gone and hit those segments. And therefore, it is positive. But if you recall our past conversations, I've always maintained that at about at our current cost structure levels and if we want to spend the kind of -- or provide the kind of advertisement and other outdoor support, then breakeven would be somewhere around INR 140 crores, INR 150 crores. And our ambition, like we've always stated, is to quickly grow it to a INR 500 crore business because by -- at that level, then we can bring manufacturing inside.
Got it, sir. Currently, 100% is outsourced?
Currently switchgear is -- some of the switchgear SKUs are made in house. Some of the switch SKUs are made in-house, but lamps, fans and water heaters are sourced.
Got it, sir. Sir, and very last question from my side. The CapEx in terms of quantification, do we still stick to INR 2 billion over the next 18 months?
Yes. Some part of it has been spent. So I think over the next -- from now to the next 18 months, another INR 150 crores, INR 160 crores.
Got it, sir. Very helpful.
The next question is from the line of Mr. Saurabh Patwa from HDFC Mutual Fund.
Sir, can you hear me? Am I audible sir?
Yes. Yes.
Yes. Sir, just wanted to understand the status of the J-Power entity, how Y-o-Y, last year, we made a loss of -- we had infused another INR 50 crores how much we had to infuse in FY '21, sir? And any traction in terms of orders with EHV cables?
Okay. We -- this year, the entity made a loss of INR 32 crores, I think. We infused INR 20 crores from our side. The partner also infused INR 20.2 crores or INR 20.3 crores from their side. Currently, the order book is at around INR 65 crores approximately. And we have pending jobs in the -- from services for another INR 20 crores. So totally, even if no new orders are received a revenue of about INR 85 crores can be booked this year.
And sir, what's your outlook for this, how -- I think at last year's annual report you had mentioned that we believe it will -- the loss may continue for around 18 months. So what's the outlook now, sir?
Well, okay, the pandemic has pushed the time lines out by a few months. So maybe another year or so. But beyond that, I think we should start seeing at least cash positive numbers.
So by FY '23, you believe you should be breakeven at least on the cash side?
Yes, that's the plan now.
[Operator Instructions] The next question is from the line of [ Mr. Yogesh Bhatia from Sequent Investments ].
Actually, I think in the beginning of the call, you explained the difference between the stand-alone and the consolidated. Can you please revisit that? I missed it.
Sorry, I did not talk about to consolidated in the beginning. The only difference between the consolidated numbers and the stand-alone numbers is on the expense line in the stand-alone books, there is a provision of about INR 26 crores or so towards impairment of the investment in J-Power. In consolidated, that goes away on the other expenses line. Because the loss or profit from the investments appear in the line which says share of loss of profit from associated from joint venture companies. So you will see a INR 290-odd crore number there. That includes our share of the loss in FJPS plus our share of the profit in FIL.
Okay. Okay. So going forward, how does this JV number [Foreign Language] do we expect this on a steady-state basis, how is it expected to be?
So which is what the previous question was also about, what is the expectation in terms of the performance levels at the entity. And the answer was, at least by next year -- next financial year, I expect it to be cash positive. I may not be able to record full depreciation, but I do expect to be cash positive.
The next question is from the line of Mr. Amit Naagar (sic) [ Amit Mahawar ] from Edelweiss Financial Service.
This is Amit Mahawar from Edelweiss. I just have 2 quick questions. Mahesh, first for you, in FY '21, what is our volume growth in retail house wires and also contribution from top 100 dealers in retail house wires? That's my first question.
Okay. Volume increased by about 14% -- sorry, that was in the quarter, whereas for the full year, it was more or less flat because you're comparing a 9.5-month year versus a 1.5 month year.
Yes, fair. And contribution from the top 100 dealers only in retail house wires.
I will have to come back to you on that. I don't have that figure with me on top of my head.
Okay. Fair point, Mahesh. Second question is maybe with Mr. Chhabria. I think in terms of our capital allocation and business expansion, you mentioned about CapEx for 18 months. But the next 2, 3 years, what is going to be the bigger game plan in terms of expansion? Because generally, we've been very prudent and if I can use the word prudent in expanding capacities in wires. But any thought process we have, how we'll use the balance sheet or cash that we have in the next 2, 3 years? Yes.
So we have regular expansions on the normal product lines, let's say, like house wiring. In fact, we have an expansion program on in Goa as well as in the Hosur plant. Equipments have come, and in fact, they are under insulation, and we expect that expansion to be complete by November. So that's a standard expansion, which we do year-on-year. We've also expanded capacity in land cables. We've grown pretty handsomely there in the last couple of years, and we are doing regular expansions there. And one more expansion is underway, which is coming nearing completion. We started a new product line, which is the electrical conduits. We set up the plant in Goa, and we are trying to cater to the South, because in a conduit, the freight cost is high. And once we find that the acceptance of our product is good, we will also like to set up a plant at Roorkee to cater to the northern region and then maybe probably also at Urse or Pimpri to -- for the Western region. So we have those plans in mind for the next 3 years. The ebeam has been a little disappointment. Our plan was that once the ebeam is operational, and we are running solar cables of that, which is the first product. then we were planning to work on instrumentation cable and cables for railways. And for the metros which require all ebeam in terms of the core. So those plans are kind of held up, but I hope the matter has sorted out with China and India, and we are on stream to go forward with those kinds of expansion plans. So we have plans for expansion in the cable line. We are also having expansion in fiber optic where the cabling capacity is going to get augmented and we should be -- I mean the designs are ready, which should be starting construction of the building, maybe in a month's time, we are doing tenders right now. So a lot of the cable product lines will see expansion. In the new products, we are trying to, like Mahesh explained earlier, once we get a certain turnover, we would like to set up the plants because we don't want to source it, we want to control the quality, and with that comes the R&D and innovation. So we will spend money in setting up those plants, and that should come in the next 3 years' time frame in the CapEx.
Fair point. Sir I think that's -- maybe just 1 clarification on the second answer that you've given. Can I still assume that in the electrical cable and wire, I'm taking away the communication and all that. But in electrical cable and wire, the mix has historically always been -- Finolex has always been a wires company, and we have a very small share of electrical cable. So are you suggesting that there'll be a change in this mix significantly in the next 3 years? Or largely, it's going to be 80% or 90% wires?
I know we are predominantly a wire company. Our strength is in that area. I personally would like to grow on the cable side, and we are trying to work on the ROI over there. I mean, to be honest, there's some work that needs to be done. And once we achieve certain numbers, then we would like to expand on the cable side as well. But we are working on that.
[Operator Instructions] The next question is from the line of Karan Agarwal from Tusk Investments.
So my question is along our wires and cables business. We are actually a firm based out of Kolkata. So we did our channel checks in East India, and we came to realize is that Finolex over the past 2, 3 years have not been aggressive in terms of sales. For example, we spoke to a number of developers. They told us that Finolex is not being that aggressive with the sales stuff, isn't being prompt isn't calling them -- isn't pushing their products. And during, say, 5 to 10 years back, Finolex was the cables large company in India. People used to say cables [Foreign Language] Finolex. So what steps are we taking to change the perception from -- change the perception of the market. So that developers start taking our products again.
I think we are, like we said earlier, more in wires and in cables. We have always been more of a wire company and that is continuing right now. So I presume that when you're talking about the Eastern market, you're talking about the wires. Now if you will see Finolex in the past has been predominantly having higher sales in South and followed by West and then by North and the East. And this has been because South is more quality conscious and willing to pay a higher price compared to, let's say, North India, and parts of East India. But we've been trying to popularize our products in the North and the Eastern grow over there and our growth rates have been pretty well in the East, in fact, we were earlier selling in -- let's say, in Kolkata area through a lot of wholesalers and the wholesalers would take the product and sell it over to small retail counters. Now we have stopped doing that, and we are doing a proper distribution channel wherein we have distributors spread out over the East. And each distributor has allocated some 400 retail counters. The prices are controlled through a computer system that the price is same no matter in which retail counter you are selling at. So people from the rural don't have to travel to a bigger city to get better prices and buy the product. So we are trying to do a proper brand building and selling at a fixed price in all the shops. And the sales have, in fact, grown in the East. Now you may have got certain feedback based on the way the business changed from the wholesaler to a distribution network and maybe some people are unhappy. But we will look into it and see what we can do to make sure that everybody is happy in terms of the business and distribution.
[Operator Instructions] The next question is from the line of [ Mr. Mohit Kumra from Kumra Investments Limited ].
My question specifically regarding the balance sheet.
Sir, sorry to interrupt you. Mr. Kumra, your voice is breaking, may I request you to come in a better reception area?
Can you hear me, please?
Yes, I can hear you. Yes , I can hear you.
Yes. So my question is regarding a very specific entry on your balance sheet. On your current asset side, the other financial assets are listed at INR 778 crores. The last year, this was INR 55 crores and note against that entry was loans to others. I don't know who the others are. But this year, it is 1/4 of your balance sheet. So could you please shed some light on what this money is and how?
Sure. Sure. Sure, no problems. So if you look at the financial assets, there are -- there is 1 item called cash and cash equivalents. There is another item called other bank balances, and the third item is other financial assets. So -- and if you see last year, the first item that is cash and cash equivalents, that shows INR 856 crores. This number basically represents fixed deposits, we used to, in the past, keep money in liquid funds, debt funds, but liquid funds. But when the pandemic hit us, we did not know how the market would react. So the first thing we did around the 24th or 25th of March last year was to convert -- get out of all those liquid funds and put them into fixed deposits. And we put them into fixed deposits for 7 days because we were really not sure how long this would last, what we need to do, and there was hardly any time to study anything. So when you put something in fixed deposits for less than a 15-day period, it is treated as equivalent to cash. So that is how it got classified under cash and cash equivalents. Later on, as the year stabilized, those fixed deposits were extended to 6 months and later on to 1 year. Now anything that has got a maturity period beyond 1 year, does not remain cash and cash balances anymore. It has to be classified under other financial assets. So bulk of the INR 778 crores that you see in the current year, is representative -- is fixed deposits, which are maturing at a period longer than 12 months.
Okay. So these are not...
No, we've not given money to anybody. We haven't given money to anybody.
So that is my first question. My second question is that...
It's only a matter of classification under the IndAS rules that's all nothing else.
No, no, you can understand loans to other can -- anyhow let's go to the next question. My next question is that you have about INR 1,300 crores of cash on your books. And is this really necessary for that much of cash, I mean you are dragging down your ROEs, your investors are happy, but not that happy. Any idea to [Foreign Language] -- do you ever -- [Foreign Language] are you an ROE focused company like do you want to lead your increase you equity by buybacks, special dividend, something...
Okay. The money has been retained because we are constantly looking for assets to buy. When I say assets, I'm talking about other businesses that we can take over and run. And we've been doing this now for close to more than 2, 2.5 years. We have not found the right target as yet or when we found the right target, the prices were not okay. So this money is basically kept as a fallback for an acquisition. And...
Okay. There is no addition to cash, basically, just...
Yes, yes. So this is the reason why it has been kept there. There would have been an addition to cash, had the inventory levels remain same as last year, but unfortunately, that have went up.
The next question is from the line of Mr. Devansh Nigotia from SIMPL.
Yes. Sir, just in the earlier comments, you highlighted a bit on the opportunity in the communication cable. If you can just throw some more soft points on how the unit economics will be in comparison to 4G and 5G as in how much does the opportunity size increases? That's the first question.
Okay. Well, a few things there. Currently, I think only about 30%, 35% of the towers are fiberized. So there is a huge portion which is still not connected by fiber, right? That is at the existing level. So that needs to change. And when you move to 5G, the number of cell sites will increase by a factor of 4 or so. And each one will require a similar amount of fiber as it is connected today. And when you go into 5G, then every cell site has to be connected by fiber. It cannot be the way it is today that you might have experienced as you are -- let's say, you're traveling from point A to point B and you're on the phone and suddenly, you get into a black spot and you lose connectivity. That's because of a particular cell tower there is not connected by fiber, and it is depending on either the carrier or waves. So that will not work when you are talking about 5G where you're talking about near-field communication where you are expecting, let's say, for example, your car to be self-driven. And suddenly, there is no tower there where the sensors can talk to, your car will just stop there. So every cell site has to be connected with fiber at that point in time and the cell sites have to be closer than what they are today. Today, I think there is a -- between 2 cell sites, there will be at least 1 kilometer distance. But I don't think that is possible when you go on to 5G. And so the volume of fiber that is going to be consumed when you go there, when deployment starts, will be substantially higher. And that has been -- that's visible in places like China, it is visible in places like Japan, some of the centers in U.S., which have migrated to 5G, it is visible there. So now when that will happen, we're not too sure. People are trying out test. But then if 5G rollout in India is similar to 4G rollout, then you may not see anything for some time.
Okay. Okay. Okay. And sir, in case of I mean, retail wiring, if you can just throw some light on how the demand has been in the past 3 months. So there was some hit by the lockdown and then a recovery. So overall, some soft points on how demand has been sequentially and the overall outlook for the same?
Well, for the year 2021, we've had different seasons there. The first 3 months, of course, we were all -- the whole country was locked out. And it happened suddenly. So when things reopened, there were 2 things at play then. The first was there was a pent-up demand. None of the dealer points were stopped at that point in time. So there was a pent-up demand. Secondly, the demand had to be serviced only by organized players like us because the unorganized players were unable to open up even after the lockdowns were lifted because they didn't have access to labor, all the labor had migrated back to their hometowns and they were also short of cash. So the first, I think quarter 2 and quarter 3 partially were helped by those moments. I don't think there was any consumption increase at that point in time, but that started happening towards the latter part of quarter 3 and quarter 4 this year. But again, we had the second wave and so how much of construction has recommenced is yet to be seen. While retail house sales in Mumbai and Pune have gone up, that is mostly liquidation of inventories rather than new projects coming and getting closed and sold. So I think there will be a lag. But at some point in time in the future, it has to revive because as a country, we are still short of housing.
The next question is from the line of Mr. Nilesh Shah from Envision Capital.
Yes. I just wanted to understand that we've given an aspiration of getting to about INR 10,000 crores of revenues over the next 5 years. Could you just kind of help me understand what's the thought process behind this? What are the contours of this aspiration? Where do we think this is going to come from, especially in context that our previous 5 years or previous 10 years have been aggressive in terms of growth. So it would be helpful if you could just give some more color on this?
Okay. So because in the past, we have not been at that aggressive, we thought we need to change and be aggressive going forward. We -- 1 of the strategies is not to just grow an electrical wire, but also grow in the various other product lines. So even in the wire and cable, we have now a large portfolio of electrical and communication cable products. And we are constantly growing in all product lines now, whether it's coaxial cable, land cables or developing new products which we are launching. We've taken in last couple of years, we launched the new products, like the 5 new products, fans, water heaters, switches, switchgear, lighting, we intend to launch a few more product lines, the 2 product lines we are working on for development purposes. We haven't announced them as yet, but there are products we are working on. So we do in the next 5 years plan to have more products, which will be on the B2C sale, leveraging the sales network. And then as Mahesh was explaining earlier, we are conserving cash to have some acquisitions because we cannot buy a natural growth reach INR 10,000 crores. So we are constantly evaluating where we can have a big ticket acquisition, which will help us to get to that number. And we are looking for the right opportunity. We haven't found it as yet, but we hope to find it. So that's the plan.
The next question is from the line of Mr. Rahul Agarwal from Incred Capital.
Just a couple of questions. Firstly, on the margins. Maheshji, do you think this margin of fourth quarter 14.7% reflects largely the past number, right, 15%, 15.5% is what the companies do. Should we look at similar numbers going into '22, '23?
Yes. So long as there is no repetition of the pandemic or related effects, I think that is something that we have been steadily doing in the past also. So the blip was only in the last 1 year.
So 15% is what we should look at as sustainable long-term margins. Is that fair, company level?
I think so.
Okay. Fair point. And 1 clarification on the cash side. You explained the accounting changes. But I think current assets will have everything which is less than 12-month view, right? So the FDs, which you're talking about are all dual as in 10 months, but maybe more than 15 days, and that's why it's classified as other assets?
So okay, let me restate that. When we put the deposit on, it was 12 months. But on the closing date, it was more than 15 days deposit.
Got it, sir. Just last small question. What was fiscal '21 CapEx, please?
20 -- I think it was around INR 28 crores or so.
The next question is from the line of Mr. Ashutosh from Ocean Dial Asset Management.
Hello, sir, can you hear me?
Yes, clearly.
Yes. So you just mentioned about the EBITDA margin expectation at around 15%. But wouldn't the commodity increase play a part in the first half of this year? And maybe 15% kind of a margin would be sustainable from next year and this year may not be the year where we might be able to do 15%. Would that be a fair thought process or?
See, our aim has always been to pass on any input cost related change to the market. Either way, whether it goes up or goes down. And there might be a small lag the lag is longer when there is a price increase and lag is really short when there is an input cost reduction because that's the way the market works. But when you take it on a longer period average like a year, it should even up. So I think it is doable. It may be a little bit of a stretch, but it is still doable. It is not something that we have not achieved in the past.
And -- okay. And also on the volume growth you mentioned, although you would want to grow at around 15%. Sir given that the first quarter of this year, as was the case of the first quarter last year, being slightly, I mean, not the way we wanted. So do you think that 15% is it receivable or the volume growth for the year would be more realistically around 10%, 11% for us for '21 I mean.
Again, it depends on how things change going forward. Let's say, you can have multiple scenarios. You can think of a scenario where this is the end of pandemic...
[Operator Instructions] Ladies and gentlemen, thank you for your patience. We have the line for the management reconnected. Sir, you may go ahead.
Yes. So sorry. What I was saying was it depends, you can have multiple scenarios. Let's say, tomorrow is the end of pandemic and all things return to normal, then I think the number we should be looking at should be north of 15%. Or another scenario where we stumbled along and sometime during the year, things become okay, maybe 15% could be a little bit of a stretch. Our third scenario, pandemic continues for a long period of time, then 15% -- why 15%, even 5% may not be achievable. So it depends on how the situation outside is. But I think 1 needs to plan for something. So we are geared to handle a minimum of 15% expansion. If that is the opportunity, then we will take it. But if the opportunity is not there, then we will take whatever that opportunity affords us.
The next question is from the line of Mr. Mayank Bhandari from Nirmal Bang.
Sir, firstly, what was the ad spend in FY '21 vis-à-vis FY '20?
Spend in '21 was about -- just give me a minute please, one second. About INR 14 crores, and this includes both above the line, below the line everything.
Okay. And sir, you spoke a lot more to the distribution expansion and I believe that you had given a number of 90,000 retailers now.
90,000 retailers are to whom we have done unique billing during the year.
Okay. And so this expansion has come in which particular geography?
It is across the board. It is all over the country.
Okay. And are we catering -- are we using channel financing in our...
We have always had channel financing. We were, I think, 1 of the pioneers in channel financing. The big difference between Finolex and everybody else is that Finolex does channel financing without recourse to Finolex, whereas everyone else has a certain portion that is with recourse to that company. So the risk in our case, there is 0 risk in our case, whereas in all the other companies, they take a little bit of that risk on versus on their balance sheet.
Okay. And sir, this 90,000 number can reach up to what in next upto 1 year?
So the 509 distributors that we had have been mapped to about 150,000 retailers. So that is the size of the opportunity. So out of that opportunity of 150,000, 89,000 -- 90,000 have purchased during the year, at least once. Our cash, therefore, is now 2 things. One, is to make sure this 90,000 continue to buy month after month because then the volumes will improve. And the second one is also to increase that number from 90,000 to 150,000. That also will give rise to additional volumes. The 509 is not the endpoint. We took a target of 500 distributors at a certain point in time, about 1.5 years ago. So we said by 1 year from now, we should be at 500 distributors. And each distributor, when we did the math, we found that they need an average of 280 to 300 retailers to service to generate an ROI that would be -- that would make them happy. So that's how that number came about. So we said 500 distributors and 150,000 retailers. That should be our first target. So 500 has been achieved. 150 opportunity size has been achieved. In terms of actual sales, 90,000 have purchased from us. So like I said, the task is to increase at 90,000 to 150,000 and secondly, to make sure that this 90,000 or 150,000 buy regularly from us because that will be repeat business coming month after month October.
Okay. Okay. Sir, this 90,000 number that you have given, and you are telling that 150,000 will be in future. So we are expecting at least a growth of 20%, 30% based on that?
No. Let's say, today, I'm a retailer I've been used to buying from you for the last 12 months. So I am part of that 90,000. And another retailer who's buying you buying it from you for the first time. I may buy from you in April or I may buy from you in September or October or whatever. So it is not a simple calculation, 90,000 going up to 150,000 therefore, the number going up by 25%. But yes, volumes will increase.
And sir, out of your 500 distributors, how much will be exclusively for FMEG business?
We -- I think all of them are working on all the product lines. We had initially not send wires through them, but now that also is also the.
Okay. And last question, sir, what is the sell through e-commerce. Do we have any sale from e-commerce?
We have very negligible numbers. We are on Amazon. We are talking to a few others also. But the numbers have not climbed substantially. They're very small at this point in time.
The next question is from the line of [ Harshit Bhabani from Locus Investment ].
I just missed the FY '21 CapEx numbers. Could you just repeat that number?
That was about INR 28 crores, if I'm not wrong.
The next question is from the line of [ Mr. Deepak Mehta ], an individual investor.
My question is around the 5G which you talked about. So what can be the total market opportunity in terms of rupees. And what can be the market share we are targeting to get from telecom players here? So basically, in telecom space, are we supplying to any players towers for 4G, optic fiber and others?
I think it's a little early to give out a number there because it will depend on, a, when the rollout happens. It will also depend on what the license and spectrum fee are for those airwaves because if the entry costs are so high, then not many people might participate. So 1 really, there is no about it. I think what we are trying to say is companies like Airtel or Jio, they're talking about bringing 5G sometime in the near future. So when they are ready to get in, we are ready to provide the fiber as well as the cables to them. We are increasing our efficiencies on the draw towers. We are working on increasing the capacity there. And as we see demand for -- or as we see the deployment coming nearby, we could invest in additional drought towers to supplement the fiber availability from our side. But to put a number now, I think I'll be just making a wild guess.
Yes, sir, got your point. So right now, we are already supplying fiber cable to Jio and Airtel?
Right, we are. We supply certain designs of fiber -- certain designs of cable to Jio. We are supplying various designs to Bharti. We are supplying to Tata Sky. We had been supplying to Vodafone. Their demands have come down now, but they are still our customer. And we are also supplying to BSNL. So we supply to all the major telecom service providers.
Okay, sir. And all these 3 are, I think, doing testing for 5G. So for the testing, are we involved as a supplier or if you have anything on this, that will be my last point.
We are not involved in the 5G part because the fiber designs will remain the same. 5G has to do with development from their side. But we are involved with fiber-to-the-home design, and we've developed a lot for our customers where there is a rollout happening where the fiber comes right into the home. So those kind of developments we are involved as a partner with telecom vendors.
Ladies and gentlemen, that was the last question for today. I will now hand the conference over to Mr. Mahesh Viswanathan for closing comments.
I'll keep it brief. Thanks. Thank you, ladies and gentlemen, for participating in today's call. I hope we've been able to satisfy you with the answers that you were looking for. Thank you once again.
Thank you very much. If you have any further queries...
We lost him again.
Thank you very much. If you have any further queries, please send an e-mail to gaurav.g@conceptpr.com. On behalf of Finolex Cables Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.