A very good morning and a warm welcome to all our shareholders and independent directors who have joined us via video conferencing. A warm welcome also to Mr. Inder T. Jaisinghani, our Chairman and Managing Director, our Executive Director, and Gandharv, our CFO, present on the dais. Before I request CMD Sir to conduct the proceedings, I would like to inform the shareholders that the video conferencing platform for joining the AGM commenced 30 minutes prior to the scheduled time of the meeting at 8:30 A.M., and it shall remain open for another 15 minutes after the conclusion of the AGM. In view of the circulars issued by the Ministry of Corporate Affairs, the Annual General Meeting is being held through video conferencing.
The requisite quorum for convening the Annual General Meeting is present, and hence I request Inder Sir to commence the formal proceedings of the 26th Annual General Meeting of the company.
Good morning. I welcome you to the 26th Annual General Meeting of your company. I would now request other directors present at the meeting to please introduce themselves.
Good morning. I am Bharat Jaisinghani, Executive Director of Polycab India. I am attending the AGM from Polycab's Corporate Office located in Mumbai.
Good morning. I am Nikhil Jaisinghani, Executive Director of the company. I am attending the AGM from Polycab's Corporate Office in Mumbai.
Good morning. I am Rakesh Talati, Executive Director of the company. I am attending the AGM from Polycab's Corporate Office located at Mumbai.
Good morning. I am T. P. Ostwal, Independent Director on the Board of the Polycab. I am the Chairman of the Audit Committee and Risk Management Committee of the company, and I am attending this AGM from my residence at Parel, Mumbai.
Can you please repeat? Mr. Sharma, it seems you are on mute. Can you just please repeat?
I'll repeat.
Thank you.
Good morning. I'm R. S. Sharma, Independent Director on the Board of Polycab. I'm also Chairman of the Nomination and Remuneration Committee of the Board, and I am attending this AGM from my residence in Gurgaon.
Good morning. I'm Pradeep Poddar, Independent Director on the Polycab Board and the Chairman of the Stakeholders Relationship Committee. I'm attending this AGM from my residence in Mumbai. Mute. Sutapa, you're on mute.
Good morning. I'm Sutapa Banerjee, Independent Director attending on the Board of Polycab. I'm attending this meeting from my residence in Mumbai. Thank you.
For the introduction, I would like to inform that Bhavesh Dhupelia, Partner at BSR & Co. LLP, Chartered Accountants. Mr. Dilip Bharadiya, Proprietor of Dilip Bharadiya & Associates, Secretarial Auditor of the company, is also present at the meeting. Dear shareholders, our strong performance in the fiscal year 2022 was underpinned by the extraordinary efforts of our team to achieve new milestones even in one of the most uncertain environments. We deliver accelerated business growth, record free cash flow, healthy returns on the capital, and market-leading shareholder returns. We champion our renewed purpose of innovating for a brighter living. Our high-power values will guide our thought and actions, will help us to create long-term sustainable value for all stakeholders and enrich the lives of everyone connected with Polycab. I now request Gandharv to give an overview of the year gone by.
Thank you, Inder Jaisinghani. Good morning, everyone. I would like to extend a very warm welcome to you all at the 26th Annual General Meeting of our company. I hope that all of you, your families, and all your loved ones are staying safe and healthy. In my presentation over the next few minutes, I would like to highlight the company's performance for the year gone by and provide an update on various strategic initiatives. Today, this is the third time in a row that the AGM is being held virtually. I'm thinking of how the pandemic has given us a new perspective of doing the same old things differently. Overall, the business environment is evolving, and so are we. We have been working on aligning our business by integrating new technology, new talent, and providing innovative products to our customers. Moving to slide two.
Being a responsible corporate citizen, we believe promoting inclusive development and supporting our communities will go a long way in ensuring our efficacy to create shared values. During the year, we have spent around INR 190 million in CSR activities. Considering the pandemic, we spent a large part of it towards providing affordable healthcare facilities to communities around our facilities and operating sites. During the year, we also supported several hospitals in enhancing their capabilities. For example, we assisted Dr. Hedgewar Hospital, Aurangabad, in setting up two general wards of 25 beds each and a mammography machine in the radiology department. Our education: We work on developing academic institutions which include renovating or building schools, the development of Anganwadis, science and computer laboratories, among others, to ensure that India's youth are capable and empowered.
On environmental sustainability, our organization has always focused on maintaining a fine balance between economic growth and ecology. Today, around 17% of our energy needs are fulfilled through renewable sources as compared to 10% of FY2021. This led to over 15,000 tons reduction in carbon dioxide emissions, thereby lowering our carbon footprint. During fiscal 2022, we recycled over 67 million liters of water. On rural development, we have implemented projects on efficient farming, created self-help groups, and assisted in the implementation of clean drinking water projects. Taking our sustainability initiative a notch up, we have initiated a project with an external partner to create our long-term ESG framework aligned with integrated and international ESG protocols, guidelines, and standards. This framework will provide us a sustainable outlook towards the environment and society alongside business goals and will be implemented from fiscal 23 onwards.
Moving to the next slide on financial performance, the financial year 2022 began with a lot of uncertainty, such as the second wave of the pandemic, higher commodity inflation, and many more, but ended with numerous achievements for us as a record revenue of over INR 120 billion and exports of INR 9 billion, making Polycab the largest exporter of cables and wires in the country. FMEG, which is a natural extension of our wires and cable business, is now a INR 12 billion franchisee. Furthermore, the EBITDA margin, which saw a sharp correction in the first quarter of fiscal 2022, witnessed a strong recovery in the next three successive quarters and ended the year with a double-digit mark. Going forward, we are working towards better profitability in fiscal 2023 with favorable operating leverage, premiumization, and calibrated pricing hikes. Moving to the next slide.
Over the past five years, we have achieved a compounded annual revenue growth of 17%, EBITDA growth of 20%, and PAT growth of 31%. Our ROCE has averaged at 24% in the last four years. Our debt-to-equity ratio is more than near 0.01x, and we have a net cash position of INR 11 billion as of March 2022. Considering the healthy financial position, the board has recommended the payment of a dividend of INR 14 per equity share for the year ended 31st March 2022, subject to the approvals of shareholders. With this, our dividend payout ratio on standalone profit will sequentially improve to 23% in fiscal 2022. Moving to the next slide. This slide gives you a brief overview of our core strengths, such as robust manufacturing capabilities, strong distribution network, and competent management bandwidth. We have also proven a track record of delivering high-performance results in challenging times.
Moving to the next slide. We operate in a competitive, highly regulated industry across multiple geographies. To thrive in this environment, we operate an integrated business model that is focused on creating value at every point and for every stakeholder. On manufacturing, we have in-house manufacturing with a high degree of backward integration. Product innovation, quality, and service capability are our defining traits. On suppliers, we ensure an optimum supply chain with competent suppliers for seamless operations. We also engage and collaborate with our suppliers closely for knowledge enhancement, process improvements, and product applications. For our people, we strive to provide equal opportunities to all our employees, ensure capacity building, training, and a safe working environment. Finally, for customers, we provide high-quality and sustainable products to our customers. This has been detailed in our second integrated annual report for fiscal 2022. Moving to the next slide.
In FY2022, we embarked on our flagship project, LEAP, with Boston Consulting Group. Project LEAP, which is a multi-year program, includes a range of strategic themes and initiatives focused on growth, profitability, and long-term capability building for the organization across B2B and B2C businesses, with a goal of achieving greater than INR 200 billion or INR 20,000 gross sales by fiscal 2026. It's been one year in this journey, and we have made significant strides towards our vision. In the first year, we primarily worked on four key areas, that is, setup of right organization enablers, customer centricity, go-to-market, and product portfolio optimization. In the next slide, delving deeper in the first, that is, setup of right organization enablers.
Within this, the major initiative was setting up the right organization structure and fill critical capability gaps across the departments like manufacturing, procurement, supply chain, digital, and IT, and across the businesses, including B2B and B2C. Over 90% of talent acquisition for critical roles was completed in fiscal 2022, while the balance will be done in the coming quarters. Performance measures, rewards, and recognitions were aligned to the growth strategy and cascaded through all levels of the teams. The new transformation management offers were set up to strengthen governance and, most importantly, monitor the implementation of various initiatives because we believe we have an ambitious vision for our organization. We also have the enablers, so execution has to be sublime. The second area is customer centricity. During the past year, we redesigned the operating model of B2B business.
The new model was implemented in pilot states and showed tremendous opportunity for growth. Accordingly, we took a bold structural move to merge heavy-duty and light-duty cables, verticals, in order to unlock latent value through cross-selling opportunities and operational efficiencies. Given the significant distribution and geographical overlap, this initiative will materially improve customer servicing, as most of their B2B wires and cables requirements will be addressed by a single point of contact. Combined portfolios will drive faster business growth. Optimization of team structure and joint back office operation will also enable faster rollout of GTM initiatives while establishing a leaner cost base. Marketing and influencer management platforms will be streamlined to increase efficacy. The new structure also includes key account management or CAM to enable selling of full product portfolio and bring in more customer focus. We designed and piloted unique structured influencer management to support our B2B business.
The third area is go-to-market. As you may be aware, we put in a lot of efforts to build presence in semi-urban and rural India. Post-successful pilot projects in select rural markets, we took several initiatives to build the right infrastructure, portfolio, and team to leverage the immense demand potential of semi-urban and rural India. We created a new business vertical called Emerging India, focusing on building presence in towns with up to 2 lakh population. Distribution architecture was designed post-detailed mapping and evaluation of these geographies. Product portfolio is being calibrated to address specific needs of consumers while offering innovative products at economical price points. Another area where we really worked hard on is building presence in alternate channels like e-commerce, modern trade, canteen department stores, etc. Currently, over 600 Polycab products are available on all leading e-commerce portals like Amazon, Flipkart, JioMart, and Moglix.
We believe these two new sales channel verticals will act as additional levers of growth for our B2C businesses. Core distribution expansion was driven by rigorous execution using digital tools and structured playbooks. We fast-tracked expansion, clocking nearly 2x increase in direct towns coverage. Our authorized dealers and distributors increased from over 4,100 last year to over 4,600 now. Retail outlet reach increased by nearly 25% over last year to about 205,000 outlets now. We also successfully piloted end-to-end digitalization of front-end sales. It is currently being rolled out in phased manner. Lastly, we are trying to create a winning portfolio for us, which are innovative and resonate with consumer needs. Towards the end of fiscal 2022, we launched a new sub-brand, Etira, which will play a pivotal role in economy price segments as well as enable our expansion into emerging India clusters.
Currently, we have launched Etira Housing Wires, which has seen strong response. We will extend this brand to other categories progressively. Overall, we have built a robust portfolio roadmap for the next three to four years across large businesses. This will ensure we are present in segments which are growing faster and are margin-accurate. NPD on new product development councils have been set up across businesses for structured review and governance of innovation initiatives. We also saw healthy progress in the premiumization journey. For example, premium products now contribute 16% to overall FMEG business, which was just meager 7% last year. We never shy away from taking bold decisions to improve our efficiency and thereby enhancing profitability. During the year, we have divested our entire stake in Ryker Base, which used to play a strategic role in providing us high-quality copper rods.
However, considering the suboptimal utilization of capacities and focus on our core business, we decided to exit this venture. Having said that, we simultaneously executed a multi-year tolling arrangement with Hindalco to process and supply high-quality copper rods to us at mutually beneficial commercials. Moving to the next slide. So that was broadly on fiscal 2022. Going ahead, we have chalked out some key focus areas for next year. One is improving customer centricity through enhancing visibility and control of secondary sales by significantly improving our understanding of end users and influencers. Secondly, we will aim tirelessly on executing the NPD roadmap to drive market share gains as well as premiumization. Third, again, go-to-market where we aim to digitize the entire distribution ecosystem. And lastly, emphasis on governance, where we will monitor progress towards clearly defined growth and profitability drivers for all building blocks.
Moving to the next slide on the growth drivers, our sales growth is outpacing the industry average, translating into broad-based market share gains across categories and regions. The government's focus on infra activities, strong real estate demand, and good demand visibility across various end user industries led to an improving demand environment for the sector. Meanwhile, macro indicators such as services PMI, rail freight, air passenger, and GST collections all signal that the economy is gaining momentum. On the contrary, inflation is now perhaps one major risk to the improving demand environment. While we do not anticipate it to be any more challenging in the B2B segment, we will remain watchful of consumer sentiment and how it plays out for B2C categories. Moving to slide 11, our teams are making continuous efforts in improving transparency and governance.
Polycab is perhaps the only mid-cap company which publishes quarterly financial statements duly reviewed by its statutory auditors. The Institute of Chartered Accountants of India has also recognized the best-in-class quality of the financial statements by giving the Excellence in Financial Reporting Award for fiscal 2022. Your company's first integrated annual report for fiscal 2021 also won two awards by the prestigious AIRA. During the year, the company renewed its corporate purpose and values, as well as initiated ESG framework development. The company also implemented a comprehensive budgeting, monitoring, and governance framework with the help of world-class digital and BI tools. In the fiscal 2022, taking the excellence in corporate governance to the next level, the company's CMD, Inder Jaisinghani, decided to waive 1/4 of 1% commission payable to him as approved by the shareholders. This resulted in a reduction of approximately INR 3 crore in payout to the CMD.
The board has deeply appreciated his kind gesture. We are sure that this decision of Inder Jaisinghani will set up a right and significant precedent for the Indian corporate leaders. Moving to the next slide, the enhanced shareholder value is underpinned by the improved market positioning. Our market capitalization now strengthens around INR 353 billion, and Polycab shares have outperformed all relevant indexes since listing. We are now among the top 131 large-listed companies as per the market cap in India. As I wrap up, I want to thank our colleagues, customers, shareholders, and other stakeholders who have provided incredible support and trust. I'm filled with optimism for this new fiscal, and I'm confident we will continue to build a better tomorrow for our business, for our stakeholders, and for the world around us.
Before handing over to Manita, I would like to play a short video highlighting the year gone by. Thank you.
Thank you, Gandharv. The notice dated 10th May 2022 convening the 26th Annual General Meeting had been circulated to the members. With your permission, I take the notice as read. The auditor's report for the financial year 21-22, issued by BSR & Co. LLP, statutory auditors of the company, does not contain any qualifications, reservations, adverse remarks, or disclaimers, and as such, the report can be taken as read with the consent of the members. Hence, with your permission, I take the auditor's report as read. Further, the secretarial audit report for the financial year 21-22, issued by Mr. Dilip Bharadiya, practicing company secretary, does not contain any qualifications or adverse remarks. The resolutions in respect of ordinary and special businesses have been circulated to the members.
With your permission, I may take them as read. I'm pleased to bring to your attention that the company has provided a remote e-voting facility to the shareholders of the company in respect of all the businesses mentioned in the notice. The remote e-voting facility has been kept open from Sunday, 26th June 2022, 9:00 A.M. till Tuesday, 28th June 2022, 5:00 P.M. Members who have not exercised their votes electronically through the remote e-voting can vote at this meeting through the e-voting facility provided by NSDL. The board has appointed Mr. Dilip Bharadiya and Associates, practicing company secretary, as the scrutinizer to scrutinize the e-voting process in a fair and transparent manner.
The final report of the voting shall be submitted by the scrutinizer within 48 hours of conclusion of the annual general meeting, and the results thereof shall be declared immediately upon receipt of the report of the scrutinizer. The combined results of the votes cast by the members through remote e-voting and the e-voting at the meeting on all the resolutions based on the report of the scrutinizer once finalized will be informed to BSE and NSE and also uploaded on the company's website, www.polycab.com. I now hand over the proceedings to Chairman Sir and CFO Sir.
Thank you, Manita. I will now call out the names of people who have registered to ask questions. We will attempt to answer all of them once all the shareholders have spoken. Please limit your questions to two per participant and unmute your line before asking a question. I now invite the first participant, Mr. Vikram Thakkar, who has registered himself as a speaker to express his views and ask questions. Please unmute your line, Mr. Thakkar.
Good morning. Good morning, everyone. First of all, thank you very much for making us enabled to participate. Sir, my question is, I observed the company is doing very well and generating a healthy cash flow. The company had a net cash flow around INR 11 billion at the end of March 2022. You are also showing a consistent growth in cash flow, improvement in cash flow over the last few years. I just would like to know how management is looking at utilizing this cash flow going ahead, going forward. And my other question is, what is the company's plan for next CAPEX plan for next two years? Just would like to know these two things.
Thank you, Mr. Thakkar I invite the second participant, Mr. Amit Bagri, who has registered himself as a speaker. Please unmute your line, Mr. Bagri. Mr. Bagri, if you are able to hear us, please unmute your line and please go ahead.
Hello. Sir, it is very good that the market share is. We are a market leader in the bio-medical industry, and our market share is growing consistently for the last two years. What is the outlook on the industry and its future prospects, and what is our company's outlook with relation to it? Thank you very much.
Thank you, Mr. Bagri. I invite the third participant, Mr. Pathik Chandarana, who has registered himself as a speaker. Please unmute your line and ask your question.
Good morning, everyone. This is Pathik Chandarana. My question is that we have observed that EBITDA margin in FY20 21 was around 13%, whereas in FY20 22, it has reduced to 10%. So I believe that it is primarily due to an increase in the raw material cost. I would like management to explain this contraction in the EBITDA margin and the steps taken to address the same. Further, subsequent to the year-end, there is significant volatility in the commodity prices. So what is your outlook in EBITDA for FY20 23 and the way forward? Thank you.
Thank you, Pathik. I invite the fourth participant, Mr. Gagan Bajaj, who has registered himself as a speaker. Please unmute your line and go ahead, Mr. Bajaj.
Hello.
Please go ahead.
Annual report that has been prepared very well and presented also very well. We have a very good last financial year, including the new products, new expansions, and many more things. What are the three, four key areas that we are focusing on for the coming year, and what will be the roadmap for that, which will take us to the next level? Thank you.
Thank you, Mr. Bajaj. I invite the fifth participant, Mr. Harshal Gosrani, who has registered himself as a speaker to express his views and ask questions.
Hello. Good morning. First of all, I would like to thank the Chairman and the other board of directors for the good performance of the company. My question is about the FMEG segment, which used to historically grow at a very high rate. But in the last two years, the pace of growth has mellowed down.
What are your thoughts on the process for this business and how you are going to improve the performance of the FMEG business? Furthermore, it will be helpful if you could elaborate a little bit about product development in the FMEG space.
Okay. Thank you, Harshal. So these were the participants who had registered for asking questions. Let me take these questions one by one. The first question was around the current cash balance and our plans for deployment. I believe there will be three broad avenues to utilize our cash. First, we have an annual CAPEX requirement of around INR 300-INR 400 crore for the next few years. Most of these investments are likely to go either into developing new products or to expand our portfolio or expanding capacities wherever needed.
In this year, we have been able to get to new spaces, for example, defense, railways, automobile, and all of these product categories are niche with good margins and require a fair amount of product innovation. Second, we are exploring M&A opportunities, which can add value to our business or provide us with a competitive advantage. For example, last year, we have acquired Silvan Innovation Labs, which has a significant presence in the niche home automation market. Home and Silvan put together gives us a strong foothold in the IoT space, and it is in line with our ambition to become a forefront consumer-centric company. We will also explore adjacent categories, either for M&A or for greenfield expansion. Third is dividend or payout to the shareholders. We will progressively continue to distribute cash with better payout ratios.
The goal is to have a right capital structure and the right size of balance sheet, which will facilitate higher returns of investments. The second question was around the cable and wire sector outlook and our company's expected performance. May I request Nikhil to attend this question, please?
Good morning. So the government has announced a 7.5 lakh crore expenditure on infrastructure, and the government has chosen this instead of handing out SOPs and handouts. Now, this should bode well for the core sector industries like steel, cement, and overall drive growth for us in our B2B segments. In addition, this should also drive jobs, which will drive consumer demand going forward for our wires and our FMEG businesses. While there will be growth in the market, as Gandharv mentioned, we will also be investing in new product development and therefore try and focus on value-added segments like railways, defense.
Besides that, exports is another focus area where we will continue our multi-country expansion going forward. So overall, we are quite optimistic and excited, and we will be geared up for the growth to come. Thank you.
Thank you, Nikhil. Moving to the next question, it was around EBITDA margins. So in our cable and wire business, historically, we have hovered between 11%-13% EBITDA margin. We expect to maintain that in the future as well. Having said that, we are working towards better profitability in the coming years with favorable operating leverage, premiumization, and calibrated pricing hikes. Also, we are targeting an EBITDA margin of 10%-12% by fiscal 2026 for our FMEG business under Project LEAP. This will, in turn, aid our consolidated margins.
It's important to note that we are not chasing growth, but instead aim to build a sustainable and stable business which generates a stable cash flow and a better margin. So that was on margin. Moving to the next question, that was around priorities for the next year. So we are mainly focusing on Project LEAP, which consists of various strategic themes and initiatives focused majorly on growth, profitability, and long-term capability building across B2B and B2C businesses. Under this project, we are targeting to achieve INR 20,000 crore of top line by fiscal 2026, which seems to be achievable as we have already crossed the INR 12,000 crore mark in fiscal 2022. Just to recap, in last year, we worked on four key areas that are setting up right organization enablers, customer centricity, go-to-market, and product portfolio optimization.
As there are several objectives to be achieved under Project LEAP, we decided to split the entire project into 24 work streams while prioritizing work streams on a year-by-year basis. To give you a color on key themes and priorities to be worked on for the current year, our customer centricity, launch of new products, digitalization of the entire distribution ecosystem, and further raising the bar on governance. The next question was around FMEG growth, profitability, and its outlook. I am requesting Bharat to please attend this question.
Good morning. FMEG business has grown consistently over the years, but in the last few months, a few quarters, in fact, we identified that we need to recalibrate this business for further growth. Under Project LEAP, we have reinvested in people, processes, and products, and piloted all the avenues that are going to take us at a much faster pace.
The next phase of these businesses will be marketing-driven and digitization-driven, which will give us further leverage to become even, I mean, to go at a much faster growth. The needs of customers are changing as well, and various segments of India require different products. Recently, we also identified that the fans market is moving towards BLDC. Most products need to be IoTized, and we have heavily invested in most of these initiatives around six months back. So with all the people and process-driven initiatives, plus upping our gains on products, we'll see the next phase of the FMEG business going really well. And soon, as the volume grows and we build efficiencies, the EBITDA margins will also go up consistently.
Thank you, Bharat. This was the last question. I am now requesting Inder Jaisinghani to share his concluding remarks.
I wish to thank all my fellow shareholders for their enduring support, and I would further request the shareholders who are attending the AGM today and have not cast their vote by remote e-voting to cast their vote on the e-voting platform over the next 15 minutes. I greatly value the collective contribution made by the entire Polycab team to help the company in leaping to tomorrow. Lastly, I place on record our appreciation to the cooperation and support extended by everyone, directly or indirectly, including our auditors, government agencies, stock exchange, regulatory banks, dealers, customers, and our well-wishers. Above all, the biggest asset of our company, which is our employee. I once again thank you all for participating at the AGM. Have a nice day.
Thank you, Inder, sir, for chairing this meeting. I would also like to thank our independent directors, executive directors, and CFO. Lastly, thank you, shareholders, and we look forward to your continual support and cooperation. With the permission of the Chair, I do hereby conclude this meeting. Thank you once again.
Thank you.