Interview with Rajratan Global Wire Limited

Interview with Rajratan Global Wire Limited

by 5paisa Research Team Last Updated: Dec 16, 2022 - 11:55 am 29.3k Views
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Our biggest challenge was dealing with the sharp increase in freight costs for shipping which we have managed efficiently, says Yashovardhan Chordia, Director, Rajratan Thai Wire Co Ltd. Rajratan Global Wire is based in India as well as Thailand. In Thailand, the company is operating as Rajratan Thai Wire Co Ltd

Can you give insight on your recently completed, ongoing as well as future Capex plans? How do you fund Capex? 

Our most recent major project was completed in FY20 when we increased production capacity at Indore from 36,000 TPA to 72,000 TPA (60,000 TPA of bead wire and 12,000 TPA of high carbon steel wire). Our current Capex project in FY22, which is expected to be completed in Q1FY23, is to increase capacity at our Thailand unit from 40,000 TPA to 60,000 TPA for an estimated Capex of Rs 75-80 crore. Our other major Capex plan, which has recently begun, is the construction of a 60,000 TPA facility in Chennai for Rs 300 crore over the next 24 months.

Can you highlight some of the biggest challenges you are currently facing? What measures are being implemented to tackle the same?

Our biggest challenge was dealing with the sharp increase in freight costs with respect to shipping. We have, however, managed it efficiently, owing primarily to our local facilities in India and Thailand, which have been able to meet local demand. Today, the Indian market for bead wire is approximately 120,000 TPA, while the Thailand market is approximately 100,000 TPA, and we are present locally in these two large markets with our manufacturing units. In addition, we have been effective in convincing our customers in export markets to bill on a FOB (Free on Board) basis, while freight is billed on an actual basis.                     

What are your plans to further enhance your global footprint?

Our facility in Chennai will play a significant role in our plans to serve export markets. From Chennai, we intend to increase our volume supply to existing customers in the Southeast Asian market. During the Covid- 19 pandemic, we began our business with a few customers in Europe and South America. Once Chennai's capacity is closer to completion, we will make concentrated efforts to map and enter the Europe and North American markets.

By when do you expect the company to become completely free of long-term debt?

The Chennai Capex may envisage some long-term debt (say up to a maximum of Rs 100 crore). However, our overall debt-equity ratio currently stands at 0.46x which gives us enough headroom to stay net debt-free in the long term. We are working on all possible methods to reduce the overall debt of the company. We continue to get very attractive interest rates and simple structures for our working capital limits which have allowed our overall return ratios (ROE and ROCE) to improve from 23.89% and 22.65% in FY21 to 36.9% and 38.13% in FY22 respectively.

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