Finolex: Expanding the Gamut

“Over the past decade we have evolved from a jelly filled telephone cable company to the most diversified wire & cable company of India” said Mr. Deepak K Chhabria, MD, Finolex Cables Ltd during the interaction with Team WCI. Supplementing the above statement he gave us the elaborative view of how Finolex has evolved over the period of 6 decades and now being designated as Executive Chairman of Finolex, what are his plans to nurture it further.

Wire & Cable India: Walk us through the journey of about 6 decades of excellence of Finolex and brief about its diversified operations?

Deepak K Chhabria: Starting with a modest beginning way back in 1958, Finolex has steadily grown and transformed to post a Rs. 2,100 crore turnover in 2011-12. From modernizing plants with state of the art technology to offering innovative solutions to customers to our continual increasing reach. Over the six decades Finolex has imbibed growth through technology, network and people and has emerged as a very powerful brand. Today the name Finolex has become synonymous with quality and enjoys overwhelming confidence of the customers. While enhancing our capacities in electrical, data and telecommunication cables, the company has augmented its product portfolio by foraying into the manufacture of high voltage power cables, electrical switches & accessories and lighting products. The tremendous growth of IT and communications industry in India is a globally recognized fact. We have made rapid advancements in the field of technology and the need for specific and specialized fibre optics communication solutions in the emerging data communication sectors like telecommunications, IT/ITES, medical tourism etc is serviced with our high quality fibre optic and networking cables.

Today, our product basket includes, electrical wires, industrial cables, winding wires and 3 core flat cables for submersible pumps in the agriculture sector, auto cables for the automotive industry, communication cables like indoor telephone cables, jelly filled telephone cables, optic fibre cables and optic fibre, LAN cables for networking, low voltage, medium voltage and high voltage power cables for the power industry, coaxial cables for the DTH and entertainment industry, electrical switches and accessories, lighting products including compact fluorescent lamps, T5 tubes and fittings among others. The company has created a pan India strong and dependable distribution network of channel partners, dealers besides representatives appointed in the overseas market. Not only has the distribution network been built with an objective to serve the customer at his doorstep, the company undertakes a periodical review for the upgrade and expansion of the systems. The domestic distribution network is supported by branch offices and depots opened by the company at a number of locations across the country. Today we have over 2,500 channel partners and more than 20,000 dealers through whom we service our customers. We have evaluated and enabled an infrastructure to provide the best of facilities to our employees and customers. Our IT systems has been designed with the objective to provide enterprise wide SAP and zero defect on critical servers.

WCI: You are being designated as Executive Chairman of Finolex. What are your plans to nurture it further?

DKC: Over the past decade we have evolved from a jelly filled telephone cable company to the most diversified wire & cable company of India. We have also invested in products like switches & opened a separate lighting division mainly manufacturing CFL’s & T5 tube lights. Going forward, to be able to achieve higher growth we plan to get into more electrical products like MCB’s & ELCB’s next year. We would continue to introduce more such electrical products in the coming years & transform the company from a wires & cables company to an electrical products company. We also plan to expand the lighting division further by introducing LED Lamps & fittings in the near future.

WCI: Detail us about the manufacturing facilities, technical capabilities in terms of backward integration and product portfolio?

DKC: “Integration” is the key and makes us create each link in the supply chain. It helps us deliver end-to-end solutions even in a simple household scenario like a switch that power an electric lamp. Creating high quality switches which when switched on powers an electric circuit which again is of excellent conductivity because of the copper we use in the cable to finally illuminating the lamp, which in turn is both economically efficient and ecologically responsible. Integration is a principle that qualifies our manufacturing process across a very broad spectrum of our offerings. At our manufacturing units we integrate processes that ensure qualitative control over our products. Copper being a very important metal and volatile in terms of prices, is the most important element that decides the conductivity and performance of electrical wires. We do not take any chance and manufacture the copper at our plant in Goa that goes into our wires. Insulation is the other important aspect that determines flawless conduction in an electrical wire. We make our own insulation material through a process of converting PVC resin (which we source from our group company Finolex Industries Ltd) into insulation and jacketing compounds. We have stringent quality control processes, which ensure the purity of PVC compound and the sheath strength. With our own state of the art optical fibre manufacturing and FRP manufacturing facilities, we ensure quality and timely delivery of FinOptic products to our customers.

WCI: What would be the next level/future plan for Finolex in terms of expansion, distribution, improvisation, technological up-gradations etc?

DKC: We have undertaken a major expansion plan at our Roorkee plant & are in the process of doubling our capacity at this location. The 1st phase of the expansion should get complete in April 2013 & 2nd phase a year later. We have already just completed doubling of capacity at our Urse plant for medium voltage power cables using latest technology from Troester, Germany. This latest technology allows us to offer near zero discharge cable to our customers.

We have just recently announced a project to install a 5 MW solar power plant at our Urse facility. We intend to use this power completely in our facility. This will give us experience in the solar power business & allow us to pursue further larger opportunities in this space going forward.

WCI: Your views on wire and cable industry and what changes you are expecting in terms of demand, supply and growth factors in the next 5 years?

DKC: Although the light duty cable segment has shown reasonable growth of approx 12% over last year, wire and cable industry in general did not grow as was expected this year. Rather there has been an overall de-growth in the demand. The main concern of the industry is in the power cable segment, where the production capacity is more than demand as of now. The slackness in demand is attributable to the slowdown in economy and particularly the poor progress of power projects. Shortage of fuel has also added to the problem.

For India, to sustain a reasonable growth in economy, there is no option but to substantially add to our power generation capacity. Moreover, the limits of all major cities are expanding due to rapid urbanization. This will call for higher usage of underground cables. Many distribution utilities are now converting their overhead systems to underground to ensure reliability of power and most importantly to reduce T&D losses due to pilferage. These actions are bound to result into increased demand for power cables.

WCI: Opportunities and challenges are the vital part of the any industry. Kindly highlight some of those for wire & cable industry?

DKC: The competition has increased manifold in the last couple of decades increasing capacity much more than demand, thereby putting margins under pressure. Another factor, which is of concern for wires and cable industry, is the lack of quality consciousness among all stakeholders. “Price” has become the undisputed king while factors like ‘reliability’ and ‘quality’ has taken a back seat. We need to reverse this trend and must look into the lifetime cost of a cable.

Cash flow is another problem due to poor financial health of many government utilities. A debt restructuring may help the utilities in the short term but in the long term they will have to improve their operational performance to sustain growth. Therefore, on one hand utilities have to reduce their T&D losses drastically and on the other government has to stop giving subsidized power or at least reduce it considerably.

On the opportunities front, barring a few intermittent hiccups, there has always been good growth of demand for wires and cables. As an emerging economy, India will certainly have good GDP growth, which will translate into increased demand. We have also matured in terms of technology and manpower skill and therefore should look at the global market rather than depending only on domestic demand. The fact that many overseas companies are looking forward to India as a potential manufacturing destination proves that we are capable of making international quality cables at a much competitive price.

WCI: The JV with J-Power Systems Corp of Japan commenced manufacturing operations in September 2011. Brief us about how it was shaped up and the product being manufactured and further plans?

DKC: J-Power Systems Corporation (JPS) is a Japanese multinational formed as a 50:50 JV between Hitachi Cables Ltd and Sumitomo Electric Industries for manufacturing HV and EHV cables. Few years back when JPS was looking for a partner to manufacture high and extra high voltage cables in India they found Finolex to be most preferred choice because of the similarity in our quality culture. We formed the JV with JPS where all technical matters including design, manufacture, quality assurance, testing, installations and commissioning at site etc are covered within the responsibilities of JPS. And that was the beginning of our journey into high and extra high voltage cable segment. Thereafter, we have established a most modern cable manufacturing plant with vertical continuous vulcanization (VCV) process capable of manufacturing XLPE insulated cables from 60kV to 500kV grade.

This plant will cater to the demands of JPS’ customers worldwide except Japan. JPS has already started promoting this facility to potential customers abroad. We have started receiving orders from customers in India and abroad. Right now we are executing one order for a customer in Singapore and recently we have received orders worth Rs. 37 crores from MSETCL for 132kV cable system.

The company recently had conclave of J Power global managers from GCC countries and South East Asia including Hong Kong in Pune and there is high level of confidence reposed by the global mangers on the facilities and product being manufactured by the company to further push global footprints for the company. The facilities also have been inspected by a few leading Indian utilities and have been adjudged the best in the country and at par with any global players. We have been continuously absorbing technology by sending our key officials to J Power and visit of J Power teams to company facilities at Shirwal. The company has established product process parameters which has been long researched and developed by J Power and testing parameters which are much more stringent then the international standards thus ensuring product quality including surface finish, which would be the best in the country.

As a contribution to Indian cable industry, the company participated in various technical seminars organized by government and semi-government bodies for imparting and upgrading technical knowledge of the Indian cable industry, presenting technical papers by J Power and Finolex J Power team, which have been accredited and awarded best technical papers in various categories and seminars, even with cash prize.

WCI: Provide us a glimpse of the business approach/philosophy at Finolex?

DKC: At Finolex there is a constant thirst to innovate and produce for the better with progressive demand for excellence. We constantly try to excel in our endeavor of taking a step further in advancement and technology. We continue to come together in order to strike a balance and create products and services of excellence to meet the customer’s needs.