With Indian cable industry becoming more competitive with the entry of foreign players and growth of the domestic players, Amit Jain, Managing Director, CMI Ltd...
With Indian cable industry becoming more competitive with the entry of foreign players and growth of the domestic players, Amit Jain, Managing Director, CMI Ltd, talks with Akash Sinha about the growth of the industry and CMI’s future plans:
Q. How do you see the Indian cable market over next five years?
In India, the size of the cable manufacturing industry is approx Rs. 40,000 crores. The specialised cable industry in which CMI operates currently, is roughly of the size of Rs. 10,000 crores. The government has announced ambitious plans for infrastructure development. One of the primary focus area of the development plan is railways, with over Rs. 800,000 Cr as promised investment over the period of 2015-2020. In addition, the government has earmarked Rs 50,000 crore (US$ 7.53 billion) to develop 100 smart cities across the country. Highway projects worth US$ 93 billion, which include government flagship National Highways Building Project (NHDP) with total investment of US$ 45 billion over next three years, have also been announced. The Digital India campaign will require an investment of Rs. 4,50,000 Crore. Ministry of Power is also looking at an investment of 15,000 lakh Crore over the next 5 years.
We are expecting that the industry which has been growing at the rate of around 15% currently, will start growing at the CAGR of over 20% over the next 5 years. CMI limited has been outperforming the industry and we hope to continue doing so, over the next 5 years as well. The future looks bright if the proposed plans take shape.
Q. What is your current focus?
Our current focus is on consolidating our current areas of interest. Railways happens to be our largest customer and since there is a huge opportunity in expansion and modernisation of the Railways we are bullish on this sector. We are hopeful that with our existing products, current certifications and newer innovations, we will be able to get a sizeable chunk of this business.
Q. Mostly Indians do not opt for branded cables/wires. Your comment?
In India we have got cable manufacturing industry mainly in two segments: Organized and Unorganized. In the organized sector cables are produced with best / virgin raw materials as per specification, are duly tested during production at various stages and the final product is retested before dispatch. This makes the products from the Organised sector more expensive vis a vis the Unorganised sector. The Cable Industry in the Unorganised sector is mainly in House building wiring industry, where no quality control is followed. The main reason being that the end user is also not aware of all quality requirements.
However the situation is changing. With the slew of advertising and the publicity campaigns targeted at this segment, people are getting more and more aware about the quality of products in this category too and asking questions before deciding on the cables and wiring. This I believe is a step in the right direction, since the safety and durability of electrical and electronic fixtures depends on these.
Q. Is there any JV/MA on cards?
We have been on an expansion spree and over the last six months, we have made two acquisitions for scaling up our operations tremendously. In Sept 2015, we acquired the fully developed manufacturing facility of Danish company FL Smidth at Bawal, Haryana. Spread over 11235 sq. yards with built up area of 67000 sq. ft, the facility is located in the Industrial area of IMT, Bawal and has all the necessary clearances and facilities for Industrial production. This facility is expected to significantly augment the production capacity of our company. We intend to start production in the new facility within this financial year.
In November 2015, we acquired the facility of General Cables Energy India Pvt. Ltd., a fully owned subsidiary of General Cable Corporation(GCC), a Fortune 500 company. With this acquisition we have exponentially increased our manufacturing capabilities. Over the next few years, this acquisition has the potential of adding around Rs.1,000 Crore to our top-line. We are focusing on putting our two new facilities into high gear within this financial year.
Q. With Havells’ and some other cable manufacturers going all out for advertising, do you see the competition firming up?
We see advertising as a positive step for our industry. But as you must have noticed, the primary focus of these advertisements is towards house wires and not towards Cables which are an Industrial product. The winners will be all because of this – the awareness generated will positively impact the whole industry and not just the advertisers. However, since we are currently in the speciality cables industry, our customers are not retail buyers but big organisations which work through either the tendering process or we have already pre-qualified for their selection process because of the certifications that we have. Since we are a multi Product Company serving multiple customers in various sectors, we are not going to be impacted with the advertising from the other players in the category.
Q. What is your USP?
CMI manufactures a wide variety of cables & is a multi product company, manufacturing Special & Super speciality cables for very special usages. We manufacture cables for Indian and Global customers as well. Our USP lies in being a multi-product company and having the certifications from leading buyers. We are amongst the few who address the needs for a variety of sectors and has all necessary customer approvals from segments as diverse as Railways to Oil and Gas and Telecom, ISRO to Steel plants, etc.
We at CMI continuously keep ourselves updated with the developments in the industry in India and abroad as well as the new requirements of the customers, which helps us to stay ahead of the learning curve.
Q. How do you see your company’s growth this year?
In the last three years we have achieved a growth rate of app 25% CAGR and we expect to have much better growth rate in future. Our target for 2015-16 is total sales turnover of app Rs 200 crs, almost 33% growth over last year. Railways, Oil & refinery and Petroleum industry will continue to be the major sectors for contributing to our growth.