KEI Industries Limited (517569) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the KEI Industry Q1 FY '21 Earnings Conference Call hosted by Edelweiss Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Mahawar from Edelweiss. Thank you, and over to you, sir.

Hello, and welcome to KEI's Q1 Results Conference Call. We have with us today Mr. Anil Gupta, Chairman and Managing Director; and Mr. Rajiv Gupta, Executive Director from KEI. I now hand over the call to the management for the brief opening remarks, that will be followed with a Q&A session. Thank you, and over to Mr. Gupta.

Yes. So good afternoon to everybody. I'm Anil Gupta, Chairman and Managing Director of KEI. So I'll give a brief summary of the Q1 results. In the quarter 1 of 2020/'21, the company has achieved a net sales of INR 745.3 crores against INR 1,081 crore. So the sales declined by 31%. It was due to lockdown and restrictions of business activity caused due to COVID-19 pandemic during the current quarter. The factories were almost shut for 1 month -- on for the whole of April and resumed operations in the end Of April. Our EBITDA in this quarter achieved is INR 80.87 crore against INR 119 crore. So the EBITDA margin over net sales in this quarter is 10.85% versus 11.02% in the same period of the -- same period of the previous year. Profit after tax this quarter is INR 36.23 crore against INR 45.81 crore in the same period of the previous year. However, the profit after tax/net sale is 4.86% versus 4.24% in the previous year. Now I'll come to the sales part. The company has achieved the institutional cable sales, domestic, INR 307 crore against INR 403 crore last year. But the export sale is INR 163 crore against INR 96 crore last year. So the total institutional sales, including exports, is INR 470 crores in the first quarter as compared to total institutional sale of INR 499 crore in the same period of last year. So that this institutional sales is declined by 5%, mainly because of the jump in the export sales. Sales through dealer network, dealer/distribution network achieved is INR 186 crore in the first quarter against INR 366 crore in the same period of the last year. So the dealer sales declined by approximately 49%, mainly due to lockdowns in the factories as well as in the major cities and metros -- in most of the cities. So the dealers were not open and not operational. So most of the dealers started operating after 15th of May, but the activity picked up from the first week of June. Dealer sales contribution is in -- the total Q1 sale is approximately 25% as compared to approximately 34% in Q1 of '19/'20 last financial year. In financial year '19/'20, contribution of dealer sales -- the total active working dealer of the company as on June 30 is -- was 1,648. In this quarter, the sales of extra voltage cable increased to INR 88 crore against INR 78 crore in the same period of the previous year. So this segment has achieved growth by 12.82%. And export sales total, including cable, stainless steel wire and EPC exports, total put together is INR 183 crore against INR 112 crore last year. So growth in this export segment is 63.39%. In this total sale, the sales to Dangote refinery during Q1 is INR 96 crore. The sales of EPC segment, our EPC sales other than cable is INR 78 crores against INR 195 crore in the previous period. Out of the total sales of EPC, the sales of extra high-voltage cable EPC is INR 16 crore. That means the execution portion of the EHV project is INR 16 crore as against INR 34 crore in the previous year same period. It was mainly because of the lockdown in various sites and the execution activity could not be carried out. The pending order as on July 31, 2020, is approximate -- in around INR 2,951 crore, out of which the EPC domestic is INR 705 crore; EPC export, INR 389 crores; extra high-voltage cable turnkey projects, INR 627 crore; the cable domestic orders INR 1,112 crore; and pending export orders are INR 118 crore. The pending export order of the Dangote refinery is now only INR 9 crores, which is -- which will be dispatched in August and that order is finished. The one landmark achievement in the first quarter is the company has bagged its first big order of 400 kV voltage grade of INR 148 crore from Tamil Nadu Transmission Corporation Limited in this quarter. With the receipt of 400 kV extra high-voltage cable order, the company has achieved another milestone and has placed KEI amongst few large international players in this industry who manufacture and supply cables of this level of voltage grade. It is pertinent to mention this is the highest voltage grade of cable being used internationally anywhere -- used for making 400 kV underground transmission lines. Now I will touch about the CapEx. The ongoing CapEx at Silvassa in our -- in new Chinchpada plant was INR 90 crore to INR 100 crore. The first phase was already operational last year. And second phase was to be operational in the first quarter of 2020/'21, but now will be operational in second quarter -- in this quarter, which is coming in. We have spent approximately INR 71.5 crore on this total project till July 31, 2020. During this year, Q1, finance cost has decreased to INR 16.79 crore as against INR 32.96 crore previous year's same period. The percent of financial charges on net sales has decreased in this period to 2.25% from 3.05%. The company credit rating of last year from ICRA and CARE is A, for long-term rating and A1 for short-term rating. During the quarter ended March 31, 2020, the company issued through QIP, INR 1 crore equity shares of INR 2 each at a premium for INR 498, so that issue price per share was INR 500, amounting to INR 500 crores. The net proceeds of QIP have been fully utilized as on June 30, 2020, as per the objects of the QIP issued for repayment or prepayment of debt/meeting of working capital requirements and general corporate purposes. The book value per equity share of the company is INR 172.95 as on June 30, 2020, as against INR 168.34 as on March 31, 2020. The total borrowings as on June 30 is INR 459 crore, and cash and bank balances of INR 110 crores, so -- as against INR 367 crore as -- on borrowing as on March 31, 2020, and cash and bank balance sheet of INR 214 crore. However, the acceptances against letter of credit, creditors, as on June 30 is INR 342 crore as against INR 770 crore as on March 31, 2020. So this is company's -- the general outlook of the company is strong, and we believe that we should -- the company should be able to maintain close to 85% of the sales of the pre-COVID level in the full financial year. It's a tentative guidance, but we are hopeful that considering that the pending order position and our exposure in the international markets as well as domestic markets and the way we have booked new orders in the first 4 months, we should be able to achieve and honor this guidance. Retail sales maybe -- may remain at around 75% of the peak of COVID level of last year because of the lost sale in the first quarter and also still the lockdown activities prevailing in many towns and the many cities. However, we have achieved better results from B and C class cities as compared to A class cities, where we are experiencing a number of containment zones, hampering the economic activity. So thank you very much for listening to me. Now I would like you to post any questions, which you may have, and we'll be glad to answer. Thank you very much.

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

Congratulations for posting a good set of numbers. I just wanted to have some thoughts on the current working capital situation in terms of -- in absolute number of days outstanding and how you think it will move going forward?

So current working capital requirement of stock, which was held in the March, it has reduced by approximately INR 200 crores. But the debtors which we were having close to INR 1,350 crore, that is remaining as on this June '20 is also the same level, close to INR 1,368 crore as of now. So now the institutional payments are coming because it was held up because of the lockdown. So slowly, slowly now the old payments, which were due, so now they are coming up. So we are quite hopeful that by October, everything will be normalized in terms of working capital.

And so you already shared the numbers of acceptances. And so -- since you're saying you're expecting a 15% kind of a decline this year, what's the outlook for next year in terms of -- because the orders, the CapEx now may be slowing. So right now orders that we will be getting, would lead to further CapEx, which is near the completion, but any thoughts on how you see the private CapEx going on and which would impact your next year's order book?

See, I think that it will be better that if we give that guidance maybe after -- in our next conference call in October or -- I mean, after the second quarter because then we will have more clarity over how the private CapEx will be there. However, we see that there is a pickup in the CapEx from the government. And we have seen a number of tenders from transmission and distribution utilities in last 1 month. But it will be better that we give this guidance, but we are quite bullish on our exports. And we are -- the markets where we are operating, we are getting very good new orders even now. So even without Dangote also, we will be able to maintain the exports at the last year level.

Just 1 question, if I can just add. Can you share some breakup of the order book in terms of exports in domestic or private or public sector?

See, I have already given you the breakup of orders, but I will again give you. But I don't have the data of private and government order at the moment.

No problem. That is also -- can you give us the current data? In terms of product profile, you've already shared in the press release also, that I have. Okay. No problem, sir.

But the segregation of private and government orders is not available at the moment. We can look it and send it you later on.

The next question is from the line of Lavina Quadros from Jefferies.

Just 2 questions. Sir, firstly, your export order about at this point of time has declined. Can you give us some thoughts on where are you seeing visibility in the order flow there? That is one. Secondly, sir, on the interest cost breakup, if you can know if there are any charges or bank charges because the drop was a little bit of a surprise. So I just want to understand if there are any one-offs in it?

See export orders at the moment is INR 118 crore of the cable exports, and INR 389 crore from the EPC exports. If EPC exports, I think close to INR 100 crores will be the cable orders -- the cable portion. But we have not segregated that out of it. And we are getting now a good set of numbers from our export -- of new orders from our export markets, mainly Middle East, Australia and Africa. These are our strong export markets, and the booking has been strong and new orders, which are coming up in every month. That is the reason we have been able to maintain good amount of exports in the first quarter. And even in the July also export has been very, very strong. So I'm sure that the guidance I'm giving you that may remain -- we will not be able to increase the exports on the full year compared to last year because the Dangote was a big order. But in spite of that, we will be -- we should be -- we will be able to maintain the export level at the last year level.

Lavina, regarding the interest, interest was close to INR 7.5 crore to INR 8 crore, was reduced in the working capital interest. And balance INR 8 crore reduced in terms of the LC interest and the bank charges on bank guarantees. Because the sale is low, so that's why the LC interest is low and the bank guarantee charge is low.

Sir, breakup would you have for this quarter and last year same quarter?

You can note down. Term loan interest was INR 1.4 crore in this quarter, last year was INR 3.74 crore. And working capital interest was close to INR 8.5 crore, which was earlier the INR 14 crore. And LC interest is INR 3.64 crore as compared to last year INR 7.18 crore and bank charges on LC is INR 0.98 crore, last year was INR 2.75 crore. Bank charges on bank guarantee is INR 1.67 crore, last year INR 3.35 crore. And other bank charges were INR 0.6 crore, last year was INR 1.81 crore.

The next question is from the line of Charanjit Singh from DSP Mutual Fund.

Sir first of all, congratulations on a good set of numbers in a very tough environment. I would like to understand, sir, more on the working capital front, in terms of the receivables, how is the payment in July and how it is going to shape up in the future. But from the debt level's perspective, what is the level of debt you would be expecting to finish this year end?

End of the -- you see as it was in the last year, by March, hopefully, we will end up with this kind of situation of debt. But as we earlier said, at the time of the QIP also because whatever we will spend on the CapEx, the same will be, again, debt will rise for -- to that extent. Because our working capital will remain same. So whatever we will accrue in this financial year, we will deploy in the capital assets for next financial year. Because since this year, we are not going to do much CapEx, only in the fourth quarter, we will look how we will be doing the CapEx. And major CapEx will be only in the next financial year. So the debt level will be remaining as it was in the March '20.

Okay. And sir, in terms of the receivables collections in July, so we are already hearing that even in May, June, some of the payments have started coming through. But how is the trend now in July? And if you can give us color in terms of which key customers are there from where the payments are pending? And how do you see this normalization of the receivables going forward, sir?

See, Charanjit, by October, it will be normalized because it will take another 3 months to get normalized because all the payments of the EPC, which is from government, they are now coming, like one large payments we have received in this month only by end of July. And we are quite hopeful that all these payments, which were delayed, it will be on time by October. And then the better period will be the normal as it was in the March '20.

Okay. And sir, just last question from my side on the cables and wires right now. How do you see the demand trajectory going forward in July? How you're seeing the pick-up and especially for the housing wire? And in terms of the channel health, how is that right now? So that's the last question from my side.

Channel health is good because all the collection from the dealer-distributor, that is now coming and it is up to the mark. Whatever we are selling, we are getting collected also. And in the month of July, if we are talking almost -- dealer-distributor sale is almost, we can say 95% as compared to the year.

The next question is from the line of Jason Soans from Monarch Networth Capital.

I just wanted to know what's the breakup of your sales currently in terms of institution and retail as of now? And how do you expect this proportion to continue? I believe it is around 65 institution and 35 retail. So I just wanted to know what's the mix? What do you see it going ahead?

See, normally, our retail sale is close to 30%, 32%. So in this quarter, it is only 25%. So in the balance of the period, again, it will be going to 30% to 34% sale for the retail market sale.

Okay. So 30% to 34% would be retail and the balance would be institution. You see the same thing going forward, right?

Yes.

The next question is from the line of Sangeeta Purushottam from Cogito Advisors.

Yes. I'm a partner, Andres here. Just a follow-up question on July. Could you give us a flavor on what the top line is across product categories and segments? Just to give us a flavor as to what will happen in case of [indiscernible] normalization will be?

Sir, July level is not available. [indiscernible] percentage terms, that almost July sale is good and as good as close to last year's sale.

Okay. But are there any highlights in terms of which segments or product categories are doing better and which are doing worse?

Yes. Institution sales and export sales have done better. Although dealer sales has also gone up significantly, reaching around 95% level of the pre-COVID level. But I'm not giving the guidance that it will be -- it will remain at that well because uncertain conditions are there in most towns about lockdowns. So July has been good. [ What will happen in ] August, I don't know.

The next question is from the line of [ Abhishek Mathur ] from [ KS Capital ].

I have 3 questions. Sir in the Q3 of last year, our order book was around INR 4,500 crores and right now, it is INR 3,000 crores. So that's a significant reduction. Is there any kind of thinking how it will impact our revenue going forward?

Sir, normally, if we see orders whenever it comes, it comes in bulk, close to INR 1,600 crores, INR 1,500 crores, kind of things. So if any order comes, in this range only. So this time, EPC order has come and basically [Foreign Language]. So a few orders are in the quotational stage. So whenever we get, we will let you know.

But orders of the cables, wires and cables are in line. Month after month, we are receiving, whatever our desired level, we are getting it.

Sir, my next question is, we did a [ LC ] in January-February timeline. But the net debt seems to have decreased to around INR 350 crores in June. So -- and last quarter, the company mentioned that it has paid down around INR 400 crores of debt. Can you provide some more clarity on this situation?

The debt is basically because of the debtors. Because I think -- and we have paid to our creditors around INR 400 crores. That's why you see the acceptances level has decreased from INR 770 crores to INR 342 crores. Because these are the creditors for copper, aluminum and other materials.

Other than LC also, we had paid to all the creditors in time. But debtor collection was slow because of the lockdowns, and it is improving now. And we hope that working capital cycle should be regularized by October.

You see. If we don't pay to our creditors or LCs, the interest rate there was 9%. But now we are getting the limits from the bank at a 6%. So it was better to pay to them and avail the working capital loan.

Okay. So that turns out to be cheaper, is it %?

Yes.

The next question is from the line of Vinod Bansal from Franklin Templeton.

Sir, Vinod here. Just 1 question on the exports. Your order book has continued to shrink over the last few quarters. Of course, there has been adverse macro conditions during lockdowns, et cetera. But what gives the confidence that we shall be able to maintain our revenue in line with what we did last year given the high base? And if I look at even this quarter, the order book is less than 1 quarter's revenue. So if this is the case that situation hasn't improved for next 2, 3 months globally also, you are saying that order book going almost next to 0. And therefore, delay in the pickup in revenues. So what gives the confidence that, a, for exports, we shall maintain our last year's run rate; and, b, overall for the company declines of revenues just to 15% of last year. So any more clarity on how the business has done and exports and [ revenue numbers ] also would be helpful. What is the tenure of order book execution?

Same as we had said about last year's sales. We said the -- other than Dangote sale. See, Dangote was the one kind of thing. So whatever sale, our run rate in the export was more than INR 500 crores. So that INR 500 crore to INR 600 crore, we will be maintaining in any way. But Dangote -- because these kind of orders, one of the things actually. Normally, in the cable division from institutional orders, we are having orders not more than 3 to 4 months, normal course. So this order book was higher because of the Dangote order and the EPC segment orders.

Right. And sir, these -- they have 3- to 4-month order book. Essentially, it would also mean that the moment you would order, you are looking to execute it immediately, that's the sort of time frame to execute. So within 3 to 4 months, this also happens. Is that the right way to look at it?

Yes.

So which means it's a continuous flow of work happening at the consumer's end, whether it's utility, India or outside. Therefore, the question that if things remain a little weak and which is quite plausible in the current scenario, people don't open up so easily in various countries that we work in. If you don't get a good enough order book next 3, 4 months, you might run dry. That's the whole point in exports as well as in other short-cycle orders. So I was trying to understand, given -- how do you operate in this segment, so that you're confident that for a company as a whole, you still look 85% of what you did last year?

As of now, during the 4 months, whatever we have sold, more than that, we have received the new orders in institutional segments. So that is the actual reality.

Okay. Your order book looks low though from a...

Normally in our cable division, it happens always like this. Generally, we are having only not more than the 3- to 4-month order book position. And every day, we are getting order, every day, we are selling. And every day we're quoting also. We are serving more than 1,300, 1,400 institutional customers in the country. Very well diversified customer base. Yes, sir, you were asking anything.

I'm just looking at that, let's say, cables order book, it was INR 2,000 crores in March '20, dropped to INR 1,800 crores in 1Q '21. So does that bother you at all?

This is the -- INR 626 crore extra high-voltage cable is the cable order, INR 1,112 crore cable domestic order and INR 118 crore is the export order. And whatever order of INR 1,100 crore of EPC, out of that, 30% is a cable portion.

The next question is from the line of Rita Tahilramani from Invesco.

Congratulations on good set of numbers. Just 2 clarifications. What would be the absolute CapEx, which we would incur in FY '21?

FY '21, absolute CapEx, not yet known, but whatever the maintenance CapEx will be INR 10 crore, INR 12 crore. And the balance CapEx of Silvassa will be the INR 10 crores, Chinchpada. With regards to new, it is not known now. It will be measured in next financial year.

Sure. And when we say the working capital is expected to normalize by October, do we mean that this will come back to the FY '21 level -- FY '20 level, sorry?

Yes, yes it will be FY '20 level. By year-end, you will see again by FY '21.

Year-end, you will see FY '21, you're saying?

Yes, by third quarter, it will be.

Okay. But sir, if working capital is to get normalized October, and we are not to incur additional CapEx -- new CapEx in that sense, then why will there not be an improvement on the debt side?

There will be improvements. So that's why interest cost is going down.

There will be improvement in the debt side. What Rajeev had said that once we start doing CapEx for the new project, which was conceived, then the debt will come back to the last year level. Otherwise, debt will remain low.

Okay. So just an extension, if you don't incur the CapEx, additional new CapEx, where would your debt be as per -- debt be compared to FY '20 level by FY '21?

Maybe nil. Because FY '20, the debt was only INR 152 crore.

The next question is from the line of Nikunj Bahety from LIC Mutual Fund.

My question is regarding the export side of the business. We are quite optimistic there, given the strong order book intake we have seen. So I just wanted to know what are the -- what is the kind of clientele profile, which we are looking to saw? And what would be the time line -- average time line for each project, which we are executing in the export market?

See, our -- the customers export profile in the export market is mainly in the Middle East, it is oil and gas companies and petrochemical companies, which -- where we are directly catering to them. And other markets in Australia, it is mostly solar and wind projects. And also, we have bidded for metro projects in Sydney and some other cities. We are also supplying -- we are also approved in Australia by many transmission and distribution utilities. So now we are doing a good amount of sales -- we will be eyeing good amount of sales in other parts because in Australia, manufacturing is not there. So there is no internal manufacturing of wires and cables. In Africa, it is a combination of transmission and distribution projects, mostly distribution jobs, which contractors are carrying out and buying our cables. We are approved in many distribution utilities in Nigeria, Ghana, South Africa, and similarly many other states -- countries of Africa. We are approved -- we are supplying to many UNDP projects, United Nations Development Projects in Africa through EPC contractors operating there. This is our customer profile for the front end. And in surrounding countries, we are selling our cables to Bangladesh, to Nepal, to Sri Lanka and there the customer profile is mostly the distribution -- power distribution utilities.

And sir, the time line for the project, considering an average standard that we need to take for the export order?

Normally, after export order comes, if it is a supply order within 3 to 4 months, we -- or maximum 5 months, we complete the order. And we can do it even faster, but customer delivery requirements has to be met. But in case of overseas EPC, which are mostly whatever orders we have, they are ADB-funded projects. Their timeline is around 24 months from now.

Okay, sir. Sir, my second question is on the government side of the business. What kind of orders we are taking in? Like for exports, we have said that we are taking in oil and gas and kind of clientele [ there]. So from the government side of the business, the recent order book has been with respect to what kind of projects? Like is it more of a rural-based project and/or more of infrastructure-based projects? So if you could throw some light over there?

These are more of the infrastructure-based projects out of transmission systems projects of power grid or state transmission companies and various projects of distribution companies for underground cable taken by various EPC contractors, and they in turn has placed cable orders on us. Similarly, many EPC companies, who are executing export EPC in overseas countries, they are also buying substantial amount of cables from us, but it is not counted as export from our point of view. Next point is the construction projects like -- which are executed by National Building Construction Corporation and such agencies, they are building up a lot of hospitals, ESI hospitals and other, like exhibition center in Dwarka, this kind of construction projects where we are selling our cables through EPC contractors and plus the smart city projects, which are under execution by many EPC companies, they are buying cables from us. Plus the metros, railways, this tunnel ventilation projects in Northeast or J&K executed by many transmission contractors.

Right, sir. That was really helpful, sir. My last question is on the -- considering that we have a lot of distributors from the government side, I assume. So what would be the percentage of a trade receivable from the government's point of view -- on the government side? And we're expecting that to normalize, say, and I assume that it is September and government starts paying out in a [ good ] manner. So what is our view on that? And what would be our percentage of trade receivables from the government business?

Sir, all the EPC business, we do, that is a government business. Otherwise, our major business is with large EPC contractors and other institutions, basically. And in EPC contractors, basically, the institutional sales. So these payments are not coming because they are getting the payment from governments, as we are receiving our payments from the government for EPC business. So that's why I said in that normal, which was -- we are having in the month of March holding period of the debtor, it will be resumed by October.

The next question is from the line of [ Nishit Shah ] from Aequitas Investment.

Sir, I want to focus on EHV. So this quarter, we saw sales if we compare it to last year. So any particular reason over there?

See, last year itself, we had said that we had a very strong order book position in extra high-voltage cable. And even now also the order book in extra high-voltage cable is INR 627 crore. So in this -- actually, the cable portion itself is around 65% to 70%. The value of the cable itself in these projects is -- because it is major cables and joints. And then 10%, 15% is the execution portion. So it is -- that is the reason that the cable sales in this segment is very strong and will continue -- it will remain strong in the rest of the year. These orders are mainly from the power transmission utility.

Okay. So sir, can you give some outlook on the demand side of the industry, you are looking at in PSU, tenders coming up or anything we have bid?

Yes. We are continuously bidding new tenders. And I think around INR 400 crores to INR 500 crores worth of tenders are under evaluation at the moment. And every month, we are bidding around INR 250 crores to INR 300 crores worth of tenders.

Okay. And sir, we were planning to do double the capacity of EHV. So even that plan is off as of now?

So in the new greenfield CapEx, it will be done. But in existing CapEx, no.

We have already doubled.

Already, we have doubled.

That is deferred for the new greenfield?

Greenfield, we will do in the next financial year, that we said. So from fourth quarter onwards, we will starting looking for the greenfield projects.

The next question is from the line of Nishit Shah from Nepean Capital.

So just had a broader question on our strategy going forward. So we've been seeing that you're doing exports, you are doing extremely well. So just wanted to understand as to who are we competing in the export market? And normally, if we bid for, say, INR 500 crores, what is the bid conversion rate? So what are the projects which are getting converted? And who are we competing with in the export market?

Normally in cables, our competition from India is very limited. Major competition we face from European companies. From India, only in Dangote, Polycab was there, which was -- which took a good amount of share. But otherwise in our other export markets, we are competing with only international players.

Okay. And the bid conversion rate?

It is whatever we are bidding, we are almost getting around 35% to 40% of the orders.

Okay. And also just, again, a broader question. So on the housing buyer side of things, are we seeing any kind of slowdown because of the kind of stress that developers are currently? So are we seeing any stress going forward? And this is all -- not for this year, this is for next year on a broader sense because this year will be bad and most of the unorganized developers will come under stress. So there is going to be substantial issues, which the developers are going to face. So are you seeing any stress?

In last 3 months, from May or probably June and July, we have seen very strong sales coming from B class and C class cities -- and that too from the segment, where the smaller residential projects are there or where the people who are making their own independent houses. The demand from big developers is definitely very, very weak. And we feel that it will remain weak in the -- throughout the year because of the obvious problems of labor and execution and maybe low demand. But the demand from B and C class cities and then 2 C class cities, the goods are going to rural areas, that demand is very strong. And that we have witnessed. And that has brought us very strong sale in June and July.

The next question is from the line of Vaibhav Gogate from Ashmore.

Could you give some color on the Chinchpada CapEx that you are doing?

We have already done a CapEx of INR 71.5 crore, around another close to INR 18 crore to INR 20 crore CapEx is pending, which will be done in next 2 to 3 months because we had slowed down on this CapEx because of these lockdowns. And since the markets were also closed, so we delayed the completion. But I think by September, the second phase will also be completed, and the investment will be over.

So this is mainly towards housing wires, right?

Correct.

The next question is from the line of Manish Agarwall from Edelweiss.

Sir, this is a small bookkeeping question. Sir, our other income has continued to be around INR 8 crores this year. So sir, is this -- is there some one-off? Or this is a sustainable number for a quarterly basis?

It's basically interest on fixed deposits and the -- close to INR 6 crore is the foreign exchange gain.

Okay. Sir, the foreign exchange gain on our import side? Is it correct?

Yes. Export and import both.

Ladies and gentlemen, due to time constraint, we'll take the last question from the line of Aditya Kondawar from JST Investment.

My questions have been answered.

Our next question is from the line of Nishit Shah from Nepean Capital.

Yes. I just got dropped off the line, sir. So just completing on that question. So you mentioned that Tier 2 and Tier 3 towns demand is extremely good. So what proportion is that now versus pre-COVID?

Can you answer that?

Pre-COVID, the C class cities was close to 41%. And again, it is also -- it has improved by 3%, 4%. So it has gone to 44% now.

Okay. And just on the export bit, again, just the last question from my end. So export going forward, how do we see that progressing in the next 2, 3 years? Like what proportion of our sales would be exports? And do we make better margins on that?

Export, we do into the institutional exports sale, as we do institutional sale in the domestic market. So whenever there was a large order, last year, like Dangote, so because of the capacity, we have not participated in the local domestic order because of constrained capacity. Now that order is complete, so it will be replaced from the domestic institution side. But being a -- our CMD sir is concerned like, he wants always a very diversified customer base and very diversified geographical base. So that's why every year, our target is 15% to 20% growth in the export as well as in the local domestic institution apart from the dealer/distributor growth.

Okay. And do we make better margins on them?

Yes. Margin is slightly better, at least 1%, 1.5% because of the specialized cable and the good cash flow because we are getting almost 50%, 60% cases LCs from there.

Thank you. Ladies and gentlemen, due to time constraint, we'll take that as a last question. I now hand the conference over to Mr. Mahawar for closing comments.

Thank you. Sir, you have any closing remarks?

So thank you very much for joining us on this investor conference call. We hope that we have been able to answer most of your queries. If still anything is left out, you can approach us for any clarifications. I can reassure that we -- our business model is very strong. Whatever we have stated, we are always a little conservative in our approach, and the company has always performed better than what we have stated. With this remark, I convey my thanks and regards to all of you for supporting our company in the capital market. Thank you so much.

Thank you. On behalf of Edelweiss Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.