Rajratan Global Wire Ltd 2023

 

• Rajratan Global Wire Ltd manufactures tyre bead wire and high-carbon steel wire for the automobile, construction, and engineering industries.
• The company is among Asia's largest bead wire manufacturers, with a market share of around 50% in India and 25% in Thailand.
• Rajratan has a diverse customer base in India, Thailand, and other countries, including major tyre manufacturers like Bridgestone, Apollo Tyres, and Toyo Tires.
• The company has manufacturing facilities in India and Thailand with a combined installed capacity of 112,000 TPA and plans to expand with a new facility in Chennai.
• During FY21, the company's revenue was split 66% in India and 34% in the rest of the world.
• The company has tax benefits in Thailand until 2025.
• Rajratan focuses on bead wire manufacturing, with expansion plans and the ability to pass on raw material price increases to its customers.

Rajratan Global Wire Ltd

About

Established in 1989, Rajratan Global Wire Ltd is a manufacturer of bead wire, high-carbon steel wire, with a specialization in TBW. TBW is bronze-coated wire used in tyres, while high-carbon steel wire is also known as black wire, and is used in the automobile, construction, and engineering industries.

Key Points

Product Offerings

The company offers two primary products:

• Tyre Bead wire: Used in all types of automobile tyres, tyres for earth moving equipment, and aircraft. It prevents vibration during driving and is essential for the safety, strength, and durability of tyres.
• High Carbon steel wire: Used in the automobile, construction, and engineering industries. It is also known as black wire.

Market Position

Rajratan Global Wire Ltd is among Asia's largest bead wire manufacturers (excluding China). The company's subsidiary, Rajratan Thailand, is the only bead wire manufacturer in Thailand, with a market share of approximately 25%. Rajratan India is the largest manufacturer of TBW in India, with a market share of around 50%. The TBW industry has a high entry barrier due to the long approval cycle by tyre manufacturers, making it a critical product.

Clientele

As of Q3FY21, 85% of customers had been associated with the company for more than five years. The company services customers in India, Italy, the USA, the Czech Republic, South Korea, and other countries. Indian clients include Apollo Tyres, ATG, Birla Tyres, CEAT, MRF, Balkrishna, and more. Thailand clients include Bridgestone, Sentury Tire, Destone, and more. International clients include Toyo Tires, Nankang, Trelleborg, and more.

Facilities

Presently, the company has a combined installed capacity of 112,000 Tonnes per annum (TPA) of bead and black wire from its facilities in India and Thailand, with upcoming facilities in Tamil Nadu, Chennai. The facilities are as follows:

1. Pithampur (M.P.) India - 72,000 TPA
2. Ratchaburi, Thailand - 60,000 TPA
3. Tamil Nadu, Chennai - 60,000 TPA (Upcoming)

The company undertook aggressive CAPEX programs during FY19-21 and increased its capacity from 62,000 TPA in FY19 to 112,000 TPA in FY21.

Geographical Split FY21

India accounted for 66% of the company's revenue, while the rest of the world accounted for 34%.

Customer Concentration

During FY21, the top 3 customers of the company contributed approximately 39% of the total revenue of the company.

Tax Benefit

The company's Thailand subsidiary/division will receive tax benefits on profits reported on all production in excess of 22,000 TPA for a period of eight years. This benefit is expected to expire by 2025.

Focus

Rajratan Global Wire Ltd is mainly focused on the manufacture of bead wire, which accounted for 87% of the total capacity and 90% of the revenues in FY20. The company has completed its expansion in Thailand, taking the installed capacity to 60,000 TPA. Further greenfield unit expansion is planned in Chennai with a capacity of 60,000 TPA.

Raw Material Fluctuations

The company is able to pass on raw material price increases to its customers with a slight lag.