Rajratan Global Wire Limited (RAJRATAN) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the Rajaratan Global Wires Q2-FI27 Earning Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sehlish Rajab from 361 Capital. Thank you, and over to you, sir.

Yeah, good evening, Swatnali. Thank you for joining us for Rajat and Global Live limited second quarter of FI 27 Yennings conference call. During this call from the management side, we'll be hearing from Mr. Sunil Chodhya, Chairman and Managing Director, I would now like to turn the call to Sunil, sir, for the opening remarks, followed by the Q&A. Sir, you may begin now.

Yeah. Good evening, all TRS shareholders. Very happy to connect with all of you today. You know, we are in very encouraging times for Rajatan. Our earnings are growing faster than revenue. It is led by operational improvement, higher volumes, led by higher utilization rates in Chennai, as well as in Thailand. Our operating margins are moving in the right direction. In a manufacturing business exposed to raw material prices, product mix, and capacity utilization, our ability to deliver these margins is meaningful and will only improve as these pressures, you know, changes. Today, Rajvatan is amongst top two players outside China and amongst top five players including China. This says a lot about how we have continued to focus on making ourselves a force to reckon with in the domestic as well as global weed wire industry. Our Chennai plant expansion to 60,000 tons is on track and should be completed in the current quarter. We are almost full capacity utilization in the initial 30,000 tons capacity, which we had installed in the first phase, and now expanding it to 60,000 tons. Our debt also, in rate, debt to equity also is comfortable, 0.6 is the ratio, which indicates a healthy balance sheet. This is also visible in our cash flows. In September, we have generated positive operating cash flow in stand-alone as well as consolidated business. And, you know, so overall, we are very optimistic for the remaining two quarters of this year, as well as at least two to three years. We think that Rajatan will continue to grow at this pace.

Thank you, sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then 1 on the touchstone 34. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use hand tips while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

A reminder to all the participants, you may press star and one to ask a question.

We will take the first question from the line of Adhanav Sakuja from Ambit Capital. Please go ahead.

Hi, thank you for taking my questions. So, my first question is that we mentioned in our presentation that we are planning a 50,000 ton capacity addition in Thailand. So, what is the broad timeline of this?

Yeah, we, as already told you, we are running at full capacity, almost 100% capacity in Thailand, and we are refusing customers locally also. Some of the Chinese companies who buy from us and we are not able to supply to them. So, it is mandatory for us to now expand in Thailand. So, maximum it will take one year. Okay. So, within next three to four quarters, this capacity will be up and running.

And, you know, still focusing on our Thailand business, we saw a strong improvement in the realization at around 97,500 rupees per tonne. So, what drove this improvement in realization for Thailand?

I don't think your numbers are correct. But broadly, what you are saying is right. We are getting more approvals from major customers, the multinational clients, and more volume will be going to them in the current quarter and next quarter. And also the export from Thailand is also improving. So all this will improve the performance of Thailand. And that is why the capacity is, further capacity is planned. And with that capacity, our cost will further come down. So, going down the line for next 2-3 years, we are very bullish on our talent business and performance.

Okay, congrats again on a strong current numbers and thank you for answering my questions. Thank you.

Thank you. We will take the next question from the line of Ritesh Shah from Investec India. Please go ahead.

Hi, sir. Thanks for the opportunity. I have a couple of questions. First is, how much is the CAPEX number for the Thai expansion?

Ritesh, generally the brownfield expansions are very competitive, which gives you a very good return on the investment. So, broadly, we should be able to do it in 100 crores, ballpark number. Last year, up to now, we have already spent about 20 crores in acquiring a new factory there, where we will be shifting some of the facilities. And so, there is hardly investment in infrastructure. So, investment will be there only in the, you know, machines and plant and machinery. Yeah. So, including everything, it will be 125, but from now, 100 crores is enough. Yeah.

And sir, you said shifting some of the facilities, I didn't understand that, sir.

No, no, because we were short of space. We bought one closed factory across the road. So, finished is shops, raw material, is tool cages. They are shifted in that location, which is not the same land area. It is across the road. Yeah. Okay.

Okay. And this close factory had nothing to do with Bidwai. It was something else.

No, no. It was something. We have been building its infrastructure. Land and some sheds.

Perfect. Yeah. Yeah. Correct. Sir, second is, can you give some broad numbers on the total exports out of Thailand for first half?

Pranay, you are there? Yes, sir. I am here.

So, first half, we have done 8,500 tons of exports from Thailand.

Okay, and in Q2?

Am I on the other?

Yes, yes.

No, I am talking about H1. Yeah, it is H1. Correct. And Q2 is 5200.

5200. Sir, would you like to, correct, sir, would you like to call out for any numbers for full year? Will it double or can it be more than double?

Uh, this year, uh, total export target from India and Thailand is more than 30,000 tons.

Yes. Sir, India would be how much?

Close to 14,000, 15,000 tons.

14,000, 15,000 tons.

Okay. Uh, so second question, uh, I think Chennai expansion, any thoughts on increasing capacities over here? I think we are already marching towards, I would presume, 40, then 60, which is not very far. Do we have, I presume we have land in place for the next phase of expansion, but how are we looking at it? So, I think the incremental growth engine is steel cord, but on bid wire also, are we looking at something with the next three years, five years in mind?

Yeah, yeah, definitely. You know, the Indian tire market is growing at 8% to 10% now. In the last entire year, we didn't see a dip in demand. We didn't see even two, three months where customers had cut down their production. Okay. Looking at the demand and the number of export of tires, which is increasing from India, I think within next two years, we will have to put up another 60,000 tons in Chennai, but we cannot commit anything now. Okay. Everything depends on how market is. If there is a return on investment, we'll do that. Yeah.

Perfect. And sir, any specific update on SteelCod, the progress? I think earlier you had given certain numbers on revenue and margins.

Which is still called for conveyor building which we are doing in Pitampur. We have started trials, it's a small project. And again, a very quality sensitive product. So and we have some capital equipments yet to be bought and installed. But till the time we'll be buying the semi finished goods from the market. And I think next month we'll be able to submit samples to our customers. But in all our projections, we are not taking any number of revenue or tonnage in our presentations. So, but I'm confident that it will be up and running in full scale next year. And this remaining six months of this year, we'll go in trials, submitting samples, maybe one lot, two lot, we'll keep doing that. Yeah.

Perfect. And the last one, would you like to comment on how the competitive intensity is in the local market? I think we are going at with playing on the operating leverage market share, which is great. But from a top-down standpoint, how should we look at it?

So, as I told you, we had decided to continue capturing market share or at least maintaining our market share. So, you will see in the numbers at all premium customers, we are close to 50% of market share and low cost, low price customers, we are not able to supply and we We don't want to supply. Okay. And as it is, our capacities are running at full scale. So, no need to do that. I'm sure there will be some change in some change in the dynamics in next some in maybe one or two quarters. And we should be able to improve the pricing. That's what I can say. But very difficult to comment on the competition in the market.

Sure, sir. Thank you so much. All the very best.

Thank you. A reminder to all the participants, you may press star in 1 to ask a question. We have the next question from the line of Pranay Rup Chatterjee from Burman Capital Management. Please go ahead.

Hello, sir. Am I audible? Yeah, yeah, very much.

Great. So my first question is regarding the Thai expansion. So historically, we have been very conservative in terms of how we expand capacity, or I should say prudent. And only when you have optimally utilized your existing facilities, you go for CAPEX. It is heartening to see the 50,000 expansion after, you know, we have fully utilized the facility. So my question is more around at the pace at which you expect to utilize it. So I'll tell you where I'm coming from. So globally, the tire bead wire industry is growing somewhere in the 3% to 4% range. If I look at your high-end numbers over the last 5 years and last 10 years and do a CHR, both come to about 12-13%. So, if I assume you will continue growing at 12-13% after the capacity comes in, it will sort of take you 5-6 years to fill the facility. So my question to you, sir, is, has there fundamentally something changed in the global competitive landscape, which can allow us to grow faster and fill the capacity ahead of that five to six year timeline? And I'm alluding to an interesting point you made in the last con-call, where you said that, you know, there was some, I don't remember exactly, but some environmental norms which were favoring sourcing from Thailand to Europe is one thing you mentioned. And then you also mentioned that after one, one and a half years of effort, you have finally cracked some global premium MNCs. These are two of the things you mentioned. Sir, if you can help me understand what has fundamentally changed and what is allowing us to get confidence to utilize it faster, if at all.

Yeah, so very long question. I'll give a point-wise answer in brief. Yes, your numbers are correct for global market growth and everything. But if you look at regional growth, Thailand capacities are growing much faster, okay, which are growing at 10 to 15% locally. Domestically, Thailand tire industry is growing. That is point number one. Point number two for us in Thailand, we have got major approvals from world leaders in tires, okay, whom we were supplying locally. Now we are supposed to supply them in their different locations in Europe, America, and Southeast Asia.

Okay.

So that will take our capacity or that is already happening. We had to shift a lot of supplies from local customers to those MNCs and we are short of capacity in Thailand. So, my projection for utilizing this capacity is not more than three years. Okay. It is against your estimate of five to six years. So, I am very confident that this capacity will be utilized in the next two years. Yeah. One year of implementation and two years of utilization.

Interesting. So, my last, second and last question.

Yeah, about the sea bomb. Yeah, sorry. So, Thailand, we are the only company in bead wire space who can supply green bead wire, okay, because our source of raw material is green, and which is not available in India, which is not available elsewhere in the world. It might be available in some places, but not available easily. So, especially European customers are inclined to buy major quantities of green bead wire from Thailand. That encourages us to quickly ramp up the capacity.

That is very interesting, sir.

Sir, my second and last question. Is there any one-off impact in the other expenses of this quarter? I saw two comments in the presentation. One was freight cost inflation and one was fuel cost inflation, both of which I don't consider as structural. These are one-offs and should eventually wear off. So, what would be the one-off impact this quarter? Because I would expect with higher volumes, margins ideally should have expanded, but they have been under pressure quarter-on-quarter.

Yeah, so freight, you must be talking to other companies. Freight remains very volatile, okay? We are supposed to, you know, supply material on DDT basis delivered to their door of customer and freight rates are fluctuating. So to mitigate that risk, some places we have built up a markup or kind of freight surcharge. Some customers have agreed and then there is C-Bomb in Europe. There is a quota which has started in Europe. So, Rajvatan being an agile and smart company, we are able to supply at bigger quantities in those markets. And we are, of course, taking the risk of all this volatility. Yeah.

Thank you so much, sir. All the best. Yeah. Thank you. Thank you.

Thank you. We will take the next question from the line of Barkov, Bhaddadev, from Ambit Asset Management. Please go ahead.

Yeah, good afternoon, sir, and congratulations on a good shot of numbers. Sir, you mentioned that the CAPEX in Thailand is closer to about 100 crores. So, is it fair to say that if you are able to utilize in about two years' time, then eventually the payback can also come back in two years of this 100-odd crores?

Payback, again, depends on the profitability, margins, everything. Okay. So, as I told you, our focus is to consolidate our market share. And I believe once you have a bigger market share, your profitability always improves. Okay. And we don't see business on absolute, you know, bottom line. We see it on a comparison. How our competition is doing, how the market is doing, how the other industry is doing. And we find Rajatthan in a very, very consolidated position today. Okay. So very difficult to commit that payback will be two years, but it is absolutely necessary From the point of view of supplying to marquee customers, this increase in capacity, and 100 crores is nothing. It would have costed us, you know, maybe close to 300 crores for a greenfield project in Thailand, which we are doing for only 100 crores. Yeah.

Secondly, sir, if you look at EBITDA per ton, it has sort of declined by marginal 3% on a YOY basis. Now, we are seeing a very strong revenue growth, but essentially the operating leverage benefits are not coming at the EBITDA level. So, when do you see the operating leverage benefits also coming to the EBITDA in terms of EBITDA per ton?

You know, let me tell you, it will not reflect in numbers, because a lot of our inputs have gone up, the gas price, the electricity, the transportation, diesel cost, a lot of consumables, baking material, everything has become expensive in last, you know, since this war has started. Okay. In spite of all those increased costs, we have been able to maintain the EBITDA pattern, I think, which is commandable. Okay. If you don't appreciate it, at least I would like to appreciate that we have been able to do that. Sure, sure, sure. And our strategy also is to not reduce production or not walk out of the market, okay? As told you, we want to consolidate on the market share further.

And, sir, in terms of profitability on the export side, given that exports will be driving the volume growth going forward, is it fair to say that exports are more profitable on a per-turn basis compared to either selling in the Thailand local market or selling in the Indian domestic market?

Exports overall are good. It's a good business, profitable. In India also, or in Thailand also, you know, in our conversation, we have said there are marquee customers. For us, marquee customer means who gives a good price, where our product is appreciated. Okay, there are customers who don't want to pay good price to us. So, it is, export is better than those customers. So, if we are not exporting means we'll have to sell it to customers where profitability is very low or probably there is no profit left for us. So, in our priority, our marquee customers are number one, export is number two, and then some 5-10% we continue to sell in the customers where profitability is not there.

And lastly, sir, if you look at rubber prices for your customers, it has actually gone up more than 50% on a YOY basis. And we have seen some impact in terms of profitability for the tire companies as well. So, given that your customers are going through a tough time, are they also trying to squeeze you or because you are not a very big sort of cost in their overall tire manufacturing, you are able to pass through easily?

Nothing is easy. Whether rubber prices are going up 50% or 10% or it is going down, the purchase manager of a company will always bargain. Okay. And, but he always have an argument that if your balance is okay with our bead wire, take it free. We are only 3% of your total, you know, tire cost. So, end of the day, we are getting reasonable, you know, support from our customers also.

Great. So, thank you very much and all the very best. Yes.

Thank you, Margot.

Thank you. We will take the next question from the line of Nashita from Sapphire Capital. Please go ahead.

Yes. Hello. Am I audible?

Yes. Yes, I have audible.

Yeah. So, I had a few questions. So, on our Chennai facility, you mentioned that we'll be able to, so the rest of the 30,000 ton capacity, we'll be able to start, like, the commercialization from this quarter, right?

No, you know, it is not that something new we are starting here. We were already having the capacity of 30,000. We started adding more machines, and machines are modular. So, if you ask me today, our rated capacity in Chennai, 40,000 tons. Few more machines will be added next month. It will go up to, you know, on a monthly basis from 3,500, we are targeting 4,000 tons. From 4,000, we'll start making 4,500 tons. So, gradual improvement and gradual increase in production per month to ramp up the capacity up to 60,000 tons. Yeah, that is the plan. So, there is no starting date or ending date in this, yeah.

Okay, okay. So, like, by end of FI27, can we expect that the capacity will be improved till 60,000 tons?

No, no. So, to give you a, you know, flavor, this year from Chennai, we will be at least making 37,000-38,000 tons in the current financial year, which is already more than the 30,000 tons overall capacity. Yeah. And the balance will come in the coming years.

Okay, okay. Understood. And so, what is the incremental cost in adding each machine? Like you said, gradually we are adding the capacity. So, what is the incremental capex that we are sending there?

No, I recall we had spent 270 crores for a facility of 30,000 tons and we spent another 30, 35 crores to complete it to 60,000 tons.

Okay.

Okay. Understood. And my next question is on our Thailand capacity. So, you mentioned that our KPEG, the brown free KPEG that we do will be of 100 crore. So, how are we going to fund this KPEG? Is it going to be from internal accrual?

Yeah, both. It's a combination of internal accrual. Thailand balance is accruing cash month-on-month basis, and there are banks' loan is also at a very competitive rate, below 4% we borrow from bank. So, it will be a combination of loan and internal accrual.

And the capacity, like, we can start operations in that capacity from FY29 start, right? Because it will take a year to, like, build the machineries and, like, start the capacity.

FY28, FY28.

No, so, like, you mentioned that it will take a year for the capacity to start.

Yeah, yeah, so, one year from now, okay? We are in September.

Okay, one year from now. So, H2FY28, we can expect the capacity to start, and that will be of additional $50,000.

Yes, yes. And it will take two years to, you know, utilize that capacity based on the current, you know, demand, which is our projection.

Right. So, I just wanted to answer, now our margins have been under pressure, like we are doing all this KPEC also. So, can we expect the margins to improve gradually from here on? Like, do you think the bottom part of the margin?

I can say that our current margins are rock bottom. It should not go below this. So, anything from here will improve. Okay? But we have decided to compete head on in the market. We don't want to leave the space for competition to grow.

Right, right. And my next question will be on growth. So, like we've had very good growth, revenue growth in Q1 and Q2 year on year. So, can you expect this growth trajectory of around like 27-28% to continue for the full year and for FY28 as well? Yeah, yeah.

So, as I can talk about volume, revenue is a function of price and, you know, other dynamics also work. So, as I have been saying, 15 to 20% volume growth year on year, you can safely, you know, consider for Rajatan. It is a combination of growth in Thailand, in Chennai, and some in Indore. So, this will continue for next, you know, at least 10 to 15 quarters. And we have been consistent in saying this.

Right. Okay. Understood. Yeah, that is it, Samhain. Thank you so much.

Thank you.

Thank you.

We will take the next question from the line of Abhishek Benkar from Genuity Capital. Please go ahead.

Yeah, hi. Am I audible? Yes, Abhishek. Yeah. So, thanks for the opportunity. My questions are, first, my question is about EBITDA pattern, differences between Thailand and India. So, what is that difference and on a blended basis? I mean, where are we going? How are we going to, you know, improve that?

We have to, let me tell you, we never compare India, EBITDA, Pertan, and Thailand, EBITDA 1, Pertan. Thailand has different set of customers, different market, different source of raw material, their cost of manufacturing is different. Okay. So you have to divide your question in two parts. India business is very different. The source of raw material is different. Prices are different. In Thailand, we source globally raw material. Thailand is a market which is open for Chinese competition. So very difficult to answer your question. If you can break it down into two questions, I'll be happy to answer that.

Yeah, then my other question is that Thailand expansion we are doing, so are we targeting similar set of customers, I mean same customer mix or are we going from current customer mix to premium or export customers from there?

Let Pranay answer this question. Now, he is better connected to all the customers than me. Pranay?

Yes, sir. So, yeah, I would answer that Thailand itself is a growing market, and we have recently got good approvers in our marquee customers, which sir has just mentioned, and they are very hopeful with few two or three good counters, which are renowned all over the world. So, the growth which we are expecting will be, of course, with the premium customers increasing their shares, and the balance will be in the Southeast Asia and European market. So, that is the target for the growth, what we are presenting now, and what we are going to get the new customers.

Okay. That's it. Thank you.

Thank you. We will take the next question from the line of part-shake from Smith & Thompson's Capital Advisors. Please go ahead.

Hello, Emma, what is that?

Yes.

Yeah, so I want you to ask the declining other income. Is there any one-time reason or what is the sustainable income, absolute number you can assume?

Other income, you know, because we are a company having a subsidiary in USA, a subsidiary in Thailand, and the consolidation applies. So, a lot of revenue items also, when we consolidated, you know, reflects in the other income. So, other income is not extraordinary income, which generally is not part of the EBITDA. I'll say this is very much part of the EBITDA for us. Otherwise, what is your question? I didn't understand.

Like, like, what is the reason for, like, on Q1 basis, the other income has declined significantly. Like, earlier it was 3.4, and now it has declined to 0.66.

I think there is some wrongdoing in your numbers. Other income on a standalone basis has gone up. And on consolidation, because of consolidation, that has gone down.

Consolidation?

Yes, when the U.S. balance sheet is consolidated, the other income will knock off.

Okay, got it. Thank you.

Thank you. We will take the next question from the line of Leticia from Investec India. Please go ahead.

Hi, sir. Just a quick question. Sir, what percentage of our volumes will be premium for India and Thailand? The reason to ask this question is you indicated that as we move more towards premium customers, we will get rid of the bottom customer base. So, just trying to understand the impact on profitability it can have, say, over next two years, three years. So, if you could help us understand the percentage of premium volumes and how much is the difference in pricing for a standard customer versus a premium customer?

Yeah, so, Ritesh, it won't make a big difference in India because in India, premium customers, we are already at more than 50-60% counter share. Okay. So we are not projecting to further consolidate that market share. Something may happen because of our Chennai location. Okay. But that is not our projection. Definitely the big difference will come in Thailand where the price difference also between a premium customer and a Chinese customer is in some cases up to 10,000 baht per ton, which is In Indian rupees today, close to 25, 26,000 rupees. Okay. So that should make a difference. Yeah. And what percentage of our volume premium customer volume growth takes time. Okay. So it is happening. Every year we add more volume to that.

Yeah, so I'll answer that question. So currently around 30 to 32% of our sales are towards the premium customers. And as Sir has mentioned, it will take a time to grow, but few marquee customers are already approved and we will supply them. So we expect this to grow by 40, means 30% will become

40% in the coming year product mix.

Correct. And sir, how much is the differential in working? Yeah, that is helpful. Related question, basically, when we look at exports, how much is the difference in working capital days? Basically, when we are catering from India to, say, Europe or US, likewise from Thailand to Europe to US?

So, working capital for European customers is around 70 to 80 days. What's the credit? It also includes around 40 days of transit time. So, transit time to Europe is 40 to 50 days from family. So, that is the reaching time and after that 30 to 40 days is the credit time. So, we can say around 70 days is the working capital for exposed to Europe.

And as against local, local I think is 30 days.

Yeah, local is 30 days. So on and average is 40 days of the receivable collection days for local.

Sir, I didn't understand.

Sorry. Sir, my second

question is, you did indicate a Thai facility has the benefit of probably scrap usage and its green bead wire. Are we getting any benefits out of it?

Yes, definitely. We got few quick approvals only because those European customers were very keen to buy green beadwires because of the targets of making green tire and reducing carbon footprint. Right. So, Thailand also has an advantage, the C-bomb, which is applicable in Europe now, EU. Thailand is much competitive when the C-bomb will be applicable. So, compared to India, Thailand is a better position.

And, sir, Indian exports, do they target Europe or is it largely towards US? How should we look at it?

From here, we are exporting to both the continents. It is depending on which product is approved from which location.

Correct, but sir, there will be a negative impact because I think, I don't know the source of our feed for the Chilnai and Pitampur plant. It won't be scrap-based wire rods, so the carbon intensity will be higher.

No, no. It is higher. It is higher. So, those customers are not supplied from India. We cannot.

Okay. Fair. This is helpful. Thank you so much, sir. Thank you. Thank you, Ritesh.

Thank you. We will take the next question from the line of Varun Sharma from Corpel Investments. Please go ahead.

Yeah, Varun. Congratulations for the good setup number, sir.

Thank you.

Sir, my first question is that, what were the tariffs on our products when we were exporting to the US, when the tariffs on India were 50%?

So, for a long time, the tariffs on our products was 50%. Our product falls under Section 232. So, all the steel products exported to the US face a 50% duty. From India, or from Thailand, or from anywhere else. And against China, it is a little more. They have an additional duty of 12.5%.

Sir, and my second question is that, who would be our main competitor?

Would it be Bansalwire or would it be Tata Steel?

The main competitor. Would it be Bansalwire or Tata Steel?

We consider both of them as competitors, but Bansal is new. Okay. Still, according to us, he is not in all the counters able to supply. So, more competition with Tata than Bansal.

Yeah.

Okay, sir.

Okay.

Thank you, sir.

Thank you. We will take the next question from the line of Sanjay A from Ilara Capital. Please go ahead.

Yeah, good evening, sir. Thank you for giving me this opportunity. I just wanted to ask you regarding this green bead wire, as you mentioned. You said that you are the only supplier which is supplying from Thailand, and you also got the approvals regarding the same to export it to Europe because of the green, I mean, whatever the globalization it is, the green, So, can you highlight some more details on this? Why don't we have some other competitors in this green wire?

Very simple reason. LNJ, the source of raw material, he uses 100% scrap. So, the material coming out of the scrap is called green steel. Okay. Okay. In India, nobody is making wire rod out of scrap. They are still using the iron ore and pellets and, you know, those ROM clear. That is the difference. Okay. So our Thailand source, you know, he uses 95, 92, 95% scrap as a, as a, as his ROM clear. So we use that wire rod for making green bead wire. That's it. Okay, okay.

So, the technology is open, or is it that, I mean, any competitor can come in and make this thing?

Like, if we want to make it in India, you know, we are not able to do it. So, some customers who are doing some trials, they place a small order on our Thai company, And we supplied them from there to make some prototype trials and trials and everything is going on.

So, yeah, Abhi, it's more of theory.

It is more aggressive in European market. But other companies are also, you know, because of their commitment to become a green company or reduce carbon emission globally, there is a flavor, there is a pressure, there is a need for green. Yeah.

Thank you so much for this answer. And may I know, sir, I understand that this is very initial and nascent state that we are heading towards green revolution and everything. So are we expecting some huge amount of good amount of margins or it is just for green energy and everything? I mean, the introductory stage, as you said, what kind of margins can we expect once this scales up?

No, because margin margin we cannot project today. Because of our ability to supply green bead wires, we got approval faster in bigger counters, European tire makers. Okay. That is the advantage. They got attracted. So in short time, they said, okay, okay, if you are supplying that product, we will approve. So, entry ho gai, or business chadu ho gaya.

Understood, sir. So, basically, initiation of market share.

That green bead wire, I can sell at $300 more.

No. Okay, okay. Initiation of market share. I agree, sir. Entry to the new market share.

Yes, yes, yes.

Agreed, sir. Agreed. And as you said that on the steel rod, which is for conveyor beds, you said that it is in the nascent initial stages. So, just wanted to understand, any other products in the pipeline other than this, which you might be testing?

No, not right now. Our focus is on building up capacity in Chennai and Thailand, which I can see will be consumed very quickly. So, right now, nothing beyond this.

Okay, okay. Thank you so much for this, and good luck for the future. Thank you so much. Thank you, Sanjay.

Thank you. A reminder to all the participants, you may press star and 1 to ask a question. We have the next question from the line of Sakeet Kapoor from Kapoor. Please go ahead.

Yeah. Namaskar, sir. May I watch the sponsor? Yes, sir. Ah, sure, sir. Firstly, just to reiterate two points, you mentioned that, firstly, our EBITDA margin will be in the vicinity of this 12.7-13% event, we expect the minimum of this margin.

But this is the minimum. I think this is the lowest margin because our volume and our efficiencies, we are able to click this double digit volume. But when I look at other balance sheets of our competitors, none of them globally is making double digit EBITDA margin.

So, we are getting additional 7,000 from the Indian domestic opposition, that is the Chennai part for H2.

Yes.

That is what the volume growth will be, expected volume growth for H2 from the Indian part.

We are on track to continue growing in the second half also. So, and consolidated growth of 17%. Thailand has grown by 22%. Yeah. So, this year we should end up more than close to 160,000 tons of business. Yeah.

Uh, 160,000 for the entire, uh, both, both the profile, yes, yes, yes.

So, sir, last year we did 133? Yeah, yeah, we are targeting 160.

160 out of, uh, which we did, uh, 71, uh, for the first half, right? Aji, Aji. Sir, one second, sir. Sir, secondly, when we look at our balance sheet part, sir, our capital work in progress, closing balance is 90 crore for stand-alone. So, for 90 crore, generally, it is for both the steel wire project, cord project, as well as the shennai capacity, that is what the closing balance is, and how much you are going to capitalize?

No, it's about 70 crore, so it's just a steel cord project, and it's small and small and small and small and small. Sir, let me just tell you. 70 crore is for a steel cord project, which is still not capitalized. Okay. Okay. Okay. So, out of 90 crore, yeah. 10 crore, you can take both places, more and more. Chennai as well as Thailand.

Okay.

Then that figure is 115. When we look at the console part, our closing. Yeah, yeah, yeah.

So, the real number for Hitampur is 80 crore. Okay. Okay. And Chennai must be 15 crores and 20 crores in Thailand. Okay.

And out of that 80 crores which we have done in the sale court, that will get capitalized when it comes to this quarter?

I think in this quarter, we should be capitalizing that. Okay. Now the trials are going on. Once we start regular production, we will capitalize it. Depreciation will start.

Okay, and what should be the expected revenue contribution for H2, sir?

For H2, in all our discussion, we are not counting, you know, still record revenue.

Okay, but then it will be an account of deficit and interest.

Not very big, not very big, because we have not expected volume growth in H2. Okay, the trials will be the customer, the sample will be the, the approval will be the. We need ISO certification, we need BI certification, you know, all these formalities will take a lot of time, but I'm confident that next financial year, it will be full, well, it will be running at good capacity utilization.

Okay, and then when we look at our borrowing part also, on a consolidated level, the borrowings have gone up. So, what explains this, this 90 crore difference for the consolidation. When we look at consolidation, it is only, I think, Thailand that gets consolidated. So, in the, in the borrowing and as well as in the inventory part.

So, can you explain, uh, I'm thinking that 27% revenue growth ha ha ha. Okay. So, uh, major, majority of this is, uh, working capital borrowing. And it is more so because working capital cycle for export

is higher than the local.

Okay.

So majority of this is

borrowing for working capital. And it is for, it is in proportion to the growth of business.

Yes. Okay. And sir, lastly, what we have invested in the capex for the last six months is in a 50 crore stand-alone. That will be a major part of your steel cord project that we have invested in. Yes.

Yes. Yes. Yes.

And sir, what have we created infrastructure? It is only the plant and machinery, I think. So that is what the infrastructure is.

Plant, machinery and our shed is... No, no, no, no. Our first factory was dismantled and we made a lot of shed. Almost 2.5 lakh square feet. Okay. With the capacity to, I mean, with the capability to take more machines and more volume in future.

So, when we look at our EBITDA growth, EBITDA growth is still 10% quarter on quarter. So, when we look at a console level, Q1's EBITDA was 41.71 and Q2 was 45.79.

Year-on-year, that is 14.

So, that translates into 10% Q1Q. So, taking into account what you expect, We are expecting this number. What will be the trajectory in terms of the growth part? And it will be expected to be 10 percent.

Our position for Thailand is better. You will see better number from Thailand in the coming quarter as far as EBITDA is concerned. We don't expect much improvement in EBITDA in the remaining two quarters in India. As I told you, market is competitive. Okay. And we are also one of the head-on competition with other two names, which were discussed earlier. But in console, you will see improvement coming from Thailand.

Okay. So to conclude, Thailand will come from the margin contribution and the volume will come from India. No, both of them will come from Thailand.

The volume will come from Thailand and the margin will come from India.

We will take the next question from the line of Pranay Roop Chhatarji from Burman Capital, Please go ahead.

Mr. Pranay, please proceed with the question.

Hey, sorry, I was on mute. Am I audible now? Yes, Pranay. Sorry about that. So my question is with respect to the India capacity. So after Chennai scales up, our total, let's say, I'm talking with respect to Q4 of FI27 as an example. By then, our annualized capacity in India would be 132,000 tons, 1,32,000, which is effectively 1,20,000 of bead wire, and the remaining is the other product. And 10,000 tons of steel cord. So, total is 132,000 tons, right? 142,000. Okay, let me then be sure about this. I am looking at your presentation. Pitampur has total capacity of 72,000 tons, of 60,000 bead wires.

That is correct? Yeah, yeah. But we are adding 10,000 tons of steel cord also.

Achcha. Because I think the last time I spoke with the team, I was under the impression it was being that bead, that black wire is being converted into steel cord and it is not incremental.

That is wrong then. No, no, no. But I also told in the call that few more, right now we'll be buying raw material, semi-finished goods, but we are installing few more equipments and lines to have in-house capability.

Okay, so if I then for a second ignore that additional 10,000, because anyway we are not building anything into this year, which is probably next year. So, I focus only on the 132,000 tons, and I divide it by 4. I did 33,000 tons for the quarter, which is the capacity. What is the maximum we can produce on that 33,000 tons, even if we stretch ourselves to the max?

So, 90% of that? 90% of that. Doing that in Thailand, we are stretching to that capacity.

So, hence my question, sir, Thailand, aren't we doing almost 100%? Because I think we sold 15,260 and our quarterly capacity in Thai is 15,000 tons.

So, yeah, yeah, you are right. You are right. Production was a little lower than this. It was 4,600 something. So, yes, we are doing some de-bottlenecking, some change in the sizes. Yes. Okay. So when we say capacity, it is based on some assumptions of sizes and speeds.

Okay.

So if there are orders for thicker wire, product capacity grows. Those complications are difficult to explain to you on phone.

No, no, no, perfect. Sir, the reason I'm asking this is, obviously, at the start of the call, you said that basically now nothing is approved on Chennai going beyond 60,000 ton capacity, and obviously, this is how it gets utilized, and this is the return on investment, you will decide. I'm just thinking, India, if it continues growing in 13-14% range, sometime in the second half of FY28, likely you will be fully utilized. Chennai, completely utilized, and Pitampol, completely utilized on the bead wire front. Yes, yes. So, when, assuming everything goes on track, how do you plan to progress in terms of timeline of events? Because first, you have to take board approval, then there will be a lead time of, you know, the machines being ordered and coming in.

And basically, I have answered in the previous question that we have the land available in Chennai, And it's a very good location, very well-located. Profitability, margins are much better in Chennai. Okay. And our competition is far away from south, which encourages us to quickly ramp up the capacity in Chennai. But unless there is a board approval and there is a firm plan, I don't want to announce. But if you want to foresee, yes, I also foresee that expansion in two years' time.

Understood, sir.

Sir, last question I'll ask, sir, just to gauge how the growth could be from an India front, since you have explained Thailand beautifully. Sir, India in F526, we did about 81,000 tons, 82,000 tons if I round. I can split that 80,000 tons into 62,000 to 63,000 tons of domestic bead wire consumption, about 10,000 tons of black wire, if I assume it's fully utilized, and about 9,000 tons of export from India. Is that correct, sir?

I'm not so handy with numbers. I think it's correct, sir, because I think I got it. It is correct. Yeah, yeah. So, it is correct number.

Yeah. Yeah. So, I'll tell you where I'm getting at. So, if I want to think about what the growth could be from a more medium-term perspective here, the domestic consumption of bead wire would be constrained, right? Because anyway, it is limited by how much capacity your entire guys are putting, and obviously, you are confident of gaining market share, but you are already at a high market share. So, maybe 10, 11, 12% could be the growth on the domestic consumption piece. I am very excited about the export from India piece. This, I think, historically has been in the 1,000 to 2,000 mark. And after Chennai sort of successfully ramped up in FY26, that went to 9,000. And I think this year you could almost not double, but a bit less than double, maybe 14, 15, 16,000. 40% growth. 40% growth. So, sir, what is driving the exports from India, and how much runway for growth do you think there is? Because for me at least, how much I understand your India capacity, this is going to be the material growth engine, sort of, where you can gain market share and drive faster growth.

Yeah, so, what is driving growth is the quality we make. So, other than Raj Bhutan, nobody else is able to export. And it is also because of our long, long relationship in India, Thailand, with those global customers. And we clearly see that there is a demand China plus one in our product. Okay. People are not very comfortable buying 100% from China. Yeah. So we are getting our hard work of last two, three years of making effort. We now have a subsidiary in US. Very soon, we'll start a subsidiary in Europe. But our marketing people are already located there. So their efforts, our efforts have given this result. And I can say this is only beginning. This volumes will keep growing if everything goes well. Yeah.

And would it be continued to be driven by Southeast Asia and US? I think these are the two geographies that are captured from past phone calls.

Yeah, so Southeast Asia, I don't see much growth because, you know, China is very competitive there. But yes, growth in Europe and USA is certain.

Correct. And you said 40% is the growth expectation this year from India exports. Yes, yes. Okay, great. Thank you, sir. You have been very, very patient in answer.

Thank you so much for your interest. I think it's over now.

First, we have one last question.

Okay.

We have the question from the line of Ajay Gabbadia from Hothilal Oswal. Please go ahead.

Yeah, good evening, sir. Sir, the last prize hike we took was in the first quarter. Remember, when, you know, the steel prices had gone up considerably in the last quarter of the last year. So, in the last couple of months, although the steel prices have gone up significantly, and we normally take a price hike on quarterly basis. So, any hike we have taken at the end of this second quarter?

We have been able to take some hike in some cases where prices were not finalized or we were not committed at old price. Yes, but remaining will, we have to take end of this quarter.

End of the third quarter. Yes. So, currently, the pressure on margin is more due to the freight and the other raw materials rather than steel? Am I correct or steel is also one of the parts?

No, the steel impact is not in the paper, but the result of it is not in the paper. Okay. Okay. Okay. Mainly energy, gas, petroleum, baking products, you know, dyes, everything has gone up. Transportation costs. Yeah. Export main sea freights and they are like crazy. Yeah. But still prices, yes, are going up. And I think it will continue till mid of November. But whatever it is, December onward, we have to pass on the price increase in remaining counters.

Okay. Okay. Thank you. Thank you so much.

Thank you very much. Ladies and gentlemen, that was the last question. And with that concludes the question and answer session. I now hand the conference back to the management for the closing comments.

So, thank you all the shareholders for your interest in Rajadhan. We are in exciting times in spite of very turmoil market, very turmoil geopolitical situation. Your company has been able to show a good growth and we are confident of continuing this growth journey for next couple of quarters. Please keep watching us, and we'll try to do our best. Thank you so much.

Thank you, members of the management. On behalf of 361 Capital, we conclude this conference. Thank you, everyone, for joining with us today, and you may now disconnect your time.