In conversation with Yashovardhan Chordia, Director, Rajratan Thai Wire Co. Ltd

The demand for bead wire is expected to rise even further, driven by the replacement market, exports, and timely capacity expansion; asserts Yashovardhan Chordia, Director, Rajratan Thai Wire Co Ltd. Rajratan Global Wire is based in India as well as Thailand. In Thailand, the company is operating as Rajratan Thai Wire Co Ltd

With a sharp rebound in economic activity over the last few months, what is your outlook on the domestic and global tyre industry? What are the key factors expected to give a fillip to bead wire demand growth over the next 2-3 years?    

The Indian tyre industry grew by 13-15 per cent by volume and 16-20 per cent by revenue in FY2021-22. (Source: ICRA). The sector reported a 12-15 per cent increase in realisations during the financial year 2021-22 by passing on the cost of raw materials. Exports and replacement growth drove the increased industry revenue, which was driven by an increasing need for personal mobility. Replacement volumes increased as the economy recovered from multiple lockdowns over the last two years. Electric two-wheeler sales increased while component supply constraints hampered passenger vehicle production. Between FY22 and FY25, the Indian tyre industry is expected to grow by 7-9 per cent in volume. A significant increase in raw material costs is being passed on ahead of the consumption chain. The demand for bead wire is expected to rise even further, driven by the replacement market, exports, and timely capacity expansion. 

For Q4FY22 and FY22, Rajratan Global Wire reported its highest-ever consolidated profit. What factors are responsible for this stellar outperformance?  

There were quite a few key factors that contributed to the growth in Q4 & throughout FY22 and this is expected to continue over the next 3 to 5 years. One of these was an increase in our capacity utilisation for timely Cpaex done at our Pithampur (Madhya Pradesh) plant. We have been able to meet the growing demand for bead wire from tyre manufacturers driven by capacity expansion and tyre replacement demand. Our positive growth was further propelled through our consistent focus on optimising production efficiencies and calibrating our manufacturing costs lower than our competitors. Another key factor was our continuous efforts to increase our customer base, expand our wallet share with existing customers and achieve breakthroughs with reputed as well as large customers both in the local & global markets. 

What are your key growth triggers?  

The key growth drivers for us will be a blend of multiple factors. The increase in our capacity to 60,000 TPA versus 40,000 TPA in Thailand will be a key growth driver for our Thailand business. With this, we will eventually achieve key breakthroughs in acquiring new customers in Thailand and other international markets.  

The de-bottlenecking process at our Pithampur, Indore plant will further accelerate our ability to meet domestic demand for key products. 

The new greenfield facility in Chennai, India, for an additional 60,000 TPA will be instrumental in meeting the growing demand in domestic markets as well as for export. 

At the moment, what are your top three strategic objectives?  

Our top focus and priorities are to continue and complete the expansion process of the 60,000 TPA facility in Thailand and also, set up the 60,000 TPA Greenfield facility in Chennai for bead wire production at an estimated Capex of Rs 300 crore. Our strategic objective has been to increase and extend our reach as well as market share with customers in and outside India & Thailand for exports. We are continuing to work towards improving our cost of production and ensuring that we consistently maintain our profitability with respect to per tonne of bead wire produced. 

What is your earnings outlook for FY23?  

We wish to refrain from sharing any specific guidance on our earnings outlook for FY23. However, we expect to grow our volume by 20-25 per cent, which should lead to a strong earnings growth in FY23 on the back of stable EBITDA margins and improved working capital efficiency.