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Right on the Way to INR 10,000 Cr by 2020: Polycab

Owing to considerable economies-of-scale, dominant market position, unleashing of newer cable products, venturing into electrical appliance segment, and a series of recent expansions, Polycab is sure not to miss its targets of revenue, product diversification, and market penetration.

Polycab Wires Pvt Ltd, the Mumbai based company with a dominant position in cables and wires, has undergone massive expansions in recent times either by adding capacities in the existing segments or by entering into new segments such as electrical appliances. The company’s decision on backward integration to set up a copper rod plant with Dutch firm Trafigura is another noticeable event in its expansionary momentum. Besides, the company has ventured into various untouched segments of cables and wires including OFC, rubber elastomeric cables, and other special purpose cables. Polycab’s recent launch of ‘Green cable’ has been much talked about because of its certain novel, ecologically balanced features.

WCI recently talked to Mr. Nikhil Jaisinghani, Executive Director, Polycab Wires Pvt. Ltd. to know in detail the company’s strategy behind this aggressive expansion phase. The young director of Polycab sound confident of touching the INR 10,000 Cr mark that Polycab has set to reach by 2020.

Wire & Cable India: To start with, tell us about some recent and new developments at Polycab.

Nikhil Jaisinghani: We try to do different things at Polycab. The thing which is really working in our favor is the new distribution setup we have started introducing in the retail business. Our objective is to set up a distribution chain akin to FMCG industry with deployment of technologies aimed at the optimization of workforce and distribution management system.

Besides, we have launched a new product, i.e. Green Cable, which is sustainable, green and nonhazardous. It has 60 percent more visibility than the standard FR wires along with features such as higher flexibility and flame retardancy. The pronounced visibility factor makes a big difference, especially for crowded places which are prone to a fire outbreak because of a short circuit. This product also emits negligible toxic gases and therefore is more safe in case of such fire related accidents. People usually don’t die because of burns, rather than are affected by the toxicity of smoke. We firmly believe in the efficacy and timeliness of the product, so much so that we might see the Govt. working on this product by 2019-20.

Developed through comprehensive R&D, the product signifies a good beginning for us. The special compound being used in these cables has been developed in-house. The product fully complies with RoHS standards and is totally lead free as our other wires, which use the highest grade PVC compounds developed in-house. With this lead-free, environment-friendly wire, we have credibly moved from FR to FRLS.

WCI: You mentioned about your working on establishing a new, robust distribution channel and strengthening the retail side. Elaborate more on what exactly you are doing to revamp your distribution system.

NJ: We started a program ‘Josh’ two years ago with a sole aim to identify right partners in ‘select markets’. These right partners need not necessarily have to come from our business. We have identified numerous right partners. Once we identify such suitable partners, we have our own people who make sure that the placement of the products occurs properly. With the model, we are trying to increase distribution related ROl. To make this happen, we need to make sure that inventory moves really fast. Traditionally, we had a model of dealers-distributors mix. We are shifting towards ‘only dealers’ model now.

WCI: As Polycab remains firmly in the lead within the Indian wire and cable market, there however must be many challenges to maintain that leadership not just with regard to revenues but also with respect to continuous product development, R&D, innovation, economies of scale, and so on. How do you manage all that in order to remain at the forefront?

NJ: We keep on working to transform the company by improving processes and systems. Standing at the front of the line makes it imperative for us to make products that meet the highest standard set. Polycab therefore believes in a continuous transformation in its process and systems in order to move with time and requirements. We are happy being number one and are determined to aggressively maintain that position.

Further, we invest before time which fuels our growth as Polycab’s core strength, besides its product development, is the availability of its range of service that it is able to provide. If you want a Polycab cable or wire, you will get it effortlessly because of an extensive network of dealers and distributors that hold an immense inventory. Usually, customers don’t like to wait. Sometimes they come up with small requirements in the middle of usually big orders and they can’t wait for such emergency requirements however small it may be. Polycab comply with their requirements fully and completely irrespective of the size of orders. I think availability is our core USP.

WCI: What are other USPs of Polycab that you can think of?

NJ: As said, the biggest strength of Polycab is the unceasing availability of products. Besides, our comprehensive product range and product quality constitute another USP, unparalleled in this industry. The customers who have been using our products since years can vouch for this USP of Polycab.

We are indeed trying to give more value to the customers with our product innovation; for example, Polycab launched lead-free FR wire at the same price of an FR wire. You will never hear that Polycab is extremely expensive or extremely cheap. We are very customer centric organization. I think that is our core strength and USP.

WCI: Do you support your distributors with regional depots?

NJ: Absolutely! We don’t have regional depots, but we have depots in every state.

WCI: Will this continue post GST as well?

NJ: We are still analyzing. What we are trying to do is to reduce inventory at these depots as it would be costlier now. Closing down couple of depots in each region is also being considered. GST has made logistics better and Polycab is working to make its logistics better than what it is now. At the same time, the inventory at the factory would be increased proportionately.

WCI: What level of data analysis Polycab does to remain profitable as it is a big company?

NJ: We of course have an ERP system in place besides various other business intelligence systems that support it. Almost 70-75 percent of the cost goes in raw material itself, and the remaining 25 percent therefore becomes very crucial. As a cost conscious company, we effectively need to manage our revenue, especially the remaining 25 percent because that’s the only margin we get to work on various other aspects such as production, quality, and management.

Besides, we try and look at a lot of efficiencies. The customer feedback is also a crucial parameter to gauge our product quality or customer service. We, through indexing the customer feedbacks, try to make sure that we are able to feed our customers on time and our people are reaching over to them besides receiving important inputs on products. I think that drives a lot of changes effected at Polycab; once the customer’s feedback comes in, we know what direction to take. The feedback from your customer will drive your product and market related strategy. That is what we do.

WCI: Polycab has now diversified into a complete electrical goods company including the manufacture of various appliances. What would be the company like in the future with regards to wire and cable’s contribution?

NJ: Of course, wires and cables would constitute almost 90 percent of our products. However, our whole purpose behind venturing into the manufacture of these new products, i.e. electrical appliances, is that we desire to become a ‘one-stop-shop electrical solution company’. Suppose a builder is putting up a project, he will now get everything he needs within a single brand, i.e. Polycab. I guess it becomes much easier for them to purchase that way.

We keep on bringing products, one or the other, which makes sense and fits in the basket. But it tends more towards bringing in some ease to the customers. At the same time, if you talk about our vision in these products, we are not just trading in the business; we have set up manufacturing plants. We have set up manufacturing plants for LED lights and are in the process of setting up a second plant now. Polycab has a plant for switches and switchgear, and it has probably the India’s largest single shed plant for fans. We want to make sure that we control our own quality even though the businesses are new for us. The growth of this business in absolute terms is also among the priorities. It would be beneficial for our brand too because wires and cables either go inside the walls or under the ground; you never get to see or interact with the brand at all. Some of these products would help us in better brand visibility.

WCI: Polycab has a target to achieve INR 10,000 Cr turnover by 2020. What is the strategy to achieve this number?

NJ: We are right on the track to touch the number. Obviously, India’s growing economy is guiding us. Polycab is working very closely with the govt. organizations as a lot of requirements are coming through them, especially in segments like defense and railways. We are focusing a lot on the specialty cables and have launched optical fiber cable, which again is a whole new segment for us including the launch of rubber elastomeric cables for mining. Polycab in this manner is constantly identifying new segments. We have started some auto cables as well. The good thing is, when it comes to wire and cables, we have the expertise and we really understand the industry well.

Apart from the distribution expansion that we are working on, we are trying to get deeper than just showing our presence in a specific market. We have spread wide enough, but I don’t think we probably went as deep as needed, especially in states like U.P., Bihar, Andhra Pradesh, Telangana; these states are growing rapidly. We need to touch them as there are huge opportunities waiting for Polycab in these markets. We are focusing in these areas by expanding our distribution, making sure the availability is there. We have started approaching the end clients; we have started approaching them directly, from small to big client. It is not that we are eating our distributors away. We are approaching the clients directly to make sure they are happy with us.

The new business will grow faster and would probably be contributing significantly to the 10,000 Cr target.

WCI: Polycab has expanded phenomenally in the recent couple of years including the wire and cable facilities. Tell us something about that and what kind of future expansion we can see from Polycab.

NJ: We currently have capacity to probably sell around INR 10-12 thousand crores worth of wire and cables. I am telling about the capacities which are in process. We are continuing to invest because we truly believe in India’s growth story. We have a very small market unit when it comes to exports, a very small percentage of our business. We however see an opportunity to expand there as well.

We are constantly expanding. Whatever money the business generates just goes back into expansion. In fact, we are even expanding in some of the new products, for example, in switchgears.

WCI: When we talk about expansion, selection of technology is very important. What does Polycab keep in their mind while selecting a technology for any of the product?

NJ: The past experiences and the reputation of technology supplying companies help us tremendously in selecting a technology. In our newest factory, we have used the European machinery to get higher precision and speed.

WCI: Which cables would be your focus with regard to the expansion you are going to do?

NJ: We make extra high voltage (EHV) cables only up to 220 KV. We can consider doing something in that business. Polycab has built enough capacities when it comes to high voltage power cables. Besides, we have recently increased the capacity in communication cables. Optical fibers and rubber cables are newly launched, so we will take our time to make sure that the capacities are utilized up to 80 percent before we move forward. We are also focusing on e-beam cables and have set up our own e-beam plant which is commercial now and is something which has a lot of applications in defense and railways. These special application cables would of course attract a lot of focus from us in coming times. We do not want Polycab just to be a wire and cable company, but rather desire it to be a technological leader when it comes to the wire and cable business, a reason why we are trying to launch and move into special application cables. We want to bring our brand image to a level where we believe we are true technological leaders.

WCI: You have recently announced the backward integration by setting up of a copper rod plant. Tell us something about that – the present stage and when it is expected to come on stream.

NJ: The project is in full swing and the production is expected to begin by March 18. The biggest reason for us to invest in this project is to quench the need of raw material as there are times when we urgently need a raw material and we are not able to source it. It is more of a strategic investment for us to make sure our raw material is available to us as soon as we need it.

WCI: You are the next generation; how are you intending to add value to the business as the next generation?

NJ: It is simple for me. When I joined this business, I tried to look at a space where nobody else was looking at. My job is to make sure the team is in the right place and the direction is correct; it automatically fuels growth and you move towards something next.

There is always an opportunity at Polycab if I want to add value wherever I can. It doesn’t matter if it is big or small. I always try to bring in the right people or the people who have way more knowledge of the industry than I have.

WCI: How lucrative do you find the industry – wire and cable?

NJ: From the position we are in, I find this industry extremely attractive. Firstly, we enjoy a lot of economies of scale but, at the same time, I think there is so much to do in this industry. The industry is not getting disrupted by any new technology soon; there is only more automation. Also, the industry is not going to get disrupted by any product yet. I think this scenario as a big opportunity. Apart from this, there are so many segments within this business we are not even close to. We can always identify new product segments as we have core expertise of the product and the business. We have identified certain segments where we are going to tap very soon. It is a very exciting industry.

WCI: Please tell us about your views on overall Indian wire and cable industry.

NJ: The market outlook looks interesting with Govt.’s focus on infrastructure and energy. I think the market should grow at 15-16 percent, which is very large as our industry size is quite large too. There is already a good growth along with a good competition in the industry.

Also, with GST’s arrival, there ought to be a shift of the unorganized sectors towards becoming organized. Of course with GST rate at 28 percent, there are some issues. But once people accept it, I think it will not make much difference. The unorganized sector, which accounts 30-40 percent of the whole industry, has always been a concern. I think with GST that scenario is to change fuelling the market growth.

WCI: Lastly, would you like to add anything to this conversation?

NJ: Last year we became number 1 in wires as well. I think that’s a great achievement for our team. Not only in capacity, but we have grown aggressively in all business areas along with unprecedented customer reach.

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