• The performance of your Company marked a notable improvement during the year under review. This sets an upswing trend on your Company’s year-on-year performance. Overall, the improved performance can be attributed to the strategic initiatives taken by the Company, interalia, for meeting and anticipating customer needs timely, improving operational efficiencies with the end-goals of delivering products of highest quality at competitive costs, achieving manufacturing excellence through gradual upgradation of plant and equipment with consequential capacity augmentation and aligning the same with the long term objectives. Your Company has been consistently striking a balance on the operating risks and the strategic business efforts. Your Company has been upgrading its manufacturing infrastructure in a phased manner with the twin objectives of augmenting the capacity and cost reduction which has also paid off in terms of increased production, better process capabilities, improved quality, energy conservation and lower manufacturing cost.
  • With the underlying objectives to create business value, growth and market reach, your Company seized the opportunity to cater to the turnkey business model for Extra High Voltage (EHV) underground transmission system and has emerged to be the leading player in this specialized market segment, especially, having the facility for manufacturing EHV cables, the highest cost element of such turnkey projects. With the demand in this segment growing steadily and which is expected to continue to meet the infrastructural needs in the country, your Company is in a position to take advantage of the captivating challenges playing-out. In changeable circumstances, where there is an asymmetrical demand pattern, your Company is equipped to change gears in line with the demand scenario having a flexible manufacturing facility which can switch between EHV & HV, the major product groups. Your Company is also in the process of augmenting its HV manufacturing capacity by way of installing a new generation CCV line dedicated to the manufacturing of HV & MV cables. This new infrastructure is being added to cater to the foreseeable demand as an outcome of the large infrastructural investment and the stimulus for inclusive growth under the Government’s manifesto for “Make-in-India”.
  • In the annals of technological excellence in the manufacture of power cables and capacitors, the Company retains its prominent position. Over the years, the Company with its wide array of products has accomplished a powerful brand “UNISTAR” which embraces the Company’s core values of innovation, quality and safety.
  • The threat of imposition of protectionist curbs on trade by USA on imports from China could wreck the balance of trade and as a fall-out, Chinese goods may find India as one of its dumping grounds where already China commands approximately 35% share of the imported electrical goods in India. The Industry also has concerns on imports at dumping prices but is largely hamstrung due to insufficient data-base on anti-dumping trade and developments.
  • Metals prices, both ferrous and non-ferrous, are fraught with uncertainty. The fluctuations in these prices are highly sensitive as the cost in the manufacturing chain is mainly driven by the raw materials cost. The international commodity prices of the non-ferrous metals i.e., copper and aluminium are passing through a phase of extreme volatility which is a pressing concern to the cable industry. After a long spell of calm, copper prices swung back with vengeance and continues to remain bullish. According to forecast, this price trend for copper is likely to remain elevated during 2018, much of which would depend on the consistent demand from China, the second largest consumer of this “red metal”.
  • The Extra High Voltage (EHV) Power Cable demand had registered a significant growth over the previous fiscal. The production level of the Company has been growing over the past five years at a CAGR of 40%. The Company having installed two VCV lines has the maximum installed capacity in the country and is geared to increase its production volume for this market segment. The Company is also continuously expanding its construction team with skilled manpower and associated infrastructure. The Company is progressing in full swing to commercialize 400kV class cables which is the future demand segment in the Extra High Voltage category.
  • As a consequence to the country’s economic growth and the demographic change with the increasing size of the middle class society and its income level inducing a transformation in the life style, the per capita consumption of power in the urban and sub-urban sector has significantly increased. To meet this insatiable demand of power by the urban and sub-urban consumers, the sub-transmission network is undergoing a rapid augmentation to facilitate in bringing power to the load centres. In all the states of the country, the sub-transmission power transmission network is inevitably being constructed, due to right-of-way constraints, ecological, environmental, safety and aesthetics issues, using underground extra high voltage power cable system. In addition, the rising cost of real estate is economically favouring underground power transmission as opposed to overhead power transmission lines which occupies expensive corridor of land. This demand for EHV power cables is still in the early growth phase and there is no doubt that the demand would increase more sharply in the years ahead.
  • The Company has an impressive product portfolio for the specialty cables and is catering to the original equipment manufacturers (OEMs) and the infrastructural segment such as the railways, steel plants, petro-chemicals plants, cement plants, onshore and offshore oil ring manufacturers, ship building, heavy engineering and mining industries. The renewable energy still constitutes the major volume of business where the company has a leading market share. Since the major OEMs are dependent on the demand from the infrastructural segment, the growth has considerably tapered down as a consequence of the slow pace in the infrastructural development. The Company caters to a niche market segment which is gaining rapid acceptance in various applications including the world wide trends on environmental safety, low toxic emissions in fire conditions and capability to operate directly under fire and firefighting situations for a considerable period.
  • The Company had not expanded its manufacturing capacity in LV cables segment in view of the low margins prevailing in the market, despite being the largest market segment in power cables. This segment being proliferated with low quality products manufactured by the informal sector. However, there is a reversal in trend by the customers who are shifting to quality manufacturers in the formal sector recognizing the cost of ownership. This trend is expected to continue, therefore, the Company considers it an opportune moment to expand its manufacturing capacity in this large market segment where economies of scale and low cost production is the name of the game. The development of the smart cities would further catalyze the growth in demand. The Company having a strong brand equity would find least resistance in expanding its market share. The Company is maintaining its dealer network in various parts of the country. The Company also focuses on the genre of cables which involves special features on fire safety and environmental issues.
  • The Company has been focusing its attention to export business. By directly participating in the international bids to the overseas customers, the business volume has significantly increased by 90% over the previous year led by strong growth in export of optical fibre cables. The Company expects growth in its overseas business considering the opportunities which remains untapped. In addition to the overall business growth contributed from export business, the Company is also able to de-risk itself from exchange rate fluctuations as the major raw-material prices are inextricably linked with the FOREX. The Company has been accorded the status of “Star Export House” by DGFT.
  • In the power cable segment, the overseas competition is mainly in EHV. These overseas players which are mainly from South Korea, Thailand, Turkey, China and sporadically from Europe are routing their products through local EPC contractors. The Company has been competing with the EPC contractors backed by the overseas players and has been successful in winning contracts, however, the intensity of competition may increase especially from Chinese manufacturers in view of the geopolitical issues which are likely to inflict injury to the international trade. Over and above, the unfolding Middle East crisis resulting to rapid market shrinkage is likely to cause the cable manufacturers to focus on the growing Indian market. To accelerate the growth, the Government would largely depend on funding from International Agencies e.g., Asian Development Bank (ADB), International Monetary Fund (IMF), Japan International Cooperation Agency (JICA) & World Bank which would involve International Competitive Bidding (ICB) and therefore, as an outcome, competition from foreign bidders would be more pronounced. The Company with its technology and infrastructure is at par with the best-of-class global players and is geared to compete with the foreign players.
  • Historically, the demand of power cables has been cyclical in pattern. Your Company is dependent on the infrastructural sector, industries and original equipment manufacturers. The Government policies have a direct bearing on the demand from the various market segments. Your Company has a broad base clientele, wide product range and flexible manufacturing set-up, therefore, it can somewhat off-set the cyclical or depressed demand of affected segment with the other segments. From time-to-time, the Company makes changes in its product- mix to suit the order and demand pattern.
  • The market value of quoted investments has increased to Rs. 40778.19 lakhs from Rs. 26393.78 lakhs in the previous year.

 

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