Adani, Birla enter wires and cables market, but cracking distribution holds the key

Goldman Sachs says Cable and Wire's sectoral attractiveness is raising competition and supply build-up

As the Adani and Birla groups announce their foray into the wires and cables industry, sector analysts say that the key to disrupting the segment lies in building a robust distribution network.

The sector, currently dominated by legacy players like Polycab and Havells, thrives on deep-rooted trade relationships, an extensive on-ground presence, and strong influencer engagement, particularly among electricians and contractors. With the segment poised for disruption, the real battle will not just be about manufacturing capabilities but about who can solve the distribution puzzle first, according to analysts.

Both Adani and Birla have significant brand equity in building materials, with established businesses in cement, however, analysts believe that alone might not help to thrive in the business. They suggest that the new players would take at least five years to reach the scale of incumbents and that legacy players may see a margin erosion but not necessarily a topline impact.

“The prowess of the pure-play legacy cable players cannot be counted out, just because the large promoters are entering the sector. The new companies first need to build up dealer capacities, which may not be achieved just by leveraging their cement or metal presence,” said an analyst from a leading domestic brokerage.

For years, key players such as Polycab India, KEI Industries and Havells India have steadily raised their market shares, thanks to rising demand for houses, manufacturing facilities, data centres, electric vehicles, solar farms, etc. The share of branded players has increased to an estimated 74 percent in FY23 from 61 percent in FY14 and is expected to improve to 80 percent by FY25, according to Motilal Oswal Financial Services. The share of dealer sales among the top companies ranged from 50 percent to 80 percent in FY24, according to their respective annual reports, underscoring the critical role of a strong dealer network.

Uphill task

"Any new player would need to have significantly higher advertising & promotional spend. But for them to achieve the scale of incumbents would take at least five years, by which time these legacy players would have further strengthened their presence in the consumer market," said Aakash Fadia, an analyst at Yes Securities. UltraTech may need to build a separate team for wires and cables since its existing dealer network is tailored for cement, he said, adding, “Initially, they might offer higher incentives to dealers, which could create some margin pressure for incumbents. However, the overall topline impact is expected to be minimal."

UltraTech could initially penetrate the institutional channel, which is real estate developers and infrastructure projects for bulk buying, while simultaneously building its domestic distribution/influencer network (electrical contractors/electricians are the key influencers in urban/rural markets), Umang Mehta, an analyst at Kotak Securities, wrote in a note.

"Ultratech has already stressed upon leveraging synergies from their established brands in terms of existing relationships with infrastructure, real-estate players, etc, as well as copper procurement from a nearby group facility at Dahej. Its access to end users through its UBS outlets, which is a pan-India multi-category retail chain – providing a one-stop solution for individual home builders, and a large distributor reach is likely to provide better visibility for the new category," Nirransh Jain, an analyst at BNP Paribas, said.

On February 26, UltraTech Cement said it will set up a wires and cables plant in Bharuch, Gujarat, with an expenditure of Rs 1,800 crore over the next two years. The plant is expected to be commissioned by December 2026. Less than a month after this, billionaire Gautam Adani's conglomerate announced its foray into the sector through a new joint venture company, Praneetha Ecocables Ltd (PEL). Both announcements reflect the companies' larger infrastructure ambitions.

"We believe that UltraTech could initially ramp up in relatively simpler segments such as wires, as the more complex cables would necessitate securing technical approvals from several agencies and EPC contractors, which could be a time-consuming process,” Mehta added.

Distribution strategies of key players

Polycab has strengthened its network through digitalisation, integrating Salesforce for automation, product tracking, and reverse logistics. It also engages electricians via the Polycab Experts platform and Pro+ App, boosting brand loyalty across 5,000+ residential sites.

Havells follows an omni-channel approach, ensuring product availability across traditional dealers, exclusive brand stores, modern retail, CPC/CSD canteens, rural Utsav stores, and e-commerce platforms. With a vast network of 18,000 dealers, 2.47 lakh retailers, and 2.98 lakh electricians, it aims to deepen urban market penetration through over 100 new distributor appointments.

Meanwhile, KEI actively incentivises dealers and electricians through year-round loyalty programs, monetary benefits, and factory visits.