Rajratan Global Wire Limited (RAJRATAN.NS) Q2 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Rajratan Global Wires Limited Q2 FY '26 Post Results Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Sailesh Raja from B&K Securities. Over to you, sir.

Yes. Thanks, Shlok. Good evening, all, and thank you for joining us for Rajratan Global Wire Limited Second Quarter of FY '26 Earnings Call. During this call, from the management side, we'll be hearing from Mr. Sunil Chordia, Chairman and Managing Director; Mr. Yashovardhan, ED of the company; Mr. Pranay Jain, CFO, Rajratan, Thailand; and Mr. Hitesh Jain, CFO, Rajratan, India. I would now like to turn the call to the Chairman for the opening remarks, followed by Q&A. Sir, you may begin now.

Yes. Thank you, Sailesh. Thank you, B&K, for organizing this call. Thank you all the participants for your interest and joining the call today. I'm happy to share with you that we have posted good results. We have shown a revenue growth of 20% this quarter. There is a substantial volume growth in this quarter, both in Thailand and in our India business. And led by that growth, we have posted a EBITDA, which is close to INR 40 crores in this quarter and highest-ever sales crossed 32,000 tons in 1 quarter. And all this is possible because of our Chennai plant getting more and more approval, and there is a good traction in global market also for Rajratan to export more in coming quarters. And I think we have left behind the worst quarter, which was last. And going forward, you should be able to see better performance of your company. With this, I'm open to answer your questions.

[Operator Instructions] The first question comes from the line of Sanjay Shah from KSA Securities Private Limited.

Congrats on great set of numbers. Sir, continuing to your last sentence about export, can you highlight what was the export volume from Chennai in first half of '26 and what is the total target of '26 and '27. And what are the primary market that we are targeting?

Yes. So currently, our total export to markets other than India and Thailand is around 2,200, 2,300 tons per month, which is also divided into around 1,200 tons from Thailand location and 1,000 tons per month from India. And within India also roughly it is 50-50. So we are doing around 500 tons of export from our Chennai location and around 500 -- and all these decisions are based on the availability of containers, availability of the competitive freight rates and all this. And primarily the exports are happening in Southeast Asian market, which are Sri Lanka, Indonesia, Malaysia, Vietnam, and many more locations in Asia. We continue to export to Europe, which we had developed post-COVID. And we are also exporting quantities to North American market. And there is a mix of export from both the locations from Thailand and India.

Then what we can do in next H2 and next year, sir, export. What are the targets?

Yes. So we have -- as you know, we have a setup in America now, we have a setup in Europe. We are shortly engaging more people in Asian market. And our plans are to at least reach a total export of around 40,000 tons in next financial year, FY '27. That is the plan we have made.

Sir, my second question was regarding our realization which has gone up in India as well as from Thailand by 6 to 7 kgs (sic) [ INR 6 to INR 7 per kg ] in India and by INR 10 per kg in Thailand. So are these sustainable and what should be the sustainable number you feel which we can do and what are the reasons for this higher realizations?

So I think -- I'm not confirming these numbers of higher realization, but yes, this gross margin is sustainable. There can be some pressure on gross margin if there is a change in the raw material price. Currently, the raw material prices are softer, so we are able to maintain this. Otherwise there may be a lag of 1 quarter if there is a sudden change in the raw material price. But we are currently operating at a very competitive market. So these prices are after factoring in all the competition from other players in the business.

Right. In last quarter only you alluded about the higher imports from China, both in domestic as well as Thailand. So currently what is the status and how competitive we are...

No, in India, there is not much of import from China. Only few customers are able to import. But in Thailand we are competing with Chinese import, and we are profitably competing with them and growing also.

So in India, new capacity from Tata and other companies are coming up.

Yes. So in India, as you know, Tata has also increased capacity, our other competitor Aarti Steels has also increased capacity. And Bansal Wires, they have also put up capacity. But Rajratan being present in this business for a long time because of our knowledge of this business, our product quality, and our strategic locations, Chennai and Indore, I can say we are ahead of our competition.

So price parity is coming near to the competitor? We are getting better off?

No, price differentials are there, depending on the customer. Earlier we were not selling quantities to North Indian market, which is low price market, where approvals are also not required. But with Chennai in operation a lot of our customers will be fed from Chennai, and we'll have open capacity available in Indore plant, which will start selling to customers in West and North of India.

Sir, my last question about nonauto business opportunity for bead wire in overseas and domestic market.

Yes. So there are not many opportunities like that. Mainly we are exporting bead wire only for now. And in India we are doing some business which is non-tire business. So that is a constant business we are doing.

The next question is from the line of [ Rishabh Gang ] from Sacheti Family Office.

Good set of numbers. Wanted to understand more on how are the export volumes shaping up especially for the premium customers in the U.S. and Europe. And if you can provide a breakup of like from where are we exporting to the U.S. and Europe. A follow-up on that is, wanted to understand more on the size of opportunity at customer level in the U.S. and Europe. So if you can explain for any one customer, names are not needed, in general how much bead wire they will be consuming per annum in these geographies, U.S. and Europe, and how much are we supplying them currently, to understand what is the potential to grow to supply more premium bead wire to these geographies.

Yes. I am afraid we'll not be able to give you very specific information. But the Yashodhan will throw some light on this market and opportunity because he is responsible for global market. Yashovardhan?

Yes. So in the last 2 quarters, we've transitioned into supplying bulk quantity trial lots to many customers. So we were in an approval phase earlier, which has now converted to bulk trial. Eventually we are hoping that this volume should increase further this year. And the plan that we have for next year's export business is also dependent on these approvals [ kick in ], which has already happened. Just to give you a perspective, one Japanese MNC, who we are approved with now in Europe, probably buys about 3,000 tons to 4,000 tons a month. And there we have started supplying probably 5% to 8% of their requirement. So the headroom at these counters is quite a lot.

This is very encouraging, sir. Also, wanted to understand any senior management hire or hires that we have done especially for the exports, as well as for the Korean customers. So I remember that you mentioned that the volumes were not moving up some quarters ago. So any actions that we have taken to improve volumes to the Korean customers?

To be honest, the action that we've taken is we've shifted our focus to other customers. Korea seems to be slightly overcompetitive market, situated very close to China. The logistics cost from China is also very less, and probably we are seeing that those companies, the approval and scaling up is very slow. We are still in discussion with them. It's not that something has stopped, but the kind of trajectory which we were expecting, that has not happened. But contrary to that we've got that growth trajectory from companies in Europe and America. So probably there are many counters that we are working at. Some would be slow, some would be fast, and some we would have to shift our focus from. So that's the plan that we have.

And I would like to add here that serving to Korean customers was resulting into tougher competition with 2 Korean multinational companies who supplied bead wire to them. So that is -- let me tell you, that is becoming very difficult, and that is our learning also in last 2 years.

For the Indore plant, I think, have we witnessed any volume decline because we are shifting more volumes to Chennai, as well as we wrote this point that liberated the Pithampur plant to seek alternative and more profitable markets. So when we say more profitable markets, what do we mean, like which markets are we supplying from Pithampur?

No, when I say more profitable, it doesn't mean only profit in terms of price. We were not able to supply to customers in this part of the country, North India and West because of nonavailability of capacity. So there is no decline in the capacity in Indore. There is a shift in service from which location we are serving. So we were serving big volumes to South Indian customers from Indore, which is now moving to Chennai location, and we'll have capacity available. So we are using that capacity for export and also to service to North Indian customers. And in our business more volumes means lower cost of production. So that is where we are confident of keeping our profitability intact in spite of competition and in spite of higher volume to lower-cost customers.

91% Thailand utilization was very encouraging. On Chennai, I wanted to understand, like how much offtake per client has increased because of Chennai being very proximate to them. As well as you know what is the status on the PLI for Chennai? Did we do 14,000 tons in FY '25? Like how is PLI thing moving for Chennai?

Yes. So volumes are shifting to Chennai-based customers. So I'll say currently we are supplying 50% of what we were supplying from Indore. So 50% of that quantity has moved to Chennai. So more and more of that will happen. On PLI, we couldn't do 14,000 tons as committed with the PLI agreement. We have done less than that. But we have applied for revision in the production volumes year-on-year. And we are chasing with the department, we are representing to the government to allow us change in the year-on-year production targets. And I hope that will happen. But in all our projections, we are not including PLI as a gain up till now. That will happen only if we get approval of the change in year-on-year production targets.

So any PLI incentive will be incremental to the margins.

Correct.

Sir, when I asked you about the volumes, let's say we are supplying 100 units to company A, which is near Chennai, earlier, before Chennai plant was there. So now Chennai plant has come. So how much additional volume have we able to get from customers which are near Chennai? That was my question, like increasing wallet share, if you can illustrate with a number maybe.

Difficult to say. We have grown our business with them. If I compare from my last year. Because our understanding with these bigger clients is on an annual basis. So our business with these companies have grown anywhere from 10% to 20% in [ first 3, 4, 5 ] companies.

Just a last question and then I will come back...

And then we have plan to offer them some value addition. Like we are offering them to keep minimum inventory, and we will take the responsibility of supplying them just in time, which will be possible because we are surrounded with 10 tire manufacturing locations. But all this will take some time.

Excellent decision on the location, sir. One question is I've been reading a competitor's investor presentation. They entered into the steel tire cord, and I read that somewhere it's 20% kind of margin. So I wanted to understand like do we also think about entering into other products which we can sell to tire companies. And as a percentage of the total tire cost, can you give us an idea on how much does the tire cord -- steel tire cord constitutes?

Yes. So I'll answer all the 3 questions. Our back-of-the-envelope calculation doesn't show that it is a 20% margin business, one. Number two, it is a very difficult business. Investments are very high, and approval cycle is much longer than bead wire. So we will not dare to enter that business without a very, very strong partner, who takes the responsibility of making the right product and getting the approvals quickly. So that is our plan. So right now there is nothing such happening in Rajratan that I can tell you about tire cord. Number two, tire cord is about 10% to 12% of the tire input, against 3% to 4% of bead wire. So yes, consumption is high, and it is a bigger raw material for tire industry.

The next question is from the line of Arnav Sakhuja from Ambit Capital.

So with regards to your other expenses, there was an increase by around 60% year-on-year. So just wanted to understand that a bit from you.

Yes. So these other expenses are related to expenses in Chennai, because till last year we were able to -- a lot of expenses were capitalized. But we have shown fully commercial plant operating now. So all those expenses have come to P&L. Number two, this also has lot of freight outward cost for exports we are doing. So around INR 13 crores -- INR 11 crores is the freight outward cost, then there is a higher cost of power and fuel by around INR 9 crores, and many more such costs. So there is nothing extraordinary about it. This other manufacturing cost will come down drastically as the volume in Chennai picks up. So the cost is not proportionate to the volume right now because Chennai is still operating at lower production.

And you were mentioning the PLI benefit earlier that basically you applied for volume revision from this PLI perspective. So if the PLI benefit comes through, then could you quantify what the benefit would be?

No. As per the agreement with the Ministry of Steel, we are supposed to get 8% of incremental sales every year.

And so, just my last question is, could you please give a bit of an outlook into the tire industry?

So I see tire industry doing very well. They are also growing, but their growth is 5% to 8%, not more than that. And I also see that tire industry is able to export also. So the projections they have given us is in that range of growth for next year also.

The next question is from the line of Bhargav from Ambit Asset Management.

Congratulations for a good set of numbers. Sir, my first question is that given that our utilization in Chennai is now closer to 60%, what is the time line and CapEx for the second phase of expansion, if you can elaborate on that?

Yes. So Bhargav, we have already decided to invest in the balance CapEx, which is maximum INR 20 crores to INR 25 crores, which will be sufficient to bring the modular machines to increase the capacity to 60,000 tons. And we are placing all the orders in a phased manner to reach us in next 1 year time. So some of it will be available for beginning of the next -- first quarter of the year and some will be available for second and third quarter. Because we have an aggressive sales plan from Chennai also, we want to not limit it because of the capacity. And it is a small investment which is required. So we have decided to go ahead with this.

Secondly sir, given that from Chennai we are closer to the customer location as well as in terms of raw material sourcing also we are now closer, is it fair to say that the freight savings, once the Chennai plant operates at full-fledged, could be about 1.5% to 2.5%, both inward and outward, as a percentage of revenue.

Yes. But we are not committing that as an improvement in bottom line entirely. Some of it will have to be passed on because of competitive market. But definitely you can see the glimpses of the right decision we took to be in Chennai. But Chennai, on a monthly basis have become profitable, and going onward, this is to improve further.

And sir, in terms of Thailand, given that it's operating at almost 90% utilization, and we are making inroads into premium customers as well, any plans to increase capacity there? Or we'll use the Chennai facility to target those customers?

So when we say Thailand is 91% utilized, we are doing some debottlenecking, making some little more investment, doing some more work to increase the capacity by another 10%, which will be possible in the same location. Beyond that we don't have the space here. So the next move will be moving from low-price customer to better-price customers. That will be the next year. When Yashovardhan gets major approvals in multinational counters, the volumes to Chinese companies will reduce and volumes to those multinationals will increase. So that will benefit the bottom line of the company. So for now, this is the plan, and there is no possibility of increasing capacity further in that location.

And lastly, sir, in the presentation you mentioned that despite a significant improvement in Thailand in terms of pricing, you expect this to sustain or maybe in a band of about 10-odd-percent here and there. So that confidence comes from the fact that you are seeing good visibility from your premium customers. Is that the reason why you are confident on this realization in Thailand sustaining more or less?

Yashovardhan or Pranay, you should answer this.

Yes. So like I mentioned, because now good amount of volumes have started going and the negotiations with premium customer is always annual. So we have a much better visibility with these counters. And the discussion is always for the entire year's business, which we have had for 2025 and now we are in the process to do it for '26. So the discussions are quite encouraging, and we are confident that these volumes will increase and will sustain.

And one clarification on this, if there is a bilateral trade agreement which happens in the U.S. maybe in the future, will that also include our category, or our category is excluded as of now.

It is excluded.

Bilateral trade with India or you mean Thailand?

Sir, I didn't understand.

No, Bhargav, this product is excluded. This falls under Section 232. So there is no adverse impact of reciprocal duty. Whatever duties, they are across the board for all the countries is there, and it is little higher on China. So as of today, we don't see any change in the duty structure because of the trade agreements with India or any other country.

[Foreign Language] it applies to us also, meaning the penal tariff of 25%...

[Foreign Language] But that is across the board for all the countries.

The next question is from the line of Ritesh Shah from Investec.

Sir, my question is, with a 5-year view, how should we look at the company? You indicated that we will go ahead with Chennai Phase 2. So that is one. But beyond that, how should we look at the company, sir?

Yes, Ritesh, difficult to talk 5 years view in this volatile market. [Foreign Language] But I can tell you 3 years view, which is very -- we are very confident of that Rajratan will be doing a business of around 190,000 tons or 180,000 tons with a top line of close to 2,000 tons. This plan is intact. Beyond that maybe we walk little further and we'll see some visibility.

And sir, second question related to this one. When we say Chennai Phase 2 expansion, what will be the process in securing approvals, basically stabilization of the plant? Will it be as easy as the first one or is it like we have done all the hard work, Phase 2 expansion won't have any of those hiccups?

No, those hiccups won't be there if we are expanding in the same location. So we won't have to go for a new approval. But if we see the market growing that fast, we see the customers demand which can absorb doubling the capacity there, we are ready to do that with a very low-cost investment. But as of today, I don't see that happening in maybe 3 years' time. So 3 years are too long to predict that.

And sir, my second question was on Thailand operations. I would presume there would be some benefit of ForEx in the reported rupees-per-ton number, the implied number that we see for Thai operations or consol minus standalone. Sir, how should we understand the ForEx impact over here? Are there any tailwinds? Basically if you look at Thai baht, it moved both ways during the quarter, and if there are exports out of Thailand, probably in dollar terms, we would have some gains probably over there. So net-net, sir, if you could help us understand how to look at those numbers.

Pranay, would you answer this? Broadly, we are not doing any hedging as of today because we do import from China in dollars, and we export out of Thailand in dollars, and there is a natural hedge available. Whatever foreign currency impact you see of valuation is because of our investment in Thailand and that relationship is changing. But Pranay, can you say more on this, or Hitesh?

As part from Thailand, I agree with you and this is the only practice which we are following. There is a natural hedging on receivables and payables. But we do monitor. If there is something changing related to ForEx, we are sometimes taking action, and we are hedging ourselves also if it is really necessary.

So Ritesh, very difficult to give projections on foreign currency gains or losses.

But Ritesh...

Yes, Yash.

Yes, sorry. So the improvement in realization that you see is also because there's some downward trend on the raw material cost. But we are not looking at it as reduction in raw material cost. The idea is or the actual scenario is that we were able to improve our realization because the proportion of sales to premium customers increased. So that's also one of the major reasons for the realization improving in Thailand.

I'll just take the third question. Sir, how should we look at the timelines for Phase 2 Chennai expansion and the ramp up of Phase 2 at Chennai?

I already told you we are ordering all the required equipments, and that should be available beginning of the first quarter of next financial year and complete in the second financial -- second quarter. So next year plans for Chennai are big. So we need to have the capacity in place.

The next question is from the line of [ Saket Kapoor ] from [ Kapoor & Company ].

Sir, can you please the [ quantify ] the tonnage from Chennai for Q1 and Q2.

Hitesh, will you answer this? You have the numbers?

Hello.

Yes, sir.

Q2 sales tonnage 4,768 metric tons.

4,768 metric tons is for Q2?

Yes. And Q1, 2,485 metric tons.

2,485 metric tons. Okay. So when we are comparing Q1 versus Q2, sir, there is an incremental 3,855 metric ton. So the entire contribution is from this Chennai unit only. Whatever improves...

Yes. And you will see more of it is coming.

[Foreign Language] for the entire year. I missed that tonnage.

So around 6,000, 7,000 tons for this year.

6,000 tons to 7,000 tons. [Foreign Language] tonnage of 1.80 lakh tons, the 3-year vision and INR 2,000 crores top line. This is what you mentioned, sir?

Close to that, yes. 1.80 lakh tons of bead wire and other products maybe 15,000, 20,000 tons. That makes it close to 200,000 tons. And because we are also investing in a wire rope facility, and that will also add 10,000 tons. [Foreign Language]

I was coming to the wire rope part only, sir. [Foreign Language] and how are we progressing? What is the...

Yes. So it will take another 6 months to complete. We are building up a new building. Machines are already at site, stored in a godown. But we had to make a new building for accommodating all that layout and machines. And we will start production in the first quarter of next financial year.

Sir, when we look at our cash flow, for the first half under the plant, machinery, and property, we have invested around close to INR 31 crores. So can you quantify where this money has been spent, INR 31 crores -- INR 30.72 crores.

Hitesh?

INR 29 crores in wire rope plant at Pithampur.

And some in the balancing equipment in Chennai maybe.

And sir, for Pithampur, is it the efficiency one -- can you quantify where that this money has gone?

No, it's for the new project.

Can you elaborate slightly more, off the record, what are we setting up and what are we...

No, we have talked about it in the past also. We are doing a pilot project of wire rope business which is 10,000 tons per annum capacity. If we are successful in this business, then maybe after 2, 3 years we really want to invest in a bigger capacity. So as of today because we had the space available, we had the capability, people were available, we decided to put up this in the mother factory at Pithampur. So for longer run and for global market, Indore may not be the right location. But all those decisions will take maybe 2 years from now.

Okay. So that entire INR 29 crores is attributed towards the wire rope facility? That is what...

Yes. And more of investment is required, which will be in the coming months.

And what will be the total CapEx we have envisaged for this project?

INR 70 crores for this project.

And this is only the plant and machinery part, since land is there co-shared by the...

No, total investment is around INR 70 crores, out of which plant and machinery majority has already come.

So now we need to invest in land.

No. Land is already there. We had our company land. So new building, other infrastructure, power, electricals, material handling, all this will be done now.

Sir, when we look at the realization part, that is trending lower only. So if you could just give some color for the domestic entity or on a consolidated levels also. So just a color on the market, and what are we anticipating in terms of realizations going ahead?

Yes. So as I told you, we are working in a competitive market. You see realization lower because the raw material prices have also come down. So there is a huge correction. Prices of steel products remain softer -- the price of bead wire. But we are happy with this realization. And we have enough -- plans to improve on our cost to continue generating satisfactory EBITDA number and profitability.

And last point is on the -- hello. I'm there, sir?

Yes.

Yes, sir, you can continue.

Sir, in the cash flow that we see that the net of income tax paid for the first half on a standalone basis is lower than what we paid for the last year first half. So does that include some regarding the Chennai operation unabsorbed depreciation...

Naturally Chennai operation depreciation will save us on income tax, because this year we'll claim full depreciation on Chennai operation. So the income tax liability will reduce.

Will reduce. But going ahead, we will be seeing improvement in the tonnages from the Chennai unit. This is what the road map for H2 looks like.

Yes, sure. Yes, you are right.

And sir, thank you for this very detailed and crisp investor presentation that answers and gives the information in the much-needed way. So please continue with the same, sir, and all the best to the team.

The next question is from the line of Preet from InCred AMC.

Congratulations on the stellar performance. Sir, I would like to know about the realization which we get in India market as well as export market. What would be the difference? We are being continuously telling that we will be supplying to premium customers. Just wanted to know about the realization difference which we get and also if we could talk something about EBITDA margin which we make in India and what EBITDA margin we make while we export the same product.

So there is a big price differential in the market. Multinational companies we get better price, in India also there are certain market where the realization is very low. So the price differential in our product is [ quite often ] ranges between plus/minus 8%, 10%. So very difficult to tell you. What you see in the profit and loss account or balance sheet is a total number divided by tonnage, which is average price which may be a misleading figure. In the international market, again, the same scenario. If we are supplying to a Chinese customer, prices are very low. If we are supplying to a European or an North American customer, prices are better. So what you see here is a total average price. Very difficult. On EBITDA, we are confident of continuing with the same margin or some improvement from here because there is a lot of improvement in the cost possible with increased tonnage. So our costs are likely to come down substantially in coming months. Part of that will have to be passed on to customer. But there is a likelihood of improvement in the EBITDA margin also.

Sir, I can understand that it would be difficult to mention about the realization exactly. But if you could just tell the ballpark difference between Chinese customer which are the lowest realization, and the premium customer which we have started like in Europe and North America, what would be the difference of the realization between them, lowest and the...

[Foreign Language]

It is 25%, 30% kind of difference.

Yes.

And also on the thing that now I've heard about the policy of anti-involution which has been played in China. So this is the reason why they are not dumping now in Thailand, or is there any other reason why we are getting a better realization as well as volume are increasing in Thailand plant?

No, it is only because of increase in volume. Chinese have not stopped dumping. They are as competitive as they were. But fortunately, our cost structure is also very competitive, and we are able to compete with Chinese suppliers in Chinese tire companies. So we are making little profit, but we are able to supply them. And increasing volume in our business gives you an overall improvement in the cost. So we have decided not to reduce the production but continue with full production and keep supplying wherever we have little contribution.

And we do one more business apart from bead wire, some wire rope or I don't remember the exact name. What would be the volume for this quarter and what kind of volume we are expecting for this year from that particular segment?

[Foreign Language] and that will be maintained at that level. So we have some spare capacity which is profitably being used [Foreign Language].

And have we see any margin improvement in that particular segment or that are in the line with 6%, 7% which we used to do earlier?

It is same. But it helps us reduce the overall fixed cost.

Last question on the CapEx front. We have told that we are making into that wire rope business, and we would be doing around INR 40 crores, INR 50 crores of more CapEx in coming half. So total CapEx, if I'm not wrong, you have guided in some of the conference that it will be INR 100 crores for FY '26. If you can guide on similar basis, what are you expecting on FY '27 basis, what would be the CapEx total?

FY '27, we don't see much happening, except INR 15 crores, INR 20 crores, which will be balancing equipment in Chennai and maybe some balancing equipment for wire rope business in Indore location, and some debottlenecking in Thailand. So you can call it maintenance CapEx which will happen, but not more than INR 20 crores, INR 25 crores max. [Foreign Language]

Sir, one last question on gross margin side. For this quarter, we have seen a very much high -- much improvement in gross margin due to Thailand plant. So what would -- from the 3 years' point of view which we have guided like 180 tons of bead wire and INR 2,000 crores with improving EBITDA margin what we have done in this quarter, what gross margin can we think from 1 year point of view that would be sustainable? Would it be the current level of 42% or we see around 38%, 40%, which we have been doing in last 3 quarters?

38%, 40% we never did. Something wrong in your data. So again this percentage will change with the change in the price. So I think, for now, you can assume the same EBITDA level and do your calculation, or we can get on to -- you can get this information later on.

The next question is from the line of Vinit Thakur from Plus91 AMC.

I have a couple of questions. So could [ we have ] guidance regarding the revenue for next 2 years?

Sorry, come again.

I would like to know the guidance for next 2 years, sir, what guidance -- what revenue are you expecting this year in FY '26?

So we have plans to grow in 15% to 20% volume growth in next year also, like 15% this year, 15% to 20% next year; depending on the price, a similar top line growth.

Similar top line of 15% to 20% from last year FY '25.

Yes.

And sir, what would be the realization consolidated for us this year?

Sorry, I already answered these questions.

Sorry, sir, I joined late so that's why I missed it. I am really sorry.

What is your question?

What was our consolidated realization on a top line basis for per ton?

So in India it is around INR 88,000 to INR 90,000 per ton. And in Thailand it is around INR 82,000, INR 83,000 per ton, in rupee terms.

And sir, what EBITDA margin are we hoping to -- are we able to going to bounce back to our old margins around 17%, or it's going to stay at 14% for this year as well?

No, it will range between 13% to 15%, because anything beyond 15% requires a tailwind, and we cannot predict a tailwind.

The next question comes from the line of [ Rahul Kothari ], an individual investor.

My question to Mr. Yashovardhan. Sir, do we see any export opportunity in markets other than U.S., Europe, or Southeast Asia, like Middle East or Latin America?

So when we talk of America, broadly it also covers Latin America. So we are looking at a few counters there. Other than that, Middle East does not have too much of tire production and countries like Iran have it, but there are some sanctions on those countries. One potential that we are evaluating is increasing our sales to -- or probably look at counters in Japan. But it's too early to comment or it's too early to predict that market right now. But that's what we are looking at for the next 2 years of growth.

The next question is from the line of [ Rishabh Gang ] from Sacheti Family Office.

Thank you for the opportunity. Sir, first question was on the wire rope. We had talked about a INR 50 crores kind of CapEx for that, right? You mentioned INR 70 crores today.

No, total INR 70 crores.

Next question was on...

I think we have been saying that only.

Okay, my mistake, sir, then. Sorry. On the competition front, how are we seeing the competition dynamics in Thailand? I read somewhere that there's this company called as Xingda, X-I-N-G-D-A, they are claiming to have 80,000...

Yes, it's a Chinese company.

Yes. They claim to have 80,000 tons bead wire capacity in Thailand. So have they reached a commercialization stage? Because I read it somewhere on their website. Second was, on our customer mix, we say that we will sell more to premium customers such as MNCs in Thailand. So how hard it is to get the approval for these MNCs such that what is the moat that we have against Chinese players also getting access to these premium customers?

Yashovardhan?

Yes. So Xingda is there in Thailand since last probably 8 years. But they only manufacture steel cord. They don't make bead wire. A few years back, I think around pandemic, they had announced to put up an investment in Thailand, but it never took off. That's what we know. But if there's any information, probably you can share with us. So that's about Xingda. Regarding MNC, the approval cycle is long definitely. What gives us an advantage is we are a local supplier or local producer in Thailand. So our service levels and our discussions with the customers are all based on providing and providing them an added advantage of being a local producer. Chinese suppliers are already present in these companies. So it's not that Chinese are not supplying to them. But probably definitely Rajratan has an edge because we are there in Thailand.

Also, sometime back you had mentioned that Chinese government have stopped the export rebate. So there's no such export incentive by Chinese government to bead wire manufacturers currently also, right?

Yes, it's not there. It's still there on steel cord, but it's not there on bead wire anymore.

On the BIS regulation, I understand that BIS regulation don't easily go to players in China. Or maybe last time you mentioned Rajratan Thai Wire. So is it still as hard as earlier to get this BIS regulations?

Yes, it's still hard. We are done with our inspection, but still we've not received the license. So probably getting BIS approval for bead wire still seems to be a struggle.

So that is actually beneficial to us when we compare to China and India.

Yes.

My last question is on the working capital. So how do we see our working capital days panning out, considering both we sell more from Chennai as well as we increase our exports because those have higher inventory days and receivable days?

Yes. So it is because of our higher sales to global market. So, say, for example, if we are shipping to a customer in U.S., it takes about 45 to 60 days transit time, and he pays after 60 days. So the real -- the credit cycle goes up to 120 days, in some cases 150 days also. So you have seen historically we were operating at 70 days working capital cycle, which has gone up to 90 days. And it is only because of that. There is no change in the customer profile or credit days in local Thailand or in India. It is purely a factor of higher export to long-distance customers.

If you can quantify on the time it actually takes for the approvals to come for a normal tire manufacturer and, let's say, a very premium MNC customer? Because we keep on reading about this, but I never read the number of months. So if you can tell about that, as per your experience by and large.

If everything goes -- multinational companies, anything from 2 to 5 years. And with local big companies like MRF, who is sitting close to you, anything from 1 year to 3 years.

That is a significant...

But 1 year is the minimum time. 1 year is minimum time for any good customer.

The next question is from the line of [ Nikhil Joseph ], an individual investor.

So I just wanted to ask you in terms of the Thai plant, as you just mentioned on this call, since we are very competitive there despite Chinese competition. So what is it that is going right there? And my question is currently, although India doesn't see a lot of import from China, but suppose that changes in a significant manner after a few years, will the Indian plants also be as competitive or what are the factors actually differentiating?

So you asked 2 questions. So the good thing in China -- in Thailand business is that we are exporting to better customers. We are selling bigger quantity to multinational companies where prices are better. And number three, our volumes have grown in Thailand. So any volume growth in business gives you a better cost of product and better gross margin also. So this is about Thailand. Hypothetical question, if China enters India, if the quality control order is done away, if government freely allows Chinese, so they will also allow Chinese wire rods to be supplied to us. And if we get Chinese wire rod, our conversion cost will be as competitive as any Chinese player. So I think with bigger capacities like 60,000 tons in one location, we'll be equally competitive from both our locations, which are strategically closer to the consumer.

And just one last thing. You had mentioned that the overall industry, you named some of your competitors also putting up capacity. So what is the total industry capacity right now and what is it that is coming up, say, in the next 1 or 2 years? And how do you expect it to impact say margins or any other operating metrics?

No. So as I told you, the total Indian market to our calculation is around 160,000 tons to 170,000 tons per annum. And installed capacity is much higher. But that is on paper. Viable capacity is a capacity which is approved by customers. So there is a difference in the installed capacity and viable capacity. So that is how it is. Companies have invested in 3 lines, but they are lying idle. So this is about it.

So if I understand, probably these guys are not getting approval, which is why they are not producing. Do we see them getting approval, say, down the line with a 2, 3 year lag to us, or that's not really how it works?

No. If they sustain these losses for 2, 3 years, yes, they will learn, they will improve the product quality, they'll get the approval also, yes. But depending on the -- I keep saying that smaller capacities are not viable because your cost of production goes very high. And bigger capacities are not sellable because there is no customer without approval.

The next question is from the line of Radha.

Congratulations for significant improvement in performance. Sir, I wanted to know what is the total employee headcount for Chennai facility and also for Indore. And if Chennai Phase 2 comes on stream, how many more employees do you plan to add?

Yashovardhan?

Sorry. You were asking about the Chennai employees, right, when we increase capacity?

Chennai and Indore. Yes. Chennai and Indore currently. And for Phase 2 Chennai, how many more are you planning to add?

The sales team in Chennai, if I've heard correctly.

No, I'll answer this. In Indore we have around 450 people. And in Chennai currently we have 180 people working. And we have an approval to go up to -- we, as management, have given an approval to go up to 210 people with full capacity of 60,000 tons installed.

If the Chennai plant is ramped up further over the consequent quarters, so the Indore utilization will gradually come down. So in the interim, because of this, just wanted to understand what is the total fixed cost per metric ton in Indore versus Chinese.

Fixed cost per month is -- Hitesh, you will have number? But right now, per metric ton is INR 8,000 per metric ton in Indore. And it is much higher in Thailand -- in Chennai because the volumes are very low. But I don't see possibility of Indore volume coming down, because we will be exporting from here, and we also have customers whom we were not supplying because we were short of capacity.

Could you tell it in terms of fixed cost per month in rupees?

Hitesh, Indore fixed cost?

In Indore, fixed cost per month is INR 2.27 crores per month.

Okay. And Chennai?

No, INR 4.55 crores per month in Indore.

And Chennai?

Chennai, hold on.

Radha ma'am, are you done with your questions?

One moment, Chennai cost he is giving.

In Chennai, INR 2.33 crores per month.

And what is the tax rate in Chennai, sir?

There is no tax -- separate tax. The results are with the same company. It is the Unit #2.

Sir, because of the PLI -- the PLI is a total tax benefit. So it will be 26% only.

Yes. It will be on the balance sheet. Tax will be on the total consolidated number, the merged number of Chennai and Indore operation. So there is no separate tax on Chennai.

Radha, you can connect with Hitesh if you want more numbers.

The next question is from the line of Preet from InCred AMC.

Sir, only 2 questions. I need some clarity. You have mentioned that from 3-year point of view we are planning for around 180,000 to 200,000 tons and our top line...

200,000.

200,000 tons. And our top line would be in the range of INR 2,000 crores. So are we expecting the realization to increase from INR 88,000 -- currently INR 88,000 to INR 90,000 to go to INR 1 lakh?

No. I'm building in some inflation. But that is why I'm talking of a range, anything from INR 18,000 to INR 2,000 crores. Because the new wire rope business which we are doing, the prices are around INR 150,000 a ton. So different products will get you different realization. So it's a ballpark number.

And one more thing...

And Preet, I think [indiscernible] also will have an effect of raw material prices that day. So probably 180,000 tons of sales is what is a good number to look at.

And one more thing on export side. Correct me if I'm wrong. I've heard that you have mentioned that for this year we are planning 6,000 tons of export and for next year we are planning around 40,000 tons of export.

No, 6,000 tons from one location in India. And overall global export, including Thailand and India, is 40,000 tons.

So what...

So this year it will be -- so let me clarify. This year we are expecting it to be about 23,000 tons -- 20,000 tons of export. And next year's plan is in the range of 35,000 tons to 40,000 tons. 6,000 tons was only from Chennai. Approximately, 6,000 would be from Indore. And Thailand would be doing about 12,000 tons to 13,000 tons.

And on employee expense side, now as you mentioned that we have around 180 employees in Chennai. So this is the reason why we are seeing increase in employee expense for last 1 year? And are we -- and will this be number stabilized going forward?

But these numbers are stabilized only. But there will be a bigger denominator in terms of tonnage. So per ton cost will substantially come down when we increase the production.

And for the fixed cost which we have mentioned INR 4.5 crores per month for Indore and INR 2.3 crores per month for Chennai, does this include employee expense as well?

Yes, it does include. And interest, depreciation, other overheads also.

The next question...

I think it is 5:10 pm. We will take it to -- how much more time do we have?

Just a second, sir.

Sailesh?

Yes, sir, one last question.

The last question comes from the line of [ Rishabh Gang ] from Sacheti Family Office.

So what is the current trend that you are seeing on the competition front from your Indian peers like Tata Steel, Bansal, and Aarti? Also you spoke about unviable players possibly exiting due to excess capacity. So what is the capacity utilization which is needed in the industry below which players generally make EBITDA margin losses, if you can tell about that, sir?

Yes. Very difficult to comment about competition. But our experience says that at current price level 60%, 65% -- unless you do 60%, 65% utilization, you don't break even. So we are seeing some of the competition only using 15% capacity. So I'm assuming that they'll be making losses. So it is all about how much loss-absorbing capacity you have, which will decide.

On the wire rope front, so we mentioned that it is possible to achieve a 17%, 18% margin, let's say, when the plant comes up. So what is the right to win in that particular segment? And is 17%, 18 the best margins? What is the path to getting to that? How do we think about it? Just a strategy-based question.

Yes. So path is simple. Make full production, get approval for the product, make good quality product, sell it to global customers. And this is what the people in the wire industry who are doing that right. This is the number they are able to achieve. So our projection is based on the assumption that we'll be able to do the right quality volumes to achieve the similar profitability what our competitors are doing.

So the approval periods are similar as bead wire?

No. Much, much lower. It's not as complicated. It's not an auto product. It's an engineering product, so not such a long time.

So 4, 6 months...

And as I told you in earlier conversation that this is a pilot project. So pilot project is more for learning.

Correct.

But if we do it well, the opportunities are very big. U.S. alone imports around 15,000 tons of wire rope every month.

Okay. That's a very big opportunity. Correct.

Thank you. This was the last question. Ladies and gentlemen, I now hand the conference over to Sailesh Raja from B&K Securities. Over to you, sir.

Thank you all for attending this session. Sir, would you like to make any closing comment, Sunil sir?

So I'll end the call on a positive note that you have seen improved performance I think which is beginning of U-turn and the road ahead looks very promising to us. So keep watching Rajratan and thank you for your interest. And from management side, we'll keep doing our hard work with full value for our investors. Thank you so much.

Thank you, sir.

Thank you. On behalf of Rajratan Global Wires Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.