Ladies and gentlemen, good day. Welcome to KEI Industries Limited Q1 FY 2024 Earnings Conference call, hosted by Monarch Networth Capital. As a reminder, all participant lines will be in the listen-only mode. 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Dani from Monarch Networth Capital. Thank you. Over to you, sir. Thank you, Sima. Good afternoon, everyone. We are pleased to host the senior management of KEI Industries today. We have with us Mr. Anil Gupta, Chairman and Managing Director of the company, and Mr. Rajiv Gupta, CFO of the company. Let's start the call with the opening remarks from the management. Then we move to Q&A. Thank you, and over to you, sir. Yeah, good morning. Good morning. Good morning, colleagues, I'm Anil Gupta from KEI Industries. I'll give you a brief about the results of quarter Q1. We achieved a net sales of INR 1,782.5 crore with a growth in net sales to 13.87%. EBITDA in this quarter is INR 186.6 crore, we have grown this EBITDA by 14.37%. EBITDA over net sales margin is 10.47% against 10.42% in the same period last year. Profit after tax in this quarter is INR 121.39 crore. The growth in the PAT is 17%. PAT over net sales margin is 6.81%. Domestic institutional cable sale wire and cable is INR 538 crore in the first quarter, it has grown by 14%. Export sales achieved in this quarter is INR 307 crore against INR 247 crore last year, it has grown by around 25%. Domestic institutional cable sales of Extra High Voltage cable is INR 50 crore in the first quarter, against INR 100 crore previous year. The total cable institutional sale contribution is 46% against 49% in the previous year same period. Sales through distribution network, that is B2C, is INR 796 crore in our first quarter, against INR 652 crore in the same period last year. Growth is approximately 22%. The B2C sale has contributed approximately 45% in the first quarter, against INR 42% in the last year. Sale of EPC division is INR 111 crore, against INR 84 crore last year. Sales of stainless steel wire division is INR 58 crore, against INR 61 crore last year. Volume increase in the cable division on the basis of consumption of metal in Q1 of FY 2023, 2024, as compared to previous year same period, is approximately 22%. Pending orders as on 26th July, 2023, is INR 3,567 crore. External rating. The company has got a external India Ratings and Research Private Limited has affirmed its long-term rating as AA with positive outlook. ICRA and Care long-term rating is AA, stable. Short-term rating from India Ratings, ICRA and Care is A+, A1+. Book value of the equity share of the company is INR 300.86, as on 30th June. Total borrowing is INR 130 crore. This is only for Channel Finance, otherwise, all other limit utilization is nil. Cash and bank balances of the company on 30th June is INR 306 crore, as against total borrowing of INR 135 crore for Channel Finance. Cash and bank acceptance credits as on 30th June is INR 151 crore, against INR 219 crore as on 31st March 2023. Continuing the net cash position. Continuing the net cash position. The net cash is INR 24 crore as on 30th June, against net cash of INR 183 crore as on 31st March. The finance cost has decreased to INR 8.94 crore against INR 9.23 crore last year. Interest income on fixed deposit is, in Q1, is INR 5.92 crore, which is included in the other income. It was INR 1.44 crore in the previous year same period. Future outlook of the company. At present, company has repaid all its debts and is a debt-free company. What other cash approvals will be there, it will be used for CapEx, for future growth and additional working capital requirements. The company is confident of increasing its top line by 16%-17% in the current financial year. During the year, the company has incurred a capital expenditure of approximately INR 114 crore in the Q1, during the current financial year, doing a brownfield CapEx of INR around 45 crore in Silvassa plant, which will generate additional top-line revenue of LT power cables of INR around 500 crore. This will enable us to grow by approximately 16%-17% in the current financial year. Apart from brownfield CapEx, in FY 2023-2024, company has planned INR 250 crore-INR 300 crore CapEx on greenfield expansions of cable and wires in Gujarat. Commercial production of which will commence by fourth quarter of FY 2025. We have already purchased land in Q1. We will spend every year in capital expenditure, approximately INR 300 crore-INR 350 crore each year for the next three years, to maintain a CAGR of 15%-16% per annum, as a means, achieved CAGR of 14% during last 15 years. Industry outlook. As said earlier, the demand for our products is strong in domestic as well as overseas markets. India has emerged as the fastest growing major economy in the world and expected to be in the top three economies in the world in next 10-15 years. Demands in the infrastructure sector, in the solar, wind, and other infra projects of the central government, as well as industrial projects by the private CapEx, is very strong. Demand for residential properties has surged due to increased urbanization and rising household income. Increasing private and government investments in energy-intensive industries such as iron, steel, aluminum, cement, fertilizer and refineries. The government emphasizes on infrastructure development and projects such as energy, railways and metro constructions, roads and highway building, ports and airports, and modernization, among others. We thank you for your participation, and we'll now invite you to ask any questions which you may have, and we'd like to answer. Thank you. Thank you very much. We will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone 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. We take the first question from the line of Mr. Piyush Khandelwal from Bank of India. Please go ahead. Hi, thanks for the opportunity. I just wanted to understand that your current capacity I'm sorry to interrupt you, Mr. Piyush. Sir, your voice is very soft, sir. Could you speak a little louder? Hello. Can you hear me loudly now? Yes. Yeah. Thanks for the opportunity. I just wanted to understand, let's say, at, at current capacity, what can be the peak revenue that you can do? In the current capacity, as well as with the brownfield CapEx, which we are going for the next year, we can generate a revenue of INR 9,400 crore-INR 9,500 crore. This will be able to take care of the growth. That's what I wanted to understand. Yes, yes. That's why Anilji has said that the next year also we will grow by 16%-17%, as well in the current year also we will be growing 16%-17%. All right, understood. Sir, next question: If I look at the segment breakup in terms of growth, our domestic cables business has just grown 3% YOY. I mean, just wanted to understand, because in the opening remarks as well, you mentioned that the demand is good, then why that side of the business is not done well? No, in that domestic side, if you talk of the low tension and high tension power cable, we. Earlier our turnover was INR 472 crore last year. This year, our first quarter turnover is INR 537 crore. We have grown by close to 14% in the local market also. In the case of the retail sales, our growth is close to 22%, as Anilji has said. Sir, if I see Insta cables business, that is around INR 588 crore, versus INR 572 crore in the previous quarter, it's a 3% growth. Extra High Voltage power cable, which was earlier INR 100 crore, is now INR 50 crore. Now order of position of Extra High Voltage power cable is very, very strong. From the second quarter onwards, again, this, this thing will go to INR 100 crore-INR 125 crore per quarter for Extra High Voltage. You will be able to do INR 550 crore of annual sales in this. Yes. Yes, yes. Understood. Understood. Got it. Thank you. We take the next question from the line of Mr. Rahul Aggarwal from InCred Capital. Please go ahead. Yeah, hi, good afternoon, and thank you so much for the opportunity. Sir, Anilji, one question to you. I mean, cable segment growth is at 14% YOY, overall, everything put together. Was this in line with your internal planning for the quarter? Because it seems to be a low number when I look at your peer group, who already reported numbers. Looks like cable are seeing some exponential demand in the country. Just need some of your thoughts on this. I understand EHV is down for some order execution delays. If you can explain that as well, what happened on the LTHT side? Is it, like, material enough to think about market share loss here? No, no, no. I'll explain you. We have grown actually by 22% in volume terms. The revenue growth is 14% because of the decline in the raw material prices and the metal prices of copper and aluminum, due to which the revenue growth is only 14%. In quantitative terms, we have consumed 22% more raw material during this period. Second, your second thing is that we are not, you know, we have some capacity constraints at the moment So which we are doing a lot of debottlenecking process in our existing plants, so that we maintain a growth of around 16%-17% revenue growth and around 20% in volumes this year also. It, I'm assuring you that it will be done. It will happen. Rahul, as per our earlier guidance also, we have already guided every time that we will be growing 16%, 17%, 18% kind of thing. In volume terms, depending, in volume terms, it has already grown by 22%. Our sale is as per the guidance, actually, which we have given earlier also. We absolutely agree, sir. I mean, the thing was actually most companies are beating guidance, given that there is some, you know, exponential demand scenario along the CapEx lines of the country, both private and public. I was thinking that in that context, it is low. I'm not saying obviously you have guided and you've met the expectation. Rahul, I am not aware whether the peer group has guided you about the 30% growth for full year. No, they haven't. They They haven't. They, they have not. They have not. Yeah. Because it means we always talk of the yearly growth, and since so many years in the past, we always guided you, and we achieved that as well. Agree, sir. Moving on, sir, between the copper and aluminum mix, I just wanted to know for KEI, in terms of raw material, should it be should we assume equal mix between copper, aluminum? Normally, it is a 65/45 kind of thing, sometimes 60/40. It is like that. Okay, get it. One question on balance sheet. Your net working capital, it looks like it's up INR 250 crore of investment quarter-over-quarter. The operating cash flow is negative for the quarter. Any thoughts what really happened? No, no, that is mainly because of we have paid more to the creditors, because the money is in the business only. Whenever we would like to have increased the creditor, that will be there available. Right now the cash is available, so we are purchasing more and more on the cash. If you see our creditors has gone down. See the credit level figure. Yeah, yeah, I understand that, sir. That's been, we have been doing that for Whenever we want, we can increase. Whenever we don't want, we t hat is there. That's basically the cash flow is available with the company actually. Okay, get it. No no major increase into inventory than debtor. Nothing unusual there, right? That's what I want. No, no, debtor is already last year was INR 1,387 crore. The CR is INR 1,322 crore. The EPC projects, which we have already closed, we are getting our retention money, so debtor is slowly, slowly decreasing actually. Even the, even the sale has grown by 14%, even the debtor is low as compared to last year. Got it, sir. Lastly, on the CapEx, the brownfield of INR 45 crore, this is the second time we are doing this. Is that correct? Yes, yes. Yeah, yeah. First is already completed. Now the second is going on in the Silvassa, which will be completing by September. The second half production capacity will be available. Another CapEx is going on in the Bhiwadi, and another is going on in the Gujarat. That's why overall, we have already invested in the land. Now we will invest in the plant, machinery, advances, and the building for Gujarat and Bhiwadi. Approximately another INR 300 crore we will spend in this financial year. For the next two consecutive years, every year we will investing close to INR 350 crore each year. The growth target, whether for current year or for next financial year, we are, we are keeping in our mind 16%-17% kind of growth. There is a brownfield happening in Bhiwadi also? Yes, yes. How much is the spend there? It will complete by the first quarter of the next financial year, so it will take care for the next year, 17% growth. What is the CapEx there, sir? Close to INR 110 crore. Okay, if I understand this correctly, you've spent about INR 114 crore this quarter. You'll spend another INR 300 crore in the balance nine months. Yes. From next year onward, it will be INR 350 crore each. Yes, yes. This includes Bhiwadi CapEx also? Yes, sir. Okay, perfect, sir. I'll come back in with you. Thank you so much. All the best. Thank you, Rahul. Thank you, sir. We'll take the next question from the line of Ms. Shubham Agarwal from Axis Capital. Please go ahead. Yeah. Hi, sir. I think most of my questions got answered, during the last interaction with last participant. Just, on the capacity itself, what is the capacity utilization right now for you? Close to 90% capacity we are utilizing in our low tension and power cable capacity. Since our Silvassa plant in our housework capacity, we have already increased, so that capacity utilization is close to 63%-64% now. In our extra high voltage power cable capacity, from the current quarter, it will be touching close to again 90%-95% now. Right. This new capacity in Silvassa is LTHT. I heard it right, right? It is only for LT cable. In the Silvassa, this is the brownfield capacity is going on. It is only for LT power cable. Okay. Can you just give me some detail on the pending order book, the breakup that you gave? Pending order book, as Anilji said, that is INR 3,567 crore, which includes our EPC pending order is INR 832 crore. Extra High Voltage power cable is close to INR 809 crore, and the domestic cable for Low Tension and High Tension is close to INR 1,690 crore, and export order is INR 236 crore for the cable. Put together all, it is INR 3,567 crore. Okay. That's all from my side, sir. Thank you. Thank you. Thank you. The next question is from the line of Mr. Achal Lohade from JM Financial. Please go ahead, sir. Yeah, thank you for the opportunity. Sir, I just wanted to check on the margins. If you look at the margins for the cables in terms of the EBIT margin, we see that it has contracted on a YOY as well as QOQ. The number, this is not large, but, given we are, you know, we have capacity constraint, which implies that we have, utilized fully, why would the margin contract? Is it to do with the raw material? Is it to do with the product mix, or is it? No, it is mainly, it is mainly because of the advertisement and IPL expenditure during the first quarter, only because of that only. Nothing else. will you be able to quantify what is the quantum of- Close to INR 10-12 crore we spent on the advertisement and the IPL, which was not the in the last year quarter. Understood. Understood. This is, this is obviously, the, accounting- Actually, all that expenditure we were relating to the quarter one only. We have to book in the same quarter, actually. How do we look at the spending from a full year perspective? What is the spending we would look at in terms of percentage or... No, actually, the other expenditure on business promotion advertisement will remain same as we were doing in every quarter. Last year, we did not participate in the IPL and we did not done the TV advertisement for IPL. Because of that, additional INR 10 crore was the expenditure in this quarter. Otherwise, overall business promotion advertisement, overall year-on-year basis, it will be close to INR 35 crore. Annually. Okay. Understood. Secondly, can you talk a bit more on the exports? Which geographies have you got more, you know, customers now, signed up, in terms of the margins for these export, and what are these, you know, what is the mix in terms of export, in terms of wires, cables, and within cables, if there is LT, HT, et cetera? You see, as Anilji earlier also guided this year, that last year our export was contributing close to 10%. We have done this export within 2, 3 years' time to go to the level of 17%-20%. In the current financial year, we are targeting a 17% kind of total contribution from the exports. Even in this quarter also, if you see, the contribution from export has reached to 17% in the current financial year also. Right. The export order of position is strong. It is INR 236 crore export. We are exporting mainly the cable part, Low Tension, High Tension, and little bit Extra High Voltage power cable. Right. Just a clarification in terms of the execution period, what is the typical period for the domestic cables as well as for these exports? Is it 3 months? Yeah, it is normally 2.5 to three months. 2.5 to three months, from the getting the order to the delivery? Yeah. Whatever pending order is there, we have to supply within three months almost. Got it. This is very helpful. I'll come back in the queue, sir. Thank you. Thank you. Thank you, sir. The next question is from the line of Mr. Venkatesh Balasubramanian from Axis Capital. Please go ahead, sir. Yeah, thank you for the opportunity. Now, I had a few questions. The first question is on copper. Now, can you please highlight how much percentage of your, of the copper that you use, you procure from India, and how much you import? Normally, major copper and aluminum is, we are using domestic, only against the advanced license, few orders we take from the import side. Otherwise, most of the cases there are these value addition, so we, we, we take even the duty fee from the domestic supplier, that is Hindalco and Vedanta, et cetera. Okay. Because the reason I'm asking you this question is primarily because the market leader actually claims that when you actually, if you import copper, there are contracts available, where, let's say, you place the order for copper today, the price doesn't have to be decided on that day. Let's say you will take the delivery of the copper after three months, you have the option of deciding how you want to price the copper, whether it be at spot. Or let's say, if the prices have actually risen over the three-month period, you can take the average price. Are these kind of contracts available in the international market, first of all? Secondly, why is somebody like KEI not participating in the international market if these kind of contracts are available? These type of contracts are available, that we can definitely do the proper LME pricing on a forward note when the actual delivery is taking place. Ultimately, it is a call which we have to take, where what kind of risk it carries. We do not know why we are not playing blind. We do the forward booking only in case we have a forward contract on firm prices, so that our actual supplies matches with the prevailing copper prices at that time. Okay. Okay, okay. Thank you. That is very helpful. The second thing is, couple of years back, there were talks about, you know, you had mentioned that you were evaluating an entry into the FMEG business. I guess, I don't know, is there any thought process on that? Because it doesn't look like FMEG is that great a business now, with almost everybody entering the business. Have you completely scrapped plans on the FMEG entry, or is it like you still have a thought process that you will enter that business? We have no plans to enter that business. Okay, okay. Thank you very much. One last thing, one last question from my side. You know, obviously, some of your peers, like somebody like Havells, who's more wires-heavy, has grown at around 25%. Polycab, whose, whose cable heavy, has grown at 40%, and you have grown at a lesser pace. Is it basically only because of the capacity constraint that, you know, you are already operating at almost 90% utilization, that is why you couldn't grow? Is there a po- was there a possibility that if you had that capacity, you could have also grown at, let's say, 25%, 30%, if the demand environment that's strong? Yes, yes, you are right. Demand environment is strong, and it is only the capacity constraint due to which we have grown lesser. Okay. If I could just ask one more, pardon me for it. Most some of your competitors have started talking about China Plus One in wires and cables, that, you know, a country like US wants to diversify its supply chains in terms of buying wires and cables. Are you facing these? Are you getting queries from international clients that, "Can you please export to us? Because we don't want to buy, we want to buy less from China." This is something some of your competitors are actually highlighting. Yes, you are correct. We are also getting lots of inquiries, and in the coming quarters and months and years, the export will grow substantially. We have also started exports to USA since February this year. Quarter after quarter, we will see our exports has jumped to 17% of our sales, which was in earlier years, it was only 10%. It will definitely be growing, and subject to, I mean, whenever we are able to feed them with our capacity. Okay. How does the export margin compare with the domestic margin? Is it higher, lower, same? It is almost 1% higher. 1% higher. Okay, okay. Thank you. Thank you. All the very best for the future. Thank you. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to two per participant. We take the next question from the line of Mr. Praveen Sahay from Prabhudas Lilladher. Please go ahead. Yeah, thank you for taking my question. related to the export only, as, there is a good growth we had seen for a quarter, you are guiding also for a 17% contribution for the this year. Is it, because largely of a geographical expansion, or you are seeing, in the existing locations, there is a growth is coming in? No, no, it is coming from existing customers in existing countries also, and also from the newer territories also. I mean, the traction is definitely strong for, for the cable products from international markets. As you also highlighted in the export that the US, in the last call also, you had said that the US, approval and everything is done. How much is the US contributing right now in the export? That clear-wise, we cannot declare country-wise, but as a overall, overall it is strong. One clarification that related to your CapEx. Two of the brownfield expansion CapEx for this year is lined up or for the next year? Actually, Silvassa was doing earlier also. In, in the last year, we invested around INR 50 crore in Silvassa, and this year we are again investing INR 45 crore in Silvassa plant. In our Dewas plant, we will be investing around INR 100-110 crore. In Ahmedabad, we are investing in the greenfield project. Overall, in the current year, close to INR 400 crore we will be investing, put together all, whether it is Ahmedabad or it is Dewas or it is Silvassa. Okay, one more clarification on the greenfield. Last quarter, you had said it will be operational by Q3 FY25. Now it's delayed by 1 quarter. No, it will be operational by Q3 end, actually. The fourth quarter sale we will be start getting from there. Thank you, sir. Thank you for taking my questions. Thank you, sir. The next question is from the line of Mr. Sundar from HSBC. Please go ahead. Hello? Yes. Hello, good afternoon, sir, and thank you for the opportunity. Sir, I wanted to ask you with regarding to the timelines of the CapEx. The Silvassa will be done by September, is that right? Yes. The another brownfield expansion will be done by Q4, Q4 of this year. By the first quarter of the next financial year. Q1, FY 2025? That's right, yes. The Gujarat, the first phase will be completed by, the sale will start from the first, the fourth quarter of next year. That's the next year. Okay, okay. Sir, on the EHV side, sir, are we confident of reaching revenues of, INR 500 crore-INR 600 crore this year? Would that be a reasonable? From this quarter onwards, you'll see that there is a we will cover, cover up the deficit of first quarter also in this quarter. Okay. Sir, one last question from my side. Sir, there has been a slight receivable improvement this quarter, is it sustainable or should we? It will remain the same range. As I earlier said, because of the change in the mix of the House Wire, the retail dealer distribution division will be contributing in the current financial year close to 46%-47%. Because of that, last year our receivable had reached to 2.5 months, in the current financial year it will be holding will be close to 2.2 months. Okay, sir. Thank you, sir. Thank you, sir. Sir, one thing, one last thing- The last three, four years, if you see continuously, it from 3.85 months to 2.9 months, from 2.9 it has come down to 2.4 months. Now, it will be closing 2.2 months actually. Okay. sir, one last thing, if I may- Sorry to interrupt you, Mr. Sundar. May we request you to general the question to sir? No, no, please, he's asking, please, please continue. Oh, thank you, sir. Sir, one thing, on the margins, you mentioned that, there has been a, slight higher A&P spend this quarter, and it would, normalize in the subsequent quarter. Can we expect a margin expansion in line with Q4 for the rest of the year? Yes, sir, definitely. Okay. Thank you, sir. Thank you. That was it from my side. Thank you once again. Thank you. A reminder to all the participants to please limit your question to two per participant. We take the next question from the line of Amit Mahawar from UBS. Please go ahead, sir. Thank you. Sir, my question is for Ananji. Sir, this year, FY 2024, what kind of volume growth do you see for the industry in XT, LT cable? Amit, now I expect close to 20% volume growth overall for us. For industry, I, I don't have the, I mean, figures at the moment. We can provide you an estimation. It will be only, only an estimation. Sure, sure, fair point, very helpful. Second thing is, FY 2024's, it has started on a very strong note. You know, we saw all the peers in volume growth, even cables reporting very strong volume growth. It also tells us that a lot of states are, you know, inviting supply tenders, right? We've seen a lot of states where some of our peers have supplied a large quantity. Do you think, in your assessment and understanding this year, we, it's going to be a very heavy first half and relatively slower second half, considering we are going to also enter the election period? Is it right to say for cable and wire? No, no. I think the year, the year all will be good and strong, even in H1 and H2 all. I think overall it will remain a good period. Fair point. Thank you. Maybe last question for Rajivji, sir, what's the target, you know, by next year for, you know, debt levels and interest cost you're targeting? Thank you. Amitji, as we earlier said, the debt level we will be maintaining as a debt-free company, now from here onwards, so debt will not be there. Because of that, we are having a disciplinary approach, wherein we are maintaining a growth target of 16%-17%. Accordingly, whatever internal approval we are generating, we are investing into the capital expenditure as well as keeping for working capital requirement. To maintain certain kind of discipline and the capital allocation, the same kind of growth we are targeting for next 5 years or next 10 years, as a, as a debt-free company. Okay, thank you, sir, and good luck. Thank you, Amitji. Thank you, sir. The next question is from the line of Akshay Kothari from Envision Capital. Please go ahead, sir. Yeah, thanks for the opportunity. Just wanted to know, regarding the earlier participant's question, if you are seeing a very good demand on the, you know, very good demand tailwind on cables, wires, and everything, is going good, then why not go for that forward contract, LME? In that case, we won't be playing blind, because we are actually seeing a lot of tailwinds across the sectors. In the past also, as we have earlier communicated, that we don't, we don't run that crazy, number one. Okay. Whatever natural hedge is available to us, we are having a three to four months kind of pending order book position, and we are having two and a half months to close to inventory in our shop floor, so it is under natural hedge. Only in the case of the contract from the customer, which is the longer period, only against that only we do forward contract, otherwise we don't do. That's why neither we lose, neither we gain from the copper purchasing. Okay, okay. Sir, the we are also planning a CapEx on the EHV side, right? Yes, in the new greenfield project. Okay, okay. Yeah, that's it from my side. Thanks a lot. Thank you. Thank you, sir. The next question is from the line of Natasha Jain from Nirmal Bang. Please go ahead. Hi, sir. Thank you for the opportunity. This is regarding one of the earlier participant's question. You said that in this quarter, there has been a higher ad spend of about INR 10-12 crore. Even if I add back that number to your EBIT, your margin expansion only improves to 50 basis points. I just want to understand, is it fair to understand that most of the expansion was let go because you had to take a price reduction? Price reduction. Madam, repeat your question. We are not able to understand. Sir, so if, if I do not consider the higher ad expenses in this quarter, which you said you incurred of about INR 10-12 crore, I mean, your margins would definitely expand, but probably from 9% to say 9.5% to maybe 9.7%, whereas the peers have shown a very strong growth in terms of margin. I just want to understand, is it because we had to, you know, the raw material pricing softened, and that's where we took the hit? No, no, it is not like that. In the earlier also, in the House Wire product, our margin is 11%, their margin is 14%, 15%. We have earlier also communicated. Our margin is 10.5%-11%, so we will be maintaining that rate of, of, of margin in our business level. All right. Okay. As far as advertisement is concerned, the normal advertising will continue. It is on, only the IPL expenditure, which we incurred in the first quarter, may not be there in the subsequent quarters. All right. Understood. My second question is more on a longer term basis. We hear the infrastructure development that's going on, and then there is a, you know, decadal tailwind in the cable sector. The infrastructure is not something that's going to end in one year. It's a multi-year project that the government and private CapEx, et cetera, is going to be done. Sir, understanding from a three to five years perspective, given 2020, FY 2024 start was very strong, how do you see midterm? You know, next three to five years, the demand, is it going to remain as strong? How do you see it? Definitely, demand will be as strong, and, just, in the last 15 years, KEI has grown at a CAGR level of 14%. In the next 10 years, we are planning to grow by 17% of CAGR, because now we are a debt-free company. We are talking of a longer term perspective, not for 1 year, but for 5 to 10 year basis, that we will grow by 17% CAGR. Understood, sir. Okay, sir, those are my only two questions. Thank you. Thank you. We'll take the next question from the line of Mr. Prashant Kothari from Pictet Asset Management. Please go ahead. Yes, sir, thank you for the opportunity. I just had this question on the capacity, like, your constraint for the capacity today, does it mean that you have the ability to maybe prioritize your customers better, and therefore, kind of retain more higher margin business? I just want to understand how you are kind of thinking about it, how you are prioritizing which clients to kind of supply to or which dealers to supply to and dealers not to. Sir, we are the among the second largest company in the country, we cannot deny to our old customer. We have to maintain the relation with all our customers. We cannot choose and pick only for higher margin, because business has to go for longer period. It is not the case. The case is that we are serving our customer, we are having the patronage from our old customers, and we will be maintaining that. EBITDA margin, we will be maintaining, as we said, 10.5% to close to 11%, definitely we will be reaching. That is our goal also, to reach 11% EBITDA margin. We will with a growth rate of 17%, kind of CAGR. Accordingly, the capital which we are earning, which we are allocating. Okay, okay. Just in terms of your future capacity planning, sir, how do you think about kind of, having more spare capacity than what you have today? Like, what is the downside if you had to invest, let's rather than INR 300-400 crore a year, if you had to invest maybe bit more? You see, we cannot see that only in a one year, if a competitor has increased, we should chase them, because then the accident will happen. In the past also, even in the last 14 years, whether it is a competitor or it is a KEI, all have grown 14%-15% CAGR. We know that in future also, we may grow by 17%. CAGR level, the difference are much, much higher, though. We are not, we are coming for the 10 years. Sure, sure. All right, sir. Okay, thank you much. Thank you, sir. The next question is from the line of Ms. Sangeeta from Cogito Initiatives. Please go ahead. Yeah, hi. good afternoon, and thank you for the opportunity. I wanted a little more color on your margin. you know, we have talked in the past also and said that, you know, one of the reasons you gave why the margins have not grown despite the, its growth in sales, was that you were reinvesting in advertising, et cetera. Now that that business has also grown a lot, you know, when can we start beginning to see some meaningful expansion in the margins? Because if I look at my last five, six years, we've been very stable around this 10, 10.5% level. Is that, is it possible to take that up, like, a notch higher? Look, we earlier also spoke about that, that when our capacities will increase from the new greenfield project and the existing brownfield projects, our EBITDA margin will expand by 1.5%. Within next b ut it will be next three years kind of thing. Because one capacity, when these greenfield projects will be there, so due to economy of scale, where the marketing expenditure and the head office expenditure will not increase to that extent. One EBITDA expansion will be from their side. And another, we are bridging the gap of the our House Wire price versus our peer prices within next two to three years' time. Because of these two reasons, our EBITDA expansion will be 1-1.5% in the next two to three years' time. Okay. over three years, so roughly, 50 basis points a year kind of thing, is that what we should expect? For current year and for next year it will be 11% range, but after that it will start increasing because the commercial production in the greenfield project will start only in the next financial year. Okay. All right. Thank you, sir. Thank you. The next question is from the line of Mr. Anupam from HDFC Life. Please go ahead, sir. Hi, sir. My question is on, again, on the margin side, but, can we say, earlier we have seen a margin of, like, 12.5%? What sort of environment will that provide that? Because at some point our ad expense will also stabilize and as well as we'll get some operating leverage. Shall we expect from FY 2025 a good growth in margins? FY 2025, 2026 financial year, we may reach to 12%. Okay. Okay. We are very, very transparent with all our investors, all our bankers, that whatever we are doing, we are communicating. There is no surprises in the negative side or positive side. We always communicate to all of you well in advance. Okay. Given that we are also increasing in our export as well as EHV, so the margins are sort of looking like it can improve from here. In the sales side, we have to maintain the quality while we are doing exports, we are doing institutional sales. Since we are doing the institutional sales, please appreciate, in each and every institution, all the sale goes through the inspection process only. We are not a 75% selling to the dealer distributors, wherein no inspection agencies are there, so any company can sell anything. We are selling in an institution side, where all the inspection clauses are available. All the companies are appointing the inspection agencies to our company. The quality of products is on at an international level, which the KEI, as KEI, is giving to all our customers. Okay, sir. Sir, what is your margin difference in retail and institution sales? Like in the retail, it's close to 11%, and the institutional sale is close to 10%-10.5%. Okay. Thank you, sir. I'll join back in the queue. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your question to one per participant. We take the next question from the line of Mr. Venkatesh Balasubramanian from Axis Capital. Please go ahead, sir. Yeah, thanks again, once again for this opportunity. I just had a follow-up question. Now I am aware that historically, KEI, a very long time back, used to have leverage problems. Over time, you've done fantastically, you have executed very nicely, you have reduced working capital, you have reduced debt, now you are at almost net cash. Now, one participant earlier asked that, you know, why not do more CapEx, which for, for which you had replied that, you know, over longer term, the growth is 14%-15% only, so we should target that kind of growth only. You are also aware of the fact that this China Plus One is a new opportunity which is coming up. Normally, when a country like US or large countries move supply chains to a different country, it is not a one-time opportunity. It could be an opportunity for the next decade. Is there any merit to go back to the drawing board and perhaps do double the CapEx than what you are doing, maybe even borrow for it, and maybe have slightly higher leverage over the shorter term? Because you might actually miss out on a large opportunity if you don't do the necessary CapEx. Is there any. Yeah. Sir, we will not miss out anything. The longer-term sustainable growth for any company, please note my words, will be 16%-17%. That I am talking for the next 10 years. We are not planning for one year, we are planning for the next 10 years, and we are raising our CAGR growth from 14% to 17% now. On a sustainable basis for next 10 years, we will be running a debt-free company, that is for sure. Neither we will borrow, and we will be maintaining a 17% CAGR. We are very, very transparent to all of you. Okay. Thank you very much, sir. All the very best. Thank you. Thank you very much, sir. Thank you, Rajeev. Thank you, sir. The next question is from the line of Mr. Rahul Aggarwal from InCred Capital. Please go ahead. Yeah, thank you for follow-up. Rajiv, the one question on creditors, I'm just trying to understand that better. I know the company strategy in terms of reducing payables, so I know that. What I'm trying to calculate is, when I look at March balance sheet and June balance sheet, the creditor balance is down about INR 160 crore. Is that correct? Yes, sir. You're saying that because we did this repayment. Rahul, creditors, whenever we have the extra cash, we buy the material on cash prefer to buy on scale, because where we utilize the money, either in fix the project, because we don't run the treasury, so we don't invest anywhere, we don't invest in capital market as a company. We want to remain within the business. We are going for capital expenditure, so whatever money we are generating, it will be putting only there. Creditors, debt, or but debt company. Sir, I understand that. My question was, can we quantify the savings we have done on this INR 160 crore? No, saving is only if we are opening the letter of credit, it is interest bearing. If we are not opening the LCs, then it is a non-interest bearing. If the 14% growth is there, or 16%-17% growth we are going to do, but interest cost is not increasing. Otherwise, the interest cost will increase, no? Yeah, yeah, I understand that. Okay, no problem. I'll take it offline. Actually, in proportion to that only. I understand that, sir, because I was looking at the acceptances number, it has gone down by INR 70 crore QOQ. Thank you. Yes. Is there a linkage between the difference of creditors being repaid and acceptance is going down? No, no linkage, sir. It is a simple, simple case study, because copper and aluminum always purchasing on cash. If we are having the cash extra, we are paying them directly. If we are having sometimes, going for letter of credit, but if the import is increasing, then definitely we have to open the letter of credit, because in the import, we need to open the letter of credit. Understand that, sir. just last question on again- Thank you, sir. May we request you to join the question queue? Okay, I'll come back. Thanks. Thank you. We take the next question from the line of Mr. Raj Shah from Ambit Capital. Please go ahead, sir. Sir, just one question on the capacity again. I just wanted to understand that in the short term, we have a capacity constraint, so is there any possibility of outsourcing for the incremental growth that we get? To maintain the quality of the cable, we need to manufacture in our company. Again, as of, we earlier said also, whenever we have planned for growth of 16%, 17%, so it is a well-defined process we have already communicated to you, as well as communicated to in our company, internal board also. The same way we are growing 16%, 17%, it is not the case, somebody is having more growth, we should jump into that, we should not do that. We know our strength, and we know what quality of products we need to produce and supply, whether in the domestic market or in the export market. Accordingly and ethically, we are doing our business. Just one additional question. If I just look at the margins of the market leader over the last 10 years, then they have gone from around 9% to roughly 14-14.5% for FY 2023-2024, while we have maintained margins at around 10%-11%. Just wanted to understand, so going forward, what are we spending more on branding? What are we doing differently on the branding and advertising part, so that we can reach, as we reach a good, decent scale, we can also reach margins comparable to this? We are not competing with anybody, we are competing only with ourselves. As we said, our margin in 2025, 2026, 2026, 2027 will reach to 12.5%. We are not guiding that we will be catching up the clear growth or something else. We will be growing with a 17 kind, 17% kind of thing for a CAGR growth, having EBITDA margin is close to 11% right now, which will be reaching within three years' time, 12.5%, and we will be running a debt-free company. These three things we are maintaining. Okay, thank you very much. Before we move on to the next question, a reminder to all the participants to please limit your question to one per participant. The next question is from the line of Neeraj Dubey from Anand Rathi. Please go ahead. Hello, sir, thank you very much for the opportunity. At end FY 2022, our installed capacity across all the multiple cable options that we have was 14.95 lakh kilometers. Would it be possible for you to share what is the, that number currently, and what can that be number end of this year and end of FY 2025? Thank you. Sir, this I will communicate. Right now, I am not having the kilometer number. In my presentation, you will see, which will be in the website by evening. We are already disclosing the capacity every, in our every presentation. Thank you, sir. Thank you. Next question is from the line of Mr. Siddharth Purohit from InvesQ Investment. Please go ahead. Yeah. Hi, sir. Sir, any, like, you know, by clarification, you provide, how much of business normally we get from, government-related, like, you know, projects, and how much from non-government, and particularly from railway side? You see, we don't have that kind of number, but we are having a segment type of number, wherein the institutional business for low tension, high tension power cable contributing 30% of our total sales. The other distributor business is contributing 45% of our total business, and export is contributing around 17% of our total business. The institution business includes not only railways, railways, metro rail projects, EPC contractors, because when the LNT is giving the order, we don't know whether it is a distribution and transmission order, or it's a metro rail project order, or it is any refinery order, or it's any railway project order. We supply lots of cables to these EPC contractors like LNT, Siemens, ABB, like companies, large companies. Okay. The reason I was asking is that there are very few large companies like yours, and the government is on a massive expansion mode, both on railway as well as non-railway. You are seeing the government expansion now. We are always telling you since last three years, the demand is good. Since the capital allocation basis and the capital availability to us, we are in a mode wherein we will grow 17%-18% kind of growth. Okay. Okay, sir. Yeah. Thank you. Thank you, sir. We take the next question from the line of Drashti from Thinqwise Wealth Managers. Please go ahead. Thanks for the opportunity, sir. When you say that you are, you are forecasting your growth of 16%-17% for the period of next 10 years, is there any particular segment that you see this growth with? You will skew towards one particular segment, or this is going to be a broad-based number that you are, projecting? Well, no one can predict like this. Actually, we are running a complete profile, portfolio like you. We are having Low Tension, High Tension, Extra High Voltage power cable. We are having wire, and we are having the segment like we are supplying to institution, supplying to export market. Product and segment. No one can know, say, that which of the product will be higher, which of the product will be lower, like you. As a whole, we will be growing like this. Thank you. We take the next question from the line of Ritika Gupta, an individual investor. Please go ahead. Hi, sir. I just had one question. I wanted to know that you're bullish. Which is the geography that you're most bullish on? U.S. market, you started in February, so what% of our exports are going to be U.S. market? Close to 10% of the, or maybe more, because I cannot disclose those number actually to you for country-wise, actually. Okay. Yeah. Which geography are you most bullish on? You see, we are in the geography of Africa, in the Middle East, Australia, U.S. These are the major geographies wherein we are operating. Okay. You see mainly growth coming from? The growth is coming from every sector, everywhere. It is not the case that the Middle East is not growing or Australia is not growing or Africa is not growing. No, if I have to ask you. U.S., we have added. U.S., we have added. Because of that, our CMD, sir, has already increased the contribution target for, from 10% to 17%, actually. Okay, that is the reason. Yeah. Thank you. Thank you. The next question is from the line of Mr. Rahul Aggarwal from InCred Capital. Please go ahead, sir. Sir, thank you. Thank you. This is my last question. Just one question on channel finance. The INR 130 crore number, if I understand this correctly, this is a recourse debt which is basically related to your dealers who have taken channel finance, is that correct? Yes, you are right, sir. My understanding was, you know, generally, when I look at other balance sheets, typically this is shown as a contingent liability, right? It's not part of the balance sheet. Is there any difference in accounting policies, what you follow and No, sir, everywhere accounting policy is same. The recourse level is also same. Sometimes, AI as a company, I have opened up directly, they clear recourse. Okay. Okay, got it, sir. Got it, got it. Thank you so much. All the best, sir. Yes, sir. Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to hand the conference over to the management for closing comments. Thank you very much, friends, for your participation, and listening to us. If you, and having faith in us, if you still have any further questions, you can reach out to us. Thank you very much. Thank you very much to all of you. Thank you. On behalf of Monarch Networth Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.