Ladies and gentlemen, good day and welcome to the Q3 FY25 Earnings Conference Call of R R Kabel Ltd. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star, then zero on your touch-tone phone. I now hand the conference over to Mr. Ronak Jain from Orient Capital, the Investor Relations. Thank you, and over to you.
Thank you, Steve. Good afternoon, everyone. On behalf of R R Kabel Ltd, I extend a very warm welcome to all participants on Q3 FY25 Earnings Conference Call of R R Kabel Ltd. Today, on this call, we have Mr. Shreegopal Kabra Sir, Managing Director, and Mr. Rajesh Jain, Chief Financial Officer. Before we begin this call, I would like to give a short disclaimer. This call may contain some of the forward-looking statements, which are completely based upon our beliefs, opinions, and expectations as of today. These statements are not guarantees for our future performance and involve unforeseen risks and uncertainties. With this, I hand over the call to Shreegopal Kabra Sir. Over to you, sir. Thank you.
Good afternoon. On behalf of R R Kabel Ltd, I extend a warm welcome to all participants on our Q3 FY25 Financial Results Conference Call. I am joined today along with our CFO, Mr. Rajesh Jain. Despite navigating through a challenging macroeconomic environment characterized by slowdown in the economy, political transition, and volatile commodity prices, we are pleased to announce our highest ever revenue for the nine-month period of FY25. This achievement is a testament to the strength of our business model and our ability to adapt to dynamic market conditions. Our cable and wire segment demonstrated moderate volume growth on a nine-month FY25 basis, supported by steady demand, fundamentals especially in cable business. Additionally, our FMEG segment continued its impressive trajectory, delivering a robust revenue growth of approximately 25% during this period.
This growth was driven by strong volume performance and improved productivity and leadership in key categories such as fans, reinforcing our position as one of the fastest-growing players in this space. We remain committed to achieving break-even in FMEG business by early FY26. Despite the downturn in the external environment, the demand for cables and wires remains resilient. To capitalize on this demand, we continue to undertake several strategic initiatives, including capacity expansion, the introduction of high-margin products, new launches, and ongoing expansions of our distribution network. These initiatives are progressing as planned and are aligned with our long-term strategy to enhance growth and profitability. Looking ahead, we are focused on achieving double-digit EBITDA margins in the coming years. Our efforts remain centered on strengthening our operational efficiencies, enhancing our product portfolio, and delivering sustainable value to all stakeholders.
With that, I would like to hand over the call to our CFO, Mr. Rajesh Jain, to take this discussion forward. Rajesh, over to you.
Good afternoon, everyone. Thank you for joining us on this earnings call. As we reflect on Q3 FY25, I would like to share some insights into the factors influencing our performance and our outlook for the remainder of the fiscal year. India's GDP growth moderated in Q2 FY25 compared to Q1, and this deceleration had varying impacts across sectors. Moreover, the sectors faced added pressure from copper price volatility, a key determinant of material costs. On the export front, the environment remained challenging during nine months of FY25. Weak economic conditions, shipment delays, and logistical disruptions, exacerbated by geopolitical factors like the Red Sea crisis, adversely affected export demand during the period. Despite this, the export revenues saw an increase of 11% YOY in Q3. Additionally, we have been actively working on securing new certifications to strengthen our position in global markets and ensure readiness for future opportunities.
Domestically, despite slowdown in the economy, we have seen 6% growth YOY in Q3. Looking ahead, we anticipate a significant boost in infrastructure and housing activity driven by higher government spending, positioning us for a robust recovery in the coming quarter. Now, talking on the financials and operating highlights of Q3 FY25, in Q3 FY25, revenue reached INR 1,782 crores, reflecting a 9.1% year-on-year growth. This performance was supported by growth in both wires and cables and FMEG segment. On a nine-month FY25 basis, revenue grew by approximately 12%, achieving our highest-ever revenue of INR 5,400 crores compared to the same period last year. Operating EBITDA for the quarter stood at INR 111 crores, while profit after tax amounted to INR 68.6 crores. The marginal reduction in EBITDA and PAT was presumably due to the impact of volatile commodity prices in the first half of FY25.
However, this was a temporary phenomenon, and sequential growth in margins indicated a stabilizing trend. Segment-wise performance in the wire and cable business recorded a revenue of INR 1,543 crores in Q3 FY25, up from INR 1,433 crores in Q3 FY24, making a YOY growth of approximately 8%. On a nine-month FY25 basis, the segment achieved a revenue of INR 4,732 crores, a growth of approximately 10% compared to INR 4,306 crores in nine-month FY24. Revenue growth was driven by improved realization along with strong growth in cable business. The segment profit stood at 7%, although the same is lower YOY due to volatile metal prices. Margins improved sequentially, reflecting our focus on cost management and operational efficiency. In the export market, which contributed around 27% of our total revenue in Q3 FY25, resilience was evident despite some headwinds. Efforts to enhance our global presence have positioned us well to capitalize on future opportunities.
Domestically, strong demand, especially in cable, and ongoing strategic initiatives continue to support growth, and we remain confident in achieving sustained progress as we move forward. Guidance: If we see about wire and cable, given the high volatility in copper prices during the first half of FY25 and the subsequent softening observed in recent months, we are gradually getting back on track. The improved stability in commodity prices has provided some relief, and we are optimistic about future margin improvements. We continue to anticipate a volume growth of approximately 15% in the last quarter, which should help us to achieve an overall volume growth in the range of 10% - 12% for FY25. In Q3 FY25, our segment profit in the wire and cable showed sequential improvement, and we remain confident in achieving a margin in the range of approximately 8% in the last quarter.
For the nine-month FY25 period, our margin stood at approximately 6.4%, reflecting the challenges earlier in the year. On the export front, looking to improvement in business scenario, we expect that our export growth will be on a normal track back with additional certifications. Further, with favorable changes in the product mix and additional capacity building, we are confident of growth and margin improvement. In the FMEG business segment, we achieved a robust revenue of approximately INR 240 crores in Q3 FY25, continuing to deliver consistent growth in the range of 20%-25% on a quarterly basis. For the nine-month FY25 period, we recorded a revenue growth of approximately 25% compared to nine-month FY24. This impressive performance was presumably driven by strong volume growth in fans, which remained the largest contributor of our segment revenue, followed by growth in appliances and switches.
On segment margin, we saw remarkable improvement, depicting a reduction in losses significantly both year-on-year and sequentially, supported by operational cost savings and a slight increase in contribution from an optimized product mix and volume growth. These accomplishments have solidified our standing as a key growth leader in the FMEG segment, and we remain dedicated to maintaining this momentum in the future. Additionally, we have successfully maintained our working capital days broadly in the range of 60%-65% days as of December 31st, 2024, further underscoring our commitment to sound financial management and operational efficiency. The current CapEx cycle continues to remain on track. Further, the company plans to incur approximately INR 1,200 crores CapEx over the period of the next three years. This will help the company to boost its top line by another INR 4,000-INR 4,500 crores annually.
Beyond CapEx, our strategic priorities continue to progress well in Q3 of FY25. Additionally, we are on track to increase our revenue contribution from the cable segment from 30% - 35%. This initiative positions us for sustained growth and enhanced market presence in the coming quarters. Our FMEG segment is progressing well with continuous initiatives, including new product launches, premiumization, and expanding geographical reach. These measures are designed to bring us closer to break-even in the near future. While we are navigating through some short-term challenges, we remain confident that these strategic actions will foster long-term growth and profitability. With this overview, I would now like to open the floor for questions. Thank you for your attention and continued support.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Yeah, hi sir. Thank you for taking my question. The first question is related to the guidance you had given: 15% volume growth for Q4 and so as for the year 10%-12%. So how is the volume growth in the nine months? Is it in the single digit? So 10%-12% for the entire year is achievable with a 15% growth in the fourth quarter?
Yes, so if you see on nine-month basis, our volume growth is around 6%. So, if we achieve this volume growth of 15% in Q4, in that range.
Okay. And in this, related to that, 15% of volume growth, are you seeing any kind of attraction, especially in your majority segment, which is the wire?
Yeah, so we are of late. At the end of Q3 and even at the beginning of Q4, we have seen good demand in wire. So earlier in Q3, like channel was also not taking so much stock, so channel was very light at that time. And now inventory is building up, and we are getting good demand in Q4 also. So it seems other than cable, where already we have very good demand, even the wire segment will also see good growth in Q4.
Okay. And can you give the CapEx number for nine months and the 25 and 26 respectively?
So if you see overall CapEx plan, which was planned till FY25, which was INR 500 crores spent in the last two years, so it is on track. Like some of the capacity was added in Q3 also, especially in power cable. And now going ahead also, the majority of the CapEx will be completed by March 2025, and a few capacity will be added out of this CapEx by September 2025 also.
So our contribution of cable has increased because of this capacity expansion?
Yeah, but we got only part of this year only. This added capacity was available only partly in this year only. But if you see on a quarterly basis, of course, our contribution from cable is increasing. And as you have already seen that our cable growth is like almost 20%.
20% for this quarter or nine months? How is that?
On a nine-month basis, our volume growth is almost 20% in cable.
Okay. And on the export, as you had mentioned, shipment delay and Red Sea crisis all led to the impact in the export. How are you seeing in the export business right now? Is that it started picking up, and these prices have somewhere subsided?
Yes, already now prices have come down, logistics prices also. And even from the demand point of view, like now at the end of Q3, we have seen good demand in the export segment also. So now it will be on a normal track sequentially in Q4 and onwards.
How is the Q3 for export?
Q3, again, since our major part of exports go to Europe, and normally due to the December-end leaves in Europe, so there was less shipment. Traditionally, also, it is always less shipment in the November, October and November months. Now exports have picked up in the month of December onwards.
Okay. Okay. Thank you, sir, and all the best. I'll come in a queue.
Okay. Thank you.
The next question is from the line of Rahul Agarwal from Ikigai Asset Management. Please go ahead.
Yeah, hi sir. Good afternoon, and congratulations for recovery in margins. Sir, one question was just wanted to hear your thoughts on what's really happening on wire, both in India and exports. So you explained a bit in the earlier question, but just wanted to be more specific. What should we expect in terms of revenue run rates for exports in India for wire over the next three to six months? Could you just help us understand that, please? Thank you.
Thanks, Rahul. So you have seen that though there were challenges and situations were different, but our growth in terms of revenue and volume were almost similar in both the markets, export and domestic as well. Now going forward, as I explained to you now, like our channel is also picking up the demand and looking to the positive momentum in copper prices. Also, we have seen good growth, at least at the end of Q3 and at the beginning of Q4 as well. So it seems now like whatever there was a degrowth in the first half of the year or even in exports also due to other challenges, now it will be on the track, and we will work like planning we have made for 15% volume growth is achievable by focusing or by having growth from both the segments, be it domestic or export.
Exports specifically, could you help us understand more as in apart from Europe, what else are we doing? What should be the quarterly run rates?
In exports, the good part is that we have again some very good orders in the cable segment. In the future also, like our focus is more on exports of cable where we have comparatively higher margins. Whatever developments we have made in these first nine months also, and now also we are in the process of getting certification from Europe as well as the U.S. also, which will give us additional growth.
Got it, sir. Got it. Thank you so much. All the best.
Okay. Thanks.
The next question is from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Yeah, good afternoon, sir. Thank you for the opportunity. Sir, if you could just give a specific sense about the volume growth for the nine months in terms of domestic cable growth and domestic wires growth, please? Volume growth.
Sure. So on nine months versus nine months, our total growth is around 5%, where cable is 20%, and wire is negative in the range of 3%. But when we see in terms of export and domestic, then wire in domestic and export, both were impacted by almost negative 9%, while cable has grown in domestic, it is 18%, and in export, it is 7%.
Sorry. In wire, the export is minus 9%. Is that so? YOY for nine months volume?
Yes.
Okay. And domestic, how much did you say, sir? I didn't follow that.
It is -1.9.
-1.9%. Yeah, yeah. And domestic also similar number? Domestic would be more?
Domestic is almost 10%.
- 10%. Is that so? Okay. So is that the industry trend according to you, or is there any specific reason for us to have a lower domestic wires volume growth?
No. So as I explained earlier, in domestic, of course, when we are comparing on nine months versus nine months, the major impact was in the first half of this year only.
Right. No, fair point. So you're saying basically the industry would be flattish, would have also seen a decline, or would have seen some growth? I'm just trying to figure that out in your estimate.
Sorry, can you come back again?
For the industry, for the wires industry, the volumes will be flat, would have seen some growth, or would have seen also a decline for nine months?
For nine months, it seems the industry had also pressure in the wire growth, and cable was doing good. Though we do not have exact backup from peers also, as public figures are not available, but still, what we understand based on our input and channel say, that it seems the wire was almost having less growth in compared to cable.
Understood. And now help us understand in terms of the cables, the capacity, where are we in terms of addition? You said there will be some capacity which will come by March, and some will come by September. So what is the potential revenue of cables out of these two and existing capacities put together?
So what happened with CapEx? What we have done, we have potential to have a further growth of around INR 2,500 crores. But since this will be on sequential growth, will be there. So this CapEx will help us to meet the additional growth demand of FY26 and FY27.
Understood. And the next round of CapEx, I was a bit confused. You said INR 1,200 crores over the next three years. Is that so?
Yes.
Which these three years are, sir? It is 2026, 2027, 2028, or 2025, 2026, 2027?
2026, 2027, 2028. Because see, what CapEx already we have done, it will be completed by March 2025. So what CapEx I'm narrating is INR 1,200 crores is for the next three years, starting from FY25 onwards.
Understood. And can you be a little bit more specific, sir, on this INR 1,200 crores? Where is it going to spend in terms of location and in terms of which category?
This will be like a greenfield project in the existing facility at Waghodia, which is near Vadodara. Majority of this export will be in cable only because still our share in cable is very less, and we have high potential growth area also. It will be like balanced with wire growth in wire as well to have sequential growth over year on year. Majority of my CapEx will be focused on cable only.
So is it fair to say like 70%-80% of this?
Yes. Almost 80% will go in the cable.
So almost INR 1,000 crores, and that would give what, incremental INR 5,000 crores of revenue?
No, no. On consolidated basis, it will be in the range of INR 4,000-INR 4,500 crores because majority of the cable wire, as per thumb rule, you can expect a return of sales cycle of 3x, 3-3.5x only.
3x-3.5x. Understood.
For cable.
Understood.
Just, I would like to clarify on volumes because I mentioned the figures on YOY basis. So just to clarify the volume growth on nine months versus nine months basis, my domestic wire was almost flat while cable grew by 21%.
Okay.
Export wire was negative by 5.6%, while cable was 18.5%.
Understood. So last question, if I may, with respect to the exports. Can you help us understand in terms of particularly to U.S., how large is for us U.S. market out of the total export? And in terms of the SKUs, whatever U.S. imports, do we have all the capability certifications? What percentage of their imports we are entitled for or eligible for?
As of now, almost 10% of my revenue is coming from U.S. In this quarter, we have in the process, almost we have received the certification of one and two products. To get that streamlined, I think by next quarter, we will start another new product in U.S. market. In this quarter, we may not see huge growth in U.S. exports, but from next year onwards, we can see good improvement in our exports in U.S.A.
Understood. Just to drill on this, who do we compete here, which country, and what advantage or disadvantage we are against the other exporters in terms of percentage of the value?
Every market has different competition. In Europe, we have competition from Turkey, while in U.S., still China is the largest supplier of cable, though now the tax and import duties are not favorable to them also. Right now, it seems India still has a lot of export potential, and we are a very small contributor in overall exports at international level. We have good scope to improve, particularly in U.S. and Europe.
Got it. And just to clarify, 10% of export revenue is from U.S. or 10% of total revenue is from U.S.?
Of total export only.
Of export revenue. Okay. Europe is the largest. Got it.
Europe is like more than 50%.
Got it. Got it. Thank you so much. I'll call back in a few, sir. Thank you.
The next question is from the line of Natasha Jain from PhillipCapital. Please go ahead.
Thank you for the opportunity and good afternoon, sir. So my first question is on the export mix. So out of the 27% of your exports, how much is wires and how much is cables currently?
So it's like a 70/30 ratio of 27%. So what happens at the overall basis also, our wire and cable ratio is 70/30 now, which is moving towards improvement in cable, which is moving by 1% or 2% every quarter. And in export also, we are almost maintaining the same ratio.
Understood. Sir, so when you say 1% or 2% every quarter, next year, next financial year, when your cable capacities come up, can we expect this shift to move to at least 60/40 in terms of exports?
40, but maybe 35 or 65.
All right. So 35 of your exports would be your cable exports?
Yeah, and similarly, we are expecting domestic as well, so I'm seeing here even at company level, we try to improve our cable sales ratio, and it may now by next year, and it may in the range of 65/35.
Got it. Sir, and a question on wires again. So wires, what I understood is at least at an Indian industry level, there is overcapacity for wires. Now, I want to understand, is this market a very brand-conscious market? Because otherwise, scaling up of capacities is very easy for wires. So having said that, do you see any near-term risk for wires as a product category?
So yeah, good part about the Indian wire market that this is like now it is directly B2C category product where people care about brand quality, and it is like B2C category. And day by day, the organized sector is getting more market share. Of course, our competition will always be there, but it is more about how you build your brand, how you generate or get pull factor in market. So it is all about marketing effort as well as focus on your quality. And even when we see like offline, we have seen that after this GST or Demonetization, we have seen that day by day, organized share is increasing. So it's about the big brands or all top tiers, how they achieve or how they improve their market share.
Got it, sir. So you mentioned in your opening comments about the governmental CapEx slowdown, which is obviously there. So I want to understand, can that pose a near-term risk for us or, in fact, for the industry? Because a lot of cables capacity will come live in calendar 2025. So any slowdown in governmental CapEx and then a slowdown in power distribution and then a slowdown in cables, do you see that as a risk in, say, the next one-year time frame?
What I consider that decreasing government spending was temporary. Because if India has to focus on growth or if we have to build infrastructure, then government has to focus on spending, and they have to increase spending. We may wait for some time how government declaring budget also. But fundamentally, I believe that there will always be a good scope of improvement in infrastructure investment, and therefore, wire and cable demand will always be there. And even whatever additional capacity we see, it is in the building, still there will be more demand in terms of export market as well as India spending on infrastructure building.
So it's safe to say that the capacities that are coming live will still be short in terms of what the demand for cables is?
At least for next three, four years, it seems like there will be shortage of supply only.
Got it. And so last question, if I may, you mentioned about the Red Sea crisis, which affected your exports. So has that kind of eased down now? And what about the freight charges? Has that also softened?
So, freight charge, of course, they have softened, and we have seen reduction in freight to Europe as well as USA also. Yeah, the Red Sea crisis also, to some extent, it has eased up. And there are some delays, but now it is not external delays. And I think our people have also adjusted their delays in their shipping requirements.
Got it, sir. Thank you and all the very best.
Thank you very much.
The next question is from the line of Manoj Gori from Equirus Capital. Please go ahead.
Yeah, thank you for the opportunity, sir. Sir, since over the last one, one and a half years, we have been targeting to scale up our presence into HT or probably into newer geographies, and we believe this should have resulted in better than industry growth rate, especially in the wires. Wires, we do understand that there have been underlying demand challenges, but ideally, we should have outperformed the industry and probably the geographical strength that we were looking to build. That's not visible in the numbers, so can you throw some light? Where are we lagging or probably what's actually obstructing this growth? That's my first question, sir.
Yeah, I can understand. Of course, we have grown better than industry pace also, and there were challenges. It doesn't mean that we were not having efforts towards that. But the corporate-wise volatility has affected more in compared to other industries there in the first half of this year, and that's why we have seen lesser growth. But on the basis of fundamentals where we are working, first, we are based in quality in terms of we are the only company in REACH and RoHS compliance. Same way, even our loyalty management program is the largest in the industry. So there are some short-term impacts, but fundamentally, still we are confident that we will do better than industry efforts.
So I will ask it a bit differently. So probably in the last one and a half year, can you throw some light? Which are the new geographies that you have ventured into and how things are progressing over there?
So if you see our current strength, we are very strong in west and north part of the country. But still, we have to weigh our path of growth or improving our market share in southern part of the country and east part of the country. So now we have a good network of dealer and distributor, but still we were not able to get the quantum what we were looking for. And it seems now since we have already made the best, so now it is time how we did that effort and how we get the results of our investment, what we have done in previous year or even current year, nine months in this new geography. But it will be more from southern and eastern part of the country.
Okay. And sir, lastly, if I may, how do you read the overall underlying demand environment? We know it's challenging, but probably long-term macros obviously will continue to remain intact. But probably from a six-month or to nine-month period, overall, if you look at underlying demand for last couple of years for wires as a category has been under pressure. So if you can throw some light, how do you read the situation for the industry in specific?
So when we see at GDP level, we have seen some downward trend in GDP when public figures available for first half of this year. So there was some pressure, and still there are some pressure in wire, especially in wire. But overall, if you see at micro level, there are good demand, at least in cable. And there are so many reasons. First and biggest is this wind and solar. So moving towards this non-traditional power generation, there are a lot of opportunities out there. Same way, infrastructure work, its pace was slow in first half, but now it seems to be on track. So fundamentally, it seems to be even in short term or a little bit longer term also, wire may have some challenges, but cable, of course, has very good growth, and wire also sequentially it has to grow.
Right, sir. Thank you. Wish you all the best.
Okay. Thank you.
Thank you. The next question is from the line of Shrinidhi Karlekar from HSBC. Please go ahead.
Hi. Thank you for the opportunity and congratulations on good improvement in margin. Sir, a couple of questions just for clarification on guidance for Q4. Are you saying cable and wire EBIT margin can go to 8% from 7% in Q3?
Yes, yes. So what we have seen, 8% even last year, our overall margins were in the range of 8.4%. And looking to the trend of last quarter also and current trend, it seems we will be able to achieve 8% kind of EBIT margin for Q4.
Right, and the second question is, in the quarter gone by, did you face capacity constraint in the cable business?
Yes. Cables, always we are getting those challenges, particularly in HT cable, where we have very limited capacity. And still, though we have added some capacity in Q3 also, but I think we can have some relaxation in terms of capacity constraint in Q4. And later on next year, onwards, we will have some capacity.
Sir, last one, when you say you aspire to reach you have a long-term vision of reaching double-digit EBITDA margins. Here, are we specifically talking about the cable and wire business, or we're talking about at the company level? In what time frame are you trying to achieve that?
So for both, of course, we have to achieve this. At the company level also, we are trying to get double-digit margins, but first, we will get in wire and cable. And it is expected that by FY28, we can expect double-digit margins at company level also.
Okay. Thank you for answering my question, and all the very best.
Thank you.
Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question is from the line of Naushad Chaudhary from Aditya Birla Mutual Fund. Please go ahead.
Yeah, hi. Thanks for the opportunity. Two clarifications, sir. Firstly, I was just curious to understand in terms of what specific calculation you have and what is the max you have that makes you believe that there will not be a supply issue or there will not be a capacity step-up issue in the industry, especially in cable business, why there should be a continued supply shortage for the next two, three years? What is the calculation you have that makes you believe this?
Naushad, if you see the capacity of all the big players of particularly cable manufacturers, and the way Indian cable growth is growing. Normally, it seems to be by looking at the plan of government or development infrastructure or development in wind, solar, power generation, or even the opportunity in the export market. Even if this industry, particularly in cable, if it grows by, say, 20%, then the sum of this industry average may not suffice to supply all CapEx. Because now these days, even the CapEx cycle is almost 24-30 months to get whatever capacity you are building. Even in our case, CapEx started in FY24, now it is getting completed. In that way, it seems India has more growth opportunities than what capacity it is getting built up.
Already we have seen that even last year or in this year also, there was huge supply shortage, at least in power cable.
Yes, sir, but historically, if we look at the industry CapEx average, if we look at last three years, five years, so broadly, it has been in the range of between 700, 800, or max 1,000. Last year was a peak in terms of capacity addition from a CapEx point of view, and next two, three years, it is going up substantially. And we have seen the peak of demand for 24. And on that basis, we have to grow. And with this kind of capacity, at least we should have some very strong visibility, at least in one or two pieces of end-user industry where we are confident that this should be able to help to absorb all these capacities.
The only thing, the kind of run rate, which used to be INR 1,000 crore, has gone up to INR 4,000 crore annual gross block addition in the industry started from FY24, should be a problem in FY25, FY26. At least for short term, we understand the growth point of view. But because this is B2B, everybody's capacity would come together. At least for short-term period, everybody would fight to absorb this capacity. Short term, we think we might have to compromise on the margin side. And long term, I believe it's okay. Five years, this capacity would be absorbed. But short term, one has to compromise on the margin to fill the capacity.
So first, regarding demand, I must clarify that you have to see, even if you see the way government has planned the growth in solar power generation, what we have done till now, five times more is government is planning in the next four, five years. So even if it happens not in four years, but in six, seven years, you can assume the quantum of solar cable will be required. Same way, the infrastructure, though this year, we have seen some slow growth in the first six months. But still, if India has to grow, then we have to invest in infrastructure growth. Thirdly, even in export opportunity, we have seen a very good demand. Earlier, there were hardly any exports of wire and cable. And now we have seen good demand from Europe or U.S.A. also.
So that is giving us the confidence that in long term, there will be a good demand. Even at our level, when we are a very small player in cable and our capacity is very limited, we know there is huge potential of expansion and growth. And that is also without compromising on price. So we are confident to have a higher growth in cable segment in coming years.
Okay. And second, on the margin side, can you share the specific levers which you have which makes you believe that your 6% should go to double-digit? What should drive it?
Yes. So, two or three reasons are there we are working. First, last year, we were in the range of 7%. So though this year, we have seen this growth, but even if we take the improvement of 100 to 120 basis points year on year, then we can be by FY28, we can be in the double digit. And this will be backed by my first changing product mix where we are improving our margins. We are having high-margin products like export of cables or solar cable or specialized cables. And plus, we will get the benefit of scale also. So this will give improvement in our margins.
So your first lever is changing product mix, export of power cable, solar cable. Would it come at the cost of the overall business economics in terms of do you have to compromise on the working capital or have to deploy some more money to get this 1% margin?
No. The working capital cycle is only 60 days, which is almost at the best of the industry average. And export doesn't mean that I will need higher inventory or higher working capital. So this is affecting all the factors we are saying that our margins will improve. Even my scale will improve, so I'll get a cost-benefit advantage also.
Okay. Okay. All the above. Thank you.
The next question is from the line of Rohan Vora from Envision Capital. Please go ahead.
Hello, sir. Thank you for the opportunity. So sir, to one of the previous questions that you answered, you said that volatility in.
I'm sorry to interrupt. Mr. Rohan, your volume is coming very low.
Is it better now?
Yeah. Thank you.
Yes. So thank you for the opportunity, sir. So one of the previous answers, you mentioned that volatility in copper impacted us more than the other industry players. So just a little bit more color on how that was the case and what we've done so that this is not repeated going forward. Because that resulted in us losing market share in wires. So that is why this is option one. Thank you.
Yeah. So Rohan, what I meant to say by more impact of volatility in my margins because we are having highest revenue coming from wire, which is B2C product. And what happens, always there will be time lag between passing on the prices of whatever raw material prices has been changed. The only extraordinary thing that happened in the first half of this year was that there was a sudden rise in the copper prices. And by the time we could pass on that price rise of impact to our consumer, the copper prices again came down very sharply. So if there is too much volatility within a very small span of time, then of course, we may have some impact in our profitability. But overall, it will be always passing on the effect of copper prices to consumers. So this was kind of one-time-only effect.
Okay. Understood. And sir, so second question was, sorry if it is a repetitive one, the capacity that is coming in the coming quarter. So how much volume growth would that enable us to do? And what is the color on FY26 volume growth that you're looking at? Thank you.
This overall CapEx has a probability or possibility of adding top line of INR 2,500 crore. Looking to our historical growth and even our current expansion plan, for this Q4, we are planning having volume growth of 15%. For coming years, we are making detailed plans and will give guidelines by end of Q4.
Sure, sir. Thank you so much.
The next question is from the line of Praveen Sahay from PL Capital. Please go ahead.
Yeah. Hi. Thank you for a follow-up. My question related to the FMEG business. There, you had mentioned that there is a very strong volume growth in the fans. So if you can give some color on this in the nine-month growth you had achieved, how much is from the wires segment and also volume value mix if you can give how much is like for 23% of a growth comes from the volume and how much is the value? And related to that, by when you are expecting to achieve a break-even in this segment?
In FMEG, we have seen a very good growth in fans, particularly in fans. Earlier, almost 40% revenue was coming from fans. Now it has increased to 45%. In lights also, we have seen a very good growth, but due to that price rationalization and negative pricing in lighting, the growth is flat at value level. At the same time, we have seen very good growth in appliances also. By the broader product mix in our FMEG, like 45% revenue is coming from fans, 32% is coming from lights, and the rest 23% is coming from appliances and switches. When we talk about break-even, as I mentioned earlier also, we are expecting that Q1 of next FY26, that is like June 2025 quarter, we will be able to come into the green at that level.
Right. And volume growth, can you give color on that? So out of a 23% of a growth, how much is from the volume?
So approach, though I do not have exact backup of this, but 55% growth came in FAN segment. And 20% of our sales in FAN came from new products which we introduced in this year. And we are getting almost 23%-25% revenue in FAN from premium category. So this is a very broad backup of our FMEG sales.
Right, sir. And how much of the CapEx is planned in this segment? And at what level of utilization of your capacity currently in?
So in FMEG, we have not made any big CapEx plan. It will be very small, like in the range of INR 20-INR 25 crores only. Because still, majority of our FMEG, we are sourcing through third-party only. So almost two-thirds of my revenue is coming from on trading basis, and only one-third is coming through manufacturing.
Okay. Okay. Thank you, sir. Thanks.
Okay.
The next question is from the line of Shivam Khare from 3A Financial Services. Please go ahead.
Hello. I'm audible?
Yes, please.
So I just wanted to know the capacity utilization over the segment?
Yeah, so particularly in wire, we are at 65%-70%, while in cable, we are already at 90%-95% capacity utilization.
90%-95% in cable, right?
Yeah.
What about the order book, the current order book and the targeted order book as well over the next couple of years?
So here, since we are more into B2C category also, so it is an ongoing project, and we do not have very long order book where we have orders of two years or three years or one year since major cable sales is B2C category. So it is a continuous process.
Okay, and any revenue guidance as a business as a whole, where do we see ourselves in the next four years or something by 2030 or something like that with the data centers and everything coming up?
We are making our detailed vision statement and growth plan, which we'll give by next quarter.
Okay. Okay, sir. Thank you. That's awesome.
Thank you. Ladies and gentlemen, that was the last question for today's conference call. I now like to hand the conference over to the management for the closing comments.
Thank you everyone for joining this call. We appreciate your participation. If you have any questions or queries, please feel free to reach out to us directly or contact Orient Capital. We look forward to connecting with you again next quarter. Thank you.
On behalf of R R Kabel Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.