Recently, to scale-up capacity, LAPP India has expanded its footprint with the recent inauguration of phase one of its second cable manufacturing facility in Bhopal, Madhya Pradesh. With a total investment of Rs.150 crores, the Bhopal plant will be well-equipped to meet the logistical requirements of the North and East parts of India and cater to increased demand across India. The 4-phased construction spanning an area of 117,000 sqm is planned to be completed over a period of 5 years, post which the Bhopal facility will be LAPP groups’s largest facility globally. Further to look into the matter team WCI interacted with Mr. Andreas Lapp, Chairman of the board of LAPP Holding AG and Honorary Consul of the Republic of India for Baden-Württemberg and Rhineland-Palatinate.
Wire & Cable India: India’s economy is thriving and it is the future market of the connectivity solutions industry, therefore most of the international players have come to this turf. Your thoughts on how LAPP will play its role?
Andreas Lapp: Expanding LAPP operations in India has been a key focus at LAPP group, mainly due to promising growth opportunities presented by the country. This year LAPP India’s growth has increased to 23% compared to last year and the set-up of this new facility in Bhopal will help cater efficiently to growing customer demands. The market size for single core wires (in the building segment) today stands at approximately Rs 6,000 crores, which indicates a large market opportunity in this sector. With respect to LAPP range of products, the addressable cable market in India is currently being valued at Rs 1,000 crores. We, at LAPP, have identified this opportunity in India for single core cables and are strengthening our base accordingly by focusing on the production of single core cables targeted to the building segment through the set-up of phase one of the Bhopal facility.
With growing awareness about safety and efficient use of energy in the building sector, the building connectivity solutions division of the organization is expected to be the next growth buster for LAPP India. In the last year, we at LAPP India, have received significant percentage of business from the building segment, which reflects a positive trend.
The Indian manufacturing sector is facing a slowdown with the depreciating rupee and inflation. We are looking at offering customers high performance & quality cabling solutions to help them meet their manufacturing output and improve efficiency. We are working by example, by implementing the LAPP operating system (LOS) a global initiative taken by the parent company to enhance efficiency of operations in all its manufacturing plants and sales organizations to which India is a significant contributor. This methodology will enable the enterprises to manufacture products and services for the customers within shortest time, by eliminating redundant activities involved in manufacturing and support functions. We are focusing on verticals like renewable, building solutions, and instrumentation cables for process industries by offering customized cables relevant to the respective domains while communicating the need for quality cabling solutions for these industries.
We are planning to gear up to meet India’s growing domestic needs. The Bangalore plant is nearing its full capacity so the plan is to invest in expansion of the Bangalore plant. Also, we are planning on making India the hub for marketing the company’s products in the SAARC region.
Further the tier-II and III cities have been developing vigorously and we have been witnessing good demand from these regions. Hence we are focusing our efforts on exploring the market potential in these regions by educating buyers about the significance of quality products as opposed to the low-priced sub-standard products.
WCI: As mentioned, the new facility in Bhopal will help you to cater efficiently to growing customer demands? Detail us about the strategic geographic advantage that it offers?
AL: Given that the majority of LAPP business comes from the automation industry that have their manufacturing base in the South and the West, it is natural for us to have strong foothold in the region, which is established through our first Indian cable manufacturing facility in Jigani, Bangalore. However, in terms of the location of the plant, Bhopal provides a strategic geographic advantage. Being centrally located in the heart of India, the facility in Bhopal will be well-equipped to meet the logistical requirements of the Northern and Eastern parts of India and cater to increased demand across India. In terms of the benefits, the LAPP India plant in Bhopal is well-connected, making it a key factor for us to decide on the location. Further, the Government of Madhya Pradesh has been extremely supportive towards LAPP India, including providing required land approvals without causing any delays as well as offering uninterrupted power supply at the plant thus helping increase efficiency of production.
WCI: “LAPP India is extremely bullish on the opportunity for single core cables in the country, thus making India the focal point”. What strategy has LAPP charted for this segment having other domestic players in the field?
AL: Rapid urbanization has escalated the need for quality infrastructure in cities. The increased number of buildings, malls, houses and offices has created a connected society dependent on wires and cables. From public infrastructure to homes, installation of quality cables becomes an integral part during construction of buildings. The cabling industry has gradually moved from unorganized to organized. However, the unorganized players still hold 35% of the wire and cable market in India. The diverse market presents a challenge in identifying quality cables for building construction. Research indicates nearly 15% of fire accidents occur due to the poor quality of wiring. Thus, arises the need for safe cabling solutions.
Focusing on this single core cable segment offers LAPP India great potential to grow and cater innovatively to the evolving needs of the industry as well as add to the range of products that LAPP India currently has to offer. Further, it is a well acknowledged fact that the Indian construction industry has been playing a vital role in overall economic development of the country, growing at over 20% compound annual growth rate over the past 5 years. This growth is now being tinted with green building, with both the government and the public sustaining this trend. Keeping up with this demand we are enthusiastically cultivating the building connectivity solutions and are looking to launch a new range of power cables and cables for instrumentation to meet this requirement. Essentially, we focus on sectors where cables are required to do some work rather than just lie around.
WCI: Today’s consumer is not well versed with the standards of the right product quality therefore it’s the responsibility of the manufacturers to make him aware along with providing the right products? What steps does LAPP take on this front?
AL: Our products are in conformity with German VDE Standards that are harmonized with IEC (International Electric Commission) and are more stringent than the IS (Indian Standards), generally followed by majority of the cable manufacturers in India. The VDE mark confirms compliance with protective requirements ensuring maximum safety and reliability.
Educating customers about the existence of important certifications such as ISI, product certification from BIS, etc., is highly important. Non-adherence of standards can be quite disastrous, especially with reference to the numerous fire accidents that are caused due to poor quality of cables/wires used in India today. The quality of insulation material used in most cases is questionable. FRLS (flame retardant and low smoke), halogen free flame retardant (HFFR) wires can be quite useful to minimise fire accidents. FRLS PVC is a special grade PVC which limits the amount of smoke that is generated when the wire catches fire and at the same time is self extinguishing. Adoption of modern manufacturing technology for wiring systems is important so as to cater to safety aspects in this high growth market.
Educating the masses is a most crucial initiative that will trigger awareness about the importance of FRLS cables/halogen free cables. Initiatives such as informative seminars on the ill-effects of inappropriate cabling, educative write-ups in technical journals and workshops for designers, architects, builders, consultants and users are highly effective in spreading the word about the usage of safe connectivity solutions. As an organization, we are very upbeat about addressing the concerns attached with inappropriate usage of connectivity solutions causing many evitable accidents and therefore taking a lead on driving awareness.
Apart from setting standards in the industry, LAPP India also serves the society by being a responsible corporate. LAPP has sponsored centre of excellence to improve the quality of teaching and impart practical skills to students in critical areas of cables, cable accessories and systems. Currently two such centres have been set up – at the R V College of Engineering, Bangalore & PSG College of Engineering, Coimbatore. The faculty has been trained at the Oscar LAPP Academy, Stuttgart. The centres serve as an ideal link between the industry and the next generation of technocrats.
WCI: Metals like copper and aluminium plays a very vital role in manufacturing of wires & cables. Considering there pros & cons what would be the future?
AL: Aluminium products are used in power cable applications both underground and overhead along with high voltage applications due to its advantages in terms of being lightweight, strong, corrosion resistant, and a highly efficient conductor. It is also infinitely recyclable, making it a perfect fit for today’s environment. Aluminium replaced copper in high-voltage transmission lines after 1945 and today is the most economical way to transmit electric power.
On the other hand, copper is one of the most widely accepted and used metal across the world, and in the recent past has attracted high price. Out of total consumption of copper in India 65% is consumed in electrical industries. Demand for copper in India is expected to grow by 10-12% compared with 5% globally which is mainly due to the power sector driving the demand high. Additionally, agriculture also consumes about 30% of power in India with appropriate use of electrical grade of copper. Copper has wide application in electrical industry because it has the highest conductivity, ideal mechanical properties at low, ambient and elevated temperatures, is easily fabricated into shape, can be readily machined and has fare resistance to oxidation and corrosion. From high voltage transmission cables to microcircuits, and from megawatt generators to computers, in every aspect of electricity generation, transmission and use, copper is the vital, energy efficient metal. It is easily separated from other scrap and can be reused economically thus preventing further depletion of the earth’s natural resources.
Hence for conductivity and strength, high conductivity copper is clearly superior to aluminium. For a given current and temperature rise, an aluminium conductor would be lighter than its copper equivalent. By weight, aluminum has higher conductivity than copper.
Future outlook:
In India 60-65% of copper and aluminium will be used in wiring for power, building sector, automobile, railways and infrastructure with a total requirement of 600,000 TPA. By 2020 copper capacity in India is projected to raise 16,00,000-18,00,000 TPA going by the growth in domestic demand.
India is a developing country with a high population, the economic growth of the country and the demand for power sector grows proportionately with the population. The ever increasing use of electric power for domestic, infrastructure and industrial purpose requires providing bulk electric supply economically. At present power generation capacity in India is about 1,05,000 MW, but the projected demand for 2012-13 is around 2,05,000 MW that means around 1,00,000 MW extra power has to be produced to meet the extra demand. To supply the additional demand to the subscriber, there should be a large network of transmission and distribution system with HT power cable (copper/aluminium), all aluminium overhead conductor (AAC), LT cable (copper/aluminium). With this, the consumption of both aluminium and copper are expected to be a substantial quantity. Also a massive rural electrification programme has been taken by GOI where the commitment is to electrify each and every house in a remote village resulting a high consumption of aluminium and copper in power sector. A study of petrochemical sector in India reveals that most of the refineries will be commissioned in the subcontinent around 2020. Therefore the future scenario indicates that the aluminium and copper industry have a bright future.