Got it, sir. And secondly, there are some issues happening in the industry related to delays in approval for solar projects that are to be connected with grid and some land availability issues that you rightly mentioned in the domestic market. So, conductors are also an important component in the wiring of the solar plant. So, are you seeing any slowdown here in the orders in Q1? Kushal Desai: So, we have had a reasonably good order book as we mentioned, Rs. 3,175 crores approximately. So, the order flow has still come in. And our expectation is it should continue as this execution takes place. If they had gone as per the plan, there would have been more business than we have been awarded. But our plants are running pretty much full and in a way actually, it will time some of the expanded equipment that is coming in. CA Garvit Goyal: Okay. But actually, I am just trying to understand from you regarding the industry issues that recently came into picture regarding some approval getting delayed with respect to solar paths to be connected with the grid. And secondly, on this ISTS waiver that is removed from the inter-transmission connectivity. So, are these issues anyway going to impact our business going ahead? Kushal Desai: I don't think so. In fact, these are matters which have to get resolved. And I think as I mentioned, even at the highest level, there is a reasonably good understanding of what the issues are. So, people are all working towards solutions on this. So, in fact, on the contrary, I believe that in the months going out, you may see stronger demand. Once these issues get sorted out, there will be more ordering that will take place.
Apar Industries Limited analyst Q&A
Got it, sir. Thank you very much, sir. That's it from my side, sir. All the best for the future. Kushal Desai: Thank you. Moderator: Thank you. The next question is from the line of Charanjit Singh from DSP. Please go ahead. Charanjit Singh: Hello, sir. Thanks for the opportunity. Sir, my question is on the premium conductors. So, especially in the domestic market, if you can help us understand in terms of the demand supply scenario and from the growth perspective, what is the current size of the market and how do you see over the next 2 to 3 years? This is mainly for the domestic market premium conductors. Ramesh Iyer: Charanjit, there are no sources to get the market information on this kind of premium products. But what is also happening due to various right of way issues and the general increase in electrification, there is more tendency to switch to reconductoring due to which the work on reconductoring is happening on a, may happen on a faster pace. So, as I said, there are no sources to get this market information. And overall, there is, as I said, there's more tendency to do more of reconductoring projects because of various right of way issues, because of time cost, because of capital cost outlay by the utilities company. So, there is more tendency on the premium part of the conductor business. Charanjit Singh: Okay. Sir, in terms of the execution of the projects and especially in the US market, how you are seeing that on the ground and when you are saying in terms of the stocking and the inventory buildup which has happened there, this could be for what duration you would generally see the kind of inventory buildup happening there? Kushal Desai: So, Charanjit, on the buildup, it's not really, these are all projects which are being executed. So, most of the products have actually gone to project sites. And I think
Got it, sir. Sir, on the EBITDA per ton perspective, would you like to change your guidance in terms of what the number has been or you would like to maintain at the earlier level of guidance itself? Ramesh Iyer: So, we have been increasing these guidance’s on the conductor EBITDA per metric ton. You have times where competition is putting a lot pressure. As you see in the domestic market, there is pressure on prices and also in the non-US market, there is pressure on prices. But wherever we feel that we have that confidence that the EBITDA cannot go beyond X level, that's where we put our guidance on. And we have been increasing that. Having said that, in the last quarter, we increased further to 30,000 plus tailwinds. For now, we are studying and depending on how the future quarter and US tariffs and there are so many moving parts to all of this, currently we would like to maintain it at 30,000 plus the tailwinds. And as I said, the tailwinds could be positive depending on various things that happen. But we
So, we will probably wait until all this quarter gets settled down. I think after that, if any revision has to be done, I think a more appropriate time would be once all this settles down in terms of US tariff, etc. Charanjit Singh: Got it, sir. Thanks a lot for taking my questions and all the best for the future. Kushal Desai: Thank you. Moderator: Thank you. The next question is from the line of Nilabh Jadey, an Individual Investor. Please go ahead. Nilabh Jadey: Hello. Congratulations on a good number, sir. One question I have regarding, for a long time you were telling earlier, at least in 2024, we have heard that you are facing a lot of competition from China because they are transshipping the goods to Vietnam. So, now, how is the situation panning out after this transshipment tariff has come in? Are you facing some better ecosystem with regards to the competition? You mentioned that they are still giving 8% to 10% subsidy. But this transshipment was a major issue you were facing earlier. How are things now? Kushal Desai: So, I think the current US administration is very much aware of this. And I think the undertones have been very clear that if they start picking up activities of this sort, then there could be an immediate change in the tariff that that country is facing, whether it's Vietnam or whether it's Cambodia, etc. So, I think the level of heightedness that is available now is much higher than what it was prior to the Trump administration coming in. So, I think it's something for us to wait and watch. But if this transshipment route is being used, then I think whoever is using it is really gambling on this. That's the sense that we have.
And another question, I am listening to your conversations. One thing is, I know there are a lot of confusion right now in terms of tariffs, because raw materials are higher tariff in USA. So, net, even 8% to 10% subsidy China is giving, but there are a lot of tariffs have come in, almost 30% tariffs on Chinese products. So, net-net, I do not factor the products, what is the competitive advantage? How much competitive advantage China is now having over us with the subsidies and, etc.? How much in terms of percentage? Kushal Desai: The subsidies constitute anywhere between 8% and 12%. In terms of efficiency of conversion cost, etc., there is no difference. We are able to, in a level playing field, we are in a position to compete against the Chinese on a day-in day-out basis. Charanjit Singh: Okay. Thank you. Moderator: Thank you. The next question is from the line of Nikhil from Kizuna Wealth. Please go ahead. Nikhil: Yes. Hi sir. And thank you for giving me the opportunity and congratulations on a great set of numbers. Kushal Desai: Thank you. Nikhil: So, my first question is like, with so much uncertainty to cables export, so are we still guiding 25% value growth in the cable segment? Ramesh Iyer: Yes, we are still guiding 25% value growth in the cables. Nikhil: So, that's great to hear. And then my second question is like, let's say India, as you mentioned that tariff, we have the tariff of total with the duty is 15%. And if you assume that reciprocal tariff goes to 15% to 20%, and then our landed cost would be like 25% to 30%. So, will we be advantage over the Chinese competition or not with that kind of scenario?
So, currently, the Chinese tariff is generally running 20% higher. So, when the interim tariff for India and various countries was at 10%, the Chinese tariff was at 30%. So, right now, it seems like the new normal they're looking at is a 15%, which is what they have finalized with Japan, what they finalized with the EU, etc. So, you know it's all speculation right now. As a matter of a few days, I think some of this should start getting settled down. But I don't think India will be at a disadvantage relative to China and a 10% gap, at least as far as the US market is concerned, may not really be much of a worry going forward. Also, as we mentioned in the last call, this is not the first time that China has had such subsidies, where the Shanghai Metal Exchange is so much lower than LME and the premium basically doesn't exist there at the moment. So, the Chinese government when the losses go up of the subsidy become too large, they have in the past just completely reversed it as well. So, it's not something that will be sitting with us forever. We have seen it happen a couple times before and we have seen it getting reversed as well. Nikhil: Okay, sir, that's great to hear. And then my next question is like, the cable segment, how was the volume growth in that segment? And are you assuming the same kind of volume growth going forward too? Ramesh Iyer: We don't report volumes in the cable segment, because there are number of categories within the segment. So, we are only reporting the value. But yes, I mean… Kushal Desai: To answer the question that yes, there is the demand, domestic demand remains reasonably strong. For us, what's important is that the premium segments are the segments where we differentiate ourselves, the demand for that should be strong, then that's how our domestic participation happens. We are seeing the wind sector is doing reasonably well. We are also seeing that solar is continuing to expand. We are supplying several data centers in India. So, we see that the demand generally in the domestic market has been strong. What may get affected in the
So, tariff today is coming as a line item. So, it comes with a straightforward assumption today saying that, okay, the tariff at the moment that we priced it like this, whatever changes happen is not to APAR's account, it will be to the client's account. And if the client is not willing to accept that, then we are actually not taking on the business and we are just sitting it out. The orders that are continuing to come in today are those attached to projects which are advanced stages of execution, because you see, the cost of the cable is about 5% of the cost of the project. So, even if you have a 10% difference, it becomes only half a percent on the project. So, delays in the project actually would result in a much higher overrun than just paying the increased tariff. So, we are not taking on any more tariff risks for new orders and new business that we have been signing on ever since this whole tariff thing got declared. So, whatever compromises had to be made was before this whole order book, which we were carrying prior to the declaration of the tariff, the 10% increase that happened of the reciprocal tariff. And the same thing is also true on the conductor side. Both the divisions, APAR, has been following exactly the same practice. Nikhil: Okay, sir. That's really great to hear. And so my next question is like, on our conductor's order inflow, we are at a 5 quarter high order inflows on the conductor segment. So, sir, majority of this might be from the domestic business, as you said. So, are we looking at the export, how are the export RFPs and all that, in terms of conductor side business order inflow?
Yes, they are okay, as in, like it was explained in an earlier question, answered towards that, that we are getting the RFQs, and we are giving the quotations, but our success ratio has dropped because of the intense competition from China, which is subsidized, but this may not last for long, hopefully. So, we are keeping with the market, and we are actively sort of, you know, trying to make inroads again into that marketplace, but at a reasonable price. Nikhil: Okay, sir, that's great to hear, sir. Thank you for giving the opportunity, sir, and all the best. Chaitanya Desai: Yes, thanks. Moderator: Thank you. The next question is from the line of Himanshu Upadhyay from BugleRock PMS. Please go ahead. Himanshu Upadhyay: Yes, hi, good afternoon. My question was on the oil business, okay. What we are seeing is, we are having pretty good growth rate on the better products, transformer oil, auto oil, and which we have been highlighting in industrial lubricants versus rubber processing oil and some of those segments. But the margins wise, it seems there is not much of an improvement, okay. Though it seems YoY it is some improvement, but again, the price of crude has fallen. Kushal Desai: So, I think the reference which I read out and I mentioned during my opening remarks is a quarter-to-quarter reference. So, if you see in the 1st Quarter of last year, it was also the highest margin that was there in the year. So, if you see on an absolute level, a margin of 7,000 plus EBITDA per KL is one of the higher margins that we have had. Himanshu Upadhyay: And are we seeing these margins what we are having, what we are expecting? Will it be because of product mix improvement, majorly or volatility is helping?
No, the volatility is actually not helping at all. It's actually dragging things down. It would have been even higher. It's really the mix, the transformer oil part of the business has grown and so has the lubricant side of the business, as I mentioned in my earlier remarks. So, these are the two segments which have grown. The white oil business has actually, export side of the white oil business has de-grown because that's really something that's very tactical for us. The margins weren't good. So, we just allowed that part of the business to slip a little bit. Himanshu Upadhyay: And the transformer oil and oil business, some of those challenges which are there on the conductor side, are those similar challenges on the transformer oil and …? Kushal Desai: No, so the market segment, the geographic mix is very different for our transformer oil business compared to what we do on conductor and cables. In conductor and cables, both of their largest market outside India is the America. So, when you add up the United States, Canada and some of the LATAM countries, that's where their focus is. If you look at our transformer oil business, we are very strong in Asia, all across Asia, right, including Australia. We have a very strong position in South Africa. We have a strong position in Turkey. And we are the largest in the GCC. So, it's a completely different geographic footprint. So, there, the challenges which were there is that some of the projects in these countries in Saudi and Australia, South Africa got postponed a little bit. So, even though we have a good order book, the execution of that got pushed out. Himanshu Upadhyay: Okay. Yes. Thank you so much. Moderator: Thank you. The next question is from the line of Sagar Dhawan from ValueQuest. Please go ahead. Sagar Dhawan: Yes, thanks for the opportunity and congratulations on a good set of numbers. My question is on the US demands. Basically, keeping the tariff-related uncertainties aside for a minute, what is your outlook on the US demand after the big beautiful
So, if you look at a renewable, it falls under actually three buckets. You have solar, you have onshore wind, you have offshore wind. So, for a long time, we have been saying that the offshore wind side has been one which cannot operate without significant subsidies. And that's the first one that's getting killed. If you look at the other end of the spectrum, which is solar, solar can actually be viable even without subsidies. It's the cheapest form of power today, pretty much in most of the world. And in North America, it's a good source of power because most of the country receives fairly good sunshine. So, we don't expect any massive change coming from the solar side. The wind side could face some challenges, especially projects where the subsidy is playing an important role and the plant load factor is not good based on just the natural amount of wind that's flowing. So, that could have some compensatory effect. However, on the other hand, one sector in the US which is going extraordinarily strong is the whole data center market. And data centers require both upgradation of transmission lines coming into them as well as a reasonable amount of cables. So, we don't see overall the demand scenario actually getting affected. We feel that there will still continue to be a growth in the North American market. Sagar Dhawan: Got it. And the question that I had was again on the US, any plans of setting up a local manufacturing capacity in the US? You talked about it in the past. What is your view now? Kushal Desai: So, we have been doing our homework on it. However, at this stage, until this whole tariff thing becomes clear, because suddenly there was this increase from 25% to 50% for import of aluminum, ingots, copper rods, all these things. So, that would obviously have a material impact if you were to manufacture locally in the
Understood. And one last question from my side is on the conductor volume growth, you've been guiding for about 10% volume growth on conductors. Any change in that guidance or are we sticking to that number? Ramesh Iyer: We are sticking to the same number, 10% on an annual basis. Some quarters may be but I think on an annual basis, 10% volume growth is what we are guiding. Sagar Dhawan: And sir if I heard correctly, in answer to the earlier participant, you're running at full capacity. Did I hear that correctly? Kushal Desai: We are pretty much for most of the products on the conductor side, we are running at capacity. However, you know, as part of the Rs. 1,300 crores, there is almost Rs. 400 crores, Rs. 300 and odd crores into expanding the conductor, various products that are in that division. Sagar Dhawan: Okay, so by when does that line come online? It is an additional capacity that you are getting. Kushal Desai: Equipment are starting to come in and getting installed, but a chunk of them are coming actually in Q3 and early Q4. Sagar Dhawan: Okay. That is it from me. Thank you. Kushal Desai: Okay. Moderator: Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Yes, just a couple of things on conductor as the realization has been high in Q1 and Q4. Are we expecting similar number like 4,80,000 per ton, that is what we reported? Just wanted to understand on realization going forward for conductors? Ramesh Iyer: It depends on the product mix Amit. It's not possible to predict that way. And as you know that our business runs on order book and there are one, it comes from the pending order book and another would be the orders that we get during the quarter. And due to the various product categories which are there, so it's difficult to get that number whether what kind of trend will continue in terms of realization. So, we are more guided with the EBITDA per ton. Also, aluminum price and copper prices fluctuate. Kushal Desai: And there is a big difference between the two. One is almost 3.5 times. Ramesh Iyer: So, when that price of metal fluctuates, the composition of that changes. So, it's a bit difficult to predict that number. Kushal Desai: So, everybody in the business is actually measured on a per ton basis. So, that's a good measure to track because variable compensation, bonuses, everything is based on fundamentally that metrics. And that's the metrics which we also put out for investors and in the public. So, we just, I think, focusing on that rather than the realization, I think, would be better in terms of setting up your model as well. Amit Anwani: And sir, you highlighted about reconducting being a very strong opportunity in domestic market. Just wanted to understand what was the reconducting contribution in terms of volume or what is the percentage of reconducting of current order book? How much reconducting would be there? So, any color on reconducting contribution? Kushal Desai: We don't actually end up giving sub-segments within that. We classify a certain set of products which are premium products and this falls within that. I can only tell you that as these right-of-way issues continue, the best solution is
Right. And so, any color on the competition is reconductoring? What are products we're supplying? Are we just one or two players or how is the market? Chaitanya Desai: There are players who are getting into the business. The largest is clearly ourselves. Then after that, you have Sterlite Power and following that is JSK. But the way we do the business is not just supplying the conductor but we also do the entire solution for the utility. So, it's one thing to produce a conductor. It's another thing to be able to provide that solution. And having done now close to 200 plus projects in the country, we really have a very strong ability to actually execute these reconductoring projects. So, even if competition comes in, A, the market itself will grow and B, the expertise doesn't lie just in doing a conductor production but in providing the entire solution which is far more difficult to do. Amit Anwani: Right. Lastly, sir, on cables business, if possible to share the breakup of specialty cables, power cables, elastomeric, LTC and the kind of growth we have witnessed in this quarter? Ramesh Iyer: We give the total only, Amit. We don't share the breakups of that. Amit Anwani: Okay. But sir, any color on the growth of total specialty cable portfolio? Has this been higher than the total growth in the cable business? Kushal Desai: I think it's been almost similar. As I said, the segments have moved for us where we have done more work with respect to data centers in India. We are supplying pretty much every major data center company. Recently, we also got into the global Microsoft approved vendor list for cables to data centers. So, that includes the
Great, sir. Thank you so much and all the best. Moderator: Thank you. The next question is from the line of Balasubramaniam from Arihant Capital. Please go ahead. Balasubramaniam: Good evening, sir. From the solar industry, model manufacturing capacity is almost doubling up, and how we are leveraging our solar cables and conductor side, and is there any risk of oversupply in the solar segment, which is impacting margins? Kushal Desai: So, on the solar side, we have substantially increased our own. So, if you look at the solar cable, as you've seen that investor presentation that we have, which is the comprehensive company presentation, 140-odd page. So, that is a slide which gives all the different types of cables used in the renewable energy. So, one is the string cable, which is the cable that's connecting the panel. That is where APAR actually has a very strong position because those are electron beam cables. We do our own compounding. We manufacture the whole cable end-to-end, every component that goes into it. So, that part of the business has been substantially growing for us. The margins there may have come a little bit under pressure because the volumes are just higher, but that business has been growing quite substantially. Then there is the cables which connect the panels into the substation, which is essentially a power cable. And the requirements in the US are quite unique. The requirements in India are relatively straightforward. So, that part of
So, first of all, what's happening today is that since we have exhausted building storage within our existing facilities, we actually have rented out a whole lot of tanks outside. So, this is going to result in actually consolidation of that. A lot of tank land is basically sitting on companies which previously used to manufacture liquid products and they have shut down and they have been renting out these tanks. So, as time passes by, the rental value on these tanks is continuing to grow or companies are going to redevelopment of that land. So, you will see that tank capacity will start getting a little bit more scarce as well as will get more expensive. So, this is one way of actually consolidating our stocking, making sure that the base oils are also maintained with very good quality in terms of storage because we use so many third party facilities, we don't have as much control on how the product gets into the tank, gets out of the tank. And it does open up as you did the possibility of exporting product in bulk which we haven't been doing so far. It's all going out in flexi bags etc. So, that bulk portion is still a discovery that needs
No. So, previously what was happening is that copper in the US had zero duty whereas the cables carried a duty that was the same as aluminum. So, as a consequence, there was more competitiveness that a local US manufacturer had to produce copper based cables compared to aluminum alloy based 8000 series. Now, the situation has changed where copper hasn't moved into that strategic 232 section. So, we have to see. We have capacity that's coming on stream within the next few months. So, once the dust settles, we can move around in terms of whether to produce more copper or to produce more aluminum alloy or to actually allocate more cables to be produced for the US market itself. So, there's a lot of flexibility that will come at our end as this CAPEX is getting executed. So, it's something that one has to still discover based on how this whole tariff thing settles down. But whichever way it goes, the product mix-wise, we are very flexible. Balasubramaniam: Got it, sir. Thank you. Moderator: Thank you. The next question is from the line of Mayank Bhandari from Asian Market Securities. Please go ahead. Mayank Bhandari: Thanks for the opportunity, sir. I have one clarification. Our export in the oil business, does it include the sale that we are doing from the Sharjah plant? Kushal Desai: Yes, absolutely, it is the global sales that we report. Mayank Bhandari: And what was the FY'25 number for that Sharjah plant? Ramesh Iyer: It's about 1,000 crores.
FY'25 exact number you will find in the annual report because all the subsidiary numbers are there in place. But the number that we have been talking about is the overall consolidated number. Mayank Bhandari: Okay. So, and just in terms of understanding the aspect there in the Middle East, we are hearing very good demand, particularly in the construction side. So, I mean, how is the business of specialty oils particularly panning out from that segment? I mean, what kind of growth we should anticipate from that particular plant in Sharjah? Kushal Desai: I didn't get your question clearly. Can you just rephrase your question again, please? Mayank Bhandari: Specialty oils, Sharjah plant, I mean, if we are exporting from Sharjah to nearby countries, I am assuming. So, I mean, how is the business growing in terms of the demand environment, if you could comment on that? Kushal Desai: Yes. So, actually, it's a mixed bag. Some countries are doing very well. Like, for example, there's a lot of infrastructure being added in Saudi Arabia, given that they have a commitment to increase in-country value. So, as a consequence, there's a lot of new plants coming up, a lot of new requirements coming up from there. And the government is also expanding the infrastructure substantially, because other countries where demand is flat to marginally declining. Like you've got Oman, you've got Qatar. Qatar did a huge build-up before the World Cup. Some of the North African countries are a little slow. So, Egypt has improved a bit, but it's nowhere close to what its peak was. However, from our plant in Hamriyah, we also export product into Australia and South Africa is covered from there, for example. So, it all depends on which geographies. But the thing is that APAR produces exactly the same slate of products. Whatever we produce in Hamriyah, those formulations are identical to what we produce in India. So, we have actually 100% fungibility for our client. So, we end up looking at wherever
And sir, we were planning to leverage on this cost advantage from that plant. So, why is this segment then overall not delivering growth? And the growth has been quite muted for quite some time. Kushal Desai: So, everything is relative. When you look at the growth relative to what the whole segment is growing at, the entire Specialty oil lubricant segment itself is growing at around 2%-3%. So, when you have an 8% growth, you are at around 2.5-3 times the market. Also, there are sub-segments in there. As I mentioned earlier in my opening remarks, the transformer oil side is proportionately growing because a lot of electrical networks are getting added. The white oil side, we have been dropping it off because we do not like the margins on some of those products and we treat that significantly more tactical. But if you see the overall business of the oil side, the sales volume, if you see, every year, every quarter has been hitting all-time highs. And it is not a very huge number, but it is very consistently been growing. And today, if you see the quantity of base oil that APAR imports into India and blends in India is larger than any single base oil refinery that runs in India. If you take the largest refinery of IOC, you take the largest refinery of HPC, we consume more than that entire refinery can produce. So, it is a very steady business. It is not a business that is going to grow at the pace of the conductor business or the cable business, but it is a very good cash flow business. Mayank Bhandari: Okay. So, just to sum it up, whether your overall business, whether the Sharjah plant will grow faster in this oil business or the overall domestic business will grow faster? Kushal Desai: So, I believe that the domestic business is actually growing faster than the Hamriyah business because we have transformer oil, which is a big portion of our
Sure. Thank you. Moderator: Thank you. The next question is from the line of Sushil Dhoot from Insightful Investment LLP. Please go ahead. Sushil Dhoot: Yes. So, my question actually is a couple of things. From a more longer term on a structural perspective, what really worries you most in terms of, if you just have to do some brainstorming in terms of what can go wrong, so, for instance, other than China, which is not likely to be possible where duties will be lower than India from a US perspective. Is there another country who has the capacities and the capabilities to export into US if that particular country has a lower duty than us eventually? Will that be something that will worry us, number one? Number two, on the fact that you now have power storage, which is more affordable, and if wind overall slows down, is that something that can affect our longer term growth rate? So, these kind of questions is what basically answers that I am looking for. Kushal Desai: Okay. So, on a structural basis, you see, what is our biggest worry? Our biggest worry is actually the geopolitical tensions which are there, because they are coming in from all kinds of different directions. Like the US right now and the Trump administration is not just increasing tariffs, but it's threatening that if you use Russian oil, then we will… basically, there is a tariff whip that is being used to try to pull these things. So, that adds to a certain level of uncertainty. I am not sure whether any of this is sustainable, but it can cause a lot of short term confusion. So, obviously, that's something that would keep… it has to be very high on the risk level. In terms of the renewable energy front, I think we have relatively less worry,
Sir, this is not solar, completely? Kushal Desai: Yes, on the wind side, we are focusing basically to a large extent on the wind in India because what has happened here is that given that solar was cheaper and very easy to add, a lot of emphasis has been given to solar. There are two issues coming up with solar. One is that if you want to build really huge solar farms, land is starting to get difficult. And so, not everybody can build in the salt pans of Kutch and in the Thar desert and things like that. And also, the seasonality of solar is a little high given that we do have a four-month monsoon when it falls and wind actually complements it completely. So, as a consequence, you are seeing that new tenders coming out are coming out with the hybrid and they are coming out with a certain minimum power that you have to deliver. So, that can be delivered based on a combination of solar wind and the amount of battery storage that you put in. So, when you look at all these things, and I think the regulators are getting very smart now by pushing for all these combinations, etc. So, our sense is that wind is not going anywhere. Wherever there are big subsidies required to run wind, then you will have a problem. So, we are focusing actually North America has some of the best wind tunnels. And they are also in places where Mr. Trump is not in a position to see the windmill because they are like way out of where he would typically play golf or go on a holiday or travel around. So, I don't think wind
Okay. So, we are not leaning excessively on wind in case wind slows down for whatever reason, whether in India or US. That is not going to change materially our secular growth rate? Kushal Desai: I don't think so. But at the moment, India has still got a huge runway to go on wind. The one thing that hasn't yet picked up, but is going to pick up because it's right at the top of the regulator's discussion is the replacement of windmills on existing land. You see, the windmills that went in 10 years, 15 years, 20 years ago, were of a very suboptimal size. And they are occupying some of the best wind real estate in the country. So, that is going to change because you are going to go from 250 kilowatts to upwards of 3.5 megawatts. So, the amount of wind that you can generate per acre of land is going to dramatically change if the old windmills are pulled down and the new ones are put in place. There are some policy issues that need to be ironed out to help the change to happen. And moment that happens you will see large-scale replacement of windmills happening. And as a consequence, again, good demand for cables because the towers will be replaced. So, we really think that this is a very long-term thing. It's not going to really get affected. Sushil Dhoot: And sir, any one or two particular countries other than China, because the US is doing bilateral now with most of the countries, where the duty structure turns out to be lower than India, for that particular country, then where are exports particularly of conductors or cables and cables both can get impacted? Kushal Desai: So, I think that makes sense to take a call once the dust settles on this. I think in the next few weeks, there will be the letters going out to various countries, especially those that haven't got into very serious dialogues with the United States.
My understanding is just that if Vietnam, Cambodia, Korea, or I don't know, Bahrain, or someone gets 10%-15% differential versus India, then do they have those kinds of capacities where they can really… Kushal Desai: If something happens where Bahrain is 10% cheaper than India, then obviously their conductors will land cheaper, but they don't do cables. There are still some specialty conductors which we do, especially the HTLS and some other special forms which are quite popular in the US, which will continue to go from here. So, I think, Sushil, we will wait for it till all this happens, then take a call. Sushil Dhoot: Fair enough. Thank you so much and best of luck for the year ahead. Kushal Desai: Thank you so much. Moderator: Thank you. The next question is from the line of Vignesh Iyer from Sequent Investments. Please go ahead. Vignesh Iyer: Thank you for the opportunity. So, my first question is on the interest that we paid for quarter is around Rs. 85 crores, even though our execution is almost similar to what we did in Quarter 4. So, I wanted to understand if this lower interest outflow is majorly because of lower net working capital cycle, or is it because we paid off some long-term borrowings and our total cost has come down? Ramesh Iyer: So, we have used cash and internal accruals to fund our purchases as compared to the letter of credit. So, when you do the letter of credit, you have an interest element, but when you do cash purchases, that kind of cost comes down. So, that's the reason you see in this particular quarter, there is a reduction in the finance cost. It's also a measure of more working capital utilization that we are able to generate cash and internal accruals more to be able to purchase on cash basis.
So, basically, instead of the working capital usage, we have gone for the internal accruals, right? I mean, that has resulted in this lower interest outflow, right? If I get it right? Ramesh Iyer: Yes. Vignesh Iyer: Okay. And secondly, sir, on the cable division side, we have seen exceptional growth in this quarter. And if I remember from your commentary, at the start of the call, it is because of higher procurement from US due to fear of tariff. So, can we assume that the other three quarters on a normalized basis could consistently give us a 25% growth? Ramesh Iyer: We have been targeting 25% growth. Now, actual number can be more or less depending on what kind of orders we get during that quarter. At the same time, domestic business is also very strong. Our domestic business also growing by 20% odd. So, we won't be able to give that impact how much will happen if that, you know, US thing, US orders would have not got executed, what would have been the growth rates, those would be difficult to predict. But overall, we feel that for the blended division, 25% value growth should be something that we can guide for. Vignesh Iyer: Okay. That's all from my side, sir. And all the best for the year ahead. Ramesh Iyer: Thank you. Moderator: Thank you. That was the last question for today. I now hand the conference over to Mr. Kushal Desai for closing comments. Kushal Desai: Thank you everyone for joining our earnings call. As I mentioned, we fundamentally remain fairly optimistic about the business. There are a few overhangs and short-term clouds, particularly around the US tariffs. The domestic side of the business, we feel continues to remain fairly strong right across the transformer cable as well as the transformer oil side. As I mentioned earlier, there was a little slowdown in some of the strategic markets for our transformer oil exports side of the business due to project delays, but that is also picking up. And I guess once the dust settles on the whole US tariff and import policies, then we should start seeing business again, picking up there and getting to more normalized levels. So, with that, I would once again like to thank everyone for taking the time to be on our earnings call. Thank you very much. Moderator: On behalf of APAR Industries Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.