Thank you, Mark. Good evening and thank you all for joining us on the Finolex Cables Q2 and H1 FY '26 earnings conference call.

Today we have with us Mr. Mahesh Viswanathan, Deputy CEO and Chief Financial Officer from Finolex Cables Limited.

We will begin the call with the opening remarks from the management, after which we will have the floor 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, Pratik. Welcome to all the participants in today's conference.

Very quick updates from my side. On the revenue side, we had a modest growth of about 5% for the quarter and for the half year it was about 9%.

EBITDA levels for the quarter were pretty decent. Quarter was up by about 26% and half year up by about 19%.

At PAT levels, for the quarter we were above corresponding quarter by about 35% and for the half year by about 21%. If I get into the product segments, wires and cables, the quarter revenues were up by about 8% and for the half year we were up by about 12%.

I know that this is modest in comparison with many of our peers, but we do have certain business lines which were facing certain headwinds. Agriculture, for instance, we had a very prolonged monsoon and the applications around agriculture, the volumes were depressed.

Building wire, in reaction to a kind of moderation in the real estate sector, the growth was more or less flat. Where we did grow was on the industrial cables and solar applications.

Auto is geared for growth in the future. Cables, we had a very good quarter.

We grew volumes by close to 60% in the quarter. Commodity volatility continued during the quarter.

We had to take one pricing action that was later in the quarter towards end of September. In the initial two months, there was a dip in the commodity prices and then it suddenly surged towards the second half of August.

From second half of August, it has been climbing, and we took pricing action in September. On the communication cables side, most product lines the volumes were muted.

BharatNet, I am sure you will have questions, we still do not have any meaningful contribution yet from the BharatNet business. Fiber prices, again, were low, continued the trend from the previous quarter in this quarter as well.

That depressed the cables revenues. We understand that there is a sign of the fiber prices hardening.

We are yet to see it, but we're waiting and watching it. On the metal-based communication cables, like I said earlier, the volumes were muted, but that is more to do with contract negotiations.

We have yearly contracts with the customers. Some of those contracts we had to get into protracted negotiation, and we are recently closing with some of them.

I think that catch-up will happen in the coming quarters. Balance sheet, as always our balance sheet has been strong.

Working capital, reasonably well managed. Slightly over a month of working capital is what we carry.

I think there we are ahead of most of our peers in that sense. On the capex, we spent approximately ₹75 crores in the quarter, ₹100 crores for the half year.

Two of the major programs, one is on the preform plant. The plant is ready.

It is awaiting production trials that should start in the next couple of weeks. The fiber draw plant, the building is nearing completion and the machines are expected anytime.

Once that is done, we hope to complete this by March end. Both the major spends that we had announced one year ago would then be completed by March '26.

With this, I open up the floor for questions.

Hi, sir. Thank you for the opportunity.

My first question is with respect to the top line. If we look at our peers, they are growing in double digits, but if you look at our top line growth, it's quite muted.

Where are we lacking on this? Any color on that?

My opening remarks, if you remember, I said the growth was very modest this quarter. I also understand that some of our peers have done much better than us.

The difference is in one two major areas. We are a rather small player on the cables side.

Although we had a fairly good growth in the cable volumes in this quarter, our base there is relatively small. In a total market size of about ₹25,000 crores, we do approximately ₹200-₹250 crores.

Whereas some of our peers are fairly big on that and their focus is on that. That is one one big differentiator.

The second, like I mentioned, the prolonged monsoon also hit us on the agricultural applications. That application accounts for approximately 10% of our 10% to 12% of our revenue and that was really muted then.

Good monsoons, good for the country, but not really good for us in that sense.

Got it, sir. Thank you.

My second question is on the competition side. UltraTech in their recent con-call have mentioned that they will be starting the production in Q3, according to them they must have started by now, and by January next year they're anticipated to get into the market.

How are we planning for the incumbent competition from a new player?

Okay. Two two major business houses have announced their intention to enter.

One of them has been very specific about what their plans are, the other one has not yet spelt out their plans. I think we have a brand, the brand is well entrenched across the country.

At the retail end, I think we will remain a relevant player and actions that are necessary we will take to protect our turf. That is something that we will do.

Thank you, sir. Sir, what's the price hike during the quarter?

September we took a 3%, 3.5% correction.

Got it, sir. Thanks a lot.

All the best.

Good evening, sir. Thank you so much for the opportunity.

Sir, net working capital days increased to 33 days in H1 FY '26 compared to 22 days in H1. What could be the reasons for increase in net working capital days?

Is this a new normal driven with a project business mix or when we can expect to back to 20-25 kind of levels? What specific initiatives are in place to manage receivables from discoms and other utility clients?

Okay. Net working capital this quarter was slightly higher than the previous quarter, that's true.

33 days against the earlier numbers. If you look at it, the major change was on the payable side, I think.

The payables had come down drastically and so that is a cyclical thing. It should correct itself once those payments are out.

On the receivables side, we are at I think 15 days. Inventory was slightly higher at 65 days, but that was also a planned exercise in the sense there were certain disruptions close to some of our sites and therefore we needed to carry additional inventories at that point in time.

Sir. Sir, on communication You had a

second part of your question. What was that?

Can you repeat that, please?

Sir, what specific initiatives are in place to manage receivables from discoms and other utility clients?

When you're saying receivables from discoms, meaning deep discounting on the sales, is that what you mean?

Yes, sir.

Look, when it comes to large projects or big-time customers, big builders, there will be a price differential between what you sell it at the retail level and what you sell it on the project side. Yes, one will have to moderate those, one will have to make sure that it still makes sense to the company in terms of while getting top line, you should not lose on your bottom line as well.

To that extent, I think we are careful, but it has to be a price which the market will bear, we will have to be competitive at that stage. I think the process that we follow is bag the orders, but not orders at any cost.

Sir. Sir, on the communication cable side, I think EBIT has declined nearly 51% year-on-year.

With the new preform facilities, I think it is expected to reduce cost and what kind of improvement we can expect in those areas? Given the dependence on lumpy government orders like BharatNet kind of orders, what are the tangible orders pipeline for phase 3?

What portion of your capacity is already underpinned by firm customer commitments?

About Bharat, like I mentioned, we still do not have anything meaningful from the BharatNet set of tenders that were floated last year. There were 16 tenders which were floated, out of which 12 have been awarded to the suppliers.

[Four?] are going in for retender.

I think the retender is expected by December. Of those 12 where orders have been placed, while we participated in the tenders, we were not successful in any of the tenders.

We are now following up with people who won the tenders and who do not have the cabling capacity or the fiber capacity, but those are discussions which are ongoing. On the non-BSNL side, the state tenders are yet to be floated.

There are about seven states which are coming out. I think only Gujarat had floated tenders, the other states have not yet done so.

Those are all expected in the next 2 to 4 months, and we are hopeful that we will gain some positions in those. Coming to the private side, we are one of the largest suppliers to Bharti and we have an ongoing yearly contract with them.

We also supply to the other telecom service providers, be it Reliance or be it Vodafone. Currently, factory booking is probably around 60% of the capacity.

Sir. Sir, advertisement and promotion spend increased to ₹20 crores in this quarter compared to ₹11 crores last

I can't hear your question.

Sir, ad and promotions spend increased to ₹20 crores in this quarter. I think last quarter it's around ₹11 crores.

Whether this spends for supporting new FMEG launches or defending brand premium in wires? Where we spend majorly?

If you look at the ads, it would be all brand promotion for sure and we do command a premium over many brands in the market. I think it's on both counts.

We are conscious of the fact that you will need visual impact, you will need to message the customers, not just the immediate customers like the builders and the contractors, but also eventual end users like you and I. Because if I as an investor in a home, I'm concerned about safety, and that is the factor that we are focusing on, that our wires are safe, it gives a long life.

You can use it and then you can forget it for the next 40-50 years. That's the messaging that we are giving.

It is definitely useful, but do I have a direct correlation between the spend and its immediate impact on the numbers? No.

It is, in a sense, an investment.

Sir. Sir, my last question on that FMEG business side, I think we have been missing internal targets since long.

What is the strategic review underway and what are the new product launches are planned next two or three quarters? How do you look at in this business next 2 to 3 years time frame?

I think the industry itself some of the products are facing headwinds. If you could share which are the products are picking up, which are the products are slowing down?

Okay. We are broadly in fans, water heaters, lighting, and switches and domestic switchgear.

Each one has its own characteristics. Fans this quarter had faced headwinds.

The monsoon was fairly long and I think numbers were lower for most of the competition there as well, lower compared to their previous second quarter. We were no exception there.

New models are under design, new models should be coming out. In lighting, the issue has been more on price erosion across the market.

That has been something consistently happening over the last few years with the drop in prices of LEDs. I think it's now bottomed out, I think we should see more stable numbers going forward with the volume increasing, that should show up reasonably well.

Switches and switchgears, there are multiple models on development, next few quarters should be newer variants coming in from our side. Broadly, we are committed to this segment and I think we made a statement somewhere saying that we would reach a number of ₹500 crores by 2028 or so.

I think that target is still within reach.

Got it, sir. Thank you.

Yeah. Sir, post Q2 [unclear] demand [unclear] segment?

Sir,

you're not audible. Hello, Sir Vishal?

Sir, should we move on to the next one or Hello? Hello.

Am I audible? You're breaking on and off.

We could hear your first word and then afterwards we lost you. Sir,

what demand trends

Okay. Continue.

Please go ahead.

Yeah. Sir, what demand trends we are seeing post Q2 from the housing, industrial, and infrastructure segment side for the electrical cables, first question?

Then, second, sir, guidance for the H2 FY '26 and '27?

We've never given out any guidance whether it is for the quarter or for full year or for future years. I think it's a little future-looking and we prefer not to do that.

Your other question was on the demand from infra and which other sector you said?

Housing, industrial, and infra.

Housing, industrial, and infra, okay. Housing, I think we have seen some moderation in real estate over the last quarter or slightly longer than a quarter.

New launches in this quarter have also been down and what I'm reading in reports also says that the offtake on the affordable housing seems to have dropped down a little bit. I don't know when it will pick up.

I think people were waiting to see clarifications around GST and so on, there is an implicit need for housing, that is for sure. The pickup is something that I am yet to see.

It's probably a quarter, two quarters away. On the infra and more on the cable side, we do see a lot of demand.

While we've not been very positive on the cable side because of the fact that it is all tender-driven businesses where one needs to be L1 to gain the business, we do see quite substantial volumes happening there. We will be choosy in terms of which one we pick to participate in and to what extent we participate there.

It is an opportunity, we're looking at it with all eyes open. That's my response there.

Thank you.

Thank you. The next question is from the line of Yashi from Shatrunjaya Investments Managers LLP.

Please go ahead.

Hello.

Hello, now am I audible?

Yes. Please go ahead.

Sir,

firstly thank you for the opportunity. Sir, I wanted to know any major development in the product line that you are having currently?

In which product lines are you talking about?

For the switches and switchgear and other cables also.

Switches and switchgears, multiple variants are under development right now. These products require not just testing at our end, but also certifications, especially the switchgears require certifications from the regulatory authorities.

Any product development takes about 6 to 8 months to be released onto the market. Like I said earlier, in the next coming quarters, there will definitely be some releases from our side.

On the fans and water heater segments, we are working on different designs and additional features. Those should also come into the market maybe in the next 6 months or so.

On cables, we have variants around fire-retardant cables, fire-retardant plus low-smoke cables, and the halogen-free fire-retardant cables as well. People call it by different names.

Some call them the last one, some call them green, but basically it is halogen-free cables. We've also recently introduced last year cables which are cured by e-beam, which prolong the life to 40-50 years.

There you are looking at high-rises with the building life of 100 years and these are very suitable for those kind of applications. Variants in terms of packing, variant in terms of sizes, those are also being released.

On the special products like optic fiber and so on, designs will change depending on the customer's need. We have several designs which are constantly being used.

Currently, we're working on designs meant for besides telecom, other uses as well.

Okay. Thank you so much.

All the best.

Thank you. Thank you.

The next question is from the line of Darshika Khemka from AV Fincorp. Please go ahead.

Hello, sir. Thank you for the opportunity.

I had two questions. Firstly, what is the status of the current case that is going on?

Is there any progress or is it still sub judice, and by when do we expect a settlement if there are chances of any? The second question is that what the kind of guidance that we are giving for the electrical cables, communication cables, and FMEG segment for the next few years until '27-'28?

In the light of the current market scenario, also our guidance for the current year would be extremely helpful, both on the revenue and the margins.

On the case, as you're aware, it is between two shareholders. At the company level, I have really nothing to say or talk about, you will have to excuse me on that.

On the guidance, like I mentioned, we do not give guidance in terms of either the quarter or the full year or any future period. I'm sorry, that is how we handle this.

All right. You had in the last con-call mentioned that we have the capability of doing ₹6,500 crores in revenues from the electrical cable segment at a peak level.

By when do we aim to achieve that, and what is the similar number for the communication cable segment?

At certain price levels, that ₹6,500 number was what we could achieve basis the capacity that we had at that time. That would have changed now because in the meantime we've added multiple machines at multiple places, so that number would have changed by now.

All I can say at this point in time is my utilization is approximately just slightly under 70%. That is for the electrical cables.

For the communication cables, again, it depends on the configuration of the designs that the customer wants. If it is a low fiber count product, then the revenue per kilometer would be much lower.

Whereas if it is a large fiber count product, then the revenue per kilometer would be much much higher. It's kind of difficult to put a rupee value on that.

All right. With our preform facility expected to start soon, what margin accretion can we expect in the communication cable segment?

Look, if I import from Japan, then the duty is zero. If I am importing from the US or any other place, there is a 5% duty.

That would be straight away saved. Beyond that, it also depends finally on the realized efficiency at the plant.

We're still awaiting production trials, it would be too quick to give a number out on that. It should be margin accretive.

Currently, because of utilizations and low fiber prices, our communication segment margins are in the low single digits. Like I mentioned earlier on, I think once that the preform plant and the additional fiber draw stabilizes, it is not going to be from day one, but once it stabilizes, it can go back to the traditional margin levels that we used to have.

I think that used to be around 8% to 10% levels depending again on the designs.

Okay. Sir, my last question is that we were considering in-house manufacturing for the FMEG segment.

Do we still have that on the cards?

Absolutely, it's still on the cards. We need to hit the volumes first.

All right. Not anytime soon, I would say.

Not this year, for sure.

All right. That is from me.

Thank you so much for the opportunity.

Thank you.

Thank you for participating in this conference. I hope you found the information useful.

Thank you.