The entry of the Aditya Birla and Adani groups into the wires and cables sector is expected to lead to consolidation in the space, as these conglomerates are likely to consider acquisitions to quickly expand the business, industry players said.This may also open up opportunities for some of the small players to cash out, they said, as the profitability of existing companies is expected to take a hit of around 200 basis points (2 percentage points) due to increasing competition.“Companies have announced such huge investments, so it cannot be only greenfield, because that will take a lot of time,” said Sunil Chordia, managing director of Rajratan Global Wire, a manufacturer of bead and high-carbon steel wires. “Consolidation is the answer for the long term, so some smaller companies will have an opportunity to cash out.”India’s wires and cable market is currently estimated at more than $9 billion, having grown at a compounded annual growth rate of 10-12% in the past decade. With demand coming in from several sectors including power, infrastructure and housing, growth is expected to be in the 10-13% range over the next few years, effectively doubling the market size in the next six-seven years, according to industry experts. Major players in the sector include Finolex Cables, Havells India, Polycab India, KEI Industries and RR Kabel.“In India, power will be a key driver for the demand of wires and cables,” said Manjit Singh, chief executive for cables at KEC Asian Cables, a subsidiary of KEC International. “In other countries, we see replacement demand, but be- cause India is a developing country, more than half the demand can come from the power segment alone,” he said on the sidelines of the CII WireTech 2025 event.Earlier this year, the Aditya Birla Group and the Adani Group announced that they were stepping into the sector. Given the government’s thrust on infrastructure and housing, the wires and cables segment is likely to follow the trend in the domestic cement and paints sectors that have seen a shift in industry dynamics with the entry of new players and consolidation.The Adani Group’s 2022 entry into the cement business had triggered a buyout of several smaller cement companies in the following couple of years, as the energy-to-infrastructure conglomerate and the Aditya Birla Group’s UltraTech unit sought to consolidate their positions in the world’s second-largest market for the building material. In the Asian Paints-led paints industry, the Aditya Birla Group’s ‘Birla Opus’ garnered a notable market share within a year of entering the market. Meanwhile, JSW Paints is set to acquire the Indian operations of Dutch paint major Akzo Nobel.While the long-term demand for wires and cables is seen as robust, there could be some pressure in the near term given the uncertainty around exports amid the increased tariffs levied by the US. Companies will also be bracing for an impact on margins, as competitive intensity will heats up when new players start operations.“The larger groups have backward integration, and this will be an added advantage for them from a cost perspective,” Singh said. “It may take time, but existing players are likely to see a margin impact of at least 100-200 basis points,” he said.Naitik Punamiya, head of product marketing at RR Kabel, expects the impact to be limited. “Whenever such disruptions happen, they are generally short term,” he said. Given the nature of the industry, it is unlikely that companies will be able to price their products at a significant premium, he said.
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