In today’s Finshots, we tell you why Indian conglomerates are getting interested in wires and cables.

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The Story

It’s not every day that you see two of India’s largest business groups — Adani and Aditya Birla — eyeing the same opportunity. And yet, both are entering the Indian wires and cables market.

Now you may ask – what’s exciting about wires?

Well, it turns out there’s quite a bit. The Indian wires and cables market, which was worth $8.7 billion in 2023, is expected to nearly double to $17 billion by 2032. And that’s thanks to the electrification of just about everything — homes, factories, data centres, EVs, solar farms, you name it. In fact, wires and cables make up nearly 40% of India’s electrical industry.

So, let’s look at each of the big entries.

Let’s start with the Aditya Birla Group. Last month, it invested ₹1,800 crore to set up a new cables and wires manufacturing plant in Gujarat — all under its flagship company, UltraTech Cement. But... what’s a cement company doing in the cable business?

Well, the group has been building a construction ecosystem. It has the flagship UltraTech cement company along with paints (Birla Opus) and now wires and cables. And to tie it all together it has launched Birla Pivot, a B2B e-commerce platform for building materials, which crossed ₹1,000 crore revenue in FY24.

The idea is to become a one-stop shop for all construction materials. So if you’re a builder, instead of calling ten vendors, you just call one group offering various materials. It’s vertical integration 101, control more of the value chain, reduce costs, and improve margins.

Let’s now also look at the Adani Group. The group has also launched a new company in the wires and cables space called Praneetha Ecocables Ltd. This is a 50:50 joint venture with its subsidiary Kutch Copper Ltd, which is currently setting up India’s largest greenfield copper refinery in Gujarat.

And this is important because copper is the lifeblood of cables. By producing it inhouse, the group can get better pricing and reliable supply, and a better presence in the value chain like Birla. It already owns Ambuja Cement and ACC (two of India’s biggest cement firms), and has skin in the game across power, renewables, ports, and infra – all the sectors where wires and cables are essential.

So, both Adani and Birla are not just entering wires and cables. They’re integrating it into their larger infra playbooks. It’s scaling with synergies. And that brings us to the question - What does this mean for existing players in this industry?

Well, key companies in this space – Polycab India, KEI Industries, Finolex Cables, Havells India – have had a dream run over the past few years with rising sales. Investors who spotted them early made a killing. But with the giants entering, the market looks spooked and stock prices have taken a hit.

And the concern isn’t misplaced. After all, big groups come with deep pockets. They can price aggressively, spend on R&D, build scale, buy out smaller rivals. That’s already nudging the market toward formalisation. The organised sector’s share has gone from 66% in FY18 to 68% in FY19 to over 74% in FY24 — and is expected to hit 80% by FY27.

So there’s opportunity for listed players to grow if they play it smart. They can innovate or move into premium segments, or even compete with the fragmented unorganised sector. And they have the muscle to do it. They have a strong R&D team for developing tech and electrical products. They have been paying dividends, and have seen good returns on equity for years. And with the PLI scheme for white goods and telecom and networking products, local players still have tailwinds to grow. In fact, India still imports a lot of high-spec cables.

The only flip side is that as the market grows and formalises, existing players may see margin pressure. It’s because giants like Adani and Birla can afford to price aggressively. They can spend more on capex. They can even buy out struggling rivals. And for listed incumbents, that means lower pricing power… at least for a while.

Nevertheless, the bigger picture is that Adani and Birla aren’t just here because wires and cables are the hot new thing. They’re entering because it fits neatly into their larger infrastructure ambitions. In the coming months, we could also expect acquisition announcements by these two conglomerates. For their cement capacity expansions, both players had followed the same playbook. The Birla group has acquired various companies, the latest one being majority stake in The India Cement while Adani Cement went on to take over Ambuja Cements and ACC. And last year in October, it bought a stake in Orient Cement for ₹8,100 crores. We could see the same thing happening in wires and cables.

So yeah, the listed players will have to fight harder to protect margins. But in the long run, maybe we can see the industry becoming more efficient, better regulated, and more innovation-driven. And how Adani and Birla will be placed in this industry over the coming few years remains to be seen.

Until then…

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