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Finolex Cables Ltd

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BSE Code : 500144 | NSE Symbol : FINCABLES | ISIN : INE235A01022 | Industry : Cables |


Chairman's Speech

Dear Shareholders,

It is my privilege to present to you our Annual Report for FY 2023-24, setting out our performance and progress over the year, as well as outlining our ambitions for the future. Our integrated capabilities, diversified business model, and disciplined execution have enabled us to consistently deliver positive outcomes for all stakeholders over six decades.

Amidst the global headwinds, the Indian economy has been on an impressive run, led by a robust cycle of investment in infrastructure creation and a surge in manufacturing activities. FY 2023-24 saw India's economy expanding by 8.2%. The growth trajectory is expected to continue, with ample headroom for further expansion. Increasing capital expenditure, especially from the private sector, rising exports, and growing income levels and consumption, along with favourable policy reforms, position the nation as one of the fastest-growing major economies.

I am delighted to share that we have achieved remarkable growth this year, with a 12% increase in revenue, reaching Rs. 5,014 crores compared to Rs. 4,481 crores in FY 2022-23. For the first time, we crossed the Rs. 5,000 crores revenue mark, a significant milestone for our company. Nearly all product segments demonstrated robust volume growth. Our electrical wires volume grew by 15%, and cables saw a 26% increase in volume. While optic fibre cables (OFC) volumes dropped by 30% due to a lack of government tenders and delays in telecom contracts, we managed to close some contracts in February and March, boosting volumes towards the end of the year. Despite these challenges, we remain optimistic about the potential of optic fibre cables as we continue to invest in this area. Our new product segments surpassed Rs. 200 crores in revenue for the first time, ending the year at Rs. 225 crores. We aim to achieve a revenue of Rs. 500 crores over the next 2-3 years.

Our Profit Before Tax (PBT) reached Rs. 753 crores, reflecting a 17% growth over Rs. 646 crores in the previous year. We concluded the year with a strong cash flow and tight management of working capital. Our cash flow from operations stood at Rs. 577 crores, significantly higher than Rs. 356 crores in the previous fiscal. The Board of Directors has recommended a 400% dividend, resulting in an outgo of Rs. 8 per share (face value of Rs. 2 per share), amounting to Rs. 122.4 crores. Our distribution network has expanded considerably to cover the needs of approx. 2,15,000 retailers.

We remain undeterred in our commitment to strengthening our capabilities and capacities to deliver long-term, sustainable growth. In FY 2023-24, we envisaged a capital expenditure outlay of Rs. 500 crores to expand our product offerings. We plan to scale up our manufacturing facilities, launch new products, enhance brand engagement and broaden our distribution reach while improving operational efficiencies.

We are setting up our electron beam facility by installing two machines with capacities of 1.0 MeV and 1.5 MeV. This will enable us to manufacture a range of wires and cables using radiation technology, offering products with temperature ratings up to 150?C and improved environmental and abrasion resistance. This includes solar cables, high-end electrical wires for housing and instrumentation cables for railway applications, especially in regions launching high-speed trains. The electric vehicle sector also drives demand for EV battery cables. We are also advancing our optic fibre and cabling expansion in three phases. The Preform facility structure is nearly complete, with production anticipated by the end of 2024. With this, our fibre capacity will double from 4 million to 8 million kilometres and the cabling capacity will increase from 8 million to 10 million kilometres, with full readiness expected later in the year, aligned with the increasing demand for optical fibre cables. Additionally, we are expanding our auto-cable capacity at our Uttaranchal site, with new equipment expected in FY 2024-25.

Our technology solutions have been pivotal in improving workflow efficiency, facilitating accurate inventory management and timely delivery, reinforcing our dedication to operational excellence and customer satisfaction. We have adopted a QR code-based system to enhance product authenticity and streamline material movement. This system ensures that consumers receive genuine products and optimises the supply chain, reducing the risk of counterfeit goods and driving efficiency.

We have consistently invested in bolstering our dealer and distribution network, boosting product availability. A notable initiative has been the establishment of our new, state-of-the-art mother warehouse in Nelamangala, Bengaluru, boasting 40,000 sq. ft. of indoor space and an additional 20,000 sq. ft. of open storage outdoors. Designed to ensure seamless logistics and product distribution, this facility aims to enhance our operational efficiency and customer service. Additionally, we are expanding our retail presence and establishing separate networks for each product segment to further strengthen our distribution reach.

In the FMEG segment, we continue to focus on the development of innovative, high-quality products to enhance the lives of our consumers. Powered by advanced processes and technology, our offerings meet evolving preferences and augment our brand visibility while promoting sustainability and efficiency. Our sustained investments in branding and marketing have yielded results in the form of enhanced brand resonance and customer connect.

The outlook for the wires and cables industry remains optimistic. Factors such as increased focus on infrastructure development, booming construction activities, industrial expansion, rural electrification initiatives, renewable energy generation, and upgrades to transmission and distribution infrastructure, are expected to propel the demand for cables and wires. The Union Budget 2024-25 underscores the government's commitment to infrastructure development, with a significant allocation of Rs. 11.11 lakh crores for FY 2024-25. Further, initiatives like the Bharat Net project and the accelerated rollout of 5G, aimed at improving broadband connectivity, will drive growth in communication cables. Evolving consumer aspirations, rising income levels, growing urbanisation and initiatives in the electrification and housing sectors will accentuate demand for fast-moving consumer appliances.

I would like to express my gratitude to our Board members, customers, bankers, channel partners, suppliers, employees, business associates and all other stakeholders for their unwavering trust and support. With our robust business model and strategic investments, we are well-positioned to seize these opportunities, fostering growth and value creation for all.

Warm Regards,

Ratnakar Barve

Chairman