Welcome to the 88th edition of The Chatter — a newsletter where we dig through what India’s biggest companies are saying and bring you the most interesting bits of insight, whether about the business, its sector, or the wider economy. We read every major Indian earnings call and listen to the interviews so you don’t have to.
We’re always eager to improve—please share your ideas on how else we can innovate “The Chatter” format to better serve your needs.
In this edition, we have covered the RBI Governor, Deputy Governor’s Address & 3 companies across 4 industries.
Regulator
RBI Governor
RBI Deputy Governor
Defence
Cochin Shipyard
Engineering & Capital Goods
KEI Industries
Consumer Durables
Symphony
Regulator
RBI Governor Sanjay Malhotra | Shaping the Next Decade of Finance – Technology, Trust and Innovation
RBI Governor Sanjay Malhotra, speaking at the Global Fintech Fest, outlined his views on the evolving role of fintech in the financial system. His address focused on fintech as a partner in financial inclusion, the importance of building trust, India’s global fintech ambitions, and the RBI’s efforts to support innovation.
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Despite India’s digital-finance success, Malhotra said the biggest opportunity remains bringing savings, insurance, pensions and credit to underserved people in villages and smaller towns.
“Financial inclusion or ensuring financial well-being remains, to my mind, the single most important purpose that fintech can serve. Reaching the last mile via savings products for the informal sector, micro-insurance, small pensions, small-ticket credit, credit for women entrepreneurs, small and marginal farmers, in India’s villages and tier-3 and tier-4 towns, is a task that traditional banking and financial service providers alone struggle to accomplish economically.”
— Sanjay Malhotra, Governor, Reserve Bank of India
Malhotra cautioned that commercial incentives naturally pull fintechs towards banked and digitally literate customers, while the harder problem of reaching those outside the system remains under-addressed.
“Yet, too much of the industry’s efforts, understandably, gravitates toward customers who are already banked, already digitally literate, already visible to a credit bureau, just because the underlying cost-benefit justifies it. The harder work of reaching those still outside the system is where ‘potential to impact’ is least realised today, and where it matters the most.”
— Sanjay Malhotra, Governor, Reserve Bank of India
The Governor identified four major areas where AI can contribute to financial services, while also pointing to quantum computing and tokenisation as emerging technologies.
“At the FIBAC last month, I had spoken of four other broad areas, apart from financial inclusion, where AI can be of use, viz., consumer service, meeting unmet credit and other financial needs, enhancing operational efficiency of banks and other financial intermediaries, and reducing fraud. These are some areas where fintechs can contribute using advanced technologies such as AI, quantum computing and tokenisation.”
— Sanjay Malhotra, Governor, Reserve Bank of India
RBI isn’t looking at AI only through the lens of efficiency. Malhotra flagged a broad set of risks that financial institutions need to mitigate to maintain consumer trust.
“At the FIBAC last month, I had mentioned risks pertaining to opacity, bias and exclusion, concentration and herding, cybersecurity, data privacy and security, and erosion of human judgement, among others, while adopting AI. I would again emphasise that mitigating these risks is important for maintaining consumer trust.”
— Sanjay Malhotra, Governor, Reserve Bank of India
This was one of the strongest regulatory messages in the speech. Malhotra said fintechs should treat customer data as something held in trust rather than something primarily available for monetisation.
“Second, treat data as a fiduciary responsibility, not a business asset. Every fintech in this room holds something more valuable than capital: it holds the data - financial and non-financial - of real people. This data must be treated the way a trustee treats assets held for a beneficiary: collected with clear purpose, used strictly within the consent given, and protected as though it were one’s own.”
— Sanjay Malhotra, Governor, Reserve Bank of India
RBI’s message is that regulatory responsibility should increase with scale. Even fintechs outside prudential regulation acquire wider obligations once their payments, lending or user base becomes systemically significant.
“But as a firm’s payment volumes, lending book, or user base grows to a point where its disruption could meaningfully affect the financial system, that firm acquires a responsibility that goes beyond its balance sheet or its shareholders. I would describe this as the obligation to be not just ‘too big to fail’ but ‘too significant to be careless.’”
— Sanjay Malhotra, Governor, Reserve Bank of India
Once a financial platform reaches meaningful scale, RBI doesn’t view resilience and cybersecurity spending as optional compliance costs.
“Operational resilience, business continuity, and cybersecurity are not burdens to be minimised; they are the price of the scale a firm has achieved.”
— Sanjay Malhotra, Governor, Reserve Bank of India
Malhotra explicitly cautioned against regulatory arbitrage and the “scale first, ask permission later” approach sometimes associated with technology companies.
“I would gently caution against a mindset of structuring a business around the gaps between regulatory categories, or of scaling first and seeking clarity or forgiveness later.”
— Sanjay Malhotra, Governor, Reserve Bank of India
After a decade largely spent developing solutions for India’s domestic financial system, Malhotra wants Indian fintechs to take their technology and institutional know-how global.
“India’s first decade of fintech was largely about building for India. The next decade presents an opportunity to build for the world. Many emerging economies face challenges similar to those we face in India. As a result, our solutions for financial inclusion, affordable payments, digital identity, interoperable infrastructure and trusted innovation can be appropriately repurposed for wider global adoption.”
— Sanjay Malhotra, Governor, Reserve Bank of India
Malhotra stressed that RBI wants to work with fintechs across AI, quantum technology and tokenisation to build a more stable, efficient and inclusive financial system.
“The Reserve Bank does not view fintech merely as an industry we regulate. We view it as a strategic partner in leveraging the latest technologies including the three technological pillars around which this year’s programme is built - AI, quantum technology and tokenisation - in fulfilling our own core mandate - a stable, efficient, and inclusive financial system.”
— Sanjay Malhotra, Governor, Reserve Bank of India
RBI announced recognition of the United FinTech Forum as the sector’s second SRO, intended to develop standards, promote responsible conduct and facilitate engagement with regulators.
“For a regulated development of the fintech industry, we have implemented the Self-Regulatory Organisation framework for this sector. It shall promote responsible conduct, develop industry-led baseline standards, build capacity and facilitate constructive engagement with the regulator, policy makers and other stakeholders. Two years ago, we gave recognition to the first SRO for Fintechs at this very forum. Today I am pleased to announce the recognition of United FinTech Forum as the second SRO in FinTech sector.”
— Sanjay Malhotra, Governor, Reserve Bank of India
Programmability is becoming an important part of RBI’s CBDC experimentation, including potential use in government benefit transfers.
“Our ongoing pilots on programmable CBDC are exploring targeted government benefit transfers, such as the Pradhan Mantri Garib Kalyan Anna Yojana, and other innovative use cases.”
— Sanjay Malhotra, Governor, Reserve Bank of India
RBI has already experimented with tokenised certificates of deposit using wholesale CBDC. It is now extending those experiments into corporate bonds jointly with SEBI.
“Our tokenisation initiatives including Certificates of Deposit issued through the Unified Markets Interface using wholesale Central Bank Digital Currency (CBDC) are helping us understand the potential future architecture of financial markets. Today, we take the next step in our tokenisation journey as we unveil the tokenisation of corporate bonds with settlement through CBDC as a joint initiative with SEBI and with the involvement of other stakeholders.”
— Sanjay Malhotra, Governor, Reserve Bank of India
Malhotra laid out RBI’s broader regulatory philosophy: regulate the activity according to its risk, while avoiding unnecessary intervention when innovation remains small and contained.
“Underlying all of this is a regulatory philosophy: proportionate, activity-based regulation-same activity, same risk, same regulatory treatment, regardless of who performs it, calibrated to capacity across the diverse spectrum of institutions. We keep regulation light-touch where innovation is nascent and risk contained, and step in only when activity grows to scale so as to become a systemic risk or for reasons of consumer conduct.”
— Sanjay Malhotra, Governor, Reserve Bank of India
RBI Deputy Governor Rohit Jain | Emerging Technologies in Finance: The Imperatives of Purpose, Prudence, and Policy
RBI Deputy Governor Rohit Jain, speaking at the Global Fintech Fest 2026 in Mumbai, shared his views on how emerging technologies are reshaping finance. His address focused on AI, tokenisation, distributed technologies and quantum computing, framed around three key imperatives (Purpose, Prudence and Policy) and the need to balance innovation with resilience, accountability and customer protection.
Jain sees the current technological wave as fundamentally different from earlier ones because AI isn’t merely processing information faster—it is increasingly influencing interpretation, prediction and decision-making.
“Artificial intelligence is not only helping us process information faster; it is increasingly helping us interpret information, identify patterns, make predictions and support decisions. In that sense, AI is beginning to augment something especially consequential for finance: human judgment.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Alongside AI, RBI is closely watching tokenisation, distributed technologies and quantum computing—each of which could reshape financial infrastructure while introducing new risks.
“Artificial intelligence, however, is only one part of a much wider technological transformation. Tokenisation is creating new possibilities for how financial assets are represented and settled. Distributed technologies are reshaping elements of market infrastructure. Quantum computing holds promise for solving complex problems, while also raising new questions about digital security and cryptographic resilience.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain framed technological progress as a trade-off: finance can become cheaper, more accessible and responsive, but resilience and accountability need to keep pace.
“Taken together, these developments present enormous possibilities. They can lower costs, widen access, strengthen risk management, and make finance more responsive. They also raise important questions about resilience, accountability, and the choices we make as these technologies scale.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain used UPI as an example of how an architectural choice—allowing transactions across banks and apps rather than closed networks—can widen participation and create an ecosystem for further innovation.
“UPI offers a clear illustration. It was built around interoperability, allowing customers to make payments across participating banks and applications rather than remain within closed networks. That design choice widened convenience for users and created a common payment infrastructure on which banks, fintechs and other service providers could innovate.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain identified three areas where technology can amplify familiar financial risks and transmit their effects more quickly and broadly through the system.
“I see three key concerns as emerging technologies become more deeply embedded in finance: speed, concentration and opacity. None of these risks is entirely new, but technology can amplify them and allow their effects to travel through the financial system in ways that are faster, wider and sometimes harder to detect.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Technology concentration can turn a single vendor or infrastructure failure into a problem affecting multiple financial institutions simultaneously.
“Financial institutions may increasingly depend on a relatively small number of cloud providers, technology vendors and model providers, often using overlapping datasets and similar technological infrastructure. The concern is therefore not simply the failure of one institution, but the possibility that a common dependency could transmit disruption or error across many institutions at the same time.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
RBI’s stance on AI accountability is clear: financial institutions remain responsible for decisions even when sophisticated external models or algorithms are involved.
“Advanced models can identify relationships and arrive at decisions in ways that may be difficult to explain. Greater sophistication, however, cannot mean weaker accountability. An institution may outsource the computation, but it cannot outsource the consequence. A customer affected by an important financial decision deserves something more meaningful than being told that ‘the model said so’.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Credit, liquidity, leverage and operational risks remain. Emerging technology primarily changes how quickly and widely those risks can propagate.
“Borrowers can still default, liquidity can still disappear, leverage can still magnify losses, and operational failures can still disrupt financial services. Technology does not make these risks vanish. Instead, what it can change, sometimes significantly, is their speed, scale and transmission.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Quantum computing could eventually undermine current cryptographic systems. Jain argued that financial institutions and regulators need to prepare for such vulnerabilities before they become immediate threats.
“Quantum computing offers a useful example. It holds significant promise, but it also raises questions about the resilience of current cryptographic systems. Preparing in advance reflects a broader principle: we should not wait for a future vulnerability to become a present crisis before responding.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain acknowledged the central dilemma regulators face: premature rules may constrain technologies that are still evolving, while delayed intervention can allow risks to become deeply embedded.
“Regulate too early, and we risk writing detailed rules for a technology we do not yet fully understand, or for an architecture that may change before the rules take effect. Regulate too late, and the technology may already be deeply embedded before its risks are fully understood and addressed. There is no perfect point between these two outcomes.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
RBI wants regulation to focus on outcomes and accountability rather than prescribing specific technologies. Outsourcing technology doesn’t mean outsourcing responsibility.
“The first is to remain clear about outcomes and accountability rather than attempt to prescribe every technological choice. The obligation to treat customers fairly does not change because an algorithm influences the decision. Similarly, responsibility for managing risk does not disappear because a model or technology is supplied by a third party.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain advocated proportional regulation: using AI to summarise an internal document shouldn’t face the same governance burden as autonomous credit approval or financial transactions.
“Different uses of the same technology can present very different risks. A tool used to summarise an internal document cannot be treated in the same way as a system that autonomously approves credit or executes financial transactions. The greater the consequence of the use case, the stronger the expectations should be around governance, validation, oversight and intervention.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Regulatory sandboxes remain important to RBI’s approach because controlled experimentation can reveal risks and benefits that aren’t obvious beforehand.
“The third element is to create space to experiment and learn within appropriate safeguards. Emerging technologies are often understood better through carefully controlled use than through speculation alone. Regulatory sandboxes can play an important role here by allowing genuinely new applications to be tested within defined boundaries before they are deployed more widely.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Jain’s closing regulatory principle was that policy shouldn’t simply restrict technology. It should create room for useful innovation while strengthening safeguards as adoption grows.
“The objective of policy, therefore, is to create the conditions in which useful innovation can develop responsibly. This requires clear guardrails where the risks are understood, room for experimentation where they are still emerging, and the ability to adapt the framework as technology and its uses evolve. Good policy should give innovation room to grow, while ensuring that accountability and resilience grow with it.”
— Rohit Jain, Deputy Governor, Reserve Bank of India
Defence
Cochin Shipyard | Mid Cap | Defence
Cochin Shipyard excels in constructing and repairing vessels, including defence, commercial, and offshore ships. It pioneers innovative shipbuilding techniques and handles maintenance for Aircraft Carriers, Bulk Carriers, and specialized oil exploration vessels. Committed to indigenous solutions, it strengthens national security through advanced defence ship development.
Cochin Shipyard already has substantial revenue visibility from its existing order book. The company has also emerged as L1 for five Next Generation Survey Vessels for the Indian Navy.
“Our current unexecuted order book stands at around ₹22,000 crores, which continues to provide us with good revenue visibility. We have also been declared L1 for five Next Generation Survey Vessels for the Indian Navy, valued at approximately ₹5,000 crores. Once this contract is concluded, the order book will be around ₹27,000 crores.”
— Jose V J, Chairman & Managing Director, Cochin Shipyard
Beyond the existing order book, CSL highlighted three major upcoming Navy programmes—LPD, MCMV and P17 Bravo—where it intends to participate.
“In defense, many programs are running in the order book. As you are aware, there is the LPD, then the mine sweeper. From the defense side, the major order we are expecting soon is the LPD, four vessels, which will be approximately ₹32,000 crores. Then there are the MCMVs, approximately ₹6,000 crores. Then there is P17 Bravo, seven vessels, which will be approximately ₹49,000 crores.
These are the major orders we are expecting from the defense side in response to the RFPs. Since there are other competitors as well, we will also participate in the bids.”
— Cochin Shipyard Management
CSL sees a significant domestic commercial shipbuilding opportunity developing alongside defence. Government-led demand aggregation is expected to support hundreds of vessel orders over the coming decade.
“On the Indian commercial side, because of the demand aggregation being conducted by the Government of India, there is a requirement for around 432 vessels over a period of 10 years. SCI and the newly formed joint venture company DCSL have already issued three or four tenders. We are participating in those, and other companies are also participating. The pipeline is good for all companies and shipyards in India.”
— Cochin Shipyard Management
Despite the large expansion programme and order pipeline, management is retaining a relatively conservative growth assumption, formally guiding for around 12%.
“Normally, we achieve turnover growth of around 12% to 15%. We are still maintaining that expectation. Normally, we guide for around 12%, but we may finally achieve somewhere between 12% and 15% every year. Conservatively, we guide for around 12%.”
— Cochin Shipyard Management
Ship repair carries significantly better economics than shipbuilding, but shipbuilding accounts for roughly 70% of turnover. That mix leads management to guide for a mid-teens consolidated margin.
“We normally guide for 14% because, in shipbuilding, margins are normally around 10% to 12%, while in ship repair we achieve around 20% to 22%. Shipbuilding constitutes around 70% of the business and ship repair around 30%. Therefore, the blended margin will be around 14% to 15%.”
— Cochin Shipyard Management
Management attributed historical profitability partly to high-margin nomination orders such as the indigenous aircraft carrier and aircraft-carrier refits. Future defence contracts are increasingly tender-based.
“The higher margins over the last 3 years were mainly because we had some nomination orders, such as the aircraft carrier, or indigenous aircraft carrier, in shipbuilding. In ship repair also, there were two aircraft-carrier refits. Margins were high in those projects.
Going forward, we cannot expect such margins from commercial or defense orders because all defense tenders are now also on a tender basis.”
— Cochin Shipyard Management
Negative operating cash flow has largely resulted from the payment structure of European export orders, where CSL receives only about 30% during construction and most of the balance on delivery. Several vessels are now approaching delivery.
“The vessels from orders taken during 2023, 2024, and so on are now scheduled for delivery. We have already completed approximately 80% to 85% to 90% of the construction, but we have received only 30% of the money. This year, we are targeting the delivery of around 10 vessels during the current financial year.
Once we start delivering the vessels, we will receive the remaining 70% or 60% from the owners, and the cash flow will become positive.”
— Cochin Shipyard Management
CSL is entering a sizeable investment cycle across shipbuilding and repair facilities. Management provided a clear return threshold for the new investment base.
“ROCE will be around 14% to 15%.”
— Cochin Shipyard Management
CSL expects to spend heavily on expansion over the next five years, but government incentives could materially lower the effective funding burden.
“This capex will be spent over the next 5 years, and we will grow primarily through a debt-equity ratio of around 20:80. There is also a Shipbuilding Development Scheme announced by the Government of India through which we will receive a 25% capex subsidy for all these projects, as well as interest subvention of around 3%.
We want to take advantage of all these benefits while executing this capex.”
— Cochin Shipyard Management
After failing to agree definitive JV terms with HD KSOE, CSL decided to develop the block fabrication facility independently, albeit at a smaller scale than originally planned.
“Presently, our block fabrication facility at the CSL main facility has a capacity of around 12,000 tons per year. However, after commissioning the new dry dock, we will need greater steel throughput. With Hyundai, we were planning to have a block fabrication facility with a throughput capacity of 1 lakh tons. Since we are proceeding alone now, we are planning a capacity of around 60,000 tons per annum.
The new block fabrication facility will provide 60,000 tons, and our existing facility provides 12,000 tons. Therefore, our total throughput will be around 72,000 tons.”
— Cochin Shipyard Management
Electric tugs currently cost almost twice as much as conventional diesel vessels. Management nevertheless sees the transition as inevitable as environmental standards tighten.
“We believe it will take some time for mass adoption, primarily because electric-propelled tugs would cost almost twice as much as conventional diesel-propelled tugs. However, with environmental requirements becoming increasingly stringent, there is definitely no other way to go but to move forward on this front.
The Government of India also wants to see 50% of our tugs become green by around 2035 to 2040. Therefore, volumes will emerge. However, I think the real movement will probably happen 3-4 years from now.”
— Cochin Shipyard Management
Management sees localisation as more than import substitution. Domestic manufacturing should reduce logistics and duties while improving availability during global disruptions.
“There will be multiple advantages. The first is cost reduction. Local production will significantly reduce transportation costs and import duties. This will obviously lead to lower costs.
There will also be supply-chain resilience. Especially during periods of crisis, indigenous manufacturing will improve supply-chain resilience and disruptions can be addressed more effectively.
Delivery will also be faster if we produce these batteries in India.”
— Cochin Shipyard Management
CSL’s indigenous hydrogen fuel-cell vessel was primarily a technology demonstration rather than a near-term commercial opportunity. Management wants to develop expertise before the broader hydrogen ecosystem matures.
“Worldwide, hydrogen fuel cells are still at the initiation stage. People are just starting out. There are many factors that will come into play. One is the development of a hydrogen fuel-cell-propelled vessel, but there is also the land-side infrastructure, hydrogen availability, bunkering facilities, and many other systems that have to come into play. The ecosystem will take time to develop.
We wanted to be present in the technology and see how it develops so that we have a first-mover advantage and the technical and technological capabilities, which is what we have demonstrated. Converting that into a business and generating returns will take some time, but what I can assure you is that we will be there when the time comes.”
— Cochin Shipyard Management
Engineering & Capital Goods
KEI Industries | Mid Cap | Engineering & Capital Goods
Established in 1968, KEI Industries Limited is a leading manufacturer of cables and wires in India. They offer a wide range of products from housing wires to Extra High Voltage cables, and also provide EPC services for power and transmission projects. KEI is renowned for being one of the few manufacturers of EHV cables in India.
Gupta acknowledged that UltraTech brings a strong brand and deep pockets, but believes concerns around its entry are overdone given KEI’s established brand and dealer relationships.
“I think UltraTech’s entry is a little bit hyped by the media and the markets. I do agree that strong competition has come in, with a very strong brand and deep pockets, but we also have an established business for the last several decades, and we have built up our brand and loyalty with the dealer network for a pretty long time.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Rather than viewing a large new entrant purely as a threat, Gupta believes competition could push KEI to improve efficiency, brand management and engagement with dealers and channel partners.
“When a large competition or a strong competition comes, it is definitely going to teach us some better things in terms of efficiencies, in terms of better brand management, and going more closely to the dealers and our channel partners so that they demonstrate larger possibilities of business transactions, even at an increased level of competition.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Gupta argues that KEI’s exposure to residential wires isn’t large enough for UltraTech’s entry to materially affect the overall company. KEI currently has around 7% share of the house-wire market.
“Our exposure to residential wire is not that great. We only command around 7% of the market share in the total house-wire market, which is not a very significant business of our company. I’m 100% sure that it will not be impacted in any manner.
You will see in the next five to six quarters what happens, and we will be able to maintain our share of business, our share of market, and we’ll continue to grow faster than what I am predicting.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Gupta divides the house-wire market into project sales and retail trade. He expects UltraTech to focus heavily on trade, but only around half of KEI’s wire business falls into this segment.
“There are two types of markets in house wire. One is the project-based market, where we supply to large projects, which includes builders and commercial projects. Second is trade, where we supply to retailers.
I think their strategy will be to hit more towards trade, which is through retailers. Our total market in that trade segment is just 50% of the total wire segment that we do.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Even if UltraTech aggressively targets the project market, Gupta believes pricing disruption will be difficult because these are already tightly negotiated B2B contracts.
“The project segment will not be impacted because that is always done on a pricing basis, and deals are done on a B2B negotiated basis through the distributors.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
UltraTech could potentially use aggressive launch pricing to gain market share, but KEI already operates at a discount to established peers, limiting the scope for a major price gap.
“Even if they reduce the prices by 4% to 5%, our pricing is already the lowest among all our peers in the trade market.”
“Around 3% to 4% lower than the other brands.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Gupta said his initial channel feedback suggests UltraTech’s pricing is broadly near KEI’s, although the impact of launch discounts and dealer schemes is not yet clear.
“What I am hearing is that their pricing is almost nearing ours, which they have launched. But I’m not very clear about what schemes and discounts they are going to operate, which may be a launching price.
Eventually, they will also have to adjust their prices with respect to copper, and the moment they get established, they will understand the costs also.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
This is one of Gupta’s clearest comments on competitive strategy. Despite UltraTech potentially matching KEI’s pricing, KEI doesn’t intend to sacrifice margins by cutting prices further.
“We are already a very established brand, and we don’t intend to bring down our prices in the face of competition. We already have our dedicated customer base, our dedicated electrician and retailer base, and we will continue to hold on to our prices in terms of this competition from UltraTech.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Gupta clarified that he isn’t assuming UltraTech will avoid project business. Rather, he believes project pricing is already so competitive that gaining share through price cuts would require additional P&L investment.
“First of all, I have not said that they will not target the project business. Definitely, they will target the project business. But I have said that project business is already done at a very, very competitive price historically, and there is hardly any room for cutting down the prices in that business because these are negotiated deals on a B2B basis through the distributors.
If they cut down the prices, that means they are going to put some more investment in their profit and loss account to bring down their prices.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Even if UltraTech causes some disruption in the trade channel, Gupta believes KEI’s diversified product portfolio and geographic exposure can compensate for it.
“We will be adequately compensated from our other businesses and our other geographies in the markets world over, even if there is a minor impact on the trade turnover. But I’m sure that it will not happen. We should wait and watch.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Extra-high-voltage cables are becoming a more important part of KEI’s revenue mix. Management expects their contribution to increase meaningfully over the next year.
“Our contribution from the EHV business is around 6% at the moment in our total sales, and we intend to take it up to 8% to 10% over a period of the next one year. I think that should happen.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Unlike residential wires, EHV has significant entry barriers. Gupta doesn’t expect competitive intensity to materially change in the near term because new players need a long gestation period to enter the segment.
“I think competitive intensity will remain similar for the next one to two years because no more players are entering this field, and it is a long gestation period before a new entrant comes into this business.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
The interviewers questioned whether UltraTech could benefit from sourcing copper from group company Hindalco. Gupta argued related-party rules make preferential pricing unlikely.
“Unless Hindalco sells UltraTech at a cheaper price, which is unlikely because these are two separate companies and it triggers related-party transactions and compliance issues, I’m sure that they will not sell cheaper to UltraTech.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Gupta also dismissed concerns that UltraTech’s location near Hindalco could create a structural raw-material cost advantage.
“So far as distance is concerned, in the copper business, in a ₹1,500-a-kilo product, if 50 paise is the extra freight cost—our factory is 300 kilometres from Hindalco—it will not impact even 0.001% of the margins due to the distance.”
— Anil Gupta, Chairman & Managing Director, KEI Industries
Consumer Durables
Symphony | Small Cap | Consumer Durables
Symphony, an Indian Multi-National Company with presence in over 60 countries is the world’s largest manufacturer of air-coolers. From inventions to innovations, energy responsibility to environment stewardship, Symphony is a market leader which has been cooling customers for generations. The massive supremacy of Symphony coolers in the residential, industrial and commercial segments has made the brand synonymous with ‘cooling’.
The move into room ACs, BLDC fans and air purifiers is part of a broader strategy that began several years ago. Symphony calls this its “Beyond India Summer” portfolio, which also includes international revenue.
“Over the last several years, we have been expanding into what we call the ‘Beyond India Summer’ products, by which I mean products which are not entirely dependent on the Indian summer, or as dependent as air coolers are.
We diversified into tower fans to begin with about five years ago, and a couple of years ago into water heaters. We also consider our revenue outside India as part of the ‘Beyond India Summer’ revenue.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Bakeri doesn’t see the new categories as unrelated diversification. Symphony considers itself an air-and-water company and believes the new products fit naturally within that positioning.
“In keeping with that theme, we are going to be expanding into room air conditioners, air purifiers and BLDC fans. These are all adjacencies as far as Symphony is concerned.
We define ourselves as an air and water company, and these are natural extensions of our product portfolio.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Rather than setting up factories for ACs, fans and purifiers, Symphony plans to rely on India’s established third-party manufacturing ecosystem, keeping the expansion asset-light.
“We will not be investing in capex or incurring any capex on these categories. Fortunately, the ecosystem of manufacturing is very well established over the last several years in India. So we don’t really have to get into manufacturing and reinvent the wheel.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Outsourcing manufacturing doesn’t mean Symphony intends to compete purely on price. Bakeri said the same product differentiation, innovation and service proposition used in coolers will be carried into the new categories.
“Symphony’s brand promise has always been a differentiated product—something innovative, a quality premium product—and backed by wide distribution and after-sales service. All of those will also hold true for these categories.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Bakeri stressed that diversification needs to create profits, not just revenue. That’s important because margins in ACs and fans could structurally be lower than Symphony’s existing cooler business.
“We are not going to be chasing numbers. We are not here for merely topline growth. This will certainly add to the bottom line.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Symphony accepts that ACs, fans and purifiers may not match the margin profile of its core portfolio. Management is willing to accept lower percentage margins as long as the businesses add absolute profit.
“While the margins in terms of percentages may not be the same as in our current product portfolio, because these are more competitive and we are sort of Johnny-come-lately, we believe that these would be, all in all, EBITDA accretive.
We are sort of ignoring the percentages as long as they add to the overall bottom line. That is how we are approaching these products.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Symphony is entering established markets from a small base, making virtually all revenue and profit incremental. Bakeri believes even modest penetration could therefore materially move the needle.
“These are large categories and the upside, because we are just beginning, is that for us everything is incremental. Everything is additional, whether it’s topline or bottom line.
We believe that because these are large categories, even a small fraction of that for us, to begin with, should be fairly significant.”
— Achal Bakeri, Chairman & Managing Director, Symphony
This was the strongest long-term statement in the interview. Bakeri believes the sheer size of the categories Symphony is entering could eventually make their combined revenue comparable to or larger than its core cooler business.
“I wouldn’t be surprised if, going forward, the revenue from these categories is equivalent to or even exceeds the core cooler business, merely because air conditioners, at least, are a high-ticket item and a much larger category than air coolers.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Fans have a lower ticket size than room ACs, but Bakeri still sees the size and growth of the category as sufficient to create a meaningful opportunity for Symphony.
“Fans, of course, are a lower-ticket item, but again the market is fairly large and expanding too.”
— Achal Bakeri, Chairman & Managing Director, Symphony
Unlike ACs and fans, air purifiers represent a relatively undeveloped market. Symphony sees room for the category to become more significant over time.
“Air purifiers are an absolutely, I would say, nascent category in the country, and we believe that too has significance.”
— Achal Bakeri, Chairman & Managing Director, Symphony
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