Cables: Spiralling demand for a booming economy

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: Cables are the necessity of every basic infrastructure. Be it housing, telecom or information technology, cables form the background of all the core industries. The industry has a derived demand and caters to the high growth sector of the economy.

Says, Alok Dalal, research analyst, India Infoline, "With over $100 billion investment coming into the power generation, transmission, distribution and rural electrification, the demand for power cables will remain robust. Further investments in industrial capex by corporate as well as boom in the housing and mall industry would also drive the demand for power cables."

For the year ended March 2005, cumulative net sales turnover of six companies mentioned in the table has grown at a robust 58% with the highest growth shown by Sterlite Optical at 258.94% followed by KEI Industries at 112% at Rs 323.58 crore and 204.98 crore, respectively.

Driven by sales growth and higher profits, share prices of some of the cable major such as Finolex Cables, Sterlite Optical, Universal Cables have gone up by 98.89%, 37.47% and 269% respectively.

Industry dynamics

Indian wire and cable industry is dominated by more than 265 organised and unorganised players, accounting for around Rs 5000 crore in terms of sales. The top five companies, Finolex Cables, Sterlite Optical, Nicco Corp, KEI Industry, and Universal Cables commands more than 30% market share, Finolex Cables is the leader with the market share of about 9% followed by Sterlite Optical at about 7%.

The classification of cables is generally done on the basis of high tension, medium tension and low-tension cables used in different type of requirements for carrying or transferring different volts of current. Besides this, cables are further classified into their ability to carry data, voice and pictures or all of them through one cable application.

Jelly-filled cables (JFC) form the backbone of the telephone network in the country. JFCs meet over 85% of the total telephone cable requirements in India. Optic fibre cables (OFC) are a technological improvement over JFCs in terms of transmission, speed and capacity to transmit low power signals. A single cable has the capacity to transmit signals from few kilobytes to 100s of gigabytes. It is a natural choice for trunk routes that require higher bandwidth and better network reliability, as maintenance cost and fault rate are low.

Investments in power