KEI Industries Limited (NSE: KEI) Q3 2025 Earnings Call dated Jan. 22, 2025
Corporate Participants:
Anil Gupta — Chairman, Managing Director and Chief Executive Officer
Rajeev Gupta — Chief Financial Officer
Analysts:
Achal Lohade — Analyst
Saumil Mehta — Analyst
Rahul Agarwal — Analyst
Natasha Jain — Analyst
Praveen Sahay — Analyst
Shrinidhi Karlekar — Analyst
Bharat Shah — Analyst
Naushad Chaudhary — Analyst
Akshay Gattani — Analyst
Vidit Trivedi — Analyst
Saket Kapoor — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to The KEI Industries Q3 FY25 earnings conference call hosted by Novama Institutional Equities. As a reminder, all participant line will be in listen only mode. And there will be an opportunity for you to ask question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Achal Lohari from Novama Institutional Equities. Thank you. And over to you sir.
Achal Lohade — Analyst
Yeah. Thank you. Good afternoon everyone. On behalf of Nuama Institutional equities we are glad to host the senior management of Kei Industries. We have with us Mr. Anil Gupta, Chairman and Managing Director of the company. Mr. Rajiv Gupta, Executive Director, Finance and CFO. We will start the call with opening remarks from the management and then move to Q and A.
Thank you. And over to you Anilj and Rajivji.
Anil Gupta — Chairman, Managing Director and Chief Executive Officer
Thank you very much. Good afternoon to all of you. I’m Anil Gupta, CMD Kei Industries Ltd. I give you a brief of the Brief summary of Q3 of 24 FY25 on Net sales in Q3 FY25 is rupees 2467.27 crore. So we have grown the net sales by 19.81%. EBITDA is 254.45 crore. The growth in EBITDA achieved is 11.25%. EBITDA oblique net sales margin is 10.31%. As against 11% in the same period last year. Profit after tax this quarter is rupees 164.81 crore and growth in the PAT is 9.38%. PAT oblique net sales margin is 6.68%.
Domestic institutional cable sales of wires and cables is 809 crore. Growth is up 45%. The domestic institutional extra high voltage cable sale is 41 crore against 1. So there is a decline now around 78% during this period. I give an explanation that this decline is due to non receipt of row and permissions and clearances in doing the work during this period. However, we have used this capacity of EHP cables for manufacturing HT power cables. So that is why there is a jump of 45% in the in the HT cable sales compared to last year.
Export sale this quarter is 301 crore against rupees 284 crore. Last year growth is approximately 6%. Actually there is a growth of around 30% in the wire and cable exports. But the decline in numbers is due to the EPCD growth in the export sales from our Gambia project. Last year the Gambia project we exported 69 crore and this year it is…
Rajeev Gupta — Chief Financial Officer
It is 13 crore.
Anil Gupta — Chairman, Managing Director and Chief Executive Officer
13 crore. So it is due to this factor the EPC DE growth is there in the export. Total cable institutional sale contribution is 45%. Same as in the previous year. Sales through this distribution dealer network achieved is 1,247 crore. The growth in the sale through B2C is 31%. B2C sale has contributed approximately 51% in third quarter as against 46% previous year same period the EPC sale, engineering procurement, construction projects other than cable is rupees 60 crore as against previous year same period 146 crore. Decline is approximately 49%. This is against our. You know stated policy around three years back that we will gradually reduce the ETC business and we’ll maintain the EPC business maximum within to 4 to 400 crore to 500 crore on an overall basis out of the total sales of EPC, each EHP education sale is 21 crore against 32 crore in the same period last year. Sales of stainless steel wire in Q3 is 54 crore against rupees 46 crore last year. Growth is approximately 49%.
Now I will read the nine month summary. The next yields in nine months of FY25 is 6807 crore. The growth in the net sales is 17.68% in the nine months period. EBITDA is 724 crore. Growth in the EBITDA is 15.56%. EBITDA of the net sales margin is 10.64% as against 10.84% in the same period previous year. We are hopeful and expect to maintain the previous year EBITDA on a full 12 month basis in this financial year.
So the profit after tax in nine months has grown by 13.97% which is 469.87 crore. So the profit after tax oblique net sales margin is 6.9% versus 7.13% last year. That will also we hope to maintain the same in this financial year also.
Domestic institutional cable sales VAS and cable is 1998 crore in nine month period. The growth in the institutional Cable sales is 28% over nine month period. Export sale in nine months period is 775 crore versus 840 crore last year. This is due to the decline in the EPC sales to our EPC project in Africa Gambia which is which sale is not there this year. But actual wire and cable sale in exports has grown by around 30% overall total cable institutional sale contribution in 9 months is 41% and sales through distribution network was rupees 3590 crore. The growth in the sales through B2C network is 32%. The total active working dealers of the company as on 31st December was approximately 2016. B2C sale has contributed 53% in 9 months period as against 47% in the same period last year. EPC sale other than cable is rupees 271 crore against 370 crore last year. Decline is approximately 27%.
Volume increase in the cable division based on the production for consumption of metal in nine months of FY25 as compared to previous year. Same period is approximately 19%. Pending order as on 18.03.25 is approximately 3871 crore out of which export pending EPC pendency is 554 crore. Extra high voltage cable and connected PPC is 598 crore, domestic cables 2148 crore and cable export orders 571 crore.
I will give you a brief on the future outlook. During nine months period company has incurred capital expenditure of rupees. Capital expenditure payment of rupees 426 crore. Out of this Sanan rupees 252 crore, Chinchpala 57 crore, Biwari rupees 27 crore and Patri 49 crore and other plants and locations 41 crore. Brownfield capex at Chinchwara and Pakre 2 is completed and it will add further capacity for wires and power cables and this this capacity addition has been completed. After the completion of the Brownfield Capex capacity utilized during nine months of FY25, approximately 85% in cable division, 69.7% in houseware division and 91% in stainless steel wire division. This Brownfield Capex will enable us to grow in volumes by 16 to 17% in this financial year. Apart from this Brownfield CapEx in FY24 25 company has planned a capex of around 800 to 1000 crore on greenfield expansion for LT, HT and EHP cables in Hanan, Gujarat. Commercial production of first phase of low tension and HT cables will commence by end of Q1FY 2526. We started the construction last year somewhere in March 24. We will spend further around 700 crore in the next financial year to complete this project. This will allow us to maintain a growth of CAGR 19 to 20% in volume terms as against achieved CAGR of 14 to 15% during the last 15 years company has raised rupees 2000 crore through QIP on 28-11-24 to fund finance project and repayment of outstanding debt and for general corporate purposes it in out of which rupees 1450 crore is for Sanal rupees 240 crore general corporate purposes and 276 crore term loan repayment and rupees 34 crore QIP expenses.
Market Outlook remains strong and we are quite bullish on our demand for our products in domestic market as well as international market. We are getting a good traction from our various customers in the international market and we will be able to grow both domestic and international business as soon as our HT capacities and other capacities comes on board in Sanand.
Thank you. So this is a brief. I now request you to raise any questions or queries, whatever you may have and we’ll be glad to answer. 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 their 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. The first question is from the line of Sawmill Mehta from Kotak Mutual Fund. Please go ahead.
Saumil Mehta
Yeah, thanks for the opportunity. So, two questions from my side. While you mentioned the EH2 segment had some weakness which was there even in Q2 and continue in Q3. When should we expect some sort of traction in this business? And was this weakness got to do with large domestic orders? I mean if you can give some color on this, how should we look at EHV segment going into FY26?
Rajeev Gupta
So as of now our order book has now start building up. As of 34 current position is close to 598 crore of EHP order. Now we are carrying so so now from the quarter and the next financial year we will be again in the normal range of production for EHV table.
Saumil Mehta
So should we expect a meaningful step up in terms of the specific business related to EHV going into 26 given FY25 will have a very favorable dates.
Rajeev Gupta
You see in the EHV cable business if we talk of the last three four years. So the in one year it is almost 600 crore, 500 to 600 another crore is close to 350 crore. So sometimes these kinds of problems are there earlier also. So by next year again it will be going up towards the 550 to 600 crore sale for the next financial year for EHP. But in the meantime whatever EHP capacity was ideal, we have utilized that capacity for high tension power cable product range. So our capacity was not ideal but little bit EBITDA we lost because if we sold more than 200 crore of extra HV cable, additional 4 to 5% of EBITDA we will be generating. So only to that extent we lost actually.
Saumil Mehta
Okay, okay. And for this particular quarter given copper prices were volatile what was the volume growth? And if you can just broadly quantify the inventory losses
Rajeev Gupta
As we are increasing our production capacity because of our Chinchala and has operational. So if you talk of the only for the particular quarter three in quarter three volume production increased by close to 28% because that’s why our finished goods inventory has also increased because now our base will be close to 27 to 2800 crore rupees per quarter basis sale future. So that kind of inventory we will be carrying now. So on the basis of the whatever sale we did approximately 16, 17% was the volume growth. But in terms of the production the volume will be higher. So that’s why in fourth quarter it will be reflected in our sales also.
Saumil Mehta
Great. And some last question in terms of the retail business obviously is going showing traction. While I understand this will also include wire business now from a competitors at least our inference is that. Why? Market is still very down. So what are we doing? Especially are there any specific segments where we are growing meaningfully when it comes to our retail business? That’s my last question. Thank you.
Rajeev Gupta
Whatever we were doing earlier, we are doing the same things. We are focusing, increasing our retail presence, increasing our geography and increasing the increasing the influencer activity and the sales team. Accordingly we are growing. So in the retail business since last three, four years if you see we are continuously growing close to 20% to 25% range. So in the same year also in the nine month basis also we are growing in the same way.
Saumil Mehta
Perfect. Thank you Rajiv. And all the best for future quarters.
Rajeev Gupta
Thank you sir.
Operator
Thank you. The next question is from the line of Rahul Agrawal from Ikigai Asset Management. Please go ahead.
Rahul Agarwal
Hi sir. Good afternoon. Hope all is well at Kei. Sir, two questions. Firstly if Anand you could talk about next year. You know across segments you talked about phv. But if you could talk more on institutional sales, housing wire sales, exports. How do you see growth and margin for fiscal 26? That’s the first question.
Anil Gupta
26. Rahulji, as we have earlier guided that we will be growing, growing close to 19 to 20% because we will be creating additional capacity and our brownfield capex of since Fara and Pathele already completed. So we will be easily growing 19 to 20% in the next financial year. With regards to the EBITDA level. EBITDA level in the next financial year will be close to 11%. As we have earlier guided
Rahul Agarwal
More specifically on exports and housing wires. How do you see growth there?
Rajeev Gupta
Actually in each and every year you will see in the sales number. Sometimes exports increase, sometimes domestic institution increase, sometimes retail increase. So from this point of view we can’t comment on individual specific segments. But overall whatever capacity we will be having we will be utilizing with all these segments. But our focus remains strong. As well as in retail as well as in export. Continuously in export market. I will request Anilji to update about the placement of the new people in the overall geography area. So Anil, please explain.
Anil Gupta
You know we expect a substantial growth in the export business especially from US and Australia next year. And even our Middle east business and African business is also growing. I this year as I mentioned that we expect 30% growth in our overall full year basis in the in our account Exports in wires and cables. So in numbers it will reflect little less because of the decline of EPC exports which was last year around 160 crore which is not there this year because that project is over and. But next year we expect close to 30 to 35% growth in the export business from this financial year level. And as soon as our more capacities comes up on board we’ll be able to scale up the exports for which we will be able to comment once our first phase of production commence in
Rahul Agarwal
Is to reach export within two to three years time at 15 to 17% of the total sales.
Anil Gupta
You know, because we need little bit of. After commencing the commercial production we will need two to three months over there to stabilize the production. And also you know factory specific audits from the customer which will. Which takes little time when we shift our production to a new facility for export customers.
Rahul Agarwal
Got it sir. So this export order book right now you said was right. That is executable over what period
Rajeev Gupta
This is executable Even three to four months. Because whatever pending order is basically executable in three to four months.
Rahul Agarwal
And how would that be for EPC and EHV order book EHV 598 crores and EPC 554 crore
Rajeev Gupta
Will be executable in putting to six months time.
Rahul Agarwal
And EPC 554.
Rajeev Gupta
EPC 564 is basically in two years time. Longer period time.
Rahul Agarwal
Perfect sir. And last question on creditors sir if I look at Kei pre covered to post Covid consciously we have decided to pay creditors faster. Earlier we used to be like 120 days of COGS. Right now we’re almost half to 60 days which is very good. Just wanted to understand the benefit of this is reflected purely interest cost savings. Or should we look at.
Rajeev Gupta
Whenever we were purchasing the metal from the Hindalco, Vedanta or import it is already on the cash basis or through the letter of credit where interest was borne by Kei. So now we are having the cash. So we are purchasing on cash actually so we are not opening the this letter of credit also. So as again we were earlier utilizing the letter of credit through acceptances close to 1000 crore. Now it is hardly 100 crore.
Rahul Agarwal
Perfect sir. So it should. It should. Does it reflect any benefits on the margins also gross margin.
Rajeev Gupta
It is basically interest cost benefit as well as because if we are having the funds then buy to utilize the letter of credit and be at the interest cost on the company. If we will not have any working capital then we will be utilizing the letter of credit and the credit period from the supplier side for 90 days. So this is liquidity available to the company. Actually as of now we are, we are having cash, we are purchasing through cash.
Rahul Agarwal
Perfect, Very clear and all the best for 2025. Thank you.
Rajeev Gupta
Thank you.
Operator
Thank you. The next question is from the line of Natasha Jean from Phillip Capital. Please go ahead.
Natasha Jain
Thank you for the opportunity. So my first question is on is a continuation of what Somil asked. So in terms of EHV now I understand there has been delay in clearances execution but now this is no more a 1/4 phenomena. We’ve seen this for almost the entire year for FY25. So just want to understand what is the fundamental reason behind these delays? Are projects getting cancelled or if you could throw some light on that. Firstly
Rajeev Gupta
First of all our object is to utilize the capacity. Whether with that machine we are making the EHV cable or we are making the HD cable. The only difference while we are making the HV cable little bit EBITDA margin of 4 to 5% is higher in case of ESV project. Okay. But in the at that at the same time 1 1/2 to 2 months working capital also required more in the case of php. So. So earlier like last year we have utilized close to more than 600 crore sales through EHP. This year the sale will be close to 350 to 400 crore. So what additionally we lost is only on 200 crore same only 4% EBITDA. That is 8 crore for full year basis. So that is the difference between the product to product range. So we are more focusing on the utilization of the full capacity with respect to product with respect to the segments. So sometimes orders are there, sometimes the row issues were not there. Sometimes in the last four years. I will give you the number. In 2122 we have sold 514 crore. In 2022-23 we have sold again 366 crore. So low sale again in 2324 we sold 659 crore again. In 2425 we will be selling close to 300 to 350 crores. Here again in 2526 we will be reaching out to more than 550 crore again. So that is a trend it is going on but it does not matter to us.
Natasha Jain
Understood. Sir, the reason why I was asking is because even though, like you said, you just want to fungibly use the capacity, it does impact our ebitda. So having said that, in the fourth quarter, the ongoing quarter, has clearances come through or is there still a execution dealer that’s happening on the ground
Rajeev Gupta
Quarter sale will also be close to 50 to 60 crore because as of now we are heavy order position of HD power cable and so we need to execute those order.
Natasha Jain
Understood sir. And my second question is broadly on the domestic market for wires and cables now we entering the seasonal quarter. So can you just throw some lines to how the order book is looking like for the current quarter and a little bit sense on export as well for the current quarter. Thank you.
Rajeev Gupta
As we said that the order book is strong as of now the domestic cable buyer and cable cable division order is 2148 crore. Buyer we are not reflecting in the order book because buyer we are currently booking order from the retail and within 78 days we are supplying supplied from the stock and we are having the depots all over the country. So we are supplying all of our dealer distributor for wire from the depot itself. So as Anilji has also explained, the market outlook is very strong because since last two, three months we are very slow in order booking of HD power cable because order is more than our capacity. Normally as a natural hair we were carrying order book of three to four months and we are carrying inventory of close to three months. So in last two quarters because of the heavy demand South Carolina Power cable booked more from the customer side which was not the capacity available from our side. So market outlook for us is very strong. So that’s why we are estimating for the next financial year growth is also 19 to 20% because we will be having the capacity.
Natasha Jain
Understood sir. Thank you. I’ll get back in the queue.
Operator
Thank you. A reminder to all the participants, you may press star and one to ask a question. The next question is from the line of Pranay Sahai from Prabhudas Leeladhar Capital. Please go ahead.
Praveen Sahay
Yeah. Hi sir, my first question is related to the your guidance for 26 you had given 11% of EBITDA margin for a 26. So is that because of a EHV expected to improve? That is the one reason on account of that you are saying or something else as well to read through
Rajeev Gupta
With regards to EHV. Even if 300 crore sale we do or we don’t do hardly. It matters because on a 300 crore sale additional EBITDA will be 12 crore of a full year balance sheet. That 12 crore EBITDA is nothing actually because we are having more than 1000 crore EBITDA. So whether the 12 crore EBITDA or 15 crore EBITDA may come or may not come, it will not impact in our balance sheet EBITDA level. So our guidance is based on the capacity which we are going to create and the order book we are having and the market for exports we are doing and for retail our earlier vision for reaching the retail was 50%. So now we have crossed that 50% vision and now so now our future is we are targeting for export to growth more than the in local growth. So we are targeting our contribution of export which is right now is 11 to 12 to 13% maybe 15 to 17% in next two to three years. So that’s how we are marketing more from exports.
Praveen Sahay
Yeah really helpful sir. Second thing on the your capex for this year and the next year if financial year’s numbers if you can give
Rajeev Gupta
So capex we have already done close to 400 crore and balance 400 crore we will be doing in this quarter itself and in the next financial year balance 600 to 700 crore we need to do so almost in next 15 to 18 months we need to spend around 1100 crore to 1200 crore rupees whatever the balance is for the for the project.
Praveen Sahay
Right sir, last questions are related to the. Maybe it’s a repetition but it’s related to the wire volume and already you had said that there are a lot of retail activity which led to the you know improvement in your numbers. But if I look at an entire nine month the past quarter or even the Q1 for industry we had seen a quite soft numbers but your numbers are still way ahead of industry. So is that the market share gain you are getting in and if you can some you know color more on the from which segment of the wire you are getting in
Rajeev Gupta
Normally you see we are continuously growing in the retail market wherein we are selling wire as well as we are selling cable. Also in the retail we are targeting a 20% plus growth over a period of time and since last three, four years we have grown to this level. Neither we are saying that we will grow 30, 35% neither we are saying that we will grow 14, 15%. So we are maintaining a 20% growth. For that we need to deploy more and more manpower, increase more and more number of dealer and distributor and increase the geography. So accordingly whatever we have planned two, three or before we are continuously going ahead there. That’s why we are able to give you the guidance for one to two year in advance like in the next financial year we are again giving you giving you the guidance of 19 to 20% as against achievement of 17% plus in the current financial year. So. But sometimes what happens sometimes there may be the chance and export grow more than the retail. So ultimately the overall portfolio of the company will grow 19 to 20%.
Praveen Sahay
Right sir, got it. Thank you and all the best.
Operator
Thank you. The next question is from the line of Srinidhi Karlikara from HSBC Securities. Please go ahead.
Shrinidhi Karlekar
Hi. Thank you for the opportunity and congratulations on impressive growth rates. Sir, would it be possible to comment on which end markets are driving very strong growth for you as well as outlook for the domestic institutional business?
Anil Gupta
Domestic institutional Domestic statement. Hello. Domestic institutional business is at the moment driven by solar power projects and solar related projects and in the same energy segment, basically the power distribution companies, they are very strong in their underground cabling projects. So these are the two segments which are driving which are going very strong. Secondly, rest all other segments like infrastructure related projects or data centers, they’re also driving the demand.
Shrinidhi Karlekar
Sir, would it be possible to give some color in terms of breakup how much of your business is actually coming from the solar and the power distribution end market?
Rajeev Gupta
Actually we are supplying to EPC contractors now. So that’s why we are not segregating the ultimate user actually because the same EPC contractor is using for solar, same APC contractor using for distribution and for data centers and the industry.
Shrinidhi Karlekar
And the second question is there are a lot of HVDC projects are being announced. I’m just wondering, does EHV cable business benefit from these HVDC projects?
Anil Gupta
Yes, we are coming up with HVDC cable capabilities in our Tanan project and but that facility will start by March 26th because this is a very large facility and so it is in the second phase of our project. It will come up and which is the final phase we are already working on, you know, equipping the company with the type test and pre qualification tests on HVDC cable. And we have already developed the cables and done this testing in our existing plant. But on a commercial scale we can manufacture only in our new plant coming up at Sanand because of the long length and big drums required in the project. So we will, we will definitely, definitely be benefited with HVDC projects in the coming years.
Shrinidhi Karlekar
Right. And Rajiv ji, one question on depreciation and amortization expenses. Given new plants are coming up in a phase manner, would it be possible to guide us what we should build in our model for the next financial year? Depreciation. And the following year, depreciation expenses
Rajeev Gupta
Next year. You see, the phase one will commence by June, but the second phase will come in by maybe the 31st of March. So for the second phase, the depression will not come in the next financial year. So that will come only in 26, 27 actually.
Shrinidhi Karlekar
27. And would you have some numbers? What should we build? Or.
Rajeev Gupta
I will give you the separately the number.
Shrinidhi Karlekar
Yeah, at the last one. Yeah, last one. If I may. On the cable and wire export business, the 30 rule that you alluded for the cable and wires part, which countries has driven that?
Rajeev Gupta
Which country of the export.
Anil Gupta
See, our major exports are to at the moment to four regions. One is Australia is our at the moment biggest market. Second coming up is now US and then the third is the Middle east and, and then the Africa.
Shrinidhi Karlekar
What are typical freight costs when you export to us? Particularly
Anil Gupta
Freight cost in. In C, for freight cost comes to typically 8 to 10%.
Shrinidhi Karlekar
80. 10% of sales,
Anil Gupta
Around 8%.
Shrinidhi Karlekar
Okay. Yeah. Thank you for answering my question and all the results.
Operator
Thank you. The next question is from the line of Bharat Shah from ask Investments Manager Ltd. Please go ahead.
Bharat Shah
One fundamental long term growth issue that we were seeking to address in a particular way earlier. It has steady 15, 16, 17% kind of growth at which we relentlessly chugged along for a long period of time. And now we, we are very clear, I presume and judge from the various statements that 20% kind of close to 20% kind of volume growth is something on a more sustained basis over a period of time through various strategic initiatives would be very predictable and strong outcome. Is this something apart from being strategic intent? A very strong reality as you see it.
Anil Gupta
Of course we are aiming for more than 20% growth on year after year. And you see this even in this quarter also the growth is 20%. But we are just waiting for the large capacity to come on board because in certain product segments, especially HT Cable and LT Cable where the demand is very strong, we are still struggling for the capacities. So. But we are very confident that we will be able to maintain this growth rate at this level. I mean maybe for the next financial year itself.
Rajeev Gupta
So Bharatji, for long term point of view for five to six year perspectives as we have earlier spoken also that we are setting up this plant of Osanan where the capacity will be close to 5,500 to 6,000 and another expansion will be there from the next year onward. So our overall target to reach 25,000 crore turnover by 2030. So now we are working for the 25,000 crore turnover. Sir, for that number you are also the inspiration for us.
Bharat Shah
Thank you. But so that now is a clear reality that we see and not merely is a strategic priority but at an operational level we see it as a clear reality either through product portfolio, capacity expansion, focus on exports and approvals needed or specific portfolio needed for exports or people at ground level. Because we’ll need to strengthen the manpower team finance. Of course we have strengthened with QIP that we did. So all strategic inputs are now in place to drive that growth apart from the clearly opportunity being there. So can we say that all the pieces in the which can make that outcome happen now are firmly in place?
Anil Gupta
We are absolutely very confident that our 2030 vision will be reaching to 25,000 crore and we will be growing with 20% CAGR from the next year. Even this year also will be very close to that. But definitely may not be 20% but next year onwards. Because we are just building up our capacities to grow with that number.
Bharat Shah
Sure. And as we get into this journey of accelerated growth compared to decent 15, 16% kind of a growth that we have constantly done, which is basically doubling every five years in say the 20% plus then we are essentially doubling in less than four years time. Our margins logically should improve and return on capital employed also should logically improve. Because exports produced better margins. Our EHV drive will produce better margins. Also upgradation of the product portfolio logically and operating leverage. So all of these levers put together not only the top line growth at an accelerated level, but steady and clear improvement in margins is something now very clear reality. Rather than these 10 to 11% bend that we seem to be in for a length of time
Anil Gupta
As we progress towards higher sales and higher with the streamlining of new projects coming up. We expect that from FY27 onwards we should be able to maintain a EBITDA level of close to 12.5%.
Rajeev Gupta
Yeah. By 28. So yeah, by financial year 2728.
Bharat Shah
Yeah. So from 2728 Rajivji about 12 and a half percent and further improvement thereafter as we progress until 27. What kind of margin improvement can be in V6?
Rajeev Gupta
In financial year 27 we can expect half percent. But by 2728 we will be crossing 12% EBITDA margin
Bharat Shah
And improved. Hereafter as we check along
Rajeev Gupta
As our economy of scale will improve, this margin will go improvement. Now this is the five year plan is completely on the ground. Because we have taken two, three classes from you also. And we deliberately with Anilji. Anji has set for himself the target to grow export to the level of 17 to 18% in next two to three years time. Detailed vision he has already completed which he has taken four, five year before to reach out 50%. So now we are crossing 50%. So now we will be setting up a new target for the retail. Maybe another 2, 3% over. But the employment is recruiting the person in the retail as well in the export market to reach the vision.
Bharat Shah
Fantastic. And Rajeshi, last thing. Return on capital employed also will improve as we move ahead.
Rajeev Gupta
Return on capital employed as of now is also 24 to 25%. But within three to four years time, sir, it will again improve to 28%.
Bharat Shah
Okay. Thank you. And all the very best.
Anil Gupta
Thank you.
Operator
Thank you. The next question is from the line of Naushat Chaudhary from Aditya Birla mutual fund. Please go ahead.Yeah. Hi. Thanks for the opportunity. Just one clarification, sir. We understand the EHV is a better margin product and would be a growth driver. But looking at from the overall business economics point of view in terms of the overall trade terms in terms of the length of the contract in this business process based business. And given the kind of the raw material we deal with. Don’t we think incrementally from a business economics point of view, volatility point of view. We are heading incrementally. It would be slightly weaker versus what we have today in terms of overall business. Because we think you’re. If we.
Anil Gupta
If we have to retain our market leadership and to remain in the market we have to cover all. All type of cable, electrical cable products. Right from 1kV to 400 or 500kV and HVDC. So some margins are. Some businesses are. Their margins are high but the working capital is also long. And some business are very, very quick. Where the margins may be low but the rotation of money is very fast. So we are developing a business with a long term perspective to maintain our market leadership in all the segments of the economy and the industry. Especially in the where electrical cables are concerned. Whether it goes to energy sector or real estate or industry. So it is a overall objective of the business. We have to watch and the business is developed in that way.
Naushad Chaudhary
We understand and appreciate that sir, but just. And from a growth point of view we have to be in all the products. But it was just clarification that given a choice if you get decent growth in your business, would you still be. I know we have to do EHV but from a understanding point of view would you rate your base business economics are much better than versus the EHV business.
Rajeev Gupta
So normally we are not dependent on a particular product or a particular segment. If you see our history of last 10 years, our last 10 years growth rate is close to 17%. Sometimes the export is higher, sometimes HP is higher, sometimes retail is higher, sometimes ltht is higher, sometimes low. So it’s a combination. It’s just like a portfolio which you are managing. We are also managing the whole portfolio with respect to the product, with respect to the segment of sales. That’s how overall EBITDA margin comes to 10 and a half to 11% close to that. So now we have already reached last year 10.84%. But in the current year because of certain fluctuation of the raw material etc, so little bit EBITDA margin we were lost in the last two quarter. But again as an said that for the full year basis our EBITDA will be maintained to the level of 10.8%. Finally after the fourth quarter sale in future also whatever product range, whatever segment we are maintaining, we will be maintaining a growth rate of. Against the 17% growth rate, we will be maintaining a 19 to 20% growth rate with an EBITDA of 11% to 12, 12 and a half percent within two to three years time.
Naushad Chaudhary
Yes, I take your point sir. Growth and EBITDA margin should improve. But because of the EHV thing, do you think the volatility in the business going forward should increase because of the nature
Rajeev Gupta
First of first of all for next year if I talk of the total sale close to maybe 11,000 plus crore sale, the 600 crore is the capacity for EHV cable. So 600 crore with respect to percentage terms it is not more than 6% of our total sale, 6% of the total sale. If we are earning 14, 15% or if we are having sale of maybe instead of 6%, maybe 4% it will not impact the balance, it will not impact the profitability of the whole company because the sale is very negligible in the balance sheet. Maybe individually it looks very attractive that a 14 15% EBITDA margin. But of 11,000 crore company sale, only 600 crore sales belong to HV.
Naushad Chaudhary
All right,
Rajeev Gupta
So that’s why we are explaining it will not impact and it is not impacting even in the, even in the current year. Even the sale of extra high voltage is almost 50%. But still the EBITDA is for the nine month EBITDA is 10.64% as against 10.84% last year.
Naushad Chaudhary
All right, sir, thank you so much.
Rajeev Gupta
Okay, sir.
Naushad Chaudhary
Yeah,
Operator
Thank you. Thank you. The next question is from the line of Achal Lohari from Nirvana institutional equities. Please go ahead.
Achal Lohade
Yeah, thank you for the opportunity. Sir, just a couple of questions. One, you know, if you could talk about since we are on the topic of margins, just about, you know, broad sense, you know what typically are the margins for exports in terms of cables when it goes through the distribution channel, what margin? If it goes through institutional, just a ballpark range or stacking of the margin which is the highest margin and which is the lowest margin? If you could give some order, that would be very helpful.
Rajeev Gupta
Margin in export is close to 11%. In retail is close to. In retail is close to 11%. In close to this low tension and high tension power cable, institutional business is 10 and a half percent. In extra high voltage power cable the margin is 14 to 15%. In EPC business margin is 12 to 14%. But with a combined we are getting margin of 10.7% to 11%. But in future when the economy of scale will get rise and the fixed overhead will not get increased to that extent. So because of that our EBITDA margin will improve by 1 1.5% within three years time. So that will be the range of the market, sir.
Achal Lohade
And I presume when you’re talking about the export retail LTHD margin, the structure of these are. These are excluding the other income is my understanding, sir.
Rajeev Gupta
In other income it is basically the only the two income. One is the interest on fixed deposit, one is the exchange fluctuation and the export incentive. Only major three incomes are there against the interest on fixed deposit there is an interest downside. Also export incentive is pure operational income. So we are always talking of the EBITDA whenever we are speaking to you all. In our case we are. We are not running a treasury. So there is a no income from treasury side and export incentive is actually operating operational. That is taken into consideration. Why loyal export pricing.
Achal Lohade
Absolutely makes sense. The second question I had in terms of the. You know. So one is the tannin plant. You’ve already talked about, you know, potential revenue of five and a half to 6,000 crore. How about, you know the next round of expansion to achieve the 25,000 crore revenue. If you could give some sense on that as well.
Rajeev Gupta
So we have already in the creation of the land at Baroda wherein we bought a good size of land. Almost 60 acre land we have accumulated. So by next year once we complete the Talon project we will do another expansion for low tension and high tension power cable for the further expansion and further growth from the border itself. So the land is already having in hand. And from the internal approval we will be doing additional 700 crore to 800 crore yearly expenditure over there for two years. So that again we will be creating a 5,000 to 6,000 crore top line factory over there. That’s how we are making a target of 25,000 crore turnover by 2030. Existing locations plus Sanam plus.
Achal Lohade
Understood. This is very helpful, sir. And this last question. How much of the cables go through the distribution channel as of now? And how do you see it evolving
Rajeev Gupta
From the distribution? Almost 50% sale of wire and 50% sale of cable.
Achal Lohade
Understood. That’s great, sir. I’ll call back in the queue. Thanks.
Operator
Thank you. The next question is from the line of Akshay Gatani from ubs. Please go ahead.
Akshay Gattani
Hi. Thank you sir, for the opportunity. So my question is.
Operator
Sorry to interrupt. Mr. Akshay, I would request you to please use your handset.
Akshay Gattani
Yeah, I am on handset. Is it clear?
Operator
Yes.
Rajeev Gupta
Yes. Yes. Now it is clear.
Akshay Gattani
Yeah. Thank you, sir. So my query is on export business. Which products do we sell in export market? And you have talked about export business margin. But with EHV capacities coming up by end FY26. So does this open opportunities for EHV export as well? Like from a meaningful perspective?
Rajeev Gupta
Yes. Yes. That’s why we are setting up that plant which will cater the export market for ehv. Because we are in the length in one single drum we will provide almost double as we are doing right now.
Anil Gupta
And that is basically hindering our exports of EHV cable. Because we cannot supply that desired land on a drum from the existing factory.
Akshay Gattani
Got it. And margins on EHV export are higher than domestic EHVs single or they are broadly similar.
Rajeev Gupta
Almost. Almost little bit similar or maybe sometime higher. If we are going ahead with HBDC then it will be higher.
Akshay Gattani
Got it. Got it. That’s all from my side. Thank you.
Operator
Thank you. The next question is from the line of Vedit Trivedi from Asian Market Securities. Please go ahead.
Vidit Trivedi
Thank you sir, all the questions have been answered. Just one clarification. Did you say the volume growth is 19% for this quarter?
Rajeev Gupta
Volume growth? In terms of the production if we Talk we consumed 28% more metal in this quarter. But in terms of the sales the growth rate of the cable business was close to 24%.
Vidit Trivedi
Thank you sir. Best of luck.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor and company. Please go ahead
Saket Kapoor
Namaskar Guptaji and thank you for the opportunity. Sir. When we look at the segmental reporting under the EPC projects we find sequential decline also and a substantial decline on a year on year basis in the revenue.
Anil Gupta
EPC has two kind of revenue reporting. One is pure EPC Another is the EHV epc. So whenever we execute the contract of EHV supply come laying complete commissioning. So that is also coming under EPC business is already declined. And EPC as stated earlier two, three years before that we will maintaining only 4 to 5% of 400 to 500 crore business. So that is also on that
Saket Kapoor
So what are the key reasons why our interest costs are higher and we have raised also? I think so some that UIP money. So how are we using that? And the debt number
Anil Gupta
[Foreign Speech]
Saket Kapoor
[Foreign Speech]
Anil Gupta
[Foreign Speech]
Saket Kapoor
[Foreign Speech]
Anil Gupta
[Foreign Speech]
Saket Kapoor
[Foreign Speech] so what gives us the confidence and what are the pillars in the EHV segment going ahead?
Anil Gupta
[Foreign Speech]
Saket Kapoor
Okay sir and the total market size?
Anil Gupta
Total market size [Foreign Speech] is only 2,500 crores.
Saket Kapoor
[Foreign Speech]
Anil Gupta
[Foreign Speech]
Saket Kapoor
[Foreign Speech]
Anil Gupta
[Foreign Speech]
Operator
Thank you. Ladies and gentlemen, you may press and one to ask a question. A reminder to all the participants, you may press star and one to ask a question. The next follow up question is from the line of Natasha Jain from Philip Capital. Please go ahead.
Natasha Jain
Yeah. Thank you for the opportunity again. Sir, in terms of export, can you call out what is your percentage contribution from US in your total exports?
Rajeev Gupta
Negligible contribution
Anil Gupta
This year. I can tell you this year expected contribution from us should be around 200 crore. But from next year we expect it to go up to around 500 crore next year.
Natasha Jain
Okay. And so this sharp increase, it’s good to know that from 200 we’re moving up to 500. But given the current stance of the current government in the US any risk in terms of supplying cables to the US market,
Anil Gupta
These are very small numbers for my country. Like us where the market size is, I mean at least 8 to 10 times of India. So I mean these are peanuts. We have to grow substantially from these numbers as soon as our new capacity comes up on board.
Natasha Jain
Got it. But then at least you do not see any risk in terms of any slowdown. The market looks robust for you.
Anil Gupta
I don’t see any risk of slowdown. Rest. If the government policies somebody imposes a huge amount of custom duty then that is not in our hand.
Natasha Jain
Understood sir. And just one feedback that we have got. So while the product has been very, very well accepted by the channels, just that the replenishment cycle of the product is a little longer than the peers. I know you are, you’re expanding your channel. So that’s deeply appreciated. So just this feedback. Thank you so much.
Anil Gupta
That is related to the capacity because we are building up our increasing our capacity to improve the, you know, restocking.
Natasha Jain
Understood sir. Thank you. And all the best.
Operator
Thank you.
Rajeev Gupta
Thank you for your feedback.
Operator
Thank you. As there are no further questions from the participants I would now like to hand the conference over to the management for closing comments.
Anil Gupta
So thank you very much to our investors and for attending this conference call. I hope that we have been able to answer most of your queries. If still you have any other queries, you can reach out to us. Thank you so much and have a good day.
Rajeev Gupta
Thank you very much to all of you
Operator
On behalf of NUVAMA Institutional Equities. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.