LS Cable & System, a total solution provider of electric power and telecommunication industries, has established itself as an ideal partner advancing with its customers. The company always focuses on new growth phase by building up its competencies to innovate business models, develop eco-friendly products and solidify partnerships with its stakeholders. In the course of becoming a global leading cable company it acquired Superior Essex, the largest cable maker in North America, in 2008, and then went on to acquire HongQi Electricity (now LS HongQi Cable & System) in China in 2009. LS Cable & System (LS C&S) is now a global top-tier company in the international cable industry with around 100 local subsidiaries, production plants and sales offices in 26 countries. With the clear philosophy of having the 100% investment in leading markets, LS C&S completed the construction of a power cable plant in Bawal, Haryana, by investing a total of USD 80 million in last year April. Team WCI interacted with E.Don Park, MD, LS Cable & System India Pvt Ltd, reviewing facility performance, new developments and their future plans for the Indian facility. Excerpts
Wire & Cable India: Brief us about the Indian journey?
E.Don Park: We started our Indian operations 12 years ago by supplying utility power products and the main item supplied was optical composite ground wires (OPGW). Till date we have installed more than 20,000 KM of OPGW. Next item was underground high voltage and extra high voltage (EHV) cable upto 400kV. We have been No.1 in India for EHV cables for the last 5 years. This led us to give serious thought to have a direct investment here. In 2008, LS Cable established its locally incorporated firm, named LS Cable & System India, thus launching its communication cable production business in the country. Then, in 2012 we started our project of power cables. Major items produced at the plant located on the plot of 200,000 square meters are 220kV power cables and optical composite ground wires (OPGW). As far as technology goes we have installed it according to the voltage, till now 220kV is our maximum. In the last one year we have obtained necessary certifications and our products are tried, tested and approved by CPRI. We have already delivered our 220kV cables to different state utilities in India who have successfully installed and commissioned our product.
With the completion of the plant, we are equipped with the capacity to produce USD 200 million worth of power cables and USD 100 million communication cables, emerging as a comprehensive cable manufacturing company in India. Last year, power cable comprised 60% of our Indian turnover and rest was telecom products.
WCI: Going forward any plans to ramp up the offerings?
EDP: Of course yes, as the voltage is going up in future there is a need to increase the efficiency of power transmission. In India right now the highest underground voltage is 66kV to 132kV, 220kV is barely used and in future it will be replaced by 400kV. Nowadays, many EPC companies are designing their projects on 400kV voltage. Till now we are covering this need from our head office. But, in coming 2-3 years we are planning to produce 400kV in our Bawal plant and then move on to produce 500kV. Moreover, we are very much ready technology wise, we just need to extend our present facility and increase the capacity of our CCV line. This is our immediate plan for next 2-3 years, till then we will focus on our 200kV business. We would like to be first one to supply 400kV to our Indian customers.
In the current financial year we expect to generate revenue of about USD 100 million from our India office. At last, LS Cable India is fully prepared to serve the Indian power utilities by providing them an Indian product made with the international expertise backed fully by our parent company.
WCI: Many companies are en-routing the JV to have presence in India. Have LS Cable ever thought on this line?
EDP: Not at all, the policy of the company is to have 100% fully owned subsidiaries through which we can transfer the expertise of our principal company here without any barriers. Our strong point is that our principal company is supporting us completely, which makes facilitation of the decisions smooth and transparent. Having technical support and the quality assurance from our principal company makes our customers safe. You see, LS Cable has possessed all production and sales presence in both advanced and newly developing markets, including North America, China, India and Vietnam.
WCI: How come you selected Bawal as your area for Greenfield investment?
EDP: Initially, we surveyed a lot of areas but at the last moment we thought that Delhi/NCR would be the best-suited region for us to be closer to our customers. Many telecom companies are situated here and many decisions for power sector too are taken in this region. Besides, the connectivity to our facility is flat and route is easily approachable for people coming from Korea. The only challenge we are facing is on the logistics front as we are located far from the port. We will overcome this issue in the near future, rest all is good.
WCI: Any plans of moving on to another location?
EDP: We have no plans to move to another area as our Bawal facility is well arranged and we are using only 1/3rd of the available area and future expansions will take place in the same area. The main investment in future will happen in the power cable and overhead conductors. We are also thinking to serve other markets from here like Middle East and Africa. From the strategic point the facility in China and USA take care of Mainland China and Europe & USA respectively. And, another in Vietnam and India will serve South East Asia and Middle East & Africa along with Indian sub-continent respectively. In the next 5 years our exports from India to other market will account for 30%~40%.
WCI: What amount you will invest further in your facility?
EDP: China and India are our next promising destinations. Till date we have invested around USD 80 million including land and building in Bawal facility. Our next phase of investment will include capacity expansion in power cable at the same facility, which will cost around USD 10 million.
WCI: Your view on the Indian wire and cable industry.
EDP: In my view, Indian telecom industry works on a very interesting model. If you see other countries have started with the experience of wire first and then moved on to wireless. But in India, it has straight away moved on to wireless mobile services without much experience of wire. Now as the broadband is coming and the wireless mobile has certain limits therefore companies are investing in building new infrastructure like 3G, 4G etc. Sooner or later, wire (FTTH) will have a huge role to play. Now India is thinking on that concept and huge investments are lined up on this front and we are preparing for the FTTH projects, which are coming up.
Also, the Indian economy is being negatively impacted by power shortages. It is an issue that has gained significant notice ever since the collapse of the Northern Grid last year. Hence the government is focused on adding to the generation, transmission and distribution capacities. So there are lots of opportunities for us on this front simultaneously.
