APAR Industries Limited (APARINDS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Apar Industries Limited Q3 FY '21 Earnings Conference Call hosted by Four-S Services. [Operator Instructions] Please note that this conference is being recorded. At this time, I would like to hand the conference over to Mr. Samayak Jain of Four-S Services. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone. On behalf of Four-S Services, I welcome all the participants to the Apar Industries Q3 FY '21 Earnings Conference Call. Today on the conference, we have Mr. Kushal Desai, Chairman and Managing Director; Mr. Chaitanya Desai, Managing Director; and Mr. VC Diwadkar, CFO of Apar Industries. I would now like to hand over the call to Mr. Desai for his opening remarks. Over to you, sir.

Yes. Thank you. Good afternoon, everyone, and a very warm welcome to our Q3 FY '21 earnings call for Apar Industries. I will start the call with a quick industry update and then an overview of our performance, followed by more detailed information on the segmental performance. Post all this, we'll open up the floor to questions. So at this stage, we are happy to report a good performance despite continued adverse sentiments in Q3, especially the difficulties that have been faced in the domestic market where there is still some pandemic firefighting mode going on. Apar's diversified portfolio of products, customers and geographies helped us with a relatively strong response to the situation. Our profit has grown substantially. It's 2.5x what it was on a consolidated basis compared to the third quarter of the previous year, with the large contribution of this coming from our Specialty Oils segment. We continue to have a focus on exports; looked at certain niche markets like agriculture lubes, which actually has paid significant dividends through this period; maintained a strict focus on our per order profitability. And we've tightened credit terms besides looking at various initiatives to reduce cost and improve productivity. The domestic market continued to see headwinds for the state transmission and distribution projects as a lot of state funding was channelized towards the pandemic response. As a consequence, a lot of tenders were postponed. There is now an improvement in the order booking for both Conductors and Cables, and we expect the situation to continually improve going forward. In Q3 FY '21, Apar posted a consolidated revenue of INR 1,699 crores, which is 7% lower than the same period previous year. Our exports, however, were up by 6%. The domestic revenues were down by about 7%. The EBITDA at INR 163 crores is 37% higher than in the previous period and stands at 9.6%, which is an expansion of 312 basis points. Our finance cost has come down by 57% year-on-year due to favorable LIBOR and local rates as well as reduction in the number of days of working capital that is being utilized. This excludes a onetime charge of INR 14 crores related to some IGST-related expenses. So PAT adjusted after this onetime charge came in at INR 93 crores, which is 5.5%, and a 347 basis points higher than the same period previous year. In the 9-month period for FY '21, Apar has posted consolidated revenues of INR 4,491 crores with an EBITDA of INR 316 crores and a profit after tax of INR 123 crores, which is 10% higher than year-on-year. This is -- we consider this to be good as the company had to tie it over, obviously, the first quarter where there was relatively very little production and sales that took place. I would also like to cover a few industry highlights and touch upon some of the happenings in the budget of '21/'22. So in this budget, there is an outlay of INR 3,05,984 crores, which has been announced to be spent over the next 5 years for launching a revamp and reforms which are result-linked in the power distribution segment. This, coupled with INR 1.2 lakh crore liquidity package under the Atmnirbhar Bharat program, which was announced in May of 2020, augers well for the sector, We still estimate this to be about double the incremental debt requirement of the discounts in FY '20 through to '23. We are still awaiting more details on the same because some of these have riders and -- with respect to what the state government needs to do. But overall, this should be a major shot in the arm for the sector and something that we've all been waiting for a while. Also, there is a 60% increase in allocation towards renewable energy for FY '22, which stands at INR 5,753 crores. The budget has also given a major boost to the railway electrification, telecom infrastructure, automobile and EV industry, which is good for the portfolio of products which we have. The government plans railway electrification to reach 46,000 railway kilometers by the end of 2021. The allocation to BharatNet is at INR 7,000 crores, which is up 27% from the FY '21 estimates. Allocation to the fiber optic cable database network for defense services is also up by 30% to INR 5,200 crores. FAME India, which is a scheme for electric vehicles, is also allocated INR 757 crores, which is up 138% year-on-year compared to what was in FY '21. Through the pandemic so far, we have seen that the production of railway, locomotives and coaches has been at a very, very low level. Our expectation is that from the fourth quarter of FY '21 onwards, there will be an accelerated production to catch up from this time. And this will auger well for our E-beam cables that are produced both for locomotives as well as coaches. Key transmission and development companies have received orders of about INR 8,600 crores in this quarter so far. As per the government's year-end review, 83 new substations were commissioned, 224 substations augmented and 27,261 distribution transformers installed from April to November 2020, despite the lockdown. Loans worth INR 43,000 crores were disbursed and released, and INR 1,18,508 crores sanctioned against the liquidity inclusion package announced by the government. 8, 439 kilometers of transmission lines were added in the period April to November, which is up 19% year-on-year basis. So this seems to have cleared a reasonable amount of the backlog of inventory, which was being held through the pandemic. So our expectation is that offtake will start increasing as we move through the coming quarters. I will now like to just go over the performance on a segment-by-segment basis. So in the Conductor business, the revenue had declined 15% year-on-year and come in at INR 737 crores. This was mainly due to a 28% decline in the domestic revenues. Demand for conventional and HEC products were subdued in the domestic market, as I mentioned earlier, especially in terms of tender finalizations. Exports declined 6% year-on-year. We did have a setback where we export benefit under the MEIS was withdrawn by the Government of India, and that has had an impact in terms of our realizations in Q3. The scheme now stands closed, and a new scheme has been announced by the government, but that does not carry significant benefit. Total volumes fell 13% to 31,671 metric tonnes. Amongst the higher-value products, our HEC, high-efficiency conductor contributed 50% -- 15% to the revenues, and copper conductors contributed towards 11% of the revenues. The rod business increased by 22% with a revenue share of about 14%. There has been an increase -- improvement in the offtake of our copper transport conductors where -- which go into the transformer industry, where we have been gradually receiving more and more approvals. And there has also been a better order book that is coming for the OPGW project. The EBITDA per metric tonne post-ForEx adjustments came in at INR 13,022, which is 5% higher on a year-on-year basis, mostly from cost discipline and some of the productivity initiatives that we had. In terms of the new order inflow, order inflows in the quarter came in at INR 1,047 crores. That's up 68% year-on-year and 30% more than in the previous quarter. The order inflow from railways for copper conductors was up 2x that of Q3 FY '20 and contributed 46% of this new order flow. Export order inflows contributed 35%. And order book as on 31st December 2020 came in at INR 2,123 crores. So that's 25% higher than Q2 FY '21. The total amount of export share of this INR 2,123 crores is 55%. In the 9-month period, Conductor revenue came in at INR 275 crores, which is down 26% year-on-year. The EBITDA ForEx adjustment per metric tonne -- after adjustment per metric tonne came in at INR 10,357. So that's 3% lower than on a year-on-year basis. The new order inflow during the 9-month period was INR 2,169 crores. Coming to the Specialty Oil business, here the revenue had increased 18% year-on-year to come in at 3 -- at INR 692 crores. We had a 30% increase in the export revenues during this period. This has been the highest Q3 sales volume that we have achieved in the last 4 years, with the sales volume closing in at 1,20,205 metric tonnes, which is up 18% year-on-year. Hamriyah's -- the Hamriyah plant's capacity utilization was close to 99% in the quarter, up from 65% in Q3 FY '20. Our white oil sales increased by 25%. Transformer oil exports increased by 5%. However, we had a 7% drop in the transformer oil domestic business, which, as I mentioned earlier, was plagued by the lack of resources that the utilities had. So we've been maintaining a relatively low profile with respect to the transformer oil distribution segment. The industrial oil volumes have grown 19% year-on-year in this period. Automotive volumes for us have grown 31% year-on-year, most being contributed by the agriculture, the retail segment as well as growth in our OEM accounts. So if you take the lubricants, which is industrial and automotive put together, it's up by 29% year-on-year. And today, it contributes to 26% of the revenues of the division. The EBITDA per KL after ForEx adjustment increased to 165% year-on-year. So it came in at INR 8,158. The EBITDA improved significantly with improvement in prices as well as a product mix, i.e., the lubricant portion was higher compared to previous periods. In the 9-month period, the oil division posted revenues of INR 1,642 crores, which is 8% lower than on a year-on-year basis. The EBITDA per KL came in at INR 5,987 per KL, which is 82% higher than the 9-month period previous year. Q4 FY '21, however, has had some disruption of lube-based oil supplies mainly because of COVID-19-related issues. Given that there are lockdowns running in many parts of the world, the fuel demand has contracted, resulting in less feed going into the lube refineries, due to which there have been supply outages and a major strain with respect to the base oil supply chain. What has been happening for us is that as months have been passing by, our inventory levels have been falling. And therefore, we could see some impacts in the fourth quarter due to some supply chain outages. We're obviously working with various refineries with whom we have long-term contracts to try to speed up supplies to us, but this does remain somewhat of a risk. If you look at the Cables side. The cable revenues were 18% lower year-on-year, came in at INR 322 crores, mainly due to overall low market demand and unremunerated prices from a significant competition given that demand was lower. Exports contributed 16% of revenues in Q3, up from 13% a year ago. The power cables side of the market continues to remain fairly competitive. The elasto and E-beam cables saw reduced demand coming from the railways and defense particularly, where, as I mentioned earlier, the production levels are very low. We are optimistic that over the next several quarters, there will be some sort of a catch-up as there will be pressure to make up for lost time. The solar sector also was relatively slow. But from December onwards, we have started seeing an uptick in terms of orders for cables going into solar installations. The optical fiber and telecom cables also saw a relatively slow uptake from telecom companies. The EBITDA margin post-ForEx adjustment came in at 8.4% for the quarter versus 10.6% for the same period previous year. If you look at the 9-month period, Cables has posted a revenue of INR 826 crores, which is down 28% from a year ago. The EBITDA margin post-ForEx adjustment came in at 5.5% versus 11.7% in the 9-month period. However, Q4 FY '21 has started with a good order inflow, especially from the solar and the wind segments, and with an expectation that call-ups will start taking place for railways as well as the defense. Going ahead, we expect recovery in the domestic demand to be very strong. We hope that the discount reforms announced soon come about and the execution plans are well laid out. There is a clear buoyancy also in terms of demand from the export markets as global energy transition is taking place towards renewables and is creating a demand for transmission lines and new distribution networks. So as mentioned in our call, our product profile is -- we are continuing to focus on the higher value-added items, and we are constantly focusing on improving the return on equity with a limited CapEx spend to come in the next few quarters. So with this, I'd like to end my comments. I thank all of you for joining us on this call and would like to open up the floor for questions, please.

[Operator Instructions] The first question is from the line of Pratiksha Daftari from Aequitas Investment.

I wanted to ask, what kind of inventories do we keep for our raw materials at base oil and metals? And what kind of impact do we see of rising prices on the profitability going ahead?

So the typical inventory which we carry for our base oil is about 30 days in tank. And generally, you have another month, which is on the waters coming in. So about 60 days is the gross inventory level. In the case of our Conductors and Cables business, also the inventory is approximately -- if you take the total inventory, it sits at around 50-odd days. Now there has been a steep increase in all commodities. So it's -- there's an increase in terms of base oils as well as aluminum and copper. And particularly the most steep has been in the case of steel. So our expectation is that in terms of the base oil side, we would be in a reasonably strong position to pass on those increases as things stand today because the supply chain itself is very tight. So as a consequence, the whole industry is going to run on pretty tight inventories, and whatever they sell will be pretty current cost. So they have been -- on the lubricant side, Castrol has already announced its second price increase in 2 months. Being the industry leader, normally the rest of the industry follows suit. So to some extent, I think the whole -- the oil side will have a certain amount of cushion. We have had relatively higher margins in Q3. We don't expect the same high level of margins in Q4. But our margins should mean revert back into the INR 4,500 per KL sort of range. And we should be able to maintain that in -- through the Q4 period. In terms of the Conductor side, we have an exposure really on 2 fronts. One is the steel prices have gone up where there is no hedge. And in fact, they've gone up quite substantially. So that's where there will be some amount of hit. Also, wherever there are DDP and CFR contracts particularly with government and semi-government utilities, there, the freight cost is going to hit us because there's been a substantial increase in freight and shipping costs. And these contracts don't have an escalation in freight. They have escalations in terms of on the raw materials side, particularly aluminum and copper. We don't see a huge problem on the aluminum and copper side, because there, we have price variations and we are pretty much hedged.

Okay. So how much of our -- like the contracts would be without any escalation cost per freight?

So most of the export contracts which are there, they -- wherever they are CFRs, they don't have an escalation which is there for freight. So wherever you're supplying to private companies, you can sit and negotiate it. Wherever it's against tenders of world bank and some of the utility tenders, there will be an impact. So I don't have the exact percentage number available off-hand. But there will be some impact coming on that particular front.

Okay. All right. And sir, we've been -- you've been mentioning that there has been a focus on profitability for conductors in general -- or higher order profitability. Sir, I just wanted to understand how much of this is coming at the cost of volume growth. Or like if we had to maintain our profitability, what kind of volume growth can we expect?

What we've done is actually according to other related conductor businesses. So the conventional conductor business may remain stagnant, but the other newer products like the HEC, then the copper for the railways and OPGW and the CTC for transformers. So these are new segments that we have created. So these businesses, we have invested in, and they are sort of at different phases in their growth right now. So OPGW actually is quite an interesting situation because it was largely being serviced by imports if you look it as 4, 5 years ago. There is a Chinese company that has set up a large capacity. And today, under the new norms, they have difficulty in quoting for new business. Pretty much left to 3 players -- it's become a 3-player market, and the volume is likely to increase over the next few years. So OPGW is something that will grow. Copper transport conductor, as I mentioned in the opening remarks, getting more approvals from utilities and transformer OEMs. So that product line also will grow. The railways have, after a gap, have finalized contracts in the last couple of months only. So we received an order in excess of INR 450 crores, which I had mentioned during the opening remarks. So all those segments are showing signs of growth. So as we get into FY '22 and '23, we see that there is a tailwind in all these segments. Also high-efficiency conductor, the transmission companies today, based on our latest discussions are -- their cash flows also have improved. And allocations are -- they're being allowed to now start finalizing the tenders and going ahead with the implementation of projects that they had lined up. So you will see the HEC side also, as we get into FY '22, ordering and execution starting to improve. So we just allow the conventional conductor thing to fall as the capacities of all these other things' utilization goes up.

Okay. Okay. And so what kind of execution period do we have for this INR 2,000 crores order book? And do we have a pipeline right now that we are working on, on both Conductors and Cables?

Execution period is about 8 months actually for the pending orders, and the pipeline is INR 301 crores.

Pipeline is INR 300 and...

INR 301 crores, 3-0-1 crores, pipeline in sales.

Okay. All right. And if you could -- like if I adjust for the onetime finance cost of INR 14 crores, you're seen a sharp decrease in finance costs for the quarter, which is commendable. I just wanted to understand, do we see this sustainable? And what is -- like what are the key factors? Like how much is it because of LIBOR and how much because our days has come down?

At present, I will say, it is mainly on account of LIBOR and the local interest cost coming down. But we have taken a lot of action as far as number of days are concerned, and those are things that are going to materialize in the next 2, 3 quarters actually. It takes time to adjust those things.

Right. And if you could just give me the total outstanding LC amount?

Yes, I'll give to you. Pratiksha, it's INR 1,179 crore. Out of that, INR 827 crores is LIBOR-based and INR 352 crores (sic) [ INR 354 crores ] is domestic.

[Operator Instructions] The next question is from the line of Saurabh Patwa from HDFC Mutual Funds.

Congratulations for a really good performance in these difficult times. Sir, I just wanted to have your thoughts on a very -- a slightly longer kind of period compared to the past. So I think last 3, 4 years, what has happened is we have actually performed really well in terms of EBITDA, in line with broadly what we had been communicating through these calls. But -- so I think our CAGR on last 3 years basis, our EBITDA -- I'm not talking FY '21 into account, this being an aberration kind of a year. So even in FY '20, despite last quarter's disruption, our EBITDA grew 30% on absolute basis on a 3-year basis. But by the time we come to PBT, actually the numbers look like -- it looks like we have actually de-grown. So -- and I think largely the reason would -- is actually the depreciation which has increased and also the finance charges. And this is despite the fact that our debt has actually come down. I guess you guys have already communicated in your calls in the past, it is because of the LC-based funding and bank charges, et cetera. But -- so how -- what would be the key driver of EBITDA converting to PBT going ahead? So I think we are -- LC-based funding itself has started coming down, say, from maybe, I think -- it was, I think, in FY '19, it peaked, I think, around like INR 3,200 crores. And now it is, as you mentioned, it's close to this INR 1,200 crores. So I think that there has been significant headroom done there. But how -- what's your thought there, sir? And in terms of depreciation also, as you mentioned that, I think, large part of CapEx was done on this conventional conductors and all new value-added products. But I think -- part of it, we already started gaining in terms of EBITDA. But I guess it was not enough to get transferred to PBT. So just how -- like maybe 3 years, 2 years down the line, how you think the performance should look.

So our sense is that, first of all, there will be a period where in the next, maybe, 3 years horizon we are looking at where you will see a low-interest rate regime. So there is a definite benefit that we have in terms of lower interest rates, which will translate to the bottom line in terms of -- and we've already seen that in the last quarter, which is more representative because collections and things have now come in line. So the first half was a little disrupted because of COVID. But then when you look at particularly Q3, it's more representative of the type of interest that we will be picking up. So in the EBITDA, the 2 big pieces are the interest and the depreciation. On the depreciation side, we don't have significant head CapEx going forward. There's only CapEx which will be largely for productivity, quality, some debottlenecking, et cetera. The big chunk of CapEx is already through. And as our value-added products start growing, you will also see the EBITDA also growing on a per unit basis, whether it is per tonne for conductors or whether it is on a per KL basis for our oil business. Because as I mentioned earlier, the lubricant business also has grown, and that actually carries a higher per KL EBITDA margin also. So you will find that the EBITDA percentage itself should grow, plus the absolute value of EBITDA will also grow. The interest and depreciation will kind of remain at -- depreciation will remain constant in absolute terms, and interest will be at whatever level you are seeing pretty much in the third quarter of this year. So I would see a significantly higher translation of EBITDA coming into PBT. And as our Hamriyah facility starts cranking up and -- more and more approvals have been coming through during the last 9-month period. So we are able to grow larger volumes there even though the region has been a bit subdued. And whatever profitability comes there, it is free of tax. So it helps -- goes straight to the bottom line. You will see profitability growing, and our whole focus is on return on equity. So you will start seeing the return on equity also improving year-on-year.

Okay. Sir, just one small thing, but I'm not sure whether you will be able to pull it right now. Can you share a number like what -- the peak capacity which we have right now, you'll not give into detail. But like broadly, if we are at like maybe 90% of our capacity in conductor or 90% of capacity in transformer and specialty oil, what kind of revenue and EBITDA can we have based on current numbers?

Saurabh, it will depend upon the mix actually. At present, the capacity utilization in Conductor is 72%, and the oil also is around 72% and the Cable is 55%. But this 72%, the -- all these new product lines which we have added in Conductors, the OPGW is only 2%. CTC is also only 2% because these new product lines are just beginning to -- starting to...

That is what I'm trying to understand, sir. So when you -- so whatever capacity of OPGW we have or whatever capacity of...

We'll give you offline actually.

Okay. I'll get in touch with you, sir, on that. Okay, sir. And sir, just one last question on my end. When we say this Hamriyah has reached 99%, so this is -- if we can just -- there would be some amount of -- historically, when we started Hamriyah, a large part of export order which we were supplying from India were moved there. So if on a like-to-like, say, what would have Hamriyah gained itself, like, say, like when x of orders which were moved from India? Can you share that kind of a number?

Well, no, it -- I mean, that would be kind of slicing it a bit too fine. But generally, what's happened is that by -- there was a certain -- certain customers obviously moved from India over there because the servicing was much faster and more efficient. But our share of business in that region has substantially grown. So if you see the amount of export of transformer oils going from India into GCC, we have 80% market share today. So some of our competitors who are also having significant sales into the GCC, we've pretty much knocked them out because of logistics and the speed of delivery. And today with the freight costs having gone up, the domestic freight costs haven't really increased very much, the tanker freights, as much as the container freights. So we've gained share of business and market share within the GCC. We've also added new customers. So I'd imagine that at least about 30%, 40% of the business is from new sets of customers. And there is a share of business growth also which is there. We -- the nameplate capacity that we set up was 100,000 KL, which is about 8,250 KL a month. But if the business goes up, then we need to look at debottlenecking, some running capacity and things like that. The core capacity can increase substantially more than the 100,000. So I don't really see huge investment going in to keep debottlenecking what happens at Hamriyah. And there is -- because the plant is very automated, it has a big leverage in terms of cost. While your volume throughput goes up over there, the cost base is -- increases very marginally.

I think that is what we can see this quarter when there's, I think, the one -- as Hamriyah reached 99%, I think our EBITDA to PBT transfer has been pretty high because the...

Exactly. So that is -- depending on the loading at that plant, because of the automation, as you keep loading it more and more, the incremental cost is relatively marginal. It's lower than what would be the incremental cost in India to service the extra business.

[Operator Instructions] The next question is from the line of Viral Shah from Prabhudas Lilladhar.

Congrats on the results. Sir, harping on the action of Conductor margins as well again. We had a steep increase in sizes. So does that mean that these INR 13,000 per metric tonne EBITDA will come down by maybe 10%-odd for 4Q? Or that guidance is not possible?

To nail an exact number is really difficult because there are a bunch of moving parts here, especially with respect to freight. It's something which is changing on a day-to-day basis simply because of the physical movement of goods under these COVID-related conditions. So the freight portion is a little unpredictable in this coming quarter, so it's difficult to nail a number. Our sense is that as you get into the May-June time frame, you will start seeing -- with the vaccine program and with the spring and summer coming in, demand will start improving, and there'll be a more normalization of movement of goods taking place.

Okay. Sir, also, we look at that 9 months just before pre-COVID, when we had met you, our strategy was very clear, that we would be focusing on exports because we were looking at great demand coming in all the 2 segments -- in fact, all the 3 segments, what we are into from export market. But now since the budget, when you see that there is huge amount of opportunity in domestic as well, so has that strategy changed? Or still we continue to retain both export and domestic equally?

So we will continue to look at both the segments because there is -- there are certain geographies where there is a good demand which is there for exports. So for example, if you look at conventional conductors, our sense is that we will get better realization for conventional conductors in export than we will get in the domestic market, simply because the competitive environment is a bit different. However, for some of these value-added products, this is your high-efficiency conductors and railway conductors and all, obviously, we will be focusing much more on the domestic market. So depending on the product line, we will maintain our presence in both export and domestic. But I think the overall mix will start looking much richer -- much better because we will optimize for each category of product, which geography you're looking at selling. Fundamentally, I think the Indian side or the domestic side, the fundamental demand itself will grow, and we have the capacities in place to actually service this.

Yes. Fair enough, sir. Sir, second -- and last 2 questions from my end. In terms of working capital, have we started receiving payments on time from some private players and government? What is your stand there, on to it? And lastly, on Cables, you did mention that you expect a good amount of ramp up happening in defense and railways. Are we having the highest number of market share in this segment? And what's the outlook there?

Okay. So payments have definitely improved as we've gone month by month. In fact, they're now pretty much at normal levels. So we don't really see any major problems in terms of collections. So that's the first part of the question. What else?

Yes. So if I may add. Some of the working capital has also been dried up in our case because we are doing certain project work. So some of the COVID-related restrictions did not allow us to do the project work, and then there were some more money blocked in the form of retention moneys. So those things also, in due course, will get unlocked. Yes?

Yes, yes, sir. Go ahead. Go ahead.

So the working capital side actually has improved. And if you look at it first quarter versus second quarter versus third quarter, it's getting better. And the fourth quarter should be better than the third quarter. So that side is looking fine. Can you just repeat the second part of your question?

Yes. Second part of the question was on the Cable division. One, we...

Yes. So on the Cable side, we definitely expect that from Q4 -- because, see, there were some serious problems with the production facilities of the railways than the defense because there would be a couple of COVID cases and the whole shop floor would be shutdown. And these are pretty large shop floors. So now the cases have obviously come down significantly, and there is a lot of pressure to complete some of this work. And we don't have the most friendly neighbors sitting around. So as a consequence, the pressure is coming on the defense side. As far as railways is concerned, there is an outlay increase. And as a consequence, the future requirements are further going up. So you not only have to catch up on backlog, but also meet the future requirements. So our sense is that over the next 4 to 6 quarters, you will see a very steep increase in terms of the locos coming out and the coaches coming out.

Fair enough, sir. Sir, lastly, in terms of market share, because in defense and railways, what will be your market share be? Because we understand that E-beam and [ electrostatic magnetic ], we would be one of the largest player in this segment, or no?

So we are -- we have a significant share in that segment. And in fact, we were just putting up -- our third electron beam is just getting commissioned. It got delayed because we couldn't get any of the foreign engineers to come in. So we've commissioned it pretty much ourselves through remote monitoring from the supplier. But there is increased competition in that area because other players are also coming in, but we see the absolute volume of the business also growing. So in addition to cables, we've also entered the harness business for locomotives and coaches. So now today, we are participating in a harness tender with our own cables, plus supplying cables to the railway directly and to other harness manufacturers. So our sense is that even though competition will increase with new players coming in, because the market is going to grow and because now we are participating in both harnesses as well as supply of cables, we should be able to maintain our share.

Fair enough, sir. Sir, lastly, if I may add one. What is the CapEx for FY '21 guidance? And how much we have incurred for first 9 months?

We have incurred CapEx of INR 30 crores in the first 9 months. And we did not give CapEx in the future actually, as far as next year is concerned.

So CapEx will be pretty much within the depreciation that we are looking at. It's not in -- there's nothing -- it's not going to make a big difference in terms of the total working and such.

[Operator Instructions] The next question is from the line of [ Sriram Rajaram ] from Ratnatraya Capital.

Sir, just want to know, at full capacity, what can be the potential revenue for Conductors and Cables division?

Full capacity, almost INR 5,000 crores for Conductor, we can achieve. And when you find -- although...

Cable, really -- Cable can be INR 2,200 crores.

Cable would be how much, sir?

INR 2,200 crores.

INR 2,200 crores, okay. And what would be the incremental CapEx that is required, I mean, probably after a couple of years?

So as I mentioned earlier, that for the next couple years, whatever CapEx goes in will fundamentally go for some debottlenecking and productivity programs, maybe some quality control, equipment and things like that. So it should come within the depreciation that we have. So clearly, you will see the free cash flow coming out from the businesses.

Okay. Okay. And sir, just one more question. On the Cables front, can you give the breakup for the -- each of the segments in the Cable, like solar, then E-beam? Sir, you can throw some light on that? That would helpful.

You want the percentage, actually?

Yes, percentage. Percentage would do, sir.

Basically, elasto is 27%, okay? OFC is 12%. And...

How much, sorry?

12%, OFC. 12%.

Okay, okay. 12%, okay.

And balance is [ specialty ], 61%.