Major opportunities for cables & wires industry will be in the infrastructure and renewable sectors.

- Shashi Amin

Executive President & Chief Business Officer - HDC, Polycab India

How do you see the opportunities for cables and wires in India's growth story?

Cables and wires industry in India will see impressive growth in the next five years due to key reasons like increase in consumption with the increase in working-age population, budgetary allocations to infra projects, industry capex and policy reforms that will boost production.

The Union Budget revolves around infrastructure revival and growth stemming from the 34.5% increase in capital expenditure in FY22 set at Rs 5.54 lakh crore. This coupled with an increase in the number of projects under the National Infrastructure Pipeline (NIP) indicates strong infrastructure development and growth. The infrastructure development for both urban and rural areas promise a balanced positive impact for the economy. There is a surge in demand due to higher outlays on infrastructure and public capital spending, steel and cement companies are expected to be much benefitted. This will give a booster for fundamental sectors like cables and wires due to increased demand. Increased spend on road infrastructure, voluntary scrappage policy, R&D are deemed to favour the automotive industry. The recognition and focus on building rural and agricultural infrastructure may have a positive impact on rural demand for vehicles.  

There is a lot of emphasis on strengthening our transmission and distribution network. Your take on the same?

With increasing infrastructure development, right of way comes into play. There is a growing need to replace the overhead transmission and distribution lines with underground cables in the populated areas to ensure safety. Private transmission & distribution utilities aren't rigid with old standards that may need an update with progressing technology. Hence, it is likely that private utilities would like to adopt underground cabling with a keener intent. Hence, privatization brings a positive sentiment that both state-owned, and private utilities will expectedly adopt and make the latest standardization specifications aligning with the latest technology and convenience of the consumers.

The overhaul of the power distribution segment by providing a choice of supplier in electricity distribution will encourage the retail segment players to compete based on service quality and value-added services. This will put the onus on the state discoms to improve.

Discom privatization could be a two-pronged improvement strategy to bring significant private sector participation and simultaneously pace up the state discoms to deliver on time. To balance the impact, Rs 3 lakh crore will be pumped into the discoms for improvements to be consistent with the proposed model.  Having the ability to forecast the demand with accuracy and hassle-free inventory management is good news for Polycab from business and EPC perspectives. The gamut of private suppliers tagged along with the discoms opens the field to fair play among the players of the cables and wires industry.

Your take on the stress in the power industry and how it is impacting the ancillary businesses like cables and wires.

The power sector has been under stress owing to delays in procurement of regulatory clearances, inadequate supply of fuel (coal & gas), the inability of promoters to complete the large complex power projects within the stipulated costs and timelines, absence of creditable off-take under long-term/medium term PPAs owing to negligible power procurement by discoms, contractual disputes, and delayed payments among other reasons. The muted power demand from industrial and manufacturing sectors coupled with low power procurement by discoms on long-term basis disturbs the planning of ancillary businesses like cables and wires. Focus on improving solar capacities could be a positive sign in this regard.

The capacity of the “Development of Solar Parks and Ultra Mega Solar Power Projects” Scheme has been enhanced from 20,000 MW to 40,000 MW vide Ministry of New and Renewable Energy's order dated March 21, 2017. These parks are proposed to be set up by 2021-22. Relaxed norms along with exemption of TDS on dividends paid by InvITs attract and permit increased domestic and foreign investments in InvITs. The private sector companies and the PSUs that are aligned with the ambitious 175 GW target of renewable energy by 2022 shall expect to leverage InvITs to unlock their equity. This will facilitate generation, transmission and distribution of power stimulated by an aggressive boost in projects which will create a healthy demand. The Ministry of New and Renewable Energy has extended the commissioning for solar projects under Tranche-III of the Central Public Sector Undertaking (CPSU) program Phase-II to 30 months from the existing 24 months from when the letter of award (LoA) is issued. This is still very optimistic as compared to thermal plants that may take several years only to gain clearances before seeing the light of the day.

The government is laying emphasis on Aatmanirbhar Bharat and make in India. What are the challenges impacting the manufacturing sector?

The Aatmanirbhar Bharat Abhiyan is aimed at merging the global with the local, with focus on generating the manufacturing investment in India, and becoming the global multinational manufacturing hub after the pandemic. In April 2020, the Union Government announced the production-linked incentive (PLI) scheme, aimed at achieving large-scale electronics manufacturing in India. The state governments have also announced several schemes to garner investments and support local manufacturing.

The demand has been very volatile and has significantly dropped due to multiple lockdowns. It is yet to recover which will further delay investments. The Union Budget was announced amidst the recovering economy after the first wave and was followed by the second wave. The Budget is very optimistic towards the manufacturing sector and if we tread carefully and follow the plan, growth may be realised.

Increasing cost of raw material and investment problems faced by manufacturers are factors restraining the growth of this market. The government is expected to draw large overseas investments to help domestic companies become dominant players in the export market. Manufacturers expect government help to ensure raw material supply and imports of foreign-produced specialized items. 

Domestic manufacturing sectors could be strengthened through PLI schemes that benefit local manufacturing companies. The PLI scheme strengthens labour-intensive sectors (pharma, telecom) that will generate employment. The move is instrumental in reversing the pandemic disruptions on labour along with bringing India on the forefront of the global supply chain by identifying us as the global manufacturing leader.

What is the current size of the cables and wires market? How Polycab is gearing up to meet the demand of the future?

The domestic wires and cables market, at about Rs 450-500 billion, makes up about 40-45% of the Indian electrical industry. Major opportunities will be in infrastructure and renewable sectors. Other key sectors are oil and gas, defence, Indian railways, and automobiles, especially electric vehicles.

Polycab is a leading manufacturer of state-of-the-art cables and wires manufacturing in the 0.20 kV - 220 kV range across 11,000+ SKUs and growing. Polycab has been manufacturing and growing extensively while keeping up with latest technology and commands a diverse portfolio of EHV cables, fire survival cables, optical fibre cables, JFTC, high voltage cables, LAN cables, power and control cables, instrumentation cables, co-axial cables, solar cables, railway signalling cables and other cables such as CCTV, festoon, and submersible cables. In the wires segment, we are growing with House wires, green wires, industrial flexible wires, and speaker wires. We have sufficient capacity in the range of 4.1mn kms of wires and cables to meet the demand of future.

Polycab is continuously implementing a thought-through strategy for a truly sure-footed leap into the future. We focus deeply on strengthening manufacturing excellence with technological upgradation, expansion of our product portfolio, distribution network and accelerating our branding initiatives, besides optimisation of costs to stay ahead of the curve. We are focussing on enhancing our distribution presence by onboarding new dealers and distributors, in-depth focus on rapid product innovation, fire survival cables, rubber cables, e-beam cables, solar cables, green range, green efficient products and higher focus on automation, digitisation, and optimisation.

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