Introduction
Aditya Birla Group is once again in the news, this time for its entry into the wires & cables sector through UltraTech Cement with an investment of ₹8,000 crore. This move follows their foray into the paint industry last year, where they aimed to disrupt the sector. The wires & cables market has seen rapid growth, and UltraTech Cement plans to capture this expanding opportunity by investing ₹1,800 crore over the next two years.
However, this announcement has caused significant fluctuations in the stock prices of existing players, with cable company stocks dropping 8-20% in just two trading sessions. But Aditya Birla Group is not alone in its aggressive investment strategy—other major companies like Polycab, KEI Industries, and RR Kabel are also planning large-scale expansions.
Why Is the Wires & Cables Industry So Lucrative?
The wires & cables sector has been growing at a CAGR of 13% from 2019 to 2025, and experts expect this growth to continue at 1.5x to 2x the real GDP rate. The rising demand is driven by:
- Urbanization and infrastructure growth
- Expansion of renewable energy projects
- Increasing electrification in rural areas
- Rising safety and quality standards in electrical products
The market is currently fragmented, with only a few organized players dominating the industry. This presents a great opportunity for big brands like Aditya Birla Group to enter and capture market share.
Market Structure & Key Players
Wires and cables are broadly classified into five segments:
- Housing Wires (33% of market share) – Used in residential buildings
- Power Cables (25% market share) – Demand increasing with renewable energy projects
- Control & Instrumentation Cables – Used in factory equipment
- Communication Cables – Used in telecom and broadband networks
- Flexible & Specialty Cables – Used in specific industrial applications
The housing wire segment is the largest, but the power cable market is seeing the most significant growth due to the increasing use of underground power transmission systems. Companies like Finolex Cables, KEI Industries, and Universal Cables dominate the high-voltage power cable market.
Key Cost Factors: Copper & Aluminum
One of the biggest challenges in the wires & cables industry is the volatility of raw material prices, which account for 75-80% of total costs.
- Copper (55-60% of raw material cost) – Prices fluctuate due to high demand and limited domestic production. India imports most of its refined copper, primarily from Japan. However, Adani’s new copper smelter in Mundra is expected to stabilize prices.
- Aluminum (15-20% of raw material cost) – India is the world’s second-largest producer and third-largest consumer of aluminum. However, fluctuations in global aluminum prices also impact the industry.
Competitive Strategies: Branding & Distribution
Unlike cement, where a few distributors handle sales, the wires & cables sector is highly B2B-driven, requiring strong relationships with electricians, retailers, and dealers. Polycab and KEI Industries have built extensive networks:
- 2 lakh+ electricians
- 2.2 lakh+ retail outlets
- 6,000+ dealers
Electricians play a crucial role in purchase decisions, which is why companies offer loyalty programs and cash incentives to influence them. For example, Polycab has a dedicated “Experts App” where electricians can redeem loyalty points for direct bank transfers.
Why Is Aditya Birla Entering This Market?
There are three major reasons behind Aditya Birla Group’s entry into the wires & cables industry:
- High Market Growth – India’s private capital expenditure is expected to rise from 14% to 20% of GDP by 2030. The real estate sector alone is projected to become a $1.5 trillion industry by 2034. With strong global demand, Indian exports in this sector are also increasing.
- Shift from Unorganized to Organized Players – In 2014, 40% of the market was unorganized; today, it’s down to 30%, and by 2027, it is expected to shrink further. Increasing safety regulations and compliance requirements are pushing this shift.
- High Return on Investment (ROI) – Most leading wires & cables companies have ROIs above 18%, making it a lucrative industry compared to UltraTech Cement’s ROI of 14-15%.
Will Aditya Birla Disrupt the Market?
Unlike their paint sector entry, where they explicitly mentioned their goal to become a market leader, Aditya Birla Group’s announcement for wires & cables was more cautious. Their official statement mentioned an investment to “extend its footprint in the construction value chain,” rather than disrupting the industry.
This suggests that, at least for now, Aditya Birla Group is focusing on strategic expansion rather than aggressive market disruption. However, given their history, it would not be surprising if they scale up operations and compete with existing market leaders in the future.
Conclusion
The wires & cables industry is at a critical growth stage, attracting major investments from existing players and new entrants like Aditya Birla Group. With increasing urbanization, infrastructure expansion, and shifting consumer preferences, this sector is poised for long-term growth.
However, strong brand presence, a vast distribution network, and control over raw material costs will determine the winners in this space. It remains to be seen whether Aditya Birla Group can carve out a significant market share or if the existing leaders will continue to dominate.