In this (apparently) post-corona phase of recovery, how is the Indian wires & cables market scaling up?
I am quite bullish regarding the growth of the wire and cable sector post pandemic because the economy is growing very fast. From infrastructure power generation, transmission and distribution to oil & gas, construction, real estate, and massive housing projects, everything requires wires and cables. No sector of the economy can grow without the use of wires and cables. The government is now pushing for offshore wind farm projects. Thus, a good amount of
subsea cables to bring power from the offshore wind farms to the shores will be the future. The companies should look at it as a new prospect for growth. I foresee a growth of close to 12-13% in the overall industry for
the next twenty years. Talking about KEI’s performance during the pandemic and what we plan to do now that the pandemic has come to an end. We faced the category challenges head on during the pandemic – and made crucial strategic moves to sustain our position as one of India’s leading and fastest-growing wires and cables manufacturers.
Could you throw some light on the market-reach of your company?
Our present market share in the domestic segment, if we talk about the organised sector, is around 12-15%. We are exporting around 12% of our total turnover. Our wide range of cables, including EHV cables, HV cables and
LV power cables, stainless steel wires, are exported to customers in over 50 countries with Germany, Australia, New Zealand, the Middle East and South & West Africa as its main markets. Our high quality, customizable solutions and specialty cables at competitive prices enable us to meet the requirements of the oil and gas and other infrastructure-focused sectors in these geographies. Besides this, we also provide our international customers with EPC services.
Our aim is to grow the exports to at least 15-18% of our sales and we would be aiming to achieve at least 50% of our sales through retail network. We are already very strong in Africa, Australia, and the Middle East. Besides focusing on growing these markets, we are also penetrating the American market. The strategy is quite clear – a very strong thrust on building the brand and reaching out to every sector of the economy. For exports, we are working with a focused marketing approach by deploying focused teams in different countries.
How is the scene in the export front?
KEI’s export segment received a major boost with rising demand from various end-users from oil and gas, renewable energy, power and infrastructure sectors across important global markets. To maximise our export opportunities, we built a new authorised dealer and distribution network in international markets with a focus on both domestic and industrial cables and wires. The strengthening of KEI’s prequalification credentials to meet the stringent parameters of international customers has garnered ISO and NABL certifications for Quality Management, Environment Management and for the testing laboratories.
What are the challenges that the Indian wires & cables manufacturers are facing at this point of time?
I honestly don’t see any challenges as I am habitual to looking at the brighter side of things always. Once considered an unorganised segment, the Indian wires and cables industry now makes up approximately 45% of the electrical industry. With markets poised to make a recovery by resuming manufacturing activities, the global wires and cables market size is set to expand at a CAGR of 4.4% over 2021-28, to reach US$ 260.16 billion. The Indian wires and cables market alone is valued at around US$ 64.60 billion. The institutional demand for cables in India is being driven by the expansion of transmission and distribution infrastructure, increasing investments in infrastructure projects and renewable power generation. The Indian Government’s focus on 100% electrification of the railway network, setting up metro rail, providing public charging infrastructure, 100% population coverage for telecom and high-quality broadband services and laying optical fibre cables across the nation under the Bharat Net project, and smart city projects are augmenting the demand for cables.
Road and highways, tunnels, railways, metro rail, power transmission and distribution, airports, solar power and nuclear power projects are being awarded to spur economic growth. The Government’s National Infrastructure Pipeline (NIP) is an umbrella program integrating multi-sector infrastructural projects with an initial sanction of USD 1.5 trillion over FY 2019-25. The Government’s thrust on converting overhead lines to the relatively safer underground cabling in smart cities, metro rail, high-end hospitals, hotels and shopping malls has increased the need for EHV cables. The Government’s Production-Linked Incentive (PLI) Scheme encourages private players to enhance their manufacturing capabilities. The retail demand for housing wires is being fuelled by flagship government schemes for urban and rural electrification such as Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and 24×7 Power for All. Increased urbanisation and housing due to improved affordability is also boosting the demand for housing wires. Current market dynamics augur well for organised players with rising middle-class incomes, greater customer involvement in electrical purchases, and growing preference for branded offerings.
KEI, with its strong cash flow and balance sheet and substantial liquidity combined with its proven manufacturing and distribution capabilities, is in the ideal position to be opportunistic in strategically reinvesting, capitalising on market trends, and expanding its business.
Have you launched any new products in the recent past?
Yes, we have launched a range of communication cables recently. Communications cable is essentially a cable used to transmit information by use of currents of various frequencies. In the basket of communication cables we offer; CCTV, Telephone Cables, CAT 6 UTP Cables, and Co-Axial Cables. These cables are typically used for data transmission, Ethernet connections, electronic circuits and networking.
Are you doing anything for the electric vehicle (EV) industry?
Yes. We have noticed an increase in the adoption and use of electric vehicles that has accentuated the need for EV charging cables. We too are developing a range of EV Charging cables that will be launched in the markets soon.
What are KEI’s other recent strategic developments?
KEI has identified the retail segment for driving its next leg of growth. The company aims to scale up retail contribution to 40-50% of overall sales in the medium term, led by 40% growth in housing wires. To push this agenda ahead, KEI has hired a leading consultant for the development of strategies and policies for increasing retail sales. Higher margins and lower working capital requirements in retail visà-vis other business segments are key factors driving KEI’s focus towards growing the former. To gear up for these growth expectations, KEI has already expanded production capacity in house wires, keeping ample headroom for boosting production.
For additional distribution muscle, we have increased our retail sales team for deeper penetration in smaller cities and rural areas. To ensure the team’s effectiveness, KEI has mapped out every geography by population and accordingly positioned its people. The teams conduct promotional activities with electricians, architects and electrical consultants for more impact.
KEI has also stepped up its distribution network to supplement its retail capabilities. KEI’s strategy of all-India distribution expansion, however, remains unchanged: to increase distribution reach by 10% every year in the medium term. Getting products approved from architects and consultants and entering new markets in semi-urban and rural India are its other focus areas for growing retail sales.
How do you define your brand values?
With a clear and strategic product-centric vision and mission in hand, KEI’s core values cover people, community and the planet. The safety of people and property is reflected through its attitude. The company vows to respect people and the environment. Transparency is a vital element in all its dealings and behaviour. KEI reiterates its commitment towards self and organisational development. To all its stakeholders, KEI makes a promise to always love and care for them.
What are your next plans?
We will be setting up, and adding more advanced cable products for the oil & gas sector, which are presently being imported. Besides launching them in the domestic market, the company also has plans to export those products. The future plan will be to set up a new Greenfield project in the next few years and enhance the capacity of the factories by almost double the present capacity. We will be betting upon existing products, and also more advanced products for solar and wind farms.
We foresee a very strong future in shipbuilding, oil & gas, and the renewable segment within India as well as internationally. Also, we are doing a lot of work on the cables for the mining sector.
The EPC division would remain close to 10% of the total sales. The major thrust of the EPC division is to do underground cabling projects – so that we are able to load our factories to a certain extent for our own EPC projects. The products are manufactured by us – that is our biggest USP and it always remains to be the major leverage and strength in executing these kinds of EPC projects.
