Adani and Birla Clash in Wires and Cables Market
Billionaire Gautam Adani’s Adani Group and Kumar Mangalam Birla’s Aditya Birla Group are set to engage in a fierce competition in the burgeoning wires and cables sector. Both conglomerates have recently announced their entry into this market, which has been primarily dominated by smaller, unorganized players. The move is expected to significantly disrupt the industry landscape, as evidenced by a sharp decline in stock prices of existing key players following Adani’s announcement.
New Battle for Market Share
The wires and cables industry has experienced a remarkable 13% compound annual growth rate (CAGR) in revenue from FY19 to FY24. This growth indicates a shift towards a more organized and branded market, making it an attractive arena for new entrants like Adani and Aditya Birla. According to reports from PTI, the entry of these two giants is likely to challenge the existing players, many of whom are struggling to maintain their market positions. Following Adani Enterprises’ announcement on March 19, shares of major industry players such as Polycab India and KEI Industries fell to their 52-week lows, while Havells and Finolex Cables also saw significant drops in their stock prices.
Why Wires & Cables?
Industry analysts from JM Financials highlight that the wires and cables sector is particularly appealing for new entrants due to its fragmented nature. No single company holds more than 15% of the wires market or 20% of the cables market, with nearly 400 players ranging from small and medium enterprises to larger corporations. Global brokerage Jefferies estimates the Indian cables and wires market to be worth around Rs 80,000 crore, with Rs 56,000 crore attributed to cables and Rs 24,000 crore to wires. The industry is projected to grow at a rate that outpaces the real GDP, with expectations of reaching Rs 1,30,000 crore by FY29, driven by strong demand and a significant unorganized segment.
Strategic Moves by Adani and Aditya Birla
Adani Enterprises is making strategic moves by forming a joint venture, Praneetha Ecocables, through its subsidiary Kutch Copper Ltd (KCL). This venture aims to manufacture and sell metal products, cables, and wires. Meanwhile, the Aditya Birla Group’s flagship company, UltraTech Cement, has announced an investment of Rs 1,800 crore over the next two years to establish its presence in the wires and cables sector. UltraTech plans to set up a greenfield plant near Bharuch, Gujarat, which is expected to be operational by December 2026. This expansion is part of Aditya Birla’s broader strategy to diversify within the construction value chain, complementing its recent launch of the ‘Birla Opus’ decorative paints brand.
Synergies with Copper Businesses
Both Adani and Aditya Birla have established operations in the copper industry, a crucial raw material for wires and cables. Aditya Birla’s Hindalco, a leader in aluminum and copper production, is well-positioned to create synergies for its new wires and cables business. Similarly, Adani’s Kutch Copper is expected to provide advantages for its operations in this sector. Analysts at Jefferies suggest that the entry of these companies into the wires and cables market is part of a forward integration strategy for Adani’s copper business and may also serve as a backward integration for its captive group transmission business. This strategic initiative is anticipated to take 3-4 years to fully materialize.
Expanding Construction Ecosystems
Adani’s aggressive expansion strategy was highlighted by its acquisition of Ambuja Cement from Swiss firm Holcim for USD 6.4 billion in September 2022, making it the second-largest cement producer in India. This move has positioned Adani to challenge UltraTech, which has also been active in the market, acquiring several companies to bolster its capacity. UltraTech aims for a total capacity of 200 MTPA by FY27, further solidifying its leadership in the cement industry. As both conglomerates venture into the wires and cables market, their competitive strategies will likely reshape the landscape of the construction ecosystem in India.
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