Indian Cable Industry Exhibits Healthy Growth in FY-23, Key Investments in the Pipeline
Most Indian cable manufacturers posted healthy financials during FY-23, exhibiting substantial growth in terms of revenue and profit. The year was marked by several new developments in the industry, and multiple cable and wire manufacturers shared their CapEx plans for the near future.
Listed Electric Cable & Wire Manufacturers Grew 15-20% in FY-23
Major listed Indian electric cable manufacturers reported healthy growth in revenue.
Apar Industries Ltd. exhibited the most remarkable increase in its cable segment revenue by 63.68% to over Rs. 3,200 crore in FY-23. The company has attributed this extraordinary growth to increase in its elastomeric cables revenue and increased exports. The company’s revenue from its elastomeric cables grew by 41% from FY-22 to FY-23 owing to increased demand from the renewables, railway, and defence sectors. Further, the share of exports in Apar’s sales was 51.7% in FY-23 against 29.2% in FY-22.
Barring Apar, most cable manufacturers grew by 15-20% in terms of revenue from FY-22 to FY-23.
Polycab India Ltd. maintained its position as the market leader with its FY-23 top line from wires and cables breaching the Rs. 12,500 crore mark. The company exhibited a growth of 18.38% in its wire and cable segment revenue in FY-23.
Finolex Cables Ltd.’s revenue from electric cables grew by 15.35% to Rs. 3,683.51 crore, while Havells India Ltd. reported a healthy 19.11% increase in its cables segment revenue to Rs. 5,532 crore clocked during the year ended 31st March 2023.
KEI Industries Ltd., another major Indian cable manufacturer, reported a YoY increase of 22.07% in revenue from its cables segment to over Rs. 6,200 crore in FY-23.
Instrumentation, specialty and LV power cables manufacturer, Cords Cable Industries Ltd., reported a revenue of Rs. 526.26 crore for the recently concluded fiscal, thereby exhibiting a remarkable growth of 20.15%.
OFC Manufacturers Show Mixed Performance during FY-23
While some Optical Fibre Cable (OFC) manufacturers reported revenue growth during FY-23, others exhibited stagnation and even shrinkage in their income from operations.
Sterlite Technologies Ltd. (STL) grew impressively by 27.32% and reported a revenue of over Rs. 6,900 crore for FY-23.
Himachal Futuristic Communications Ltd.’s (HFCL) revenue remained largely stagnant, growing by a mere 0.34% to Rs. 4,743.31 crore in FY-23.
However, Aksh Optifibre Ltd.’s revenue slid to Rs. 286.55 crore in FY-23, reflecting a drop of 9.42% from its FY-22 revenue.
Key Developments in the Indian Cable Industry during FY-23
Several important developments speckled the Indian cable industry landscape during FY-23.
Fort Gloster Resumes Operations after 20 Years
Fort Gloster Industries Ltd. (FGIL) resumed operations after a gap of two decades.
The company’s production had been suspended since 2003 after its admission in Board for Industrial and Financial Reconstruction (BIFR) for Bankruptcy proceedings.
After overhauling its manufacturing capacity in Howrah, Fort Gloster dispatched its first cables consignment in June 2023.
Universal Cables to Expand its EHV Production by 50%
Universal Cables Ltd. (also known as Unistar), a part of the MP Birla Group, has decided to expand its Extra High Voltage (EHV) cables production capacity by 50%.
The company presently manufactures around 900 Km of EHV cables annually which will be augmented to about 1,350 Km annually by October 2023. This expansion will take place in a phased manner at Unistar’s Satna facility in Madhya Pradesh.
Universal Cables expects this expansion to be completed at a cost of about Rs. 40 crore, which will be financed through a combination of internal accruals and bank loan.
KEC, HFCL Inaugurate New Plants, LAPP India Opens New Service Points
KEC International inaugurated its Railway conductors unit at Vadodara in June 2022, while HFCL commissioned its new polymer unit at Hosur in October 2022. Further, LAPP India opened its service points at Coimbatore and Vadodara during FY-23, both of which were targeted at providing end-to-end harnessing solutions to its clients.
STL Launches ‘Multiverse’: India’s First Multicore OFC, Exits 5G Radio Business
Sterlite Technologies Ltd. (STL), a major Indian OFC manufacturer, launched India’s first multi-core OFC in October 2022. This quad-core OFC had been named ‘Multiverse’ by the company, which anticipates it to significantly increase data transmission capacity in and out of data centres.
Further, in November 2022, Mr. Ankit Agarwal, Managing Director, STL, told The Economic Times that STL would be pulling out of its non-core business, namely its wireless business, and focusing on its OFC segment. This change was made to improve the company’s profitability. In the company’s earnings presentation for Q4 of FY-23, Mr. Agarwal confirmed that STL had exited its ‘loss-making’ wireless business.
A quick look at the company’s financials shows that STL’s Q4 Profit After Tax (PAT) increased significantly to Rs. 63 crore in FY-23 from a loss of Rs. 25 crore in FY-22.
Cords Cable Enters the 500 Cr. Club, Delton Cables’ Exceptional Growth
Delhi-based Cords Cable Industries Ltd. reported its highest-ever revenue of Rs. 526.26 crore for the recently concluded FY-23 and thus made its entry into the coveted 500 crore-club.
In terms of financial growth, another cable company that exhibited exceptional growth was Delton Cables, a longstanding Indian cable manufacturer. The company’s revenue from operations exhibited a remarkable increase of over 71% to Rs. 272.15 crore in FY-23 from Rs. 159.12 crore in FY-22.
Polycab Signs Distribution Agreement with Redington
Polycab, India’s largest electric wire and cable manufacturer signed a distribution agreement with Redington. This agreement is for the company’s passive networking products which had been launched in March 2021. Redington is a leading technology solutions provider and a major distributor of smartphones, IT services, and hardware.
Polycab’s Copper-based passive networking products comprise screened co-axial cables and twisted pair (Unshielded Twisted Pair and Shielded Twisted Pair) cables. The company’s non-Copper passive networking products include its OFC range, which consists of Armored Cables, Duct Cables, FTTH (Fibre To The Home), Indoor/Outdoor Cables, Fig-8, Aerial cables, Ribbon Cables, and Special Cables. Polycab also offers several OFC accessories.
Initiation of IBC Process for CMI
CMI Ltd. communicated through a stock filing dated 30th June 2023 that one of the Financial Creditors of the company had submitted an application before the Delhi bench of the National Company Law Tribunal (NCLT). This application is for the initiation of Corporate Insolvency Resolution Process (CIRP) for CMI.
The company’s promoters have been diluting their shareholding in the company since 2021, and as of now, promoter holdings in CMI amount to 0.5%. With the resignation of key position holders in the company, such as the Chief Financial Officer (CFO) and the Company Secretary, CMI’s future as of now stands uncertain.
Ravicab’s Acquisition of Leoni Cable Solutions India
In September 2022, Bengaluru-based Ravicab Cables Pvt. Ltd. acquired Leoni Cable Solutions India Pvt. Ltd. (LCSI), which was a 100% subsidiary of Germany’s Leoni AG.
Major Events and Investments in the Indian Cable & Wire Industry Expected During FY-24
RR Kabel’s IPO Planned for Q3 of FY-24
Mr. Shreegopal Kabra, President, RR Global, told PTI in December 2022 that RR Kabel would file preliminary papers with SEBI for an Initial Public Offering (IPO) planned for Q3 of FY-24. As stated, RR Kabel filed these papers in May 2023 and has targeted to raise about Rs. 225 crore through the sale of 1.72 crore equity shares.
Finolex Cables Envisages 300-350 Cr. CapEx
During the company’s earnings call for FY-23 financial results, Mr. Mahesh Viswanathan, CFO of Finolex Cables conveyed that it has lined up a CapEx of about Rs. 300-350 crore in a period of 18 to 20 months in its Pune facility.
Out of this investment, Rs. 250 crore has been earmarked for FY-24, while about Rs. 75 crore to Rs. 100 crore will be utilised in FY-25.
Speaking about this expansion, Mr. Deepak Chhabria, Executive Chairman, Finolex Cables, said, “We are also adding capacity on the cable side along with the preform, as well as on the tower side. So we’ll have preform, the fibre drawing tower and the cabling side all getting expanded to take us to a capacity of about 8 million fibre kilometer per year.”
KEI Industries Plans Greenfield Expansion in Gujarat, Brownfield Expansion at Silvassa
During FY-24, KEI Industries will be investing about Rs. 250 crore to Rs. 300 crore for greenfield expansion in Gujarat. This capital expenditure will be directed towards expanding the company’s wire and cable manufacturing capacity. Work on this facility had been scheduled to commence in June 2023, and it is likely to be commissioned within 18 months once the construction begins.
Apart from this, the company will be investing about Rs. 45 crore at its Silvassa plant for brownfield expansion. With this, the company expects to expand its LT Power cable production, and consequently grow its revenue from this segment by about Rs. 500 crore. “This will enable us to grow by approximately 16% to 17% in current financial year”, the company’s management stated in its May 2023 earnings call.
Speaking of the company’s future CAPEX plans, Mr. Anil Gupta, Chairman and MD of KEI Industries said, “We’ll be spending every year around INR 250 crores to INR 300 crores every year in next 3 years to maintain a CAGR growth of 17% to 18% per annum, as against achieved CAGR of around 15% during the last 15 years”.
Apar to Invest 260-270 Cr. in its Cable Business, Greenfield Cables Plant in the Pipeline
Addressing its shareholders, Apar Industries’ management shared that the company has planned a CapEx of about Rs. 400 crore to Rs. 450 crore for the coming 12 to 18 months.
Out of this amount, Rs. 260 crore to Rs. 270 crore has been earmarked for cables. Apar will be setting up a greenfield manufacturing facility for cables using this amount.
Explaining Apar’s motive for this CaPEx, Mr. Kushal Desai, Chairman and MD, Apar Industries, said, “The implementation of renewable energy has been growing. So that’s the reason why our plan is to invest the total capex of the company about INR 400-odd crores”.
Havells India Announces 600 Cr. CapEx for FY-24, to begin Production at Tumkur
Havells India has planned an investment of about Rs. 600 crore in the 2023-24 financial year.
Further, Havell’s under-progress cable manufacturing facility at Tumkur, Karnataka is also expected to begin production by the end of FY-24. This unit, which is being developed at a cost of about Rs. 300 crore, will have an annual manufacturing capacity of 3,48,000 Km.
Polycab Announces 600-700 Cr. Investment for FY-24
Polycab has announced a CAPEX to the tune of Rs. 600 crore to Rs. 700 crore for FY-24. This amount will be spent partly on greenfield and partly on brownfield expansions.
Growth of Key Industrial Sectors to Drive Cable Demand
Cable demand in India is expected to be driven by Renewable Energy (RE) projects, refining and petrochemical sectors, development of High Voltage Direct Current (HVDC) power systems, infrastructure and real estate segments, metro railways, and other industrial segments.
A PIB release dated 5th April 2023 states that to achieve Government of India’s target of 500 GW RE generation by 2030, about 50 GW of RE generation capacity needs to be added annually for the next 5 years, thereby implying that several RE projects will be set up in the coming few years.
As per Mordor Intelligence, a Hyderabad-based advisory firm, the Indian HVDC market is expected to grow from USD 3.27 billion in 2023 to USD 4.96 billion by 2028. Considering this, the demand for HVDC cables is expected to soar.
Government of India has been focusing on infrastructure projects through several programmes such as the Gati Shakti scheme, Regional Rapid Transit System (RRTS), development of Multi-Modal Logistic Parks near Special Economic Zones, Airport projects, Metro rail expansion projects, and more. As per Mordor Intelligence, the size of India’s infrastructural market is expected to grow to USD 294.12 billion by 2028 from USD 186.24 billion in 2023. Therefore, this projection suggests a healthy demand for cables and wires from this sector.
Apart from this, several upcoming refineries and petrochemical projects by major state-owned players such as HPCL, BPCL, and IOCL are poised to further increase cable demand.
Therefore, the demand scenario for wires and cables seems favourable in the Indian context.