Adani Group eyes $500-700 m cables & wires segment foray

The Adani group is planning to make an entry into the cables and wires (C&W) segment and scale up through acquisition in the range of $500-700 million and sources said that it is scouting for potential targets in the segment.

Late on Wednesday, group flagship Adani Enterprises said in an exchange filing that its wholly-owned subsidiary Kutch Copper has incorporated a joint venture (JV) company called Praneetha Ecocables that will be involved in manufacturing, marketing and selling metal, products, cables and wires.

The equal JV is with Praneetha Ventures Pvt Ltd, a Delhi-based entity involved in real estate activities.

According to sources, Adani’s foray into the C&W segment is part of its $1.2-billion copper smelter project coming up at Mundra. Production of cables, wires and copper tubes will be a downstream expansion in the project that will be used in industrial applications, retail and real estate sectors.

In order to jumpstart its foray and presence, the plan is to make an acquisition that will help it in scaling the segment faster. “We do not plan to build it from scratch. Inorganic acquisition is preferred for faster scaling,” said the sources.

Kutch Copper is expected to launch its operations in the next couple of months with an initial production of 1.1 lakh tonnes per month, scaling to 5 lakh tonnes by the end of 2025, and by 2027 reaching an annual capacity of one million tonnes (mt). The long-term goal is get to two mt production capacity.

Making a foray and scaling up through acquisitions is a strategy that the Adani group has been following in the cement sector, and it plans to follow a similar playbook here.

C&W segment

The Adani Group is the second big conglomerate to announce its entry into the C&W segment after cement major UltraTech Cement said in February it was investing an initial ₹1,800 crore to set up a manufacturing facility in Gujarat, that will start production by December 2026.

Now, as then, it had the effect of knocking down the stocks of existing, listed companies in the space.

The segment, dominated by organised players such as Polycab, KEI Industries, Finolex Cables and others, has been growing at 11 per cent annually in market size over the last five years, while the sales of the top six companies have been rising 15 per cent during the same period.

The supply has, however, been lagging demand, presenting opportunities for new entrants into the segment. Over the next two-three years, the existing players will be investing around ₹8,000-9,000 crore in expanding capacities to meet the demand.

M&A opportunities

Analysts said that the entry of the two big players will lead to consolidation in the segment and offer opportunities for mergers and acquisitions. Organised players have 70 per cent market share, with the top five players controlling 60 per cent of the organised market.

The demand in the segment is being driven by the power sector especially renewables, real estate and infrastructure.