Mr. Deepak K Chhabria – MD, Finolex Cables Ltd

“Over the past decade we have evolved from a jelly filled telephone cable company to the most diversified wire & cable company of India” said Mr. Deepak K Chhabria, MD, Finolex Cables Ltd during the interaction with Team WCI. Supplementing the above statement he gave us the elaborative view of how Finolex has evolved over the period of 6 decades and now being designated as Executive Chairman of Finolex, what are his plans to nurture it further.

Wire & Cable India: Walk us through the journey of about 6 decades of excellence of Finolex and brief about its diversified operations?

Deepak K Chhabria: Starting with a modest beginning way back in 1958, Finolex has steadily grown and transformed to post a Rs. 2,100 crore turnover in 2011-12. From modernizing plants with state of the art technology to offering innovative solutions to customers to our continual increasing reach. Over the six decades Finolex has imbibed growth through technology, network and people and has emerged as a very powerful brand. Today the name Finolex has become synonymous with quality and enjoys overwhelming confidence of the customers. While enhancing our capacities in electrical, data and telecommunication cables, the company has augmented its product portfolio by foraying into the manufacture of high voltage power cables, electrical switches & accessories and lighting products. The tremendous growth of IT and communications industry in India is a globally recognized fact. We have made rapid advancements in the field of technology and the need for specific and specialized fibre optics communication solutions in the emerging data communication sectors like telecommunications, IT/ITES, medical tourism etc is serviced with our high quality fibre optic and networking cables.

Today, our product basket includes, electrical wires, industrial cables, winding wires and 3 core flat cables for submersible pumps in the agriculture sector, auto cables for the automotive industry, communication cables like indoor telephone cables, jelly filled telephone cables, optic fibre cables and optic fibre, LAN cables for networking, low voltage, medium voltage and high voltage power cables for the power industry, coaxial cables for the DTH and entertainment industry, electrical switches and accessories, lighting products including compact fluorescent lamps, T5 tubes and fittings among others. The company has created a pan India strong and dependable distribution network of channel partners, dealers besides representatives appointed in the overseas market. Not only has the distribution network been built with an objective to serve the customer at his doorstep, the company undertakes a periodical review for the upgrade and expansion of the systems. The domestic distribution network is supported by branch offices and depots opened by the company at a number of locations across the country. Today we have over 2,500 channel partners and more than 20,000 dealers through whom we service our customers. We have evaluated and enabled an infrastructure to provide the best of facilities to our employees and customers. Our IT systems has been designed with the objective to provide enterprise wide SAP and zero defect on critical servers.

WCI: You are being designated as Executive Chairman of Finolex. What are your plans to nurture it further?

DKC: Over the past decade we have evolved from a jelly filled telephone cable company to the most diversified wire & cable company of India. We have also invested in products like switches & opened a separate lighting division mainly manufacturing CFL’s & T5 tube lights. Going forward, to be able to achieve higher growth we plan to get into more electrical products like MCB’s & ELCB’s next year. We would continue to introduce more such electrical products in the coming years & transform the company from a wires & cables company to an electrical products company. We also plan to expand the lighting division further by introducing LED Lamps & fittings in the near future.

WCI: Detail us about the manufacturing facilities, technical capabilities in terms of backward integration and product portfolio?

DKC: “Integration” is the key and makes us create each link in the supply chain. It helps us deliver end-to-end solutions even in a simple household scenario like a switch that power an electric lamp. Creating high quality switches which when switched on powers an electric circuit which again is of excellent conductivity because of the copper we use in the cable to finally illuminating the lamp, which in turn is both economically efficient and ecologically responsible. Integration is a principle that qualifies our manufacturing process across a very broad spectrum of our offerings. At our manufacturing units we integrate processes that ensure qualitative control over our products. Copper being a very important metal and volatile in terms of prices, is the most important element that decides the conductivity and performance of electrical wires. We do not take any chance and manufacture the copper at our plant in Goa that goes into our wires. Insulation is the other important aspect that determines flawless conduction in an electrical wire. We make our own insulation material through a process of converting PVC resin (which we source from our group company Finolex Industries Ltd) into insulation and jacketing compounds. We have stringent quality control processes, which ensure the purity of PVC compound and the sheath strength. With our own state of the art optical fibre manufacturing and FRP manufacturing facilities, we ensure quality and timely delivery of FinOptic products to our customers.

WCI: What would be the next level/future plan for Finolex in terms of expansion, distribution, improvisation, technological up-gradations etc?

DKC: We have undertaken a major expansion plan at our Roorkee plant & are in the process of doubling our capacity at this location. The 1st phase of the expansion should get complete in April 2013 & 2nd phase a year later. We have already just completed doubling of capacity at our Urse plant for medium voltage power cables using latest technology from Troester, Germany. This latest technology allows us to offer near zero discharge cable to our customers.

We have just recently announced a project to install a 5 MW solar power plant at our Urse facility. We intend to use this power completely in our facility. This will give us experience in the solar power business & allow us to pursue further larger opportunities in this space going forward.

WCI: Your views on wire and cable industry and what changes you are expecting in terms of demand, supply and growth factors in the next 5 years?

DKC: Although the light duty cable segment has shown reasonable growth of approx 12% over last year, wire and cable industry in general did not grow as was expected this year. Rather there has been an overall de-growth in the demand. The main concern of the industry is in the power cable segment, where the production capacity is more than demand as of now. The slackness in demand is attributable to the slowdown in economy and particularly the poor progress of power projects. Shortage of fuel has also added to the problem.

For India, to sustain a reasonable growth in economy, there is no option but to substantially add to our power generation capacity. Moreover, the limits of all major cities are expanding due to rapid urbanization. This will call for higher usage of underground cables. Many distribution utilities are now converting their overhead systems to underground to ensure reliability of power and most importantly to reduce T&D losses due to pilferage. These actions are bound to result into increased demand for power cables.

WCI: Opportunities and challenges are the vital part of the any industry. Kindly highlight some of those for wire & cable industry?

DKC: The competition has increased manifold in the last couple of decades increasing capacity much more than demand, thereby putting margins under pressure. Another factor, which is of concern for wires and cable industry, is the lack of quality consciousness among all stakeholders. “Price” has become the undisputed king while factors like ‘reliability’ and ‘quality’ has taken a back seat. We need to reverse this trend and must look into the lifetime cost of a cable.

Cash flow is another problem due to poor financial health of many government utilities. A debt restructuring may help the utilities in the short term but in the long term they will have to improve their operational performance to sustain growth. Therefore, on one hand utilities have to reduce their T&D losses drastically and on the other government has to stop giving subsidized power or at least reduce it considerably.

On the opportunities front, barring a few intermittent hiccups, there has always been good growth of demand for wires and cables. As an emerging economy, India will certainly have good GDP growth, which will translate into increased demand. We have also matured in terms of technology and manpower skill and therefore should look at the global market rather than depending only on domestic demand. The fact that many overseas companies are looking forward to India as a potential manufacturing destination proves that we are capable of making international quality cables at a much competitive price.

WCI: The JV with J-Power Systems Corp of Japan commenced manufacturing operations in September 2011. Brief us about how it was shaped up and the product being manufactured and further plans?

DKC: J-Power Systems Corporation (JPS) is a Japanese multinational formed as a 50:50 JV between Hitachi Cables Ltd and Sumitomo Electric Industries for manufacturing HV and EHV cables. Few years back when JPS was looking for a partner to manufacture high and extra high voltage cables in India they found Finolex to be most preferred choice because of the similarity in our quality culture. We formed the JV with JPS where all technical matters including design, manufacture, quality assurance, testing, installations and commissioning at site etc are covered within the responsibilities of JPS. And that was the beginning of our journey into high and extra high voltage cable segment. Thereafter, we have established a most modern cable manufacturing plant with vertical continuous vulcanization (VCV) process capable of manufacturing XLPE insulated cables from 60kV to 500kV grade.

This plant will cater to the demands of JPS’ customers worldwide except Japan. JPS has already started promoting this facility to potential customers abroad. We have started receiving orders from customers in India and abroad. Right now we are executing one order for a customer in Singapore and recently we have received orders worth Rs. 37 crores from MSETCL for 132kV cable system.

The company recently had conclave of J Power global managers from GCC countries and South East Asia including Hong Kong in Pune and there is high level of confidence reposed by the global mangers on the facilities and product being manufactured by the company to further push global footprints for the company. The facilities also have been inspected by a few leading Indian utilities and have been adjudged the best in the country and at par with any global players. We have been continuously absorbing technology by sending our key officials to J Power and visit of J Power teams to company facilities at Shirwal. The company has established product process parameters which has been long researched and developed by J Power and testing parameters which are much more stringent then the international standards thus ensuring product quality including surface finish, which would be the best in the country.

As a contribution to Indian cable industry, the company participated in various technical seminars organized by government and semi-government bodies for imparting and upgrading technical knowledge of the Indian cable industry, presenting technical papers by J Power and Finolex J Power team, which have been accredited and awarded best technical papers in various categories and seminars, even with cash prize.

WCI: Provide us a glimpse of the business approach/philosophy at Finolex?

DKC: At Finolex there is a constant thirst to innovate and produce for the better with progressive demand for excellence. We constantly try to excel in our endeavor of taking a step further in advancement and technology. We continue to come together in order to strike a balance and create products and services of excellence to meet the customer’s needs.

Mr. Maadhav Digraskar – MD & CEO Cable Corporation of India

Cable Corporation of India announced the appointment of Maadhav Digraskar as the Managing Director & CEO of the company on January 18, 2013. Maadhav Digraskar, a veteran of power industry who has been associated with the industry for more than 30 years, will now lead the management team of CCI.

A firm believer of transparency and system oriented work environment, his problem resolving style is through root cause analysis. He encourages a learning environment and enjoys nurturing young talent. Having proved his mettle over the years by serving the industry in various capacities, Maadhav Digraskar has fulfilled the role of Chairman – MV & HV Switchgear Division at IEEMA; Chairman at CII – Nashik Zone; Head of Manufacturing panel at CII – Western Zone; Vice President at LSI – NIMA; Member in Executive Council – IEEMA etc.

“Maadhav comes with an impeccable track record and we are delighted to have him as part of CCI. His wealth of experience in managing both products and projects in the electrical field combined with his leadership capabilities will ensure progress of the company on its path to profitable growth” says Hiten Khatau, Chairman and Managing Director, Cable Corporation of India.

Maadhav Digraskar started his career with Jyoti Switchgears Ltd in year 1980 and then joined ABB Limited (Erstwhile HBB) in 1982. Within ABB, he had grown through different roles in projects and product divisions. During his tenure, he also had a rich experience in handling key customer accounts in the capacity of regional group head for transmission & distribution segment. He had been responsible for group of business units located at Bangalore, Halol, Mysore, Nashik and Vadodara as President – Power Product Division. He was also member of ABB’s executive committee for High Voltage Switchgear and Corporate Management Committee at ABB, India – Bangalore. In year 2011, Maadhav joined KEC International Limited as Chief Executive, Power Systems Divisions and member of Management Committee. In this capacity he was globally responsible for Substation, Electricity Distribution and Cabling work related project businesses.

“I am delighted to be part of CCI’s exciting journey of providing power solutions to a global market. With an unmatched global network and a strong portfolio of assets and customers as well as visionary leadership, the company has a solid base upon which to take its high growth businesses to a whole new level in terms of scale and reach” says Maadhav Digraskar, Managing Director & Chief Executive Officer, Cable Corporation of India.

Wire & Cable India: Elaborate on the Apar manufacturing facilities in its respective fields of conductors, specialty oils, cables, lubricants etc along with the joint ventures?

Apar Industries Ltd: Apar has 4 existing manufacturing locations in India (Rabale in Navi Mumbai, Silvassa, Nalagarh and Umbergaon), with 2 more facilities on the anvil. In addition, Apar has strategic tie ups in Australia, South Africa & Turkey for manufacturing in its oil business. The conductor division is manufacturing the full range of conventional & new generation high temperature low sag conductors; it also has backward integration by virtue of its aluminium rod manufacturing capabilities. The oil division’s main segments are transformer oils, white oils for pharmaceutical & cosmetic oils, rubber process & industrial oils, and automotive oils. The cable division manufacture low voltage & medium voltage power cables, elastomeric cables, instrumentation & control cables, optical fiber cables, electron beam irradiation of cables & services.

WCI: Explain the strategic intent with which Apar acquired stakes in Uniflex Cables Ltd and further plans for progression?

AIL: Apar acquired Uniflex Cables in order to establish its growth in the power sector. The cable & conductor businesses are synergistic from production & marketing point of view. Since Apar tookover Uniflex in 2008, it has grown from net sales of Rs. 130 crores to Rs. 425 crores (expected this year). Recently, Uniflex Cables Ltd has been merged into Apar Industries Ltd. This merger will facilitate Apar to grow Uniflex Cables and to avail economies of scale which will wider our product portfolio and offerings. The plans for Uniflex Cables, are to enhance its power cables and fiber optic cable capacities by de-bottlenecking additional equipments. Besides this, we have plans to establish the electron beam irradiation facility & develop various businesses emanating from its service centre; this new facility is likely to be commissioned in this financial year ending March 2013.

WCI: Your views on Indian transmission and distribution sector and how you look forward to its advancements in the near future?

AIL: The Indian transmission & distribution sector has been historically under-invested in. Only in the recent period has the government realized that this segment also needs prioritization, instead of only concentrating on generation sector. While there is significant potential for the T&D sector, there are several challenges too. The T&D losses in India are amongst the highest in the world. There are huge opportunities for adopting new technologies in order to drastically reduce T&D losses. Amongst the new technologies, foremost is the usage of annealed aluminium conductors with carbon composite cores. These types of conductors can reduce the technical line losses by 30% to 40%. The additional benefit of these new generation conductors is that they help in mitigating the major hurdle of right of way (ROW) since they can transmit upto 200% of the power. Indian utilities are slowly switching over to these types of products in order to avail their inherent advantages. Apar has also been promoting the usage of anti-theft cables to the Indian power distribution utilities. These types of cables are already used globally, and can help in improving the financial health of the state distribution companies.

WCI: According to you, how Indian wire & cable industry is shaping up. Kindly highlight its challenges and opportunities?

AIL: Due to the current fuel related issues, new investments in the generation segment of the power industry have been slow. This has adversely affected the investments on the transmission & distribution segments too. However, the government is fully aware of this issue, and is likely to work on a solution for encouraging investment in the generation segment. On the distribution segment, the central government has announced bailout packages for the state distribution companies. Once this is fully implemented, investments would regain momentum in this segment too. As such, the nation’s need for increased power is undoubtedly prevalent, and will drive the investments & opportunities for the Indian wire & cable industry.

WCI: Details about the new electron beam irradiation facility for cable and expansion in conductors?

AIL: The new electron beam irradiation facility has two accelerators of 1.5 MeV & 3 MeV. This facility will enable the company to enter into highly specialized cables and offer its services for the railways, defence, shipbuilding, enhancement in treatment of polymer materials used in insulated pipes, auto components, diamond irradiation, precision engineering parts etc. The conductor division is currently running at full capacity utilization. The ongoing expansion will enable the company to cater to the additional demand from new geographical markets & new products such as high temperature low sag applications.

WCI: “The company has recently acquired 47.5% stake from Chematek SpA in the distribution JV company viz Apar Chematek Lubricants Ltd for automotive oils”. Your comments.

AIL: The company has plans to grow its automotive oils business. It produces the “AGIP” brand automotive lubricants with license and technical know-how of ENI-SpA of Italy. The distribution company which was a JV with Chematek will be gradually integrated into Apar’s operations in order to synergize with its overall marketing network. This segment is a focus area for Apar, since the market is very large & growth potential for Apar is very significant.

WCI: For the next 5 years what Apar Industries is eyeing on in its respective field like conductors, specialty oils, cables, lubricants in terms of expansion, product development, markets etc?

AIL: Company has just invested in state of the art facilities for its businesses, and will consolidate in the next few years in order to reap the benefits of these investments. The e-beam facility would open up new avenues & would be further grown when the present capacities are optimally utilized. Similarly, the facilities for manufacturing new generation conductors would be de-bottlenecked as the demand grows in this area. Apar is committed to maintain its leadership position in terms of size, quality, technical & financial aspects; and would invest prudently to sustain a strong growth.

Wire & Cable India: Provide us a quick review on how the plant is performing?

Sandeep Sood: General Cable in India has one big facility at Baddi (Himachal Pradesh), which is segmented into four product lines in alignment with the four market verticals it operates under. The copper division of the plant has been split into two segments of building wires & flexibles and instrumentation & control cables. Likewise the aluminum division has also been segmented into the power cable & overhead conductor lines. In Asia, India is the only plant of General Cable, which is capable to manufacture overhead conductor with ACSS technology. As far as capacity utilization is concerned, aluminum section is adequately loaded, while the copper section has been commercialized only recently.

WCI: Highlight the current and future application segments of your products?

SS: To begin with our focus has been on the business segments which consume aluminum cables & conductors, i.e. the power transmission & distribution segments in the private space.

WCI: What’s the strategy for future?

SS: Within the global theme of One Company, though the Indian entity would be sequentially & appropriately be introducing most of the “Safe Products”, manufactured by General Cable, worldwide, the foremost strategy would be to load-up the Indian asset completely. India, being the 4th largest market for wires & cables, the operating strategy is aimed at garnering leadership position within the organized & safety conscious business segment of the total market. Globally, all our 50 plants operate under an integrated supply chain module and hence India would be strongly leveraging this integrated might of the global organization, while harnessing the local knowledge of our skilled manpower.

WCI: To leverage upon your global synergies do you intend to make India as a manufacturing hub?

SS: This is something, which we have already started doing and you will be happy to know that in 3 months of firing this plant, we commenced physical exports of special aluminum wires to US, post having attained the mandatory UL certification within flat 90 day period – a testimony of our global knowledge & local technical prowess. We have also exported some other special products to South East Asia and are in the process of building on this global expertise of ours. General Cable as a brand has its own innovative strengths having integrated operations worldwide gives us the advantage of leveraging the global strengths. The investment in the Indian facility is made with specific goal to look after the Asia Pacific Region, which is a key focus region for General Cable.

WCI: Tell us more about your innovative strengths?

SS: General Cable globally works on the basis of a few well defined business imperatives. The biggest and foremost amongst them is CSR; embedded in this imperative is the strongest one of Safety. We at General Cable follow the Safety theme of “zero & beyond”, which implies that we not only target & work towards attaining zero accidents within our plants, but take this Safety initiative right up-to the families of our cherished employees & valued customers. Safety, hence, is an important aspect for us as all our units are measured significantly on their safety performance, even ahead of the financial one. Safety also is the norm & measure which we provide to our customers right across our product line. The second major pillar of our CSR initiative is community development, which we specifically focused in & around the area where we are present, since we firmly believe & understand that our employees & the community around us has got to be happy and satisfied in order to help us build a sustainable business. The third pillar of innovation is akin to the DNA of living beings and is the genetic construct of our global operating model. We have different focus groups working on the different facets of wire & cable making and located across various geographies with one in India as well.

WCI: What kind of investment you do in the R&D facilities?

SS: All our investments worldwide on these activities are substantial. The pilot plants within the global development centers are well structured to meet the flexible needs of all research & developmental works. Needless to say these centres of excellence are well manned & resourced through a global pool of engineering & talented skills.

WCI: HR is an important aspect for any company, how General Cable addresses this aspect?

SS: It’s a big challenge across the manufacturing space. As far as the Indian wire & cable industry is concerned, there is a sizeable skill deficit, which keeps manifesting itself through delayed & disrupted customer deliveries. At General Cable, the emphasis is more on internal skills development by focusing on hiring academically proven professionals who have the hunger to learn & grow. So starting from me, we have a lot of our associates who are rank outsiders to the wire & cable industry, but have their own professional expertise & strength. Our people, invariably have a thorough understanding of systems, technology, applications like six sigma, lean manufacturing, but post recruitment do undergo an intensive in-house training for cable design, manufacturing etc. We try to bring in more of operational skills rather than the functional skills in cable making. For example the people on our cable making machines are being freshly recruited from ITI’s from nearby areas. We are running a program with them from last two years where-in we train them on different facets of cable making, machine operations and above all safe practices. Post the two years program they are absorbed as trained operators.

WCI: Kindly share your views on the wire & cable industry and power sector?

SS: Power is one major segment, which drives the industry and there is an immense potential for growth of power sector within India. This potential is well chronicled in the 12th plan document of Government of India and only needs to be cascaded & broken down to throw-up the embedded potential for the cable industry. The industry only needs to focus on this opportunity rather than continuing with the historical practices of making compromises to a large extent. Since the industry is now well matured and significantly evolved, it is not difficult for all participants to visualize & realize the value which gets delivered by offering good quality, safe products at an economically viable price point. As India embarks upon its journey of creating quality infrastructure for its socially awakened population, it is time the Cable manufacturers realize the significance of their products in keeping every Indian safe & happy; Cable is a very important area of risk and this is something which industry has got to realize and upgrade the manufacturing standards.

WCI: According to you when this thinking will change?

SS: We have seen over the years in the power sector that the private distribution companies take a different view in terms of their purchases for cable. What is required is that industry itself takes a knowledgeable view & position by creating the requisite awareness and sell & develop the product on the life cycle performance basis aligned well with the best-in-class Safety norms, which then will help in improving the industry perception & performance, to a large extent. The demand is already there for all of us to see & feel, so there is absolutely no need to continue with the age old practice of deploying pricing as a marketing tool for enhancing reach & penetration; The cake is big enough to accommodate sufficiently large amount of quality suppliers.

WCI: Where do you see the wire & cable industry in India in 10 years from now?

SS: I think it would be doubled from what it is today as power has been the leading consuming sector, thus far. It represents the huge investments both in capex and infrastructure creation, from generation to distribution, the entire cycle is going to be huge in the next 7 years. Beyond that there are other spaces like the urbanization needs of India, which are putting pressure on creating the infrastructure that will emerge as the major consumer of wires & cables. The mobility need of the country will become a huge driver for demand creation. These are the sectors for the future which have not been tapped yet. People are leaning to power sector because it is a huge consumer and easier to enter. So this has led to a skewed development of the wire & cable sector. As private sector with diversified applications, grows, there will be a niche created by the multinational companies like General Cable, who value the consumer more than the products.

Jiangsu Sterlite Tongguang Fiber Co. Ltd. (JSTFCL), the joint venture (JV) company formed between Sterlite Technologies Limited (Sterlite) and Jiangsu Tongguang Communication Co Ltd (TGCI), announced the commencement of production of optical fiber at their new facility located in Haimen, Jiangsu Province, China.

The greenfield factory has been set up with an investment of around USD 25 million. China with a total annual demand of optical fiber of more than 100 million km is an extremely important market for Sterlite Technologies and this strategic investment will help the company establish a stronger foothold in the market. While Sterlite brings expertise in fiber technology, TGCI brings significant fiber cable manufacturing expertise and market reach in China. With the benefit of extended product lines, Jiangsu Sterlite Tongguang Fiber Co. Ltd. would make it faster, easier and more cost-effective for utilities and service providers to build new age communication infrastructures.

“This joint venture leverages the strengths of two great companies to offer high-quality and competitive optical fiber to our China customers,” said Pravin Agarwal, Whole-time Director, Sterlite Technologies Ltd. “Additionally, it strategically positions both companies for global growth in the telecommunications segment.”

“This partnership combines the expertise of both companies to become a technology leader for the global market,” said Tang Jinming, Chairman of Jiangsu Tongguang Communication. “We look forward to continued cooperation and innovation with Sterlite to provide our customers the best in class products at competitive prices.” The first phase of the project, which has started operations, has an installed capacity of 5 million km optical fiber annually and the state-of-the-art facility today provides direct employment to over 90 people.

In November 2010, Sterlite partnered with jiangsu Tongguang Communication Co. Ltd. (TGCI) to form a joint venture company Jiangsu Sterlite Tongguang Fiber Co. Ltd. (JSTFCL) in Haimen, Jiangsu Province, China to manufacture, market and distribute optical fiber used in the production of fiber optical cables. This was an important milestone for Sterlite becoming a localized player in the largest optical fiber market in the world from being primarily an exporter of optical fiber in that market. The registered capital of this JV is USD 10 million and Sterlite is 75% shareholder of the JV.

Overcapacity in most markets and an overall slowdown in global demand led to fierce competition and persistent price and margin pressure in 2012. The sawing wire business collapsed even further in 2012 and the measures taken to rightsize the respective activities with the new business reality substantially affected Bekaert’s financial performance for the year. The company incurred a total of € 202 million non-recurring costs, of which € 117 million related directly to the restructuring and impairments in the sawing wire activities, and € 85 million to other realignment measures.

Notwithstanding this difficult economic and business climate, Bekaert managed to achieve stable sales volumes and a solid cash flow from operating activities, and significantly reduced its net debt position.

• Consolidated sales of € 3.5 billion (+3.6%) and combined sales of € 4.4 billion (-4.6%)

• Gross profit of € 479 million (13.8% margin) compared with € 651 million (19.5%)

• EBITDA of € 275 million (7.9%) compared with € 497 million (14.9%)

The company continued to invest in future growth while strongly reducing net debt:

• R&D expenses totaled € 69 million, representing 2% of sales

• Capital expenditures reached € 127 million

• Net debt decreased to € 700 million from € 856 million, resulting in a net debt on REBITDA of 2.1

Market Developments

Bekaert is active in many sectors. The largest markets for Bekaert’s products are the automotive, energy and construction sectors. In the automotive sector, sales demand was down in our markets. Weak OEM markets in Europe, a global downturn of truck sales, tire replacement delays in most markets, and increased competition as a result of overcapacity and currency-driven import flows, created unfavorable business conditions on a global scale. While solar energy market conditions further worsened at a global level, other energy-related sectors continued to perform well across different applications. In construction markets, Bekaert was able to gain market share in difficult economic circumstances thanks to successful product innovation.

January 18, 2013

Production capacities in Chinese industry continue to increase rapidly, and after a brief period of weakness, growth has now picked up again significantly in the country. This means that the demand for high quality components and system solutions for industry also continues to rise. In response to this trend, the Lapp Group is further strengthening its presence in China. This spring, the Lapp Group’s first production plant in China will come on stream.

The new Lapp Cable Works Shanghai Co. Ltd. production plant is located in the Southeast of Shanghai in the Lingang Industrial Park. It has a total floor area of more than 11,000 square metres, with further expansion possible down the line. Directly adjacent are sites owned by global companies such as Siemens, Caterpillar, Atlas Copco and Lenze, alongside well-known Chinese manufacturers like Shanghai Electric and SAIC Motor.

Chairman of the board Andreas Lapp commented: “We have been working in China since 1999 and have numerous customers there, from the automation, industrial machinery and automotive sectors. The new production facilities will enable us to deliver to our customers more quickly and improve our service. I believe there are major growth opportunities for us in China.”

At present, the production machinery is being delivered, all of it meeting the very latest specifications. The extrusion machine for the cable insulation alone can be operated at a top speed of one kilometre per minute. The entire plant produces using the lean method, which has already brought about significant gains in efficiency at the Lapp Group’s other production locations around the world.

Initially, the new plant will manufacture product specially certified for China (China Compulsory Certification), as well as standard products from the ÖLFLEX® power and control cable range. Within around two years, production is due to be ramped up to more than 3,000 kilometres per month. Lapp Cable Works Shanghai will initially employ 30 people. The total investment is 7.2 million euros. The new plant in China means that the Lapp Group is now operating five production facilities in Asia.

February 25, 2013

As part of its ambitious expansion plan and commitment to quality and service, leading wire and tube drawing lubricant specialist, Metalube, has acquired almost £60,000 worth of new laboratory equipment.

With a £40,000 investment, the Mettler TGA/DSC is a laboratory highlight. This cutting edge instrument carries out simultaneous differential scanning calorimetry and thermogravimetric analysis in a single test enabling the evaluation of oxidative stability and evaporation rates under a variety of conditions.

Commenting on this notable purchase, Metalube’s Technical Director, Chris Nettleship says: “This new Mettler TGA/DSC is particularly good news for wire and tube drawing manufacturers. It allows us to study the ageing of oils and therefore extend the service life. We can also investigate how lubricants behave during the annealing cycle, working alongside customers to optimize product and processes. This all results in enhanced tube quality.”

Another recent addition to Metalube’s lab is an £18K Reichert M2 friction and wear tester. This latest model with variable speed and load, allows the company’s chemists to study the frictional and wear reduction properties of Metalube’s wire drawing products (copper and aluminium).

Nettleship adds: “Investment is key to our growth and ensures that Metalube continually provide the class of products that meet our customers’ needs. We are 100% committed to quality and innovation. This requires equipment that meets 21st century demands.”

Besides the company has installed three new manufacturing vessels into its Manchester based factory.

These new additions will allow the company to diversify into new product ranges as well as considerably increase existing production capacity. The new vessels are capable of producing more than 5000 tonnes of speciality lubricants per annum and the installations are a sizeable £100,000 investment.

Commenting on these new factory additions, Commercial Director, Douglas Hunt says: “As a business, we are fortunate to be growing fast and equipping our factory to meet current and impending customer demand is vital to our success.” He adds: “Our strategy is to continually re-invest into Metalube’s future whether this be in our people, increasing our global presence or advancing our factory and laboratory.”

The Nexans Board of Directors meeting on February 6, 2013 approved the Financial Statements for 2012. Net sales for 2012 totaled 7.178 billion euros compared with 6.920 billion euros in 2011. At constant non-ferrous metal prices1, the figure is 4.872 billion euros compared with 4.594 billion euros in 2011.

The consolidated net debt was 606 million euros at December 31, 2012, compared with 222 million euros a year earlier. This change is mainly attributable to the acquisition of AmerCable in the United States accounting for 211 million euros and Shandong Yanggu in China accounting for 127 million euros.

On November 26, 2012, Nexans signed an amendment to the March 27, 2011 agreement with its lead shareholder, the Chilean group Madeco. The main point of this amendment is to allow Madeco to raise its maximum stake in Nexan’s equity from 22.5% (as stipulated in the initial agreement) to 28% of the shareholders’ equity and voting rights, thereby enabling Madeco to consolidate its position as reference shareholder and long-term partner.

Referring to the 2012 results, Frédéric Vincent, Chairman and CEO said: “In 2012, numerous strategic initiatives were implemented, such as the acquisition of AmerCable in the United States and Yanggu in China, as well as the launch of the project to build a plant in South Carolina for land high voltage cables. Nonetheless, they occurred against the backdrop of worsened economic conditions in the second half of 2012 and implementation difficulties for submarine high voltage energy contracts, and the 2012 results did not meet expectations.

For 2013, the economic context in certain parts of the world is unclear (Brazil and Australia) or even subject a recession (Europe). High voltage business will see its profitability improve without, however, reaching a level considered normal. Given that the action plans launched or under review will produce only marginal effects in 2013, the Group is currently expecting operational profitability to be roughly the same as in 2012.

In this context, the Group would like to adopt the means to protect and restore its competitiveness, contain its costs and pursue the rationalization of its organization. Consequently, a study will be launched of a plan having as its objective, savings in the order of 70 million euros in Europe over time relating to land high voltage cables, special cables for industry and administrative structures in general. The Group will table the subject with the relevant employee representative bodies in the third quarter of 2013.

Additionally, at its January 14 meeting, the Board of Directors approved the main directions set in the 2013-2015 strategic plan in terms of markets, products and industrial policy. The actions included in this strategic plan are designed to reach an objective for the Group, assuming an unchanged economic climate, of raising its operating margin by 2015 to 350 to 400 million euros and to approximately double its return on capital employed.”

Characterised by the varying developments in global markets and the uncertainties in the Eurozone, the Stuttgart-based Lapp Group recorded moderate growth in the financial year 2011/2012 (1 October to 30 September). The leading provider of integrated solutions and branded products for cable and connection technology increased revenue by 1.5% to around 860 million euros (previous year: 847 million euros).

“Our company is fundamentally healthy – despite the Eurozone crisis – and we have positioned ourselves well. We will continue to lead the Lapp Group from a position of strength towards a good and successful future”, said Andreas Lapp, Chairman of the Board of Lapp Holding AG.

Uneven development in the regions

The Lapp Group is organised into the three regions Europe, Asia and America. The way countries are allocated into the regions does not always follow geographical lines. South America, Africa and the United Arab Emirates are served by Lapp Europe, for example. North America includes the USA, Canada and Mexico while Asia also covers Australia and New Zealand.

• Europe: The continuing uncertainty around the future of the Eurozone led to a fall in domestic demand. Revenue came in at 594 million euros (previous year: 620 million euros), a drop of 4%. As the strongest single market, Germany maintained its revenue share of 36% of the total group revenue. With a 69% share of total turnover (previous year: 73%), Europe remains the core market for the Lapp Group.

• Asia: The powerful economic growth in Asia has been particularly positive for the Lapp Group’s companies in the region. Growth was at 20%, leading to revenue of 183 million euros (previous year: 153 million euros). Targeted investments in this region supported the above-average growth. This helped the Asia region to increase its share of total company turnover to 21% (previous year: 18%).

• America: Revenue developed very dynamically in America. Revenue rose by 12% to 83 million euros (previous year: 73 million euros). Revenue development in the USA was particularly positive, with growth of 22%.

Significant increase in investments

Lapp Group increased its investments in the 2011/2012 financial year, laying the foundations for further growth. Investments therefore rose to 33 million euros (previous year: 21 million euro). The largest investments came in Germany. For example, the interior construction of the new fully automated service and logistics centre in Ludwigsburg cost 16 million euros. The state-of-the-art goods warehouse (total investment: 48 million euros) entered service last autumn and will be officially opened in mid-2013. Another major investment was the opening of a second Indian production plant in Bhopal and the expansion of production capacities at existing sites such as Contact GmbH in Stuttgart, Camuna Cavi in Italy or Lapp Cable Works in the USA. Further expenses resulted from the 100% acquisition of the long-time sales partner Coelco Trade S.R.L in Romania as well as license payments to SAP for ECC 6.0 of around 1.3 million euros.

Asia will be the focus of investment for the current financial year. For example, a new plant in Shanghai, China (5.5 million euros) and the further expansion of the plant in South Korea (2.7 million euros) for the production of electron beam cross-linked cables, for example for photovoltaics. In Europe, the construction of a new administration and logistics centre in Poland (approx. 4.1 million euros) is in the pipeline. The continuing implementation of SAP alone will cost 1 million euros in the current financial year. This new information and communication technology will enable the Lapp Group to optimise its processes even further, improve service and fulfil customer wishes even quicker. Total investments for the current financial year are 35 million euros.