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Polycab India, one of the largest cables and wires maker in the country, is expecting benefits of its distribution realignment to accrue this fiscal onwards with the FMEG vertical expected to turn profitable.
According to Gandharv Tongia, Executive Director and CFO, the company will invest around ₹700 crore as capex for setting up the extra high voltage (EHV) products facility at Halol in Gujarat. The unit is likely to be operational by FY26 and is expected to have a topline contribution of ₹800-1,000 crore over the next three years.
Investments into the facility will be made from “internal accruals”. The company has a positive cash position of about ₹1,900 crore, as of end-FY23, an improvement over around ₹1,100 crore in the year-ago period. The improved cash position came of the back of a revenue, EBITDA and PAT growth of 8.9 per cent, 28 per cent and 33.5 per cent y-o-y, respectively.
“We will retain the remaining amount towards merger and acquisition activity, if the need arises,” Tongia told businessline.
FMEG business
According to an ICICI securities report, the distribution restructuring (in FMEG) was completed in FY23. Launch of ratings on fans and distribution rejig impacted the FMEG last fiscal. Benefits of distribution restructuring will accrue in FY24, the report said.
The company, Tongia said, is on course to generate ₹20,000-crore revenue by FY26, as part of its Project LEAP, while export earnings are expected to be in the 10 per cent range | Photo Credit: cueapi
A “strong growth in fans” has been factored in following the launch of 40 new store keeping units (SKUs) and commencement of production at the Halol plant (for fans) — commissioned in March.
“While there is still some softness in the FMEG vertical, we expect it to turn profitable by the end of this fiscal,” Tongia added.
Export push
The company, he said, is on course to generate ₹20,000-crore revenue by FY26, as part of its Project LEAP, while export earnings are expected to be in the 10 per cent range. Exports in FY23 was around ₹1,400 crore, with the US being a key market.
Going forward, the company would tap into new markets in West Asia, LatAm (Latin America) and Africa.
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