Mumbai, September 1: Established electrical equipment manufacturers Polycab India, KEI Industries, and Havells India’s shares tumbed 6.4% today after UltraTech Cement announced the commencement of production of its wires and cables facility in Jhagadia, Bharuch (Gujarat).
The facility comes with an installed annual capacity of 1,098,000 kilometres dedicated to house wires and light-duty cables. With this foray, the Aditya Birla Group company is aiming to emerge into a comprehensive, multi product building solutions firm from just a cement manufacturer. With a capital expenditure of ₹1,800 crore, UltraTech Cement aims to cross-sell its house wires and light-duty cables to its existing network of over 100,000 dealers, retail distributors, and EPC contracts through its core cement and concrete businesses.
While the distribution channels for electrical goods differ from cement, a large-cap player with significant capital backing could intensify competition in the sector. Despite high demand from housing, data centers, and power transmission infrastructure, UltraTech’s entry into the sector could intensify competition and compress margins for all the players.
Strengthened by rapidly developing infrastructure, the Indian wires and cables sector has delivered a healthy CAGR of about 13% between FY19 and FY24. Though demand remains strong, the sector remains vulnerable to volatile commodity prices, especially copper and aluminium, while seasonal slowdowns in real estate construction, especially during the monsoons, can also affect capacity absorption.
