Finolex Cables Ltd
NSE:FINCABLES
| US |
|
Fubotv Inc
NYSE:FUBO
|
Media
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
| US |
|
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
| CN |
|
NIO Inc
NYSE:NIO
|
Automobiles
|
| US |
|
Fluor Corp
NYSE:FLR
|
Construction
|
| US |
|
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
| US |
|
TopBuild Corp
NYSE:BLD
|
Consumer products
|
| US |
|
Abbott Laboratories
NYSE:ABT
|
Health Care
|
| US |
|
Chevron Corp
NYSE:CVX
|
Energy
|
| US |
|
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
| US |
|
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
| US |
|
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
| US |
|
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
| US |
|
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
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.
|
|
Fubotv Inc
NYSE:FUBO
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
C
|
C3.ai Inc
NYSE:AI
|
US |
|
|
Uber Technologies Inc
NYSE:UBER
|
US |
|
|
NIO Inc
NYSE:NIO
|
CN |
|
|
Fluor Corp
NYSE:FLR
|
US |
|
|
Jacobs Engineering Group Inc
NYSE:J
|
US |
|
|
TopBuild Corp
NYSE:BLD
|
US |
|
|
Abbott Laboratories
NYSE:ABT
|
US |
|
|
Chevron Corp
NYSE:CVX
|
US |
|
|
Occidental Petroleum Corp
NYSE:OXY
|
US |
|
|
Matrix Service Co
NASDAQ:MTRX
|
US |
|
|
Automatic Data Processing Inc
NASDAQ:ADP
|
US |
|
|
Qualcomm Inc
NASDAQ:QCOM
|
US |
|
|
Ambarella Inc
NASDAQ:AMBA
|
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 Q4 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Mamta Samat. Thank you, and over to you, ma'am.
Thank you, Seema. Good evening, everyone, and thanks for joining us on Finolex Cables Limited Q4 FY '24 Earnings Conference Call. Today, we have with us the senior management represented by Mr. Mahesh Viswanathan, Deputy CEO and Chief Financial Officer.
Before we begin, I would like to say that some of the statements that will be made in today's discussion may be forward-looking in nature. It is subject to unfortunate risks and uncertainties and the actual results could materially differ. We will begin the call with the opening remarks from the management, after which we will have the forum open for the interactive Q&A session.
I will now request Mr. Mahesh Viswanathan for the opening remarks. Thank you, and over to you, sir.
Thank you, Mamta. Good evening, everybody. Welcome to this earnings call of Finolex Cables. Thank you very much for joining us today. I'd be very brief with my opening remarks, the fourth quarter as well as the full year went rather well for us. We posted a 15% increase in revenues in the quarter, in the year, a 12% increase. And for the first time, we crossed INR 5,000 crores revenue, I think that will be a line mark for us now.
In terms of volumes, practically all product lines showed an increase in volumes. In the fourth quarter, Electrical Wires was up 15%. Cables improved 50%, 5-0, while we do have a very low base, 50% was still impressive. Communications, the, metal-based cables all reported on average growth of about 14%. Optic fiber is slightly lower in the quarter, in the year, of course, it is a slightly different story. I'll come to the year again.
All new products are within the FMEG offerings, so the appliances, conduits, lights, all of them showed a fairly good volume growth both in the year as well as in the quarter. Full year, like I mentioned earlier, value-wise, we had a revenue growth of about 12%. And while commodity prices continue to remain volatile, we had to make price adjustments on our selling side as and when we target was appropriate by quantities we thought it was appropriate.
For the full year, volume in wires grew about 15%, in cables about 26%. OFC was the only category where the volumes are lower for the full year by a fairly large number, 30%. But I -- but then the year also was witnessed to no tenders floating by the government as well as delays in contracts -- contract closing with the telecom companies. We did close some contracts in February and March. So there was some volume coming in towards the latter half of the year. But during the year, of course, that business is impacted. We still remain optimistic on the optic fiber cable side, as we continue our investment there. And we still believe that as a country, our current demand is far, far below its potential.
The new product segments crossed INR 200 crores for the first time. We ended the year with INR 225 crores. And I think we are on track to reach the INR 500 crores over the next 2 to 3 years. In terms of profits for the quarter, INR 196 crores, which was a [ 13% ] improvement. And for the full year, of INR 750 crores, which was a 17% improvement from year-over-year. Similar improvements were also there in the PAT levels.
The other features during the -- operations during the year is we had a very strong cash flow this year. Our management of working capital was very tight. We ended the year with 11 days of receivables and about 36 days of inventories. I think that's by far the best among the peers that we have. Cash flow generated from operations was about INR 575 crores, higher than the INR 380 crores, around INR 380 that we achieved last year.
Our expansion programs are going on track. We have 3 major expansion items. The first one was the e-beam, which has been delayed for a long time now. I'm happy to say that the first machine has been installed and is currently being tested before commissioning. The suppliers, engineers are currently working on the final testing, post which we will have to call the people from the ARC to [indiscernible] certification to plant. So that's one machine from -- on the e-beam side . So our -- I hope that we will have products available in the market in the next 6 to 8 weeks.
The second machine is likely to be received here sometime next month, around the second week or third week of June. By then, the first machine would have been fully commissioned and then they will start working on a second machine. So by August, September, this project in -- products from these machines will be available to the market.
The second large trend that we had as earmarked for the fiber and cabling of fiber side. There are 3 parts to it. The first part is the Preform facility. The structure for the facility is more or less ready, currently, the HVAC related items are ongoing. Once that is done, the equipment has been received with the inside that will be then taken inside for installation. So we still hope and we believe that we will be ready for production some time towards the end of this calendar year. Our hope is that by end of December, we should have the first 3 forms out of this special item.
The second part of this program was on increasing the fiber assets. Currently, we have fiber capacity of -- fiber ground capacity about 4 million kilometers. We will double this to 8 million in 2 steps. And then -- so preparations are on for making that happen. Right now, the concentration is on getting the Preform facility up and running, we will take more efforts under the fiber side once that is done.
The last part is on the cabling side. We currently have a capacity to cable about 8 million kilometers of fiber, we will take this up to 10 million. And the building for that is already ready. We have not populated it with machines so far, but that is a 6- to 8-month later. We were listing for the demand side to pick up a little. And in February, when we -- when BSNL announced its tender for the third phase of management that will provide us an opportunity to utilize our capacity. The tender was floated in March. It is expected to -- it was scheduled to close -- open rather first week of next month. All indications are that it will get pushed back by about a month or so. So by current indications, we expect this will flow in sometime around September, October this year. We hope to get some positions in the tender.
This tender will invoice on the fiber side, consumption of anywhere between 16 million to 20 million kilometers of fiber. The final length will become, of course, on the actual distance that needs to be covered between various ramp on chart on the BSNL bench. But the estimate is somewhere around 15 million to 18 million kilometers. So that will be the consumption over the next 3 years. This is the centrally sponsored program.
Besides this, there are also expectations that some of the states, which were not part of this program will come in from their Phase 3. And we expect a similar or probably higher demand from those states as well. So we believe, and as we said in the past, we believe that there is quite some gap between the demand potential and the actual demand that has been showing up year after year. A company like ours should be capable of consuming somewhere around 60 million to 70 million kilometers in fiber, whereas our current dimension is about 20 million kilometer, 22 million kilometer, somewhere around that. So there is a large target, there's huge potential, and we're basically getting ready for that.
The last part of the capitalization program, last major part was expansion of the other cable capacity at our [indiscernible] site. [indiscernible] been placed, we expect the equipment to come in the third quarter of business. So hopefully, from fourth quarter onwards, that capacity will also be available. We do see a need to add more capacity there. We -- there is a fairly large other manufacturing environment in Delhi NCR and regulatory areas. So this facility would cater the need from there.
With this, I think I've covered whatever I wanted to say at the beginning. One last point was that at the meeting of the Board on 23rd, the Board has recommended a dividend of 400%, which translates to a payout of about 21.5%.
So that's it for the introduction. So now I'm happy to answer questions.
[Operator Instructions] We take the first question from the line of Achal Lohade from JM Financial.
Sir, if you could help us with the capacity utilization. If you could quantify what is the capacity and the utilization for these segments, for wires, cables and OFC?
Currently, on wires, across various product lines, we are around 70%, 72%, cable to be lower. We have much more capacity than we are currently consuming. It's less than half.
On OFC, like I mentioned, -- during the year, there was not much of a demand from the government side. So the capacities were [indiscernible] for some time. Currently, of course, we are somewhere around half utilizing, about half. So there is for capacity underlining to take care of any needs from the bid tenders at the moment. And we are building more for the future. So as the years go by, we should be able to utilize those.
And sir, if you could quantify the capacity addition, what kind of capacity addition are we looking at in wires, in percentage terms?
So typically, we start planning for additions once we crossed the 75 mark. So we are nearly there, so we should start looking at additions. So there are some plans that again, we are too early to talk about at this point.
Understood. And is it possible to know how much of our wires like the if you could classify in terms of the less than 1.1 kV or in that sense, what would be that mix? Like we will be more low-voltage wires absolutely right? I mean more of ...
Our revenue comes broadly from wires. So not at -- wires account for -- within the electrical cable segment wires is -- electrical cable segment is about INR 4,200 crores, out of which about INR 200 crores is cable and the rest of wires, [indiscernible].
Okay. Understood. And if you see from a, let's say, a 4-, 5-year perspective, would we have gained market share in wires, we would have just maintained? Or is there any market share loss we have seen?
I don't believe we've last share. We have not gained too much as well, but we think we have been steady.
Understood. And sorry, I missed that part on the FMEG, the new product part, you said INR 225 crore revenue for the current year FY '24. But there was something you mentioned for current coming year or medium target. Any color on that? What kind of aspirations we have?
Yes, we have set out our aspirations. I think from time back, we talked about this in one of our earlier calls. We said we would like to -- we would -- our first test to cross would be the 500 number and that we were expecting to cross in the next 2 to 3 years.
Understood. And any expectation, any guidance on -- in terms of the growth for coming years? OFC part, you kind of covered a bit, but what about the cables and wires?
Okay. Typically, I have not given a guidance in terms of numbers. But the direction what we would like to see is growth, which is 2x the nominal [indiscernible] .
Nominal GDP growth. Okay. Understood.
The next question is from the line of Manoj Gori from Equirus Securities.
So my question here is, so you gave some outlook on the demand environment. Can you throw some light to the [indiscernible] sector pieces, like construction like demand activity also pharma, refinery or IGD, so that we can just from [indiscernible] detail on the demand side?
Sure. I think construction activity has been fairly strong over the last few quarters. And part of -- I mean, part result is that you see our growth on wires at 59%. So that has been a driver for us.
The second area, which we focus and where we help has also been [ alternatives ]. There again, there has been fairly positive growth. Agricultural applications this year have bounced back to what it used to be. We used to be one of the largest companies on the agricultural application side. And 2 years ago, we had last -- with dropped down a little bit. I think we've caught up and growing there. And that is one product group, where I believe that we do have -- we have gained some share, quantifying that number is slightly difficult, but I do believe that we have gained some share out there. And that's -- That's on the electrical wire side.
As I mentioned earlier, on the power cable side, and where we will hit in 2 refineries from how we will get into steel and so on. Our presence in that -- our distribution and transmission. Our presence in that area is rather small. There was a very large market of about INR 25,000-odd crores. We get a revenue of about INR 200 plus crores. So there is nothing much that I can specifically talk about that. But I think this gives you a flavor of where the...
Yes. So if you understanding correct just probably on the electrical cable side, ECS segment, we should expect similar kind of growth momentum to continue during FY '25?
I think, yes, I think construction, infrastructure building, '23, '24 is a trend line to go by. I think there is definitely more to come in the coming years. If everything goes normal, first June 4 again. I don't see why that growth momentum that is there today cannot be [ confirmed ].
Sir, second, on the pricing trends, so obviously, the LME prices have shot up significantly, especially during April and May. So every team able to or probably your, I would refer it to you as well as of the industry side, have we been able to pass on the entire impact and progress we should see normalized quarter with normal profitability during Q1 and the coming quarters?
We've had quite a volatile period during the year. There have been times in the price -- the revenue dropped. And then, of course, last 3, 4 months, the LME has been consistently climbing up. We have taken actions as and when demanded. And our effort always has been to pass on the changes, whether this already going up or going down.
There would be a small lag when it is going up, and there will be a small pull when it is going down. But effectively, yes, that's what we do. So the last price change that we announced was actually effective today. So we have been taking -- making price changes as and when it is necessary. Margins -- with the kind of changes that have happened in the last 4 months, our margins might take until the coming quarter to revert to normalcy. But I think it's closed by. It is not very far.
Right. So further, we can deliver roughly around 12% to 13% [ rooms ] that we have been doing for the last 2, 3 years?
Yes, I think so. 12%, 13% should be developed.
Right, sir. And sir, with communication cables, especially when you look at -- so for the last 4, 5 years, the margins have been quite volatile and demand has also been very volatile. How should we look at from the profitability point of view?
At the moment, the profitability does get ahead if the utilization and capacity is low. And like you said, the demand has been fluctuating quite a bit. As I mentioned in my earlier remarks, the potential to consume is fairly high, actual comsumption is substantially low. And part of the reason is who is going to fund this yet. Government is a large tender in this area. But if they delay is spending or push the spending back by half a year, then we do get these kind of abnormalities.
But we do see that the intent is to digitize the economy, the intent is to make sure that everybody is connected in some way or the other. And the intent is also to make sure that wherever we are, whether how far from you are, the technology should reach in terms of connectivity. So with those plans in place, and I think more importantly, with budget allocations having been proposed in May, it's only a question of -- is it this year or the next year, now there is no question of whether it will happen, is it the customer are, when will it happen. So I think that is a positive sign. And what we are trying to do is to see how can we capture that demand, our rightful share of the demand and how can we provide a full service. So that is why we are integrating assets backwards into making 3 funds, expanding on the fiber side so that we can also keep our costs within control and thus we remain competitive.
Sir, lastly, if you can highlight what has been the quantum of price rate that we have taken during March, April and May?
I'm sorry?
What would be the quantum of price increases that we would have taken in the electrical cable segment during March, April and May month?
I think it's totaled to about 10%, 11%.
[Operator Instructions] The next question is from the line of Anirudh Agarwal from Valuequest Investment Advisors.
Congratulations on great performance. My first question was on the e-beam cable CapEx that we've undertaken. So basically the point is that from the CapEx, what is the peak top line potential that you're expecting? And how much time do you expect to scale up this segment in terms of good product certification approval that you might require as well as from a sales perspective?
Okay. So we expect the -- we're putting in 2 accelerators, one which will go in 1.5 NAV and the other one at 1 NAV. The first one that is going online would be the 1.5. So this will handle the larger sized cables, so applications for the solar industry, those could start off immediately.
Further applications would be in instrumentation, in real [indiscernible] in auto, where higher temperature resistance is getting -- is coming into play. So all this is possible. So I think fully in a year when -- in a full year, the potential could be as high as INR 500 crores INR 600 crores. So as that's probably the potential of the work we have.
Understood. . So this -- could we expect FY '26 could be that your revenue achieved closer to full potential, if not full potential, given the kind of demand that we've been seeing for your payer also across these product lines?
Could be. It depends only on -- you talked about the certification parts. So -- and when it comes to instrumentation railways, you know you do need to get to clearing from the railway authorities, from [indiscernible] in fact. So that offhand, I don't remember how long it takes. So barring that, I think everything else should be okay.
Understood. And my second question was on the EHV cables JV that we have. So if you can update on the order book of that segment now? And how do you see that scaling up going ahead? Because even in EHV, some of your peers have been reporting very strong growth and full order books, et cetera. So how are we placed there?
Okay. The order book for the JV is very promising at this point in time. So we have confirmed orders of close to INR 280 crores at the beginning of April. Besides the confirmed orders, there are also orders worth about INR 190-odd crores, where we are on line, but because of the code of conduct, which is announced, the power contract has not had been signed. We are waiting for [indiscernible] 4th of June, for that process to happen.
So we're starting off the year in a fairly happy environment. The issue is not so much about making the cables available. The issue there is more to do with execution of projects where, typically, you get in to issue around right of way, around the routes that are finally approved by various authorities that are required to sign up. So if you are talking of, let's say, some city like Chennai pulling even multiple authorities get involved in the approval of laying process.
So you have the utility sales, you've got the police, we have got the -- so a municipality and God forbid if it goes through or under the railway line then you get the railways involved or if it goes near a cantonment, then you got the military authorities involved. So getting permissions from them and then starting [indiscernible] working with is the one that we are facing challenges on. So that's an experience that we have gained from. And I'm sure that every year, we are doing better than the previous year. So we should get it right sooner than later.
But I think the opportunity is fairly large there. The size of the month, I think is approximately close to INR 3,500 crores to INR 4,000 crores in sales, and growing. Requirements are coming in from multiple transmission companies primarily. Some part of it is in the lower end of EHV profile, so 66 and 110kV. And we do see some graduating towards 220 kV range as well. The market [indiscernible] and I think we are there at the right time. We need to get our act around execution right.
Perfect. So this order book of INR 280 crores that we have, what would be a fair estimate of the execution period considering all the challenges that we just spoke about is 12 to 15 months of fair period to assume? Or could it be longer than that in your openings?
It depends on the site and city. For example, we've done projects in Delhi within 6 months. We have also taken 2 years in other places. It depends on the -- actually the location, the issues involving the location, how crowded it is plus what other complications come up when you start digging. Unfortunately in our country, not many certain installations are properly mapped. So many times, when you actually start digging, you find there is something else there, and then we need to make sure we're not disturbing that whatever is layed down there, you could have a water line, you could have shared line, you could have another power line going below. So those are things that create a problem, especially in the city areas.
Understood. Sir, is it fair to say that this business would have hit some kind of inflection point now after all the being that we have had to endure over the last few years. Now is this the time where in '25 onwards becomes like an inflection point wherein you see material scale up in execution, top line as well as the margins starting to come through?
I surely hope so.
Perfect. Sir, final question from my side was on overall margin profile. So I think you mentioned that 12%, 13% sort of margin band would be sustainable even current copper price levels, what sort of margins are we doing right now in the housing wires versus our different auto, agri, industrial cable segment if you could throw some light? And any internal levers that you're exercising to increase margins?
Well, obviously, a packed product like packed in a branded. Branded product like our general wire, Obviously, the margin number would be better. Auto wires, we are dealing with -- it's a B2B product. So there, the margins are going to be thin. And of course, we are dealing with the other companies. So the demand was fairly high. And we are working really on raising numbers. So there, the number is not really comparable. I just want -- I don't want to get into the actual numbers that are being -- that we derive from each sector. Suffice it to say that general wire, agriculture wire, both are more or less at par. And let's come the industrial wire and finally [indiscernible].
[Operator Instructions] We take the next question from the line of Vidit Trivedi from Asian Market Securities.
[indiscernible]
Your voice is a little garbled, can you speak up, please?
[indiscernible]
Sorry to interrupt you, Mr. Trivedi, we are unable to hear you clearly.
Am I audible now?
Yes, sir.
So my question is on the CapEx front. Any guidance for the coming year?
Yes, we had announced a program of INR 500 crores. Last fiscal, we spent INR 160 crores over that. So the balance would be spent largely in this fiscal. There might be a small spill over to '25, '26.
[Operator Instructions] The next question is from the line of [ Varun Vasseur ] From Julius Baer.
Congratulations on a good result. So my question has to do with how your distribution footprint is improving. Any commentary you could give on how you're engaging better with your existing distributors and retailers? And how -- where you see expansion potential?
Okay. I should have done this in my introduction, sorry. Yes, we talked about this in earlier calls as well. A few years ago, we started this program of having 2 sets of approach to the market. One is to retain our existing channel partners, who will help us more on the project and B2B side. Whereas on the retail side, we will focus on distribution. Like I mentioned in the past, we have around 700 distributors across the country today. Some distribute all products, some are specific to 1 or 2 product lines, depends on what we are strong at and what the market really requests. We still have some uncovered areas especially in the East and the North. So that is something that we will continue to focus on.
As I said this year, we have a technology backbone to help them monitor their progress. We focus on how many retailers is -- how many retailers are we engaging with. At the end of last year, we have made a unique billing of close to 120,000 retailers, which in '22, '23 closed at just under 90,000. So there has been an improvement there. We're also tracking to see how many are these retailers buy every month, how many of them buy more than once a month, more than twice a month. So that way, the engagement with those retailers could be improved.
And we're looking at what -- which part of the product basket is somebody carrying, are there some missing SKUs for what reason we try and analyze those and trying to put things on track. To support all this, our market spend has also been increasing. We have budgeted for approximately 1.5% of revenue on market spend. So that could be a [indiscernible] spend, it could be peers material, it could be other promotional events or expenditures.
So this is something that has increased considerably from the earlier times when it used to be somewhere around 3/4 percentage. So there has been a recognition of the fact that at the retail end, we need to attract customers, and you need to speak to the customers in a direct session. And at least for us, [indiscernible] are social media business are a fairly good way of improving this. So those are areas where we continue to focus on and gauge the results. So that's where we are at this point in time.
Right. If I may add -- so what is your experience with channel financing? Do you see any benefit in sort of improving the availability of channel financing to the existing dealer and retailer base?
Absolutely. We do have a channel finance program, but our program is slightly different from many of our peers. The major difference is that our program is a nonrecourse program, the Finolex. We are very clear in our mind that while we should have a tool, which helps fund the customer, we are not a bank. And therefore, credit risk is something that we are willing to take.
So what -- our program that we have with multiple agencies, there are banks involved, there are fintech companies involved, all of them are on a nonrecourse basis. Currently, I think about INR 700 crores and INR 800 crores of revenue is related to that. It could be much more. I heard somebody was willing to take [indiscernible]. But that is something that as a policy we do not.
The next question is from the line of Srinidhi from HSBC.
Congratulations on that set of numbers. So a couple of questions on margins, sir. So do you think you can scale back high single-digit or early double-digit margins in your communication cable segment? You used to do that a few years back. So maybe not...
To say that, in the past, we used to have high single-digit, in fact, we've also had double digits there. The issue is the volatility on the optic fiber segment volumes. So you have a capacity and if you do not use it then the fixed cost line [indiscernible] that's been the only issue. Barring that, I think the other product lines within the communication sector are reasonably profitable to deal with high single digit numbers.
But then with the OFC accounted for more than 60% of that sector in the [indiscernible]. But like I mentioned earlier, we have our -- we are fully committed to the OFC business, and we do see that the potential demand gap that is there will be realized sooner than later. It needs to be done is, typically, every time there has been an improvement in communication ability, it has had a positive effect on the GDP.
And I'm sure in this case also, there is no [indiscernible]. So as you get into high applications and new use cases, it is going to grow our driver economic activity considerably. And like I mentioned earlier, most often, it is funding the CapEx that is required that seems to have been the issue. As a country, we should have announced as well.
Sir. And the second one, I just want to confirm that in the electrical cable business, there you're guiding to maintaining the margin, what you did in last financial year, right broadly?
Yes, because if you look at the -- if you compare performance over several quarters, over several peers, you will find that traditionally, we have been more or less double-digit there. So I think we are still there, not far. We're probably #2 in that lot right now. But I think to sustain something beyond 14, 15 is would be a challenge for anybody else.
Okay. So sir, I'm asking like if you see in the years of '21 and '22 when there was a very high copper inflation, we saw some dip in the margins, right, which makes sense as well, because that you shouldn't pass on entire margin. But this time, you think that given the copper inflation is very high, you would still be able to maintain the margin?
I think, yes we should because at the moment, we are.
Right. And sir, last one, if I may. I think you gave us some breakup on the electrical wire business, INR 4,000 crores being wires and INR 200 crores being the cable? Would it be possible to share the breakup of the INR 4,000 crore wires business?
Yes, sure. Between 60% to 65% is wires, which go into construction, which go into general usage. About 10% to 15% is automobile and other 10% to 15% is industrial, and the balance is agricultural. These would be the 4 large buckets.
We take the next question from the line of [ Paras Mehta ] from [indiscernible] Capital.
Just to continue on the distribution side, if you could just help us what is our retail touch point [indiscernible]?
So, unique billing has been approximately 120,000, but we have we have a universe of 2x that much that we are interacting with. Obviously, when you meet a retailer, we're not doing the conversion on day 1, it will take multiple visits before we start occupying their sale. So that's the -- so about 200,000, 210,000 is what we are currently engaging.
[Operator Instructions] The next question is from the line of Anirudh Agarwal from Valuequest Investment Advisors.
Two questions from my side. First one was on copper prices again. So what is the hedging strategy, if any, that may follow? So I know that in our business, largely there is a pass-through that is done. But in the interim, is there any volatility, any hedging that we do or how do we manage sourcing and pricing of our copper supply?
Okay. Prices are largely domestic, although the pricing was [ LME ] driven. What do we do, we buy on average. So for example, we are in a month of May now. All receipts of copper that I have taken in the month of May will be priced at the May average, now the May average will be found out on the 2nd of June, or 3rd of June. Obviously, the supplier is not going to wait until then. So for cash flow purposes, there is a provisional price, which we agree on and that is what I settle each time material is received at our end. And at the end of the month, when the actual average is discovered, we set the difference. If I had paid more, I get the money back. If I paid less, I pay the difference. That is what we do.
And so what we are effectively doing is that we are following the market. We do not take long positions on the metal. We are very clear that our ability to forecast a product, which metal prices would move 2 months from now, 2 days from now,Or now 3 years from now. That is a year, yes, it is mine. So we don't take the risk on that [ owner ] account. We are very clear that the cost of the metal is a pass-through. So we will pass it through. There may be a small lag, but that's a temporary issue that we will have to manage.
The flip side of this is then what do we buy, what quantity do we buy. We buy only what we can consume in a month. But that estimation has been reasonably good. We are not far away, there may be a 5% variation. But otherwise, we've been able to manage that part fairly well. So the inventory carry also we have is also rather limited. And we believe that [indiscernible] that we can leave it. So if I had to sacrifice margin for a month, so be it. But then there will be a practical before that.
Got it. Got it. Second one was on capacity utilization in the subsegments of auto and agri wire given that you've seen very strong growth this year across there. Do you have sufficient capacity for growth this year?
Agri, yes. Auto by the time we require it as our additions in [indiscernible] will be online.
Understood. And what is the quantum of expansion there? How much are we expanding the capacity now?
I think we are taking that from -- I think it's [indiscernible].
The next question is from the line of [ Mehul Mehta ] from Nuvama PCG.
Am I audible?
Very clear.
Congrats on great side of number. Part of my ignorance, but I have a question on EHV cable side. Apart from Universal cables, how is the [indiscernible] landscape. How many other players? And what is the size of that market? Can you update on that?
Yes, I think the market size is around INR 3,500 crores or so. Universal is a large player there. But then you also have other players like KEI, KEC, Telecab and LS cables, LS is a Korean company, which makes up to 220 kV here in India. And then you have Sterlite Power as well. So these are the largest players. There are some others, who were planning, but have -- they were there up to '23, but not beyond '23. Torrent is also there in 66. So that's another large player in that.
We take the next question from the line of Manoj Gori from Equirus Securities.
My question here is with the retail touch point. If I'm not wrong, probably somewhere around FY '20, FY '21, we had around 35,000 to 40,000 retail test points and which we increased to roughly more than 2x test points today. But if I look at the overall performance of probably volume growth, we have been lagging versus what we would have actually aspired to do.
Given that we have been multiplying a retail presence, what do you see like what is your personal assessment over here? And probably how satisfactory the responses have been? And so that if we are lacking some where. So what are those the areas where we would be focusing in the coming years, which should lead to significantly better than industry growth rate?
Okay. I understand the question. First is that 40,000, 45,000 was an estimate, because we were growing by 4,000 channel partners multiplied by an average retail [indiscernible]. So that's where we were doing. We didn't really have data on how many retailers were being serviced by those partners.
Secondly, yes, you're right that while we have we are now engaging with close to 200,000 plus partners, our billing is only to about 50% of those. Part of this is the effort that is required before we are able to convert retailers and giving us a sale space from one brand to the other. It requires repeated efforts, it requires convincing somebody that this is a product that we should sell. While the brand has excellent recall, that is helping us, but still requires a lot more effort from us to get that done. I think basically, that is one point.
The second is we now have information on what moves in a particular market, what -- and therefore, we are able to start tailoring schemes for individual markets and individual reasons. I think this should then help us in converting more of the uncommitted retailers, if I were to say that over a period of time. So these are 2 things that we should definitely need to look at.
We also need to look at how much of what the [indiscernible] is somebody carrying. And then effectively, are we delivering the kind of ROI that somebody that we promised someone at the beginning. So we did some calculations. We worked out a mathematical model from them. And if we are able to -- if we're able to share them time after time that their investment is paying off in exactly the same management we said it would, I think that would help us to carry the story to the others and convince this.
Sir, one more point over here. So if I look at some of the peer companies have been talking about engaging with the influencers and ruling them under the program. And they believe like that has been one of the major drivers probably for whatever performance we have been delivering, like what the update over here? Are we doing this? And what differently we would be doing a [indiscernible]? Any color over there?
Okay. We do engage with the influencers. Now at the retail level, we engage with the electricians. We have a few programs running for them. There is a cash incentive that goes on the cable that we buy, I mean on the wire that we buy. Besides that, there are multiple training and other engagement programs that we run for them, we take a market and invite those people and spend a day with them talk to them about different practices, what should be the right way to do things and so on.
So those are measures that we've been taking. Not now, it's been there for a long time. It's been there in the company even before I joined the company. Because that at a B2B level, the engagement has to be with the architects, the contractors the people that are in decision-making roles in either a developers firm or builders firm. That is something that we probably could do better. We have been doing that, but maybe there is a better possibility.
Thank you. Ladies and gentlemen, that was the last question for the day. On behalf of Finolex Cables Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.