Mr. Gajanan Nalge, Senior Executive VP-Sales & Marketing, Cable Corporation of India. Prior to joining CCI, Mr. Nalge was Vice President, Marketing, EHV Cables at US multinational General Cables. He began his career with Siemens AG where he joined after completing his Bachelors in Electric Engineering from VJTI in Mumbai in 1984. During his tenure with Siemens AG, Mr. Nalge also took a six-month Credential Program for Business Manager.
Cable Corporation of India Ltd., a BSE listed company was promoted in 1957 by Siemens AG, Felten & Guileaume AG, Khataus and Thackerseys. The Company is an industry leader in power and control cables in India. Apart from domestic markets, the Company has also exported its quality products to South Africa, Sri Lanka, Bangladesh, Mauritius, Kuwait, Singapore and other countries. CCI was the only company in Asia to have the technical collaboration with Mitsubishi Cable Industries of Japan for the MDCV process, for the manufacture of EHV XLPE cables.
Speaking with Hemant P. Maradia of IIFL, Mr. Gajanan Nalge says: “In FY13, we see the situation improving. Already there are signs of some revival in demand.”
Tell us about the new order from Power Grid Corporation? What is the scope of work for you? What is the timeline?
The Company has bagged a cable supply order for a 110 kV EHV cable turnkey project from Power Grid Corporation of India Ltd. valued at Rs 290mn.
It is a complete turnkey contract for design, engineering, supply, installation and commissioning of the 110 kV EHV underground power cable & fibre optic cable package to the existing Marappalam substation in Puducherry.
The electricity from the Marappalam substation will then be supplied to the Vengatta Nagar substation in Puducherry.
CCI will be providing the single core 630 sq mm XLPE copper cable with lead sheath and HDPE outer sheath and underground fibre optics cable (24 fibres).
The cables will be complete with all associated materials for the three-phase, single circuit transmission link with a total route length of ~7 km.
CCI has been supplying cables of up to 220 kV.
The power cable link will transfer power at 110 kV through single circuit in trefoil formation with 1Cx630 sq mm size copper conductor in each phase.
The duration of this contract is 18 months. We have to supply the equipment in 9 months while the installation is to be done in another 9 months.
This is a prestigious order for us as it has been bagged against stiff domestic competition.
Could you throw some light on factors that led you to win this order?
The main factor was that CCI has been in the EHV power cable business for a long time. We first supplied 220 kV EHV power cable way back in 1994. It is still in operation today. CCI is well known for its quality.
Quality benchmark and competitiveness in price bids were the two key factors that helped us win this important order.
They also looked at the past projects that we have completed. About 5-6 years back we did a similar project for Power Grid. The new projects that we have completed in the past few years also helped us in winning this bid.
Among the other bidders were Universal Cable and KEC.
Basically, Power Grid is known for quality. Its requirements are very high when compared to other state utilities. On the other hand, if you have supplied cables to Power Grid other utilities may readily accept your products. And, since we had completed a project for Power Grid earlier it gave us an edge over the other bidders in this project.
Could you delve on the latest trends in the cable industry?
As far as the EHV cable segment is concerned, the requirements are going up because substations have increased in the past five years. More and more cities have got developed; real estate prices have gone up. You can’t transmit power through overhead cables in cities.
So, the trend is to lay the cables under ground in the cities. EHC cables are preferred as they save space and easily transfer the power under ground.
In addition, the manufacturers of GIS substations have also come to India. These substations help to connect cables easily. Earlier, we used to have open air switch yards. That is how the demand has increased for EHC cables.
Demand for power is also rising rapidly in India in step with the GDP growth. This in turn leads to the requirement for power cables. This is the current trend; many companies have started making the EHV cables in India.
We have the experience of 20 years and we are the pioneers in the EHV cable space. We are also the market leader in India for EHC cables. We continue to maintain our market share in the EHC cable space. We expect a good future for our company in line with the growth of the industry. The Power Grid order would certainly add to our reputation.
What is the break up between private sector and public sector?
EHC cables carry lots of power. That is why they are used in industries with heavy power requirements. The ratio of state-run power utilities to private power companies is in favour of the former. It is somewhere around 85-90% for state power utilities. The balance is accounted for by the private utilities.
Have you experienced any slowdown or slackness in new orders?
The amount of tenders from utilities has reduced from last year because of various issues plaguing the power sector in the country. The Government has announced certain measures aimed at supporting the Power sector. At some point in time the power utilities will have to increase tariffs and the Government will have to support them so that they do not make more losses. If power tariffs are not hiked and subsidies go up, the discoms will incur further losses. It is a politically sensitive decision but one that cannot be postponed for long. The power utilities have not increased electricity rates for several years.
The Government is also likely to support the power utilities and discoms because the economy cannot grow without a healthy power sector.
How do you see the way forward for CCI? What is the outlook for FY13 and beyond?
In FY13, we see the situation improving. Already there are signs of some revival in demand. We expect good volumes.
MACTCL will come out with ~Rs 6bn of EHV cable tender in six months; TNEB will also announce its Rs 1.5bn tender; Rajasthan will also come out with its own tender.
We expect demand to increase due to growing urbanization. All the cities in the country are growing and therefore require huge amount of new power capacity. So, EHV cable demand will rise in sync with the market trend.
The proportion of EHV cable in total volumes is very high. It is our main product. We have put up one more line for EHV. The line has also got commissioned.
Are you witnessing any pressure on margins?
Majority of raw material is imported and the cost hinges on dollar. That effect is transferred to the customers. So, there should not be any margin pressure.
Do Siemens and F&G still own any shares in the company?
No, they don’t hold any stake in the company. The Indian promoters hold the majority stake in the company.
How much of your topline comes from exports?
Exports are very little right now. But we plan to be aggressive, particularly to the South African market. We also supply our products to Bangladesh.