Rajratan Global wire held a conference call on 21 October 2022 to discuss the results for the quarter ended Sep'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 quarter was marked by lower demand for bead wire due to lower production of tyre companies in Thailand who are majorly exporting tyres to Europe and USA. This pulled down its overall profitability. However, the company used this period to introduce improvements to overall productivity through TPM projects and digitization of its factories.

• The company is seeing robust demand in automobiles in India and as result domestic tyre demand is be strong. Only tyre companies who are exporting are seeing lesser volumes. In Thailand all major tyre companies are exporting. There is geo political problem in Europe and the company is not sure about when it is going to be resolved.

• The company feels recession in Europe or inflation in USA is real. It's customers who are tyre companies are making tyres for exporting to those two advanced countries and the Thailand based tyre companies are running at around 50-60% capacity utilization which has resulted into substantially lower demand from customers.

• The company is not expecting volume growth in Thailand but 10-15% volume growth in India. Overall the company expects 7-8% volume growth in current year.

• The company mentioned that its quarterly performance depends on the business and the volumes of tyre companies. However it has no control on the market situation. But in the longer term tyre companies continue to invest in India creating more capacity while more capacities being created in Thailand, which the company thinks will continue to consume more bead wires in the coming years.

• Margins during the quarter were impacted due to higher price inventory of raw material, lower volumes and increase in energy costs.

• The company has received environmental impact assessment (EIA) approval for the expansion in Thailand, which paves the way for moving to 60,000 tonne per annum (tpa) production capacity in November'22. It is now in talks with new customers in Korea, Vietnam and Europe to cater to from this expanded capacity.

• The company is now approved by “Michelin” for supply of bead wire to its India plant. It has already initiated market surveys for the entire European region in preparation for this upcoming capacity.

• The company has completed 50% of the construction at Chennai, where it is setting up the greenfield facility for 60,000 tpa. Some of the machines are expected to be received by the Q4 of FY23.

• There is no new bead wire capacity coming in India and Thailand as of now.

• The company is procuring raw material from domestic markets to mitigate the risk of fluctuating currency rates.

• The company is confident to deliver 20% CAGR (in volumes) over the next 3-5 years.