RR Kabel, founded by the Kabra family in 1999, is one of the leading players in low-voltage cables business. Now the company plans to enter medium-voltage cable segment commencing March next year, informs Shreegopal Kabra, Managing Director, RR Kabel in an interview with Subhajit Roy.
In September, TPG Capital acquired a significant minority stake in RR Kabel with an estimated investment of Rs 650 crore. How do you look at this step?
TPG has been one of the most active private equity investors in India for the past one and a half decade. We feel, TPG is the right partner for us to help RR Kabel reach the next level. The partnership will strengthen our financial and management capability.
What is the kind of revenue growth expected during the current fiscal?
We achieved a revenue of Rs 1,615 crore for the fiscal ended March 31, 2017 with a net profit of Rs 86 crore. This year we will grow by about 20 per cent.
How will the partnership with TPG impact on your revenue growth?
It will obviously have a positive impact – that is the basis of any partnership. We are concentrating on further expanding our wires and cables as well as electrical business in the foreign markets and plan to achieve 25 per cent to 30 per cent growth over the next few years.
What’s your take on the recent performance of wires and cables industry in India?
The wires and cables industry in India is performing well and it will continue to do so. The government is investing a lot of money on ‘Housing for All’ and ‘Electricity for All’. These are the major avenues that will continue driving the demand for next 5-6 years.
What is your market position as of now?
We are in to the business of wires and low-voltage cables. Today we are in top 3 companies in India in this segment. Now we are entering into a new range of medium-voltage (MV) cable. It is also pertinent to note that we are of the foremost companies that have more than 29 certifications from across North America, Europe, Middle East, Africa and Asia.
What prompted you entering a new business segment?
Increasing our product basket, thereby looking to be identified as a complete electrical solution provider.
When are you going to start commercial production of your MV cables?
We are all set to make an entry in MV cables segment by March 2019. We will be producing this range of cables in our new facility at Waghodia, Vadodara.
How much you are investing in this project?
We will be investing around Rs 400 crore in the next 3-4 years.
How is the industry growing? What is the growth rate as of now?
It is 12-14 per cent approximately.
What is the market size for LV and MV wires and cables?
About Rs 2,000 crore.
You are in top 3 in LV and getting in to MV business now. Is attaining the No.1 position on your radar?
No, we are not into the volume game, we are basically into quality game. We do not compromise on quality. Our target is to maintain the top quality in which we are a leader.
Are you expanding your export market presence?
Yes, expansion is a continuous process for us at RR Kabel. We are the only wire brand to export to over 75 countries. Also, we are the only company who have 29 investment approval from 30 countries.
How do you see the future of your industry beyond 2019?
As 2019 is the election year, we expect the same government will come back to power. The growth initiatives initiated by this government will continue to support industry growth. Even if something goes wrong, what they have started, the new government cannot stop it and it can be slow.
Talking about RR Kabel, what sort of roadmap do you have beyond 2019?
For next 5 years, we target to grow by 20-25 per cent CAGR.
After entering in to MV cables market and joining hands with TPG, do you have any other investment plan in pipeline?
Yes, there will be many…you need to wait for that.
