At Finolex Cables, we are well-positioned to seize the opportunities
presented by these market dynamics and accelerate our performance.
To effectively convert these opportunities into tangible results, we
remain dedicated to strengthening our dealer and distributor channels across various
regions, bolstering product availability.
Dear Shareholders,
I am pleased to reconnect with you to discuss our Company's performance
and future direction. Our focussed efforts to strengthen our business and leverage
improving market conditions have resulted in promising outcomes during the past year.
Additionally, our plans for investments in capacity expansion using internal resources
exemplify our commitment to sustainable, long-term value creation.
Entering FY 2022-23, the Indian economy witnessed a robust revival
as numerous businesses returned to normalcy, driven by growing public confidence in
pandemic management. Favourable macro-economic indicators, coupled with government
emphasis on infrastructure development and digitalisation, created a positive environment
for India's wires and cables industry. The revival in the real estate sector further
fuelled the industry's growth. Our Company's performance for FY 2022-23 reflects our
success in capitalising on these opportunities. The volume of our electrical wires segment
grew by around 16%, optic fiber cable volumes increased by
over 50%, and all other products within the communication
segment exhibited volume growth exceeding 25%.
The year, however, was not without challenges. The repercussions of
Russia's invasion of Ukraine triggered significant inflation and interest rate impacts on
a global scale. The Indian economy experienced a sustained inflationary trend, especially
notable during the first half of the year. Escalating prices outpaced the growth of
consumer incomes, resulting in weakened consumer sentiment. Consequently, discretionary
spending remained sluggish, leading to muted
growth within our FMEG segment. Additionally, regulatory changes to
energy efficiency norms during the year impacted
the volumes of new products within our FMEG segment.
Combining our performance across business segments, we achieved
revenue from operations of Rs. 4,481 crores, representing a growth of 19% compared to Rs.
3,768 crores in the previous year. This growth can be attributed to
improvements in volume and increased retail penetration. Our Profit
before Taxes reached Rs. 646 crores, demonstrating
a growth of over 22% compared to Rs. 526 crores in the previous year.
Our firm financial standing, characterised by a debt-free balance sheet and strong cash
position, empowers us with the capability to internally finance our capital expenditure
and working capital needs. Operationally, we expanded our distribution network by 25,000
touchpoints, reaching a total of 2,00,000 retailers while our overall plant utilisation
remained healthy at 70%.
We have consistently invested in enhancing our manufacturing
capabilities and capacities to meet the growing demands of our customers and drive higher
growth. With the Indian economy projected to maintain its growth momentum in the coming
years, the demand for wires and cables will remain robust across various sectors. Keeping
the future in focus, we have planned a capital expenditure of Rs. 500 crores over the next
18-20 months to expand our plant capacities in all product categories. We are also
investing in backward integration to manufacture optical fiber preforms and expand our
fiber draw capacity. We are expanding our auto cable capacity by 50% and building
additional compound manufacturing capacity. The upcoming capacities are slated to be
commercialised by the second half of FY 2024-25. Additionally, we are progressing with the
establishment of an e-beam facility as part of our ongoing expansion plans.
We also remain Focussed on improving our systems and
processes to drive operational excellence. This includes closely
monitoring inventory levels and streamlining cycles whenever feasible. In this regard, we
have initiated a project aimed at optimising the end-to-end supply chain, leading to
inventory reduction from raw materials to finished goods. Simultaneously, this project
aims to improve delivery and customer service. To accomplish these objectives, we are
collaborating with a reputable consultant and leveraging automation, AI and technology.
Although the project is in its early stages, we anticipate significant results within a 12
to 18-month timeframe. Another key focus area will be
enhancing order execution speed to safeguard margins and drive
profitability.
The wires and cable industry outlook remains highly promising,
driven by demand from key sectors including automobiles, construction and industrials. The
government's sustained focus on infrastructure development is expected
to enhance the demand environment for the wires and cables industry.
Furthermore, government initiatives such as Bharat
Net Phase II, aimed at improving broadband connectivity, will continue
to drive growth for communication cables. The capital expenditure by telecom players on
optic fiber cables will contribute to increased demand in the communication cables
segment. The Indian FMEG sector is also poised for substantial growth, propelled by macro
drivers such as evolving consumer aspirations, rising awareness, increasing income levels,
rural electrification and urbanisation.
At Finolex Cables, we are well-positioned to seize the
opportunities presented by these market dynamics and
accelerate our performance. To effectively convert these opportunities
into tangible results, we remain dedicated to strengthening our dealer and distributor
channels across various regions, bolstering product availability. Our focus on capacity
expansion and backward integration ensures increased volumes, superior quality and
safeguarded margins. Furthermore, we are committed to introducing new products within the
FMEG domain and making strategic investments to enhance our brand visibility. By executing
these initiatives, we are confident in maximising our growth potential.
In conclusion, I would like to express my appreciation to our
employees for their contributions throughout the year.
Their dedication and hard work have been instrumental in our success. I
would also like to extend my sincere gratitude to our esteemed Board Members for their
invaluable guidance and insights. Additionally, I want to acknowledge and thank our
stakeholders, including customers, bankers, financial institutions, channel partners,
business associates and suppliers, for their support. Guided by an ambitious vision that
is backed by right investments and capabilities, I firmly believe that our Company is on
the path to power a bigger tomorrow and deliver sustained value.
Warm Regards,
Deepak Chhabria
Executive Chairman