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KEI Industries Ltd
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Ladies and gentlemen, good day, and welcome to KEI Industries Limited Q4 FY '22 Earnings Conference Call hosted by Monarch Networth Capital Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rahul Dani from Monarch Networth Capital. Thank you, and over to you, Mr. Dani.
Thank you, Nirav. Good afternoon, everyone. We are pleased to host the senior management team of KEI Industries today. And we have with us Mr. Anil Gupta, Chairman and Managing Director of the company; and Mr. Rajeev Gupta, CFO of the company. Let us start this call with the management's initial comments followed by Q&A. Over to you, Anil sir.
Good afternoon, everybody. I am Anil Gupta and joining me with me, I have Rajeev Gupta, Director of Finance. So warm welcome to all of you on this conference call. I'll give a brief about our results performance in the Q4 and then followed by yearly achievement. In Q4, the company has achieved a net sales of INR 1,791.7 crore against INR 1,246 crore last year. The growth in the net sales is 43.76%. Company has achieved highest ever quarterly sales in this quarter.
EBITDA achieved is INR 179.7 crore against INR 140 crore last year in the Q4. Growth is around 28.45%. EBITDA/net sales margin is 10.03% as against 11.23% in the same period previous year. EBITDA margin declined mainly because of some expenses normalized back to pre-COVID level and sharp fluctuations in input costs as well as in case of export orders the CIF rate. Profit after tax this quarter is INR 115.88 crore against INR 86.1 crore last year. Growth in the PAT is 34.57%. Company has achieved highest ever quarterly PAT during this quarter. Profit after tax/net sales margin is 6.47% against 6.91% last year same period.
The domestic institutional wire and cable sales through direct sales B2B is grown by 47% in this quarter and domestic institutional extra high voltage cable sales is INR 146 crore. Growth is approximately 103% compared to last year. Export sales in this quarter is INR 177 crore against INR 126 crore. Growth is approximately 40%. The total cable institutional sale contributed 53% in fourth quarter against last year same period 50%. Sales through dealer network in this Q4 is INR 717 crore in fourth quarter against INR 464 crore last year. Growth is approximately 55%.
From the beginning of the year 2021, company has been working on strengthening its dealer and distribution network and has recruited more than 150 additional marketing people from FMEG product background at different levels pan India basis resulting into good growth in the dealer and distribution segment. We expect further boost in this as the active working professionals all over India in the marketing are now established and we expect better results this year again. The total active dealers of the company as on 31st March 2021 -- 2022 was approximately 1,805 numbers.
The total sales contributed through dealer network out of the total sales of the company is 40% through the B2C segment. I will mention that in this quarter, we have grown in volume terms also by 19.7% in cable division, in wire and cable division. Out of that, sales from EPC department other than cable is INR 109 crore as against previous year INR 133 crore. Decline is approximately 18% in fourth quarter. Out of the total sales of EPC, the sales of extra high voltage EPC is INR 37 crore. The sales of stainless steel wire in Q4 '21-'22 is INR 61 crore against INR 45 crore in the same quarter last year. Growth is approximately 34%.
Now I come to the results on behalf for the full year of financial year '21-'22. The total net sales achieved is INR 5,726.55 crore against INR 4,181 crore in the last year. Growth in the net sales is approximately 37%. EBITDA in financial year '21-'22 is INR 603.57 crore against INR 475.5 crore. The growth in EBITDA is around 27%. EBITDA/net sales margin is 10.54% as against 11.37% in the previous year -- previous whole year. The profit after tax during the year is INR 376 crore against INR 269.5 crore last year. Growth in the PAT is 39.5%. Profit after tax versus net sales margin has improved to [ 6.45% ] last year.
The domestic institutional wire and cable sales contributed and improved by 33% -- contributed 33% as against 30% last year. The total extra high voltage cable sales is [ INR 512 crore ] against INR 418 crores in the previous year. Growth is approximately 23%. Export sales in '21-'22 is INR 585 crore against INR 608 crore. The decline is approximately [ 4% ]. Export contributes approximately 10%; out of which cable contributes 7%, EPC 1%, and stainless steel wire 2%, as against 14.5% last year. Sales through dealer networks, that is B2C sale achieved is INR 2,319 crore as against INR 1,408 crore. Growth in this segment is 65% compared to last year. So, the sales through dealer network has contributed 40% of the total turnover against 34% last year.
Now the sales of EPC department other than cable is INR 380 crore against previous year INR 466 crore. Decline is around 18%. This is in line with our previous guidance to lower EPC business and restrict it to 10% to 12% of the total revenue. EPC contributed approximately 7%. Out of the total sales of EPC, extra high voltage cable EPC is -- execution portion is INR 128 crore as against INR 105 crore last year. Stainless steel wire sale in financial year '21-'22 is totally contributed INR 226 crores against INR 140 crore last year. The growth achieved is 61% over a full-year period.
The pending order position as on 31st March is approximately INR 2,419 crores, out of which the EPC orders pending are INR 959 crore, which includes ADB funded turnkey project in Nepal, INR 202 crore and Gambia, which is again a World Bank funded project is INR 410 crore. Incidentally we have not booked any new EPC order in the last financial year from the domestic market. However, we do book -- we did book the turnkey orders -- project orders of extra high voltage cable, wherein 80% of the value of the order is only cables, which is manufactured by us and the execution portion is very small. The pending order position of extra high voltage cable is INR 224 crore and domestic cables INR 1,100 crore and export order pending is INR 137 crore. So, the total is INR 2,419 crores.
Besides that, we have -- we are L1 in orders of approximately INR 61 crore in extra high voltage cables. The company's credit rating from ICRA, CARE, and India Rating is AA-minus for long-term bank facilities and A1-plus for short-term bank facilities. The book value per equity share of the company is INR 236.98 as on March 31, 2022 as against INR 197.83 as on March 31, 2021. The company's net debt including acceptances is INR 270 crore as against -- as on 31st March 2022 as against INR 408 crore as on 31st March '21. It was INR 922 crore as on 31st March 2022. During financial year '21-'22, finance cost has decreased to INR 40.39 crore against INR 57.31 crore in the previous year same period. Percentage of financial charges on net sales has decreased to 0.71% from 1.37%.
Now I'll give you a brief about the future outlook. Our strategy is to increase continuously retail sale through our B2C segment. Downsizing EPC business is working well. And in the future with 2 years' time, our retail sale will reach at least 50% of the total sales for the company with annual growth of 30% to 35% per annum in the retail business. The retail business offers superior growth prospects with better margins and lower working capital requirements. The capacity utilized during FY '21-'22 is 76% in cable division, 59% in house wire division, and 84% in stainless steel wire division. So the company already has capacity in place to achieve growth for the current financial year.
Company is in the process to expand the capacity by setting up greenfield projects for low tension, high tension, and extra high voltage cables with an investment of approximately INR 800 crores staggered over 3 to 4 years to maintain a growth of 17% to 18% CAGR in the coming years. For last 15 years, we have achieved a CAGR growth of approximately 15% and in last 5 years, the CAGR is 20% except 2021 due to the COVID.
Overall, company is targeting approximately 18% to 20% growth in the current year with strong order book in hand and good inquiry pipeline and good demand from government and private CapEx, and also by increasing our footprint through our dealer network.
The demand drivers and the industry outlook, we see a robust demand [ in ] government CapEx and infra spending especially from oil and gas sector, refinery expansion and fuel upgradation projects, solar power projects, and tunneling and ventilation projects in highways as well as railways. Similarly the metro rail projects, et cetera. In the private side -- the sector side, strong CapEx is seen in solar power projects, real estate projects, and we see a strong industrial demand due to this PLI schemes given by the government and we are seeing revival of CapEx especially in steel, cement, and many other miscellaneous Industries.
So with this brief, I thank you very much for -- and request and invite you to ask any questions whatever you may have. Thank you very much.
[Operator Instructions] The first question is from the line of Mahavir Jain from Avendus Capital.
Sir, my first question is on the order book breakup. I'm really sorry, I couldn't get it. Can you repeat it?
So total order book is INR 2,419 crore, out of which EPC order is close to INR 959 crore, extra high voltage power cable is INR 224 crore plus INR 161 crore is the L1 order, and domestic cable order book position is close to INR 1,100 crore, and export order book position is INR 137 crore.
My second question is on the margin guidance. So since we are seeing a high cost inflation in terms of metal prices so any guidance on that, any sense on that?
Margin we are able to maintain close to 10.5% to 11% range. It's all depending on the input pressure. But we are in the range.
And sir, last question on the electrical good side, any sense on that?
At present, we are strengthening our dealer distributor network and for that from the last financial year last quarter we have engaged from the sales side also who is taking care and that background is from the switch gear. But at least for another 6 months, we will further strengthening of our dealer distributor network because we want to grow further from here. Already we have reached close to 40%. Our target to reach 45% to 47% contribution from dealer distributor network in this current financial year. So when we will be reaching to that level, then we will be adding slowly, slowly 1 or 2 products in a year.
So for now, switch gear is the prime product?
Yes. But not for now, it will be at least after 6 months.
The next question is from the line of Prakash Goel from ICICI Prudential Asset Management.
I just want to understand why there has been a change in accounting method with respect to inventory?
Basically the ERP does not support the FIFO method. So in FIFO, we need to calculate that manually actually. So because of that, ERP supports only moving average. So all the big companies are now having only inventory method through moving average. So we have also shifted to moving average.
Which ERP system is this, sir?
Yes. That is [ IBAN now in force ].
I'll take it probably off. I just wanted to understand what is the impact of this?
Impacts have already been disclosed in the result.
Not for the previous year. For this quarter, how much profit has been understated because of shifting to --?
No, [Foreign Language] that is already written there. The table is there actually.
No, no. That's what I wanted to understand as to why the accounting.
It will be difficult to automate and bring the inventory calculations on the ERP because the ERP system was not supporting FIFO method.
Majority of the companies we track are on FIFO and I suppose SAP supports FIFO. But I'll take it offline, sir, to understand in greater detail.
No, we have IBAN. Now most of the companies, whether you talk of Havells or other companies, they have already moved to moving average. Because moving average is more scientific actually.
No, that's true. But what happens like the advantage of changing these besides the technology.
No, it's just not advantage. It is just automate actually, because you want automate actually.
The next question is from the line of Naval Seth from Emkay Global.
Couple of questions. If you can highlight what is the status of capacity expansion plan? Has the land been totally procured now? So by when it will be operational?
Almost 35% land has already been registered and every week few registries are going on. So earlier we were thinking that by 31st of May, we will be acquire complete land, but at present It seems that at least 2 months will take place to acquire the land. It's 100-acre land so we have already registered 30% now.
So basically then it will be operationalized only by end of FY '24. Is that fair assumption?
Yes, yes, in first quarter of [ '24 ].
And sir, CapEx, what you have stated is INR 800 crores over 3 years. So F '23 CapEx, any guidance on that?
'22-'23 CapEx will be in the range of INR 150 crore to INR 200 crore.
And this would include the land cost?
No, land cost then it will be INR 200 crore.
And in terms of order book, the same has kind of dipped on sequential basis and marginally grown on y-o-y basis. So what has been the reason for the shortfall? Are we back on track in April? How you're sensing 1Q over there?
In the order book -- the normal low tension, high tension power cable; that order book is mainly in the range of INR 1,100 crore to INR 1,300 crore range. In extra high voltage power cable, sometimes it may go up to INR 400 crores. At present it is close to INR 300 crore. So once one order comes, it's almost INR 100 crore to INR 150 crore single order.
Actually, the earlier our order book position used to be in the range of INR 3,000 crore approximately in last 3, 4 years, which was mainly because of the EPC orders. Since we have reduced by EPC business, that is the reason that order book looks lesser. But because we are normally executing orders maximum within 3 to 4 months. And secondly, in the B2C side of the business which is constituting now 40%, there is no -- practically no order booking. The order comes and dispatched from the stocks so it is sort of an instant order and instant sales. I hope I'm clear.
Yes, you're clear over here. In terms of receivables so last year F '22 we would have got INR 150 crores as retention money from government. So the similar amount can be expected this year also?
Yes. This year additional INR 125 crore will come. Last year we received more than INR 150 crore. So this year another INR 125 crores will come. So our receivable has already gone down from 3.87 months to 2.9 months.
Which has been your target 2.9 months and it will sustain over here. Is that fair assumption?
It will reduce further from 2.9 to our target to reach 2.5 months.
And that will be by when?
Because [indiscernible], so it will be in the range of 2.5.
And sir, 2.5 will be achieved in FY '23 or will take 2 years kind of?
It will be done in '23.
And in the past, sir, because we had stated as our focus is high on retail distribution and retail revenues, which will also be margin accretive going forward. Because of the commodity inflation and because of the logistic cost increase so the margin increased guidance how we should look at it? Has that got now postponed to FY '24, or we will still see some benefit coming in, in the current financial year?
See, earlier also we were in the range of 10.5% to 11% and last year we achieved 11%. But in '22 -- '21-'22 we achieved 10.5% mainly because of the inflation in the input costs. But once they settle in this current financial year, we will again be going towards 11%.
And that if I remember in between, there were some guidance of 100 plus basis point expansion because of that retail sales. So that would be then in FY '24 once everything settle down?
Yes. Once everything settle down and due to increase in retail and the increase in the pricing from the next year as Anil ji, earlier spoke that from the next year onwards, we will be improving our pricing once we are at 50% contribution level. So it will further strengthening of our EBITDA margin by 0.25 to 0.5 basis point each and every year.
Understood. And last question is on volume. So can you provide volume details for house wire segment in 4Q? And what is your expectation of that 18%, 19% revenue guidance growth if you can bifurcate that within the segments for FY '23?
See, the last year our volume growth was close to 21% as a whole wherein the last quarter was 19.7%. But as a whole for full year in the whole wire and cable division, we have grown by 21% volume.
Naval, I'll request you to come back in the question queue for a follow-up question. The next question is from the line of Manoj from Equirus Securities.
Sir, most of the questions have been answered. One thing I would like to understand is what would be the strategy or the mindset behind the new categories that we are trying to venture into over next 6 months. Like what would be the overall thought process apart from building strong distribution network because that would be one of the key driver. But other than that, what would be the thought process? What would be the other initiatives that how we target to scale this business over next 2 to 3 years?
At the moment, we'll be able to give you some guidance about new products maybe after 6 months because we are yet still discussing it. At the moment we are strengthening our network for improving our sales of house wires and cables and then we will gradually take a call on which segment to go about. The prime purpose will be to utilize the same dealers and manpower to sell some additional product, but we'll be able to really give some idea maybe after 6 months.
Sir, over -- like if you look at now for several years we have been doing extremely well in the house wire segment. So eventually if you look at the B2C business has been doing extremely strong. So now in fact even in the current period, what I understand that you have definitely done better than industry in the house wire segment. So what's leading to this strong growth, this continuous growth and what's influencing your channel partners to stock more of KEI products or replace some other brands? So, what's happening at the ground level? That would be very helpful, sir.
You see, I'll state it like this. Since our base was low as compared to others so what we did was first improved our branding. Secondly, increased our reach to the areas where we were not present, where we had no marketing team or didn't have the dealers. We tapped those areas and did micro level planning about towns and districts and pushed the dealers and influencer schemes to get some more market share. We are still I mean comparatively far behind the other players like Havells or Polycab in the wire segment. So there is still a lot of room at this to grow in this area.
Sir, I completely agree to that. And sir, my question would be just follow-up on this. Like how would the gross margins differ for house wires as compared to other brands like Havells or probably Polycab?
In our case, EBITDA margin is close to 11% in the wiring segment or maybe plus. But in the institutional sale, our EBITDA margin is close to 10% to 10.5%. And in export is also in the 11% range. So that was earlier also communicated to you. But after the current financial year, [ in advance ] we will be reaching towards 50% sale contribution through dealer distributor than a pricing will be -- gap of the file between the top players and the KEI, we will be basically narrowing down in the coming years.
Sir one last question if I may squeeze in. So on the margin side, Q3 we had highlighted like there were some old price orders that we had executed, especially in the EHV side and we were confident that probably 4Q won't take a major hit, and in fact sequentially what we have seen is margins have declined. And so probably FY '23 largely when you're talking about margin improvement on y-o-y basis, so that would be led by product mix or whether there would be some normalization in pricing strategy and how do you see it?
Manoj, ji, we work as a company as a whole times even in spite of the input cost rising, but we increased our sale or we will be able to increase our sales in fourth quarter, so there the expenses percentage versus sale has gone down and we were able to maintain the EBITDA as well as PAT. And the whole year also because of the lower interest costs, we were able to maintain our PAT for same period compared to last year was also higher. So that is the -- basically the management you can see wherein if we are losing at some front, then we are gaining at another front. So in future also, you will see. So that's why we generally communicate the EBITDA margin is close to 10.5% to 11% range. [Foreign Language] But we are trying to maintain almost PAT level close to 6.5% range now.
The next question is from the line of Rahul Agarwal from Incred Capital.
Congratulations for a great set. I think actuals continue to beat the guidance given at the start of the year. Sir, firstly, there was a revised filing of results on the stock exchange as I saw 5 minutes back before the start of this call, any material change?
No, just one figure was actually not able to read people funding creators. So that was figure 600 something, but there was showing by zooming it was 850 crores. So that's why we have revised our material. It was pointed out by Mr. Amit Mahawar of Edelweiss Capital. So otherwise the numbers are in the same chart. There was a scanning mistake only.
Then moving on to questions. So on the category-wise peak revenue, obviously understand the guidance and I mean you mentioned that capacity is in place to meet INR 6,600 crores of top line next year. But broadly, if I look at the full year performance for LT, HT, EHV housing and stainless steel, and I'm also assuming there has been some capacity expansion happened during the year also. There are some volume number available in terms of these capacities let's say for example, EHV somewhere about 900-kilometer, LT cable are about 1.2 lakh kilometers, housing wire almost like 1.2 million kilometers, stainless steel was about 7,200 tons. Could you help me understand by March '22, are there any changes -- material changes within the segments in number of capacity and what is the peak revenue possible through this segment and not connecting it to the guidance.
Rahul, peak revenue with this capacity available with us. We can reach out to INR 6,800 crore to INR 7,200 crore. Because already as Anil Ji, has communicated in the cable division we have utilized 76%, so almost more than 20% capacity there. House wire since we have set up a new plant in '19, so almost 60% capacity we are utilizing, so almost 40% capacity idle for house wire. But for extra high voltage power cable, we are already utilizing 95% capacity, so there is not much scope.
But we are definitely working every year to and doing debottlenecking process and by debottlenecking process and efficient improvements we are able to improve our capacity from the same plant by 5%. So this year also we will be working on in terms of some changes in the replacement of some machinery and debottlenecking process, which will further jack-up that capacity to 5% to 7% extent.
Sir, fair to say EHV full year should be like INR 600 crores run rate and housing wire at about INR 1,800 crores, fair to say that?
Yes.
And sir, second question was essentially on the margin. Now a lot has been discussed around it. But the way we analyst understand that, generally it's the pass through in the cable and wire segment because pretty straightforward relatively smoother versus other electrical products and purely because it's related to copper and aluminum. But now, if I look at gross margins and the way I'm calculating it is basically sales minus raw material cost, there are historical lows for KEI at 24%. The long-term average is like 30% for last 6, 7 years. Would I really understand why is this happening even though we are trying to pass it and what has to happen to take it to come back [indiscernible].
I will explain, Rahul. First of all, we have reduced our EPC sale. In our EPC sale, we were almost supplying 25% to 35% of the cable where the cable margin was much, much higher. So now we have reduced the EPC sale, so that average percentage of gross margin has gone down because of that, #1. #2, the input cost have sharply fluctuated in the last financial year. So because of that there is a lag effect of 15 days in the retail market, because in every 15 days, we are revising the list price, and mostly we are having 3 to 4 months pending order position, but we are having 2.5 to 3 months inventory. So almost 25 to 30 days lag effect is there in the institutional side. So because of that -- because last year, the prices were going only in one direction. If they were going up and down, then it will average out. So because of that impact what we have -- what we have make-up that because of high sales volume in the fourth quarter as well as the whole year. So because of that we were able to maintain the EBITDA as well as the tax.
So should I assume that the gross margins ever go back to 30% because one is the product mix [indiscernible].
We are not working for gross margin, we are working for EBITDA level because sometimes the aluminum cable we are selling, sometimes copper cable we are selling. So EBITDA margin will be in the range of 10.5% to 11% and our PAT margin will be closer to the 6.5%.
Done, sir. Best wishes to you ahead for fiscal 2023.
As you have seen the last 5 years, you will see the sustainable growth in the next 5-year also.
Next question is from the line of Shrinidhi from HSBC.
Congratulations on good set of numbers, both P&L and balance sheet. Sir, would it be possible to give some more color on your growth guidance of 18% to 20%, what really driving this strong guidance, particularly given copper prices we are seeing softening and probably growth has to be driven much more by volume rather than price.
I have already mentioned that there is a good pipeline of inquiries from government infra spending, especially in the railways, metro rail, tunnel ventilation projects, oil and gas sector like refineries upgradation in terms of fuel upgradation projects as well as capacity expansion projects and private CapEx also including real estate and the construction sector. So that gives us the confidence and what inquiries are in hand, what orders we are booking every month that gives us the confidence of the growth, which we are projecting.
I can say that our monthly order intake, new order intake is in line with our projections that we are giving to you. So far, as copper prices are softening, we can't say that, how much it has suffered. These are temporary fluctuations and we are more driven by the volumes. If volume, if we are able to improve the volumes, we are more satisfied than just growing by the -- due to the cost of [ improvement ].
Shrinidhi, as you have seen the last year also, we have grown the volume comes close to 21%. So whatever capacity we are having, at least, 18% volume terms, we can grow. Prices, we cannot control, but at least volume terms, we will be definitely growing close to 18%.
Okay. Good to hear that, sir. And sir, with company turning net cash, can investors expect increase the dividend payout ratios in coming years?
Because we are into expansion. So every year, we need to spend around INR 200 crores to INR 250 crores. And we are reducing our financial cost by way of the cash purchases. So a little bit increase every year we are doing in terms of the dividend payout. So in future also that kind of increase will be there.
Okay. And one last bookkeeping question, sir, out of INR 2,300-odd revenue through dealer distribution network, can you bifurcate that between housing wire and HT/LT cables?
Definitely. The dealer distributor division close to INR 1,254 crore of the buyer and balance INR 1,033 crore of the HT/LT cables.
The next question is from the line of Harshit Kapadia from Elara Capital.
So congratulations, first of all, for a very good set of numbers. Just wanted to check, we have seen the inflation in the commodity price is continuously rising. Is there any some softness in demand, which you have seen in the month of April or part of May, if you can highlight, that would be helpful?
No, we have not seen any softening of demand. It is basically, only deferment of purchases by 15, 20, 2 to 3 weeks by the customers because of the very high LME of aluminum, copper and even steel. So the demand has not gone, it will -- it is there. So -- and we are seeing a very good order booking now because the markets have softened like prices have softened. We see -- we have seen a very good booking now at the moment.
Okay. That's good. Secondly, sir, what we have seen looking at yours as well as your competitor as well, it looks like people are chasing -- companies are chasing market share rather than taking the adequate price increase to offset the inflation. So how much more price hike is required to reach [indiscernible] 10.5% EBITDA margin level. Right now, we are at 9.6%.
So that 9.6% is basically the institutional orders, which we are in at least 1 month lag effect is there. So now if the prices are settled, so then I think the margin will be in the range of 10.5% to 11%.
So far as price hike is concerned, I think whatever price hikes were to be done due to input cost increases have already been done. And now no more price hikes are needed at least for our industry, unless the LME goes up further.
Understood, sir. And any color you can give us on the export portfolio, sir, because we have been trying to get into new countries. Right now, we are at INR 400 crores, and you are looking to raise it to, let's say, INR 700-plus crores. So any strategy on this would be helpful, sir.
First, we are focusing on increasing the sales in the existing countries of exports, plus we are working on certifications in some more countries and forming teams exposing ourselves to more and more international exhibitions since they have started to get more net agents and network in some new countries like South America, North America and similarly some African countries also. So it will yield dividend. For last 2 years, we were not able to -- our exports were stagnant, mainly because there was no traveling anywhere by our export teams.
Understood. And how much could be the number? Any suggestion you can have for FY '23 in terms of...
At least 10% to 15% growth will be there in export also.
Okay. That is good to hear. And sir, just a bookkeeping question to Rajeev sir. Sir, is it possible that you share the interest cost breakup for FY '22?
Yes, yes. Please note down. Interest on term loan was INR 1.97 crores. And working capital interest was close to INR 20 crores. LC interest cost was very less, INR 0.57 crores, bank charges on LC was INR 0.63 crores, bank charges on bank guarantee was INR 10.6 crores, and [indiscernible] INR 6.39 crores. So it put together INR 40.39 crores.
Fair enough, sir. And just final question. And with this new product that we'll be launching in [indiscernible], we'll be having a separate team...
No, new product launching is just after 6 months because we are focusing only and only on the houseware and improving our dealer distributor network and the sales to a level of 50% because in the existing, we can make the profit for any new product, we cannot make profit at least for 5 years.
Okay. Okay. But there would be a new -- a separate team who would be there for...
No, no... The same team, those who are [indiscernible] we have already divided our dealer distributor team in 2 parts. One is taking care of consumer and another taking care of the dealer distributor those who are working for the projects.
The next question is from the line of Nikunj Gala from Sundaram Asset Management.
Sorry for that. Sir, is it possible to give us copper volume consumed in FY '22 versus say, FY '20 or FY '19?
I will give you. FY '22 versus FY '21, I can give you right now. So copper consumed, means copper and aluminum both because they are consumed either by metal or in copper aluminum. So financial year '22, we have consumed 67,978 metric ton as against 56 107 in the previous year. So almost [indiscernible].
Yes. Okay. Yes, in case possible, take the [indiscernible] And sir, secondly...
Not I am having this right now, but it's [indiscernible].
Yes. And then secondly, is it possible to just help us in the understanding of working capital going forward. So is there any equity constraint you are seeing in the market? Or what kind of a lever you are comfortable with?
No, you see our receivable cycle has already gone down. Our inventory was 2.19 months last year, which is in '22 is almost same 2.26 months, but our debtor has already gone down from 3.87 months to 2.92 months. And our creditor is depending on the cash available we are having. So this year, we were having sufficient cash. So we have called for the cash purchase and the creditor holding was only 1.6 months as against 2.13 months.
Right, right. And on a sustainable basis, what is the number of days you are working with?
Our working capital cycle is at present 3.41 months because...
Sir, we're unable to hear you.
[Technical Difficulty] go down to less than 3 months.
Sir, sorry to interrupt you. We lost your audio, may I request you to repeat the answer once again, please.
Hello. Are you hearing me?
Yes, sir, now we can hear you fine.
At present, as per the balance sheet, our working capital cycle is 3.41 months wherein the creditor is only 1.6 months. Normally, creditor is close to 2.5 months. So if you consider that, then the working capital cycle is already less than 3 months.
Okay. Sir, it's a [indiscernible] one can assume going forward also, right?
You see, the receivable and inventory is sustainable. As I said, receivable from [indiscernible] targeting 2.5 months in this financial year and the inventory will be in range of 2.25 months. And creditor again depends on the cash we are having in hand, because we are getting benefit on the cash purchase.
[Operator Instructions] The next question is from the line of Harsh Shah from Jefferies India.
Actually, my question has been answered.
[Operator Instructions] The next question is from the line of Rahul Agarwal from Incred Capital.
Just one question. You said the new plant will start in phases sometime in 3Q of fiscal '24. Is that correct?
Yes, sir.
So sir, the capacity talking about [Foreign Language] I think we'll be very close to that number next year. So first half of fiscal '24, 9 months of fiscal '24, we'll have some kind of -- we'll need some kind of capacity, right, to further grow from there. So any thoughts whether I'm doing this calculation, right?
We have already mentioned that every year, we are improving the capacity by 5% to 7% in our existing plants by debottlenecking process. And we will be having adequate capacity to cater to our requirements before our new plant comes out for production.
Already Anil ji has taken a decision to adding the capacity in our [indiscernible].
The next question is from the line of [ Khadija Mantri ] from Sharekhan.
First of all, I would like to say that the volume and value market share in wires and cables, I understand that you are at a low market share of comparable [indiscernible], but can you just give a color on your market share at least in the urbanized segment and whether it has increased in the last year or in the last quarter gone by?
You see the market share in the wiring segment, our market share is close to 6%, house wire segment, but in the institutional side, our cable market share is close to 12% to 14%.
Okay. And sir, I want to understand more about the PLI scheme and some of the companies like Bluestar [indiscernible] going to be an incremental revenue. I just wanted to have your perspective want to say and how is it going to be accounted for in the future for the upcoming capacity...
See, from PLI scheme, it will be bringing in a very heavy new CapEx by several companies in the private sector in the manufacturing of solar equipment, solar power equipment, batteries, mobile sets, white goods, and many other equipment. So they will be setting up new industries and the cables are required heavily than any new industry contract. And it has -- it gives a multiplier effect to the power [indiscernible] as well as the industrial requirements in those projects.
Ms. Mantri, I would request you to come back in the question queue for a follow-up question. The next question is from the line of [ Bob ] from Falcon.
You mentioned you have been growing sales.
Sorry to interrupt you, your voice is not very clear.
Am I audible now?
Slightly.
Yes. You mentioned that you had been increasing your sales through increased dealer penetration because we're starting off from a low base. So when is that expected to level off because once you have dealers in most areas of the country, your growth should level off, shouldn't it?
I mean that is what I was talking about of the house wire. So because our base has been low. If we take I think another 3 years for us to reach to level off. How much it level off, I cannot say because if we are growing other companies, we will also strive to grow. So our aim is to grow, but not to compete and go in a rat race of others that how much market share we gain. We want a decent growth and a profitable growth. That is our aim.
I understand that. My point was more that once we have a dealer in an area that has not been serviced before, there will be an initial spurt of growth. But after that, there wouldn't be much growth, correct? Because the dealer is already there.
There will be growth, but it will be maybe 20%. It may not be 50%. That will be the difference. That's all. Once we reached to a significant base.
Okay. That you're saying will take 2 to 3 years.
See, the existing company is also growing. You may be talking of the quality at Havells. They are also -- still they are having so many [indiscernible].
The markets are growing out.
If the market is growing, they are also growing.
Yes. But their growth rate is not as high as yours.
No, if the base is higher, then the percentage growth will be large due to that kind.
Right. Yes, that's what I meant actually because your growth rates are now much higher than the industry growth rate, driven by the low base. Once the base gets higher, then it obviously will start coming back, right? More -- it will be similar to the industry growth rate.
Yes, yes, but after 3, 4 years.
The next question is from the line of Devang Patel from at NAFA Asset Managers.
Sir, have you not changed the accounting policy, what would our Q4 margins look like?
Future margins is in the range of 10.5…
No, no, no. Had you not changed the accounting policy, that...
No, it is only INR 3 crores, INR 4 crores impact, not much impact of the inventory.
So that was the impact for last year in FY '21, right?
FY '22 also, no? [Foreign Language]. It is very minor impact because moving average sales are average and the FIFO method sales are first in first out. So it is not much [ of an impact ].
Okay. Sir, secondly, what is our revenue contribution from renewables?
From renewables?
Yes, renewable energy, solar, et cetera.
We have not quantified it but we can answer it later.
[Foreign Language] because whether it goes to solar, it goes to wind, it goes to the thermal, for us, it is the power sector actually.
Yes. But you -- earlier call, you mentioned that in solar, much more DC cables are required...
We can quantify it and we'll let you know.
The next question is from the line of Harsh Shah from Jefferies India.
Sir, is it possible to repeat the interest cost breakup, please?
Yes, please note down. Interest on term loan is INR 1.97 crores. Interest on working capital is INR 20 crores approximately, then LC interest is INR 0.57 crores. bank charges on LC is INR 0.63 crores, bank charges on bank guarantee is INR 10.6 crores and other processing charges are to bank is INR 6.39 crore.
Thank you very much. Ladies and gentlemen, we will take that as the last question. I now hand the conference over to the management for closing comments.
Thank you very much colleagues for attending our con call on the financial year '21 '22 results. If you still have any other questions, please reach out to us. I really thank you for your support and trust you have. Thank you.
Thank you very much. On behalf of Monarch Networth Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.