After cement, Adani and Birla to compete in wire & cable industry

After cement, billionaire Gautam Adani’s group and Kumar Mangalam Birla’s Aditya Birla Group are set for a face-off in the wires and cable business with both conglomerates announcing forays into the high double-digit growth sector.

In less than a month, both groups — who have been fiercely competing in the cement sector leaving smaller players way behind — announced their entry into the wires and cables segment, which is dominated largely by unorganised players and some smaller companies.

Entry of the two big players will intensify competition in the wires and cables industry, which posted 13 per cent compound annual growth rate (CAGR) in revenue between FY19 and FY24 and is migrating towards an organised branded market.

This was evident as sensing disruption from these deep pockets, share prices of listed players in the wires and cable segments slumped a day after March 19, when Adani Enterprises informed bourses of entering the segment.

Share price of Polycab India, a leader in the segment, and KEI Industries reported 52-week lows on March 20.

Similarly, shares of Havells also went down 5 per cent and while Finolex Cables was down 4 per cent the next day.

Terming wires & cables “ideal segment for a new entrant with deep pockets”, JM Financials has said, “This is an industry where no single player commands more than 15 per cent share in wires and 20 per cent in cables.”

The industry comprises nearly 400 players, ranging from SMEs to large enterprises, with revenue of Rs 50-400 crore, it said.

According to global brokerage Jefferies, the India cable & wire industry, which stands at Rs 80,000 crore (Rs 56,000 crore cables and Rs 24,000 crore wires), has an “attractive opportunity”.

“There is enough room for a new player in the cable & wire industry”, as it is growing by double digits, and 30 per cent of the industry is still unorganised, analysts at Jefferies said.

Motilal Oswal Financial Services said the demand for cables & wires remains strong, with a stable long-term growth outlook.

“Industry is estimated to grow at a multiplier of 2x of real GDP (12-13 per cent), whereas key players Polycab, KEI, Havells, and Finolex Cables have largely outpaced the industry.

“We estimate the overall C&W industry size to reach Rs 1,30,000 crore in FY29,” said Jefferies.

Adani Enterprises, through its step-down subsidiary Kutch Copper Ltd (KCL) earlier this month formed a JV , Praneetha Ecocables in partnership with Praneetha Ventures, which will manufacture and sell metal products, cables and wires.

The move comes almost a month after Aditya Birla Group’s flagship firm UltraTech Cement, on February 25, announced the extension of its footprint in the construction value chain through the wires and cables segment with an investment of Rs 1,800 crore over the next two years.

UltraTech has also proposed to set up a greenfield plant near Bharuch in Gujarat which is expected to be commissioned by December 2026.

This move is part of Aditya Birla group to expand presence in the adjacencies of the building construction business, in which it has launched paint business under the brand ‘Birla Opus’.

Interestingly, both Aditya Birla and Adani have a presence in the copper businesses, which is the mainstay of the wires and cables industry.

Aditya Birla’s Hindalco, a leader in aluminium and copper production, may also provide synergy to its wire & cable business.

Similarly, Adani’s Kutch Copper also provides synergy for its cables and wires business.

Analysts at Jefferies said: “The company’s entry into this segment is part of the forward integration project for the copper arm of AEL and possibly backward integration for the captive group transmission business.

“This announcement is very preliminary, and the project could take 3-4 years to come online.”

Now, both groups are moving towards adjacencies as Aditya Birla is expanding its footprint in the construction value chain through the wires and cables segment.

With cement, decorative paints and now wires & cables, it is on its strategy to become a complete construction solution provider.

dani Group had entered into the cement business in September 2022, after acquiring Ambuja Cement from Swiss firm Holcim for $6.4 billion (about Rs 51,000 crore).

It is the second largest cement producer and challenging India’s top cement maker UltraTech, through series of acquisitions and brownfield expansions.

It has done three major acquisitions – Penna Industries, Sanghi Industries and recently announced CK Birla group firm Orient Cement. Besides its subsidiary, ACC has acquired Asian Concretes and Cements.

Similarly, UltraTech in the last two years acquired India Cements, Kesoram Industries’ cement business and the UAE-based RAKWCT. To maintain its lead in the sector, the Aditya Birla Group flagship firm plans to have 200 MTPA capacity by FY27.