Cords Cable Industries

Cords Cable Industries
The company operates under a single product segment i.e. Cables. The company mainly focuses on specialized cables which differentiates it from other cable players in the country.
The vision of CORDS is to be recognized as a leading global player, providing products and services, offering comprehensive solutions to the electrical and data connectivity requirements of businesses as well as household users. It focuses on capturing new markets by developing customers in new and existing territories, to provide new cables for special applications like solar, marine, low temperature cables, cables for automobiles etc.
New Clients added in last two years - EPC contractors like Bombardier, Welspun, GE, ABB Global, Alstom Transport etc.
existing customers - L&T, Siemens, EIL, NTPC, BHEL etc.

Future Outlook
Infrastructure Boom: Company is engaged in cable manufacturing products used in projects hence demand is likely to increase significantly as Government of India has focused again on infra projects and approvals and investments in new projects will entail higher turnover of the Company which will ultimately increase the profitability of the Company.
Efficiency: Also, company has been continuously working upon achieving better efficiencies, cutting costs at every stage of production, better preventive maintenance, making product mix having higher contribution and achieving higher production so that company can achieve the scale of economy and maintain higher margin of profit. Expectation of company in terms of increase in its profits is in line with the increase in its activity and market penetration in the potentially improving macroeconomic scenario in the country.
Debt Reduction: Further, interest rates are likely to soften in near future and your company is expected to save significantly on its interest outgoes. Additionally, with the ongoing repayment of term loans availed for project financing, your company is expected to save on its financial expenses
(Already 30% debt reduced this year)

Huge Opportunities
freight corridor, smart city, railway signalling and protection system and infrastructure projects.

Promoter Holding
51% (all unpledged)

Promoter Holding decreased from 58% to 51% (Partners exited at 31 rs per share to current promoter)

Since IPO in 2008, the share price has remained in very strict range (not sure about the reasons)

No Dividend Payments since 2010-11

Promoters don’t have any set goals (in terms of revenue guidance and growth for future)

Income Statement of Last Five Years

Mar 2011	Mar 2012	Mar 2013	Mar 2014	Mar 2015 

Sales 289.61 376.81 385.44 262.99 265.03 283.32
Expenses 264.57 341.19 347.09 237.17 237.75 259.47
Operating Profit 25.04 35.62 38.35 25.82 27.28 29.26
OPM 8.65 9.45 9.95 9.82 10.29 10.33
Other Income 1.28 1.51 1.71 1.86 1.91 1.9
Interest 14.10 22.93 22.64 19.66 19.99 20.87
Depreciation 4.34 6.77 8.40 4.99 5.41 5,41
Profit before tax 7.88 7.44 9.00 3.02 3.80 4.87
Tax 2.51 2.07 2.92 0.98 1.10 1.77
Net Profit 5.37 5.36 6.08 2.03 2.70 3.11
EPS (unadj) 4.70 4.63 5.16 1.62 2.20 2.51

I believe, this is again coming into same cycle of 2012-2013 which was very high growth.
With huge opportunities in infrastructure in next 3 years like freight corridor, smart city, railway signalling and protection system and infrastructure projects, this can gain huge benefit

More over it has been under valued over a period of time . At current EPS of 2.51 , PE stands at 17.9X while other peers (V-Guard, Finolex) are trading at PE of 30 approximately

I believe, debt reduction and sales growth in next 2-3 years can bring back company to EPS of 5-7 approximately (very much conservative)
Opinions invited.

Disclosure : Holding less than 5% of portfolio

Hi, Thanks for posting about this. The stock has been trading much below its book value (P/B = 0.6 currently). Any idea why so (just looking for red flags, if any)?

I don’t know the exact reasons but i believe below are some possible reasons

  • Company performed well during the 2010-2013 years as revenues increased significantly (almost doubled) from 220 odd crores to 450 odd crores (at that time P/B value had touched 0.4) but i am not sure whether we can value this on P/b as historically it has been low throughout…

  • ROCE and ROE have consistently been low about 5% avg over so many years and 2-3 percent over last three years… may be a possible reason.

  • Promoters had been aggressive during IPO period and in 2010 saying … 500 crore revenue target in 3 years… no doubt they reached closed but didn’t achieve

What impressed me about the CEO-MD is that in Apr 2015, when his partners wanted to sell his stake in cords cable industries, CEO-MD purchased whole stake at a premium (no doubt its just 4-5 rs… share was at 26 then and he purchased it at 31 approx)… which gave a positive impression about his responsibility for stake holders and i personally thought it was a good sign…

Since then i am following it up… its consistently giving stable results… but i expect it to deliver 2011-13 growth or may be more in coming years due to infrastructure boom and their specialized competency in cables…

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Yes, the company does have low RoE. I was going through the BSE filings of the company and found out that the company has witnessed two high level resignations in the past year. In April last year,
the Joint Managing Director of the company - Mr. Devender Kumar Prashar resigned and later, in October 2015, the CEO - Mr. Vinod Kumar Beri himself resigned - Couldn’t find the reasons for the same though. This makes me slightly uncomfortable about the management quality issue.
Overall, the company has stable customers and has bagged orders for supplying to goverment’s solar projects

Yeah they did have two exits… and their stake also was picked up by current CEO-MD at a premium…
But exits were due to diverse interests of the respective people…
Mr Devender Kumar Prashar has founded a new firm called GLYNC Tech Pvt Ltd (bulbs and LED’s ) in 2015 and his profile says good management practices of cords
"A diploma holder in Mechanical Engineering, had association of over 40 years in Cable Industry and has exceptional Managerial & Administrative skills, vast practical experience in Strategic Planning, Marketing, Manufacturing and Operation Management.
He was one of the pioneers in establishing Cords Cable Industries Ltd. which in present stage is a Public Limited Company and reputed as one of the largest suppliers of Control & Instrumentation Cables and other specialized cables in India, to address the specific requirement of industries of diverse sectors such as Power, Oil & Gas, Refineries, Steel, Cement, Water Desalination, Metro Rail, Airports etc.
In 2008 ,Cords Cable Industries Ltd. became the only cable manufacturer in the Asia Pacific Region to be listed by Forbes Magazine in its list of Best Companies -Under 1 Billon US $"

All the above points are fine… Just one question: Why is the company paying Rs.20 crore as interest annually??? How do we reconcile this figure with the total loans outstanding of just 60 crores???


Hi Ankit,
You can check the balance sheet of last five years … and annual reports too… (annual reports i have not checked)
But through balance sheet , its easily visible that every year… long term liabilities are being reduced…
From 2011 to 2016… Long term borrowings have been reduced from 50 crores to 13 crores odd now… ( every year they have cleared around 10-8-6 crores i believe…

And reducing long term borrowings with no increase in short term borrowings…

Which is positive… and it does help counting 20 odd crores… in finance costs…easily

waiting for this year annual report

Hi Paresh,

I think you did not get what I was asking. For a total borrowing (long term + short term) of close to 60 crores, how do you end up paying Rs.20 crores as interest? Interest rate of 33%???


That’s what i am telling…its not only interes (in 20 crores)…it includes principal repayment too in parts

Hi pareshji,

If I am not mistaken, loan repayment amount is not included in P&L statement. Only interest component is included. Loan repayment is a balance sheet item and is adjusted there itself. It will also show in cash flow, but not in P&L.

Please correct me if I am wrong…


You are absolutely correct … but i believe this is a common mistake made by many firms…
they count interest + principal (EMI) as interest expense only…

I checked balance sheet too… If they were following principal payments separately there should have been deduction from Cash and Cash Equivalents over the years…while its not so…

Deduction in long term borrowings in balance sheet is negated by increases in reserves and surplus over these years…

So i believe… interest payments are here interest + principal…

Can you also recheck and confirm

I believe they have added fees for getting bank guarentee’s issued from the banks. So, this bank guarantees fees will be part of the finance cost but won’t get reflected in debt in the balance sheet. One can check the contingent liabilities. I know this as a fact in regards to this company. Haven’t checked the contingent liabilities, but I have dealt with them in the past.

Disc: No exposure.

Hi Guys,
If the company is including pricipal re-payment in financial costs, then they are showing lower profit and paying less tax every year. Would this not have become an issue with the IT dept by now?

Other thing is, they had about 6 cr of principal re-payment last year. Even if we deduct that from 20 cr of financial costs, it still works out to 14cr of interest payments on 60 cr loans. Still a whopping 23%.

Does anyone have access to management of the company? Can we get some clarity on these issues??


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If this is true, that is, interest + principal being shown as expense in P&L, then I believe it is a serious red flag on the auditor. In that case, I wont be able to trust any other number in the Balance Sheet and P&L.

This is just my view (as a credit analyst). Not interested in the company, yet.

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Interest To Bank
On Term Loan 13,31,589
On Other Borrowings 12,56,71,460
Interest to Others 5,00,09,778
Others 2,28,55,374
TOTAL 19,98,68,201
This is the breakup of the finance cost as per last annual report,
which indicates that there might be something fishy needs clarification from company…

Hi Kushal, you seem to have mentioned that you know the company. Could you get in touch with the management possibly for clarification on the interest cost issue?


Hi Ankit,

I know them in professional capacity. You can pm me, I can share the contact details with you.

Kushal Masand

This is for 2014-15 though…
but yes this is something which needs to be clarified with management

i found some bank guarantees …amount in lakhs
Particulars 2014-15 2013-14
Guarantees issued by Bankers * 7987.17 9083.39
L/C’s negotiated by bank 929.33 1325.51
In respect of Bill factored from banks/Factoring agency 1483.16 1219.88

Bank Guaranties includes BG’s amounting to Rs 3695.60 Lacs (PY 3645.60 Lacs) extended to Raw
Materials suppliers for credit period extended to company and the same is accounted for in sundry

Can finance cost be related to these @kushal … i believe you have more idea on this…

Can you explain if possible…it would be helpful…

This company started reporting decent numbers but thanks for enlightening regarding the interest and principal component hope to hear on this.

I came to ace investor Mukul Agarwal has increased his stake wish to see AR to get more clarity.The infrastructure growth and spending of 1 Trillion USD in next few years make it good small cap investment.

The book value is still around 91rs and with debt going down hope it can make new high

Disclosure:Hold cords cable since 2012 bought at average price of 28rs

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Not sure if this thread is being followed anymore. Below is some information on the finance cost from Q2FY18 corporate presentation

As of H1FY18, short term debt is 58Cr and long term 7Crs (total 65 Crs). Credit ratings are CARE Triple A and Triple B minus respectively.
Bank charges constitute more than 20% of finance cost. Interest rates on WC appears to be approx. 26%
If anyone has further updates on why finance costs are so high, would really appreciate. Thanks