In conversation with Rajesh Jain, CFO of RR Kabel Limited
India's cables and wires industry is poised for strong growth, driven by increasing infrastructure investments, rising urbanisation, and the push towards smart and energy-efficient electrical solutions, states Rajesh Jain, CFO of RR Kabel Limited.
What were the key drivers behind the company's 9 per cent year-on-year revenue growth in Q3 FY25, and what strategies are being implemented to improve profit margins?
Our year-on-year revenue growth of 9 per cent in Q3FY25 was driven by an 8 per cent growth in the wires and cables segment and strong performance in the FMEG segment, which witnessed a 20 per cent revenue increase due to robust volume growth and an improved product mix. Despite moderate volume growth in the wires and cables business, overall demand remained stable.
Looking ahead, we are focused on enhancing profit margins through operational efficiencies, optimising the product portfolio, and maintaining a disciplined approach to cost management. We are also committed to achieving double-digit EBITDA margins in the coming years and breakeven in the FMEG segment during the next financial year, further strengthening our long-term profitability.
Could you provide insights into the segment-wise performance and the company's approach to expanding revenue share from the FMEG segment, which recorded 20 per cent growth?
The FMEG segment has been a key growth driver, delivering a substantial 20 per cent revenue increase in Q3FY25, mainly driven by fan segment growth. This growth was fueled by increasing consumer demand, improved product mix, and deeper market penetration. Additionally, segment loss was reduced substantially in this quarter, driven by premiumisation and new product launches.
We continue to focus on expanding this segment through product innovation, brand-building initiatives, strategic investments in R&D, and distribution expansion across key markets, further strengthening our position in this segment and supporting sustained growth in the coming quarters.
With exports contributing 27 per cent of total revenue, what factors drive the rising global demand for the company's products?
R R Kabel remains India's largest exporter of wires and cables, with exports contributing 27 per cent of total revenue. The rising global demand for our products is driven by our commitment to international quality standards, adherence to stringent safety regulations, and the superior reliability of our offerings.
Additionally, our compliance with REACH (Registration, Evaluation, and Authorization of Chemical Substances) and RoHS (Restriction of Hazardous Substances) directives has strengthened our position in international markets. Our continuous efforts to expand our global distribution network and cater to emerging infrastructure and industrial projects worldwide have further contributed to this growing demand.
What are the company's top three strategic priorities at present? Are there any upcoming capital expenditure plans?
Our key strategic priorities include:
1. Enhancing Profitability: Achieving double-digit EBITDA margins in the coming years and breakeven in the FMEG segment during the next financial year through operational efficiencies and portfolio optimisation.
2. Capacity Expansion: Strengthening our manufacturing capabilities to support growing domestic and international demand, particularly in the cables segment.
3. Market Diversification: Expanding into new and emerging markets while further consolidating our position in the domestic market.
Regarding capital expenditure, we plan to invest Rs 1,200 crore. Over the next 3 years, we are focused on expanding production capacity and our product portfolio and investing in new technologies to drive long-term growth and innovation.
How do you view the future trajectory of India's cable and wires industry, and what steps is the company taking to leverage emerging growth opportunities?
India's cables and wires industry is poised for strong growth, driven by increasing infrastructure investments, rising urbanisation, and the push towards smart and energy-efficient electrical solutions.
As a leading player in the industry, R R Kabel is well-positioned to capitalise on these opportunities through continuous product innovation, expansion of our manufacturing capabilities, and strengthening our distribution network. Additionally, our focus on sustainability and compliance with global safety standards ensures that we remain at the forefront of industry advancements.
Disclaimer: The opinions expressed above are personal and may not reflect the views of Dalal Street Investment Journal.