Red Sea crisis: Exports, higher freight impacts wire maker R R Kabel

As much as half of Indian wires and cables maker R R Kabel's exports are being delayed due to the Red Sea crisis but it is passing on higher freight costs to customers via price hikes, the company's finance chief told Reuters on Tuesday.

Attacks by Yemen's Houthi militia on merchant ships in the Red Sea and retaliatory U.S. strikes have ratcheted up tensions in the Middle East as the Gaza war rages on, forcing companies to reroute shipments as they face delays and jacked-up rates.

"We have no option but to reroute supplies. The cycle will be delayed and we don't know how much time it would take to normalise," Chief Financial Officer Rajesh Jain said, estimating about 40%-50% of the company's exports were affected.

 

R R Kabel, which got 27% of its revenue for April-December from exports, is re-routing shipments to key export geographies, adding 10-15 days in travel time, Jain said, to the typical travel time of 25-30 days to Europe and the United States.

The comments sparked a 3% drop in the company's share price.

"Cargo costs have increased significantly, but since I am able to pass on this price to my customer, it will not have an impact on my bottom line," Jain said, adding there was no price sensitivity from buyers.

R R Kabel's rival Polycab, which gets about 8% of its revenue from exports, has also flagged increased delivery timelines, although Havells India, with 3% of revenue from exports last fiscal year, has seen no impact.

Jain's comments come a day after R R Kabel posted a drop in quarterly profit, mainly due to higher copper prices. It did not flag any impact from the Red Sea crisis on its revenue, which rose 10% to Rs 1,634 crore ($197 million) in the quarter.