Category
📺
TVTranscript
00:00Good morning and welcome back to The Smith Show. We're now taking stock of Bansal Wires
00:13after their stellar Q1 results as well as business outlook going forward. We're now
00:17joined by Mr. Pranab Bansal, the MD and CEO of Bansal Wires. Good morning, sir, and thank
00:22you so much for joining us today. Firstly, many congratulations on your listing. I just
00:28wanted to start with, you know, about the company specifically, you know, you are a
00:31steel wire manufacturer, but if you could just run us through what are the verticals
00:36that you currently operate in and the business per se as well.
00:39So, as far as Bansal Wire is concerned, we are now the second largest steel wire company
00:48and the largest steel wire company in India. We have three main verticals. First is high
00:54carbon wire, which is a product that is used majorly for automotive and infrastructure
00:59applications. Second is low carbon wire, which is used for power and cables, agricultural
01:04applications. And the third is stainless steel wire, which is used for various other industries,
01:10majorly for consumer products. So, today we have more than 3000 SKUs that we make and
01:17we are selling to almost 5000 different customers across various different industries.
01:23Got it. And Mr. Bansal, Harsh also joining in. What would your market share be like in
01:29this space?
01:30That's actually a very interesting thing. Being the second largest steel wire company
01:35in India, we still only have 6% market share. So, we are a part of a very, very big industry
01:41in India itself.
01:43Okay. And how quickly are you ramping up? So, where were you maybe a couple of years
01:47back? Where do you expect to be two, three years from now? You've done your fundraise,
01:51you've set up a new facility. So, just, if you can give us just visibility on where it
01:56goes from here.
01:57Sure. So, even if you look at our history, not just for one or two years, even for 10
02:03years, we as a company have grown at 20-25% every year. There is no year in which we have
02:08not outgrown our last year's number. And I would say we are focusing on doing the same
02:14for the next five years as well. As far as capacity goes, the main uptake that you will
02:19see is that, till about last year, we had a capacity of close to 2.6 lakh tons, which
02:25by the end of this year will be about 6 lakh tons, by setting up the largest wire plant
02:32there is in India. So, capacity-wise, we will see two and a half times kind of number.
02:41But before I come back to the capacity expansion, I just want to get some more colour on the
02:46divisions. You mentioned that high carbon, mild steel as well as stainless steel wires
02:51are three divisions and you gave us the applications as well. What's the current revenue, our segmentation
02:56from this? What is the highest revenue contributor among these three verticals? And if you could
03:02just give us some margins, is there some particular vertical such as stainless steel which has
03:06the highest margins or something on those? Some colour on that as well.
03:09So, to understand our business, revenue will not be the right number. The right number
03:16would be quantities. At the end of the day, we are following the cost-plus model, wherein
03:22whatever increase or decrease there is in our raw material gets passed on to our customers.
03:26Therefore, our margin per ton remains constant. So, high carbon, I would say, accounts for
03:32about 75,000 tons a month, 75,000 tons a year. Similarly, stainless steel would be about
03:39the same level as well as low carbon. So, it is quite evenly split between high carbon
03:46and stainless steel. Low carbon is the third smallest vertical that we have.
03:50Okay.
03:51But right now, we are focusing more on low carbon because of some consolidation that
03:56is also happening within the group. We are trying to get everything into one cell via
04:00the other. Therefore, you will see a good increase in high carbon as well as low carbon
04:05parts going forward.
04:07Okay. And you are focused on margin expansion, at least that is what your Q1 FY25 disclosure
04:14seems to suggest. You are currently at 7. What are the levers and what is the appetite
04:20like? Because you seem to suggest that there is a cost-plus model involved. So, just trying
04:24to get a grip of how exactly do you intend to expand margins? It is only capacity, efficiency,
04:30etc., playing through or what?
04:33So, I would say there are two approaches here. The first thing is, of course, by setting
04:37up this kind of a facility, we will definitely have economies of scale on our side, much
04:43more than we had till now. So, that will definitely help us in margin expansion. Similarly, we
04:48are also focusing on high margin products within our portfolio. So, today out of 5,000
04:53different products, all products have a different market and a different margin profile. We
04:57are focusing on the higher margin products. With that being said, we are also adding a
05:01fourth vertical, which is what we call a speciality bar vertical, in which the main products are
05:07products like steel core, hose wire, IHD and OHD wires, which are, in general, relatively
05:14higher margin products as compared to the regular products that we make right now.
05:20So, by adding up these verticals, as well as expansion of our current base, we should
05:25be able to do a little better as compared when it comes to margin. But again, what is
05:32important here to understand is our margin is not only on a percentage basis, because
05:38we buy a commodity, which is steel, and steel comes with all its fluctuations. Therefore,
05:44my revenue is only a result of the raw metal price that we have.
05:48So, margin, it is better to understand in kg for us.
05:55My last question, sir, to you. We have seen very strong quarter one results, revenue grew
06:00by roughly 49%, margins upwards of 100%. How much was volume growth in this versus value
06:05growth? And specifically on the Dadri facility you mentioned, your current capacity is roughly
06:102.6 lakh tonnes. You are increasing it to 6 lakh tonnes, I think, over the next 12 to
06:1518 months. But capacity utilisation, what is the current utilisation as well? And how
06:20are you seeing this, you know, this very big jump in capacity? Where is the demand coming
06:24from?
06:27So, if you see for the last two years, we have actually not been able to expand capacity
06:31as we have been in the past, majorly because of the delay in the Dadri project, which was
06:36supposed to start, in fact, last year, but it has just started now. Therefore, right
06:41now, we see a good market within our current customers to ramp up this capacity. Therefore,
06:47we are very confident of utilising the capacity also very soon. As far as volume growth, we
06:56have done about 20-30% increase already in the first quarter. And this is the increase
07:01that we will also look forward to in the next quarter also.
07:04So, Dadri, for us, is a plant where we are increasing and ramping up capacity on a daily
07:11basis. Therefore, we are looking at a good volume growth every quarter from here.
07:17Okay. So, strong volume growth led by the ramp-up in the Dadri facility. Thank you so
07:22much, Mr. Bansal. It's been a pleasure speaking with you, breaking down the company as well
07:27as wishing you all the very best for the rest of FY25.