KEI Industries Limited (517569) Earnings Call Transcript & Summary

I hope everyone is safe and healthy. We are pleased to host the senior management team of KEI Industries. And today, we have with us Mr. Anil Gupta, Chairman and Managing Director of the company; and Mr. Rajeev Gupta, CFO of the company. Let us start this call with management's initial comments about the results, and then we'll take your questions. Over to you, Anil, sir.

Yes. Good afternoon to everybody, friends. I'm Anil Gupta, CMD, KEI Industries Limited. So it's very nice interacting with you. I'll give a brief about the results of Q4 of financial year 2021. In Q4 of 2021 The company has achieved a net sales of INR 1,246.31 crore as against INR 1,258.5 crore last year. So approximately, it is almost at par with last year, maybe down by around 1%. The company was able to maintain its sales because of our strategy and focus on developing and improving the retail sales through our dealer network, where our sales has grown by approximately 44% in this quarter, in quarter 4, in spite of lower revenue in EPC and Exports, which is down due to execution of a very large export order of Dangote oil refinery last year same period. EBITDA margins have -- over net sales in this quarter has improved to 11.56% as against 9.77% in the same period of the previous year. And profit after tax over net sales margins has improved to 7.16% versus 4.84% last same period. So thus, improving our net profit by around 2.4% in percentage terms in this Q4 compared to last year. The company has achieved its -- the dealer retail sales has contributed around 36.24% in quarter 4 against last year same period, which was 25.52% of the total sales. However, on the total active working dealers of the company as of 31st March 2021 was 1,655. Now I'll give you a brief about our results and deals of the whole financial year of 2021. Net sales since FY 2021 is INR 4,181.49 crore against INR 4,884 crore. The decline in net sales is around 14.9% over corresponding period, which was mainly due to lockdown and business restrictions in Q1 of the FY 2021 because of COVID. Other than that, the sales, which has declined in EPC segment, which is as per the management strategy to reduce the dependence on EPC business and restricted [ September ] number. However, the EBITDA/net sales margin has improved by 1% to 11.49% in the whole year as against 10.49% in the same period previous year. Profit after tax in 2021 is INR 273.31 crore against INR 255 crore in the same period of the last -- in the last financial year. The company has pending order book -- pending orders of INR 2,561 crore overall, in which EPC is INR 806 crore, which includes the export order of -- in Nepal, ADB-funded project, of INR 316 crore; Extra High Voltage cable turnkey projects, INR 506 crore; cables from the domestic customers, INR 1,198 crore; and export order of 51 crore. And we expect a growth of approximately 25% in FY '22 in the Domestic Institutional sale and a retail sale growth of around more than 35% in this financial year, as per the current estimates. The company's credit rating from ICRA and CARE is A+ for long-term rating and A1 for short-term rating. The book value of the -- equity share of the company is INR 197.83 crore as against INR 168 crore last year. The total borrowings, including channel finance, of INR 157 crore as on 31st March is rupee -- so the total borrowings of the company is INR 305 crore, including channel finance, and cash and bank balance of INR 221 crore as against borrowing of INR 367 crore and cash and bank balances of INR 214 crore as of 31st March 2020. However, the creditors against letter of credit acceptances as on 31st March 2021 is down to INR 323 crore as against INR 770 crore as on 31st March 2020. So the net debt, including acceptance, has reduced to INR 408 crore as on 31st March 2021 as against INR 922 crore as on 31st March '20. So the net debt has -- is down by INR 515 crore over -- in this period, in the current period. So consequent to this, the finance cost has decreased to INR 57.31 crore as against INR 129 crore previous year same period. So the percentage of financial charges on net sales has decreased this period to 1.37% from 2.64%. The company has used operating cash flow for cash purchases resulting into reductions of trade payables, acceptances, substantially by INR 447 crore, which has further reduced finance cost during the year. Though it may impact certain financial ratios like working capital cycle and ROCE, but it has benefited the company in the form of reduction in the financial. We now come to the future outlook. The working capital of approximately INR 150 crore is expected to be released during financial year 2021 from EPC data's retention money.

For '21, '22.

Sorry. Financial year '21-'22 from EPC debtors, which is more of a retention money, which will be used for increased sale of Cables and meeting the CapEx requirements in current financial year. So the company will have sufficient cash flows to meet its working capital and growth requirements for the future. The company is at a transformation stage as consultants are making strategies and policies for increasing its -- our sales through retail dealer network by approximately 35% in this financial year. To maintain retail sales growth, the company has also recruited more than 100 manpower in various sales branches at different levels in the last 4 months all over India. The present capacities utilized during 2021: 59% in Cable division; 61% in House Wire division; and 85% in Stainless Steel Wire business. So the company has sufficient capacity in place to achieve growth for the next 2 years by the time the new capacity will also be available. Overall, the company is targeting growth of 17% to 18% in current year, and we'll do that at approximately INR 600 crore to INR 700 crore from internal accruals in next 4 years to maintain a CAGR of 17% to 18% as against achieved CAGR of 15% during the last 15 years. I will give you a brief of the industry outlook. We have been observing continued focus of government on infrastructure projects and focus of the government on CapEx as announced in the Union Budget. We are seeing a lot of tunneling and ventilation projects in Indian railways and different railway projects. And across India, underground cabling projects for transmission and distribution in metro cities, Tier 1 and Tier B cities; conversion of overhead lines into cable, underground cabling, either to Extra High Voltage cable or HT cables; modernization of railway stations and platforms and metro rail projects; smart city projects, as announced by the government; modernization and development of tourist places, pilgrimage places and heritage places across India; announcement of new airports across India and modernization of existing airports; metro rail projects and suburban train projects being under execution at various places in India as well as the bullet train project; construction of roads and highways, which leads to a lot of undergrounding of distribution and transmission system across highways; solar power projects, nuclear power projects transmission and new projects coming up; oil and gas sector, refinery expansion, fuel upgradation and capacity upgradation in various state-owned oil refineries going on across India; steel industry expansion, other industrial growth projects, private CapEx across industries. We expect a lot of private investment due to this PLI scheme announced by the government. And we are also working on developing new export markets in Africa, Latin America Brazil, et cetera, although there are restrictions in traveling, so it is taking a little time. So -- but we are hopeful that we'll be developing new markets at these places. Thank you very much. And I now request you to raise any queries, whatever you may have, and we'll be able -- happy to answer the same. Thank you.

[Operator Instructions] The first question is from the line of Naval Seth from Emkay Global.

A few questions from my end. First, you explained on receivable part that there is close to around INR 165 crores, INR 160 crores pending as a retention money, which will be released. But this year, somehow, your receivables have not reduced despite of the fact that revenues have declined. So are there payments which are stuck with government authorities and will be released in first quarter of this year? That is my first question. Second, is it the same reason why your capital employed in cable and wire has increased on a year-on-year basis as well? And third, on the dealer additions. So this year, there has been only 5 new net dealer additions. Now you have set targets on retail revenue growth and added sales force as well. So any number you would want to add over here in terms of what kind of number, apart from the long-term 10%, 11% CAGR, which is there on dealer addition number as well?

As far as the receivable is concerned, this is Rajeev Gupta, you can see that in EPC division, the sale has reduced. But the retention payment, which was not due -- which is due only in the last quarter, so now it will be received in the first half, hopefully. So one, there is approximately INR 150 crores we'll receive. It will -- again, will be used for working capital requirements of the incremental sales. The second, ROCE. You see, we have reduced INR 447 crore of the creditors, wherein we have already benefited in terms of the healthy interest and healthy bank charges, approximately INR 23 crore. So ultimately, it is in the interest of the company to continue through cash, if we are having the cash available in the system. So we have the good card in operating cash flow. That's why we have used this operating cash flow to buy the metal, practically, aluminium and copper, in cash. So because of that, the creditor has gone down by close to INR 450 crore. Because of that, you might be seeing that capital implied increase. Apart from this, the number of dealer/distributors increment because last year, as we said, we are a transformation stage. We are focused on the existing dealer/distributor network. We strengthened them. And we are focusing to each and every existing dealer/distributor network should increase their retailer dealer -- retail network under them. So because of that focus, we were able to increase our share in the fourth quarter also. And in the current financial year, approximately 20% dealer/distributor new we'll be appointing because we have inducted more than 100 people in the retail team, as we said. And the growth in the retail sector, as a whole, will be close to 35% plus in this coming financial year.

Understood. And my last question is on exports. The order book has fallen this quarter. So any sense how export order book will be built up as you enter the new territories? Or there will be challenges this year also, as we have entered the second wave of COVID, there are travel restrictions? Some thoughts about there also.

As you see, last year, we had almost did around INR 600 crore of sales. So that kind of export sale will be maintained in this year also. Because other than the motive we did -- other than the motive we did this kind of sales, so close to INR 550 crore to INR 600 crore export sale will be there. We have already started export into Latin America side because where we have taken the approvals also for the solar cables. And we are already a distance in Africa and Australia market and Middle East market, from where we are getting the regular orders from there.

Sure. And sir, you want to share any progress on your expansion into electrical products, where we are now? Any time lines you want to state?

As our team has said that more than 100 people we have inducted into the buyer business, we are focusing more and more on the consumer buyers. Out of this 35% growth of the retail vertical, our target to grow a pure consumer buyer business in this financial year is almost double. So once we get this, so our total dealer/distributor network sale will be more than 40% this year. And we will be trying to reach now 50%. And hopefully, after achieving this in this financial...

[indiscernible]

Yes, versus turnover. After receiving this kind of dealer/distributor growth of 35% plus, definitely, we'll be having 2, 3 more products on the contract of the retail consumers.

The next question is from the line of Saurabh Patwa from HDFC Mutual Fund.

Congratulations for really good number. I just wanted some broad thoughts on the EHV side. So we've been doing really well in the last few years. But at least, now, other companies are also trying to get into this business, specifically, we see Finolex Cables with -- so do you believe there is increasing competition in this side? Because so far, I think, you were competing largely from players outside India. Is anything changing there?

I don't think that Finolex J-Power is any threat because they're -- they do not meet qualifying requirements anywhere. So their total turnover in a year is less than their yearly expenditure.

Possibly.

So they're a completely loss-making company, and hence, they do not meet technical and financial QR of any tenders. So they are not a threat. However, we hope that -- and we believe that there will be good growth in this market. But the movement is -- economy starts opening up maybe from July, once these COVID restrictions are over, and a good amount of work will come.

And second was on the solar and other renewable power side, which you just briefly mentioned. So what kind of product, specifically, do you sell there? Or who would be the competitors there? Because that market would expand very fast in the coming years.

See, we are selling there high-tension cables, HT cables and LT cables. And also, in some of the projects, Extra High Voltage cable, which is mainly used to connect the power withdrawal to the grid transmission system of the state. So this type of projects consumes all type of cables. Also, we are supplying them solar wires, which are used in the solar panels, inside the -- inside the panels. That is also a product we are -- DOE approved for these products.

So who would be the current -- who will the competitors over there, sir?

Present -- main competitors in this segment is mainly Polycab and Apar.

Okay. Sir, just 1 last question, if I can just squeeze in. Any thoughts on the second wave, and how it would have impacted? Because there are mixed reviews -- mixed views from when we speak to multiple companies. Some believe the impact would be larger, some believe it is -- it could -- as the lockdown starts opening, easing out, the demand would come on -- come in sharply. So your thoughts on the same, sir?

Okay. At the moment, definitely, May is impacted in terms of sales because of the lockdown and because of the closure of the sites where the projects are getting executed. All of -- and this has been most in the most parts of the country. So the -- but we feel that cable sales is intact. But buyers -- the retail sale will not be impacted. Maybe these will be able to improve their sales in the coming months as soon as this lockdown is over. Because there will be a pent-up demand and, suddenly, the customers will be in the -- out in the market to buy the product and -- for building their houses.

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

Congrats on a good set of numbers. Sir, just on the debtor side, now that EPC revenues will go down further, retail proportion should rise. Where do you see this debtor number stabilizing in the next 2 years? Because it's moved up by about 20%, so I understand the upticks of lower EPC revenues. But where do you see that headed?

So you see, in the next 2 years, as you said, that it will be close to 2.5 to 5 months holding because now, our EPC revenue is going down, where the data period was 6.5 months. But now, in that current financial year, the 2021 balance sheet, which you are seeing, though the EPC sale has gone down, but the retention money has not received. So retention money, as you know, so it will be received in the current financial year. Then at that, it will be a reflection of the true picture of the receivables. But in future going ahead, our working in the receivable side, the retail sales is going to increase year-on-year basis and EPC sales will not increase from here. So the total overall receivable will be less than 3 months, maybe 2.5 to 2.7 minus of the balance sheet.

Understood. And just on the EHV side, any thoughts on the tender pipeline or bids that are coming up over the next 12 to 18 months? I understood the color that was given but...

You're already holding more than INR 500 crore of the pending order, though we are having the capacity of close to INR 450 crore to INR 470 crore. And more overhead cable projects are converted into underground cabling, as CMD Anil has said. And that demand is always higher than the industry capacity in India available. So always, there are imports. So that is not the challenge in the EHV side. Only the execution part was the challenge in EHV because of the construction side was stopped due to this tender.

Okay. And sir, lastly, can you give me a split, please, of the interest cost, the breakup?

Yes, you can note down. The interest on term loan was close to INR 4 crore as against INR 14 crore. Working capital interest was close to INR 24.5 crore as against INR 58 crore. LC interest was INR 9.55 crore as against INR 26.36 crore. Bank charges on LC was INR 4.6 crore as against INR 10.3 crore. Bank charges on bank guarantee was INR 9.3 crore as against INR 13 crore. And other bank charges was INR 5.2 crore as against INR 6.9 crore. The total was INR 57.3 crore against INR 129 crore. So that you see the major benefit was in the LC interest and bank charges of approximately INR 23 crore, INR 24 crore. And the other working capital also, it was close to INR 23 crore, INR 22 crore.

The next question is from the line of Rahul Agarwal from InCred Capital.

Congrats for decent results, Anil-ji and Rajeev-ji. I had 2 -- 3 questions, actually. Firstly, on the greenfield expansion. Can we have some final details, analyze the location, land, project finance, what products we're talking about here? Obviously, I know it's more to do with EHV, LT, HV, but any final detail possible?

Actually, in the month of February, we have gone for Gujarat. We almost were in the finalization stage. We have identified 3 locations in Gujarat. But unfortunately, in the month of March, again, the pandemic started again. And we -- so now, after June, again, we will go and we will finalize this. And hopefully, we will be starting in the second quarter, this CapEx, because now we need to put this CapEx. So we are almost already -- we have in our mind, INR 150 crore to INR 175 crore we need to spend from our internal accruals because...

[indiscernible]

Yes. Yes, India is coming in current financial year of '21-'22 because -- almost projects will also take 18 months' time. So by the time we have sufficient capacity for this year and the next year, but by the time this new capacity will come for LT, HT, Extra High Voltage power cables. And we will also add a few new electrical products, as we are discussing, in the next financial year. Already, we have expanded our capacity in the House Wire division in Silvassa. So that capacity is available for the next 2 years. We are having sufficient capacity to grow more than 80%, 90% year-on-year basis.

Got it. So as I understand, LT cables and Housing Wire has a lot of scope to grow because of capacity. But HT, as well as Stainless Steel Wire and EHV has capacity constraints. Is that correct? As of now, I'm saying?

No, HT, we are also having. But EHV is the concern, wherein we cannot sell more than INR 470 crore of these as a cable product, which we have already sold INR 417 crore as a product.

All right. So...

That's to go up to INR 470 crore or maybe INR 500 crore, but that's it.

So peak sale possible for Housing Wire was INR 1,600 crores; for Stainless Steel Wire, about INR 150 crore; and for EHV, about INR 500 crore. Is that correct?

Yes. You are right.

And overall, company level, it was INR 5,800 crores. Is that correct?

Overall, company level, we can go up to INR 6,500 crores.

INR 6,500 crores?

That's right.

Okay. Okay. Got it. And one last thing, on capacity utilization, you said Cables was about 59% and Stainless Steel Wire was -- I missed the Housing Wire number, if you could help me with the capacity utilization.

That's 61%, Rahul.

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Sir, I have a couple of questions. One, for your industry, what is the importance or contribution of power sector as a percentage of total sales? And how does the dynamic changes under the rising solar installations in power versus the conventional thermal or wind? Does the cable intensity goes up? And by what proportion?

See, the proportion of cable, at present, in our -- to the power sector, which includes power generation, transmission and distribution, put together, is close to 30% at the moment. That 70% goes to infrastructure sector and the construction sector, which includes housing also. Now basically, the thermal projects are almost negligible now. It is only the -- some additional units are somewhere or the other being installed in the current power projects in thermal sector. Major expansion is in the solar side. And some expansions are in wind power also. So the cable demand majorly comes -- is coming from the solar side. And it is from the -- for the evacuation of power from the solar generation site to the grid, which includes extra -- a very small quantities of Extra High Voltage cable and then majorly 33 kV cables and HT cables and Low Voltage cables.

Does the intensity rise for a megawatt of solar project versus a megawatt of thermal project in terms of cable consumption?

Yes. Because mostly, the evacuation of the power from the solar projects is through cable. And in the earlier times, when the large thermal projects were coming, there, the evacuation of power were mainly from the overhead transmission system. So the cabling route was used very less. So hence, the intensity rise, in this case.

Okay. And sir, my second question is, and it links to that debtor reduction to about 2 to 2.5 months. So one, will we -- the EPC business is [ cap side ] a certain number, in your mind, in terms of size? And what will be the net debt figure in '22 and '23 for the company? Considering this reduction in debtor days, change in mix and, I don't know what is your assumption, EPC business.

So net debt is already apart from the acceptances. This is a cash surplus company because there is a INR 157 crore in the channel financing. You see channel financing is not practically the debt, particularly, basically. Because of Ind AS adjustment, we have to show here. Otherwise, our term loan and working capital minus cash is a cash surplus company. So apart, as we said, that whatever receivable we will be realizing in this financial year from ECP side, we will be using this money for incremental sales as well as the CapEx. So there will not be any both in the debt. The debt number will decrease from there also because whatever we will accrue further from here, we will be utilizing this fund to the cash purchases. So LC level, which is now at September is INR 323 crore as compared to INR 770 crore, which will further go down. So our focus, not to maintain the capital employed, but our focus is to reduce the interest cost and use this cash flow, operating cash flow, to the interest of the company, wherein we are saving interest costs, bank charges and getting additional cash discount by way of cash purchase rather than keeping the money in the fixed deposits.

And your indicated number is INR 400 crore that we see as total, which you have mentioned in the presentation, after acceptances. What number this INR 400 crore should go to over the next 2 years?

This INR 400 crore in this financial year, it will be close to INR 350 crore, and it will be further reducing every year. Because now, whatever CapEx, we are indicating you to INR 150 crore to INR 175 crore per annum, wherein our cash profit will be more than INR 350 crore. So almost 50% [ sitting ] in the CapEx. And the next 50%, we are still keeping for the working capital. So our focus to reduce the debt further from here also, to reduce the interest cost further from here also so that we can improve the cash profits from here, and we can be a cash-based company in future.

My last question is, sir, what is the challenge that you are facing in Housing Wire in '21 for -- not able to generate growth?

Sir, repeat your question?

What is the challenge you are facing in Housing Wires for us not to -- not able to generate growth?

No, sir, we -- Housing Wire, as a whole, was not growth because of the -- the total retail sale was not because of the Q1 was bad. But if you see the Q4, Q4, we have grown by 44%. And every company has grown, not only KEI, because the demand is very good. Whether you talk about computers, we have also grown into 35% to 50% range. We have also grown in this rate. That's why in future, in '21, '22, we are targeting pure retail House Wire sales almost going to double. But as a whole, retail, wherein the flexible buyer -- Housing Wire and the Cable sales to the retail sector, combined, put together the retail sales, we will grow close to 35%.

And it has -- what percentage margin higher than the company level? How much percent is higher than the margin?

Margin, you see now in the retail is close to, earlier, it was 11%. Now it has moved to another 11% to 12% range. Earlier, the institutional margin was close to 9.5%. It has moved to now 10% to 10.25% margin. So that's why the overall EBITDA margin has improved to 11.5% in this quarter. Also, at 11.5% range as a company as a whole also.

The whole year.

Institutional moved from 9.5% to 10.5%?

Yes. Yes, institutional has also improved because the demand is improving and the prequalification criteria the company is having, so all the top companies are benefiting. Smaller companies, those who are in the range of INR 200 crore to INR 500 crore, are not able to cope up with the working capital requirement.

Okay. So your company level margin of 11% that we see in the year gone by is a sustainable number?

Yes. Yes, it's a sustainable number. And with the interest cost also. That is also now -- in the reducing mode now from here onwards.

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

One, if you can just high level to us in the sort of price hike, what would you have taken in the retail and the institutional side [ in the quarter ]? And do you intend to take any further price hikes in Q1?

Actually, there is some disturbance from where you are speaking in your...

Kindly please repeat your question?

Sir, can you hear me now? Is it better?

Yes.

Yes.

So just in terms of the price hikes, can you just elaborate what kind of prices would you have taken at the retail level or for the institutional sales also? And in Q1 also, do you intend to take any further price hikes? That's my first question.

See, the price hike in the House Wire is, I think, gone up to 40% in last 6 to 7 months because of the rise in copper prices. And so far as Q1 is concerned, yes, there will be some price rise of, I mean, 8% to 10%, which is in line with the increase in the copper prices during April and May. So -- but any further price rise or price reduction will depend on the movement of copper price.

Sir, and this is Rajeev. Whenever copper goes up, the price goes up. So whenever the copper goes down, prices goes down. Only this is the year where the continuous price was rising. Otherwise, it was not happening in so many years, whereby continuous rising. It will always sometimes goes up, sometimes goes down.

Okay. And on the retail channel front, sir, what are the benefits which any retailer/dealer would see? From KEI's perspective, is it a better margin or a better product portfolio mix which you think that could attract them to start selling more KEI products? And in terms of any region, where we are trying to focus more in terms of this retail channel expansion? If you can give more inputs on that.

We are working on retail expansion all over India. So we are -- so we do not have a reduced focus anywhere. We have built up our retail sales team in all our 27 branches in all regions. So we are not very specific. That's where we are -- our focus is. We are focused on entire India.

So in terms of our channel margins versus the competitor channel margins, how different will it be? And in terms of their ROEs and ROIs for any dealers, do you think it will make more sense to go ahead and start selling the KEI brand?

There is the -- actually, the channel margins, I think we are able to give good channel margins to our channel partners because of the strategy that we are not allowing them to compete with each other in their same territories. I do not know. I think most companies do track the channel margins of their dealers, and that is a practice in this industry.

Okay, And sir, last question from my side. You also talked about other retail channel expand further. We also could have -- to see more products added into the portfolio, which we would like to push from this channel. So if you can elaborate on those product segments here, which you are looking to expand into, what could be the strategy in terms of the scale-up on those strategies? Yes, that's all for me.

We will come out with that -- those products maybe after 6 months once we see a good traction in this year up to October or November from the retail push that we are doing and additional marketing teams we have deployed all over the country. So at the moment, this -- all is in planning state. Actually, everything is delayed for another 3 months due to this lockdown because offices are not working. So the strategic discussions are not taking place. And people are not able to go to the markets.

The next question is from the line of [ Akshay Gohil ] from [indiscernible]

Congratulations on good set of numbers. Sir, my first question is on [ number to bill ] has reduced substantially in the quarter, and there is some movement on the Cable margin as well. Can you clarify what's happening there?

No, you are talking of this segment result?

That's right, sir. That's right, sir.

Yes. In the segment result, this time you know the GST has issued the concept of the cross charge. Cross charge means all the head office expenses, which were earlier shown in the unallocable expenditure. Now the unallocated expenditure has moved to their respective head of Cable and Stainless Steel Wire and EPC division. So we have reversed the first 6-month charges, which we have not unallocated -- we have shown in unallocated. So that entry was done only in the fourth quarter. Approximately INR 26 crore of unallocated expenditures was the -- reversed in this quarter, which was relative to previous quarter. So because of that, you are seeing only the margin. But otherwise, you'll see, if you reduce this INR 26 crore or add in the margin of the segment results in the Cable, you add INR 26 crore, then you will find that 11.61% EBITDA margin is there.

Understood. So the INR 26 crores is coming from the Cable segment, sir?

Yes. It is basically the cross charge were in the all the head office expenses earlier, et cetera. Now we need to allocate to the branches and the segments, actually. Earlier, we were showing only into that unallocated expenditure. So that's why in the whole year, you will see against INR 129 crore expenditures, you must be witnessing only INR 36 crore expenditure and in allocated -- unallocated. So in future, onwards, every time unallocated expenditure will be very, very minimal because everything needs to allocate actually now.

Got it, sir. Got it. And just, sir, 1 more clarification. In terms of the 2.5 months that you indicated, was that for overall working capital? Or that's only for receivables? And if that's the case then, what's the...

Overall, we're looking at -- it will also be 2.4 months. And hopefully, in this year also, 2.5 months. If everything goes well, then the 2.5 months will come down to this area itself. The fund in EPC, the -- in EPC, the retention is due. So if that comes, and we are not increasing the EPC sales, we are having the EPC sale only in the range of INR 450 crore to INR 500 crore so that will be in the range of. You see -- if at present, also, you see in the working capital cycle, the creditor has reduced close 2.8 months. So if you consider that, then still you will see the working capital cycle is not that bad that we are seeing from the balance. But it is looking light because we are utilizing our CARE to pay the creditor early. It is generally because of that only. So we opt not to keep the fixed deposits, rather, we should avail the benefit of the cash by purchasing in cash and get the discount as well.

Just 1 last clarification from my side. The elevated capital employed on working capital, is that also because you're -- because copper prices have gone up and your quantity would have kind of remained the same, either with dealers in terms of outstanding or inventory for you? I mean is that also a factor that has played in?

Yes, that's why I said. In spite of increase in the prices, everything is in build now, whether if it is stock, whether it's the better -- better credit assets.

The next question is from the line of Atul Bhole from DSP Mutual Fund.

Sir, just 1 question. You have -- you are giving a guidance of 35% growth in the retail side, whereas you have taken 40% price hike. So does that mean that a large part of the growth will be price hike? Does that mean that you're expecting to return all this growth for the next year? So can you -- with just the guidance, can you provide the acquisition or volume growth, please?

So actually, nobody knows whether the copper price will remain at this level or it1 will further reduce. If we talk of the last year, complete year, the copper has increased, on an average, is only 17%, not more than that. If we compare in a particular quarter, then we see it has increased a lot. But if we talk of the total year, then it has not increased more than 17% of that average copper rate on a monthly basis. So nobody knows the -- this copper rate will maintain or not. Definitely, if this copper will maintain for full year, then the growth will be much higher. But we are assuming always on the average basis, sometimes copper goes -- sometimes copper goes up, sometimes copper will go down also. So on that basis, we have financial year growth, as a whole, of close to 20%, including the institutional sale exports, retailer EHV sale, dealer/distributor sales every year. The growth will be much higher because of the penetration in the market and the number of increased sales power -- sales manpower, number of retailers. So more and more growth will come from the retail side and -- while we will continue to decline EPC business gradually.

But is it possible to provide volume growth guidance for the retail business, given the expansion you are in on the distribution side?

In '21, '22, the volume growth will be close to 25% plus.

[Operator Instructions] The next question is from the line of Shrinidhi Karlekar from HSBC.

Sir, I just have a couple of questions and a bit of hypothetical question. Sir, if we assume that copper prices remain where they are now throughout the rest of the financial year, would you say your margin would remain in the guidance range of INR 11.5 crore?

Sir, margin has nothing to do with the copper price because copper is an item where no one can exhort the pricing. It is like a gold. If the gold is higher, then the jewelry price will also be higher. So it is like the same. If copper price will go up, our cable or wire price will go up. If it goes down, then it will go down also. It is not the case that it will maintain.

Yes. Sir, the next question is that do you think from a pricing point of view, more of a margin, or you think more from a contribution profit? So it appears like, if I think more from a margin, like even the industry thinks more from a margin point of view, right?

The margin is almost a [ gift ] vis-à-vis in our industry. The margin is not like the key 18% or 20% margin we are operating. We are operating only between the 10% to 12% margin. So there is no -- not much scope to the upper side or to the downside.

Okay. Yes. Understood. And sir, you have guided something 15% to 16% growth, right, on a consolidated company level?

Consolidated base, Anil-ji has said 17%, 18% the last call. But seeing in the penetration in the retail, et cetera, definitely, we will grow more than INR 5,000 crore turnover in this financial year. And as you said, if these kind of copper rates remain as it is for full year, then it will be further improved for more than INR 5,000 crore.

Okay. Clear. Okay.

Growth was never a challenge for KEI in the last 15 years, if you see the balance sheet of KEI. We have always grown more than 15% CAGR. In the last 5 years, the KEI have grown almost 20% CAGR, except the last financial year. Look, the last financial year, economy was down, et cetera. So growth was never a challenge for KEI because it's a 50-year-old company. All the institutional demand, through the prequalification, comes to us. Export, we have already well established. In Extra High Voltage power cable, only there are 2 companies in India. So that's why these are the sectors where no one can compete with us. But now in the retail, we are penetrating because now, neither we will be borrowing more because we are increasing to be more and more into the retail side, wherein working capital cycle is very, very less, close to 1 month, as compared to 3 months in the institutional side. So that's why in future also, the borrowings will be going further down from here, even though we are going to CapEx for INR 175 crore, INR 150 crore year-on-year on basis. In spite of that, the company will be the cash surplus company.

The next question is from the line of [ Santosh Kumar ] from AMSEC.

I had a couple of questions, sir. I just thought the bookkeeping question. Could you please share the revenue mix for your wires business for A, B and C-plus cities for FY '20, sir?

From the retail side?

Yes, sir.

In the House Wire segment, approximately A-class city business is close to 35% to 40%. Again, on the C-class business is also close to 37% to 42%. And balance, 18 -- 17%, 18% to 20% business is from the B-class cities. Our A-class city categorization is only the metro cities.

So these numbers are referring to FY '20, sir?

FY 2021.

[ How about ] fiscal year '20?

So whether you talk of '21 or '20, hardly 1% or 2% here and there, sometimes because of the pandemic last year, basically, the rural sector or the C-class city, it was more than the A-class city by more than 2%.

Sir, I'm just trying to understand when the -- because of, again, consecutive year when the industry really grew in FY '21 as per, i.e., in your numbers. And if that is the case, and already most of the cities we are seeing a lockdown kind of a scenario, what is the comfort that even for the remaining 10 -- 9, 10 months of the year, we would see a strong growth? Because nothing has changed much when I compare to FY '21 scenario, then the growth was not there, right? Housing Wire, we saw there's still 6.5% growth.

Yes. Consecutive terms, however, last year, it's supposed only [ INR 400 crore ]. What this means, we have grown by 14%. But EPC business, [Foreign Language] Yes, that is our intention for the group.

Sir, I'm referring only to the Housing Wire group. And I'm taking your guidance. I'm trying to understand how things have changed.

The Housing Wire -- yes. In spite of that, we were maintaining the same level from a dealer/distributor INR 1,413 crore, at par. And in spite of the pandemic, et cetera, we have achieved around INR 1,408 crore. So this means almost at par in spite of the pandemic. [Foreign Language] So in spite that debt, we will grow further from here.

And you know what, we have to be optimistic. We can't see that country will remain in lockdown. Ultimately, vaccination has started. And if by June and these lockdowns are open, then 9 months is enough to grow very fast, and there will be unsaturated demand.

Okay. Understood, sir. Sir, 1 last question, if I may. Sir, the share of exports in Q4 declined, the share of retail increased. So even if I consider the number of INR 165 crores of retention money to be released, so is it that -- on a Y-o-Y basis, the retail working capital has got a bit stressed?

So retail working capital is not more than 1.5 -- 1 month to 1.25 months. Because in retail, we have that channel financing. So all the receivables in the retail side is hardly 1 month as compared to the institutional side is 2.5 months in the Cable division. But in the Extra High Voltage power cable, the receivable is close to 4, 4.5 months because of the, basically, EPC segment over there. So we supply the cable, then we lay -- so then we execute. But in the EPC side, the receivable cycle is close to 6.5 months because of the retention money. So already, there is only 1 month working -- particularly, receivable.

The next question is from the line of Paarth Gala from Prabhudas Lilladher.

Just 1 question from my side. Sir, on this, EPC, excluding Cable for the full year that we did of around INR 400 crores, INR 460 crores, what would be the EHV contribution on that? If you can just help get that.

Yes. Repeat your question, please?

So on the EPC, ex cable, for the full year, the number that we did of INR 460-odd crores, what would be the EHV contribution, the EHV, EPC, sir, in this number?

EPC -- the EPC business, a complete year was -- if you talk of EPC and EPC Other than Cable was close to INR 400 crore Cable. Out of this, close to INR 150 crore relates to EHV and INR 250 crore relates to Extra High Voltage -- sorry, EPC.

So INR 150 crores only EHV? All right.

Ladies and gentlemen, this will be the last question, it is from the line of Sparsh Raina from Mirabilis Investment.

I had just 1 question. Sir, could you give a comment on how the employee costs have reduced the spend for this quarter? And are these sustainable? Or will we go back to the last year's number?

No, implied cost is sustainable because, in the EPC, there was much more employees, more than 300, 400 employees. Because now, the EPC has -- the size of the EPC has reduced to 45%. So because of that, that employee cost has reduced. And it is sustainable because we are not going to increase the EPC.

Ladies and gentlemen, as this was the last question for today, I would now like to hand the conference over to the management for closing comments.

So I thank all of our business associates and market associates for joining this conference call. If you have any further questions, you may write to us and contact -- or contact Mr. Anil Gupta. Thank you very much, sir.

Thank you very much to all.