Wa0007.
Wa0007.
Wa0007.
IPO NOTE
OVERVIEW
RR Kabel Ltd is one of the leading companies in the Indian consumer electrical industry comprising two broad segments - (i) wires and
cables (W&C) including house wires, industrial wires, power cables and special cables; and (ii) FMEG (fast moving electrical goods)
including fans, lighting, switches and appliances. It had highest revenue contribution from the business-to-consumer (“B2C”) sales
channel in wires and cables with ~74% of revenue coming from it and the company has largest network of electricians, covering
2,71,254 electricians across India as on 31st March 2023. It has strong market presence in West and North regions of India.
11%
23%
77%
89%
Wires and cables Fast moving electronic goods India Outside India
IPO NOTE
ABOUT THE COMPANY
• It has diversified and expanded its product portfolio both organically and inorganically. In FY20, it amalgamated the business from
one of the group companies, Ram Ratna Electricals Limited (“RREL”) and acquired the light emitting diode lights and related
hardware business (“LED Lights Business”) of Arraystorm Lighting Private Limited (“Arraystorm”), along with its trademarks and
design certificates. In May 2022, it acquired the corresponding home electrical business (“HEB”) of Luminous Power Technologies
Private Limited (“Luminous”) and also obtained a limited and exclusive license to use the ‘Luminous Fans and Lights’ brand for an
initial period of two years subject to extension of six months at a time for a maximum of four times with effect from May 1, 2022,
out of which it paid a lumpsum amount of ₹5 cr as royalty for use in the first two years. Further, it needs to pay royalty of ₹5 cr on a
semi-annual basis for the remaining two years to use the brand.
• The company exports range of wires and cable products directly to distributors across the world. It sold products to 63 countries in
North America, Europe and Middle East during FY21 to FY23.
• It also has extensive pan India distribution presence as on 30th June 2023 it has 3,450 distributors, 3,656 dealers and 1,14,851
retailers, on a non exclusive basis. They are also growing existing presence on e-commerce platform to develop an omni-channel
presence.
• Over FY21, FY22 and FY23 and three months ended June 30, 2022 and June 30, 2023, it has spent towards advertisement and
business promotion expenses, constituting 0.95%, 1.12 %, 1.52%, 1.09% and 1.18% of revenue from operations over the same
period.
• The primary raw material includes aluminium, copper, galvanized iron, packing material. It manufactures PVC compound, LS0H (low
smoke zero halogen) compound, XLPE compound and solar cable compound at Waghodia and Silvassa facilities. It also sources raw
materials from suppliers in India and other countries such as UAE, Thailand, Japan and Taiwan.
IPO NOTE
ABOUT THE COMPANY
MANUFACTURING FACILITY DETAILS
IPO NOTE
SECTOR OUTLOOK
• The India is the third largest producer and the second largest consumer of electricity in the world. Consumer electrical industry is
one of the important aspects of the Indian economy, contributing approximately 8% to the country’s manufacturing production,
approximately 1.5% to India’s GDP and approximately 1.5% to India’s exports. Consumer electrical industry comprises of wires and
cables, FMEGs, transformers, boilers etc
• The consumer electrical industry consisting of W&C (wires & cables) and FMEGs was estimated at approximately ₹1,81,150 cr in
FY23 and is expected to grow at a CAGR of approximately 10% till FY27 to reach a market value of approximately ₹2,66,500 cr.
• In FY23, the total domestic market for W&C industry was estimated at approximately ₹74,800 cr, which is expected to grow at a
CAGR of 13% till FY27 to reach a market value of approximately ₹1,20,000 cr.
• In FY23, the total domestic market for FMEG industry was estimated at approximately ₹1,06,350 cr, representing approximately 59%
of the total consumer electrical industry. This is expected to grow at a CAGR of 8% till FY27 to reach a market value of ~₹1,46,500 cr.
• In W&C segment, the total addressable market (“TAM”) for leading brands like RR Kabel, Polycab, KEI etc. is approximately ₹53,860
cr as of FY23, which is projected to reach approximately ₹96,000 cr by FY27. In FMEG segment, the TAM for leading brands such as
Havells and Crompton Greaves and challenger brands such as RR Kabel and Polycab is approximately ₹83,100 cr as of FY23, which is
projected to reach approximately ₹1,24,000 cr by FY27. As of FY23, the FMEG product portfolios of leading players in W&C industry
like RR Kabel covers approximately 77% of the FMEG industry market size in India by value.
IPO NOTE
SECTOR OUTLOOK
• The domestic W&C and FMEG industry is pivoting towards branded play. The share of branded play in domestic W&C and FMEG
industry has grown from 60% in Fiscal 2015 to approximately 76% in Fiscal 2023 and is projected to reach approximately 82% by
Fiscal 2027.
• Housing wires constitute ~32.8% (₹24,535 cr) of the wires and cables market in India. In FY23, the market size of 90m, 180m and
200m housing wires by value are ₹14,530 cr, ₹45 cr and ₹9,960 cr respectively.
• Indian W&C industry exported products valued approximately US$ 1,717 million in CY22. It majorly exports to USA constituting
approximately 23% of exports, followed by UAE (8%) and UK (8%).
• The total market for fans has grown at a CAGR of approximately 12% from ₹5,690 cr in FY15 to ₹13875 cr in FY23 and is further
expected to grow at a CAGR of approximately 7% till FY27 to reach a market value of ₹18,500 cr.
• The total market for lighting in India was estimated at approximately ₹33,600 cr in FY23 that grew at a CAGR of approximately 12%
from ₹14,000 cr in FY15. This market is expected to grow at a CAGR of approximately 11% till FY27 to reach nearly to ~₹50,500 cr in
annual sales.
• The total market size of switch and switchgears industry in India was collectively estimated at approximately ₹29,160 cr in FY23.
This has grown at a CAGR of approximately 8% from FY15, when its size was at ₹15,500 cr. Going forward, the collective market (of
switches and switchgears) is expected to grow at a CAGR of approximately 7% till FY27 and reach ~₹38,000 crore of annual sales in
FY27.
IPO NOTE
COMPETITIVE LANDSCAPE
RR KABEL LIMITED
FINOLEX CABLES LIMITED
₹88,746 cr ₹74,142 cr ₹23,183 cr ₹16,469 cr ₹11,676 cr
• PAT Margin: • PAT Margin: • PAT Margin: • PAT Margin: • PAT Margin:
6.3% 9.1% 6.9% 9.7% 3.3%
IPO NOTE
COMPETITIVE LANDSCAPE
RR KABEL LIMITED
₹13,368 cr ₹19,580 cr ₹13,036 cr ₹11,676 cr
IPO NOTE
OBJECT OF THE OFFER
The company proposes to utilize the net proceeds towards funding the following objects:
• Repayment/ prepayment, in full or part, of borrowings availed by the company from banks and financial institutions
• General corporate purpose
Major Selling Shareholders Shareholding % Pre Issue Shareholding % Post Issue % of OFS Issue
TPG Asia VII SF Pte Ltd 17% 5% 75%
Mahendrakumar Rameshwarlal Kabra 8% 7% 4%
Hemant Mahendrakumar Kabra 6% 5% 4%
Sumeet Mahendrakumar Kabra 5% 4% 4%
Kabel Buildcon Solutions Pvt Ltd 1% - 4%
Ram Ratna Wires Ltd 1% - 8%
IPO NOTE
RISK FACTORS
• The operations are dependent upon the price and availability of the raw materials that are required to produce wires and cables
and FMEGs. The primary raw materials include aluminum, copper, galvanized iron, packing material, low smoke zero halogen
compound, master batch, solar cable compound, polyvinyl chloride compound and cross-linked polythene compound. It strives to
maintain 20-25 days of inventory of raw materials at the facility but have experienced instances of shortages in a limited manner.
• It is exposed to foreign currency fluctuation risk, particularly in relation to import of raw materials and export of products.
• The wires and cables and fast moving electrical good industry is subject to seasonality. Typically, customers purchase FMEG
products such as fans and water heaters due to seasonal factors. For example, fans sales increase leading up to the summer season
and water heaters sales increase in the cooler winter months.
• The business is dependent to a significant extent on the performance and growth of the real estate sector and the slow down of the
relevant sectors would affect the business of the company.
• They are dependent on a limited number of third-party suppliers for the supply of raw materials that they do not produce
themselves. As on June 30, 2023, they were dependent on three third-party suppliers for more than 77% of supply of raw materials
being copper and aluminum.
• The industry is highly competitive with the presence of many national and regional players (manufacturers, traders, suppliers, and
importers etc.), competing on the basis of factors such as products, price, customer service, post sales services, quality and delivery.
IPO NOTE
STATEMENT OF PROFIT AND LOSS
Data for three
Particulars Data for the year (₹ crore)
months period
2021 2022 2023 30th Jun’23
Revenue From Operations 2,724 4,386 5,599 1,597
Other Income 22 46 34 16
Total Income (I) 2,746 4,432 5,634 1,614
Cost of goods sold 2,149 3,608 4,576 1,306
Employee Benefits Expense 148 189 264 77
Finance Costs 27 23 42 14
Depreciation and Amortization Expense 45 46 60 16
Other Expenses 196 282 436 101
Total Expenses (II) 2,566 4,152 5,379 1,515
Profit Before Tax (III) = (I-II) 181 284 256 99
Total Tax Expense (IV) 46 70 66 25
Net Profit for the Period (III-IV) 135 214 190 74
IPO NOTE
STATEMENT OF ASSETS AND LIABILITIES
Particulars Data as on 31st March (₹ crore) Data as on
2021 2022 2023 30th Jun’23
Property, plant and equipment 386 384 449 454
Capital work in-progress 7 42 44 50
Right of use asset 8 11 62 66
Intangible assets 5 5 6 5
Other non-current assets 62 84 126 165
Inventories 534 710 860 859
Trade Receivables 420 517 592 632
Bank Balance and Cash & Cash Equivalents 8 12 81 15
Other Current Assets 284 286 413 398
Total assets 1,715 2,051 2,633 2,644
Total Equity 1,047 1,250 1,420 1,524
Non-Current Liabilities 19 29 85 96
Total Borrowings 499 521 516 404
Trade payables 114 168 440 453
Other current liabilities 37 83 173 168
Total Equity and liabilities 1,715 2,051 2,633 2,644
IPO NOTE
STATEMENT OF CASH FLOW
Particulars Data for the year ended 31st March (₹ crore) Data for the
three months
ended
2021 2022 2023 30th Jun’23
Net cash generated from / (used in) operating activities (A) (71) 98 454 78
Net cash generated from / (used in) investing activities (B) (6) (63) (333) 35
Net cash generated from / (used in) financing activities (C) 74 (32) (102) (128)
Net increase / (decrease) in cash and cash equivalents (A+B+C) (3) 4 19 (16)
IPO NOTE
KEY METRICS
Particulars Data for the year ended 31st March Data for three
months ended
2021 2022 2023 30th Jun 23
EBITDA margin (%) 9.2% 7.9% 6.3% 8%
Profit/(loss) after tax (₹ cr) 135 214 190 75
PAT margin (%) 4.9% 4.8% 3.3% 4.6%
ROCE (%) 13.5% 17.4% 15.5% 5.9%
ROE (%) 13.8% 18.6% 14.2% 5%
Debt / equity (times) 0.48 0.42 0.36 0.26
Wires and cables volume (MT) 37,139 45,629 54,571 15,559
IPO NOTE
SWOT ANALYSIS
IPO NOTE
TIMELINES
Finalization Credit of
of basis of shares to
Issue Opens allotment depository
13 15 21 22 25 26
Sep Sep Sep Sep Sep Sep
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IPO NOTE
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