Rajratan Global Wire's Chairman & MD Announces Plans For 14,000 TN Production At New Chennai Plant Next Year | NDTV Profit - video Dailymotion

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Watch Rajratan Global Wire's Chairman & MD Announces Plans For 14,000 TN Production At New Chennai Plant Next Year | NDTV Profit - NDTV Profit on Dailymotion

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00:00Welcome back, you are watching the Small and Mid Cap show.

00:12Well, one stock that is in focus is Rajrathan Global Wires.

00:16They came out with a Q4 results where revenue is up around 9 percent, EBITDA was up around

00:212 percent, margins have slightly taken a hit.

00:24But to discuss more about this, today we have with us Mr. Sunil Chordia, Chairman and MD

00:29of Rajrathan Global Wire, who joins us now.

00:31Welcome to the show, sir.

00:32Thank you, Mahima.

00:33Thank you.

00:34So, Mr. Sunil, my first question to you would be that, you know, do you see any kind of

00:41volume degrowth in India taking place and you are prioritizing Thailand because of that?

00:46No, it's not like that.

00:49Our customers and our business in India is independent of our global business from Thailand.

00:57So the customers in Thailand are different and customers in India are different.

01:03In India, there is volume growth is not as expected, not closer to what we had targeted,

01:10mainly because of major imports in two quarters, quarter 3 and quarter 4 of this year.

01:17So our market share was lost because of that.

01:21Understood.

01:22So from what I've understood is that as compared to Q4 FY23, the mix between India and Thailand

01:28has changed from, you know, 75-25 to now 50-50.

01:32So going forward for FY25, you know, how do you expect the mix to be then?

01:38No, it is not yet 50-50, but of course it has grown from where it was because we completed

01:46our expansion in Thailand last year, our capacity increased to 60,000 tons in last

01:52year, which has become equal to our Peterborough facility.

01:56And this year we had a major growth in volume, almost 42% growth in volume in Thailand.

02:04So, Harsh also joining in.

02:07So I want to try and understand, so what's happening with regard to India and do you

02:12see a reversal with regard to volumes in FY25, where India is concerned, especially

02:18given that new capacities are coming on board in Q1 FY25?

02:22Yeah, new capacities are coming up, but the market is also growing, the tyre market is

02:29supposed to grow at 7-8% per annum.

02:33The automobile is growing, the tyre production is growing.

02:36And we are also starting our Chennai facility very soon.

02:41And we will do at least 14,000 tons of production from our Chennai factory.

02:47So I don't expect any growth in our Pitampur facility in terms of volume, but Chennai will

02:54produce an additional quantity of 14,000 tons.

02:58We are also committed to do that with the PLI, we are getting PLI in our Chennai plant

03:04and this much volume we have to come, you know, anyway produce there.

03:11Understood.

03:12So, since you talked about the Chennai facility, from what I've gathered, it will have a capacity

03:18of almost 60,000 tpa, so I want to understand that how much will this aid your revenues

03:23and margins by then?

03:24No, so Chennai will be 60,000 tons capacity, so in 4 years we want to achieve 60,000 tons

03:32of production in Chennai and a projected revenue of 600 crores from Chennai.

03:39Understood.

03:40And in terms of your capacity utilizations, what are the current capacity utilizations?

03:44Both in India and Thailand, Thailand we did around 75% capacity utilization in FY24.

03:54India was 85% capacity utilization.

03:57Thailand this year will improve the capacity utilization and we target to cross 50,000

04:05tons production in Thailand.

04:08Understood.

04:09And sir, with regard to the fresh capacity coming on board, 14,000 tons is what I gather

04:14for FY25, where does that, you expect this kind of elevated utilization from India to

04:20continue despite the weak Q4 in terms of volume?

04:24Yeah, because Chennai is strategically located very close to customers, we are also closer

04:31to port.

04:32So, in the first year, we may not get major approvals from all the tyre companies, but

04:39there are customers where we have the possibility of selling or even exporting from Chennai

04:47in the first year.

04:49Understood.

04:50Sir, with regard to just raw material prices and margins, how are India margins versus

04:57Thailand margins?

04:58Because from what I understand, you have a bit of a monopoly leverage where Thailand

05:04is concerned.

05:06And therefore, how are margins at both of these geographies?

05:11If we can just compare that and what's the downside risk you see with regard to both

05:15raw material prices as well as the China factor?

05:19Yeah, so, you know, raw material prices in the last one year has come down by almost

05:2525-30%.

05:26And accordingly, the wheat buyer prices have also come down close to 25-30% from the peak.

05:36And that is why you see in spite of 16% growth in volume, there is no growth in the top line

05:43of the company.

05:44It is because of the correction in the prices.

05:49The China factor is very much there in Thailand also.

05:52So we are competing with the global players in Thailand, including China.

05:58We are also competing with China in India, but Chinese are not encouraged to sell more

06:05in India.

06:06And that is why the margin in India is a little better.

06:10And our India capacity is also higher, we are improved with all the major customers

06:15and strategically it is located in central India.

06:19So margins, because of all these reasons, margins are better in India.

06:24So in India, we do around 17-18% EBITDA margin and in Thailand, it is 9% EBITDA margin.

06:33Understood.

06:34And I also wanted to understand, you know, with regard to your Michelin contract, I wanted

06:39to understand what kind of locations is that contract with respect to one thing.

06:44And second, any new contracts are you expecting from Michelin then?

06:48Yeah, so we are now making efforts to sell to tyre companies in Europe and America.

06:55We have started a company in America to market our products.

06:59We have also set up an office in Europe and we have got two major approvals in Europe

07:06for regular supplies to tyre companies.

07:09And in the current year, we are expecting at least two to three more approvals from

07:15customers in US and Europe for regular supplies to those markets.

07:21Understood.

07:22And so from what I understand that your Chennai plant is nearer to a port.

07:28So then do you think that your exports will go up?

07:31And if yes, by how much percentage do you expect your exports to go up?

07:36Yeah, so, you know, up till now we are exporting from our Thailand factory and now Chennai

07:42is also located closer to port.

07:45And in long run, in four years time, we expect at least 50% of Chennai production to be exported

07:53for global customers.

07:55Understood.

07:56And so in terms of CAPEX, if you can tell us what kind of CAPEX you're looking at,

08:02because, you know, you'll have to increase your CAPEX in terms, you know, to increase your capacity.

08:07So then what is the guidance that you will give for your CAPEX number?

08:11Yeah.

08:12So, Mahima, majority of CAPEX is done.

08:16Of course, some 60-70 crores will need to be spent for completing the capacity up to

08:2460,000 tons in Chennai.

08:27But our capacity expansion took place in Thailand last year and two years back in Pitampur plant.

08:34So going forward for next two, three years, we don't expect much of CAPEX to be invested

08:41for capacity.

08:43We have to work on utilizing this increased capacity.

08:48Well, OK.

08:49Mr. Sunil, thank you so much for taking our time and speaking with us at NDTV Profit.

08:54That was the management of Raj Ratan Global Wires.

08:58Well, it's all that we have on the show for now.

09:01Stay tuned for more news and updates on NDTV Profit.

09:17Thank you.

Rajratan Global Wire's Chairman & MD Announces Plans For 14,000 TN Production At New Chennai Plant Next Year | NDTV Profit

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