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Cover Story | September 2017

Shifting focus towards local manufacturing is a win

<span style="font-weight: bold;">Amit Jain, Managing Director, CMI Ltd. <br /> <br /> How is the Indian wires &amp; cables market evolving?</span><br /> The industry, which today is worth more than Rs.36,000 crore, is expected will grow to Rs.64,000 crore by 2020. This is primarily because of huge government and private investment planned in segments such as smart cities, modernisation of railways, highways, Digital India campaign, and Power for All by 2022. The future looks bright and will provide immense opportunities for all the players and will benefit the industry. We are expecting that this industry that has been growing at the rate of around 15 per cent CAGR currently, will start growing at the CAGR of around 25 per cent over the next five years. CMI Ltd has been outperforming the industry and we hope to continue doing so, over the next five years as well. The next five-seven years will be a game changer for players in the wire and cable segment. <p></p> <p> <span style="font-weight: bold;">What is your value proposition, given the market competition?</span><br /> Competition per se is fierce in the retail category both locally and globally, but good margins can still be generated by creating USPs in terms of product quality, innovative packaging, reducing inventory levels and creating value for the customers. CMI has always been able to carve a niche for itself because we focus on the better products lines and R&amp;D according to the current market requirements and future trends. We are always adding new products to our portfolio and are in fact able to bring innovation to the fore, wherein we are able to not only produce better products but also give suggestions as to the products that can be developed to our customers for different applications. We invest approximately 4 per cent of our revenues on R&amp;D activities including updating and modernising of plant and machinery and trying new raw materials. </p> <p> We have Indian and global certifications in place and have been able to crack the both markets successfully. </p> <p> <span style="font-weight: bold;">What are your plans for sustained long-term growth?</span><br /> We have already put in place the most modern technology at our Baddi facility, which we acquired from General Cable Corporation's Indian subsidiary, last year, at a substantial capex. This green facility is amongst the best in the category and gives us enough scope for expanding our product line in the next two-three years time frame. Today, we are amongst the very few companies in the country to manufacture the maximum range of cables being used and will, we hope, be able to reap rich dividends from the investments made. At CMI, we continuously invest in our R&amp;D facilities to meet customer demands and come up with cables that can meet the highest safety standards for its intended applications. </p> <p> <span style="font-weight: bold;">What impact has GoI's thrust on renewables had?</span><br /> The government is aiming to increase the share of clean energy through renewables. The target of 20 GW of solar power proposed to be installed in the country has been reset by the government, to achieve five times more, at 100 GW of solar power by 2022. While we do not have much traction in renewables as of now, with the focus in policy for this segment and witnessing the increasing demand in the segment, we are looking at this market closely. </p> <p> <span style="font-weight: bold;">What market specific technologies have you implemented?</span><br /> Our products use cutting edge technologies - the best available globally. For each of our customer, we focus on their specifications and these change from not just according to the industry, but also between players within the same industry. Specific customer approvals from customers and quality of cables are ensured as per their specifications. For example our products have been tested and approved, with certificates given by RDSO (for cables to be supplied to IR), by EIL (for different cables being supplied to power, oil, petroleum and chemical industries), by BSNL-TEC (PIJF-Telecom cables), by NPCIL, NTPC, DMRC, BHEL (for their various units), by ISRO (cables for space applications), by steel plants, and EPCC contractors, etc.,. We are proud to say that we are working on zero tolerance levels for quality and goods dispatched from our works after strict inspection have never been rejected by customers for deficiency in any parameters.</p> <p> <span style="font-weight: bold;">How are you capitalising on 'Make in India'?</span><br /> All our products are manufactured at our two facilities in Faridabad and Baddi. We service all our client requirements, whether in India or on the global scenario, through these facilities. CMI manufactures different types of speciality cables for India and globally. Make in India has provided a huge impetus to the industry. With the focus on new manufacturing facilities in India, the wires and cables market will definitely witness growth. And with the focus shifting to manufacturing in India, the industry wins in another way: Sub-standard imports, that cause trouble and give a bad name to the industry, will possibly be replaced by more robust Indian counterparts.</p> <p> <span style="font-weight: bold;">How forward is the Indian market in R&amp;D and technology?</span><br /> The key triggers for CMI's business growth have been constant innovation and focus on R&amp;D. We have managed to stay ahead of the technology curve and this has been because of us pumping money into the R&amp;D and we have innovated new products, keeping in mind changing customer requirements. We have been also focused on quality and that is why we are the preferred supplier for most of the categories that we operate in. Indian companies in the industry will start focusing on R&amp;D, innovation and product quality, now that the he industry is gearing up to take the global challenge head-on and is creating awareness about the need for certifications and educating the influencers in the category.</p> <p> <span style="font-weight: bold;">What impact will GST having on the segment?</span><br /> In the B2B segment, the GST impact should be revenue neutral, since we will be able to offset the GST paid through input credits. GST applicable on wires &amp; cables at 28 per cent is enhancing our working capital requirement for the average receivables credit period. In the long run, GST is a very positive step for the organised sector.</p> <p> <span style="font-weight: bold;">What are the challenges that still need to be bridged?</span><br /> The challenges facing the segment are many: First is input costs, which can change majorly with the variation of cost of raw materials; second is the issue of certifications, which are not standard; and the third is the issue of quality and R&amp;D in the segment. Fluctuating price of raw materials (copper, etc.,) is a key concern area for the organised sector. It becomes an even bigger issue for players like us who are focused on the B2B segment and our bottom lines are impacted by any steep price rise in the raw materials. Global certifications and requirements are very different from that in India and it is therefore important that any Indian organisation that is looking at sales abroad keeps itself updated on the global requirements. Constant quality checks, R&amp;D, innovations, and certifications will be the way to excel in exports. Short turnaround times on customised requirements will also help the cable companies in the global arena. Lack of focus on R&amp;D is a challenge in any field of manufacturing activity. One has to keep abreast with any development in the industry in the country or abroad to compete with global standards and players. </p>
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