Power-cable market is more competitive than decade ago
G. K. Banerjee, President (Marketing) at Finolex Cables shares his experience on the power-cable market, and recommends how to boost its growth
The power-cable industry is in the crossroad of hope and challenges. Where the entry of international companies is increasing the completion, the government is adding hope by approving of restructuring of ` 1.9-lakh-crore debt of state electricity boards.
Entry of new playersA number of new players have entered into power-cable industry in India in the last couple of decades. The market is now more competitive than it was a decade ago. As a result, quality has taken a beating in some areas, especially in the medium-voltage segment. The total capacity in the market exceeds the current demand. Therefore, consolidation may follow soon.
Reasons for negative growthThe power cable business has experienced a negative growth of 16.05 per cent during second quarter of FY13 compared to the corresponding period of last year. The negative growth mainly attributes to the general economic slowdown, in particular the power projects which did not come as per schedule.
Debt restructuring by the governmentDebt restructuring may help the state-owned utilities in coping with the financial crunch. However, it is important that the utilities are able to address the issue of high T&D losses and stealing of power. The policy on subsidy also needs to be reviewed so that it is extended keeping overall growth of economy in mind.
Lack of level-playing fieldLevel-playing field has been discussed for some time at various forums. An ‘inverted-duty structure’ — where duties of imported-raw materials are higher than the finished goods — can never help the domestic manufacturers. The process of availing exemptions and drawbacks on duties of raw materials for locally manufactured goods also needs to be simplified and more efficient.
Major hurdlesBesides the issue of ‘level-playing field’, the concerns of power cable industry is the large working capital requirement with debtors being the most significant component of it. It affects the performance of power-cable companies, especially when the cash flows become unpredictable and go beyond control. On one hand, the buyers must value the importance of adherence to agreed payment terms, and on the other, the manufacturers need to improve their skills in receivable management.
Another important issue is appropriate understanding of quality and reliability of power cables which robust the system to last for decades. Buyers can have short-term financial gains from a cheap, inferior quality of cable, but in the long run, they have to spend more. Unfortunately, many buyers consider price as the most important criteria. Such a tendency will work against the growth of manufacturers of international quality cables.
Future of underground high-voltage cablesUnderground high-voltage cables are expected to have a stable growth in India in coming years. It depends on the implementation of power projects and strengthening of distribution systems. The industry also should be prepared to face competition as more and more international firms are looking at India as one of the major markets.
