The Adani Group and the Aditya Birla Group, two of the biggest industrial giants, have recently entered the cables and wires (C&W) sector. This sector was traditionally dominated by smaller companies and unorganised players. However, the entry of big names in the sector will lead to increased competition and potential consolidation in the market. The global and domestic demand for cable and wire products has remained strong for a considerable amount of time now.
The cables and wires sector is also aimed for steady growth driven by industrial and infrastructural expansion. This has caused big companies to venture into the sector. With this recent initiative, India will be able to enhance its revenue generation from this particular sector. We will also be able to earn the reputation of being one of the biggest names in this particular business sector. The Adani Group Controversies will subside.
Adani and Birla’s Entry Into The Cables And Wires Business:
Within a month’s time, two of the biggest conglomerates have made their way into the cables and wires sector which has earlier been dominated by unorganised players and small companies. The Adani Group has recently launched a joint venture after Aditya Birla’s entry into the cables and wires sector amidst the Adani Group Controversies. Kutch Copper Limited which happens to be a wholly-owned subsidiary of Adani Enterprises Limited has recently incorporated a joint venture company, Praneetha Ecocables Limited. This was done in partnership with Praneetha Ventures Private Limited.
Last month, the Aditya Birla Group firm UltraTech Cement which is India’s biggest cement company also made an entry into the sector with INR 1800 crore investment which has been planned over the next two years. This includes building a plant in Gujarat. The Adani Group had earlier entered the cement and copper business where the Aditya Birla Group is currently a leader. The Birla Group aims to expand its construction value chain after it launched Birla Opus to sell a range of interior and exterior building products from decorative paints to wood finishes.
Why Did The Birla Group Make An Entry Into The C&W Sector?
The Birla Group’s entry into the wires and cables business goes at par with the company’s strategy to extend its position as a comprehensive building solution provider. From wall putty to paint and cement and now to cables and wires, the Birla Group is currently expanding its presence in the construction sector. The company’s aluminium and copper business of Hindalco can also offer synergies to the cables and wires business. The volatile prices of copper, one of the major raw materials, have further boosted the company’s entry into the sector.
Adani’s Venture Into The C&W Business:
By entering into the cables and wires sector, the Adani Group aims to exploit the existing synergies in its cement and copper business where it challenges the Birla Group. The company has an extensive presence in the cement business. Its power, coal, and logistics businesses will offer an extraordinary scope of growth within the cement business offering a reduction in the cost of the production of cement. Adani’s entry into the copper sector with Kutch Copper Limited also played to the group’s strength. Kutch Copper will allow the Adani Group to pursue its ambitious green energy business. It will also give an excellent boost to the group’s wires and cables business. The business group will be able to put aside the Adani Group Controversies and build itself an excellent reputation on a global scale.
How Will Adani And Birla’s Entry Into The C&W Sector Completely Reshape The C&W Market?
The recent entry of Adani and Birla into the C&W sector will intensify competition in the market which is currently dominated by players like Havells, Polycabs, Finolex Cables, etc. It will also put a stopper to the Adani Group Controversies. The cables and wires industry is one such industry where as of now no single player has commanded over 15% shares in wires and 20% shares in cables. However, with the entry of industrial giants in this sector, this scenario is likely to change in the upcoming months. As of now, the industry comprises around 800 players ranging from SMEs to large enterprises with revenue between INR 500 million and INR 4 billion. This makes the C&W industry an ideal industry for a new player having extensive resources.
The entry of the two big companies will lead to consolidation in the sector which is currently dominated by small and unorganised players. Both Adani and Birla can play to their strengths and grab a large share of the market in the next few months. The companies also have deep enough pockets to stay in the game and become significant players in the wires and cables industry. However, an already high planned capacity in the sector can be a challenge especially if the demand slackens or the supply remains stable. The market is also currently underestimating the power of existing players.
As of now, the cables and wires sector continues to thrive driven by domestic demand and expanding global opportunities. The global demand for C&W products is fuelled by rapid electrification, real estate development and growth in sectors like power transmission and distribution, transportation, etc. This demand is expected to drive an 11 to 13% CAGR in the domestic market from FY24 to FY27.
Conclusion:
The C&W sector remains vital to India’s industrial growth story. Continued investments made in power infrastructure, private capital expenditures, and real estate will sustain demand momentum on the global front. India’s growing importance as a reliable exporter supported by favourable conditions will also ensure a brighter future for the C&W market. With increased traction in both international and domestic markets, the industry will remain a high-growth segment offering extraordinary opportunities for the players as well as the investors.
