Finolex Cables: Wired for growth

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: Have you ever thought about the electric cable that lies concealed inside the wall? There lies a Rs.2500 crore plus organized market for this cable which is growing at a 20% CAGR.

Finolex Cables Ltd (FCL) belongs to the Pune based Finolex group with a turnover of over Rs.600 crore. The company is mainly into manufacturing of light duty electrical cables, Jelly Filled telephone Cables (JFTC) and optical fibre cables. Almost 70% of the total sales accounted for electrical cables division for FY05. The company has an installed capacity of 1000 crore-kilometer (CKM) for different types of electrical cables and 10612 CKM for JFTC. The stagnation and slowly dying nature of the JFTC industry has led the company to convert more than half of its JFTC capacity into the more growing and lucrative electrical cable manufacturing business. The conversion is expected to get over by the end of the current financial year.

Over the last few years FCL has been repositioning itself from a JFTC manufacturer to a Total Wiring Solution company. It is in the process of taking up designing and manufacturing of switches and products, which are expected to roll out by December 2005.

The company is now expanding its capacity of the electrical cable division by at least 20-25%. The change in product mix will soon be reflected in its profitability ratios and is planning to retain its Goa JFTC manufacturing unit, which is believed to have enough demand in the local as well as overseas market. FCL will also be increasing its production of new generation cables - LAN, co-axial, automotive cables etc. Although the bulk of its electrical cables are sold in the domestic market (due to country wise standardization norms), the company has some amount of direct and indirect exports for other type of cables. All the other companies into cable manufacturing either do not have national presence or do not cover the entire range of products as Finolex does.

Hindustan Cables, Sterlite Optical, Surana group, RPG Cables etc are mostly regional players and offer comparatively narrow product range. But the Rs.2500 crore organized electric cable market in India is challenged by an equally large unorganized market - where the players are mostly into low cost products of lower quality.