Finolex Cables Limited ($FINCABLES)

Ladies and gentlemen, good day, and welcome to the Finolex Cables Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Mr. [ Pranav Ramkumar ] from [ Denton Investor Relations ] team for opening remarks. Thank you, and over to you, [ Pranav ].

Thank you, Ron. Good evening, and thank you all for joining us on the Finolex Cables Q4 and FY '26 Earnings Conference Call. Today, we have with us Mr. Mahesh Viswanathan, Deputy CEO and Chief Financial Officer from Finolex Cables Limited. We will begin the call with the opening remarks from the management, after which we will have the forum open for the indirect Q&A session. I must remind you that the discussion in today's earnings call may include certain forward-looking statements and must be viewed, therefore, in conjunction with the risk that the company faces. Please restrict your questions to the quarter performance and to strategic questions only. I will now request Mr. Mahesh Viswanathan for the opening remarks. Thank you, and over to you, sir.

Thank you, Penne, and welcome, ladies and gentlemen, to this call. I'm sure you now have seen the results analyzed and [indiscernible] at your end. Briefly, I will go through the highlights as I see them. Revenue for quarter 4 was up by about 22%, both year-on-year and quarter-on-quarter. For the full year, revenue was up 1%. EBITDA for quarter 4, there was a 7% improvement year-on-year and 22% quarter-on-quarter. For the full year, was about 14% better than last year. PAT for the year -- for the quarter was approximately 6% better Y-o-Y and 19% better quarter-on-quarter. And tax for the full year was about 14% better than last year. So these are broad numbers. Of course, quarter 4, we -- towards the end of quarter 4, we had the shock from the Middle East, which resulted in cost increases across the board, while the LME poster did stay low for a couple of weeks the rupee depreciation as well as cost hikes in most other raw materials meant that at the end, we were left with the higher cost of production than before and therefore, margins were slightly under pressure. If I go into the individual segments for electrical sector, revenue was at INR 1,697 in the quarter was the highest that we've achieved, and it was about 22% higher Y-o-Y and 21% higher quarter-on-quarter. For the full year, about 22% higher than the previous year. EBIT numbers were also fairly strong, 30% higher on a quarter-on-quarter basis and 17% higher Y-o-Y. For the full year, EBIT was about 18% better than last year. Some comments on the sector. There were certain product lines, which did extremely well, and certain product lines where the growth was slightly lower and 1 product line where the growth was actually lower. So 2 batteries flexible industrial flexibles and power. All these sectors did extremely well, generating approximately high double-digit growth in volume terms. Other was about 30% higher. Flexibles was about 17% higher, and power was about 21% higher. Solar cables, which we introduced last year in the fourth quarter, has been very well accepted, and we are nearing capacity utilization at this point in time. We are looking at increasing the capacity going forward. Building were was steady, but has been impacted through the year because of constant common price increases and which meant that we have to pass it through to the customers. So there were times when there were a resistance from the market. But overall, in the year, very marginal volume growth. Agricultural applications were one area where there was an issue. The pre-seasonal monsoon plus continued monsoon got impacted the volumes here. It was down by about 15%, 16%. The year in Middle East distances, like I mentioned earlier, has some impact in terms of increased [indiscernible] cost. And together, coupled with INR depreciation meant that the overall cost of production was higher, inventory costs crept up a little bit. And that, of course, impacted the end of the year margins a little bit. We had, during the year, close to 14 price changes, all upwards and effective price change at the market was about 24%, 25% in most of the SKUs. This is on electrical. So coming now to communications side, revenues you saw was kind of flat for the year, whereas quarter 4, we did well. We were up by about 30% Y-o-Y as well as quarter-on-quarter. Some background to this. Fiber prices during most of the year, at least for the first 9 months were 7, 8 months were pretty low, but started handling towards the end of quarter 3 and since then, a continued decline. Some of the reasons behind this, there is an explosion of data center obligations in the U.S. and in Europe, which is practically eating up all available fiber supply. So currently, raw material availability is a constraint for everybody. Most capacities in China and Japan are locked completely. Added to this is the new for military applications that have also pulled in a lot of fiber both the war in Russia and in the Middle East have triggered newer applications and apparently fiber is getting consumed there. So that has resulted in a large supply kind of a scenario at this point in time, which has helped the fiber prices harder. That I think the advantage to us in terms of improvement in revenue, we should see some during the second half of this year. Our commitments locally, domestically, have been long-term yearly contracts, and those were at fixed prices. So until those contracts run out, we will not see the benefit coming into our financials. Hopefully, next year, when we renegotiate the prices that should change. On the fiber-related expansion path, we have completed the -- we have commissioned the preform plant, I said in the last call that trials were likely to begin from January and -- sorry, begin from February and end in a month's time. So mid-March, we commissioned the plant, and the plant should take another 2, 3 months to settle down and stabilize. But as of now, we are -- the performance is quite encouraging. The second part of that program, which was the fiber dry capacity expansion. That should get completed by, I think, July also. So some CapEx will still come in the current year, that the preform related CapEx, Phase 1, where we were setting up the plant for 100 metric tons that has been completed to. Coming now to CapEx. Overall, we have spent about INR 240 crores last year, including infusion into the JV with Sumitomo the -- in the current year, that is 26%, 27%, we expect to further spend another INR 200 crores on capacity expansion plans and complete the [indiscernible] reform-related CapEx, which is remaining, that will be another INR 100 crores. So that will be total spend in the current year. On cash flow, the cash flow from operations was about INR 50 crores lower than last year. But towards the end of the year, like I mentioned earlier, after the disturbance has started in the Middle East, we had to take additional inventory coverage. So if you looked at our numbers, balance sheet numbers, the inventory is up by about INR 300-odd crores. So part of that investment has gone in there. Because at that time in time, nobody is sure how long is what would last or what impact it would have in the medium or even short term. So we needed to protect ourselves to be able to run the plants in April, in May, so some amount of prebuying but at higher expenditure was done. I think we should be able to pass on the costs over a period of time to the end customer. So it should not be a very long drag on the mines. The other piece of information that I have is that the JV with Sumitomo, the extra will give you Sumitomo, that turned profitable this year. So on a revenue of about INR 450 crores, we generated a profit of about INR 21 crores. So -- and the outlook is decent. We have -- we start the year with an order book of about INR 380 crores. And so I think we have turned around the 1. So this is broadly the comments that I have to make before giving the floor to you. So I'm now free to take questions. Thank you.

[Operator Instructions] We take the first question from the line of Manoj Gori from Equirus Capital.

My first question. First, obviously, I would like to convert [indiscernible] you on your new role. So my first question is on the communication cable segment. So obviously, when we look at the quarter, this was the record quarterly performance on the revenue side. And even we saw some improvement on the margins, which would have been because of the scale benefit also. Now preform benefits are yet to kick in, and we have seen relatively better improvement on the margins. So -- and as you highlighted in your opening remarks that given the demand, especially from the West market and some supply challenges, there is a huge goal for business into communication cable segment. So for our purpose, how should we look at the growth from here on? And probably, where do you expect given the current prices, where should we expect that the margins probably by FY '27 should settle for communication cable segment? That's my first question.

Okay. So at the moment, like I mentioned, supply chain, there are still some challenges. With the -- one is on the regular business side, there is a extremely high demand towards data centers. But beyond that, there is this military application, defense application, which is also pulling fully in a lot of material. There are some restrictions in being able to participate in that because your raw material supplier also puts in covenants saying this cannot be used for initiation soon. So the opportunity can get a little limited on that side. I think -- we will get a little more clarity once there is some -- once there is some finite information about what's happening in the Middle East. That keeps spooking the market every other day. And to predict what we will end up with at the end of '27, even though it is not a long-term prediction, is a little difficult at this point in time. Also because of the exposure to defense applications, some governments have put in MRO and export of certain raw materials. So we need to work around and see how those challenges are overcome while there is a big opportunity at this point in time and the prevailing fiber prices are fairly high at the same time, securing the required raw material also pursue certain challenges. So we need to work on the track. At this point in time, I'm not able to really commit to a number or even predict a number. But I think it should improve. Beyond what we have seen this year. This year, we ended the year with about, I think EBIT numbers was about 6%. I think we should do better than that.

Sure, sure. Got it. So my second question is on the JV. So after a long period, we have taken a lot of efforts on the EHV side. And probably this is the first year where we have finally seen some numbers actually flowing in. Can you highlight like what are the steps that we have taken, how should we look at this business from a 2-year, 3-year view, where we can actually end up by FY '28 or '29 in terms of revenue. Because PBT when we look at INR 21 crores at INR 458 crores of revenue, close to around 5%. So probably the things are looking relatively break the year. So what's the overall thought process on this business?

Okay. There has been -- it has been a challenge for us over the last several years that we've been invested in this JV. Challenges were mainly around getting credentials for participation, showing experience. And some of the voltage grades becoming commoditized in the meantime. So in the last year, our focus was more on the higher voltage grids and also a mix of projects where there were only supplies and projects which were turnkey basis. So that gave us a little bit of -- once we started getting in purely supply orders, then the cash turnaround times became smaller, whereas when you get into a project-based business, then we turn on time a much longer Typically, we are unable to clear your receivables until the entire project is completed. And with the EPC part involved getting clearances and right of way in many of our cities are even sometimes in villages becomes a time-consuming issue, which drives the project for longer periods. So this year, we've been able to get an order blend of both pure supply as well as full turnkey solutions. So that improved the operations quite a bit. The second part was to ensure and see that the key equipment, the capacity utilization improves further. So at this point in time, the most key machinery there is occupied more than 80%. In fact, we are planning to enhance capacity there so that, that would help us in increasing the overall plant capacity towards the 70%, 75% funders. So utilization of capacity has been better this year, and that means fixed cost absorption is obviously better. And focus on the blend of orders that we were in. So I think that is going to continue to drive the strategy. On the market side, there is a very large market. Currently, I think the size is about $0.5 billion to $750 million. But the requirements that we are seeing when we attack to utilities across the country. eventually in 3 to 4 years, that size could go up to $4 billion to $5 billion. So that's the kind of market expansion that we are seeing and we are likely to see. It is also backed up by the fact that many in the competition are today trying to -- and -- sorry, some are riding and some are trying to add capacity of similar technology that we have. Until last year, they were not willing to spend that money. But over the last year, we have seen many more from the competition. Follow the same technology that we have in terms of the vertical insulation. So that is something that is catching up. So both from the market side as well as from our own experience, we see that there is or for growth.

Manoj, I would request you to please join back the queue for follow-up questions. Participants, we request you to restrict to two questions per participant and rejoin the question queue. We take the next question from the line of [ Vineet ] from Investec.

I had one question in particular. When we look at housing wires, that hasn't been doing well for us as well as the industry as much as we would have liked, particularly considering how real estate cycle has been over the last few years, particularly post cogitated, picked up quite sharply. So what is stopping wires as a segment to grow at least, let's say, in high single digit in terms of volumes?

I think the runaway price escalation on copper, probably in terms of trade stocking is that is not a conservative levels. It is where they are looking at it fairly tightly because like I said, we've had 14 changes over the last year. And we've had 1 more this year. So I think that has been -- that's been an issue. But where the material is going to projects we don't seem to have a major issue. The retail part of stock and sell, which is, I think, a concern. So for a distributor, a dealer to invest for amounts of money and hope that the price holds. I think that would be a challenge that is unless people are willing to take at this point in time.

Sir, I meant the tertiary demand. Now given wires as a proportion of doing up a house is so small, why are we seeing volumes not picking up? Or people deferring their purchases as far as the tertiary sales and housing wire is concerned?

So with what I responded saying when on project sales, those are the sales which are going into builders or contractors or developers. That is stable. That has not drop off. The retail 1 where you go to the hardware market or the electrical market and where the distributor is selling it as the dealer is selling it. That has taken a bit.

Understood. And do you expect a similar phenomena to play out in FY '27 as well given price increases? Or we should see some bit of improved demand, let's say, in the next 12 months or so?

I'm not going to put my neck out there. I do not know how to predict that part. It depends all on the price movement panel.

We take the next question from the line of [ Patanjali Srinivasan ] from [ Sundaram Mutual Fund ].

I have two questions. So firstly, we showed no improvement in terms of margins for our communication cables business. So could you explain as to what cost is? Is it like a product mix or pricing? What is the reason for this? And you also mentioned in your opening remarks that we have some contracts with customers, so the pricing may not change. So will we benefit when the fiber prices have improved or will we not get a meaningful benefit there?

So we should benefit except that the time frame is probably around second quarter.

Got it, sir. And the first question?

First question was how did we get 6%. That's -- there were a few orders besides the long-term contract which was taken at current prices. So that improves the numbers.

Okay, sir. And just one last question related to this. So with our future orders when we say we have contracts, what proportion of our business is contracted and what will be like unutilized or uncontracted capacity? And preform started in this quarter. So we start getting benefits from that only in this quarter, and we also have Q1 1 additional capacity coming for [ Ciber ]. So will all these things change our overall revenue base in a meaningful way?

Yes, it should change, but not -- you will not see it in quarter 2. the preform part of it, like I mentioned, we commissioned it in March. For any plant with this technology to settle down, which takes about 3 to 4 months. So I expect that benefit to kick in from the earlier I can talk about the end of cadet or maybe quarter 3. And the draft draw capacity, which will get increased will get commission towards the end of quarter 2. So any benefit that we would get from that will only be after that. So the second half provided there are no other hiccups on the supply chain part should be much better than last year.

Got you, sir. In the last quarter, you mentioned that your revenue potential can be around INR 650 crores after this entire capacity comes. But this quarter. You're working from INR 160 crores of revenue. So this largely price driven. So at current prices, can the revenue be like ballpark of INR 1,230 crores.

Again, depends on the -- and you were -- sorry, on the SKU level, depending on how the -- how complicated the construction of the cable is. So for example, cable, which has got 2 fibers or 4 fibers you're basically just paying for the -- it's not a very difficult design to make you are just being acting for the raw material. But as it goes into multiple fiber counts, are higher fiber counts, 144, 288 or even beyond that, then the revenue per kilometer changes and changes substantially. So it depends on what that configuration looks like. But as -- given the price levels that are existing today, it can be beyond INR 750 crores.

We take the next question from the line of [ Tushar Donde ] from [ Sangvi Family Office ].

First of all, congratulations on your induction to the new role. I have few questions. First on me, sir, if I see the communication cable has segment has [indiscernible] growth in this quarter Y-o-Y basis? I was just asking you to what's our outlook over here? I mean next figures could we expect similar such growth coming over the next were capacity is live. And on the preform capacity, you did mention that we will try to consume it internally. And then if we are left in the capacity, we will also we sell it outside. How are we thinking on that? Do we have tied up with the customers for the saving of that capacity? And then I have a follow-up.

No, at this point in time, right now, the situation is that, like I mentioned in my opening remarks, fiber availability is a big issue at this point in time. There is no fiber to be had anywhere in the world. And so any fiber that I can draw from my prior, I would use it as well. So that is -- so selling a reform at this point in time. probably not the right area. So that is today's case, how it might change 3 months from now or 5 months from now, that is something that we will have to look at, at that point in time. The second part of your question was? Sorry.

Growth in the segment.

Yes, growth in the segment look, as you are all aware, like in the West, there is an explosion of data centers coming into [indiscernible]. And the -- I think [indiscernible] also pushing to ensure that our data is posted within our country and not outside. So I'm guessing that will add to the number of data centers that get installed here over a period of time. So yes, there is going to be growth there is also going to be growth with obligations around AI and similar technologies. So it is, I think, the right time to be in this industry. Barring these heaps around are disrupting supply chains. I think it should be a period of reasonably good growth over the next few years.

Okay. That's great to hear, sir. I just have a clarity on the EBIT margin, segmented EBIT margin that you have bleed. I did see that communication cables has significant [indiscernible]. I just wanted to make for that have we included other income as a part of our EBIT margin calculation outlook?

No, no, no.. Other income doesn't get into the business. No, no. At the company level, it gets included, but at a segment level, no. Is that clear?

I guess. So a company like other income is around INR 32 crores. And at unallocable level, it means to be around crores. So I'm guessing the INR 24 crores would have been already included in the [indiscernible]?

No, no. I you're talking about the other income on the top line, right? So if you look at the total, that is around INR 237 crores for the year. And if you look at the allocable total that INR 224 crore for the year.

We take the next question from the line of [ Nikhil Purohit ] from [ Firan Asset Management ].

Sir, first question, what is our maximum revenue potential from the electrical cables segment? And currently, what is that utilization rate? And what is the target utilization rate for next month?

Well, we keep enhancing capacities by rebalancing almost every year. So; within the CapEx that we spend -- there is a certain amount which is spent every year on adding 2 different lines. So basis, the capacity that was available, let's say, end of March, utilization would be around the mid-60s. So there is some ability to grow further.

Maximum revenue potential?

The revenue potential can be at about 80, 85 if somebody is operating, they are doing a good job because none of these lines, this is not a single machine on process. These were multiple machines with multiple processes. Not all of them are equally balanced. So there will be always some bottleneck either at the beginning or at the end, our memory -- and therefore, if someone is able to achieve 80%, 85%, I think we are doing a fairly good job of running their plants. So -- we are -- there is a headroom there is a headroom of 10%, 12% at this point in time -- or sorry, 66% is where we're operating. So about 15% headwind is still available. So your revenues at current prices can go up by another 15% without major investments.

Got it. Got it. And could you give the retail versus project this quarter? And I see this going again because of the margins that play out because of this year?

Retail was this project I think over -- in the past, our retail to project ratio would have been 80-20. Now probably it's around 2/3, 1/3.

Okay. Okay. And just last question on the communications side. So what is that utilizable capacity for overseas right now? And when will be the 8 million fiber kilometer now and our target utilization growth because you said the fixed contracts will get over by quarter 2, I think. So if you go through some like this.

The raw capacity that we have currently is 4 million kilometers. That should crush to [indiscernible] by, hopefully, by end of second quarter. Okay. So that means 8 million capacity will be available from beginning third quarter. So 4 million is what is available for us to operate at this point in time. And we are close to [ 3.25 ] I think at this point.

So I'm sorry, your utilization rate you said is in after 5 again?

[indiscernible]

Okay. Okay. And if we hit the 75% rate, we have guided like 8% to 9% EBIT margins you already did 6%. So is it right to assume that with earlier you said that it should improve going in FY '27, we hit the 9% mark.

Yes. Subject to no supply chain concerns being there. There are supplies issues at this point in time. Things that we import especially things that we import either from Europe or China, there are difficulties are time lags in getting those -- that needs to be driven.

But the fixed contracts problems should not ideally stop our growth, right, apart from quarter 1?

No, I should not at -- so we will negotiate -- if the contract is valid until June and the next contract when with the tender and the bids we will be in the city.

Got it. And within FMEG, what kind of good did we see in the PVC conduit and fans doing this for FY '26, just to understand?

[indiscernible] has been a difficult product line this year because in the initial part of the year, you had unseasonal rains. And towards the second half of the year, there were changes to the norms, which meant that people were destocking any inventory that they had and they wouldn't want to take fresh inventories. So that has been an issue. So in actually did not grow in volume terms. Kaldi has done very well. And we are now operating at close to 85%, I think.

We take the next question from the line of [ Akshat Meta ] from [ Seven Rivers Holdings ].

I understand in the communication cadence, how much is coming from Exile and how much it came from other continuation statements on the rough basis. person would be up to further related. Sorry, I could not please. about 3, 4 would be optical-related. And sir, just wanted to understand, since you just started 2 months it you started to perform plant. Where are we getting and how easy it is for us to get the Germanium?

That is the challenge that is I keep referring to supply chain difficulties. That is the challenge. Fortunately, we do not require massive amounts but it is a challenge that we need to overlap.

Currently, how much inventory of Germanium will be there with us?

I think that is sufficient to run a few months.

Okay. And any kind of plans that you have for the SME segment as well that we're going to grow or we are focusing right on optic fiber more as a word.

Sorry, I didn't get your question.

I just try to understand if there is any growth kind of outlook that you can give on the FMEG business as well.

Yes. Okay. Our performance has been under par there. That is something that we realize and appreciate. So we are relooking at the portfolio in terms of what kind of products are we having there? Do we need to modify some of those. We are also looking at how to strengthen the teams -- so distribution is something that we've been working on and that we will continue to engage with the distributors to ensure that both geography as well as products of lipo. So it is going to be a continuous exercise this year, and we definitely want to make this success in the same manner as the other product lines.

We take the next question from the line of Vidit Trivedi from Asian Market Securities.

Most of the questions have been answered. Just one clarification. I remember we met you in the month of December last year, and you have said we are working certainly something in the export area. So how the ports are shaping up for us? And what's the export percentage this year?

Okay. So this year, we made our team was completely revamped. So I think we've had our team in place for about 6 months of the year. And yes, there are no certain inroads and they have done well. So earlier here, 24, 25 export performance is about -- just around INR 20 crores, which went up to 52 this year. And I'm looking at much higher numbers for the current fiscal. So the team is a completely new team with [indiscernible] who are better prepared, I think. And I think we should be able to show a larger revenue share from the export side. So until last year, the revenue share was, let's say, about 0.5% to just under I see it climbing to about 2% to 3% over the next 2 years.

We take the next question from the line of Sushil Choksey from Indus Equity Advisors.

Congratulations on a new resignation and a very good result. Sir, my first question is, given the situation, Boman solar, not only in India, but outside of China also because of the energy crisis and led by data center, defense and other optic fiber also. What is the potential to maximize capacity, what we have, but double the capacity or enhance our capacity and how much time will it take? And what kind of CapEx is required for that? And current CapEx, which you announced, what is the break above that?

So the current CapEx that I announced includes doubling the solar capacity. So we are cognizant of the potential there, and we are going to double the line there. And -- that would be helpful for us, not just on the fiber side, but also on the power cable side. both for ourselves as well as for the jury. So we are engaging with all those customers. The gestation time for these orders is pretty long. So you need to resources there before the order book starts we are, I think both the JV and us have a certain amount of capacity to cater to the data center needs and power cables. As I mentioned earlier on, when I was talking about the JV looking at expanding some of the capacity there. So I think.

And what is the potential or capability to go further backward communication option table the even from where we are.

So we are a ponte next day. I have to go back, then I have to make silicon Teodor Germany and the Peglar. So which I think is at this time in time, and time with the look -- so I think we are stopping here to the timing.

Sorry, sir, I could not hear you what we said.

I said going behind 3 means that we will have to produce the silica in -- that is not in our plans at this point in time.

We take the next question from the line of [ Patanjali Srinivasan ] from [ Sundaram Mutual Fund ].

Just to come from 2 things, sir. One is you mentioned that the revenue potential from the expanded line can be around INR 750 crores.

I think right now based on whatever And including the existing stuff, the overall capacity. After we expand, then the capacity could be -- I mean, potential could be uncertainty. Correct. That is for 8 million kilometers. Is that correct Right. Okay.

And how will the benefit of preform show, sir will it show up as lower cost of production? Or how will that sure.

Okay. The -- 1 of the earlier question also was, are we going to earmark a certain capacity to sell reforms outside that is a fastest depends on what the market conditions are at any point in time. It's a flexibility that we will have. So if I am shot on cable orders, then I are on fiber rather, then I will sell the preform. So it gives us flexibility. But I think overall, The intention is to use the preform to convert it into fiber, which again to convert it into cable and then sell it, which means our ability to participate in tenders where pricing sometimes becomes aggressive, is available to us. or depending on situations like today, where the fiber prices are extremely high. But we don't have to sell up reform, we can convert it into fiber and take that profitability into the books. It is not a static onetime charge that I will like, it will be dynamic as dematic demands.

Okay, sir. Just a related question I have, sir. So you when you mentioned that if we use it internally, like versus previously you would have been buying from outside, what would the margin benefit be there from this.

I don't have the exact numbers in front of me. But typically, when you -- on your production lines stabilize this, you should be able to get it better than market, whether I'm able to get it better than market at 5% or 10%, that will depend on how quickly unable to stabilize operations. So that's about as much as I can say at this point in time. So I don't want to stick it up to a single figure.

Sir, I was expecting a range. I'm not trying to get a very specific number.

Yes. So that's what we Depending on how quickly we are able to stabilize the operations. I think we should be better than market by anywhere between 5% and 10% because the preform seller is also making some money.

We take the next question from the line of Niraj Shah from Sumika Capital.

Sir, if you could just repeat the CapEx figure that you mentioned, is it INR 200 crores or INR 300 crores? That's my first question. Secondly, if you could also let me know what are your -- what is your guidance for the coming years in terms of revenue and margins? And lastly, my final question is that if you could -- this quarter, we have seen our operating expenses as a percentage of sales come down. Now -- and when I look in the past 12 quarters, we are in 1 of the sweetest spots. We are currently at employee expenses as a percentage of sales and other expenses as a percentage of sales. Both are lowest in the past 2 quarters. So do we expect them to continue in this range? Or do we expect it to revert back to normalcy?

Okay. So let me answer your question 1 by one. Your first question was on the CapEx. So I said capacity enhancement is about 200. Additionally, the plan of the expansion on the optic aerator the cable side, which we had announced 2 years ago and which is ongoing. That is a balance grow about INR 100 crores to be spent because like I said, the expansion to 8 million kilometers of fiber will get over in July or August. So all that will cost another INR 100 crores. So total INR 300 , out of which INR 200 is completely new, which is for capacity enhancement. Your second part was on guidance by actually did not give us any guidance, especially in a situation like today, where you do not know whether the -- what is ending tomorrow because you keep hearing that today is ending now that it's not ending. And tomorrow, I have an agreement, no, I don't have an agreement. So -- it is a very volatile situation. So I don't think I should be predicting anything. All we do is internally, we have targets that we are working towards. And that is subject to [indiscernible] even contents not being there or certain level of constraints not being there. So at this point in time, I would not like to make any sure, I mean talk about any guidance numbers. The third time that you wanted. What is that?

Are other expenses and employee costs percentage change?

I think on an annual basis, it should be similar. In beginning quarters, you might see differences. But overall, at an annual level, should -- we should be similar to what we have today.

What do we did in FY '26?

Yes.

We take the next question from the line of [ Pratik Srivastav ] from [indiscernible].

First of all, congratulations on your promotion. Sir, my question again is, sorry, again on the overseas side of things. So sir, if I see it from the first half of FY -- sorry, FY overall FY '21 and overall FY '26. I see the revenues from our communications in the same around INR 500 crores -- can I understand that you are saying that in the first half of FY '26 prices are depressed, they only started recovering towards the second half -- so can you give in terms of volume? What was the volume growth between FY '25 and [indiscernible].

About 7%.

About 7%. Okay, sir. And what are you targeting, sir, moving into the next year in terms of volume growth?

Again, we made our budgets two months ago. At that point in time, the expectation around what is happening in the Middle East was that it should save soon. But it's been 3 months since that started. And no rules are different. You go back and forth, back and so that and such. So there is no clarity as it, which means some of the why some quite a bit of the supply chain is impacted. And then you heard someone asked a question about Germany. Again, the supplies have to come [indiscernible] or from Europe. And both have serious restrictions and exports from their side because the rentals have extremely high demand. And the fact that it can be used for different purposes is, I guess, worrying most people. to be able to predict which way things will move at this point in time is kind of difficult. And I think I would like to while making that prediction.

Is this problem faced by the entire industry? Or is it just with [indiscernible].

No, it is faced by many people in the industry, anybody that is producing preform would face it. Anybody whether buying preform and drying the reform would also face it because glass is not available for any kind of money. There are very few people who are able to get class from outside and only those that are signed and long-term contracts. There again, the price is going crazy. So it is a problem that is being faced today how it will pan out in 3 months, I'm not bid. I hope it turns out for the better. But at this point in time, I'm not able to [indiscernible].

Yes, sir, that you can understand. And my last question, sir, on the order book on this side of things, can you throw some light on the order book we have?

So the -- like I said, there is a there is 1 major contract, which will come up for renewal in I think the end of June. I don't see why we should not be able to renew it because we've been their suppliers for the last 8 years. So product-wise, we are very happy with us and quality wise, we are very happy with us. So I don't see why that should not repeat. Beyond that, and that takes up about slightly more than half of the capacity. The balance is sold to other customers. So in terms of volume, I don't see why we should do why we should not do something similar or better than last year.

And the size of the order book, sir?

I don't have that number in front of me. But I'm quite comfortable with saying that it should be better than last year.

Ladies and gentlemen, we take that as the last question and conclude the question-and-answer session. I now hand the conference over to the management for their closing comments.

Thank you for all your good wishes and thanks for participating in today's meeting.

Thank you. On behalf of Finolex Cables Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.