Rajratan Global wire held a conference call on 21 April 2022 to discuss the results for the quarter ended Mar'22 and way forward. Mr. Sunil Chordia – Chairman & Managing Director, Mr. Hitesh Jain – Chief Financial Officer, India, Mr. Yashovardhan Chordia – MD, Rajratan Thailand, and Mr. Pranay Jain – Chief Financial Officer, Thailand of the company addressed the call.

Highlights of the Concall

• The Indian tyre industry grew 13-15% by volume and 16-20% by revenues in FY22. The Indian tyre industry is expected to grow 7-9% by volume between FY22-25.

• The bead wire sector reported a 12-15% increase in realizations during FY22. Sharp rise in raw material costs are being passed on. The improved industry revenues were driven by exports and replacement growth, collectively driven by an increasing need for personal mobility.

• Replacement volumes surged as economic activity rebounded following multiple lockdowns over the last two years. Sale of electric two-wheelers surged while component supply constraints affected passenger vehicle production.

• The company expects bead wire demand growth to continue, led by replacement market, exports and timely capacity expansion.

• The company has seen expansion in its margins in last few years because of lot of internal work it has done. It expanded its capacity two years back putting up world's biggest bead wire line leading to lower cost of conversion, improved product profile, better customer profile with enhanced efficiency. As a result also it has been able to pass on its higher cost of raw material to its customers.

• The company is supplying bead wire globally to its customers at a price lower than China and to Indian customers at a price at lower than what it can import from Malaysia or Vietnam.

• The company does not see any reason for its margins to compress in the coming years.

• The company saw a marginal dip in its margins in current quarter compared to previous quarter as it was not able to pass on price increase of raw materials which happened in February and March 2022 as its sales contract are on quarterly basis and it buys raw material on a monthly basis.

• Thailand capacity utilization is almost 95 percent for second half of FY22 resulting in improved profitability at par with Indian operations.

• Thailand capacity expansion to 60,000 tonne per annum (tpa) from 40000 tpa is expected to become effective in Q2FY23

• The company does not see any threat for its bead wire product as the automobile world is moving towards electric vehicles.

• The company has received all major approvals from customers for its Thailand plant. So it will be easier for the company to push volumes with increased capacity.

• The company is de-bottlenecking heat treatment process in its Pithampur plant (Madhya Pradesh) which will ultimately increase the capacity utilization as one furnace is starting. However that particular furnace is having some extra capacity. As a result it will be selling some patented wire which is a raw material for aluminum wire manufacturers. The company is not expanding its product portfolio and is just using some intermittent capacity.

• The company expects its sales volume to increase by 20000-25000 tonne in FY23. Total sales volume in FY22 was up 27% to 90065 tonne.

• Land development and civil work was initiated on 15th April 2022 for its Greenfield capacity of 60000 tonne at Chennai, Tamil Nadu. Trial production is likely to commence before end of FY23. The company does not have any phase wise investment plans but it will take 2-3 years for the full capacity to become operational.

• The company plans to export 40-50 percent of its Chennai plant too South East Asian countries, European countries and to America.