Riding on the back of robust demand from the infrastructure and real estate segments as well as growth prospects in the telecom sector, Finolex Cables is expanding capacities in its electrical and communication cables business.
Deepak K Chhabria, executive chairman, Finolex Cables, said the company’s aspiration was to “get to the Rs 10,000 – Rs 11,000 crore revenue mark and they would get there by using various means, including expansion of existing product lines”.
The company had big plans for the optic fibre business and was increasing cabling, draw towers and pre-form capacity which was part of the Rs 300 crore investment plan, Chhabria said.
“The auto sector capacity was sold out. We are expanding capacity by 50%. Machinery orders have been placed and delivery will be done in 12 months,” Chhabria said.
“In the PVC electric conduit plant in Goa, the company had expanded capacity twice, to produce 25 lakh pieces. With no place to expand further in Goa, Finolex was looking at setting up a new plant in the North and in the East in the next 12 months,” he said.
The company’s fibre optic capacity in cabling has been expanded from 8 million fibre km to 10 million fkm.
To ensure it doesn’t need to buy fibre from outside and all value add would be done within the company, improving its margins, the company has also been building a pre-form plant and optical fibre draw towers in phases.
The optic fibre building is ready and would be installed here, while construction on the pre-form plant will start soon.
“In the telecom segment, Finolex has taken steps to enter the engineering, procurement and construction (EPC) business of laying fibre optic cables. The first of these projects would be in Gujarat and eventually in other states too,” Chhabria said.
Meanwhile, the electron e-beam programme that uses specialized radiation equipment for manufacturing cables is progressing, with one of the machines expected to be completed by the end of the calendar year. These electric cables are for specialized applications in solar power, high-speed trains, data centres and EVs.
Mahesh Vishwanathan, CFO, Finolex Cables, said, “The CAPEX guidance for the next 18-20 months would be around Rs 300 crore and another Rs 100 crore on replenishment programmes for existing capacities. The investment in capacity expansion is expected to take the company’s topline up by around Rs 2,000 crore to the Rs 6,000-6,500 crore range. Finolex is a debt-free company with expansion funding coming from cash reserves of around Rs 2,200 crore.”
The electrical cables segment accounted for 82% of the company’s revenues and is expected to maintain a strong growth in FY24. The electric cables segment grew by 29% during the first quarter of FY24, with construction wire growing up by 30%, industrial wire by 20% and auto by 30%. Capacity utilisation of the electric wires plant was at 70%.
Value growth in the communication segment was flat during the first quarter of FY24, primarily due to the depressed price of fibre because of large-scale dumping. But the company expects a return to normalcy and better price realization with anti-dumping duties ranging from 5-15% being imposed on China and Indonesia. The government’s last-mile telecom connectivity programme was expected to translate into demand in the medium and long term. The 5G rollouts by Reliance and Bharati were expected to lead to robust demand too.
Finolex reported a 19% year-on-year growth in revenues to Rs 1,204 crore, with net profit increasing by 39% y-o to Rs 132 crore, during Q1FY24. The company’s EBIT level was at 13%. Volumes in the electrical wires rose by 29% and by 17% in the communication cables.