R R Kabel Ltd Management Discussions

Global Economic Overview

The global economy stands at a critical juncture, shaped by significant policy shifts, particularly those initiated by the United States. In April, the US announced near-universal tariffs, intensifying trade tensions and leading to heightened policy uncertainty across the world. These tariffs are viewed as both a negative supply shock and an external demand shock. At the same time, rising uncertainty and tighter financial conditions are contributing to a global negative demand shock.

Economic growth globally is projected to slow from an estimated

3.3% in 2024 to 2.8% in 2025. This marks a notable cumulative downgrade of 0.8 percentage point for 2025 compared to projections made in the January World Economic Outlook. Growth in advanced economies is now expected to reach only 1.4% in 2025, a reduction of 0.5 percentage point. In particular, the United States is forecasted to slow to 1.8%, down by 0.9 percentage point. Meanwhile, emerging markets and developing economies are anticipated to grow at 3.7%, a decline of 0.5 percentage point, with Chinas forecast revised down to 4%.

Global headline inflation is now expected to ease more gradually than previously projected, reaching 4.3% in 2025. Inflation forecasts for advanced economies have been revised upward, in part due to the supply-side pressures stemming from the recent tari_ measures. Overall, risks to the global outlook remain skewed to the downside, with escalating trade restrictions and prolonged policy uncertainty emerging as key concerns.

Commodities

The global commodity market in 2025 is shaped by complex interplays of geopolitical tensions, economic policies, climate concerns, and supply-demand imbalances. Volatility remains high, with winners like precious metals benefitting from risk aversion, while energy and industrial metals face headwinds from supply surpluses and subdued demand growth. Agricultural markets remain vulnerable to weather and trade disruptions, making 2025 a challenging but opportunity-rich year for commodity investors and traders. Copper prices began 2025 with a rebound from 2024 lows, trading mostly between USD 8,800 and USD_10,000/MT (approximately USD_4.00–USD 4.50/lb) in the early months. In late March, prices surged to an all-time high of USD 11,500/ MT (USD 5.22/lb), before retreating to around USD 9,400/MT (USD 4.26/lb) by early April. Volatility has been heightened by the threat of U.S. tariffs on copper imports, which widened the premium gap between LME and CME prices. This has injected significant uncertainty into the market, impacting both price stability and sentiment. Global copper demand is forecasted to grow by approximately 3.7% in 2025, supported primarily by the ongoing energy transition. The rapid expansion of electric vehicles (EVs), renewable energy infrastructure, and grid modernisation is fuelling long-term consumption. China remains a key demand centre, with government-led economic stimulus and a strong focus on green energy and EV adoption, even as the domestic property sector continues to struggle.

Aluminium prices in 2025 are forecasted to experience a dip to around USD 2,000 per metric tonne in next few months due to weaker global growth and tari_-related demand shocks, followed by a moderate recovery to about USD_2,300/MT by December. The market is currently influenced by a projected surplus but is expected to tighten beyond 2025, leading to higher prices in 2026 and 2027. A projected surplus in alumina, driven by capacity expansions in India and Indonesia, is set to ease production costs. While aluminium output in China remains capped, new supply from Southeast Asia is gradually entering the market. However, regional disparities persist—European consumption remains tepid amid weak growth, while U.S. demand stays resilient. Trade policies, especially U.S. tariffs, and economic conditions in major consumers like China and the U.S. remain key uncertainties affecting price volatility throughout the year.

(Source: https://www.metal.com/en/ newscontent/103207635 https://www.metal.com/en/ newscontent/103102222 https://investingnews.com/daily/resource-investing/base-metals-investing/copper-investing/copper-forecast/ https://www.hellenicshippingnews.com/ goldman-sachs-cuts-aluminium-price-forecast-on-weaker-growth-outlook/ https://www.reuters.com/markets/commodities/ goldman-sachs-cuts-aluminium-price-forecast-weaker-growth-outlook-2025-04-14/)

Indian Economic Overview

Indias economic outlook remains strong, with growth projected at 6.3% in 2025 and expected to rise slightly to 6.4% in 2026. This sustained momentum reflects the countrys enduring resilience in the face of global economic uncertainties. This projection is supported by robust domestic fundamentals and strategic policy interventions that continue to propel the nations growth. Ongoing structural reforms, technological innovation, and significant infrastructure development fuel the nations economic momentum. Targeted governmental measures further ensure the sustainability of this growth, while steady consumption and improved labour market conditions strengthen the outlook. The economic resilience is primarily driven by strong performance across the agricultural and service sectors, underpinned by stable private consumption and macroeconomic equilibrium.

Indias manufacturing sector is a vital pillar of the countrys economic growth and is among the fastest-growing sectors. According to Colliers India, the sector could reach a valuation of USD 1 Trillion by 2025-26, driven by rapid investment growth and increasing foreign direct investment, which reached USD 29.79

Billion in the first half of 2024-25. Key industries such as automotive, engineering, pharmaceuticals, and consumer durables are leading this expansion, with emerging sectors like semiconductors and agri-tech gaining traction. Government initiatives, including Make in India and the Production Linked Incentive (PLI) scheme, have been crucial in fostering investment and competitiveness, supported by state-level incentives, improved infrastructure, and a skilled, cost-competitive workforce. The sector currently contributes approximately 17% to GDP and is expected to rise to 21% within the next six to seven years, reflecting its growing impact on Indias economic landscape.

Rising exports from India are closely linked to the manufacturing sectors growth and the countrys emergence as a global production hub. The manufacturing sector alone has the potential to export goods worth USD 1 Trillion by 2030. Factors supporting this export growth include favourable government policies, competitive advantages such as skilled labour and low costs, and Indias strategic positioning as an alternative to China amid global supply chain diversification. Increased capital investment and mergers & acquisitions are also contributing to higher manufacturing output and export capacity. However, the global trade environment presents challenges, with projected slowdowns in trade growth and heightened tari_ uncertainties, particularly from the United States. Despite global headwinds, expanding exports continue to drive economic growth and reinforce Indias role in global manufacturing and services trade.

Overall, Indias manufacturing sector is poised for significant expansion, propelled by strong policy support, investment, and technological advancement. This growth is translating into rising export volumes that are essential for sustaining the countrys economic momentum.

(Source: World Economic Situation and Prospects as of mid-2025 Department of Economic and Social Affairs https://timesofindia.indiatimes.com/blogs/truth-lies-and-politics/indian-manufacturing-sector-has-potential-to-reach-1-trillion-by-2025-26-colliers-india/ https://www.livemint.com/economy/india-manufacturing-growth-s-p-global-india-report-global-investors-india-manufacturing-alternative-energy-india-11747654232132.html )

Industry Review

Wires and Cables (W&C) and FMEG Industry

Indias wires and cables market was valued at USD 9.32 Billion in 2024 and is projected to grow to USD 17.08 Billion by 2032, at a CAGR of 7.94% between 2025-2032. This growth is driven by Indias ambitious renewable energy targets, particularly in solar and wind power. Solar photovoltaic (PV) installations require high-quality, low-loss cabling systems, and the sharp rise in solar panel deployment is fuelling demand for specialised solar cables. Additionally, government-led infrastructure and electrification programs are contributing to the increasing need for reliable wiring and power distribution systems across the country.

The FMEG (Fast-Moving Electrical Goods) sector is expanding steadily, with the domestic market projected to reach INR 1,46,500 Crores by 2026-27 from INR 96,500 Crores in 2021-22, growing at a CAGR of 9%. The broader consumer electrical market, including switches, fans, lighting, and appliances, is being driven by rising urbanisation, growing residential demand, and the shift toward energy-e_cient and smart products. Increased rural electrification, real estate absorption, and policy support such as PLI and RoDTEP are also catalysing growth. The sectors digital transformation through e-commerce and smart retail continues to enhance accessibility and long-term scalability.

(Source: https://www.fortunebusinessinsights. com/india-wires-and-cables-market-109992 https://economictimes.indiatimes.com/ industry/cons-products/electronics/indias-electrical-and-electronics-industry-set-to-hit-130-billion-by-2030-elecrama-2025-preview/ articleshow/116406948.cms Company DRHP)

Key Segments in the Wires and Cables Market

-size:10.0pt;font-family:Arial;color:black;mso-ansi-language:EN-US>The wires and cables (W&C) industry is broadly categorised based on functionality and end-use applications. While a wire is a single conductor of electricity or signals, a cable comprises multiple conductors bundled together to transmit electrical power or communication signals. The key sub-categories within the W&C market include:

Business Review

Company Overview

Founded in 1995, R R Kabel Limited (‘RR Kabel or ‘the Company) has grown into a leading name in the consumer electrical products industry, serving diverse sectors including residential, commercial, industrial, and infrastructure markets. The company operates across two core business segments: Wires & Cables (W&C) and Fast-Moving Electrical Goods (FMEG). Its FMEG portfolio comprises products such as fans, lighting, switches, and appliances.

RR Kabel is particularly strong in the housing wire category, where it commands a lower double digit market share. The Company has demonstrated robust growth, achieving a revenue of INR 7,618.2 Crores in 2024-25, driven by a remarkable 15.5% growth in revenue compared to 2023-24. This leadership is driven by focused growth strategies, aimed at strengthening the companys market penetration, enhancing its retail footprint, and reinforcing brand presence across key markets. ‘Project RRISE outlines RR Kabels vision over the next three years (between FY 2025-26 to FY 2027-28). It sets ambitious growth targets, aiming for an 18% CAGR in Wires & Cables revenue and a 25% CAGR in FMEG revenue, with a goal of increasing EBITDA to 2.5x. The project focuses on increasing manufacturing capacity in W&C by 1.7x, with expansion planned in Silvassa and Waghodia. Key strategies include improving margins through portfolio mix and efficiency, leveraging export leadership, and strengthening both the W&C and FMEG businesses domestically and internationally.

Manufacturing and Distribution

RR Kabel operates five integrated manufacturing facilities across India, strategically located to support its diverse product portfolio. Two facilities Waghodia (Gujarat) and Silvassa (Dadra & Nagar Haveli and Daman & Diu) are focused on the production of wires, cables, and switches. The remaining three plants, situated in Roorkee (Uttarakhand), Bengaluru (Karnataka), and Gagret (Himachal Pradesh), are dedicated to the manufacturing of FMEG products, including fans, lighting, appliances, and more.

The company has built an expansive pan-India distribution network, enabling deep market penetration across urban and rural regions. As of March 31 2025, RR Kabels network comprises over 4,400 distributors, 4,500 dealers, and 1,91,000+ retailers. Additionally, the company is supported by one of the countrys largest pools of trained professionals, with 5,83,000+ electricians in its ecosystem. This extensive distribution and service network empowers RR Kabel to effectively serve both B2B and B2C customers nationwide.

International Presence and Certifications

RR Kabel has established a strong international footprint, with its products exported to 74 countries across the globe. The companys commitment to quality, safety, and innovation is reflected in its portfolio of over 42 international certifications, underscoring its position as a trusted and globally recognised name in the Indian consumer electrical products industry. This global reach, backed by stringent quality standards, reinforces RR Kabels reputation as a benchmark for excellence in both domestic and international markets.

W&C Segment

Wires and Cables

The Wires and Cables segment remains the cornerstone of the Companys operations, contributing a substantial proportion to overall revenue. During FY 2024-25, the segment recorded healthy revenue growth, witnessed by strong volume expansion in the cables business. This performance underscores the Companys ability to adapt to evolving market conditions while leveraging its core strengths across domestic and international markets. The Company maintained its commitment to innovation and regulatory alignment, exemplified by the launch of FireX LS0H-EBXL in the house wire category, in line with the latest Central Electrical Authority (CEA) norms mandating halogen-free wires in public and commercial infrastructure. Strategic initiatives such as capacity augmentation and the introduction of higher-margin offerings were central to its growth strategy throughout the year. Capacity additions in power cables commenced during the year, with further expansion planned in the forthcoming periods. The segment did encounter certain challenges, notably fluctuations in raw material prices, particularly copper, and a temporary moderation in domestic wire demand, which collectively impacted profitability. As a result, the EBIT margin for the segment stood at approximately 7.4% for the full financial year.

Domestic Wires and Cables

The domestic Wires and Cables business registered strong volume growth, largely attributed to sustained demand for cables. While wire volumes came under pressure during certain periods, cable volumes remained robust, buoyed by public infrastructure projects and the growing emphasis on renewable energy deployment. The Company continued to focus on enhancing market share and deepening its retail footprint, supported by an extensive and efficient distribution network. E_orts were channelled towards increasing per distributor productivity and strengthening engagement through a comprehensive loyalty programme for electricians and retailers. The Company retained its leadership in the Western and Northern regions of India, while pursuing expansion opportunities in Southern and Eastern markets as part of its broader growth agenda.

Exports – Wires and Cables

The export segment continued to play a vital role in the Companys revenue profile, contributing approximately 26% to the total turnover in FY 2024-25. Despite facing operational headwinds such as container shortages and logistical delays, the segment demonstrated resilience through proactive customer engagement and effective supply chain management. The Company actively pursued key product certifications in both markets to expand its portfolio of higher-value cable offerings. While the export product mix was consistent, a strategic emphasis was placed on increasing the contribution of specialised and high-margin cable exports. Due to prudent procurement policies and effective hedging mechanisms, the Companys export business remained insulated from commodity price volatility and foreign exchange fluctuations.

Business Outlook

The Company remains optimistic about the outlook for its Wires and Cables segment, underpinned by a projected recovery in domestic infrastructure and residential construction, fuelled by sustained public and private investment. An additional INR 1,200 Crores investment planned over the next three years under Project RRise, will significantly expand the Companys manufacturing capacity particularly in cables. These investments are aligned with the Companys long-term strategy to enhance the share of value-added products, including export cables, solar cables, and industrial specialty cables. With scale efficiencies, an optimised product mix, and a favourable demand environment driven by structural supply constraints, the Company is well positioned to achieve its ambition of double-digit EBITDA margins and volume CAGR of 18% in its Wires and Cables business over the long term.

Fast Moving Electrical Goods (FMEG)

The FMEG segment continued to grow at a fast pace during FY 2024-25, delivering strong double-digit revenue growth on a year-on-year basis. This performance positions the Company among the fastest-growing players in the FMEG space within its peer group. Growth was supported by healthy volume traction across categories, a favourable product mix, and ongoing efforts in brand building and premiumisation.

Despite elevated advertising investments linked to the transition to the RR Signature brand, the Company successfully narrowed losses in the segment. Margin improvement was enabled by stronger volumes and contribution from higher-value products. Key strategic priorities for the year included new product introductions, focus on premium segments, expansion of geographical presence, and targeted investments in brand and channel development.

Fans

The fans category remained a key contributor to FMEG revenues and recorded significant growth during the year. A meaningful portion of this growth was driven by new product launches, which contributed notably to overall sales. The Company witnessed increasing consumer traction in the premium fan segment, which now constitutes a growing share of category revenues. As part of its channel expansion efforts, the Company has achieved an installed capacity of 3.3 Million units. Simultaneously, through Project Lakshya, it has strengthened distribution by deploying dedicated field sales officers, enhancing retail presence and accessibility.

Lighting

The lighting segment saw strong volume growth, driven by product