Cords Cable Resolves Issues, Back on Growth Path
Cords Cable Industries Ltd. has been in the news recently for all good reasons. As per the CMD, Mr. Naveen Sawhney the company has an improved cash-flow currently compared to the previous fiscal. Cords Cable’s has traditionally got major business from Power sector. It is well known that Power sector has had a rough patch due to various issues such as regulatory, environmental and the famous Coal scam.
As per Mr. Sawhney, Power sector has long payment cycle of between 4-6 months which resulted in a stretched balance sheet. Cords’ trade receivables @30% of revenue are high due to this reason. Ever since Mr. Sawhney took over the company’s control 2 years ago he has chalked out new strategy for Cords. The company has proactively reduced its reliance on Power sector and diversified into various other sectors such as Metro rail, Refineries, Industries and Dealers.
According to Mr. Sawhney the payment terms are healthier in other sectors, being between 1-2 months. This shift in strategy is expected to improve the cash-flow of Cords thereby interest cost is expected to reduce. According to Mr. Sawhney the revenue from Power sector contributed to approx. 40-45% in FY16. It currently stands at approx. 30% with the intent being on reducing Power sector’s contribution to about 15% of revenue.
Cords has also renewed focus on Exports which were low for past few years. The margins in exports are generally higher compared to domestic cable business. The company has also ventured into the domestic dealer market for cables recently and expects to have better receivables from this segment.
On financial numbers, In the Chairman’s view the company should give an EDITDA of 10% above the 10.7% of FY16 which is further expected to improve in FY18. The company is expected to have a turnover of approx. Rs. 310 Cr for FY 17 and approx. Rs. 370 Cr. in FY18. The current capacity utilization of Cords is approx. 55%.
Written with some inputs from Economic Times and interview with CNBC-TV18.
About Cords Cable Industries Ltd.: Cords Cable is an Indian manufacturer of Instrumentation, Signaling, other Specialty cables, Control and LV Power cables. Cords is among the market leaders for Instrumentation, Specialty cables and Control cables in India and among the best Worldwide. The company was incorporated in 1991, but the Cords brand has been manufacturing Special cables since over 30 years.