Rajratan Global Wire Limited (RAJRATAN) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Rajyatan Global Voice Limited 34FY26 earnings conference call, hosted by 361 Capital Markets. As a reminder, all participant lines will be in the listen-only book, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your test-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suresh Raja from 361 Capital Markets. Thank you and over to you, sir.

Good evening, all. Thank you for joining us for Rajaratan Global Wires Limited fourth quarter of the 526 evening's conference call. During this call from the management side, we'll be hearing from Mr. Sunil Chodhya, Chairman and Managing Director, Mr. Yashavadhan, CEO and Deputy Managing Director of the company, Mr. Praneer Jain, CFO Rajaratan, Thailand, and Mr. Hithar Jain, CFO Rajaratan, India. I would now like to turn the call to Chairman and Managing Director for the opening remarks, followed by Q&A. Sir, you may begin now.

Yeah, yeah. Thank you, Selesh. And thank you all the participants for your interest in Rajatan. And I'm happy to, you know, say that we are meeting in a very exciting times when the... Global businesses are affected by, you know, geopolitical situation, war situation in GICC countries. Lot of businesses are affected. Supply chains are disturbed. Okay. But our company has been able to perform well in spite of all the difficulties. And we have a mix of, you know, good news and... Some not so good news. Good news is that we have been able to achieve the highest ever sales tonnage. Our sales on year on year basis have increased by 18%. We have done more than 133,000 tons of total sales from three locations. And in particularly in this quarter, we We could not achieve the EBITDA, targeted EBITDA. That is because of the high prices of raw material. There was a sudden increase in steel prices beginning from January. So from January till March, the prices went up by almost 10,000 rupees a ton, which we could not pass on to the customer. And that is why the EBITDA percentage in this quarter has gone down. Coupled with that, the availability and the price of energy was a difficulty, which also affected EBITDA margin, particularly in this quarter. So, but we have been able to pass on the price increase in the current quarter. And we see a robust demand from all of our customers. In India, as well as in Thailand, and globally also. So, I can say that this year should be another growth year for Rajatan, and we target to grow our business in volume by around 17-18% in the current year also. With this, I am happy to answer all your questions along with my team members. Thank you so much.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the test phone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question.

Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Sanjay Shah, KSA Securities Privacy Center.

Please go ahead.

Good evening, sir. Thanks. We are appreciating the performance in this global. Talk about exports, business opportunity region-wise for our bead wire and even some.

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

Yeah, Sanjay ji, hi. So, because of volatility, to be honest, the only impact that we've seen till now is disruption in shipping. Especially from our Thailand plant. But overall, the development of export market remains robust for us. There are many companies that have already approved us in Europe, and we are under regular supplies to them since last six months. Definitely ensuring that the material reaches them on time is something that we are struggling with since last year. 30-40 days, but I think that should ease out. And also, in American market, the demand still continues to be robust. So, we were expecting that the geopolitical issues will create or reduce the demand, but it has not happened till now. I would say 70% of the efforts and development is happening in tire segment in terms of number of counters and number of plants. But today, non-tire segment volume is also substantial. But this ratio will keep changing because, you know, tire companies take a long time to Thank you very much. Products are faster approvals and volumes come in faster. So it's a mix of both.

Sunil sir, I have one question for you was regarding our Chennai plant. Can you share the ideology of working where we have shifted many tire industry supply from Chennai and we are catering to some low margin customers from indoor? So, how do you see that panning out in near future, and how do you see that capacity over there, and do we need any capex in each of the plants further?

Yeah, so, you know, last quarter Chennai utilized capacity almost. 85-90%. Okay. If you look at their exit rate against 30,000 tons capacity, they have been producing 20 to 2300 tons per month. Okay. And that is why we decided to put in the money for Venice equipment. And some equipments have started arriving and will become a 60,000 tons capacity plant by second quarter of this financial year. Okay. This year our plan is to sell around 35,000 tons from Chennai to all the customers who are in that region. So we will be able to cater to customers in North India who might be a lower price customers. Okay. So as specified earlier, we don't want to lose our market share. Okay. As long as The product is giving us some contribution. We want to continue with our high market share and entire sector, our market share has again reached to 40 to 43%, which had come down to 35, 37%. And we are also putting in capex for steel cord for conveyor belt in our indoor facility so that project of course got little delay because of the reconstruction of the shed. We have broken the old shed which was made in 1989 and built up a new big shed. But now that work is over, machines are getting installed, and we'll be able to start trials in the second quarter of that product also. So apart from these two capex, there is no additional capex plans for this year, as of today, yeah. No, we in steel quad we have already invested around 55 crores, I think 45 to 50 crores, and we will require another 25 crores to complete that capex, and Chennai this year will be close to 25 crores to complete the capacity to 60,000,000.

That's helpful. Sir, my last question was regarding... Margin uptick, can we see that establishing the rising raw material and energy prices get power blown in coming future time, in this year itself?

No, now, the price of this year has been passed. Whether it is a steel price or it is other consumables, or even energy prices. And currently, we are seeing that there is a pressure on the dispatches. We are not able to meet the demand of customers to supply them on time. Okay. Because there is a shortage of raw material also.

Okay.

But I think that will become smooth by end of this month and we'll be able to meet our... Overall production target and sales target for this year. Unless something major happens again. Okay. So you cannot, you have to keep your fingers crossed that there is another war or another issue. Yeah. That uncertainty will remain. So whatever I am talking of is a normal situation. Yeah.

Got it. Got it.

We supply it to our company in USA, who imports, pays 50% duty on the product. So that amount also adds on to the working capital cost. And then customer pays us in 30 or 60 days after he receives the material. So that credit cycle has become bigger. Got it, sir.

Thank you, sir. Very helpful.

Thank you. Thank you.

Thank you. Participants, anyone who wishes to ask a question, the press star and one on the test on phone. We have next question from Preet Mitani from Incrediency. Please go ahead.

Thank you for the opportunity. Congratulations for the, for good set of volume numbers. Sir, my first question would be on raw material cost. So by telling that we are able to pass on the entire 10,000 rupees per ton, which has been increased in the cost, do we mean to say that we would be able to reach 38, 39% gross margin, which we, which we were doing in Q3, back in Q1? Is my understanding clear?

It will be a little more because in percentage we'll be able to maintain gross margin. So on absolute numbers because prices have gone up, we'll be able to do that. Not an issue. I don't see an issue in this quarter.

Okay. And I was seeing Thailand as well as India numbers. In India, there was a pressure on cross margin. But I can see that in quarter 4, Thailand cross margin stayed constant quarter on quarter. But we have seen huge increase in other expense for this quarter as well as for this full year. Any particular reason for the same?

No, look at the other expenses, it is not Thailand's other expenses. We have now one more 100% subsidiary, which is getting merged in this balance sheet, that is USA, Rajatan USA. Okay. So, there is a cost of around 30 crores. Uh, which is, uh, for six months, uh, wherein we have, uh, we have been supplying to USA on a FOB basis because the import duty in USA is on the FOB cost of the product. Okay. And the US company pays for the shipping costs and logistic costs. So that 30 crore of cost for. Second half of the year is booked in the USA balance sheet. Okay. So because both the balance sheets are merged and you can't see USA balance sheet separately, you think that it has gone up in Thailand. It has not gone up in Thailand. It has gone up in USA. Okay.

So, now it is new normal that we would be incurring around 60 crore cost for the full year in this subsidiary or

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

This will be fun. So, can you just help me explain between the EBITDA per ton or EBITDA margin differential between when we sell in India or we sell in Thailand or we sell in USA or any other export country? Are the EBITDA, is EBITDA per ton maintained at the same level? Or if you could just tell us taking order?

No, because there will be very different prices. Okay. Logistic cost, prices, long-term contracts. You know, some orders are at good price, some orders are long-term commitment. It is very difficult to tell you that what is EBITDA in USA market, what is EBITDA in Thailand or customer-wise. Okay. In Thailand, we have a mix of customer. The prices ranges from something like 26,000 baht to 34,000 baht. Okay. So, very difficult. You can continue to assume that we will be able to maintain this EBITDA level 13.5-14% safely.

Across plants? Across coordinates?

On a consolidated basis.

I want to consider it. And one question from my friend, this year you have also shown the segmental difference in the quarter quarter quarter financial about how much we have got from India, how much we have got from Thailand, USA and rest of world. Can you pick up this 17-18% volume growth which you mentioned region-wide? How much growth we expect in India, how much growth we expect in Thailand and how much growth in USA?

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

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

Yes, yes, I can tell you Thailand we are not expecting 20%, we are expecting around 10 to 14% because there is a capacity constraint in Thailand. Okay, we are doing some de-bottlemaking. So Thailand from current year volume which is close to 51,000 will grow to 55-56,000. That is why I am saying 10-11% growth in volume in Thailand. But balance growth to make it to a consolidated 17% will come from India because Chennai capacity is ramping up. And we have little growth possible in Pitampur factory. And in all these numbers, I am not including steel cord. So steel cord will be trials and it will take some time before we talk of volumes of that product. Yeah. So next year you can estimate 155,000 tons of total sales if things remain normal globally. Yeah.

Yeah, I was asking about not plant-wise growth. I was asking about region-wise revenue growth. Like USA, last year we did.

No, revenue. So USA will further grow. I'll be like this year export from India has grown by 250%. Okay. But in different markets, we choose where to supply from. Okay. So matching both this is a little difficult. Okay, we look at the transportation cost, capacities available in different plants. Okay, but we have a plan to grow around 30% in North America, I can tell you. And yeah, and some growth in Europe, which will be around 50%. And South East Asia, 10-15%. Because we were suppliers in South Asia, South East Asia for many, many years. So not many opportunities. Uh, left for us.

Uh, Northern Europe, you mentioned 50%, 50, 50.

Yeah. Yeah. Because the base is low.

Yeah. And Southeast Asia, you mentioned around 10%.

Yeah. 10 to 15.

Yeah. 10 to 15.

Base is high and, uh, U.S. we see bigger opportunities. Yeah.

Got it. Got it. And, sir, if you could mention about working capital difference, like you mentioned, if we sell to USA, we take additional 30-40 days to receive our money because of the long supply chain. What would be the difference between the working capital in India and Thailand? Do we receive it in 30 days or 60 days?

Thailand is overall average 30 days, and India is about, you know, 50 to 60 days. And then some working capital for stocking and finished goods and raw material. So, but export has a longer working capital cycle because Europe shipping line takes 45 days to reach, USA takes anything from 45 to 60 days and then there is a credit to be extended.

Okay, sir, we would continue to see short-term loans at a higher, working capital loans at a higher range for the next couple of years until we reach to another stage.

Yeah, yeah, it is good to borrow at 7, 7.5%, okay, and invest in a profitable business. So, working capital borrowing will continue.

I'll join back in the queue. Thank you so much, sir. Thank you.

Thank you. We have next question from the line of Vinit Thakur from Plus 991 AMG. Over to you, sir.

Hi, sir. Good afternoon. Congratulations on the volume growth. Sir, I wanted to know when would we see a margin reversal to the expected levels of around 13% to 14% as we had? Spoken on nine months.

Yeah, so as told you in the earlier question, you know, the margin dip is because purely because of the sudden increase in YGOT price in January, February, March, which we have been able to pass on to customers in the current quarter, April, May, June. So you will see the margin coming back to 13, 13 and a half. In the current quarter itself, if everything remains normal, if there is another situation, some, another breakout event happening in the world, then, yeah.

And sir, so like we had spoken about the wire rope expansion as well and the steel cord expansion as well. So what is the timeline of the steel cord? When would it be online itself?

Yeah, so wire rope and steel cord are one. Okay. Earlier we were telling that it is a wire rope project, but now it's a similar product. But we have decided to make the same product what was what was being made in the same factory in Greece. So and that will start the production in trials in second quarter. And we'll take some time for approval and regular production. So you can expect bigger revenue next financial year. And in all of our discussion and projection, we are not including. Bigger numbers of this product.

So, sir, as I know, steel cord gets a higher realization and has a higher market.

It is not that steel cord for tires. This is a steel cord for conveyor belt. So, very niche product in a niche market.

So, sir, what would be the capacity of the...

The total capacity of this plant is 10,000 tons a year. And the generation, at current level of pricing, the top line possible from this investment is around 150 crores.

That would be, I'm assuming, in three to four years to reach peak utilization.

Two years.

From next year onwards. On the FY29. 29. Got it, sir. And, sir, what would be the average realization for steel cord?

I mean, different sizes, different prices, but on an average, Rs.150 a kg. And what are the margins on this product, sir? The current sales and if we look at financials, they become margin as of today are around 20%. We'll have to see going forward, yeah, how it works out.

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

Yeah, I have been telling that this is the peak, but because of business situation, our volumes in North America have grown substantially, which has been... Which needed more working capital, so we had to borrow. Similarly, capex in steel court and remaining capex in Chennai require more term loan. But we have paid around 50 crores of term loan in the current year also. So that is the company culture. We keep borrowing and repaying. And we still feel, rather than diluting equity, we should continue borrowing at a lower cost and, you know, save dilution of equity.

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

Other income is gain on foreign currency fluctuations, foreign currency appreciation. So, dollar has appreciated as we have a bigger, you know, export. We gained on dollar and Thai bhat has also become strong. So, there is... So, there is a growth, there is an appreciation of high bhat, which has reflected in the balance sheet.

Okay, sir. Thank you so much for answering the question. All the best, sir.

Thank you. A reminder to all the participants, please press star 1 on the trust on point to ask the questions.

We have next question from Suhara Mabutaday from Capital 3.

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

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

Okay, sir, 526, you know, remember, yes, sir.

It is little more than 9000 tons.

Yeah.

Volume.

Balance is from Thailand.

Okay. So in FY26, the export from India was about 9000 odd tons, more than 9000 tons.

Yes. Right. Okay.

And next year, what are we planning? This number can increase to how much? I mean, in FY27 from India.

Yeah, so next year probably we are expecting about 15,000 tons of export from India. What's the 15,000 tons?

Okay, and this will be mainly from Chennai, I presume.

No, again, specific things are very different to compute today. Okay. Wherever we get a container, wherever we have capacity. Sure, sure.

Secondly, sir, you mentioned 25 crores of KPEX at Chennai for 30,000 tons. So, assuming that you are able to ramp it up in a It's more than a year's time than that. 25 crores can be recovered in a year's time? Is it fair to assume you...

No, I think, you know, the plan is not to ramp up so fast. The decision is to invest and keep the capacity ready, but the volumes will increase gradually only, and I think the plants will also develop capability to increase volume gradually, so. I think it will be wrong to estimate 60,000 figure and then calculate that next year's production will be net money.

Okay. Okay.

Yeah.

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

We are very conscious that we are in a competitive market. Okay. So competition will also play. The moment we pass on some benefits, so, very difficult to.

And, sir, lastly, what has been our peak market share in history? I mean, what was our highest market share?

43-40%, 43-44%. Close to that, close to that, exact numbers are difficult, but our monthly data collection shows that we are back at 42-43% kind of market share in India.

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

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

Okay, sir.

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

Thank you.

We have the next question from Ajit Sethi, from ECO Quantum Solutions.

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

Close to 70 crores.

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

28, 29, as Yeshwadhan said earlier, it takes time to build capability, okay? So, it's a question of... Our capability, customer approval, customer confidence, a lot of things are involved, yeah.

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

And that's what is there.

Thank you. We have next question from Pete Pitani, from Incurrency.

Yeah, this call that tax rate was very low. Any specific reason?

Yeah, it was low on a consolidated basis because, Pranay, will you answer?

Hello, hello.

Yeah.

Yeah.

So, we are getting exemption on income

tax after the sales of 23,000 tons. And we are a BOI privileged company. So, the base tax rate is 20% for the normal companies. And privileged companies, the effective tax rate comes to be 13.9%.

After volume of 36,000 on an annual basis? Yes. Yes. So this 13%, 13% is on entire profit or this is 46,000 terms, whatever we are making?

Entire profit 13% because it is pro-rated. I am telling you effective tax rate. So up to 36,000, the income is taxed up to 20% and beyond sales of 36,000, there is no tax.

It's excellent.

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

Okay. On the PLI upfront, last year we did not get the PLI because we were not able to do this in January, but this year we have done so and we are expecting 527 as well. So will the PLI benefit flow? What is the stimulus?

Hello.

Yeah, as I said, we are knocking the doors of the steel ministry. We are also making representations to commerce ministry who is overall in charge of the PLI. Okay. They all hear us, but nobody is giving assurance. I think it will take some time before I can confidently say that we are getting PLI, but we could not achieve first year target, targeted production as committed to them. And second year targeted production was also not achieved because first year was missed. Second year was also missed. So we have requested for change in the ladder. Okay, if that is approved, we'll get PLI. Otherwise, as of today, the question mark is there on the PLI. And in all our projection, discussion, we are not including PLI as a benefit. Okay.

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

8% on sales, incremental sales every year, 8% from Chennai. And total quantum will be 40 to 50 crores in 5 years time.

Got it. And sir, I see every year we get around 3 crore of state investment subsidiary. I think it would be because of Chennai plan. How many years still we will be getting more to this subsidy?

No, it is not Chennai. It is indoor. We had done investment in 2020. So we were getting 30% of the capital subsidy. So whatever we had invested that year, every year we get, you know, in seven years that disbursement happens.

Okay.

So I think some 24, 25 crores was sanctioned. And every year we get three and a half, four crores. So it is that money coming to balance sheet from NP state government. We get similar subsidy from for our steel cord investment.

Okay, and is this subsidy shown in the TNL, or is it directly knocking off the capital?

No, no, it is knocking off from the, you know, investment.

Okay, and sir, for this year, what would be our wire rope volume?

We are not assuming any volume this year. Maximum, it will be 2-3,000, okay, but right now, we are not talking of numbers.

In Fi26, I'm asking about the year which has just passed.

No, there was nothing from wire room.

Okay, so there was some other wire also we do, which contribute around 3, 4,000.

Which is 14,000 tons, which was 14,000 tons in indoor factory.

14,000 tons for Fi26?

Yes.

Okay, and our 17-18% growth projection and 155,000 volume projection include these 14,000, right?

Yes, yes, yes.

Got it. And then last on the competitors up front, like we have been hearing that competitor has done excess capacity and there is a pressure on pricing. So what makes us different with respect to competitors and will we be able to maintain this 13, 14% margin if their excess supply comes off on the road or do we have to reduce the price and take a hit on margin to preserve our market share? What would be our strategy?

If competition decides to further reduce the price, to our understanding they are already losing heavily at this price. If they decide to lose further, I don't know. So very difficult to predict. But we are surviving and making this kind of margin in the last 4 years at least. So competition is not new.

And what would be the price difference between our product and their product? Is there any difference or we are at the same level?

Sorry?

We and our competitor realization.

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

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

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

Yeah. So what makes us difference that it's our relationship with the client or what is the difference that they are purchasing?

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

Yeah, okay.

Thank you. We have next question from Saroni Aadha from Molecule Ventures.

Hello.

Yeah, good evening, sir.

Thank you for taking my question. I want to basically get a bit more understanding on the new verticals that we are trying to do pilot adjustment, that is wire rope is being called. If I am right, we have already spent around 70 crores in the wire rope pilot adjustment, right?

We have invested 50 crores. Balance will be invested in current year.

Okay, okay. And how much are we expecting to do in terms of revenue from wire rope alone?

Peak revenue will be 150 crores, which will take at least two years to reach.

That is just for wire rope, sir?

Yeah, wire rope is still called whatever you say. Yeah.

It's the same thing?

Yeah, yeah, yeah, same thing.

Yeah. So, sir, what first of all led us to venture into this segment? Because it is completely new for us, and it's a new segment, as we call it.

I'll say it is not completely new. It is a wide-growing product. Okay. And it goes into rubber application.

Okay.

So... 70-80%, we know the business, okay, and we wanted to identify one more product for growth in Rajatan, okay, so we choose to do that, okay, it's not a very big investment anyway we are making, we'll wait and watch the performance of this investment, and then we may decide to go in a big way, but right now it is a pilot project, I'll say.

But the end user industry in this segment would be different than the conveyor brand, right? So it would not be an existing client at all.

Definitely, it is a non-existing client. But there is a limited growth you can achieve in the existing client and in one product. Okay. You can't expect every customer to buy, you know, more than 40-50% from one supplier. Okay. So, if we expect a growth in our business, how much can we grow in one product? Okay, so we are also, we are also trying to identify areas of growth. Okay, so this was an effort to achieve that. Yeah.

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

No, no, no, it is a niche, it's a niche product, not a very global market. It shall will be some 70, 80,000 tons. Okay. So, but this will also teach us how to make wire ropes. So, the next project might be wire ropes. Okay. Which are similar in nature and similar in properties and manufacturing process.

So, this is not just an experiment for us. We are trying to basically venture into this because we want to create a new segment and potentially get into the virus. Am I correct in understanding that?

Yes, yes, yes.

All right, all right. Thank you, Shandika.

Thank you. We have the next question from Shashank Kanodia from ICICI Securities.

Yeah, good evening, sir. Thanks for the opportunity. So, this is just wanting to check that you're given a guidance of 13.5% to 14% sustainable margins for us in the console basis. So, are there any drivers who march in movement organically, given that we have been ramping new capacities and optimizing the growth portfolio?

Sorry, I didn't get your question.

Sir, you have gathered that the sustainable margins for us is 13.5% to 14% at the consolidated level, right? So, are there any drivers for margin improvement given that you are ramping up new capacities, you are working on the product portfolio? So, is it a case that we can improve it, you know, to erst 12, 18, 20% that we had in the past or 15, 16% is the best case?

That is possible, but we would not like to guide you with that high number. We are conscious of the fact that we are in a competitive market. Some of the participants already asked me a question. Are you scared of competition? Will you have to further reduce the price? So you are asking me totally opposite question. So we are projecting and we are talking in the middle. We are not optimistic about 18-20%, but we are also not pessimistic about 11-12%. We should be making a decent margin of 13-14%. If anything better comes up, it will be a good surprise for all of us.

Right, right. And so, given the fact that you've already passed on the rising metal prices to your customers, do we receive any compensation for loss of profitability for Q4? Any one-time compensation?

No, no, nobody gives. Nobody gives.

Okay, okay. And so last, you know, there is a fear among, you know, that the auto sales might slow down because of some supply chain issues as well as price X and auto origins. So any demand outlook will be hearing from Tali players regarding, you know, how do they see the market both on the domestic and the export sprint?

No, when we meet our customers, everybody is keeping fingers crossed. Okay. But up till now, there is no negative impact. Okay. But all of us are expecting April end-mean slow hooga. May-mean toh slow hoi jayega. But abhi tak toh nahi hua hai. And then lot of it depends on Mr. Trump. Okay.

Right, right, right. And, sir, lastly, any take on the cooperative intensity? I think, no, abhi philal demand supply mechanics in terms of capacities kaisi hai domestically and globally, if you can help us understand?

Currently, capacity is much more than the demand. Okay. So, there is a competition, and some of the companies globally are also... Whether they will survive or not is not clear. So, consolidation is also happening.

Right, right. Fine sir. Thank you so much for your input and wish you all the best. Thank you.

Thank you. We have next question from Vipul Makwana

from Stylus Holdings. Please go ahead.

Mr. Rippel, your line is muted. Can you hear me now?

Yes. Hello.

We can hear you.

Yes.

Yes. I wanted to speak. Good evening. I wanted to know the capacity utilization individually across our plants. What would be that for F526?

You know, Chennai reached peak in the month of March, which was 85-90% of installed capacity. So we have decided to put in balancing machines to double the capacity. Indore continue to operate at 90% capacity utilization and so Thailand. Okay. So our capacity utilization have been to peak level in both in Thailand and Indore, Pitampur, and Chennai is ramping up. So there will be open capacity in Chennai for the next year.

Okay, okay. And the second question would be for Yashavardhan as well as you, that in

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

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

Okay. Incidentally, we don't have a customer in GCC countries, okay, where the exports are totally, have come down to zero.

Great, that's it for my side. Thank you for the clarification.

Thank you. Next question from the line of Mr. Sarkit Kapoor.

From Capurco, please go ahead.

Hello. Yes, I am here. Hello. Namaskar, sir. Thank you for the opportunity. Sir, firstly, when you mentioned that we have done some installation of kinesin line at the Chennai unit, and then we will have open capacity. So, can you elaborate in terms of tannage, what would be the addition in the Chennai unit, and what are we practicing in, in terms of the tannage for Q1 contribution from Chennai, and then going ahead?

So there are many, I have mentioned that Chennai we had installed 50% of the machines. So capacity was till last year was 30,000 tons per annum, which is being doubled to 60,000 tons per year by addition of some balancing equipment. And it will happen in the second quarter. Some of the machines are already installed and it started running. So This year, we'll have a growth in the manufacturing from Chennai, and from 17,000 tons last year, we are doubling our business from Chennai.

Okay, so last year, Tanesh was 17,000 on installed capacity of 30,000. Now, this year, installed capacity of 60,000, we are expecting 34.

34, 35, yes.

Sir, this is our capital work-in-progress closing balance. How will this shape-up post this commercialization? Sir, we have 69,000,000 and 80,000,000.

So, this year's second quarter, everything will be capitalized. So, you will see a very small number in WIP. All this will be capitalized and up and running.

Okay, sir, when we look at this number for say 20 crore increase in the console, this is pertaining to this highland unit that is the deep water making exercise we are doing or?

No, the highland number is very small. Highland number is very small. On consolidated basis, all this is Pitampur, Steel Cod Project and Chennai balancing equipments. There is no other WIP.

Okay. And in that case, sir, then with the 50 crore number which you have said for the steel court part, how much have we invested out of?

We have put 50 crore in the 70 crore, okay?

Okay. So, sir, the 80 crore closing balance is your 50 crore, which is your steel court business?

Yes, it is about 50 crore, which is about a steel court business. It will be about 10 crore, which will be about 10 crore, which will be about 10 crore, which will be about 10 crore.

Okay, and steel quads will be commissioned, the 50 crore project will be commissioned, why?

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

So, I think we closed this year at long-term borrowing at 130 and short-term including the working capital requirement at 200. So, if this is how the trajectory is, it will be 80 crore. That is the effected already there.

So, how will this number take place? Long-term loan will be less than 50 crore this year, because we need to do a repayment. Last year also, we have reduced the long-term loan to that extent. And working capital might be required because of high prices now. Because there is a price increase of around 10 to 15% and also the increase in volume, we are talking of 17-18% volume growth, which might require some working capital borrowing also and long lead time for exports. So all these sectors put together. We don't expect any reduction in working capital requirement. Rather, we see some more requirement of working capital, but a term loan may not be required. There will be a reduction in term loan.

Just to conclude, sir, in your presentation, in your slide, you have mentioned that we have robust sales pipeline established with market client and customers. So, if you could just give us some understanding. I think, sir, we were also looking for some new geographies. And we are trying to look for new customers from that part of the globe also. So, what are you trying to explain here? And then, sir, one more point was in the number. We have mentioned within USA, the revenue at 118 crore. So, how has tariff affected this case number to US?

I think Yashwadhan will be better, but we'll be giving a guarded answer. Don't expect us to tell you everything. Yashwadhan, hello?

Yeah, so we had shared the export plan, I think, every quarter we are discussing this about setting up Infrastructure two years back, which is now reached at final approval from customers. Overall, our efforts are not specified to any particular region. We see U.S. as a big potential. We also see Europe as one of the largest markets for the bead wire. And surprisingly, Southeast Asia remains to be competitive, but Japan is turning out to be a new opportunity. Now, all of this is just increasing our existing customer relationship to different geographies. The set of customers in terms of name remains the same, but because they have various factories in the world, we are trying to explore opportunities around the globe.

Okay, sir, just to make him understand. Thank you, sir.

Sarkar, sir, can we request you to...

Okay, I'll join in the questions. Just what... Yes, but then, sir, I was mentioning, I was just trying to make sense of. If I may, then I'll join them. Yes, you were mentioning that we are setting up infrastructure. So this is including the problem we have or I could not understand that?

No, I meant to say we've been sharing updates about this every quarter. It started with setting up marketing teams two years back, which has now reached to approvals from customers from various geographies. There is no specific region that we are targeting. U.S. also has a good potential. Europe is one of the biggest markets for us. And Japan also is turning out to be, but it is very initial to discuss any specific development. I just wanted to explain that our efforts are all over.

Correct. I'll join the queue on the tariff. You please answer in the follow-up. How was tariff impacted? And then 18 crore revenue from USA. How was tariff fair is back there. Thank you.

Of course, Terry. Thank you, sir.

We have a next question from Matrisha, from Sapphire Capital.

Yes, hello, Mardman.

Yes.

Yeah, good evening. Most of my questions have been answered. Again, the previous participant, I think, asked a question on the tariff. So, if you could kind of elaborate on the impact that you had on the U.S. side, did we have the sales, most of the exports from India or from Thailand, any kind of...

So, you know, tariffs have not affected the volume or the business because tariff, we are under section 232 where U.S. has put tariff against all the imports, whether it is coming from India or Thailand or China or Mexico. Okay. So we are at par with all other countries. So it is not affected. It might have affected the customers there that they have to pay extra price for the product. Your question on. Yeah, definitely. And the sales revenue includes the tariff which comes under our USA entity. Okay. Which is consolidated with this. And I have answered the earlier question also with this.

Correct. Secondly, on the Chennai plan, so you previously mentioned that we're taking low margin kind of like low margin sales on the Chennai side to kind of fill in the capacity. And you also mentioned that there has been like a disruption because there's a lot more capacity than the demand currently, that there's increased competition and consolidation happening. But yet we're increasing our capacity in Chennai. We're actually doubling it. Any reason for this increase in capacity when the margins are so, in such a big pressure, and also there's a pressure on the raw materials, so saying there's also pressure on the supply from us to the customers in Europe and US, so if you could kind of... So, give me like a trajectory of why we are increasing the capacity in Chennai right now.

No, no, it's not that we are making a big investment. So, and now we are not selling any customer from Chennai where we are losing money. Okay, so all the customers supplied from Chennai are profitable, one. Number two, we don't want to lose the market share. Number three, increase in production reduces our variable cost also. Okay. And we want to be in the game. Okay. In a competitive market, if we are contributing to our profitability, we do the business. Okay. So this I must have told in respect of earlier, you know, kind of margins 18-20%. Okay, which are not there, but 13-14% is a decent margin to even plan an investment, yeah.

Okay, so currently the sales from Chennai are also... We will request you to rejoin the Q. Yeah, definitely. Yeah, so they are in the range of 13-14%. Yeah, yeah, yeah, yeah.

Yes, yes, more, yeah, thank you.

Thank you. We have next question from Pitani from NKDMC. Please go ahead.

Thank you for the follow-up opportunity. Sir, we have mentioned that we have raised a price or passed on the cost from Q1. So, is it fair to assume that the 84, 85, 86,000 average generalization would improve about 90,000 for this FI27?

Yeah, it has improved.

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

Yes. Yeah, yeah.

Yeah, and this, we are taking price, so it applies to all across world, like USA, Europe, also we are, we will be getting better realization. How is that agreement with us? Is it same like India?

No, it's not that big increase there because the dollar has become strong. So we have been able to pass on a little bit because for export, we look at the international prices of raw material. And we calculate from there. And there is an opportunity to import also. If the prices in global market is lower, we do import raw material. So global pricing is done on the global price of wire order. Otherwise, we can't remain competitive in the global market.

Yeah, good. So, I can see that realization for this, our subsidiary, which is combined Thailand as well as US, their realization has also improved this quarter and which has helped us protect gross margin there. Despite increase in realization, we have shown that we have seen that the margins have declined by 400 basis point on EBITDA levels. So, is it fair to assume that in Thailand and US subsidiary combined together, we would be doing EBITDA margin of around 9-10% only? Or what would be the levers which would improve margin there?

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

Yes, yes.

I'm asking about Thailand and U.S. subsidiary. Thailand and U.S. subsidiary are same. There is no change in their business. No substantial change in the business.

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

I think, what is the one minute plan? Highland debita, Machi? Or quarter four?

Thank you very much.

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

Thank you, sir. We have a follow-up question from Saroni Aria. Please go ahead.

Sir, I just want to clear up one conclusion. Basically, you said that the global market price for steel costs is 70 to 80,000 dollars. Is the same as the YRO?

Sorry, come again.

No, it's different than wire rope. What we tried explaining is the method to produce steel cord for conveyor belt is very similar to wire rope. So by this project, we'll be able to also understand how to make wire rope. So that will give us an experience to make wire rope.

Right, because earlier in the concourse, past concourse, we mentioned that we were setting up 10,000 tons capacity for wire ropes, which now, right now, is for steel cord.

So, wire rope and steel cord are same, okay. We had bought the machines for making wire rope, but steel cord is one of the wire rope products, you can say it, okay. So, application of galvanized steel rope for making conveyor belt, then it is called steel cord, but tono mein manufacturing process and quality, there is not much of the difference.

Thank you. Ladies and gentlemen, we request you to limit yourself to one question and let me join the team. We have Mr. Saket Kapoor as a product question from Kapoor.

Yes, sir. Only just to summarize what you have mentioned, if you can just hear me out, sir. Firstly, you mentioned about the general auto industry slowdown part. So, if you could just throw some more light on what you were trying to explain that April week will happen or May will be worse. And secondly, on the absolute... Okay, sir. I have answered.

And we are not expert of auto industry, but we continue to see a good demand from our customers, which are tire companies.

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

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

Okay, and this is normalized in Q1?

Sir, one question at the time, sir. Second, sir.

We have a next question from Pete Pitani from Incard MC.

Yes, thank you for the opportunity. Sir, you mentioned to one of the previous participants that 88 crores capital working progress include 25-30 crores of Chennai, Capex, which we have not yet capitalized. May I know the reason why we have not yet capitalized those? Because plant is fully operational.

No, no, no, no. Machines are on the way. Some machines are arrived, which are to be installed and put to use. So, unless we put to use and start using commercial production, we start doing commercial production, we cannot capitalize.

So, these are the machines which are still in transit, and this is the reason why we will be needing only 25 roads more for addition.

Yes, everything came in.

Thank you. We will take that as our last question for today. I now hand the conference over to Mr. Salish Raja for query comments.

Yeah, thank you all. Sir, would you like to make any closing comments?

Yeah, so, same comments, you know, unless there is a global change in the situation or something new comes up, I think Rajatan is on a path to growth, okay? This year, we have shown a good growth last year. And we are going to show good growth next year also. So keep watching, keep in touch and keep looking at Rajvatan critically. And thank you for asking very critical questions. We would love to answer all the questions, but or, you know, because sometimes all our answers become counterproductive for us. So we don't want to. Share more information than this. I think we are quite transparent and very, very transparent and straightforward with our investors. So, thank you very much. Bye.

Thank you. Thank you, sir. On behalf of 361 Capital Markets, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.