Good evening all, thank you for joining us for Rajratan Global Wire Limited fourth quarter of FY26 earnings conference call. During this call from the management side, we'll be hearing from Mr.

Sunil Chordia, Chairman and Managing Director; Mr. Yashovardhan, CEO and Deputy Managing Director of the company; Mr.

Pranay Jain, CFO Rajratan Thailand; and Mr. Hitesh Jain, CFO Rajratan India.

We would now like to turn the call to Chairman and Managing Director for the opening remarks, followed by Q&A. Sir, you may begin now.

Thank you, Suresh, and thank you all the participants for your interest in Rajratan. I'm happy to say that we are meeting in a very exciting times when the global businesses are affected by geopolitical situation, war situation in GCC countries.

A lot of businesses are affected. Supply chains are disturbed, okay, but our company has been able to perform well in spite of all the difficulties.

We have a mix of good news and some not-so-good news. Good news is that we have been able to achieve the highest ever sales tonnage.

Our sales on year-on-year basis have increased by 18%. We have done more than 133,000 tonnes of total sales from three locations.

Particularly in this quarter, we could not achieve the targeted EBITDA. That is because of the high prices of raw material.

There was a sudden increase in steel prices beginning from January. From January till March, the prices went up by almost ₹10,000 a tonne, which we could not pass on to the customer.

That is why the EBITDA percentage in this quarter has gone down. Coupled with that, the availability and the price of energy was a difficulty, which also affected EBITDA margin particularly in this quarter.

We have been able to pass on the price increase in the current quarter, and we see a robust demand from all our customers in India as well as in Thailand and globally also. I can say that this year should be another growth year for Rajratan, and we target to grow our business in volume by around 17%, 18% in the current year also.

With this, I am happy to answer all your questions along with my team members. Thank you so much.

Good evening, sir. Thanks for opportunity.

Sir, sincerely appreciating the performance in this global volatile situation. My question was regarding can you please highlight upon and talk about exports business opportunity region-wise for our bead wire and even some non-tyre segment globally?

Sanjay ji, we won't be able to give very specific information, but generally, Yashovardhan is handling the global business. He will answer you what are the developments in different markets.

Yeah.

Yeah. Sanjay ji, hi.

Because of volatility, to be honest, the only impact that we've seen till now is disruption in shipping, especially from our Thailand plant. Overall, the development of export market remains robust for us.

There are many companies that have already approved us in Europe, and we are under regular supplies to them since last 6 months. Definitely, ensuring that the material reaches them on time is something that we are struggling with since last 30, 40 days, but I think that should ease out.

Also in American market, the demand still continues to be robust. We were expecting that the geopolitical issues will create or reduce the demand, but it has not happened till now.

That's great. Basically it's in tyre segment itself or in non-tyre also we are looking?

I would say 70% of the efforts and development is happening in tyre segment in terms of number of counters and number of plants. Today, non-tyre segment volume is also substantial.

This ratio will keep changing because tyre companies take a long time to approve. Other products are faster approvals and volumes come in faster.

It's a mix of both.

Right. Yes.

Sunil sir, one question for you was regarding our Chennai plant. Can you share the ideology of working where we have shifted many tyre industry supply from Chennai and we are catering to some low-margin customers from Indore?

How do you see that panning out in near future? How do you see that capacity over there, and do we need any capex in each of the plant further?

Last quarter Chennai utilized capacity almost 85%, 90%, okay. If you look at their exit rate, against 30,000 tonnes capacity, they have been producing 2,200, 2,300 tonnes per month, okay.

That is why we decided to put in the money for balancing equipment, and some equipments have started arriving, and we'll become a 60,000 tonnes capacity plant by second quarter of this financial year. Okay.

This year, our plan is to sell around 35,000 tonnes from Chennai to all the customers who are in that region. We will be able to cater to customer in North India who might be a lower-price customer.

Okay. As specified earlier, we don't want to lose our market share, okay.

As long as the product is giving us some contribution, we want to continue with our high market share. In tyre sector, our market share has again reached to 40% to 43%, which had come down to 35%, 37%.

We are also putting in capex for steel cord for conveyor belt in our Indore facility. That project, of course, got a little delay because of the reconstruction of the shed.

We have broken the old shed which was made in 1989 and built up a new big shed, but now that work is over, machines are getting installed, and we'll be able to start trials in the second quarter of that product also. Apart from these two capex, there is no additional capex plan for this year as of today.

Yeah.

What will be that amount of capex?

In steel cord, we have already invested around ₹55 crore, I think ₹45 crore to ₹50 crore, and we'll require another ₹25 crore to complete that capex. Chennai, this year will be close to ₹25 crore to complete the capacity to 60,000 tonnes.

That's helpful. Sir, my last question was regarding margin uptick.

Can we see that establishing the rising raw material and energy prices get passed on in coming future time in this year itself? Nahi, abhi is saal to jo March tak price badi thi, wo pass on ho gayi hai.

Whether it is a steel price or it is other consumables or even energy prices. Currently, we are seeing that there is a pressure on the dispatches.

We are not able to meet the demand of customers to supply them on time, okay, because there is a shortage of raw material also. Okay.

I think that will become smooth by end of this month and will be able to meet our overall production target and sales target for this year unless something major happens again. Okay.

You have to keep your fingers crossed koi another war, another issue. That uncertainty will remain.

Whatever I am talking of is a normal situation. Yeah.

Got it. Aur yeh receivables thoda bada hai yeh time, wo because of?

Haan, wo US export ke karan bada hai kyunki US jo export hota hai

we supply to our company in USA. Wo imports, pays 50% duty on the product, so that amount also adds on to the working capital cost, and then customer pays us in 30 or 60 days after he receives the material.

That credit cycle has become bigger. Got it, sir.

Thank you, sir. Very helpful and best of luck, sir.

Thank you.

Thank you for the opportunity. Congratulations for good set of volume numbers.

Sir, my first question would be on raw material cost. By telling that we are able to pass on the entire ₹10,000 per tonne which has been increased in the cost, do we mean to say that we would be able to reach 38%, 39% gross margin which we were doing in Q3 back in Q1?

Is my understanding clear?

It will be a little more because in percentage, we'll be able to maintain gross margin. On absolute numbers, because prices have gone up, we'll be able to do that, not an issue.

I don't see any issue in this quarter. Yeah.

Okay. I was seeing your Thailand as well as India numbers.

In India, there was a pressure on gross margins, but I can see that in quarter four, Thailand gross margin stayed constant quarter on quarter, but we have seen huge increase in other expense for this quarter as well as for this full year. Any particular reason for the same?

Nahi, dekhiye, wo jo other expenses hain, it is not Thailand other expenses. We have now one more 100% subsidiary which is getting merged in this balance sheet, that is USA, Rajratan USA.

Okay. There is a cost of around ₹30 crore which is for 6 months wherein we have been supplying to USA on FOB basis because the import duty in USA is on the FOB cost of the product, okay, and the US company pays for the shipping cost and logistic cost.

That ₹30 crore of cost for second half of the year is booked in the USA balance sheet. Okay.

Because both the balance sheets are merged and you can't see USA balance sheet separately, you think that it has gone up in Thailand. It has not gone up in Thailand.

It has gone up in USA. Okay.

Now it is new normal that we would be incurring around ₹60 crore cost for the full year in this subsidiary? Or--

If the export volumes are like this or we have a projection to increase that, this will be further increased. This will be further.

Can you just help me explain between the EBITDA per tonne or EBITDA margin differential between when we sell in India or we sell in Thailand or we sell in USA or any other export country? Is EBITDA per tonne maintained at the same level or if you could just tell us pecking order?

No, because there will be very different prices, okay, logistic cost, prices, long-term contracts. Some orders are at good price, some orders are long-term commitment.

It is very difficult to tell you that what is EBITDA in USA market, what is EBITDA in Thailand, or customer-wise. Okay.

In Thailand, we have a mix of customer. The prices ranges from something like 26,000 baht to 34,000 baht.

Okay. Very difficult.

You can continue to assume that we'll be able to maintain this EBITDA level, 13.5%, 14% safely.

Across plants? Across continents?

On a consolidated basis.

On a consolidated basis. Sir, one question from my side.

This year, you have also shown the segmental difference in the quarter quarter four financial about how much we have got from India, how much we have got from Thailand, USA, and rest of world. Can you break up this 17%, 18% volume growth which you mentioned region-wise?

How much growth we expect in India? How much growth we expect in Thailand?

How much growth in USA?

I think we have given. We have grown 19% in sales volume in India, we have grown 17% in Thailand, and overall consolidated growth in volume is about 18%.

Okay.

I'm asking for FY27 guidance. The guidance which we are giving 17%, 18% volume growth for FY27, if you could just break it up further, how much growth we expect in India, how much growth we expect in Thailand?

Yes, I can tell you. Thailand, we are not expecting 20%.

We are expecting around 10% to 14% because there is a capacity constraint in Thailand. Okay.

We are doing some debottlenecking. Thailand from current year volume which is close to 51,000 will grow to 55,000, 56,000.

That is why I'm saying 10%, 11% growth in volume in Thailand. Balance growth to make it to a consolidated 17% will come from India because Chennai capacity is ramping up and we have little growth possible in Pithampur factory.

In all these numbers, I am not including steel cord. Steel cord will be trials and it will take some time before we talk of volumes of that product.

Yeah. Next year, you can estimate 155,000 tonnes of total sales if things remain normal globally.

Yeah.

Yeah. I was asking about not plant-wise growth, I was asking about region-wise revenue growth.

Like USA last year we did

₹200 crore-- Haan, USA will further grow. This year export from India has grown by 250%, okay, but in different markets, we choose where to supply from.

Okay. Matching both this is a little difficult, okay.

We look at the transportation cost, capacities available in different plants, okay, but we have a plan to grow around 30% in North America, I can tell you, and some growth in Europe, which will be around 50%, and Southeast Asia, 10%, 15% because we were supplies in Southeast Asia for many, many years, not many opportunities left for us.

Europe you mentioned 50%, 5-0,

50? Because the base is low.

Yeah. Southeast Asia you mentioned around 10%?

Yeah, 10 to 15%. Yeah.

10 to 15%.

Base is high, and US we see bigger opportunities. Yeah.

Got it. Sir, if you could mention about working capital difference, like you mentioned if we sell to USA, we take additional 30, 40 days to receive our money because of the long supply chain.

What would be the difference between the working capital in India and Thailand? Do we receive it in 30 days or 60 days?

Thailand is overall average 30 days, and India is about 50 to 60 days. Then some working capital for stocking and finished good and raw material.

Export has a longer working capital cycle because Europe shipping line takes 45 days to reach, USA takes anything from 45 to 60 days, and then there is a credit to be extended. Yeah.

Got it. We would continue to see working capital loans at a higher range for next couple of years until we reach to a mature stage?

Yeah. It is good to borrow at 7%, 7.5%, okay, and invest in a profitable business.

Working capital borrowing will continue.

All right. I'll join back in the queue.

Thank you so much, sir.

Thank you.

Hi, sir. Good afternoon.

Congratulations on the volume growth. Sir, I wanted to know when would we see a margin reversal to the expected levels from 13% to 14% as we had spoken on 9 months?

As told you in the earlier question, the margin dip is purely because of the sudden increase in wire rod price in January, February, March, which we have been able to pass on to customers in the current quarter, April, May, June. You will see the margin coming back to 13%, 13.5% in the current quarter itself if everything remains normal.

If there is another situation, some another breakout event happening in the world, then yeah.

Sir, we have spoken about the wire rope expansion as well and the steel cord expansion as well. Sir, what is the timeline on the steel cord?

When would it be on line itself?

And-- Wire rope and steel cord are one. Okay.

Earlier we were telling that it is a wire rope project, but now it's a similar product, but we have decided to make the same product what was being made in the same factory in Greece. That will start production in trials in second quarter and will take some time for approval and regular production.

You can expect bigger revenue next financial year. In all our discussion and projection, we are not including bigger numbers of this product.

Sir, as I know, steel cord gets a higher realization and has a higher margin.

It is not that steel cord for tyres. This is a steel cord for conveyor belt.

Okay. Very niche product and a niche market.

Yeah.

Sir, what would be the capacity of the--

Total capacity of this plant is 10,000 tonnes a year. The generation at current level of pricing, the top line possible from this investment is around ₹150 crore.

That would be, I'm assuming, in 3 to 4 years to reach peak utilization? Two years.

Two years. Yeah.

From next year onwards?

FY29. '29.

Got it, sir. Sir, what would be the average realization for steel cord?

Different sizes, different prices, but on an average, ₹150 a kg.

What are the margins on this product, sir? Abhi jo doosre log bech rahe hain, to

the current sales and if we look at financials, the EBITDA margin as of today are around 20%. It will have to see going forward, yeah, how it works out.

Sir, there is a debt increase as well in short-term and long-term. What would be the peak that we are assuming post the capex cycle once it's completed?

I have been telling that this is the peak, but because of business situation, our volumes in North America have grown substantially, which needed more working capital, we had to borrow. Similarly, capex in steel cord and remaining capex in Chennai required more term loan.

We have paid around ₹50 crore of term loan in the current year also. That is the company culture.

We keep borrowing and repaying. We still feel rather than diluting equity, we should continue borrowing at a lower cost and save dilution of equity.

Sir,

there is quite a spike in the other income as compared to last year. Could you shed some light on is it a one-off?

Other income is gain on foreign currency appreciation. Dollar has appreciated as we have a bigger export.

We gained on dollar, and Thai baht has also become strong, there is a appreciation of Thai baht, which has reflected in the balance sheet.

Sir. Thank you so much for answering the questions.

All the best, sir.

Yeah.

Good afternoon, sir, and congratulations on a good performance in a tough market. Sir, is it possible to share what is the exports from India which we have done in FY26?

Total volume I can tell you from India, we have done, I think, close to 9,000 tonnes this year. I can give you that number separately also.

Yeah. FY26 export--

Yashovardhan, remember, Yashovardhan?

It is little more than 9,000 tonnes volume. Balance is from Thailand.

Okay. In FY26, the export from India was about 10 9,000-odd tonnes, more than 9,000 tonnes.

Right? Yes.

Okay. Next year, what are we planning, this number can increase to how much in FY27 from India?

Yeah.

Next year, probably we are expecting to touch about 15,000 tonnes of export from India. Achha,

15,000 tonnes. Okay.

This will be mainly from Chennai, I presume?

Nahi, again, specific things are very difficult to commit today. Wherever we get a container, wherever we have capacity.

Sure, sure. Secondly, sir, you mentioned ₹25 crore of capex at Chennai for the 30,000 tonnes.

Assuming that you are able to ramp it up in a year's time, then that ₹25 crore can be recovered in a year's time? Is it fair to assume?

No, I think the plan is not to ramp up so fast. The decision is to invest and keep the capacity ready.

The volumes will increase gradually only, and I think the plant will also develop capability to increase volume gradually. I think it will be wrong to estimate 60,000 figure and then calculate that next year's production will be that much.

Okay. Yeah.

Lastly, sir, on the Chennai location being very close to your South Indian clients, is it fair to assume that there could be some savings in terms of freight expenses? Have they started realizing or it will take some time?

Definitely. Dekho, thoda realize hoga, thoda dena padega.

Sure, sure, sure. Haan.

Toh usme matlab koi margin increase pakadna nahi chahiye woh freight cost ki savings? Nahi, wo kahin pe pass on karna padega, thoda share karna padega customer ke saath.

We are very conscious that we are in a competitive market. Okay?

Perfect, perfect. Haan,

competition will also play the moment we pass on some benefits. Haan, Very difficult to Samajh gaya.

Sir, lastly, what has been our peak market share in history? What was our highest market share and are we--

43%, 40%. 43%, 44%.

Toh wahan pe pahunch gaye matlab

we are back to 40? Close to that,

close to that. Exact numbers are difficult, but our monthly data collection shows that we are back at 42%, 43% kind of market share in India.

Also, sir, you mentioned that there are some challenges in terms of raw material procurement. You being a market leader, if you are facing challenges, is it fair to say that your competitors would face far more challenges given the inflation and also the issues in terms of availability of?

I heard that everybody in the wire industry is having raw material issue. Okay?

Achha. Achha.

Haan. Yeah.

Great, sir. Thank you very much, and all the very best.

Thank you for the opportunity. Sir, what is the capex amount we are spending on steel cord wire?

Close to ₹70 crore.

₹70 crore. Okay.

Sir, in FY27, we had given guidance of 37,000 from Chennai plants, which comes around 60% utilization. It is fair to assume that we can achieve a peak utilization from Chennai plant in FY28?

'28,

'29 as Yashovardhan said earlier, it takes time to build capability. Okay.

Is a question of our capability, customer approval, customer confidence. A lot of things are involved.

Yeah.

Let me clarify. I think it's not fair to assume peak utilization so soon.

Understood. Sir.

Sir, this quarter tax rate was very low. Any specific reason?

It was low on a consolidated basis. Pranay, will you answer?

Hello,

hello.

Yeah.

Yeah. In Thailand, we are getting exemption on income tax after sales of 36,000 tonnes.

We are a BOI privileged company. The base tax rate is 20% for the normal companies, and privileged companies, the effective tax rate comes to be 13.9%.

After volume of 36,000 on an annualized basis?

Yes. Yes.

This 13% 13% is on entire profit or this is post 36,000 tonnes whatever we are making?

Entire profit, 13%, because it is prorated. I am telling you effective tax rate.

Up to 36,000, the income is taxed up to 20%, and beyond sales of 36,000, there is no tax. It's exempt.

Okay. That's why we have seen a lower tax rate.

Okay. Sir, on the PLI front, yeah, thank you.

Thank you. Sir, on the PLI front, last year we did not get the PLI because we were not able to produce in Chennai, but this year we have done so, and we are expecting in FY27 as well.

Will the PLI benefits flow? What is the status?

Hello?

Hello?

Yeah.

As I said, we are knocking the doors of Steel Ministry. We are also making representations to Commerce Ministry, who is overall in charge of the PLI.

Okay? They all hear us, but nobody is giving assurance.

I think it will take some time before I can confidently say that we are getting PLI. We could not achieve first-year targeted production as committed to them, and second-year targeted production was also not achieved because first year was missed, second year was also missed.

We have requested for change in the ladder. Okay?

If that is approved, we'll get PLI. Otherwise, as of today, the question mark is there on the PLI.

In all our projection, discussion, we are not including PLI as a benefit. Okay?

Okay.

If it gets approved, how much would be the PLI percentage?

8% on sales. Incremental sales every year, 8% from Chennai.

From Chennai. In total,

total quantum will be ₹40 crore to ₹50 crore in 5 years' time.

Okay. Got it.

Sir, I see every year we get around ₹3 crore of state investment subsidy. I think it would be because of Chennai plant.

How many years still we will be getting more this subsidy?

No, it is not Chennai. It is Indore.

We had done investment in 20 2020. We were getting 30% of the capital subsidy.

Whatever we had invested that year, every year we get in 7 years, that disbursement happens. Okay?

I think some ₹24 crore, ₹25 crore was sanctioned, and every year we get ₹3.5 crore, ₹4 crore. It is that money coming to balance sheet from MP state government.

We'll get similar subsidy for our steel cord investment.

Okay. Is this subsidy shown in the P&L or is it directly knocking off the capital?

No, no. It is knocking off from the investment.

Got it. Sir, for this year, what would be our wire rope volume?

We are not assuming any volume this year. Maximum it will be 2,000, 3,000.

Okay? Right now, we are not talking of numbers.

In FY26, I'm asking about the year which has just passed.

No, there was nothing from wire rope.

Nothing. There was some other wire also we do which contribute around 3, 4--

Which is 14,000 tonnes. Which was 14,000 tonnes in Indore factory.

14,000 tonnes for FY26.

Yes.

Okay. Our 17%, 18% growth projection and 155,000 volume projection includes these 14,000, right?

Yes, yes, yes.

Got it. Sir, last, on the competitor front, we have been hearing their competitor had done excess capacity and there is the pressure on pricing.

What makes us different with respect to competitors? Will we be able to maintain this 13%, 14% margin if their excess supply comes on the road, or do we have to reduce the price and take a hit on margin to preserve our market share?

What would be our strategy?

If competition decides to further reduce the price to our understanding, they are already losing heavily at this price. If they decide to lose further, okay, I don't know.

Very difficult to predict. Okay?

We are surviving and making this kind of margin in last 4, 5 year, 4 years at least. Okay?

Competition is not new.

Got it. What would be the price difference between our product and their product?

Is there any difference, or we are at the same level?

Sorry?

We and our competitor, realization--

No, no. There is a big, big, big, big difference.

We are on the higher end or we are on the lower end?

We are at higher end definitely. Any new entrant has to enter with a price cut.

Okay?

Yeah. What makes us different that it's our relationship with the clients or what is the difference that they are purchasing from us?

30 years of

30 years of hard work and knowledge of this product and relationship, everything. Yeah.

Got it. Okay.

Thank you.

Saloni.

Good evening, sir. Thank you for taking my questions.

I want to basically get a bit more understanding on the new verticals that we are trying to do pilot project in, that is wire rope and steel cord. If I'm right, we have already spent around ₹70 crore in the wire rope pilot project, right?

We have invested ₹50 crore. Balance will be invested in current year.

Okay.

Okay. How much are we expecting to do in terms of revenue from wire rope alone?

Peak revenue will be ₹150 crore, which will take at least 2 years to reach.

That is just for wire rope, sir?

Wire rope, steel cord, whatever you say. Yeah.

It's the same thing?

Yeah. Same thing.

Yeah. Sir, what first of all led us to venture into this segment?

Because it is completely new for us, and it's a niche segment, as you mentioned.

I'll say it is not completely new. It is a wire drawing product.

Okay? It goes into rubber application.

Okay? So 70%, 80%, we know the business.

Okay? We wanted to identify one more product for growth in Rajratan.

Okay? We chose to do that.

Okay? It's not a very big investment anyway we are making.

We'll wait and watch the performance of this investment, and then we may decide to go in a big way. Right now, it's a pilot project, I'll say.

Sir, the end-user industries in this segment would be different if I'm right, the conveyor belt, right? It would not be the same clientele at all.

Definitely. It is not existing client.

There is a limited growth you can achieve in the existing client and in one product. Okay?

You can't expect every customer to buy more than 40%, 50% from one supplier. Okay?

If we expect a growth in our business, how much can we grow in one product? Okay?

We are also trying to identify areas of growth. Okay?

This was an effort to achieve that. Yeah.

If you could give me a rough idea, sir, about the potential market size of this product, and if this luckily works out for us, how much can we target?

It's a niche product. Global market itself will be some 70,000, 80,000 tonnes.

Okay? This will also teach us how to make wire ropes.

The next project might be wire ropes. Okay?

Which are similar in nature and similar in properties and manufacturing process.

This is not just an experiment for us. We are trying to basically venture into this because we want to create a new segment and potentially get into the wire ropes.

Am I correct in understanding that?

Yes, yes, yes. All right.

All right. Thank you so much, sir.

Wish you the best.

Yeah. Good evening, team.

Sir, thanks for the opportunity. Just wanted to check that you have given a guidance of 13.5% to 14% sustainable margins for us on a consol basis.

Are there any drivers for margin improvement organically given that we are ramping new capacities and optimizing the product portfolio?

Sorry, I didn't get your question.

Sir, you have guided that the sustainable margins for us is 13.5% to 14% at the consolidated level, right? Are there any drivers for margin improvement given that you're ramping up new capacities, you're working on the product portfolio?

Is there a case that we can improve it to erstwhile 18% to 20% that we had in the past or 15%, 16% as a best case?

That is possible, but we would not like to guide you with that high number. Okay?

We are conscious of the fact that we are in a competitive market. Some of the participants already asked me a question, "Are you scared of competition?

Will you have to further reduce the price?" Okay?

You are asking me totally opposite question. Okay?

We are projecting and we are talking in middle. Okay?

We are not optimistic about 18%, 20%, but we are also not pessimistic about 11%, 12%. Okay?

We should be making a decent margin of 13%, 14%. Okay?

If anything better comes up, it will be a good surprise for all of us.

Right. Okay.

Sir, given the fact that you already passed on the rising metal prices to your customers, do we receive any compensation for loss of profitability for Q4, any one-time compensation? No,

no. Nobody gives.

Nobody gives. Okay.

Okay. Sir, lastly, there is a fear that the auto sales might slow down because of some supply chain issues as well as price hikes from all the OEMs.

Any demand outlook you've been hearing from tyre players regarding how do these days see the market, both on the domestic and the exports front?

No, when we meet our customers, everybody is keeping fingers crossed. Okay?

Up till now, there is no negative impact. Okay?

All of us are expecting April end slow hoga, May me to slow ho hi jayega. Abhi tak to nahi hua hai.

Then lot of it depends on Mr. Trump.

Okay?

Right. Right.

Right. Sir, lastly, any take on the competitive intensity?

I think, no, abhi filhal demand-supply mechanics in terms of capacities, kaise hai domestically and globally, if you can help us understand?

Currently, capacity is much more than the demand. Okay?

There is a competition, and some of the companies globally are also whether they will survive or not is not clear. Consolidation is also happening.

Right. Right.

Fine, sir. Thank you so much for your inputs, and wish you all the best.

Thank you.

Can you hear me now? Hello?

Sir, good evening. I wanted to know the capacity utilization individually across our plants.

What would be that for FY26?

Chennai reached peak in the month of March, which was 85%, 90% of installed capacity. We have decided to put in balancing machines to double the capacity.

Indore continue to operate at 90% capacity utilization. Thailand.

Okay? Our capacity utilizations have been to peak level at both in Thailand and Indore, Pithampur.

Chennai is ramping up, there will be open capacity in Chennai for the next year. Okay.

Okay. The second question would be for Yashovardhan as well as you.

That in case of exports, due to the war, was there any situation that sales got affected or are in transit or we couldn't book sales or something of that sort? Could you throw some light on it?

No, as of today, other than shipping lead times have increased, and there is congestion at Singapore port, there's congestion at the Colombo port, other than that, we have not faced any disruption.

Okay. In terms of revenue--

Incidentally, we don't have a customer in GCC countries. Okay?

Where the exports have come down to zero. Yeah.

Okay. Great,

great. That's it from my side.

Thank you for the clarification.

Hello?

Yes, Saket. ):

Hello. Namaskar, sir.

Thank you for the opportunity. Sir, firstly, when you mentioned that we have done some installation of finishing line at the Chennai unit and then we will have open capacity, can you elaborate in terms of tonnage what would be the addition in the Chennai unit and what are we factoring in in terms of the tonnage for Q1 contribution from Chennai and then going ahead?

As

I mentioned that Chennai, we had installed 50% of the machines. Capacity till last year was 30,000 tonnes per annum, which is being doubled to 60,000 tonnes per year by addition of some balancing equipments.

It will happen in the second quarter. Some of the machines are already installed and started running.

This year, we'll have a growth in the manufacturing from Chennai. From 17,000 tonnes last year, we are doubling our business from Chennai.

):

Okay. Last year tonnage was 17,000 on installed capacity of 30,000.

Now this year, on installed capacity of 60, we are expecting 34?

34, 35, yes. ):

Sir, yeh jo humara capital work-in-progress ka closing balance hai, how will this shape up post this commercialization? Sir, standalone pe ₹69 crore hai, haan ji, aur console pe ₹88.

Haan. Haan, to yeh is saal ke second, third quarter tak

everything will be capitalized. You will see a very small number in CWIP.

All this will be capitalized and up and running. ):

Okay. When we look at this number for say ₹20 crore increase in the console, this is pertaining to the Thailand unit, that is the debottlenecking exercise we are doing or--

No, no. Thailand number is very small.

Thailand number is very small. On consolidated basis, all this is Pithampur steel cord project and Chennai balancing equipments.

There is no other CWIP. ):

Okay. In that case, sir, then the ₹50 crore number which you have said for the steel cord part, how much have we invested out of the-- 70 me se 50 laga diya humne.

Okay? ): Okay.

Sir, jo ₹88 crore ka closing balance hai, usme ₹50 crore aapka steel cord business ka hi hai? Haan, ₹50 crore kareeb

steel cord business ka hai, ₹30-ek crore Chennai ka hoga, okay, thoda bahut Thailand ka hoga. Yeah.

):

Okay. Steel cord will be commissioned, this ₹50 crore project will be commissioned by?

Second will start trials in second quarter, but third quarter tak we should be able to capitalize everything.

Yeah. ): Sir.

Toh agar hum apna debt numbers pe jayenge, toh I think to be closed this year at long-term borrowing at 130 and short-term, including the working capital requirement, at 200. Yeh iski trajectory kaisi rahegi, sir, with the ₹80 crore jab badh jayega?

That is the factored already there. How will this number take off?

Haan, so

long-term loan to ₹50 crore se kam honge is saal kyunki repayment utna karna hai. Okay?

Last year also, we have reduced the long-term loan to that extent. Working capital might be required because of high prices now because there is a price increase of around 10% to 15% and also the increase in volume.

We are talking of 17%, 18% volume growth, which might require some working capital borrowing also and long lead time for exports. All these factors put together, we don't expect any reduction in working capital requirement.

Rather, we see some more requirement of working capital. Term loan may not be required.

There will be a reduction in term loan. ):

Just to conclude, sir, in your presentation, in your slide, you have mentioned that we have robust sales pipeline established with market client customers. If you could just give us some understanding, I think, sir, we were also looking for some new geographies earlier, say, Japan ke sang me, right, if I'm not wrong, correct me there, that we were trying to look for new customers from that part of the globe also.

What are you trying to explain here? Then, sir, one more point was in the numbers, we have mentioned within USA the revenue at ₹118 crore.

Tariff ka sir isme factor kiya hua hai? How has tariff affected this sales number to US?

I think Yashovardhan will be better. We'll be giving a guarded answer, huh?

Don't expect us to tell you everything. Yashovardhan, hello?

We had shared the export plan. I think every quarter, we are discussing this about setting up infrastructure 2 years back, which has now reached at final approval from customers.

Overall, our efforts is not specified to any particular region. We see US as a big potential.

We also see Europe as one of the largest market for bead wire. Surprisingly, Southeast Asia remains to be competitive, but Japan is turning out to be a new opportunity.

Now, all of this is just increasing our existing customer relationship to different geographies. The set of customers in terms of name remain the same, but because they have various factories in the world, we are trying to explore opportunities around the globe.

Sir. Saket,

just what Yashovardhan sir was mentioning, I was just trying to make sense of, if I may, and then I'll rejoin then. Yashovardhan sir, you were mentioning that we are setting up infrastructure, this is excluding the plant we have, or?

I could not understand that.

No, I meant to say we've been sharing updates about this every quarter. It started with setting up marketing teams 2 years back, which has now reached to approvals from customers from various geographies.

There is no specific region that we are targeting. US also is a good potential.

Europe is one of the biggest markets for us, and Japan also is turning out to be, but it is very initial to discuss any specific development. I just wanted to explain that our efforts are all over.

):

All right, sir. I'll join the queue.

On the tariff, you please answer in the follow-up, how has tariff impacted, ₹118 crore revenue from USA, how has tariff played its part there. Thank you.

Hello. Am I audible?

Yes.

Good evening. Most of my questions have been answered.

Again, the previous participant, I think, asked a question on the tariff. If you could kind of elaborate on the impact that they had on the US side.

Did we have most of the exports from India, or exporting from Thailand? Any clarity on that?

Tariff have not affected the volume or the business because we are under Section 232 where US has put tariff against all the imports, whether it is coming from India or Thailand or China or Mexico. Okay?

We are at par with all other countries. It has not affected.

It might have affected the customers there that they have to pay extra price for the product. Your question on-- We've been basically able to pass on that tariff

to the client, right?

Yeah. Definitely.

Definitely. The sales revenue includes the tariffs, which comes under our USA entity, okay, which is consolidated with this.

Yeah. I have answered earlier question also with this.

Okay. Correct.

Secondly, on the Chennai plant, you previously mentioned that we're taking kind of low-margin sales in the Chennai side to kind of fill in the capacity, and you also mentioned that there has been a disruption because there's a lot more capacity than the demand currently, there's increased competition and consolidation happening, but yet we're increasing our capacity in Chennai. We're actually doubling it.

Any reason for this increase in capacity when the margins are in such a big pressure and also there's a pressure on the raw material sourcing, there's also pressure on the supply from us to the customers in Europe and US? If you could kind of give me a trajectory of why we're increasing the capacity in Chennai right now.

No, no. It's not that we are making a big investment.

Now we're not selling any customer from Chennai where we are losing money. Okay?

All the customers supplied from Chennai are profitable, one. Number two, we don't want to lose the market share.

Number three, increase in production reduces our variable cost also. Okay?

We want to be in the game. Okay?

In a competitive market, if we are contributing to our profitability, we do the business. Okay?

This I must have told in respect of earlier kind of margins, 18%, 20%, okay, which are not there, but 13%, 14% is a decent margin to even plan an investment. Yeah.

Okay. Currently the sales from Chennai are also at-- Ma'am, may we request you to rejoin the queue?

The participant will also... Yeah.

They are in the range of 13% to 14%? Yeah.

Yes,

yes. More.

Yeah.

Okay. Got it.

And--

Thank you for the follow-up opportunity. Sir, we have mentioned that we have raised a hike or raised a price or passed on the cost from Q1.

Is it fair to assume that the 84, 85, 86,000 average realization would improve about 90,000 for this FY27?

It has improved.

It has gone beyond 90,000? Is my understanding right?

Yes. Yeah.

Yeah. This we are taking price hike, it applies to all across world?

Like USA, Europe also we would be getting better realization? How is their agreement with us?

Is it same like India, or is it different?

No. Now, it's not that big increase there because dollar has become strong.

We have been able to pass on a little bit because for export, we look at the international prices of raw material and we calculate from there. There is an opportunity to import also.

If the prices in global market is lower, we do import raw material. Global pricing is done on the global price of wire rod.

Otherwise, we can't remain competitive in the global market.

Got it. Sir, I can see that realization for our subsidiary, which is combined Thailand as well as US, their realization has also improved this quarter and which has helped us protect gross margin there.

Despite increase in realization, we have seen that the margins have declined by 400 basis points on EBITDA levels. Is it fair to assume that in Thailand and US subsidiary combined together, we would be doing EBITDA margin of around 9%, 10% only?

Or what would be the levers which would improve margin there?

No, no. I had in the very beginning said that India EBITDA margin declined because of the higher price of raw material in this last quarter, January, February, March, which has come back to same because we were able to pass on the price increase to our customers.

Our customers agreed to buy at a new price. Okay?

Yes, yes. I'm asking about Thailand and US subsidiary.

Thailand and US subsidiary are same. There is no change in their business.

No substantial change in the business.

We are we are doing 9% margin there, 9% EBITDA margin for quarter 4 in our subsidiary, which was around 12%, 13% which was around 11.4% last quarter and 13.5% in quarter 2. What would be the range of margin which we which is fair to

assume for Thailand business? 1 minute, Pranay.

Thailand EBITDA margin for quarter 4?

Almost 7.2%.

I think we'll give you this answer separately. I don't have that calculation right now.

Sir, I just want to clear up one confusion. Basically, you said that the global market size for steel cords is 70 to 80,000 tonnes.

It's the same as the wire rope, if I'm right?

Sorry, come again?

You said that the global--

No, it's different than wire rope. Saloni, I'll answer that.

It's different than wire rope. What we tried explaining is the method to produce steel cord for conveyor belt is very similar to wire rope.

By this project, we'll be able to also understand the method to make wire rope. That will give us an experience to make wire rope.

All

right, because earlier in past concalls, you mentioned that we were setting up 10,000 tonnes capacity for wire ropes, which right now it's for steel cords?

Yeah.

Wire rope and steel cord are same.

Okay?

We had bought the machines for making wire rope, but steel cord is one of the wire rope products, you can say it. Okay?

Application of galvanized steel rope for making conveyor belt, then it is called steel cord. Donon me manufacturing process and quality or there's not much of the difference.

Okay?

Yes, sir. Sir, only just to summarize what you have mentioned, if you could just hear me out, sir, firstly, you mentioned about the general auto industry slowdown part.

If you could just throw some more light on to explain that ki April weak hoga ya May kamzor rahega. Secondly, on the absolute-- Haan, nahi.

Humne aisa nahi kaha kabhi.

We are not expert of auto industry. We continue to see a good demand from our customers, which are tyre companies.

):

Sir. Sir, can you give me the absolute impact on the EBITDA because of the increase in RM which we do not pass on?

I told you, it is about 4%, 4.5% in the EBITDA margin. If you look at our raw material consumption percentage from 57% has gone to 63%.

):

Okay. This will normalize in Q1?

Sir, yeh normalize hoga Q1

se?

Yeah.

Yes. Thank you for the opportunity.

Sir, you mentioned to one of the previous participants that ₹88 crore capital work-in-progress includes ₹25 crore, ₹30 crore of Chennai capex, which we have not yet capitalized. May I know the reason why we have not yet capitalized those because plant is fully operational?

Nahi, machine nahi nahi nahi. Machine abhi toh raste mein hai.

Advance diya hai machine supplier ko.

Machines are on the way. Some machines are arrived, which are to be installed and put to use.

Unless we put to use and start doing commercial production, we cannot capitalize.

These are the machines which are still in transit, and this is the reason why we will be needing only ₹25 crore more for addition. Haan, usme sab aa gaya.

Right. Haan.

Haan.

Yes.

Thank you all. Sir, would you like to make any closing comment?

Yeah. Same comments, unless there is a global change in the situation or something new comes up, I think Rajratan is on a path to growth.

Okay? This year, we have shown a good growth last year, and we are going to show a good growth next year also.

Keep watching, keep in touch, and keep looking at Rajratan critically. Thank you for asking very critical questions.

We would love to answer all the questions, but because sometimes all our answers become counterproductive for us, we don't want to share more information than this. I think we are quite transparent and very, very transparent and straightforward with our investors.

Thank you very much. Bye.