Key takeaways of the call

Pending order book of the company as end of May 25, 2021 stood at Rs 2561 crore [including Rs 806 crore of ADB funded Nepal order; EHV of Rs 506 crore, domestic Rs 1198 crore and exports of Rs 51 crore].

Expect domestic institutional sales revenue growth of 25% in FY22 and retail sales growth of over 35% as per current estimates. Overall the company expects a sales of about Rs 5000 crore for current fiscal.

Working on developing new export markets. Expect an export sales of about RS 450 crore in FY22.

The capacity utilisation stand at about 58% & 61% in case of cables & Housing Wires respectively. The utilisation is about 89% in SS wires.

Dealer distributor sales of Cables & Wires in FY21 was 1408 crore vs 1413 crore in FY20. Sales through Dealer/ Distribution market decreased marginally by 0.35% YoY in FY21, mainly because of Covid-19 restrictions in Q-1 of FY 21. Sales through Dealer/ Distribution contributed 37% of overall sale in Q-4 and 34% of overall sale in FY21. So the company is optimistic as there is progress in vaccination and flattening of curve leading to easing down of retail restrictons leading to pent up demand kick in.

Active working dealer distributors as end of March 31, 2021 is about 1655 nos. In FY21 the company has focused on strengthened the existing dealers and getting more revenue. In FY22 about 20% new dealer distributor will be newly appointed. The company's target is to increase retail sales channel by about 35% this fiscal. The company is in transition.

May 2021 is impacted due to lockdown, the operations at projects sites too impacted. However wires is better than cables as wires sales will get the benefit of pent up demand once the lockdown gets over or restrictions lifted.

Expanded capacity for HW at Silvasa and that is sufficient for about 19% growth for next 2 years. EHV the company does have the capacity only for about RS 500 crore.

Retention money of about Rs 154 crore will get released by during FY22. The receivables will be used for cash purchases of materials and capex. The company focus on reducing interest cost so rather than park the surplus cash in FD, the company will use it to purchase materials with cash.

Annual capex will be about Rs 150-155 crore and the annual cash generation will be about Rs 300 crore so the company will have enough cash for business growth.

The company grew at a CAGR of 15% in the last 15 years and the company targets a growth of 17-18% over the next 4 years with a capex of about Rs 600-700 crore.

In Q4Fy21 retail sales grew by 45%. Institutional down 14%. Reduction in project revenue is in line with stated strategy of the company

Average price rise of copper is 17% in FY21. Nobody will now whether the copper price will hold on.

Price hike in House Wire is gone up to 40% in last 6 months. Q1FY22 there will some price rise of 8-10% in line with copper price increase. Any price rise/reduction is dependent on copper price.

The retail margin has increased to about 11-12% and the margin of institutional sales have also now increased from about 9% to around 10.5%. So the overall margin is about 11.5%.

‘A' class cities accounts for 35-40% sales of the company in FY21 and similar number is for ‘C' class cities. The balance is that from ‘B' class cities.

Interest cost break up of RS 57 crore (vs. 124 crore), the interest on TL was Rs 4 crore vs. 15 crore, WC Loan Rs 24.5 crore (vs 58 crore); LC interest 9.5 (vs 2 6 crore) and Bank Charges RS 9.3 crore.

Going forward, more growth will come from retail sales and the company will continue to de-grow the project sales.

Expect retail volume sales growth of 25% for FY22.

Targets drs reduction to 2-2.5 months.