R R Kabel Limited is one of the leading companies in the Indian consumer electrical industry (comprising wires and cables and fast- moving electrical goods (“FMEG”)), with an operating history of over 20 years in India. They sell products across two broad segments - (i) wires and cables including house wires, industrial wires, power cables, and special cables; and (ii) FMEG including fans, lighting, switches, and appliances.
OBJECTS OF THE ISSUE
- Repayment or prepayment of borrowings availed by the company from banks and financial institutions.
- General corporate purposes.
Tribhuvanprasad Rameshwarlal Kabra
Executive Chairman of the Company. He has completed his secondary level school education from Hindi High School, Mumbai. He has extensive experience in the electrical industry. Previously, he was associated with Shramik Winding Wires Private Limited as a director. He was appointed to RR Kabel’s Board of Directors with effect from May 13, 1997.
Shreegopal Rameshwarlal Kabra
Managing Director of the Company. He has extensive experience in the electrical industry. Previously, he was associated with the International Copper Association as the chairman of wire and cable product council and the Indian Electrical and Electronics Manufacturers’ Association as the president.
Mahendrakumar Rameshwarlal Kabra
Joint Managing Director of the Company. He has extensive experience in the electrical industry. Previously, he was associated with MEW Electricals Limited as a director. He was appointed to the Board of Directors with effect from February 6, 1995.
Rajesh Babu Jain
Chief Financial Officer of the Company. He joined the Company on July 1, 2000 and is responsible for heading the financial functions of the Company including leading various initiatives in the organization of business excellence and operational efficiency of the Company.
Dinesh Aggarwal
Chief Executive Officer of the Company. He joined the Company on December 16, 2022 and is responsible for handling the domestic business administration of the Company.
Himanshu Navinchandra Parmar
Company Secretary and Compliance Officer of the Company. He joined the Company on June 1, 2013 and is responsible for secretarial and legal functions of the Company. Previously, he has worked with MEW Electricals Limited.
Company Profile
- The company manufactures, markets, and sells wires and cables under the RR Kabel brand, and a variety of consumer electrical products, including fans and lights under the ‘RR’ and ‘Luminous Fans and Lights brands.
- RR Kabel was the first company in India to introduce low smoke zero halogens (“LS0H”) insulation technology in their wires and cables products and to introduce unilay core technology products. They have actively diversified and expanded their product portfolio in adjacent areas such as FMEG, both organically and inorganically.
- They have a dedicated team of 60 employees focused on research and development, of which 22 employees exclusively work on research and development involving FMEG products.
- The Company owns and operates two integrated manufacturing facilities which are located at Waghodia, Gujarat, the Waghodia Facility, and Silvassa, Dadra and Nagar Haveli and Daman and Diu (“Silvassa Facility”) in India,
COMPETITIVE STRENGTHS
- Scaled B2C business in the large and growing wire and cables industry. A diverse suite of products with global certifications and accreditations. Extensive domestic and global distribution network.
- Well-recognized consumer brands.
- Technologically advanced and integrated precision manufacturing facilities Well-positioned for growth in the FMEG segment.
- Experienced and committed professional management team.
KEY STRATEGIES
- Expand distribution and establish a leadership position for the wires and cables segment in India. Enhance the geographical footprint of their wires and cables segment.
- Capitalize on the market opportunity in the wires and cables segment. Enhance productivity and operational efficiencies.
KEY CONCERNS
- Increases or fluctuations in raw material prices may have a material adverse effect on the business. Distribution to the overseas market is dependent on a few distributors and significant changes to their business arrangements with these distributors may impact the business.
- The availability of counterfeit products could have an adverse effect on the business and its competitive position.
- They are subject to warranty claims, which may increase in the future and have a material adverse effect on the financial condition.
- The Company faces risks related to foreign currency fluctuations. The company faces significant competitive pressures in the business.
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)
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FINANCIALS (RESTATED CONSOLIDATED)
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OUTLOOK & VALUATION
RR Kabel is a well-established player with strong brand recall and quality products. The company has a diverse product portfolio and an extensive domestic and global distribution network, and it is working on strategies for further enhancement as well. Other than the wire and cable industries, they are also well-positioned for growth in the FMEG segment.
Financial performance has been mixed, where there is growth in revenue and net worth but pressure on its margins with declining profits. The issue size is around 1964 crore, but most of its portion belongs to the offer for sale. Finally, the IPO is coming at a P/E valuation of around 60.5x, which is looking high-priced.
Due to the high valuation and current market sentiments, we will avoid this IPO for listing benefits. However, it could be a good pick for the long term, and investors may consider it during any post-listing correction.
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