Apar Industries Limited (NSE: APARINDS) Q1 2026 Earnings Call dated Jul. 29, 2025
Corporate Participants:
Unidentified Speaker
Kushal Desai — Chairman, MD
Analysts:
Unidentified Participant
Vidit Trivedi — Analyst
Nitin Arora — Analyst
Amit Anwani — Analyst
Garvit Goyal — Analyst
Charanjit Singh — Analyst
Nikhil Poptani — Analyst
Himanshu Upadhyay — Analyst
Sagar Dhawan — Analyst
Balasubramanian — Analyst
Mayank Bhandari — Analyst
Vignesh Iyer — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Apar Industries Limited Earnings Conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero or on your touchstone phone. I now hand the conference over to Mr. Ambesh Tiwari from Essential Technologies. Thank you. And over to you sir.
Unidentified Speaker
Thank you. Good afternoon everyone. I welcome you all for the Q S26 earnings call for APAR Investors to discuss the business and outlook. We have Mr. Kushal, chairman and Managing Director. Managing Director, I would now pass on to Mr. Kushal’s opening remarks. Thank you. And over to you sir.
Kushal Desai — Chairman, MD
Thank you. Ambesh. Good afternoon everyone and welcome to the Apar Industries Q1 FY26 earnings call. I would like to start by actually giving a quick overview of our performance, then get into a quick industry update and then post that we can look at the segmental performance and finally open the floor to questions. We have started off FY26 with a notable first quarter result. Our revenue for the quarter grew 27.3% over the same period last year to reach 5,104 crores. And this was driven by growth in the domestic business, particularly. Export revenues contributed about 31.6% to the turnover.
Our EBITDA is up 27% year on year to about 501 crores which is at a margin of about 9.8%. Profit after tax came in at 263 crores which is about 30% growth year on year with an absolute margin of 5.2%. In terms of key industry highlights, India’s renewable energy sector has recorded its strongest growth in the last three years with power generation rising by about 24% in the first half of 2025 compared to the same period in 2024. The renewable power generation has reached 134 billion kilowatt hours in the January to June 25 period, which is the highest semiannual growth rate that has been seen right from 2002 onwards.
June 2025 alone added about 7.3 gigawatts of renewable energy. This is about four times what it was in the same period a year ago which was 1.4 gigawatts. So this sharp increase has primarily been driven by both expansion in solar and wind. And this has been further advancing India’s clean energy transition. In the meanwhile, you will also find that coal based Electricity generation has declined by nearly 3% in the first half of 2025 and this was influenced to some extent by milder summer temperatures that reduce the overall power demand. However, we expect that in the short to near term there will be an increase in conventional energy as well to ensure that the baseload is being maintained.
In terms of recent tenders and projects in the renewable sector, I would like to point out that in June 25th approximately 6.8 gigawatts of renewable energy tenders were issued for project development, reflecting that the sector is still seeing momentum. Secchi, which is a solar energy corporation of India, has invited bits for 2 gigawatts of interstate transmission systems connected to solar projects, along with additional between 1 GW and 4 GW of energy storage systems as well. During the same period, 520 megawatt of EPC tenders were announced, including 260 megawatt of solar EPC floated by NTPC in Rajasthan.
Further, about 1 of BESS, which is battery energy storage systems capacity and 312 megawatts of renewable energy capacity were also awarded to developers. So there is a lot of action that is happening in this sector. You will see that increasingly more and more systems are requiring storage solutions in place. On the transmission side. According to Central Electricity Authority, India has added 22,190 MVA of new substation capacity in the first quarter of FY26. This is of 220 KV class and above and this is more than double what was added in the same period last year. However, this achievement is still significantly short of the planned capacity which is supposed to be 48,100 for the quarter.
So there is a pent up demand which is continuing to be built up. In contrast, the addition of transmission lines in the first quarter of FY26 was much below target. Only 1031 circuit kilometers of lines which are 220kV and above were added representing just 17% of what had been targeted which was 6000 circuit kilometers. Some of these delays have been actually attributed to segments where the right of way has not come through and there is a lot of attention being provided to get these clearances. And once again we feel that as these clearances come through there will be significant call ups and demand coming up.
So in the full year FY26 the planned addition of transmission line stands at 24,400 circuit kilometers which is planned to be 2.5 times what it was in FY25. Now coming to more specifically the performance business performance by Each segment. I’ll cover the conductor segment first, follow that up with the specialty oil segment and then finally close to the cables. So in terms of Our Conductor Division, Q1FY26 revenues grew by 43.9% 44% year on year on the back of improved product mix, higher realization as well as volume growth. The volume has grown by about 18% versus Q1 FY26.
Exports contributed about 20% to the overall revenue of the conductor division as opposed to almost 30% in Q1 FY25. As I mentioned in my opening remarks, on the conductor side, the domestic business was quite strong during this period and the domestic order book as well as the expected business to be awarded, as I mentioned in my opening remarks, continues to look strong. Our US revenues grew by almost 83% over Q1FY25 and 8.6% over the fourth quarter of FY25. Looking at our premium product mix, that contributed 43.5% in Q1FY26 compared to 37.1% in the last year.
On the profitability front, the EBITDA post open period forex came in at 43,688 rupees per metric ton as against 38,532 per metric tonight in the same period last year. This can be attributed to an improved U.S. and export product mix as well as growth in the premium business. If you look at the order book, our current order book stands at 7,779 crores and the new orders received during the quarter were about 3135 crores. So all in all, the conductor business has put in a very strong performance coming to the oil business even though the revenues seem to be flat over last year given that the average price of crude gas oil and some of the derivatives were lower than the same period previously.
However, the volume has grown by 8.1% compared to Q1 FY25. Transformer oil volume was higher by 7.4%. The domestic transformer oil volume grew by almost 20%. So it’s really the overseas business which was a bit slower. Automotive oil grew by about 8.4%. Industrial lubricants grew by around 15.9% year on year. However, as I said, the export side was a little bit slower. Many transformer oil projects in some of our key markets like Saudi Arabia, South Africa and Australia have got a bit delayed. We do have a strong order book, but its execution has been pushed out by a few months.
For the first time, the export mix actually came down to 36.7% which used to always remain 40 plus. Last year on a comparable basis it was about 45% of our revenues. Our expectation is that this is a temporary blip and as the project executions start picking up you will see this whole equation reverse. When you look at EBITDA for KL, it came in at Rs 7,004 as opposed to Rs 6,935 per KL a year ago. Now coming to our cable segment revenues in Q1 FY26 posted a revenue growth of 36.3% and revenues have reached 1,419 crores.
There has been a strong export performance in the cable division. Domestic revenues grew 19.7% year on year, whereas our US revenues actually grew 136% over the same period last year. Part of this was meeting customers, calling our product to meet a deadline of 1 August where the tariffs will change pending a conclusion on the tariff agreement between India and the us. So if you look at the export mix it came in at 41.3% versus 33.2% a year ago. If you see EBITDA post Forex, that also grew almost proportionately by 32.2% to reach 142 crores. The EBITDA margin came in at around 10% which is marginally lower than what it was in Q1 FY25.
The current pending order book stands at about 1,653 crores. If you look at exports in the non US markets, we continue to encounter some headwinds due to the subsidized exports taking place from China. I mentioned in the last earnings call that we had at the end of the full year results where Chinese products are being subsidized by between 8 and 12% and that trend continues. The trade deal with the US unfortunately has not yet been closed so the impact on India still remains a bit uncertain until this issue is settled. However, pending the finalization of the import duty structure, we are given to understand that many US clients are sitting on the fence.
They are going a little slower in terms of ordering as they are not clear exactly what the landed cost will be. Having said that, we are hopeful that the India duty rates should not be a huge disadvantage compared to some of the countries that so far we have been having to compete with, which are fundamentally Vietnam, Cambodia, Indonesia, Korea, Mexico and the eu. However, we are optimistic that in the medium to long term the demand in the energy sector with all the various initiatives that are running continue to remain strong in Europe, ESG requirements are continuing to increase and in fact participation in tenders is becoming contingent upon clearing a certain basic ESG screening.
So as I mentioned in the last earnings call as well that we are continuing with our planned capex spending of about 1,300 crores. So far we have incurred 150 crores of capex in Q1 and we additionally expect, based on the orders that have been placed, about 350 crores to be spent in the next few months within the quarter, maybe running up to the month of October. This will enable us to be prepared for the future and tap the various opportunities that come by. And also point out that we have a detailed corporate presentation in the investor section of our website.
Also this year APAR has released an integrated annual report. It’s a very comprehensive report which covers not only the financial performance but it integrates ESG considerations within the report. And we’d be happy if all of you go through it and if any of you have any feedback because this is a gigantic exercise that has been undertaken and it’s for the first time that we’ve done it. Please feel free to give us your comments and feedback because this is something that will continue going forward. So with this I’d like to come to the end of my comments and I’d like to turn it over for any questions.
Thank you.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Vidit Trivedi from Asian Market Securities. Please go ahead.
Vidit Trivedi
Yeah, hi sir. Thank you for the opportunity and congratulations on Grades are of numbers.
My first question is with respect to the Conductor Division. We’ve seen the realization as close to 43,000. My question is how sustainable are these levels or should we stick to the earlier guided range of 30,000 plus tailwinds?
Kushal Desai
Yeah, as we have always been saying, this Conductor Division because of the various products that we have, the premium and non premium mix changes and also the geography mix changes and different product categories have different margins. So always we have been saying that our guidance has been about 30,000 plus steel bins and in many ways the tailwinds are not so easy to predict. So we continue with the same guidance. 30,000 plus tailwinds. And the tailwinds will depend on the use of premium mix and non premium mix on the various metals involved, the geography mix, the kind of products which are there, comprehensive mix of that will determine the EBITDA for the quarter.
Vidit Trivedi
Got it, sir. Second, on the US growth this year in the connected division it’s close to 83%. So can we assume that this is also because of the pre buying? As sir mentioned that in the cables division a lot of activity was seen because of the pre buying.
Kushal Desai
Yes, to some extent, yes, we can see that one of those activities because you know, this duty structure is uncertain at this stage. And therefore, you know, customers have been insisting for some early deliveries.
Vidit Trivedi
So what’s the rate of duty? When we export to the US and the other players export to the US.
Kushal Desai
Ours is subjected to reciprocal tariffs which. Is 10 percentage plus the duty which was already there about 5 percentage. That is what the products from India we are subject to. But then different countries have different rates of duties. In some cases the reciprocal tariffs are there. And also as you have been reading the newspapers, there is a duty on aluminum, on steel also. So that duty is different than. And the reciprocal taxes are on top of that.
Vidit Trivedi
Got it. Thank you. All the best.
Vidit Trivedi
Thank you. The next question is from the line of Nitin Arora from Access Mutual Fund. Please go ahead. Yes, Mr. Nitin, please go ahead.
Nitin Arora
So this first question on the conductors, then we look at your export mix. Okay. On a quarter, on quarter basis it has been not moved that much as a share in conductors. Then it looked like to us that this realization growth has come from the domestic side largely. Can you throw some light? If this analysis correct and how you’re seeing domestic prices specifically AL59 and also if you can throw some light, do you think there is a likelihood of expanding more of these capacities? Because you yourself said that domestic demand continues to remain strong. So just on one of that aspect, if you can throw some light.
Kushal Desai
So on the first point it is correct that the domestic market is the one which has driven the growth compared to the export. And on the second point, the various products which we have been expanding in, on the copper side as well as on the aluminium side, both have grown. In the domestic market we see more of a possibility of growth in volume rather than expansion in margins, especially on year 59.
Nitin Arora
And on the pricing of 59, how that has been panning out, why I’m asking you this? Because it was always our exports which used to drive EBITDA per ton or realization per tonne. On the conductor. But this is the first time we are seeing that export market is so strong that it’s taking your EBITDA or rather your realization or EBITDA pattern so higher. So on the pricing side do you see any risk in the domestic market or do you think the demand is so strong that this pricing will remain for the next one, two years or three years? How you are looking sir? Little on a longer term.
Kushal Desai
So this nitin, the function of EBITDA was one exports as you rightly said but also the function was on the premium products that we’ve been selling the. Domestic market we have the premium products. That get sold on the domestic market and the standard products that goes to the export market. These two have been accounting for the high EBITDA margin and as you have seen in the earlier, even in the non premium part of the domestic business last year because of AL59 we have been able to get a higher price as compared to the traditional ACSR conductors. And as of now, and if it has been happening for the last 2, 3/4, the entire AL59 has replaced the traditional ACSR market. So there are these three things at least on a big scale that is accounting for the higher ebitda.
Export was just one part of it. But the high premium mix as well as More use of AL59 has also added to the EBITDA margin for the diction.
Nitin Arora
Just one on that export part I think you explained in the last call as well because one is obviously the reciprocal type. The other part, even on the steel, aluminum they are putting a lot of tariff, I’m talking about us and that’s where sir touched space that there might be a situation that he might start looking in capacities there because as you rightly said in the starting of the point, what will be the mandate cost? Nobody knows at this point in time and that’s for every country given steel and aluminum I think the duties are similar.
India is not known how much they will put on us but at least for the other markets the DT and steel and aluminum is about 30, 40%.
Kushal Desai
I’ll just clarify that. So you know there are the tariffs in the US there is one which is a reciprocal tariff. However the basic materials which is steel, aluminum, copper and a few others are falling under a completely separate classification called section 232 which are products of strategic nature to the government of the United States. So there the tax is an absolute, I mean the tariff is an absolute tariff. So currently for all of these three items, steel, aluminum and copper, it is at 50%, 5, 0%. So if a local aluminum manufacturer, meaning if a local conductor manufacturer need to import aluminum or someone needs to import copper or steel for that matter, they also have to pay 50%.
So you know, the situation is a little bit fluid in terms of finally going to settle because just recently it was just about a month ago that it was increased from 25 to 50%. And copper, which was previously zero, has also come into this 50% band. So there’s been so many changes that have happened that I think a little bit more time will allow all of this to settle down. In the meantime, there will also be some more clarity in terms of the reciprocal tariff that India will have with respect to the U.S. what I mentioned earlier, in terms of the rates with some of the countries from where imports are taking place, that is a reciprocal tariff.
So the section 232 is an absolute number. There is no reciprocal tariff, nothing. It’s just a fixed number irrespective of pretty much where the import takes place. So I just hope that I’ve clarified, you know, this absolutely complicated, but this is, this is what our understanding is based on what our UN advisors have informed us.
Nitin Arora
So this is very helpful. So basically anyone either use applying from India or someone else applying for the other country, the raw material import cost is the same or any US importing that the duties are the same.
Kushal Desai
As of now, the American manufacturer will have a 50% duty on his raw material. Not us, we don’t have 50% on. So suppose we are exporting a cable which is having aluminum in it at the moment. So right now the reciprocal tariff is 10%, the basic duty is 5%. So you end up paying 15%. If today I file a bill of entry in the United States for aluminum ingots, it would actually attract a 50% custom duty under section 232. Now what the final Indian tariff settles at, you know, we need to still understand, but I mentioned a few countries, the EU currently, you know, the settled deal is at 15% reciprocal tariff.
Nitin Arora
Right? Right.
Kushal Desai
And you’ve got Vietnam, which is I think at 19 or 20%, at 19% etc. Etc. Japan is at 15%. Yeah.
Nitin Arora
Let me ask you this question. At what percentage you think will go favor for India, at least for our business? I don’t know about any other business.
Kushal Desai
But we were previously competing when the tariffs were the same for, you know, when the tariff was the same for Indonesia, Vietnam, India, Korea, Japan, all these places. So if we are not at a disadvantage relative to these countries, then you know it should, the customer will be bearing a higher price and whatever is the effect of the project cost going up will, you know, will result in some amount of demand getting a bit handicapped. But we will not be at a competitive disadvantage to these countries. The EU is at 15% which is lower than the rest of the Asian countries that the export is happening.
But I think in the course of the next few days I think there should be more clarity on this particular front.
Nitin Arora
Very helpful, sir. I’ll come back in with you. Thank you so much.
operator
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Thanks for taking my question. First question on the cable business. This quarter we saw very strong exports growth. Export number for cable is almost 586 crores versus almost 350, 400 crore remedy whole of last year. And despite that the margins are keeping at about 10%. So first thing I would like to understand is strong export is coming from only US or these other functions also. And second, despite export contribution going up this quarter, why the margins are still keeping at 10% or cables.
Kushal Desai
So you know there is a, you know there is an overall growth in exports. A larger portion has gone to the US market. Part of it was as I mentioned in my opening remarks, to try to pick up a tariff where it had been declared at that 10%. There has been some impact that has happened because in some contracts the customer has paid the higher tariff. That’s the 10% reciprocal tariff. In some cases we have had to negotiate and compromise with the client and make sure that all of this product has gone through. So a combination of these plus some of the freight rates also had gone up in the short term when everyone is trying to push the product into the US during this interim period where the tariff was pushed back.
So there’s been so many moving parts. So I wouldn’t look at it as a fundamental change in the business economics. What fundamentally can changes if the, if the tariff situation becomes something that’s highly unfavorable? I also want to emphasize that the US market on cables is about $55 billion and 40% of those cables are still imported. And even though there are a bunch of new plants which are being declared, if you look at the cumulative output of those four, five major plants which are coming there, the output would just add up to a few billion dollars.
And the growth rate There is about 3% a year, year on year at least so far. So just the growth is equal to $1.5 billion or $1.6, $5 billion a year. So our assumption is, or thinking is that once this noise settles down there will be a certain, you know, the demand should start coming in. The issue right now is that if someone were to say that what is the landed cost of my product? You are not in a position to give that number.
Amit Anwani
Yeah sir, again for cables. We were. Highlighting about the competition increasing. So any change on domestic market on the competition front for cables as well as conductors? Both.
Kushal Desai
So on the cable side the competition does continue. There’s really been very little change in the intensity of competition. We have been focusing on certain areas where APAR has been fairly strong. One of the segments which has been growing very rapidly is the wind segment because that’s something that was very slow for the last few years. Currently there are several new windmills going in, especially the hybrid projects which is a combination of solar and wind. So we are seeing a good growth on the elastomeric cable and the windmill side. But otherwise there is no change in the.
There is no major change in the competitive intensity. Still remains competitive. So our emphasis has been really on improving productivity and you know, taking out conversion costs, energy efficiency. We have a bunch of new windmills which are coming through for our own third party captive which will also help reduce power costs, etc.
Amit Anwani
Right sir, on cable’s part the premium mix has gone up significantly. Before it was about 1300 odd crores this quarter also roughly about 1200 odd crores. The previously was only 8, 900 crore. So wanted to understand, you explained that the reason also for EBITDA pattern being higher is the standard product sales in US and premium product sales in India. So wanted to understand which premium products we are talking about. If you could explain more in the domestic market which has contributed very strong contribution from premium products during this quarter and in Q4 as well. Yeah.
Kushal Desai
So generally there’s been improved execution on the htrs which is the high temperature low sac. There’s also been a growth in the entire copper set of products. We have overhead railway conductors, we have copper transport conductors going to transformers and we have buzz buzz. So that range also has grown. Besides the HTLS and some of the execution of the semi EPC turnkey projects that we have on the htls. So overall that whole group, every line item has pretty much shown an increase on that side. That’s how we are seeing even the order book has increased by almost 8 percentage points from the same period in the previous year.
Amit Anwani
Right. Any color on that is my last question. Any color on the Non U. S business this quarter and how has been the performance in non US Business for conductors and solutions.
Kushal Desai
So the non US Business inquiries continue but we are finding in, in many cases, you know, some of the domestic projects are more interesting than going down in pricing for exports in certain geographies, especially Africa and some parts of Latin America etc. Where the Chinese products carry a fairly high level of acceptability. So our strategy has always been that, you know, what is our best netback that we get. And based on that, you know, we’ve been allocating where we want to export over the last few years and including in this Capex cycle, we keep on increasing the fungibility of our equipment.
So it gives us so much more flexibility to be able to move around within the product mix. So that’s why sometimes you find that Ramesh starts off being more conservative and then you know the numbers because if the opportunity comes up we have the ability to switch, you know, on the fly.
Amit Anwani
Yeah, just a clarification. On capex we said 1300 crore and P54 is additional or it is.
Kushal Desai
That’s the execution of that. So when we spoke about this, 1300 crores which we expect to spend by June of 2026 of that 150 crores physically has been already spent and then 350 crores is what we expect to spend in the next few months. So progressively it will go through. The big payouts will come actually around November, December, January when you pay for all the equipment, you know, because Initially you pay 20, 30% of the value of the equipment and the rest of it comes later on. So progressively this, you know, is being executed.
Amit Anwani
Thank you so much and all the best. Thank you.
operator
Thank you. The next question is from the line of Siergar with Goyal from Invest Analytics Advisory LLP. Please go ahead.
Garvit Goyal
Hi, I’m audience.
operator
Yes, Mr. Please go ahead.
Garvit Goyal
Good evening sir and congratulations for a recent set of numbers. My first question is from your opening remarks. You mentioned about the transmission lines that we have achieved 17% of our annual target for FY26. So is it due to monsoons entering earlier in India or any structural issues that you are seeing?
Kushal Desai
No, sir, last year, the last year number was very majorly affected because of the elections as well. But if you’re talking about so far in the first quarter, 17% of the planned quantity has been executed. So if you were to split it into four quarters it should have been about 25%. So there is a little bit of a. And you know, part of it is because the Monsoons did come in a bit early. There is also a right of way issue. Many lines have got stuck because of right of way acquisition matters. There is also a few forest permissions and clearances that are required.
So the expectation is that given the fact that so much solar is being added, these lines also will have to speed. And I think Everybody right from CEA downward, including the PMO’s office, everyone is aware of this particular issue. This is on the back of last year being also relatively missing the plan as I mentioned, by a fairly large number. So there is a good amount of pent up demand which should come up, you know, in the domestic market.
Garvit Goyal
Got it. And secondly on the like there are some issues happening in the industry related to delays in approval for 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 important components in the wiring of the solar plant. So are you seeing any slowdown here in the orders in Q1?
Kushal Desai
So we’ve had a reasonably good order book as we mentioned, you know, 3,000 plus crores. 3,175 crores approximately. So the order flow has still come in and our expectation is it should continue as these execution takes place. If they had gone as per the plan there would have been more business than we’ve been awarded. But our plants are running pretty much full and in a way actually it will time some of the expanded equipment that’s coming in.
Garvit Goyal
Okay. But actually I’m just trying to understand from you regarding the industry issues that recently came into picture regarding some approval getting delayed to be connected with the grid. And secondly on this IFT waiver that is removed from the internal intermission 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.
Garvit Goyal
Got it. Thank you very much. That’s it for my pleasure. All the best for the future. Thank you.
operator
Thank you. The next question is from the line of Charanjit Singh from dsp. Please go ahead.
Charanjit Singh
Yeah, hello sir. Thanks for the opportunity. So the question is on the premier premium conductors, so specifically in the domestic market, if you can help us understand in Terms of the demand supply scenario and you know, from the growth perspective, what is the current size of the market and how do you see over the next two to three years. This is mainly for the domestic market, premium conductors.
Kushal Desai
There is no challenges, there are no. Sources to get the market information on this kind of premium product. 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 reconducting is happening on a. May happen on a faster.
Unidentified Speaker
But it could have been.
operator
Hello, Mr. Chair.
Kushal Desai
Hello.
Charanjit Singh
Yes, sir. Yes, sir.
Kushal Desai
Can you mute other people? I don’t know from where the noise was coming.
Charanjit Singh
Sorry for the interruption, sir.
Kushal Desai
Right, yeah. Currently there are no organized sources of. Getting this market for these premium products. But as I said, there is more room to. Hello? Hello? Yeah.
Charanjit Singh
Yes, sir.
Kushal Desai
Yes. 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 reconducting projects because of various write off issues, because of time cost, because of capital cost outlayed by the utilities company. So there is more tendency on the premium part of the conductor business.
Charanjit Singh
Okay. So 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, you know, in terms of the stocking and the inventory buildup which has happened there, this could be, you know, for what duration, you know, you would generally see the kind of, you know, inventory buildup happening there.
Kushal Desai
So, you know, the challenge is 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 calling them up a little bit sooner is only because these guys, whoever has been importing the product in, has already given a fixed price previously for the bid. So this is not like the kind of stocking up that happened at Covid where there were several months of destocking to take place, at least not in our products because we were not in a position already running at a full capacity.
We only gave some preference to clear off orders where the settlement had taken place with the customer in terms of we will land it prior to 31st of July. So I don’t see really a big overhang from the current supply. What will be critical to see is where the tariff finally lands up and hopefully it will not be disadvantages to India. If it isn’t, then we would continue to see the order flow taking place and on the contrary we’ve really improved our go to market channels. The distributors we signed up, we have today a team of three full time representatives in the us we have a fourth colleague who is going to be joining shortly.
So the team is being enhanced and our sense is that once the noise settles down then I think business should start picking up again.
Charanjit Singh
Got it sir. So on the EBITDA pattern 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?
Kushal Desai
So we have been increasing these guidances on the conductor EBITDA per metric. Tonight you have times where competition is putting lot of pressure. As you see in the domestic market there is pressure on prices and also on the non US market there is pressure on the 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 4 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’d like to maintain it at 30,000 plus plus the tailwinds and as I said the tailwinds could be positive depending on various things that happens. But we are not able to predict the exact amount of what kind of tailwinds that will happen in a quarter. We 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 etc.
Charanjit Singh
Got it sir. So thanks a lot for taking my questions and all the best for the future. Thank you.
operator
Thank you. The next question is from the line of Neelab Jade, an individual investor. Please go ahead.
Unidentified Participant
Hello.
operator
Yes sir, please go ahead.
Kushal Desai
Yeah, please go ahead.
Unidentified Participant
Congratulations and growing a good number. Sir, one question I have regarding the for the long term you are telling at least in 2024 we have heard that you are facing lot of competitions from the China because they are trans shipping the goods to Vietnam. So now how is the situation panning out after this transition tariff has come in? Are you facing some better ecosystem Regards to the competition you mentioned that you are they are still giving 8 to 10% subsidy but this transition was a major issue you are facing earlier how the things are 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 you know, if they start picking up, you know, activities of this sort, then there could be an immediate change in the tariffs that that country is facing whether it’s Vietnam or whether it’s Cambodia, etc. So I think the current, the level of heightenedness 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 transhipment route is being used then I think whoever is using it is really gambling on this.
That’s the sense that we have.
Unidentified Participant
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 and because raw materials are high tariff in USA even 8 to 10% subsidy China is giving the but there are lot of tariffs have come in almost 30% tariffs on Chinese products. So Matrix I do not across the products what is the competitive advantage? How much competitive advantage China is now having over us either with those subsidies and etc how much income so you.
Kushal Desai
Know on 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.
Unidentified Participant
Okay. Okay. Yeah. Thank you. Thanks.
operator
Thank you. The next question is from the line of Nikhil from Kizuna Wealth. Please go ahead.
Nikhil Poptani
Yeah. Hi sir and thank you for giving me the opportunity and congratulations on the great set of numbers.
Kushal Desai
Thank you.
Nikhil Poptani
So my first question is like with so much conservancy to cables export so are we still guiding 25% value growth in cable segment?
Kushal Desai
Yes, we are still guiding 25% value. Growth on the cable.
Nikhil Poptani
That’s great to hear. 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 be the advantage over the Chinese competition or not with that kind of scenario.
Kushal Desai
So currently the. So you know 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 in 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 the 10% gap 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’ve seen it happen a couple times before and we’ve seen it getting reversed as well.
Nikhil Poptani
Okay sir, that’s great to hear. And then my next question is like the cable segment, how would the volume go in that segment and are you assuming the same kind of volumes going forward?
Kushal Desai
We don’t report the volumes in the cable segment because there are number of categories within the segment. So we are only reporting the value. But yeah, I mean to answer the question that yes there is the demand, domestic demand remains reasonably strong for us. What’s important is the premium segments or the segments where we differentiate ourselves. The demand for that should be strong then that’s how our domestic participation happens. We have seen the wind sector is doing reasonably well. We are also seeing that solar is continuing to expand. We are supplying several data centers here in India. So we see that the demand generally in the domestic market has been strong. What may get affected in the short term for the cable side is we export to the US because of the, you know, until this tariff thing gets gets sorted out.
But fundamental demand may, we don’t see too much of a let up. It will continue to be there.
Nikhil Poptani
My next question is like the new contracts that we are selling on, new orders that we are getting, who will pay the tariff? Like are we supposed to pay the tariffs or it will be split between the client and you. So what are the, what are the new norms of these orders that we’re taking in?
Kushal Desai
So you know, tariff today is coming as a line item. So you know it comes with a straightforward assumption today saying that okay, the tariff at the moment that we price it is at 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. We are just sitting it out. The orders that are Continuing to come in today are those attached to projects which are at 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, you know, just paying the increased tariffs. 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, you know, this whole order book which we were carrying prior to the, you know, the declaration of the tariffs, the 10% increase that happened of the reciprocal task.
And the same thing is also true on the conductor side. Both the divisions apar has been following exactly the same practice.
Nikhil Poptani
That’s, that’s really great to hear. And so my next question is like on our conductors order inflow, we had a five quarter high orderly order inflows on the conductor segment. So sir, how like majority of these 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 or incident?
Kushal Desai
Yeah, 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 Poptani
Okay, sir, that’s great to hear sir. Thank you for giving me the opportunity, sir, and all the very best. Yeah.
operator
Thank you. The next question is from the line of Himanshu Padya from Bugle Rock pms. Please go ahead.
Himanshu Upadhyay
Yeah, hi, good afternoon. My question was on the oils 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. But the margins wise it seems there is not much of an improvement. Okay. Though it seems yoy it is some improvement but I mean the price of crude has fallen.
Kushal Desai
The reference which you know, I read out and I mentioned during my opening remarks is a quarter to quarter reference. So if you see in the first quarter of last year it was also the highest margin that was there in the year so if you see on an absolute level the margin of 7,000 plus, you know, EBITDA per KL is one of the higher margins that we’ve had.
Himanshu Upadhyay
And are we seeing margins what we are having, what we are expecting, will it be because of product mix improvement majorly or.
Kushal Desai
Yes, it is primarily. No, the volatility is actually not helping at all. It is actually dragging things down. It would have been even higher. It is 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 degrown 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.
Kushal Desai
And so the market, 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 Americas. So when you add up, you know, 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, 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 gpp.
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
Yeah, thank you so much. Yeah.
operator
Thank you. The next question is from the line of Sagar Dhawan from Valloquest. Please go ahead.
Sagar Dhawan
Yeah, thanks for the opportunity and congratulations on a good set of numbers. My question is on the US demand, sir, basically, if you just keeping the tariff rated uncertainty aside for a minute. What is your outlook on the US. Demand after the big beautiful bill getting passed as an act because it puts. A. Service deadline for the renewable projects to come in to augment the incentives. So does it change anything on the. Demand front for you in the US. Because of the urgency creates for the renewable projects.
Kushal Desai
So you know, 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’ve been seeing that the offshore wind side, you know, is than 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 would 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. 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’ll still continue to be a growth in the North American market. We’ll take all the pluses and minuses.
Sagar Dhawan
Got it, sir, Got it. And the question that I had was. Again, in 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’ve been doing our homework on it. However, at this stage, unless and until this whole tariff thing becomes clear, suddenly there was this increase from 25% to 50% for import of aluminum ingots, copper rods, you know, all these things. So that would obviously have a material impact, you know, if you were to manufacture, manufacture locally in the United States. So we’ve been doing our homework quietly in terms of figuring out what could be the possibility there, but we haven’t taken a call.
I think we need more clarity before a commitment can be made.
Sagar Dhawan
And the last question from my side is, on the conductor volume group, we’ve been guiding for about 10% on volume growth on conductors. Any change in that guidance or are we sticking to that number?
Kushal Desai
Yes, sticking to the same number. 10 percentage on an annual basis, Some quarters may be high or low, but I think on an annual basis, 10% volume growth is what we are guiding.
Sagar Dhawan
And sir, if I heard correctly, answer. To the MA participant capacity. Did I hear that correctly?
Kushal Desai
Yeah. So we are, 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 1300 crores there is almost 400 crores, 300 and odd crores going into expanding the conductor. Various products that are in that division.
Sagar Dhawan
Okay so by when does that line come on.
Kushal Desai
Come in and you know getting, getting installed. But a chunk of them are coming actually in the, in Q3 and early Q4.
Sagar Dhawan
Okay, thank you. This is for me.
Kushal Desai
Thank you. Okay.
operator
Thank you. The next question is from the line of Amit Anwani from PL Capital. Please go ahead.
Amit Anwani
Yes, just a couple of things on conductor as the realization has been. High. In Q1 and 4Q are we expecting similar number like 4 80,000 per ton? That’s what we reported. Just wanted to understand on realization going forward for investors.
Kushal Desai
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 as you know fluctuate. So there’s a big difference between the two. One is almost, yeah three and a half times. So when that price of metal fluctuate, the composition of that changes. So it’s a bit difficult to predict that number. Everybody in the business is actually measured on a, on a per ton basis. So that’s a good measure you know to track because everyone, you know, variable compensation, bonuses, everything is based on fundamentally you know that metrics and that’s the metrics which we also put out for you know, investors and in the public. Yeah. So we just I think focusing on that rather than a realization I think would, would be, would be better in terms of setting up your model as well.
Amit Anwani
Yeah. And so you highlighted about reconducting being 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 contributions.
Kushal Desai
We don’t actually end up giving sub segments within that. You know we classify the certain set of products we 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 reconducting. And theoretically we feel that Every conductor that has been put into India a few years ago is actually primed for being reconducted. So you know, we don’t have a breakup of that. We don’t hit the breakup of that today because it’s sensitive information. But otherwise, as you can see, that whole sector or section is growing and that includes the reconducting portion of the business.
Amit Anwani
Right. And so any color on the competition is reconducting whatever products we’re supplying. Are we just one or two players or how is the market who are.
Kushal Desai
Getting into the business? The largest is clearly ourselves. Then after that you have sterilite power and following that is gsk. 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 produce, 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 reconducting 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 the end providing the entire solution which is faster, more difficult to do.
Amit Anwani
All 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 give it total only. I mean we don’t share the breakups of that. Okay, but sir, any color on the growth of total specialty cable portfolio, has. This been higher than the total growth in the cables business?
Kushal Desai
I think it’s been almost similar. As I said, the power cables also have. The segments have moved for us where we’ve 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 center. So that includes the approval for the U.S. market. And so once this whole tariff overhang settles down, that’s another opportunity for growth. But otherwise we’ve seen the power cable side growing. We’ve seen a little higher growth in the flexible elastomeric side because the wind has actually picked up very substantially compared to previous periods.
But otherwise it’s really growth across segments. The railway side has been also steady. As they add more vande Bharat trains, etc. We will be, we are still at 90% of the supply to Vande Bharat Trains as well. So it’s quite a secular growth.
Amit Anwani
Great. So thank you so much. Thank you so much and all the best.
operator
Thank you. The next question is from the line of Balasugramanyam from Aryan Capital. Please go ahead.
Balasubramanian
Good answer. That solar industry model manufacturing capacity is almost doubling up and we are leveraging our solar cables and contractor 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 you know, if you look at the solar cable as you see in that investor deck, you know the, that we have, sorry, the presentation which we have, this is the comprehensive, you know, 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 a string cable which is the cable that connecting the panel. That is that apar actually has a very strong position because those are electron beam cables. We have, 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 cable which connects 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 you know, that part of the business for us, we just measure it up against other opportunities that we have for power cables.
So the solar cables which we talk about, where Apara is a very strong position is the DC cables which are the cables that are used for stringing the panels. So there we’ve invested in capacity, we have capacity to grow. And in fact my sense is that the highest amount of addition is still to come because as Reliance starts producing their own modules, there will be a huge amount of execution that they will do. Similarly, as you know, I read out earlier in the, in the opening remarks, the momentum of more and more solar projects continues to grow.
Some of these solar projects are very large in size. So you will start seeing more premium conductors being used so that the evacuation that can be done from those sites is actually carrying much higher power from those sites.
Balasubramanian
Okay sir, so the oil storage terminal side, like how much cost reductions we can expect from JNPT UEA expansions, will this improve our export competitive units?
Kushal Desai
So I mean first of all what’s happening today is that since we’ve 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’ve shut down and they’ve been renting out these tanks. So as time passes by, the rental value on these tanks is continuing to grow or companies are going into redevelopment of that land. So you’ll 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 when you 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 mention, the possibility of exporting product in bulk, which we haven’t been doing so far. It’s all going out in flexi bags, et cetera. So that bulk portion is still a discovery that needs to take place.
But the project can be justified simply on a payback based on external storage costs.
Balasubramanian
Got it, sir. So on that export side especially we are focused on aluminum alloy cables at 8000 series. Especially for us. Is there, is there any copper demand lacking due to cost or any performance factors?
Kushal Desai
No. So previously what was happening is that copper in the US had zero duty, whereas the cables carried, you know, a duty that was the same as aluminum. Okay. So as a consequence there was more competitiveness than a local US manufacturer had to produce copper based cables compared to aluminum alloy based, you know, 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, you know, 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.
Balasubramanian
Got it, sir. Thank you.
operator
Thank you. The next question is from the line of Mhandari from Asian Market Securities. Please go ahead.
Mayank Bhandari
Thanks for the opportunity. Sir. I have one clarification or export in the oils business, does it include the same that we are doing from the Sharjah plant?
Kushal Desai
Yeah, absolutely. The global sales as you report and.
Mayank Bhandari
What was the FY25 number that Sharjah plan to.
Kushal Desai
It’s about thousand crores.
Mayank Bhandari
Which was almost.
Kushal Desai
25 exact number you’ll find in the annual report because all the substitutes, the subsidiary numbers are there in place but the number that we’ve 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 banning out from that segment? I mean what kind of growth we should anticipate from that particular plant in Sharia?
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 consuming. So how is the business growing in terms of the demand environment, if you could comment on that.
Kushal Desai
Yeah, so actually the. It’s a mixed bag. Some countries are doing very well. Like for example there are a lot of infrastructure being added in Saudi Arabia given that there was 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. You’ve got 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 Humlia 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 Humbly Aya, those formulations are identical to what we produce in India. So we have actually 100 fungibility for our client. We end up looking at wherever the freight and logistics are better both in terms of timeline as well as in terms of cost.
And then we work with our customers to allocate where you know, it makes sense for them to receive the product from.
Mayank Bhandari
Sir, we were planning to leverage on this cost advantage from that plant. So I mean why is this segment then overall not delivering growth? And the growth has been quite muted for quite some time. So I mean, you know, everything is relative.
Kushal Desai
So 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 to 3%. So when you have an 8% growth, you are at around 3, 2.5 to 3 times the market. Also there are subsegments 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’ve been dropping it off because we don’t like the margins on, 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, it’s been hitting all time highs and it’s not a very huge number, but it’s very consistently been growing. And today if you see the quantity of base oil that Apar imports into India and blends in India, 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’s a very steady business.
It’s not a business that’s going to grow at the pace of the conductor business or the cable business, but it’s a very good cash flow business.
Mayank Bhandari
Okay. 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, the domestic business will grow faster.
Kushal Desai
So I believe that the domestic business is actually growing faster than the Hamriya business because we have transformer oil, which is a big portion of our domestic business. We also have lubricants, which is a big portion of our domestic business here. Having said that, the Sarja plant is an extraordinarily efficient plant. So the fixed structure there is not very high. And so you have a lot of ability to actually scale up and down depending on the opportunities in the market presents itself.
Mayank Bhandari
Sure. Thank you.
operator
Thank you. The next question is from the line of Sushil Dood from Insightful Investment llp. Please go ahead.
Unidentified Participant
Yeah, so my question, you know, actually is a couple of things. You know what from a more longer term, on a structural perspective, what really worries you most in terms of, you know, if you just have to do some brainstorming in terms of what can go wrong. So for instance, you know, other than China, which is not likely to be a 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 rates? So these kind of questions is what basically answers that I’m looking for.
Kushal Desai
Okay, so on a structural basis, you see what is our biggest worry? Our biggest worry is actually geopolitical tensions because, you know, they’re 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’s a tariff whip that’s being used to try to police things. So, you know, that adds to a certain level of uncertainty. I’m 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 simply because there is no other option that’s out there. Again, there may be some short term issues, you may have someone carrying an opinion, but the fact actually you can’t change facts. And the problem that seems to be there with some of the administrations around the world is that they’re playing around with facts. You can play around with an opinion but you can’t play around with the fact.
So when you do that, then it’s only a short term thing before, you know, the reality dawns on you. So wherever you have. The thing is that we focus a lot on where the demand of the market is going to come from. The solar demand is going to be universal because it is the fastest, cheapest form of power. Yeah. 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.
Now 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, you know, not everybody can build in the salt pan of, you know, 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 where it falls and wind actually complements it completely. So as a consequence you’re 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, you know, when you look at all these things, and I think the regulators are getting very smart now by pushing for, you know, all these combinations, etc. So our sense is that, you know, wind is not going anywhere. The wind, 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 is going to disappear. A little unpopular for some powerful people in the world, but the economics are not changing, especially where a plant load factor remains good.
Unidentified Participant
So we are not leaning excessively on wind in case wind slows down for whatever reason, whether in India or US, that’s 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 windmills. The one thing that hasn’t yet picked up, but is going to pick up because it’s right at the top of the regulators discussions, 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, 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 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.
Unidentified Participant
And so any one or two particular countries other than China, where, you know, because US is doing bilateral now with most of the countries, you know, where if the duty structure turns out to be lower than India for that particular country, then you know, where our exports, particularly of conductors or cables and cables both can, you know, get impacted.
Kushal Desai
So I think that that made sense to take a pause, you know, once the dust settles on this. I think in the next few weeks there’ll be the letter going out to various countries, especially those that haven’t got into any serious dialogues with the United states. But if 15% seems to be the bottom then, and you know, if India is in that ballpark, then we don’t see anything major, you know, upsetting this whole pfc.
Unidentified Participant
My understand is just that if Vietnam stops Cambodia, Korea or you know, I don’t know, Bahrain or someone gets, you know, 10, 15% differential versus India, then you know, do they, do they have those kind of capacities where, you know, they can really, if something happens where.
Kushal Desai
Bahrain is 10% cheaper than India, then obviously their conductors will land cheaper. But they don’t do cables. So the cables also there are still some specialty conductors which we do, especially the HTLs and you know, some other special forms which are quite popular in the US which will continue to go from here. So I think, Shushil, we’ll wait for it till all this happens, you know, then take a call.
Unidentified Participant
Fair enough. Thank you so much and best of luck for the year ahead. Thank you so much.
operator
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 you paid for the quarter is around 85 crores. Even though our execution is almost similar to what we did in quarter four. So wanted to understand if this lower interest outflow is majorly because of lower networking capital cycle or is it because we paid off some long term borrowings and our total cost has come down.
Kushal Desai
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.
Vignesh Iyer
Right, Right. So basically instead of the working capital usage has gone for the internal accrual that has so resulted in this lower intercomp. Right. If I get it right.
Kushal Desai
Yes.
Vignesh Iyer
Okay. And secondly sir, on the, on the cable decision side, we have seen exceptional growth in this quarter and as we, if I remember from your commentary at start of the call, it is because of higher performance from us due to fear of padding. So can we assume that the other three quarters on a normalized basis could consistently give us a 25% growth.
Kushal Desai
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 is also growing by 20 odd percentage. So we won’t be able to give that impact. How much will happen if that US thing US orders would have not got executed? What would have been the growth rate? 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 end.
Kushal Desai
Thank you.
operator
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. Thank you everyone for joining our earnings call.