R R Kabel FY27 Core Capex Excludes Rs 200 Crore Land Deal

In FY27, R R Kabel Limited said its Rs 550 crore to Rs 600 crore core capex excludes the Rs 200 crore Rajasthan land purchase and the UM Cables payout, lifting commitments beyond the stated budget. Management also said debt will increase in value terms as it funds capex and working-capital requirements.

What is R R Kabel’s FY27 core capex budget?

R R Kabel’s FY27 core capital-expenditure budget is Rs 550 crore to Rs 600 crore. Rajesh Jain said this plan, set at the beginning of the year, remains on track and is being executed on time, while the Rajasthan land purchase and UM Cables payout are outside that range.

The reaffirmed range differs from an analyst’s reference to Rs 600 crore to Rs 650 crore on the prior call. Management instead specified a Rs 550 crore to Rs 600 crore FY27 plan and confirmed that Rs 281 crore of capex cash outflow already incurred did not include the UM Cables payout because that payment had not yet been made.

The Rs 550 crore to Rs 600 crore figure is therefore a budget for the existing FY27 capex programme, not a total measure of every expansion-related cash commitment. R R Kabel is also starting the Rajasthan project and preparing to take control of UM Cables, though management did not provide a combined cash-outlay estimate.

Why is R R Kabel’s Rajasthan land cost additional?

R R Kabel said the Rs 200 crore Rajasthan land acquisition is new capex, separate from the Rs 550 crore to Rs 600 crore FY27 core plan. Jain described the land purchase as the first step toward a new capacity plan rather than spending included in the programme already being executed.

Management has not disclosed the final product mix, construction cost or commissioning schedule for the Rajasthan site. It said detailed capex plans may be provided after one or two quarters, but indicated that the facility would support its existing wires and cables growth plan by enhancing capacity in those product ranges.

The Rs 200 crore commitment will not necessarily be paid entirely in FY27. Jain said a major portion may be paid in the current year and some part may fall in the first half of the following year; when an analyst asked whether Rs 100 crore could be budgeted in the second half, management agreed.

This payment schedule separates the land commitment from the current-year core capex figure and leaves the FY27 cash split undisclosed. It also means the eventual Rajasthan investment could extend beyond the land cost, because management has yet to announce equipment, construction or product-specific plans for the site.

Is the UM Cables payout part of R R Kabel’s capex?

R R Kabel said the UM Cables payout is separate from both the Rs 281 crore already spent on capex and the Rs 550 crore to Rs 600 crore FY27 core capex plan. Management made the distinction when asked about the cash-flow figure and again when asked whether the transaction was included in the headline capex budget.

An analyst referred to Rs 77 crore for UM Cables, but management did not independently confirm that value in the call. Management said payment had not yet been made and that it had yet to take control of the business, so it did not advise assuming a large revenue contribution in the current year.

The immediate operating opportunity identified by management is raising utilisation at the acquired plant, which it said had operated at very low capacity utilisation. R R Kabel said it would work on revenue after control is obtained and may provide detailed guidance for the business by the next quarter.

Management did not disclose any separate expansion capex for UM Cables. When asked about optical-fibre plans, it called the entry a small capex and said there was no additional capex plan at that stage, leaving the transaction payout as a distinct, undisclosed funding requirement.

How will R R Kabel fund FY27 spending?

R R Kabel said debt will rise in value terms as it funds the FY27 capex plan and working-capital needs associated with higher raw-material prices. Jain did not endorse the analyst’s suggestion of Rs 200 crore to Rs 250 crore of additional borrowing, saying only that some increase in debt was expected.

Management said the increase in long-term borrowings was for current capex execution, rather than specifically for the Rajasthan land acquisition. It linked higher funding needs to elevated metal prices, which can raise working-capital requirements, while saying that receivable collection and trade-finance utilisation remained part of normal operations.

Net working-capital days were about 46 days, versus about 49 to 50 days six months earlier, and management expects the metric to remain in a 45-to-50-day range. Receivable days improved to 32 days from 34 days, even as business volumes increased, according to Jain.

Trade financing has nevertheless expanded with metal procurement. Management put letter-of-credit-backed facilities at about Rs 1,290 crore in the first half of FY27 and said a majority of metal purchases now use such facilities; it also said higher finance costs at high raw-material prices were a normal business consequence.

What does R R Kabel expect after FY27?

R R Kabel said capex of about Rs 300 crore may be reasonable for the following year, subject to change. Jain accepted the analyst’s figure as appropriate at that point, while noting that the amount could vary as plans are developed.

The Rs 300 crore indication comes while some of the Rs 200 crore Rajasthan land payment may be due in the first half of the following year. Management did not say whether the Rs 300 crore view includes future construction or equipment spending for Rajasthan, so the connection between the next-year estimate and the new site remains unresolved.

R R Kabel is also shifting its Roorkee plant and said the move will increase fast-moving electrical goods, or FMEG, capacity without disrupting current production. Management said the new arrangement is on lease and therefore should not require major capex.

For its core wires and cables operations, management said it remained focused on domestic and export growth. It expects exports to account for about 30% to 35% of sales in the remaining half of FY27 and said it typically adds three to four international approvals annually across markets and product categories.

Conclusion

R R Kabel’s disclosed expansion commitments are broader than the Rs 550 crore to Rs 600 crore FY27 core capex budget. The Rs 200 crore Rajasthan land purchase is incremental, the UM Cables payout is also separate, and management expects debt to increase as capex and metal-related working-capital needs are funded.

The next disclosures to watch are the detailed Rajasthan capex plan expected after one or two quarters and the UM Cables business plan management said may come by the next quarter. Investors will also need clarity on the Rajasthan payment split, the UM Cables payout and whether the indicative Rs 300 crore following-year capex includes further spending on either project.