Finolex Cables Limited — Q3 FY26

Finolex Cables Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=DfjOW3SQki4 Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Q3 and 9 months FI26 earnings conference call of Phenollex Cables Limited. As a reminder, all 0:10 10 seconds 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 0:17 17 seconds you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. I now hand the 0:25 25 seconds conference over to Mr. Pratik Battle from Densu 1 investor relations team. Thank you and over to you sir. 0:32 32 seconds Thank you Steve. Good evening and thank you all for joining us on the Penovx cables Q3 and 9 month FI26 earnings 0:39 39 seconds conference call. Today we have with us Mr. Mahesh Viswanatan, deputy CEO and chief financial officer from Pinollex 0:46 46 seconds Cables Limited. We will begin the call with the opening remarks from the management after which we will have the forum open for the interactive Q&A 0:54 54 seconds session. I must remind you that the discussion in today's earnings call may include certain forward-looking statements and must be viewed therefore 1:02 1 minute, 2 seconds in conjunction with the risk that the company faces. Please restrict your questions to the quarter performance and to strategic questions only. I would now 1:10 1 minute, 10 seconds request Mr. Vishanatam for the opening remarks. Thank you and over to you sir. 1:16 1 minute, 16 seconds Thank you Pratik and uh good evening ladies and gentlemen. Uh thank you for joining this call. Uh very quickly let 1:24 1 minute, 24 seconds me take you through the quarter uh with some uh brief remarks or bullet points on the performance and then I will open 1:32 1 minute, 32 seconds up uh for questions. Uh you must have seen the uh uh results that were hosted on on uh both the exchange as well as 1:41 1 minute, 41 seconds the our own website uh day before yesterday. Uh we've had a pretty good quarter in terms of overall performance. 1:48 1 minute, 48 seconds revenue was uh close to 1,600 crores for the quarter and for the 9-month period 1:54 1 minute, 54 seconds was about 4,370 crores. Uh in the quarter uh an incremental performance of 2:02 2 minutes, 2 seconds about 35% quarteron quarter and for the 9-month period about 17% higher than uh uh the corresponding period last year. 2:12 2 minutes, 12 seconds uh as a consequence AITA numbers were uh also uh showed an improvement 12% quarteron quarter and uh 17% over the 2:20 2 minutes, 20 seconds 9month period. Pat also reflected uh uh 10% increase quarteron quarter and uh 2:27 2 minutes, 27 seconds 18% over uh the 9 months period. Uh in terms of uh performance this was not 2:35 2 minutes, 35 seconds just a price performance it was also a quantityled performance. So overall uh 2:42 2 minutes, 42 seconds wires and cables the uh uh volume increase was more than 25 26%. 2:50 2 minutes, 50 seconds Individual product lines performed uh slightly differently. Electric wires was about 28% in the quarter. Uh auto cables 2:58 2 minutes, 58 seconds was almost 42% in the quarter. Uh industrials was about 28 and power cables were also about 22 22%. 3:08 3 minutes, 8 seconds A big new entrance for us during the quarter was uh solar cables. So uh we 3:14 3 minutes, 14 seconds are currently hitting close to uh 80 85% of our uh capacity uh that we built up last year. So uh that's good news again. 3:26 3 minutes, 26 seconds Uh what didn't do so well was the agricultural applications. 3:32 3 minutes, 32 seconds uh a it was offseason uh and uh there were uh pricing issues. So the the 3:39 3 minutes, 39 seconds overall numbers on the agricultural side was a little lower than the previous years. Uh the other part of the quarter 3:47 3 minutes, 47 seconds was the continued increase in copper prices and commodity prices. Uh we had to take multiple price corrections 3:55 3 minutes, 55 seconds overall during the quarter. uh we took a correction of about 12% on in uh in the selling prices and uh yeah most of the 4:05 4 minutes, 5 seconds uh uh the the input price increases have been covered 4:12 4 minutes, 12 seconds uh utilization like I mentioned uh earlier solar auto and power cable uh 4:19 4 minutes, 19 seconds plant utilizations are uh uh in the late '70s uh others are catching up Uh so if 4:29 4 minutes, 29 seconds I move to the communication cable side then uh OFC OC volumes were up by almost 4:36 4 minutes, 36 seconds uh a third. Uh the issue in this segment is that uh during the quarter and prior 4:45 4 minutes, 45 seconds quarters fiber prices had been depressed. Uh we are now seeing a reversal of that trend. Globally uh 4:53 4 minutes, 53 seconds fiber prices are hardening. uh the overall demand outside of India uh in fact in including India has uh 5:01 5 minutes, 1 second strengthened considerably and uh we are now witnessing a period of shortage both on the preform side as well as uh uh on 5:11 5 minutes, 11 seconds the fiber side that is as we speak today and prices are hardening. So from an average of about slightly under $3 which 5:20 5 minutes, 20 seconds were pre which was uh prevailing due to during quarter three uh the prices 5:26 5 minutes, 26 seconds currently as on date have are closer to $5 a month mark. So that's the extent of the uh demand pull that has happened 5:35 5 minutes, 35 seconds over the last uh few months. So the the net effect of this will not will be seen in the coming quarters. 5:44 5 minutes, 44 seconds uh as a uh corollery the uh investment that we are making on uh both the 5:53 5 minutes, 53 seconds pre-form factory as well as in the expansion on draw towers those investment uh uh the uh work is 6:02 6 minutes, 2 seconds progressing fairly good. Uh currently the preform factory is under production trials and we expect to commission it within the next uh within this fiscal. 6:12 6 minutes, 12 seconds The fiber uh draw expansion the building is more or less ready uh equipment for 6:19 6 minutes, 19 seconds phase one that is to take up the fiber capacity from 4 million to 6 million. 6:24 6 minutes, 24 seconds that equipment is already at site and as soon as the uh clean room uh work is completed we will start installation 6:32 6 minutes, 32 seconds there and uh the second uh uh part from 6 to 8 million that equipment is 6:39 6 minutes, 39 seconds expected to reach by March end. So we expect to to have a 6:47 6 minutes, 47 seconds uh fiber draw capacity of about 8 million kilometers by end of Q1 uh in the coming fiscal 6:56 6 minutes, 56 seconds capex uh in the quarter we spent about 36 crores uh and for 9 months it is uh 7:03 7 minutes, 3 seconds 146 crores in line with the uh projections that we had made in the beginning of the year. Um so uh most of 7:12 7 minutes, 12 seconds those projects should be coming to a fruition by now. Uh we had a very good uh uh quarter like I said earlier and that also reflected in the cash flows. 7:23 7 minutes, 23 seconds The uh uh cash flow from operations was about 78 crores for the 3 months uh against 9 crores in the corresponding 7:31 7 minutes, 31 seconds period last year and 220 crores for the 9 months uh against 75 crores in the 7:38 7 minutes, 38 seconds corresponding period of last uh year. Uh so this is broadly uh the comments on 7:46 7 minutes, 46 seconds the performance. Additionally, one single point I would like to make is that uh uh after the announcement of the 7:53 7 minutes, 53 seconds new labor code going live effective 21st of November, uh we have reassessed the 7:59 7 minutes, 59 seconds obligations towards uh graduity and uh have taken a provision of six crores which has been booked in this current 8:07 8 minutes, 7 seconds quarter. That's that's it from me for opening remarks. So now I'm open to questions. Thank you. 8:18 8 minutes, 18 seconds Thank you very much sir. We will now begin the question and answer session. 8:22 8 minutes, 22 seconds Anyone who wishes to ask a question may press star and one on your touchstone telephone. 8:29 8 minutes, 29 seconds If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use 8:36 8 minutes, 36 seconds handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question cue assembles. 8:55 8 minutes, 55 seconds The first question comes from the line of Vijit TVI with Asian market securities. Please go ahead. 9:02 9 minutes, 2 seconds Yeah. Hi sir, thank you for the opportunity. Um uh any sir any update on the Bhatnet project as of now and uh 9:09 9 minutes, 9 seconds just wanted to know your uh views on the way commodity is behaving and the overall outlook and how many price I 9:16 9 minutes, 16 seconds price price hikes have we taken uh as of today. 9:20 9 minutes, 20 seconds Uh okay so let me talk with the about the commodity first. Uh well it's it's uh very difficult to predict where it 9:29 9 minutes, 29 seconds will reach and how how long it will stay there. So even in the last couple of weeks you have seen uh movements which 9:37 9 minutes, 37 seconds have taken it up to 14,000 then it's back to 12,800 and then again back to 13,200. So it is a bit of a yo-yo at 9:45 9 minutes, 45 seconds this point in time. Uh difficult to predict uh uh how uh the swings are likely to be. Uh what we have always 9:54 9 minutes, 54 seconds been doing and we will continue to do is to uh not take long calls look at uh 10:01 10 minutes, 1 second what we need to produce and therefore uh procure only that much quantity and uh uh buy on average which is what we've 10:10 10 minutes, 10 seconds been doing all along and and treat it as a pass through to the extent possible. 10:15 10 minutes, 15 seconds uh while there will be a lag in uh passing on uh any changes uh that will even out over a longer period of time. 10:23 10 minutes, 23 seconds Uh the next part of your question was how many price changes have we taken? 10:28 10 minutes, 28 seconds Last quarter we took five uh with an overall uh correction of about 12% in the selling prices. Uh this quarter 10:37 10 minutes, 37 seconds between January and today we have already done uh two changes. So uh as 10:44 10 minutes, 44 seconds and when it is necessary uh depending on how the fluctuation is or how big the fluctuation is uh we will take that 10:53 10 minutes, 53 seconds call. Uh it also we also need to keep in mind as to what level the market can uh 11:00 11 minutes bear uh because at some point things might become inelastic. So we keep that in mind. Uh your second point was on uh 11:10 11 minutes, 10 seconds um Bhatnet. Uh as I mentioned in the earlier call uh we have not secured a 11:18 11 minutes, 18 seconds direct position on the Baratnet uh uh phase three uh tenders that were floated by BSN. 11:28 11 minutes, 28 seconds uh but given the fiber position in the global market at this point in time we 11:36 11 minutes, 36 seconds are getting inquiries from uh participants who have uh secured uh 11:42 11 minutes, 42 seconds positions. Uh so it's it's a little too early yet uh but uh we are hopeful that 11:49 11 minutes, 49 seconds there will be uh adequate business for us uh over the next two years from the from these projects. 11:57 11 minutes, 57 seconds Uh got it. Sir sir uh what's the percent in terms of percentage the price have you taken uh during this quarter? 12:05 12 minutes, 5 seconds Uh five I think sorry five I think. 12:11 12 minutes, 11 seconds Okay. Uh so second question is on the inventory days they have uh you know improved significantly uh from 61 uh 12:17 12 minutes, 17 seconds days you know from 69 to 61 days. So what are the structural changes in the supply chain you know we have uh taken 12:25 12 minutes, 25 seconds in this area and can we expect there's further room to improvement uh for improvement uh you know bring it down to 12:31 12 minutes, 31 seconds at least 50 55 days in the coming uh quarters uh that would be a little difficult I think uh I think what what we are trying 12:40 12 minutes, 40 seconds to do is to uh look at uh each segment of the uh 12:47 12 minutes, 47 seconds inventory chain so how much can uh how how much should be in raw material, how much in uh work in process and how much in finished goods. So we have been 12:56 12 minutes, 56 seconds squeezing all pre uh at this I mean and this can only happen when two things uh 13:03 13 minutes, 3 seconds change. A your your uh supply from the material uh raw material suppliers uh 13:10 13 minutes, 10 seconds that chain is kept open and uh there is a continuous feed from there. uh and B our operating efficiencies at the plant 13:19 13 minutes, 19 seconds uh goes up and that will happen as capacity utilizations improve. And the last one is uh at the field level uh in 13:29 13 minutes, 29 seconds terms of uh uh improving service which will mean uh uh the the waiting period 13:37 13 minutes, 37 seconds for the customers will be lower and we should be able to service uh practically on demand. So we are trying to squeeze 13:44 13 minutes, 44 seconds all three uh areas and uh yeah I think 13:50 13 minutes, 50 seconds uh 2 month uh cycle across uh uh across the chain uh is reasonable given the 13:59 13 minutes, 59 seconds fact that when you get into industrials and automobile cables the number of SKUs 14:05 14 minutes, 5 seconds are u are substantially large it is not just like it's not like building where 14:12 14 minutes, 12 seconds the number of SKUs are uh limited but as you get into flexibles and uh autocables the number of SKUs are substantially 14:21 14 minutes, 21 seconds high and uh you need to have sufficient production runs or uh minimum order quantity for each of those runs for you 14:28 14 minutes, 28 seconds to run a efficient operation. So there will be a slight trade-off between efficiency and uh you know in the 14:34 14 minutes, 34 seconds overall efficiency numbers and uh we try to limit it to about two months. 14:42 14 minutes, 42 seconds Got it. So uh thanks a lot. Uh I'll I'll just squeeze one more question. You know there's a significant amount sitting in your capital work in progress almost 3007 odd crores. 14:52 14 minutes, 52 seconds So uh you know what's the specific uh project it is tied to and when can we expect it to be commissioned? 14:59 14 minutes, 59 seconds So uh a lot of it is tied up on the preform project. So as I mentioned in my 15:07 15 minutes, 7 seconds opening uh remarks the preform factory is uh right now production trials are on ongoing and we expect to commission the 15:16 15 minutes, 16 seconds the plant by um next month. So when that is done uh out of the 300 about 230 15:26 15 minutes, 26 seconds or 220 somewhere around that will get capitalized. Uh so then you will only be 15:33 15 minutes, 33 seconds left with what is there for the uh fiber draw towers which will get consume which will get uh capitalized in the coming quarter. 15:43 15 minutes, 43 seconds Got it sir. Thanks a lot. All the best. 15:50 15 minutes, 50 seconds Thank you ladies and gentlemen. If you wish to ask question you may press star and one. 15:57 15 minutes, 57 seconds The next question comes from the line of Shia Wazer with BMSP I capital. Please go ahead. 16:05 16 minutes, 5 seconds Hi good evening. Uh thank you for the opportunity. Uh so sir there have been a lot of talks on a few big players with 16:12 16 minutes, 12 seconds deep pockets entering the space. Uh so how do you see their capacities ramping up and what product segments of 16:21 16 minutes, 21 seconds Phenollex will get affected and how like if you could just throw some light on uh if you see a meaningful impact on our 16:29 16 minutes, 29 seconds business operations due to the entrance of these players. 16:33 16 minutes, 33 seconds Okay. So over the last one year there have been announcements from the uh from uh uh 16:43 16 minutes, 43 seconds uh from the uh BLA uh uh side. Uh they they are coming in from their uh uh the 16:52 16 minutes, 52 seconds cement uh group. Uh they are putting up a a cable wire and cable factory and we 17:01 17 minutes, 1 second are our information is that it is likely to uh get into production mode sometime 17:09 17 minutes, 9 seconds next uh calendar year. Uh uh what we would what the information that I have is it's probably around second or third 17:17 17 minutes, 17 seconds quarter next year. Uh and that will be on the wire side. So that will be in direct competition to to us. Uh the 17:27 17 minutes, 27 seconds second uh piece of information was about uh uh Azanis getting into 17:33 17 minutes, 33 seconds u wire and cables. Uh barring the initial announcement, nothing more has been heard from them. So we do not know 17:42 17 minutes, 42 seconds yet if uh uh their plans include introduction in 27 or 28 or 29. uh that 17:50 17 minutes, 50 seconds is still something that we are not clear about but yes there will be competition prime uh to a large extent on the wire 17:58 17 minutes, 58 seconds space but we do believe that uh there is uh sufficient space for people to to 18:04 18 minutes, 4 seconds exist coexist uh competition will intensify and I think in a way that's uh that is uh that's okay we should be able 18:13 18 minutes, 13 seconds to handle those uh pressures uh yeah there's not much that I uh I'm aware of uh besides this. 18:24 18 minutes, 24 seconds Okay. Um thank you. And my second question is uh what is Fenollex's strategy to grow its telecom cable 18:31 18 minutes, 31 seconds business? Um as in what is the total market opportunity for players like Phenollex from the data center building 18:39 18 minutes, 39 seconds in India and globally respectively and how is Phenollex building its product portfolio to uh participate in this opportunity? 18:50 18 minutes, 50 seconds So uh yes, you're right. Data centers will have an impact on our uh not just the telecom operations. It will also 18:57 18 minutes, 57 seconds have an impact on our power cable operations. Uh because data centers will be massive consumers of power and they 19:04 19 minutes, 4 seconds will need uh fairly heavyized pipes for uh power consumption besides uh fiber as 19:13 19 minutes, 13 seconds well as uh uh LAN cables. Uh the uh 19:22 19 minutes, 22 seconds so that that that could that could lead to uh more market size in terms of the uh in 19:32 19 minutes, 32 seconds in terms of the optic fiber uh cables that would uh be uh be available for sale. uh in that context uh I think our 19:42 19 minutes, 42 seconds u integration backwards into uh making preforms expanding our fiber uh uh draw 19:49 19 minutes, 49 seconds capacity all this is part of that uh part of preparing for that uh additional 19:57 19 minutes, 57 seconds volumes that are expected to come currently uh the glass preforms are all imported by us uh there is only one 20:05 20 minutes, 5 seconds manufacturer in the country which is Sterlite we would be the second uh uh 20:11 20 minutes, 11 seconds second uh entity there. And so that uh what it means is uh it it reduces input 20:18 20 minutes, 18 seconds dependence. It uh uh at the same time brings a certain u self uh sustainance 20:27 20 minutes, 27 seconds uh part there. Uh simultaneously we're also expanding our uh fiber draw capacity. We're doubling it over the 20:34 20 minutes, 34 seconds next uh 3 months. So that would again make products available. Uh designs that would be necessary for data centered applications we already can make them. 20:45 20 minutes, 45 seconds So that is not a so so big a challenge. 20:48 20 minutes, 48 seconds Uh the capacity to make those is also available with us at this point in time. 20:53 20 minutes, 53 seconds So again that is not a big challenge. Uh so material availability at the moment is uh as is an issue like I mentioned in 21:02 21 minutes, 2 seconds my opening remarks. Uh the market has changed over the last 3 to 4 months and 21:09 21 minutes, 9 seconds uh uh there is a uh at the moment neither fiber nor preform is available for 21:18 21 minutes, 18 seconds um literally any amount of money. So so uh the demand scenario has changed at this point in time and I think our 21:26 21 minutes, 26 seconds additional capacity coming into play at this time is going to be beneficial to us. 21:33 21 minutes, 33 seconds Okay. Thank you so much and all the best. Thank you. 21:41 21 minutes, 41 seconds Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. Participants who wish to 21:49 21 minutes, 49 seconds ask a question to the management may press star and one. 22:04 22 minutes, 4 seconds The next question comes from the line of Shini Wasan with Sundra Mutual Fund. Please go ahead. 22:12 22 minutes, 12 seconds Hello sir. Thank you for the opportunity. Am I audible? 22:16 22 minutes, 16 seconds Uh Sir, you are not audible. 22:21 22 minutes, 21 seconds Is it better now? Can you hear me better now? Uh sir, can you please use your handset? Yeah, I am using the handset. 22:30 22 minutes, 30 seconds Okay. Okay, you may go ahead. 22:31 22 minutes, 31 seconds It's slightly better now. Let me try and see if I can uh hear you completely. 22:35 22 minutes, 35 seconds Sure. Yes. Uh two questions. Firstly on our expansion that we're doing I think 22:42 22 minutes, 42 seconds you mentioned that from 4 million u kilometers we are going to 8 million kilometers by QSY26. 22:50 22 minutes, 50 seconds So I wanted to know like what is the revenue that we could generate this asset and where uh if you can tell me 22:58 22 minutes, 58 seconds like how the margin profile has improve will improve because uh we were mentioning about realization going up 23:05 23 minutes, 5 seconds from about $3 to $5. Correct. So, uh 23:11 23 minutes, 11 seconds over the last 2 to 3 years, uh the uh demand globally was a little uh 23:18 23 minutes, 18 seconds depressed. Uh in relation to capacities available. So prices which were uh 23:26 23 minutes, 26 seconds running at about $45 had slipped to uh slightly ab $2 over the last two two and 23:32 23 minutes, 32 seconds a half years. And that has now uh changed in the last few months. 23:38 23 minutes, 38 seconds uh we understand that there is a lot of application in the defense industry. You also understand that there is uh a lot 23:44 23 minutes, 44 seconds of applications uh in the uh data center industry overseas which is uh pushing 23:51 23 minutes, 51 seconds this demand uh to these levels and uh as the previous uh participant as uh as 23:59 23 minutes, 59 seconds more and more data centers uh get up to a functioning stage in India this demand in India will also uh increase. uh add 24:09 24 minutes, 9 seconds to it the uh baratn net and other programs that are likely to come in the future. Uh I think uh over the medium 24:18 24 minutes, 18 seconds and long term the demand is uh fairly uh robust. Uh the issue in this industry 24:25 24 minutes, 25 seconds has been where you are dependent on the telecom side and especially in our country bulk of the funding comes from 24:34 24 minutes, 34 seconds government programs and if that funding is uh not consistent or sustained over a period of time then you do have blips. 24:44 24 minutes, 44 seconds uh plus government programs do have this tendency of uh time lag between announcement and uh tendering and then 24:53 24 minutes, 53 seconds again execution. So those have been uh uh uh issues in this industry. uh but I 25:01 25 minutes, 1 second think with uh committed uh uh funds for those programs uh we should see a period 25:10 25 minutes, 10 seconds where over the next few years uh besides data centers uh you will also get in AI 25:18 25 minutes, 18 seconds applications and uh a lot of fiber will be required. uh the fiber design or uh construction might be different for 25:26 25 minutes, 26 seconds different applications but uh the overall demand is likely to be fairly robust. 25:33 25 minutes, 33 seconds Currently we have a market share of about 11 12% in India. Uh the biggest 25:41 25 minutes, 41 seconds player is uh Sterlite followed by uh the Birla stable and then uh HXCL. 25:48 25 minutes, 48 seconds Uh but uh we should be able to grow uh from here on uh with our additions to capacity. 25:59 25 minutes, 59 seconds Uh so could you just answer the second part of my question like what is our current u uh capacity like 4 million 26:07 26 minutes, 7 seconds what is the potential in terms of topline and what margin do you think swing we can expect given that gone up? 26:15 26 minutes, 15 seconds Okay the top line potential is not simply a uh multiplication of the 26:21 26 minutes, 21 seconds capacity times the fiber prices. Uh the top line would depend on uh the cable 26:30 26 minutes, 30 seconds selling prices and uh again cable selling prices would depend on the design of the cable. Um it should go up 26:37 26 minutes, 37 seconds now uh with fiber [music] prices uh going up but depending on the uh configuration within the cable uh prices 26:46 26 minutes, 46 seconds can go up to uh 150,000 to 180,000 per kilometer of different kinds of cable. So uh it's a 26:56 26 minutes, 56 seconds little little difficult to estimate it but let me let me try uh I think with the additional capacity that we have put 27:02 27 minutes, 2 seconds up uh total revenues from this can go to about uh six between anywhere between 6 to 700 crores in a full year. 27:15 27 minutes, 15 seconds Okay. This is the additional revenue or the overall revenue you see sir uh this would be the total revenue. 27:22 27 minutes, 22 seconds Okay. and margins uh how is how is the margin improvement here for us given this prices have gone up 27:29 27 minutes, 29 seconds if you look at our numbers uh if you go back and look at our numbers uh when 27:34 27 minutes, 34 seconds utilizations were higher than uh 75% or so we have uh generated margins aid 27:43 27 minutes, 43 seconds margins of around uh 9 odd%. It's only in the last 3 years or so that number has fallen to uh the levels they are now 27:52 27 minutes, 52 seconds 2 and a half% or so. Uh so there is a potential that it can go to about 8 9%. 28:00 28 minutes Got it. Got it. So and just one last question uh we generate a very healthy amount of cash flow every year. So what 28:08 28 minutes, 8 seconds is our plan in terms of reinvesting after this? 28:12 28 minutes, 12 seconds Uh okay. So I like I mentioned uh uh in the beginning uh capacity utilizations are starting to 28:21 28 minutes, 21 seconds go up. Uh I also mentioned to you that uh uh automobile and uh solar applications are uh touching their 80% 28:30 28 minutes, 30 seconds numbers. So those are areas where we can look at additional uh investment. there is a need as well 28:39 28 minutes, 39 seconds um even within the uh construction wire uh as we see capacities uh climbing 28:47 28 minutes, 47 seconds beyond 70 we should start planning for something new uh so because uh planning 28:55 28 minutes, 55 seconds to execution will take about uh a year and a half so as we see those numbers inching up and touching 70 we would 29:04 29 minutes, 4 seconds start planning those so that's that those are areas where we can we will invest. Uh whether it will happen next year or the year after that will depend 29:12 29 minutes, 12 seconds on how quickly the ramp up happens. Uh we had uh already mentioned other 29:20 29 minutes, 20 seconds potential areas that where we could uh uh grow and uh two quarters ago we we 29:28 29 minutes, 28 seconds commissioned our EDM plant and uh that opens up multiple applications for us. 29:34 29 minutes, 34 seconds So as we get the uh clearances and certifications we should start investing for those applications as well. So these 29:42 29 minutes, 42 seconds are uh possible areas. Uh got thank you sir. 29:52 29 minutes, 52 seconds Thank you. Thank you. 29:55 29 minutes, 55 seconds The next question comes from the line of Venit with Invest. Please go ahead. 30:02 30 minutes, 2 seconds Um hi good evening sir. Thank you uh for giving the opportunity uh and very strong set of numbers. Congratulations on that. Um so a couple of questions 30:10 30 minutes, 10 seconds from from my side. One is the inventory levels uh in the channel. Uh given such a strong growth we've had and even the 30:18 30 minutes, 18 seconds industry and considering the price uh increases we've had u um would it be uh uh right to assume that there would have 30:26 30 minutes, 26 seconds been uh uh some bit of premand which would have happened in Q3 and consequently uh at least at the start of Q4 uh the channel inventories would have been uh uh much higher than usual. 30:39 30 minutes, 39 seconds I I believe so. Yes, the channel inventory would have been uh higher than usual I believe. So yes, and uh sir, if you were to hazard a 30:48 30 minutes, 48 seconds guess uh um how how much could it be different than than the usual levels? 30:54 30 minutes, 54 seconds uh I I think uh for uh all the participants in this industry 31:00 31 minutes uh some amount of uh volumes were uh pushed by the uh constant uh 31:10 31 minutes, 10 seconds commodity price increases. Uh the trade probably thought they would make uh if you buy low and then as the price is 31:19 31 minutes, 19 seconds increasing you would get to sell it at a higher price. uh to some extent I'm sure that is there uh but for whom how much 31:26 31 minutes, 26 seconds is a difficult uh guess to do and uh I think I will refrain from that but I'm 31:33 31 minutes, 33 seconds sure there is there was some understood uh so my second question is 31:40 31 minutes, 40 seconds is is on margins um now um precoid or maybe 16 17 18 uh we used to do mid-team 31:48 31 minutes, 48 seconds sort of uh ebit margins at for the cables division. Um those subsequently came down to uh low teens and and then 31:57 31 minutes, 57 seconds subsequently now uh it's in low low double digits and sometimes we've also recorded high single digit sort of margins in that segment. Now I 32:05 32 minutes, 5 seconds understand we've had a change in distribution model which had had has had an impact by 2 to 3% on on those margins 32:12 32 minutes, 12 seconds but what has led to such a sharp margin drop um in in this segment um and should we think that these are the bottoms and 32:20 32 minutes, 20 seconds and these should they stabilize here or or we should see an improvement from here on okay I think a similar question was 32:29 32 minutes, 29 seconds asked uh during the last call as well Uh yes there was a time when we used to do 32:37 32 minutes, 37 seconds about 15 16%. Uh but then we brought in distribution so some uh uh uh money had 32:45 32 minutes, 45 seconds to be surrendered there uh to ensure that the distributors costs are uh uh managed. Uh so I think the sustainable level is anywhere between 11 and 12%. 32:58 32 minutes, 58 seconds uh above that in today's context with uh uh intensified competition is a little 33:05 33 minutes, 5 seconds difficult to uh sustain. You might have the odd quarter when you do better than that but I think what should be sustainable would be between 11 and 12%. 33:17 33 minutes, 17 seconds Uh we are slightly behind that at this point in time. That also has to do a 33:22 33 minutes, 22 seconds little bit with the uh change in mix. Uh more of uh automobile uh cable related 33:32 33 minutes, 32 seconds sales or more of uh uh industrial products uh tend to depress the margin a 33:40 33 minutes, 40 seconds little bit because of the uh because of the nature of that business. 33:47 33 minutes, 47 seconds uh as uh the volumes grow faster and higher on the construction side then uh 33:54 33 minutes, 54 seconds the balancing would would happen. So uh it last quarter the margins were about 34:00 34 minutes 11 12% or so this quarter it is dipped a little bit. So it depends on which quarter what takes higher uh uh share of 34:10 34 minutes, 10 seconds the pie. Uh so the mix is also a little bit of a an issue. 34:17 34 minutes, 17 seconds Uh but so so just as we were discussing um some time back uh with competition likely 34:23 34 minutes, 23 seconds um in the next 12 months time uh don't you think again that will have some bit of pressure uh if not uh much uh and 34:32 34 minutes, 32 seconds consequently margin expansion from diesel will be tough uh there would definitely be some 34:38 34 minutes, 38 seconds pressure uh I don't uh uh discount that at all there would be some pressure and 34:45 34 minutes, 45 seconds uh we need to uh be prepared to handle that. And I think one of the one of the 34:51 34 minutes, 51 seconds uh uh things that we are doing right now is to make sure that our uh channel continues to be motivated uh that our uh 35:00 35 minutes distribution network continues to be motivated uh and that uh uh we also 35:09 35 minutes, 9 seconds educate them more about uh life cycle cost and things like that so that people understand with that when they buy a 35:16 35 minutes, 16 seconds product like ours uh when you use it, you use it for uh 20, 30, 40 years and uh so your 35:26 35 minutes, 26 seconds investment at this point in time is going to pay you back over those uh 30 40 years. Uh and uh everybody may not 35:35 35 minutes, 35 seconds have the same level of quality that we have. So that is something that we would need to uh reinforce in our uh marketing pitch. 35:46 35 minutes, 46 seconds Okay. Okay. Okay. Understood. Thank you. Thank you so much. 35:51 35 minutes, 51 seconds Thank you ladies and gentlemen. Due to time constraint that was the last question for today. I now hand the 35:59 35 minutes, 59 seconds conference over to the management for closing comments. 36:04 36 minutes, 4 seconds Uh thank you ladies and gentlemen for participating in this uh conference today. I hope the interaction has been 36:11 36 minutes, 11 seconds of uh use to you. Uh if there are uh questions uh please do reach out to us. 36:18 36 minutes, 18 seconds Yeah. Thank you. 36:22 36 minutes, 22 seconds Thank you on behalf of Phenollex Cables Limited. That concludes this conference. 36:28 36 minutes, 28 seconds Thank you for joining us and you may now disconnect your lines. Thank you.