The Disruption in India's Cables & Wires Industry: Adani & Birla's Strategic Entry

India’s cables and wires (C&W) industry, traditionally dominated by smaller and unorganized players, has witnessed a dramatic shift with the entry of two corporate giants—Adani Group and Aditya Birla Group. These deep-pocketed conglomerates bring significant capital, synergies, and strategic advantages that could reshape the industry’s competitive landscape. Their foray into this sector is expected to intensify competition, drive consolidation, and enhance the industry’s overall efficiency. This article explores the implications of their entry, the sector’s growth potential, and what it means for existing players in India.

Market Dynamics: The Existing Players and New Entrants

The C&W sector in India has long been controlled by companies like Polycab, KEI Industries, Havells, and Finolex Cables. According to industry data, Polycab leads the cables segment with a 20% market share, followed by KEI (12%), Havells (8%), and KEC (6%). Meanwhile, in the wires segment, Finolex (15%), RR Kabel (12%), Polycab (10%), V-Guard (8%), Anchor (7%), and Havells (6%) hold dominance.

Adani and Birla’s entry into the industry could disrupt this balance. The Aditya Birla Group, through UltraTech Cement, has announced a massive investment of Rs 1,800 crore for a manufacturing plant in Gujarat. Adani Enterprises, on the other hand, has established Praneetha Ecocables Limited (PEL) as a joint venture with Praneetha Ventures Private Limited. Their business strategies revolve around synergies with their existing operations in cement, copper, and infrastructure, which could give them a competitive edge.

Why the Cables & Wires Sector is Attractive

The Indian C&W sector is on a robust growth trajectory, fueled by increasing electrification, rapid urbanization, and industrial expansion. The sector was valued at $8.7 billion in 2023 and is projected to nearly double to $17 billion by 2032. Several factors contribute to this growth:

• Electrification and Infrastructure Boom: The push for power transmission and distribution (T&D) projects, along with smart city developments, is driving demand.
• Renewable Energy Expansion: With India’s focus on solar and wind energy, high-quality cables are crucial for energy transmission.
• EV and Data Center Growth: The rise of electric vehicles and the expansion of data centers require advanced cabling solutions.
• Government Incentives and PLI Scheme: Policies like the Production-Linked Incentive (PLI) scheme are fostering local manufacturing and reducing import dependency.

Strategic Moves by Adani and Birla

Aditya Birla Group’s Vertical Integration Strategy

Aditya Birla Group’s entry aligns with its broader strategy of building a comprehensive construction ecosystem. Having already expanded into paints (Birla Opus) and building materials (Birla Pivot), the group aims to offer a one-stop solution for builders. Integrating wires and cables within this ecosystem allows cost efficiencies, supply chain advantages, and cross-selling opportunities.

Furthermore, Hindalco, a subsidiary of the Birla Group, is one of India’s largest copper and aluminum producers. This provides backward integration benefits, ensuring a steady supply of raw materials at competitive costs, a significant advantage in the price-sensitive C&W sector.

Adani Group’s Synergy-Driven Approach

Adani Group’s entry through Praneetha Ecocables Ltd. follows its traditional playbook of leveraging synergies across its portfolio. The company already has a strong foothold in power, logistics, renewable energy, and resource trading. Its subsidiary, Kutch Copper Ltd., is setting up India’s largest greenfield copper refinery, which will provide a crucial raw material for cable manufacturing. By integrating copper production with cable manufacturing, Adani Group can achieve cost efficiencies and supply chain reliability.

Additionally, Adani’s expertise in infrastructure and industrial projects positions it well to capitalize on the increasing demand for high-performance cables in power grids, highways, metro projects, and renewable energy installations.

Impact on Existing Market Players

The entry of these two conglomerates has sent shockwaves across the industry. KEI Industries’ stock plunged 14.3% following Adani’s announcement, while shares of Polycab India and Havells India declined up to 8.5%. The fear among investors stems from the ability of Adani and Birla to undercut pricing, invest in R&D, and acquire smaller players.

Competitive Challenges

1. Margin Pressure: Adani and Birla can afford aggressive pricing strategies, which could erode margins for existing players.
2. Industry Consolidation: The influx of capital may lead to mergers and acquisitions, reducing the number of standalone smaller players.
3. Higher Capex Requirements: Established brands may have to increase investments in capacity expansion, R&D, and marketing to retain market share.
4. Innovation and Product Diversification: To remain competitive, players may need to focus on premium and specialized cable solutions.

Shift Towards an Organized Market

The Indian C&W industry is witnessing a shift from unorganized to organized players. The market share of organized players increased from 68% in FY19 to around 73% in FY24, and this trend is expected to continue. The presence of large conglomerates will accelerate this shift, leading to better quality standards, improved supply chain efficiency, and stronger brand trust among consumers.

Future Outlook

The C&W sector is poised for strong growth, driven by domestic and export opportunities. While Adani and Birla’s entry will disrupt existing market dynamics, it will also bring long-term benefits such as increased formalization, enhanced product innovation, and greater capital infusion. Existing players must adapt by leveraging technology, expanding product portfolios, and exploring global markets to stay competitive.

Potential Developments

• Increased R&D investments to develop high-performance, fire-resistant, and energy-efficient cables.
• Strategic alliances or joint ventures with international firms for technological advancements.
• Expansion of export markets, capitalizing on India’s competitive manufacturing landscape.
• Government incentives to promote local manufacturing under the Atmanirbhar Bharat initiative.

The cables and wires sector in India is entering a new era of competition and innovation with the entry of Adani and Birla. Their deep financial resources, strategic synergies, and aggressive expansion plans could reshape the industry, challenging incumbents while also driving market efficiencies. For existing players, this presents both a challenge and an opportunity—to innovate, expand, and strengthen their position in a rapidly growing market. In the long run, this shake-up could lead to a more structured, efficient, and technologically advanced C&W industry in India.