Thank you, Farha. Good evening, and thank you all for joining us on the Finolex Cables Q1 FY '27 earnings conference call.

Today we have with us Mr. Mahesh Viswanathan, CEO from Finolex Cables Limited.

We will begin the call with the opening remarks from the management, after which we will have the forum open for the interactive Q&A session. I must remind you that the discussion in today's earnings call may include certain forward-looking statements and must be viewed therefore in conjunction with the risks that the company faces.

Please restrict your questions to the quarter performance and to strategic questions only. I would now request Mr.

Viswanathan for the opening remarks. Thank you, and over to you, sir.

Thank you, Pranay. Good afternoon, ladies and gentlemen.

Welcome to this earnings call, first quarter earnings call of Finolex Cables Limited. Before I get into the explanation about the quarter, I would like to introduce Mr.

Sachin Naik, who's joined us as the CFO effective 1st of June this year. Welcome, Sachin.

Good afternoon, everyone. Look forward.

Yeah. Very quickly, a recap on the quarter performance.

As you must have all seen, we've we posted pretty good numbers, both in in terms of revenue rise as well as in terms of the bottom bottom-line improvements. While Sachin will come back to you with the specific numbers, I thought I would give you a brief on what has gone well this quarter.

Overall, there were certain product lines which did extremely well in terms of volumes. On the electrical cables side, automotive cables, battery cables, flexible wires, solar and agricultural applications, all of them did extremely well, posting fairly high double-digit growth numbers.

This is not just not a just not a price growth, it is also volume-led growth. Building wire was more or less stable, very small low-digit volume growth.

All the products had been impacted by the commodity price changes which happened which has been happening quite for quite some time now. Added to this was also the fact that post March, there have been issues around supply chain, whether available whether it relates to availability of fuel or it relates to availability of PVC.

We've been able to handle all of those changes, albeit at a higher cost, and the good thing is we've been able to pass on most of the costs to the end consumer. At the end of the quarter, channel inventory, especially on building wires, was low.

That also then it's it's reflected in the low single-digit growth in volumes for building wire. We did see a reduction, a destocking of the inventory at the channel.

Exports for this quarter was has been one of the heroes. Our exports for the quarter was about ₹50 crores, almost the entire value that we did last year.

Communication cables was one sector where the margin improvement was very, very, very visible. I had mentioned in my earlier call at the end of the last year last financial year that fiber prices were hardening, and so to the extent that we had raw material from earlier on, we were able to get a higher margin on the sales that that happened during the quarter.

Now, as and this has happened with most of the competition as well. As this material gets consumed and new material which will be at a higher cost comes in, the margin levels will come back to normal levels.

They would still be in the double digits, but not as high as what you see today. Basically, while the margins have expanded, expect this to settle down in the coming quarters once the existing RM gets consumed.

On the expansion side, I had mentioned in the last call that preforms the preform production has commenced. It has.

We are on the way to stability. Hopefully in the next couple of months, that should that should happen.

On the draw tower side, our original plan was to go from 4 million to 6 million and then to 8 million in a phased manner. In the meanwhile, we've decided to go ahead with the complete expansion right from 4 to 8 in one go seeing that there is a there is a shortage of fiber across the globe, and that shortage is likely to continue for some time more.

Overall capex for the year will still be what I mentioned in the May call, approximately ₹300 crores for the year. The additional information that I would like to share with you is that I had mentioned that the JV was doing well and had posted a profit of ₹24 crores last year.

That trend continues. In the current quarter, they generated a revenue of about ₹87 crores with a profit of about ₹7 crores.

That's the basic intro from my side. Sachin, you take over with the numbers.

Thank you, Mahesh, and good afternoon, everyone. Thank you for joining us.

I will briefly take you through the key financial highlights for the first quarter of FY '27. We've had a strong start to the financial year with a healthy growth in both revenue and profitability.

Our revenue from operations for Q1 of FY '27 stood at ₹2,013 crores as compared to ₹1,396 crores in the corresponding quarter of last year. This represents a growth of approximately 44% in revenue.

Profit before tax stood at ₹277 crores as against ₹171 crores in Q1 of last year, registering a growth of approximately 62%. Profit after tax stood at ₹221 crores compared to ₹139 crores in the corresponding quarter of last year, reflecting a growth of approximately 59%.

As a result, the PBT margin has improved from 11.8% in quarter 1 of FY '26 to 13.4% in the current quarter, while the PAT margin has improved from 9.6% to 10.7% during the quarter. Coming to segmental performance, electrical cable continues to be our largest business segment, and we've reported a revenue of ₹1,767 crores compared to ₹1,206 crores in the corresponding quarter of last year.

This represents a growth of approximately 47%. As Mahesh explained, there has been a change in the mix where segments like auto cables, solar cables, the agricultural cables have done very well.

Communication cables delivered a particularly strong performance during the quarter with a revenue increase from ₹109 crores to ₹176 crores, is a growth of approximately 62%, with margins close to 30%. Now, the business has seen a significant improvement in profitability due to certain market factors, which we will continue to evaluate the sustainability of these margins as the year progresses.

Therefore, we would refrain from annualizing the quarter 1 communication cables margin. Copper rods reported a revenue of only ₹8 crores during the quarter as compared to ₹403 crores in the corresponding quarter last year.

Copper rods were impacted by a continued restriction on the LPG availability, resulting in the rod plant being shut during the quarter. Overall, we are encouraged by the performance in quarter 1.

Our focus for the balance of the year will be on profitable growth in our key segments, building on the communication cables opportunity, while maintaining a lot of financial discipline. With this, I would request the moderator to open the floor for questions.

Hi, sir. Thank you for the opportunity and congratulations on a great set of numbers.

I have two questions. First is on the EBITDA front.

The margins we've delivered are close to 12.5% versus a 10.5% last year, meaning means last quarter, and 9.4% in Q1 last year. I just wanted to know how should we think about the underlying sustainable margins from here, and how much of the Q1 expansion is coming from operating leverage, product mix and copper pass-through versus one-off.

If you could speak a bit more on the margin profile on the exports front and the products that we are exporting. That's my first question.

Okay. I'll take the export part first.

On the exports this time, there were opportunities on the optic fiber side, those provided a fairly large margin. Now, those opportunities may not happen every month or every quarter, in terms of sustainability, I would be a little conservative on that.

In terms of the opportunities for exporting, we are now more aggressive than we had been in the past. We've been exporting in the last four months, five months, we've exported power cables, we've exported optic fiber cables, and also the traditional products that we used to export like the submersible cables and so on.

That part is continuing, while the new opportunities around power cables and optic fiber cables are what we are exploring now. There are potential leads there.

I don't want to run the horse before the cart, or rather cart before the horse. Let's see as every quarter goes by.

On the other side, on the domestic front, the margins at electrical cables side should be sustainable. We are at about 10.5%, I think, and those should be sustainable.

On the communication cables side, as I mentioned in my opening remarks, so long as the old raw material is available for use, the margins will be high double digits. As that stock gets depleted, you will see a correction in the margins.

I still believe that at the end of the year, provided the demand situation remains similar to what it is today, I still believe that you should have a double-digit margin number. It'll probably be in the low double-digit numbers.

Got it, sir. Thank you.

Sir, if you can call out the volume growth during the quarter across different categories?

All those items that we talked about, whether it is agriculture or automobile or flexibles, all of them were in the high double digits. Wires were around in the low single-digit number.

Thanks a lot, sir. My second question is on the communication cable segment.

It has been an outperformer during the quarter. Could you please speak a little bit more on the outlook, and if you can quantify the contribution from volume and value, meaning price pass-through?

Okay. Volumes have also gone up.

Volumes are up by about, I think, close to 30%. The opportunity here was that if you went through my call of last quarter, there has been an explosion of demand from data centers and usage which is riding on AI, which has resulted in a huge demand for fiber cables.

This is a global phenomenon. That is therefore throwing up opportunities for us, not just domestically, but also overseas.

Out of the ₹166 crores that has been ₹176 crores that has been reported as revenue, I think about ₹40 crores is ₹30 crores to ₹40 crores is around exports. There were opportunities to sell, which we cashed in on.

I see as the time goes by, there will be a similar demand explosion around data centers in India as well. Here, we are seeing a phenomenon where the fiber count is not just 144 or 288 fibers in a cable, that is expanding to thousands of fibers in a single cable.

The opportunity size can be substantial as large hyperscalers expand into India. We see that trend, which is currently happening in the US and in Europe, to show up in India as well.

Got it, sir. Thanks a lot and all the best.

Sir, just incremental to this, any update on the BharatNet project?

No, not really. I think with the prices as high as they are, the winners are waiting and watching.

That's helpful, sir. Thanks a lot and all the best.

Thank you.

Sir, thank you for the opportunity. Congratulations on a great set of numbers.

Sir, my first question is on the fiber prices. Sir, any indication as to what are the prices right now globally versus December '25 and your thoughts on where they will be heading from here on?

Okay. I am not able to predict where they will head from now on, but I can tell you where they are today.

The standard fiber, the technical term there is G.652.D, was somewhere around $6, yeah, about $5 to $6 back in December last year, had climbed up to $17, $18 over the last six, seven months. I think currently is settling at about between $12 and $13 per kilometer.

That's where it is today. That's the standard fiber.

More premium fibers are selling at much higher rates. Some of them have even been sold at $50 a kilometer.

Some of the exports that we did were of the premium variety when the prices were around I think $25 a kilometer. There's a mix of multiple types of fiber that have been used this quarter.

That's where the range has been. I think it is now settling to around between $11 and $13 depending on who's got what available and what the demand is at that moment in time.

That probably gives you a picture of what it is. What it is likely to be, I'm not so sure.

I am not able to predict that. Long as the demand continues to be where it is today, I guess the price will remain in this range.

Understood, sir. Sir, my second question is regarding your exports.

You did mention some numbers which I missed out. Of your communication revenue, how much is contributed from export, and which geographies have you exported to?

Out of the communication cable revenue, about I think between ₹35 crores to ₹40 crores was exports. We've exported to the US.

We've exported to Europe. These were the two main places that we exported to.

Understood. Sir, on the preform, the backward integration, you did mention in your earlier call that you're expecting the additional support to margins from the end of September quarter as the facility becomes fully functional.

Sir, how much would be used captively and how much would likely be exported from this 100-metric-ton facility?

The intention is to use all of it for making cables. Our intention is not to sell the preform.

Our intention is to draw fiber from that preform and cable that fiber.

Understood. Almost 100% captive.

How much would be the margin improvement, any ballpark, because right now this quarter, your margin is already double digits,

sir? I don't see it improving from here.

Also the current price levels of raw materials is kind of fluid. If you look at the inputs that go into it, let's say fuel, helium, for instance, was selling at approximately ₹1,600 per cubic meter.

It had gone up to ₹5,000 per cubic meter when the disturbances started in the Middle East. It is now around ₹3,400, ₹3,500 levels.

There is a little bit of fluctuation. I'm just giving you one example.

There are multiple inputs that go into it, and all of them have seen the input costs fluctuating wildly. To look at the price today and make an estimation is probably not going to give you the right results.

I would rather wait for some time before things stabilize, and you have a period of time where the Middle East stabilizes. Right now, it is a case of one day nice and two days just the opposite of nice.

I think we need to wait a little while before we predict those numbers.

Got it, sir. Would it be fair to assume that because of the preform, and once it's completely functional, almost 100 bps margin improvement can come from that because it's actually very good backward integration?

It is, but then today, the situation is that demand has far outstripped supply. That has pushed up the prices to certain levels which may not sustain all along.

Right now data center requirements have boomed, AI-driven requirements have boomed. At some point in time, they will reach if not a saturation level, they will reach a steady-state period.

Now, when that will happen, whether that will happen in six months, one year, two years, is anybody's guess. At that point in time, then the selling prices will have to cool down.

To say that I will get 100 bps over and above what I'm doing today, I think is stretching things a little too much.

Sir, actually it was not over and above, maybe the delta which I was expecting from a normalized margin to--

Maybe.

Maybe, maybe.

That might be possible, yeah.

Understood. Sir, last question from my end--

Yes, thank you very much.

Good evening, sir. Am I audible?

Very clear.

All right. Thank you for the opportunity, sir.

My first question is in the electrical cables, if you could probably for FY '26, if you could help us with the mix in terms of the wires and the various types of cables, if you could help us with that mix, a broad sense?

Typically our numbers have been like this. Approximately two-thirds is construction related, and the balance has been more or less equal between automobile, agriculture, and industrials.

Last year we introduced solar cables. That's changed the profile a little bit.

The split would probably now be 60% construction and the older three would still have about 10% 10%, 12% each, while solar would be a smaller number at this moment in time. In this quarter, of course, auto cables has grown to more than 14%.

Then we'll have to see it over a longer period of time. One quarter is probably not the right time period to define how the split would be.

I still think that going forwards, construction wire would still constitute a major portion of our revenue, followed by these four these four applications.

In terms of the whether it is wires or cables, it will be bulk of this will be effectively wires, right, the lowest voltage conductor?

All of them are wires.

All of them are wires.

I've not included cables in it.

Okay. What about cables, how much would that be, the LV cables?

LV, HV put together will be maybe another if you add that, will probably be around 7% to 8%.

Got it. My second question was with respect to the OFC.

If you could help us with assuming the current price, what would be the potential revenue at peak capacity of the preform plus drawing capacity, sir?

I think a similar question was asked last time around as well. We will have a draw capacity of 8 million kilometers.

At 8 million kilometers and assuming a average price of $11 per kilometer of fiber, then you're looking at about $88 million of $88 million of revenue if I only sell fiber and if I sell all of it.

Right. If you sell only fiber, it is $88 million, is that right?

If I sell only fiber and if I sell all of it, it will be around $88 $88 million.

If you want to use 100%, and is this 100 metric ton sufficient for 8 million fiber kilometer?

No, that's about 4 million.

Okay. You'll still have to procure from outside.

Still have to buy. If you recall our earlier calls, we said that in Phase 1, we are putting up a plant which can manufacture 100 100 tons.

Depending on how the market is, we would double that in the subsequent expansion. That is what we had said two years ago.

At that point in time, the boom in data center was not visible.

Right.

This has happened in the last six months. We will go back to our drawing boards to see what we need to do in terms of Phase 2.

We have taken one action on the fiber side that we didn't want to wait for some time before we came up with that expenditure. We are doing it together.

As far as Phase 2 of the preform is concerned, we will study the situation and then, as required, decide on whether we should spend for the expansion now or at a later date.

Got it. Just to clarify, sir, you said $88 million if you sell fiber, but what if you sell entirely the cable?

Then there'll be a value addition which will depend upon the cable design. How complicated the cable is.

If I'm only selling small count fiber cables, then the value addition may not be very high. Whereas, if I am selling complicated designs where the fiber count is higher, 96, 144, 288, or for data center applications where, like I said, it runs into thousands of cables in one sorry, thousands of fiber in one cable, then the numbers can be substantially different.

Then the value addition can be 20%, 30%. It depends on what kind of designs we get.

Understood. Thank you so much for your answers, sir.

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

Thank you.

Good evening, sir. Thanks so much for the opportunities.

Sir, I want to understand about our capability in data centers. I think we have a capability up to 1,728 fibers per cable.

If you look at data center applications, it would start from thousand thousands of fibers, as you mentioned. If you look at some of the players are into 7,000 range kind of fibers, they already achieved and they already started supplying to hyperscalers, and they are on the progress of making 14,000 to 16,000 range.

I'm just want to understand what is our capability as of now, and whether we are doing any specific capex and R&D for data center cable side. Also you could mention what are the current product portfolio which is suitable for data centers, and what are the products are in the pipeline?

Some of these are in developmental stage, I would rather not comment about them. I understand the question that you have asked, and all I can say in return is, yes, all those designs, like you mentioned, whether it is 1,700 fibers or 7,000 fibers or even 14,000 fibers, we should be capable of making those and supplying those.

Let me say it differently. We should be capable of supplying those in the not too distant future.

Are we making any steps in terms of R&D and capex, sir?

Yes to both.

Sir. Sir, my second question, the margin side mentioned about 30% for communication cables.

Just want to understand this kind of margins it's because of a higher spot contracts where the realizations are higher? Just want to understand what--

Let me explain. Let me give you an example.

Yes, sir.

Let me give you an example.

Yes, sir.

The inventory that I had at the beginning of the quarter were all sourced sometime in November, December last year. Those would have been sourced at, let us say, $X.

When I'm selling it, I am selling it at an equivalent of the current market price. To the extent that I have an opening inventory, I am benefited, and therefore, my margins are where they are at this point in time, which is why we gave that cautionary statement to say this quarter was 30%, but at some point it will normalize.

As and when I complete consumption of the existing inventory, my new cost will be what I'm buying it at today, whatever is my cost today. The delta there will definitely not be 30, but it would definitely be in the double digits.

That's the example that I can give.

Sir. The follow-up on that, what is the mix of spot and long-term contracts for communication cables?

Also you can mention about the products supplied for data centers in our product portfolio.

Sorry, what was your first point?

The long-term and spot market mix for communication cables and the product portfolio of data centers.

I think long term still would be more than half the revenue. As far as data center products are concerned, technically I'm not able to share that with you, but there are cable designs which have been supplied to people.

Sir. Thank you.

Hello, sir. Thank you for the opportunity.

Congrats on a very good set of numbers. Just following up on a couple of things you mentioned in the previous quarter.

I think you mentioned that our 8 million capacity of the additional expansion will come by Q2, but you also mentioned today that we're planning for it to go from 4 to 8 directly instead of 4 to 6 and then 6 to 8. Is this for the entire 8 million, is that the correct way to understand it?

The entire 8 will be ready by end of quarter 2. Earlier on, what I said was we would first complete the 4 4 to 6 and that would happen by Q2, and then we would wait and see how the market reacts before we go to the next level.

Seeing the current market conditions, we thought it was ideal for us to invest in the additional draw capacity right away.

Got it, sir. Sir, and just one more thing, sir.

You mentioned that there'll be a bit of repricing in terms of contracts and all, right? Is this happening in Q2 beginning or when is it happening?

You're talking about the long term, and that's happened already. That's happened in I think happened in June.

Is it there in the spot as numbers in terms of revenues, that's what I'm trying to understand.

Some of it is. Whatever was sold in the month of June is.

Sir. Got it, sir.

Just last related question is that your revenue should be much higher given that fiber prices are pulled, right? Is that correct?

For this thing because whatever we are doing as revenue this quarter is on 4 million, and I think we've done around ₹176 crores. Theoretically, should it be closer to ₹300 crores per quarter?

Again, to take you back to the earlier question that somebody else had, if I was to sell only fiber and at $11 a kilometer, my annual sale of this product would be $88 million per year. That would be $22 million.

So, $22 million times 100, if it was only fiber, would be around ₹250 crores, ₹250, ₹260 crores if it was only fiber. Then you add the cable value addition.

Somewhere around if I am selling out everything that I have, 300 is not a difficult number.

We also have some other cables, right, in this other than fiber in our communication, right? Shouldn't the segment be much bigger?

That's the part I'm--

No, okay. There are other metal-based cables there, but if you see, many of those applications are transitioning from metal to fiber.

Whether it is coaxial, which was used in your dish TV applications, those are all transitioning to fiber. While this would grow, something else would go down.

Sir. Thank you, sir.

Hi, sir. Thank you for the follow-up questions.

My next question is on the FMEG segment. It has continued to be a weak link.

I remember you've previously mentioned that we have set a target of ₹5 billion FMEG revenues by FY '28. Given the current trajectory, I just wanted to check, is this target still realistic, and what needs to change over the period of 12 to 18 months to achieve it?

I'm just curious to know why this business is holding us back. Is it a lack in the distribution phase or maybe product portfolio, pricing, or competition?

Where are we lacking in this segment, sir?

This particular quarter we had a different issue. I don't know if you've seen this from other competitors.

Fuel was an issue this quarter for many of the manufacturers. Commercial LPG was just not available, and therefore a lot of the device manufacturers, especially fans, they were not able to supply the kind of quantities that were required.

We had a quite a hot summer, but in terms of being able to supply to the market, there was an issue. I think that was a reason why you don't see too much of growth in that sector.

The second part of that group is also the conduit pipes, where, again, availability of PVC and the price of PVC that was available was a hindrance there. Those are changing now.

Unfortunately, for fans, it has changed now, but then the season is more or less gone. We will have to see how to catch up on those numbers.

The target of ₹5 billion by '28 still remains, and we are sure that we can get over there.

Got it, sir. Sir, just lastly on the copper front, copper is again at 14,000-odd levels.

Just wanted to check with you how's the channel inventory and any pricing action during the quarter?

During the quarter we changed prices once. We revised it upwards once.

That was, I think, in May. We took it up by about 3% or so.

Like I mentioned in my opening remarks, the closing inventory at the channel was lower than the opening inventory, there has been a certain amount of destocking, which should allow them to restock over a period of time now. The copper levels are high.

I'm not sure if you will be able to see the likes of $8,000 anymore.

Got it, sir. Thanks a lot and all the best.

Thank you.

Yeah. Am I audible now?

Yeah.

Yeah. Okay.

Thank you so much, sir. Sir, just wanted to understand, on the demand side as far as communication cable is concerned, I understand from an outlook point it is quite a healthy given all the demand across data center, AI-related products.

If you can quantify or maybe give us some sense around the order book which we may have or should we assume that we should be able to ramp up to 60%, 70%, 80% sort of utilization levels once the new capacity is also operational? How should we think about next one to two-year demand on the communication cable side?

Okay. The demand in our country is going to be basically telco is still going to be a significant player because many of them will still have to complete their 5G full rollouts and expansions.

AI and data centers, especially the hyperscalers, as they come into India and set up their shops, they've all announced large numbers, nobody's talking less than $5 billion, $6 billion. That kind of investment will require infra support in the form of both communication cables as well as power cables.

How long would they take to set up their basic infra, I think maybe two years for sure, the demand should be fairly robust. Post then, we'll have to see what kind of use cases AI throws up, and how one is able to capitalize on that.

Am I able to give you a number? Not really.

Again, I will refer you back to the comments from earlier calls. Our consumption of fiber per capita is still pretty low.

Our overall consumption in the country is still around 25 million kilometers per year. Compare that with China at 400 plus or even higher than that.

There is still a long way to go. I'm not saying that we will reach 400, but given the size of both our geographies, a factor of 20 is not something that we should aspire for.

I think our 25 million consumption can easily go up to 50, 60.

Understood. Understood.

Sir, if I put this question slightly differently, then is it a case wherein in the next two years maybe bulk of the growth will be driven by our consumer distribution plus telecom business, and domestic data centers will come in start contributing maybe by FY '29 onwards?

It depends on the speed of how quickly those hyperscalers are able to set up their infra. Some of them are nearing completion.

We are in Pune, and I know that Microsoft is coming up here close by with their data center, and I think it is not very far away from being completed. You would have some demand coming up in the next 6, 8 months for sure.

How we are able to capitalize on that is what we need to work on.

Understood. Understood.

Just to understand how the utilization levels could be in communication cables, would export be an equal opportunity or equal focus area at least in the near term till the time data center comes in in a real big way? Just similar to what we had it in Q1.

I understand it may not be every quarter, but could it start contributing a lot more to communication cables revenues and consequently utilization levels?

We are hoping it would.

Understood. Any visibility you have on-- I'm sorry to interrupt,

Thank you.

Hello, sir. Can you hear me?

Yes,

Thank you for allowing me to ask the question. I have two questions.

One, on the availability of germanium, which is basically raw material to fiber cables, are we facing any issues with respect to it?

Germanium tetrachloride is required for manufacturing preform. Yes, there are some issues in terms of easy availability of that item.

It is a restricted item. The lead time is pretty long.

While the usage is not in extremely large quantities, nevertheless, it is a restricted item, it has to pass through several hoops before it lands up in your place. It is a kind of a hand-to-mouth situation.

I think at this point in time, we have enough to take us through the calendar year, and more is on the way. It needs careful planning, it needs fairly tight follow-up almost on a daily basis to ensure that you have the material that you need.

Just a follow-up on this. Do we have any long-term contracts or partnership with the players which manufacture and sell these, or is it on a year-to-year basis?

No, nobody signs up for multiple-year contracts in this line. We are working on the longest contracts that we can get.

Understood. Sir, just a clarification.

Earlier you mentioned that you can do around ₹3,000 crores of revenue from fiber cable. Is my understanding right?

Sorry, when did I say 3,000?

Sir, earlier you were explaining some unit economics to one of the participants with respect to fiber cable, and you said with the capacity coming online around ₹3,000 crores of revenue can be done.

In today's call?

Yeah.

No, today's call I said if I were to sell only fiber and the entire capacity I sell at the current price of $11 a kilometer, I would be able to generate a revenue of $88 million.

Okay. That's the

peak

revenue from our fiber cable division, right? No,

no, that's only fiber if I only sell fiber. Now, if I cable it and sell it, that number will go up depending upon the design of cable that I sell.

There are certain cables where you carry only two fibers, where the value addition between fiber to cable is hardly anything. There are other designs where the number of fibers inside can go up to standard is anywhere up to 288.

Now with the data center application, those can even go up in thousands. Those will have a much higher value add.

What I said was you can add on an average between 25% to 30% on top of the fiber price.

If I'm extrapolating what the unit economics which you stated earlier of 88 $88 million

It's just a follow-up. Hello?

Hello, am I audible, sir?

Go ahead.

Perfect. Thank you so much for the opportunity.

Couple of questions, sir. Sir, when did our the expanded capacity of 8 million is expected to, sorry, the 6 million which is on fiber expected to come online or has it already come online in June, July?

No, no, we are going up to 8 million and it'll happen by August.

Perfect. For the first quarter, it was only 4 million, right?

It'll happen by September, not August, sorry.

Great, great. On cable right now, our current capacities of 8 million?

Cabling capacity is 8 million.

Got it, great. Are we expanding cabling capacity there as well?

Yes, we will go up to 10 million.

This would be also by September?

No, that would take a little longer.

Great. Sir, when you say you have probably exported for data center in your US and Europe, is it just fibers or cables as well?

We have exported both.

We've

exported fiber, we've exported cable also.

Okay. Then if you exported cable, it would be an IBR cable, right?

No, they also require other designs.

Got it. Is it right to say that, yeah, current 4 million fiber capacity, almost 60%, 70% would be utilized?

Currently? Or or

for Q1, the the on the Q1 number.

In fact, we have used up all the preforms that we had. There were difficulties in getting preforms because how tight the market is at this point in time.

To the extent that we had material, we used up everything.

Got it. In cabling, sir, utilization would be how much?

Cabling utilization, I think one plant is full. The other plant is 3/4.

Got it. Is it possible to split the revenue on cable versus fiber?

It is possible definitely, but I don't have the numbers with me today.

Not a problem. Sir, what would be the margins we would have made in the domestic business?

You showed almost 30%, 40% of the business came from exports. On 60%, what would be the EBITDA we would be making?

Not that 30 number, it will be slightly less.

There

will be slightly less because there were some contracts which were entered into last year which continued on until June.

The incremental margin only came from the export business.

Correct.

Got it, interesting. Sir, just in terms of preform sourcing, have we entered into a contract with someone or are we buying it on spot from someone?

How does the contractual terms in preform work? Just a follow-up on the same question is, let's say, if germanium is an issue right now, and we've probably foresee the issue to remain, let's say, couple of quarters, do we expect, let's say, even if our preform comes live, we will probably keep sourcing preform from outside unless and until that capacities of our own preform goes live?

See, it has gone live, it is got to stabilize.

It's a

new plant, it takes a little while to stabilize. Yeah.

No,

but then there's a germanium problem, right? Will you be still sourcing preform unless and until the germanium problem goes off?

The germanium problem is there. Not just for me, it is for everybody across the country.

There are two of us who are making it, it is for both of us. That does not stop us from making preform because we have some.

What I said was we are having what we need, but we need to follow up on almost a daily basis to ensure that it doesn't stop at any point in time. There is a lot more effort to make sure that you get that material.

The second part is the preform capacity that I have is equivalent of 4 million kilometers of fiber. To that extent, I will consume my own.

The balance, if I have to draw 8 million kilometers of fiber, I will have to buy preform from somewhere else. Yes, ideally, it would be nice to have a long-term contract, but nobody globally signs a contract for longer than a year.

Your contract for preform right now would be of a year, and that contract would have been entered at the start of this calendar year, right?

You're jumping ahead of me. What I said was nobody globally enters into a contract for more than a year.

Yes, we have certain relationships with certain manufacturers, and they're able to support us to the extent that we need that support.

Understood. Sir, the reason I asked this question, I was just trying to understand, once our preform contracts get revised, right, probably our raw material prices would go significantly up because the preform prices are also upwards, which probably right now we might be getting preform at lower levels given our older contracts.

I was just trying to understand that if you can give us clarity on this.

To some extent that is true, but then there are people who have changed their contract pricing also. Some suppliers have broken their contract midway through and have changed it.

Okay.

Got it. Sir, last question, and then I will join back in the queue.

Of course, you're probably not commenting on the order or a long-term contract, but if we want to understand what would be the export mix going forward in the quarters? One more question into this is once our fiber capacity comes live, do we expect to exit at full utilization in Q4?

If demand is as robust as it is today, then yes, that would be our effort to exit at full utilization. We'll have to see how demand keeps up there.

Great. For exports, what would be the mix?

The mix it continues towards 30%, 40% in the upcoming quarters as well?

See, export is a little longer negotiation involved. Can't really say that.

Sometimes you conclude negotiations this quarter and then the supply happens a little later. It's very difficult to predict how that is going to be.

Sir, are we looking to enter into IBR? There'll be some amount of capex going there as well, right, because that's a different machinery requirement for IBR.

Are we doing IBR right now or are we planning to do IBR for cables?

Whatever be designs the data center is looking for, we should be able to produce them, if not today, in the not too distant future.

Got it. Sir, are we engaging with any customers as of today in data center for a long-term contract?

By long term, it would be, let's say, more

Yeah. Those are things which I would not like to comment upon right now.

Okay. Got it.

Sir, do we contemplate expanding maybe beyond 8 also if the demand stays robust by the end of this year maybe?

Which is what I said. We will take a holistic view on all of that, whether we move to doubling our preform capacity, at what point in time, what else do we do, all this will be discussed and decided.

It's not for me to talk in the call, right?

No problem. Really sorry, sir, thank you so much and all the best.

Thank you.

Hi, am I audible?

Very clear.

Much of my questions are already answered. My question was on the export side.

Sir, in the opening comments, you did mention that you would be conservative basis the quarterly orders that we might be getting. I just want to understand the exports that we made in this particular quarter, what was the nature of those exports?

Were those kind of ad hoc requirements by our customer and we were able to supply to them? How are we thinking about building long-term engagements over here, we can build a sustainable export visibility over here?

One of the remarks that I made was that we are more aggressive than before on the export front, which means that we have a revamped team now which is focused only on exports. They're exploring multiple geographies to see what kind of relationships are there that we can build on a long-term basis.

There were immediate opportunities which came up from the US and Europe which we encashed upon. That doesn't mean that those are the only two opportunities that we're following up there.

We are working with finalizing relationships in multiple geographies. I hope that answers your question.

It is not just a one-off kind of a trade that we've done, one opportunity you saw and then you went and closed it. No, beyond that, it is more systematic, it is more focused, and there are people working on those relationships as we speak.

Okay. My second question was on the margins for the communication cable business.

You did mention that there would be some normalization of the margin. I am presuming it would be still higher than the margins that we make in the electrical cables division.

In the last call, you had mentioned that there would be some repricing of the long-term contracts which will happen in the 2H of the year. I guess, answering to one of the participant's question, you mentioned that that has happened post the June quarter itself.

Am I correct over here?

That change has happened towards the end of June. That is already factored in.

What I meant while I said there will be some normalization was that I think 30 is not a number that is sustainable in the long period. That's what I meant.

It should come down to something more reasonable. Whether it will be higher or lower than the electrical cable margins will again depend on what the product profile is.

If it is a complicated design, then the margins should be much better. If it is, let's say, a simple design like an FTTH cable or a drop cable, then the margins are not going to be very high, the value add is not very high.

It depends finally on what the end user wants, and therefore, how complicated the product is to make.

Okay. That would be all from my side.

All the best for your future.

Thank you.

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