RR Kabel MD Shreegopal Kabra Announces ₹500 Crore Investment for FY25 Product Development
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00:00Hello and welcome to NDTV Prophet. I am Vikas Shrivastava. Today we have with us Mr. Shri
00:05Gopal Khabra. He is the promoter and managing director of RR cable, the company that recently
00:12got listed. He will be talking to us about the company's expectations as far as the new
00:18government is concerned at the center, their new product development and also their plans
00:22for the future. Welcome to NDTV Prophet Mr. Khabra.
00:26Thank you.
00:27Sir, you have been there in this industry for last 20 years, almost two decades or over
00:33two decades. So how has been the change or what are the differences that you have noticed
00:38since the company got listed on the exchanges?
00:41See basically, generally after listing is a question of corporate governance. But as
00:46a company, we were doing corporate governance was very high in our company. Even before
00:50this private equity came in our company in 2018, we had independent directors like we
00:54had auditor, big fours are auditor. And it's an entire journey because we had a long term
01:00plan that the company has to be listed. So for us, it's a no change basically. It's what
01:04we were doing before and we are doing same.
01:07So the other thing that also people look at for listed company that makes a lot more easier
01:13for the companies to go to the market as far as raising of funds is concerned. So what
01:17are your requirements right now? Do you think that being a listed company, it would be much
01:21more easier for you to raise funds?
01:23So of course, yeah, for listed company to raise a fund is very easy. For us, it was
01:29before also very easy. But then right now, we don't have any plan to raise the fund.
01:33Whatever the expansions are coming, it will be through internal airports only.
01:37Yeah. What we have got to know is that our RR cable has very high standards when it comes
01:42to fire safety related products. And off late also we have seen there is a lot of push from
01:48the government also on how to avoid the kind of accidents that keep happening in the market
01:54or other places. So in that respect, what are the new products that you are developing
01:59and what kind of focus is RR cable given towards those kind of products, especially the wires
02:05in the cable side?
02:06So basically, we are the first company in Asia to make low smoke zero-resistance wire
02:12since 1999. So we became the first company in Asia to make this low smoke zero-resistance
02:17wire. And now recently, we launched an enhanced product that is called as 10X low smoke zero-resistance
02:26EBXL. Basically, we keep on reading and watching in TV and news that people die because of
02:35fire. So this must also happen. See, it's very difficult to stop the fire. But then
02:43the real way is that, can we stop the smoke? And the major disaster happened because of smoke.
02:50If you look into why, whether it's a Tamil Nadu restaurant in Uttarakhand or it's a Rajkot
02:57gaming zone or in Delhi, the new born baby is smaller. So what happened? When fire takes
03:07place, it's a lot of smokes coming because of PVC. See, PVC is the most dangerous material
03:12on this earth, in any form. So wire which in India we are using, people may talk that
03:19they are using FRLS. So first of all, I would like to inform that FRLS wire as such, there
03:24is nowhere in the world except India. But then our consultant, our government is thinking
03:30the contractor, we are using FRLS. But FRLS is nothing, it's a modified PVC. So if PVC
03:34smoke is 100%, the FRLS is 70%. So my humble request now, government has also made a new
03:41rule by 2023, that any building which is above 15 meters, means above building 5 floors,
03:48they need to use low smoke zero halogen wire. Any common places like hotel, hospital, clubs,
03:56airport, they have to use low smoke zero halogen wire. It's a very good news. But is it really
04:04happening? Implementation? It's a very big question mark because we are into business.
04:09Like I will give you an example. This is a new airport is coming, Jewar. Whereas it
04:15has to be mandatory, they need to use low smoke zero halogen wire. But I can tell you
04:20they are not using. Just to save some money, people are taking risk of this human life.
04:26Because India, we got a highest death because of fire. Average 60 people dies because of
04:34fire. In all together, this kind of safety we are compromising in India for electrical
04:41production. See 80% of fire in the world, civics, is because of electrical product and
04:47electrical fire. And fire, after 80%, 80% is because of wire and cable or switchgear.
04:53So in my opinion, it's a technical thing that wire and cable to be focused in terms of safety.
04:58But what is in India now happening? See BIS standards, they need to improve, number one.
05:05But are these Indian manufacturers are implementing or following the BIS standard? It's a big
05:11question mark. I can tell you that 70% of cable available in India is below BIS standard.
05:22And this 70%, when organized market share is 75%, then you can tell them who is doing.
05:29There is no need to talk about who is doing. So this organized player is a big challenge
05:34and government is silent. But what is the role of BIS here if there is so much of incompetency
05:40there in the market? So what is the role of BIS you think and what should they do to curb
05:45this kind of practice? See BIS, they got two teams. One is making specification and other
05:50team's job is to check the quality of the market. So I think so that government should
05:56give BIS more power. I've been to a couple of times in BIS to change the standard that
06:01happened. Then I came to know that they don't have sufficient finance also. Because what
06:06happened, this BIS department is handled by consumer affairs minister and finance ministry
06:11gives the budget. So in my opinion, at least government should give minimum 2000 crores,
06:173000 crores or 4000 crores per annum to BIS. And BIS should also charge, they can increase
06:24the fees. They can take it from the manufacturers more. So BIS need to be more empowered, more
06:30technically strong. See I tell you, there is a UK, it's called BASIC. BASIC is a government
06:36body which approved for the wire and cable. So they have 52 people only for this wire
06:41and cable. That's the advantage. So we are the company who got BASIC approved for the
06:46last 20 years. So when I have BASIC approved, I can export to 40 countries. And BIS, all
06:55the electoral votes come to 18D9. But 18D9, how many people they have? So government need
07:01to come out with the very strict rules. They need to fund to BIS and BIS should charge
07:07more money and BIS should come out very strict. See today, we are all talking about food,
07:11food product. So big change happened. After this masala problem happened in Singapore,
07:15Malaysia, now it came in UP also that masala is not good. But masala, I tell you Rajasthan,
07:21yeah. But see pharma, food product and electoral vote, all three should be taken as a very
07:27strict rule. See pharma, if somebody do mistake, so one patient will die. In food product,
07:35but because of fire. See 30 people died in Rajkot. What government did? They stopped
07:41all the gaming zone. But this is not a solution. But why this happened? I tell you this Upar
07:46cinema in 1997, 105 people died. And we are all happy as a common man. Oh Chandra, when
07:53you take me, he was behind the wall. But why people died? People died because of smoke.
07:58But why so many years? Now government has come up with some law, but people are not
08:03following. Now the government is very strict. We need to check whether all these new government
08:09buildings are coming, especially in Central Vista. Are they using this low smoke erosion
08:14wire? It's a big question mark. Or any common place. See government is making, trying very
08:19hard. But then government has to come with a very strict rule. Consumer need to aware.
08:24The companies who are doing misuse, like see there was a couple of head, why don't catch
08:31fire? This is not possible. There is no wire. So then we came with the ad, with Akshay Kumar.
08:38There is no wire in which fire is not lit. There is no smoke in the wire. So see, we
08:44are in India, we are allowing the company to make a wrong campaign. We don't do nothing.
08:49So in my opinion, this is a very sensitive matter. Electrical product, 60 people dies
08:55every day, which is the highest in the world, even per capita. After 140 crore people and
09:00then we got highest people die. After road accident, highest deaths are there. Then why
09:04we are silenced? So something similar to what happened in the case of Patanjali, or you
09:09know, mis-selling on the TV or commercials. So something similar should be done for wires
09:17and cables also, or in the electrical sector. See wires, cables, of course they have to
09:21do it. See their company used to get 25% saving in the power. I can tell there is no wire
09:26where you can save the power. There is no wire which don't engage fire. So these are
09:30things are happening. But more than this, the which company, I believe that SEBI should
09:35come out, the very strict rule, that quality should be part of the corporate governance.
09:40You also spoke about Jewar airport, which is a very big airport, which is coming up
09:45now, international airport. And you said that people are bypassing rules and laws. So what
09:50needs to be done so that at least this comes and can be highlighted?
09:54No, not only Jewar, there are many projects I can talk about. But Jewar, because I know
09:58this is happening, they are using FLS fire. See, of course, the tender might be the old,
10:03but rule has come. But they need to follow. 10,000 crore investment, neither the Swiss
10:10company got a financial problem. But see, this is what you call the foul play of the
10:17contractors. See contractors, they want to make more money, they compromise quality.
10:22In India, what is the problem? The consultant specifies 2, 3, 4 brands. Some project you
10:27will find, they will specify 15 brands. So what contractor will do? Contractor will buy
10:31the cheapest one which is available, right? No more. And now consultant says, contractor
10:36says, I am not responsible. Now consultant says, I am not allowed to go to site, so I
10:42am not responsible. So who is responsible ultimately? Because we are 140 crore people,
10:49we don't have any values of the human being. Kind of money we save, see all together I
10:54can tell you because of electrical, they might be selling 10,000 crore, 15,000 crores maximum
10:59per annum. But more than the wealth we lose and the man, human we lose, this is separate.
11:05So as RR cable, what are you doing so as to bring these kind of issues under control?
11:12One is you are developing these kind of products, which definitely are more premium products,
11:17must be price wise also definitely higher. So what are the other challenges that you
11:22are trying to mitigate? See basically I tell you, we are the only company in the world
11:26which got 40 plus international airport world for single factory, only company in the world.
11:30We as a company, we are maintaining 100% reach compliance, 100% RSS compliance. Those not
11:36made in India, but see we are the largest foreign cable export from India. And see what
11:42happening in our country is quite unfortunate, that people think that they can have true
11:47culture in the company, that for domestic market they will compromise on quality, for
11:51export they will make good quality. See India is very much focused on the exports. So my
11:55worry is because of this kind of company, not only in my sector, my cable sector, but
12:00in any sector, the company who are thinking for domestic, they want to compromise for
12:04export, they want to make good quality. This will, I have doubt, one person cannot have
12:09true culture, one company cannot have true culture. So these are the big challenges.
12:13Government should focus on quality and I hope that in this 100 day budget, this electrical
12:19fire safety and electrical world safety should come. So we maintain quality and then we recently
12:24launched FireX 10X EBXL. So it is a low smoke duragent, which we used to make before also,
12:32but with E-beam technology. So then we got almost 10 more advantage we have. So out of
12:37this 900 degree, it is there. So these are the products are essential. In this product
12:44what happens, when fire takes place, there is no smoke. Smoke will be there, but hardly
12:484%. That also non-transparent, non-hazardous, non-toxic. If you look into that, if you try
12:57through NDTV, I want to talk to viewers, that please burn just 2 inch of PVC wire and you
13:05will know how much smoke is there. And in any house, you will know how much wire is
13:10there. Even in 3 BHK flat, if you use this ordinary PVC wire and if you use this low
13:18smoke duragent wire that I call FireX LOSH EBXL, it will cost of Rs.16,000. Even see
13:26the conservative price in India. Rs.16,000 is the difference between the two? Two wire
13:32So 3 BHK even if I was in Lucknow, so I say if you go to Rs.6,000 price. In India, in
13:38nowhere price of Rs.6,000 is less. And 3 BHK, there are 1,100 square feet. So you are
13:44buying a flat of Rs.66,000, that is conservative here. I mean Bombay price. Then you spend
13:49almost, when you spend Rs.18,000, just for Rs.16,000, you are compromising because this
13:56is a product which is behind the wall. See challenge, I was talking that in plumbing,
14:02you should be very cautious, careful. Government should, in the RERA, they should make a very
14:08strict rule at least for plumbing, fire fighting equipment, elevator, parking system and electrical.
14:15These are the 5 major things where builder wants to try to save the money. Rules are
14:22not strict. So if this, because plumbing is not good, the life of building will be less.
14:28Electrical goes on short circuit. If you don't have fire fighting system, perfect. Then if
14:35fire takes place, what will happen? Then mechanical car parking should be of a good company. Elevator,
14:40these are 5 things. And the life of building is 30-40 years, 50 years. So accordingly they
14:45should plan and they can do it. So what as RRK bill is your plan as far as
14:51investments are concerned? And what are the new plans and projects that you are planning for the car?
14:55So as DRFG, we have declared that in FY24, FY25, we will be expanding to 500 crores.
15:02So before March 25, this expansion will be all over.
15:07Okay, and this will go towards what? So wire and cable, both.
15:10Why is it cables? And what about your appliances business?
15:14So FMAG, the investment is less, but the major investment is wire and cable because FMAG,
15:20few products are outsourced and few products are manufactured. So it's a very limited amount.
15:25And in terms of, if you can give a breakup for our audiences, like what is the kind of
15:31breakup between wires and cables and your FMAG business? So as a revenue?
15:35So our revenue is 88% is wire and cable and 12% is FMAG. And about of this 88% wire and
15:42cable, 30% is from export and 70% is domestic.
15:47Okay, so FMAG is not exported. No, FMAG will come next year.
15:52In terms of competition, what we have seen that there are various players like Bajaj
15:57and others who are there in the market for a long time. So what was the main driving
16:01factor for RR Cable to go towards that? You also took over Luminous. So what's been the
16:07change after that?
16:08See basically what happens, we had all the products behind the wall. So we were also
16:13looking that we should come out of the wall. So that's why we moved to the FMAG business.
16:18So FMAG, when we moved to the business, that was the right time. Of course, for the last
16:22two years, you know, it's challenging for even established players. So we are also new
16:26player. So it's a big challenge. But then I think so the time will come in the next
16:30one or two years where people will be looking for some good quality brand and industry will
16:36be there. So this cannot be always bad, you know. Currently it's not in good shape.
16:41What could be the reason for that, if I can ask?
16:44I don't know. Somehow this industry…
16:46I was also looking at the price chart. Could it be that the prices are slightly on the
16:50higher side for your products?
16:51No, no. It's not on the higher side. But now the best part is that now we are changing
16:56our strategy and design everything after acquiring this Luminous now. Because we got a very good
17:01R&D team, nice setup factory. So last year like we launched almost 20 new variants of
17:06fine. And our sales are also increasing of premium products now. My previously premium
17:11product sale was just 2%. Fine, I am talking specially. Now it's almost 20%. So once you
17:17reach into more premium range and distribution network you spend, I think social is stable.
17:22So we are on the right track. But still it's a… everyone is struggling in this category.
17:28All the established players, they are also struggling.
17:33And is it that… how would you describe your reach as far as rural areas versus urban areas
17:39is concerned?
17:40So we are very much focused into rural and urban modes. Because nowadays even in rural
17:45area people respect for the brand and quality. So now India has changed a lot. So it was
17:50like a first… firstly it was only urban area. But a few states like Kerala, then you
17:56got a brand… then the aspiration level of people also increasing. If you go to like
18:01place like Bihar, either you will find very high-end brand or the low-end brand. So there
18:06are two categories are there. So there is a market for everyone is there. In India also
18:11in last 10 years the rural area income has also increased. People are sending their money
18:15back to home. They have also want their family to be very happy, established. Government
18:20has also given 30 million houses last year, last 10 years. Now again there are 30 million
18:25houses. So this is an aspiration. So those who get house from government, they got especially
18:30high. Those who are not getting from government, so their spending is high. So this is good
18:34here.
18:35One last question on… you also partly spoke about it. Like the new government has now
18:39come into the centre. I mean it's almost an extension of the same government but new
18:43after elections. So what are your expectations? You said in the next 100 days plan or agenda
18:48of the government for the electrical sector or the segment of the power sector, what are
18:53your expectations?
18:54See I think so there will be lot of reforms will be there in power sector. Government
18:59focus is already there, focus on renewable is there. Now government should look into
19:05how can we export the power. Like see from Morocco, now the 3000 megawatt they are supplying
19:10power to UK. Our government is now thinking that from Andaman, Nicobar we supply power
19:15to Singapore and from India we supply power to Europe. I think so government should look
19:19into how can we export maximum power because see we got a natural like solar in Rajasthan
19:26and many more places. So we got a raw material. Solar is only there. So we need to inframe
19:31it. I think so the green investment and infra is there and of course this government for
19:36last 10 years they did lot of investment in infra and I think so this now speed will be
19:41much more higher because they have also now competition. They need to win again next election
19:47in a better position and lot of you know state elections we keep on happening.
19:52And on the electrical side also we can talk electrical equipment like you were talking
19:56about the various issues. So what are your expectations on that?
19:59See I am expecting, we are also talking government they should bring a very strict law on electrical
20:06product. I am a past president of so many association and still I am a chairman of one
20:11of association then it's my humble request to government and to media also and to viewers
20:17that they should talk and come with the government like for medical, food product and electrical
20:22and the food I have taken plumbing. They should come with a very strict rule and RERA, the
20:27real estate regulation body is there. They should also make it now electrical and plumbing.
20:32They should make now regulates fires guaranteed but they should make it now 15 years for these
20:36two three categories. Thank you very much for talking to NDTV prophet
20:41Mr. Kavya. It was our pleasure. Thank you. It's my pleasure sir. Thank you.
20:46Thank you.