Apar Industries Ltd, founded in 1958, is a leading manufacturer of overhead transmission line conductors, transformer & industrial oils, power & telecommunication cables. The company is also listed in Indian Stock Exchange. Apar is expected to clock a net sales turnover of Rs. 4,500 crores for the year 2012-13, out of which exports make up approx 25% of its revenues to over 85 countries across the world. It is a technologically driven company, with much emphasis given on developing new products & businesses. In 50 years of existence, the competitive advantage has leveraged Apar to be a market leader in the fields it operates. To explore more on the competitive advantages that company has team WCI interacted with the management of Apar Industries Ltd. Excerpts
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.
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.
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.
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.