Thank you. Good morning, everyone, and welcome to Bansal Wire Industries' Q1 earnings call.

Joining me today is Mr. Ghanshyam Das Gujrati, our CFO, and I trust you've had a chance to go through the results, press release, and investor presentation, all of which are available on the stock exchanges and on our website.

Now, before I delve into specifics of the quarter, let me spend a moment to touch upon the operating environment during this quarter. This year, we entered the quarter with an added layer of complexity as the ongoing geopolitical tension in West Asia created near-term volatility across global supply chain, leading to a temporary disruption in the availability of natural gas.

Consequently, profitability during the first half of the quarter was impacted by half by higher input cost and operational disruptions. However, business environment improved, the conditions improved meaningfully in the later half of the quarter, enabling us to a gradual recovery in operations.

I would like to emphasize, however, that we responded to this situation with agility. Through a mix of operational recalibration and increased reliance on alternative energy source sources, we were able to progressively restore production levels.

For the quarter, our sales volume stood at 1,12,000 roughly. More importantly, our operating capacity as of today stands at around 6,80,000 tonnes, and we are pleased to state that we are back to the normal level of operations with steady and comfortable margins.

On strategic front, the quarter had actually been quite eventful, with several of our key growth initiatives crossed meaningful milestones during the period. In our steel cord business, we received our first trial order from one of India's leading tyre manufacturers during the last quarter.

Given that domestic demand in this segment is largely met through imports, this milestone validates the capabilities we have built and marks an encouraging step in our journey. While the qualification progress is rigorous and typically takes time, but we are pleased with the progress that we've made so far.

Our IHST wire business continues to make good progress and has been ahead of our initial expectations. Customer approvals are progressing well, and we are seeing encouraging traction as the business gradually scales up.

We also expect our OHST wire business product to commission shortly. Therefore There Together, these products strengthen our speciality product portfolio and position us well to address larger opportunities in higher value-added segments.

On the B2C front also, we made meaningful progress during the quarter with the introduction of our new range of steel wire products for the farming, fencing, and poultry segment. The customer response has been encouraging, with these products contributing approximately 10% of our sales already during the last quarter.

This marks a promising new growth avenue for the company and reflects our broader strategic focus on diversifying our product portfolio while strengthening the Bansal brand beyond its traditional industrial channels. I'm also pleased to share that we generated a free cash flow from operating activities to the tune of about ₹120 crores during the quarter, which reflects the continued discipline we are bringing to the working capital management and overall capital efficiency, even in seasonally soft quarter impacted by these operational challenges.

Now coming to the outlook, while the quarter did witness subdued demand and some destocking at the customer end, our assessment on the underlying business is that our fundamental challenges are almost over, demand indicators are gradually improving, industrial gas availability is easing, and our strategic initiatives are all progressing well. Looking ahead, we are still working towards achieving a growth of 20% for the rest of the year.

This confidence is anchored in a few things. First, our business continues to gain market share, our core business especially continues to gain market share across all end markets, driven by stronger customer relationship and a widening product mix.

Second, our speciality portfolio is beginning to contribute more meaningfully as approvals advance and volumes scale up. Finally, our capacity, both installed and being added, gives us the runway to support this growth without disruption.

Continuing to gain market share remains at the core of our growth philosophy. It is what has driven our journey so far, and it remains our sharpest focus area, even going forward.

We are increasingly seeing the tangible outcomes of the investment and strategic initiatives undertaken over the past few years, and we remain confident of creating sustainable long-term value for all our stakeholders. With that, I will now hand over the call to our CFO, Mr.

Ghanshyam Gujrati, who will take you through the financial highlights of the quarter. Thank you.

Thank you, Pranav sir. Good morning, everyone.

Let me take you through the financial summary for the quarter of the FY27. Our revenue for the quarter is stood at ₹1,168 crores, reflecting a growth of around 25% on a year-on-year basis.

EBITDA for the quarter came in at ₹57 crores, and net profit for the quarter is stood at ₹20 crores. As Pranav sir already mentioned, our sales volume for the quarter is stood at 1,12,000, as compared to 1,04,000 metric tonnes in quarter one FY26.

While the quarter one is seasonally a softer quarter, and the temporary industrial gas shortage impacted production during the part of the quarter, underlying the demand across our end market remained reasonably fine. On the cash flow side, we delivered a heavy operating cash flow of ₹121 crores during the quarter, reflecting our continued focus on tightening working capital cycles.

With that, I will conclude my remarks. Thank you.

Hi team. Good morning.

Am I audible?

Pranav, just firstly would like to hear from you that how will you read this result for the quarter? Pranav, let's say if this war remains for another few quarters, as the oil price is again at the elevated level, and then how does Bansal Wire reach with respect to the growth and the margin per se?

Will this issue again put this on the growth and margin or are we ready to move with the strong guidance and the same strategy as given?

Fine. To answer that question, let me break our Q1 into two parts.

The first 45 days is when we saw an exponential increase in all our consumable prices, majorly gas and other packaging and other consumables, to the tune of about ₹5,000 a tonne on blended basis. Now as a company, we took a very conscious decision not to pass this over to our customers on the firm rate of orders that we already have.

We generally carry about 30 to 40 days of orders with us. That 30 to 40 days of orders, as a company we took a call that we will absorb that cost.

Because we've been with these customers and they have supported us for such a long time, we want to support them in this time and not renegotiate on the committed orders. That went with about ₹2 a kg EBITDA margin.

We took a hit from ₹7 a kg blended, and we came down to ₹2 a kg wherein we absorbed all that cost. Now once we had that cost increase, the new orders that we booked were again with the right prices.

There we were getting the ₹7, even in fact ₹8 a kg blended margin. The second half of the quarter went with ₹7 to ₹8 a kg margin.

In fact, ₹8 a kg margin, but if adjusted with the overall blended, it came down to ₹7 a kg. This is how the first quarter was.

After the 30-40 days order book, we were back to normal. The only disruption for us occurred was that our volume was not growing by 20% because there was a dip in demand.

Now as of today, even with all this crisis today, we see that the demand is there. We've been able to grab higher market share, and the B2C segment also helped us in the last quarter to gain market share.

As of now, even with all these cost escalations, this has been passed on and we are back to the ₹7 to ₹8 a kg EBITDA levels. Which gives me a confidence that we will be able to achieve our target for the next three quarters of the year.

Understood. Just a follow-up on the margin and the pricing which you told that ₹2 a kg that we absorb instead of passing it to the end consumer.

On the margin, though we run a cost-plus model, is that the reason behind the margin during the quarter has impacted and quite badly to I guess four, four-odd percentage?

We operate at a cost-plus model wherein any increase and decrease that we take in our raw material or even consumable is passed on to the customer. Now in steel, we carry about 30 to 40 days of stock.

Now to create a natural hedge in the system, what we do is that 40 days of inventory is also covered with 30 to 40 days of fixed-rate orders. That we do not get into a cycle of commodity pricing.

In this case, that strategy affected us badly because we already had 30 to 40 days of order book, and the cost escalated drastically immediately. It was not that it will escalate from the next orders.

It escalated immediately. Now in this case also we could have passed this on, but due to the relationship that we've had with all our customers, we tried to support them and not renegotiate in the already committed orders.

The day we got an increase, from the very same day, any new orders that we booked were with an escalated price. Any new orders that I booked from 1st of April also, I was maintaining my margin.

Therefore, we took a temporary hit of 30 to 40 days of order book. That is all that was.

Other than that, whole quarter we have operated on regular margins.

Got it. From next quarter onwards, we'll be back to 7.5% to 8% margin?

From almost May 15th, we are already back to ₹7 to ₹8 a kg margin.

Superb. Superb.

That is why you see a blended 4.5 or ₹4 a kg. Otherwise, the first 45 days we operated at ₹2 a kg EBITDA.

Got it. Okay.

My second question on the steel cord. We secured a first trial order from the leading Indian tyre manufacturer.

I just wanted to understand a basic understanding that first we are shifted from the pilot project to the trial order in a couple of quarters we alluded, and which means approval as a steel cord supplier, and we start getting order book from the respective tyre manufacturing company. Is that my understanding correct?

In the whole process there are two stages. One is a sample approval, and then it goes to a field trial or bulk trial.

We've passed the sample approval stage with most of our customers. We are on to the second stage.

In fact, there were some customers that were very pleased with the results that they got in the sample approval. Therefore, they skipped the second stage of a field trial and moved directly to bulk trial orders.

This one of those customers who skipped the field trial process, and they have shifted to directly product trial. We've received the first trial.

There are stages of four trials to be held in this particular case. With a couple of months for each trial, I think we should be there.

Okay.

If you can share the quantum of the order book from the manufacturing company, and if I'm not that MRF that's you can share?

I can't comment on the name, but what I can tell you is it is a trial order, there is no order book honestly there. Once we pass on these stages, then we will get a confirmed order book.

When are we—

Right now this is on a trial stage.

Okay. When are we expecting to get the final order book from this kind of customers?

We will keep you updated. It is still to be seen how long they take to try it out.

Then we have to sit with them in the second trial. How all of that works.

The results of all of those will define the timeline. Generally, from our experience till now, we see that it will take about two to three months for each stage of trial.

If we take, let's say, four trials or three trials, it can take up to what, six to eight months. We'll keep you updated.

This is not the only customer, we are expecting more trial orders in this quarter also.

Okay.

From other customers? From other customers.

Right.

My another question on this CFO that we have, I guess during the quarter that we raised to almost ₹800 crores combined for FY27, FY28. What has led us to accelerate the guidance for CFO, as earlier I guess we were supposed to be at ₹600-odd crores?

If you can just throw some light on it.

Sure. The ₹600-odd crores was a guidance for last year and this year combined.

Last year our target was ₹250 crores, against which we did almost ₹330 crores. This year our target was ₹350 crores, against which even in the last quarter after these challenges and even though we did not get a good EBITDA or a good PAT, we still were able to manage ₹150 crore ₹115 crores of cash flow.

I think our initiatives have paid off and we're on that journey. We're quite confident, given the last five quarters that we've been able to maintain our cash flows, to reach that number.

Honestly, if you don't target, you'll not be able to achieve. It's important for us to target this kind of a number to achieve it.

Right.

Are we now back to the 75% utilization levels, since the facility has been started?

Right now the demand is back, we're operating at a good level.

Thank you, sir. Thank you so much.

Thank you.

Hi. Good morning, Pranav.

Pranav, you mentioned that we should be back to 20% kind of a growth for the remainder of the year. I guess you were speaking about volume growth.

If we consider ₹7 to ₹8 of EBITDA per kg, last year we were having closer to ₹6.5 to ₹7. Does that mean that even on a profitability, on a per tonne or a per kg basis, there can be a 10% increase, and therefore at the EBITDA level we are looking at 20% volume plus 10% EBITDA increase which makes it 30% kind of EBITDA increase?

Is that how you kind of think about it?

Yeah. Good morning.

Yes, we are looking at a 20% volume growth. Our EBITDA guidance would also still remain 20%.

Although I agree that we started this quarter with a higher EBITDA base, but we have three quarters to go, you never know. 50 paise upar niche ho jata hai in a business.

We would like to be a little comfortable here and safe if we're getting let's say 20% volume, then our EBITDA will also at least grow by 20%, if not more. Anything upward of this is still to be seen.

A lot of uncertainty still remains in gas. Understood.

Understood. Also if you could speak about IHST, OHST wires.

What proportion of revenues and volumes would be coming from IHST today, and how large can OHST become? How exactly are the profitability metrics for these kind of wires?

IHST and OHST combined, right now we have 9,000 tonnes of capacity, which will reach to 15,000 tonnes with OHST commissioning. As a product combined, I think we have gotten good response from the customers here.

In IHST, just to give you an example, next month we are targeting 50% capacity utilization. Within this year, we see that we will reach to an optimum utilization level already in IHST, because our approvals are on a very advanced stages.

80% of the customers have already given us approvals. Only 20% remain, which are also in very advanced stages.

I think, yeah, this product has done well. On the EBITDA side also, although we do not see meaningful EBITDA today because we're operating still at let's say 35-40%, but once we reach an optimum capacity utilization, I would say that we can expect similar EBITDA like we are thinking of steel cord or something like that in percentage.

Specialty wire portfolio, we look at a higher EBITDA than our regular business, which is what we will get in IHST as well.

Sure. On a per tonne basis, how much does that work out to be?

In IHST, I would say about ₹10 to ₹20 a kg, in that range. Understood.

Understood. Lastly, on the B2C business, of course, this business has scaled up quite sharply and in a fairly short time.

What is the ambition that we are having? What are the targets that you've set for yourself in the B2C business?

How exactly does the profitability differ from our conventional B2B business? Sure.

The B2C segment that we have tapped into, this is in the low-carbon side of business, which contributes to about 50-55% of my total volume. Now in that low-carbon, our ambition is to reach 50% or more through B2C.

So 50% of my business in low-carbon should come from the B2C segment. On a blended basis, that would mean 25% of my total sales should come from B2C.

That is the ambition. From 5% to 10% is what we have gained in the last one year.

We've doubled our market share in B2C or our sales in B2C, sorry, last year. This is the kind of growth that we have already seen, although we were operating at a lower base.

I think we still see a lot of growth potential here. A lot of our initiatives have paid off well.

That this is a good segment, and on the margin front also, this is better than our B2B side margin. I would say about 20-30% extra EBITDA per tonne is what we are able to get from the B2C segment as compared to B2B in the low-carbon front.

Perfect. That's helpful.

Thanks, Pranav.

Thank you.

Hi, sir. Am I audible?

Yes. Sir,

can you also provide the EBITDA per tonne for the OHST wires?

As I said, OHST, IHST combined, we are looking at a ₹10 to ₹20 a kg EBITDA. It is a little early to say right now, but yeah, this is the kind of range that we're targeting.

We will reach there once we reach an optimum level of utilization, which will be within this year.

That would be 70% to 80% utilization?

Yeah. Once we reach 60% plus is when we will start to breakeven, and I think 70-80% is when we should see these margins.

What sort of [unclear]—

Sorry, ma'am, can you repeat this?

What capex are we targeting this year?

As a company now, from the last one year we've been working a little differently from what we have been doing in the past. Now, our thought process is to put in about ₹200-250 crores every year to keep growing at 20-25% kind of volume.

We'll cap our capex at about ₹200-250 crores every year to give us runway for each year. This year also should be ₹200-250 in total.

Sir. All right.

I'll get back in the queue. Thank you.

Thank you.

Good morning, everyone. Other expense this quarter has increased by ₹26 crores.

Can you roughly break that into how much was due to extra fuel cost and how much was due to additional costs with the new specialty plant whose commercial production has not started? Roughly, maybe 50-50, or 75-25, 25-25?

I would not be actually able to give you some specific numbers here. What I can say is on the gas front, our cost has almost tripled in some plants,

and

in some plants it has increased by almost 100%. Blended, I think yeah, our gas cost has increased by about, let's say, 1.5 times on an average.

Okay.

And— That is definitely there.

Okay. The new specialty plant, the new steel cord and B2C segment, will we be able to book any meaningful revenue in FY27?

Already in the first quarter, 10% of my revenue has come from B2C.

Okay. Which which

which is only growing every month. Although for B2C second and third quarter are seasonally soft quarters.

First and fourth quarters are better, but still we we should see meaningful growth from the B2C segment. In the specialty front also, IHST, OHST, as I said, this month we are targeting next month, sorry, we're targeting about 50% capacity utilization.

Within this year, we are looking at an optimum utilization, about 60% to 80% kind of a capacity utilization by the end of this year we are looking at. In IHST and OHST.

In IHST especially, OHST will also commission by the end of this year. Next year, we should see more numbers coming from OHST.

Steel cord also, we've been making we've made meaningful progress by getting our first trial order, but yeah, this there is still a long process to go here.

Okay. Thank you.

Yeah. Hi, sir.

Thank you for taking my question, and I hope I'm audible. Sir, my question is basically on your volume guidance.

Given 20% growth, and if I do the numbers, it basically implies almost 1,45,000 kind of volume in the coming quarter if I divide it by three. What is giving you the conviction of having such a high volume growth?

Is it new customer additions or new products? What is giving you that confidence to do that 20% volume growth?

Overall, in the last 20 years also if you see, we've grown at about 20% every year. We have a track record of growing at 20%.

This year should also not be very different. In general, just to give you some basic understanding of how we've done that, if you divide the 20% growth, you can divide it into three equal parts.

One-third of the growth comes from our regular customers by increasing market share or just by growing with the customers. One-third comes from existing customers.

One-third comes from new products that we get into. Every month, almost our R&D team develops 20 to 25 new SKUs.

Every year, we have a target of developing 25 to 250 new products. This product mix also gives us this kind of an increase.

All these three combined, we have generally been able to maintain the 20% growth overall. Some year it could be a little less, some year it could be a little more, but 20% average is what we have grown so far also.

Sir, why I'm asking this question is if I look at the numbers, then it basically implies over the next three quarters almost 1,45,000 kind of volumes, which is almost 85% capacity utilization. Is that a fair assumption on the numbers?

Historically also, we have maintained 85% to even 90% capacity utilization. In fact, this is a sweet spot for us.

This is where we get the best capital efficiency. With that being said, we started this year with already 6.8 lakh tonnes of capacity in hand and 60,000 tonnes of capacity that we can commission whenever required.

Other than that, we

as a company, we've made a strategy of always starting the year with 25% excess capacity available so that we can grow at 20-25% throughout the year. On the capacity front, I think we are covered.

We faced some hiccups in the Dadri facility when we started into a green facility. It was a greenfield project.

Now even those hiccups are clear and we are seeing a good ramp-up happening there. As of today, we see a good demand, and as of today we don't see why we will not be able to meet that demand, because we have the capacity, either in hand or at our disposal whenever required.

Understood, sir. Great to hear.

Just last final question is on margin. We operate on cost-plus basis, suppose once this issue of geopolitics and war, etc.

get resolved, will we also have to kind of take any kind of inventory hit or how will it function when the prices move in an opposite direction, we'll have to again pass it on to our customers? The inventory that we will be holding, which is about 30-40 days, again the hit will have to be taken by us?

Sir, as I explained earlier, we have kind of created a natural hedge in the system wherein the inventory that we have, about 70-80% of that inventory is already booked against firm rate of orders.

Therefore,

whether there is an increase or decrease in my steel prices, it is passed on to the customer. Any inventory loss also is passed on to the customer.

Now here the only difference could be that in one quarter our opening stock and closing stock prices you might see a little differently. If we take a loss in one quarter, the second quarter will cover it up, because we already have orders in hand for those prices.

That is not going to be an issue for us. In terms of consumable also, any increase/decrease is passed on to the customer.

In this case, however, in the first quarter, our only issue was that it increased suddenly, our consumable prices, from the very same day. We tried to support our customers here as much as we could.

Here in also, all new orders that we took was within increase. This principle has worked well for us so far.

We've seen a lot of these kind of crises before and we've come out of this flying, yeah.

Understood, sir. Great to hear, and best of luck, sir, for future.

Thank you so much.

Thank you.

Hello. Yes.

Hi. Thanks taking my question.

My question is with regard to what happened in the current quarter, seeing that we had a margin [unclear]

Sorry, sir, can't hear you,

yeah. Hi.

Quite recently [unclear] recent quarter

Hello. Am I audible?

Yes, sir.

I just wanted to get an brief overview of the industry demand. Previously we had mentioned that overall sectors are not performing, but automotive was the only sector providing the demand.

How is the industry landscape right now? Have we have demand overall, or only specific sectors are providing the demand?

Sir, I'm not able to understand your question properly. Can you please repeat?

Yeah. I was asking that previously we had mentioned that the demand was slow from other sectors, only automotive was the sector which was having healthy demand.

Has the industry landscape improved and now we have demand from all the sectors? That is what I just wanted to get a brief overview of the demand side.

I would say that we see demand from almost all sectors again. Even our exports have started doing well.

Auto and automotive still remains strong. With that, some of these initiatives like the B2C segment and specialty also has started helping us now, specially the B2C, in terms of margin as well as quantity.

Overall, I think things look positive in almost all sectors. Second and third quarter are generally a little weaker in infra, but yeah, overall still good.

Okay. My next question was that like we had a one-time hit on our raw material margins due to the consumable prices going up, is it possible that we might see a one-time gain as well now that the prices have already eased down as you already just reflected in one of the previous answers?

That is a possibility, but that depends on how the prices move, how suddenly the prices move. If it happens over a period of time, then it is all passed on to the customer.

If it happens drastically wherein, if we see a drastic change or decrease in the prices, we could benefit from that gain also.

Okay. Thank you so much.

Thank you.

Hi. Thanks for the opportunity.

Hope I'm audible.

Yes, sir.

Okay. Sir, I'm a little new to the company, just wanted to understand our product portfolio, specifically the specialty segment that we have recently entered, the kind of rational that we have behind entering these segments, the margin differential, if any, compared to the conventional products, and the capacity that we have for such products.

Thank you.

Sure. As a company, sir, we have products for almost all segments.

Our major segment would be automotive, and then consumer durable, power and cable, infra, general engineering, all these kind of segments, agriculture, poultry, on all of these segments we have some or the other use case in our wire. As a company, we've pretty much diversified ourselves as much as possible in other areas.

Today, no segment for us is more than 25% of my total sales. Similarly, no customer for us is more than 3% or 4% of my total sales, we've tried to de-risk ourselves here as much as we can.

Now just a natural thing in our system is we keep on adding new products. Specialty wire is also a new product or a new vertical that we have recently added.

This will help us for the next 20 years to keep growing at 20% or at a high pace. This was just a natural addition in our product mix.

Specialty wire, we see a good opportunity. We are in most of the products either we are the first or the first of maybe one or two companies in the whole country manufacturing these products, and we've identified here all high-margin items with potential of high-growth areas also.

For example, IHST, OHST, they are products used in automotive majorly, and in the automotive also, EV is a large part of consumption here. Similarly, for steel cord, this is a product in which we are the only or the first Indian company to get started, and these are all import substitutes.

These are high-growth areas with high margin or a higher barrier to entry. This takes a little time.

That is what we've done in steel cord. It has taken about one year already to reach the second stage of approval.

Once we are in, I think these will contribute meaningfully in our top line and EBITDA. This is what it is.

If you could talk about the available capacity that we have for such products, and the kind of capex we are planning?

Steel cord, we have put a pilot project of 20,000 tonnes a year. For IHST, we have 9,000.

IHST and OHST combined by the end of this year, we will have 15,000. Right now, IHST 9,000 tonnes is what we have.

About 35,000 tonnes of specialty wire product is what we have, but once we get our first order or once we start utilizing the 20,000-tonne pilot project, we have planned for bigger expansion. As a company, our vision is to reach to 2 lakh tonnes of production within the specialty wire front.

Once we achieve some level of approvals and some level of quantities, I think our eye is towards the 2 lakh tonnes, which will help us grow meaningfully in the next four to five years.

Got it. Just one final question.

You mentioned that on the gas front, your cost has increased about 1.5x on an average. Just wanted to check what is the current status on that?

Even today our gas prices are escalated. We don't see any decrease in our gas prices today.

That is still there. Our costs are still escalated, but the only change is that all of that has been passed on.

We are operating at regular EBITDA with an escalated cost.

Okay. Got it.

Thank you for the time, and wish you all the best.

Thank you, sir.

Hello. Hi.

Am I audible?

Yes, sir.

Yes. My first question is regarding what's happened in the recent quarter.

As we've seen, our margins have dipped. Us, we being one of the largest players, we might have absorbed it better than most of the industry.

How are we trying to take advantage of the situation where some of our weaker competitors might be facing a more turbulent period? Sir,

by grabbing market share, honestly. As a company, we've been grabbing market share.

The industry is growing at 7-8%, whereas as a company we've grown at 20% all these years. The thought process is to grab market share every year.

Now in only in first quarter, it is not that we have come out of it weaker or our competitors would come out of it weaker. In fact, I would say we are one of the very few companies who've taken this hit wherein we took this call of not to renegotiate in the old orders.

A lot of other companies might not have. We have been in this industry for 85 years and our customers have supported us and brought us to this level.

It was yeah, we tried our best to support them today,

yeah.

Going ahead, we already have capacity, the only thing is that we have to utilize it.

Yes. My second question is regarding the working capital.

As I've seen, we've improved our trade payable days by taking some payable financing, so that has improved our operating cash flows. That is just substituting one liability item with another.

Are there other improvements that we are making to our working capital that will make the OCF more sustainable in the long run?

Yes, of course, sir. This is only one of the initiatives.

We have taken two to three different initiatives everywhere. Our inventory days have also come down, and they will continue to keep coming down in the long run as and when we operate at a higher base.

Those operational efficiencies will come in our system or have started already coming in. Similarly, we have done a lot on terms of our receivable days also.

We've actually been able to bring down our overdues to a large extent, and now we are also renegotiating wherever we can with our customers to bring down our receivables. In the next one or two years, you will see a big change in the receivable pattern also that we have, which will be a structured change of why we'll be able to maintain this.

Could you comment on why we are not able to get payable days from our suppliers? Because as the largest player, we should have some negotiating power over there.

Why are we not able to get it, and why do we have to rely on payable financing?

As of now, we do not want to negotiate with our suppliers and get payable days, because that will also in some or the other way bring down our negotiation power. Today we have structured it in such a way that to our vendors, we are still paying advance, which gives us a lot of leverage in the market when we have to purchase.

We are the largest purchaser of wire rods in the country today. This advantage is very important for us to maintain.

There must be some raw cost advantages you might be getting. Could you comment on that?

Because we are the largest, I would assume that we should have a good pricing, and because we are the company that pays in advance, that should mean something. I can't give you an absolute number, but yes, this definitely helps us.

That is why we've been able to grab market share and still grow profitability over the years.

All right. Thank you.

Thank you.

Yeah. Hi, Pranav ji.

Am I audible?

Yes, sir. Yeah.

My first question was regarding return ratios in the specialty business. In earlier concalls, you had mentioned that for 2 lakh tonne steel cord capacity, we'd be needing around ₹2,000 crores of capex, and peak revenue potential for that would be around ₹2,000 to ₹2,500 crores, right?

It implies a pretty low asset turn of around 1x. If I do the math, even with a 16% EBITDA margin with 1x asset turn, at the end our ROCE would still be 16%.

If I see the past two quarters, even without specialty, we are doing 16% ROCE. At the end, specialty business is not adding any ROCE to our company.

Would you like to comment on that?

Sure, sir. Just to do some maths again, on 2 lakh tonnes, we will be able to maintain about ₹600 to ₹800 crores of EBITDA on an investment of ₹2,000 crores or ₹2,500 crores.

This is the overall thought process. Revenue and percentage is not something that are really stable for us.

What is stable is per tonne EBITDA and quantity. In the specialty wire front, which is majorly steel cord and hose wire, we are expecting this kind of a range.

Therefore, we see a good ROCE. Another figure again is that even in our current business, we are trying to improve our ROCEs.

As and when our low-carbon wire increases and with all the initiatives that we've already taken like B2C and other cost-setting initiatives, we are looking to go to 25% ROCE in current business also in a very short while. We've actually even in the first quarter we've decreased our total capital base.

Even in the current business, with or without specialty, we are looking at a 25% ROCE. That is our target and we have to achieve that.

Right, right. In specialty segment, you must have done a pretty good homework.

If we compare our rates to Jiangsu Xingda, I think it's the largest player in specialty segment, a competitor of ours. Can we compete globally with them, or domestically I got your point.

Some quarters back you mentioned that domestically we have an absolute advantage compared to them. Let's say three, four years down the line, if we think of competing in specialty segment globally, can we compete with them, or is it that Chinese raw material prices are lower that export would be totally out of our domain?

Yes, sir. You're absolutely right.

Export for us is not going to be a good or lucrative business because of the raw material price. I believe as a company today, I can compete with any Chinese manufacturer on an equal cost basis.

If I was to get the same raw material price, I can compete with him any day. Today, our raw material prices in India for especially this kind of business, we get a ₹10 to ₹15 a kg higher price.

That is not a call that we will be able to absorb in this product. That is 50% of my margin.

Our target market for this is India, and that is a big enough market. Even when we achieve 2 lakh tonnes, we're not looking at more than 45-50% market share.

Today, 60-65% of the market is being served through imports. This is all that we can replace, which is big enough for us already.

Got it.

Got it. Final question is regarding our future capex strategy.

Over the past two years, we've been pretty aggressive with the capex, and somewhere our utilization levels have suffered. Do you have any number in mind that in future, a certain number when we reach in utilization, after that only we'll be doing future capex?

Because what happens is once the infra growth slows, Pranav ji, we'll be left with excess capacity, and it would hurt our financials. That's why I asked.

You're

absolutely right, sir. As a strategy, and one unique advantage that we enjoy here is that more than 50% of our equipments we manufacture ourselves.

We are backward integrated into manufacturing our own machinery, which gives us a lot of flexibility in terms of deploying our capex. Today as a company, we need land and the basic infrastructure.

Equipments, we are very flexible. As and when we see demand in a particular segment is when we expand.

We don't have to plan a year or a year and a half in advance. We only have to plan six months in advance to put up new capacities.

Therefore, the strategy is to start the year with 20-25% excess capacity to enable us to grow at 20-25% for the year, not more. Even this year, if you get it, we started with 6.8 lakh tonnes of capacity, which is 20-25% extra capacity for us to grow.

That is the only capacity that we need. As a company, we've capped our capex to about ₹200 to ₹250 crores this year.

At the current base of EBITDA or revenue that we have, to grow at 20% we need to deploy ₹200 to ₹250 crores every year. This is what we will keep on doing each and every year.

There is not going to be one year of very high capex as of now, other than the specialty, of course.

Right. Thank you.

I think that's very helpful. Thank you, and all the best for the future.

Thank you, sir.

Pranav, my question was also on vendor financing. Just want to understand what's the roadmap over there to what extent do we want to keep doing vendor financing.

At the same time, is there scope of getting receivable days down sharply as the B2C business scales up involving channel financing as well?

Sir, we have already started doing a lot of channel financing with our customers. We have also renegotiated with a lot of customers wherein we could see that while maintaining market share, we could reduce our receivables.

Other than that also, there is a lot of scope on the receivable side. That is definitely in our strategy, and this year and next year most of our cash flows you will see will also come from receivable days going down.

That is definitely one of our main strategies. With that being said, there is a lot of scope in increasing our payable days.

At least for the inventory carrying days that we have, we would want to substitute that with days payable. A bit of both, honestly, can help us bring down our total capital base.

Understood. That's helpful.

Thanks, Pranav.

Thank you for taking my question again. I had a bookkeeping question.

Previously, we had mentioned that we are planning to sell our land slide from Sanand facility, but we don't see it being represented as an asset held for sale. I believe that it's in the second quarter.

Could you just shed light on that, please?

Ghanshyam ji will take this question. Yeah.

Actually,

that Sanand facility, we have that Sanand facility that is [unclear] of India, and if the additional land is available to us, but we are thinking about that, nothing more than that. We are doing that our plant is running there, and that it will be there.

Hello.

Yes. If I remember correctly, I think Pranav sir had mentioned that we are trying to sell it and cash it out, because we had already deferred our backward integration projects.

That is why I thought there's a bit of a confusion.

Just a correction here. It is not that we are trying to sell off the entire facility.

We have already started expanding in the Sanand facility with wire capex, about 90,000 tonnes. We have excess land, we will take a call on that definitely.

Some part of it we might sell, not completely, because we are expanding already there.

Sir. Okay.

Thank you very much.

Thank you, everyone, for joining us today. I hope we've answered all your questions.

If there's anything else, please let us know. We will be happy to answer any more questions that you have.

Thank you. Thank you again for your interest.

Thank you.