CMI Ltd Management Discussions.
We have consistently expanded our product are taking some of the biggest names in the industry head on. Over the years, CMI has worked with such prestigious organizationsas the Indian Railways, BHEL, IOC, BPCL, NTPC, ISRO, BSNL, EIL, Metro Railways, MTNL, oil refineries, Visakhapatnam Steel Plant and other psus. CMI has also collaborated with well known EPC contractors like Schneider Electric, GE, Siemens, L&T and many other reputed EPC Companies. Today, our client base has expanded to cover countries like Australia, Bhutan, Egypt, Kuwait, Mauritius, Nigeria, Oman, Singapore, Sri Lanka, United Kingdom and Zambia.
CMI has recorded a consistent upward growth in the last three years. The Company achieved a consolidated net turnover of Rs. 637.30 Crores in FY 2018-19. With relatively low overhead costs, the Companys performance on the EBIDTA level has been consistent Rs. 78.86 Crore in FY 2017-18 and Rs.87.01 Crores in FY 2018-19.
CMI is currently focusing on growing its footprints in the wire and cable market. Of late, there have been a few significant developments which have given the Company the added momentum to expand its business in various product segment such as :
EHV Cables, Signaling & Axle Counter Quad Cables for Indian Railways, Cables required for Refinery & Renewable energy, Control & Instrumentation Cables,telecom cables and Building wire.
In additionto the above, CMI is also considering the productionof specialized dedicated cables in various keep other sectors. At CMI, we continuously ourselves updated with the developments taking place in the industry in India and abroad that helps us stay ahead of the learning curve.
Key product Segments
The Company is one of the leading manufacturers of wires and cables, serving clients in India and abroad in various sectors, with all the latest certifications (ISO 9001, ISO 14001, OHSAS 45001). The broad segmentation of the products manufactured by the Company are as follows:
|Types of Cables||Application|
|Quad Cables||Specialized safety cables used by Railways for counting incoming & outgoing axles / coaches at any particular sectionto ensure no coach is left behind movement of trains.|
|Railway Signalling Cables transmitting signals to signal posts for smooth Usedfor|
|Fire Survival Cables||Used to maintain circuit integrity in case of fire for 3 hours up to 950o C, to ensure transmission of signals to safety equipment.|
|Fire Retardant Low Smoke Zero Halogen (LSZH) Cables||Ensures better visibility and low toxicity in case of fire.|
|Highly Flexible Multi-core Copper Used for gas insulated substations. Shielded Abrasion|
|Resistant Thermoplastic Polyurethanes (TPU) Sheathed|
|EHV/MV/HV/LV Power Cables||Used for supplying power.|
|LV Control Cables||Used for special purposes in various sectors.|
|Polythene Insulated Jelly Filled (PIJF) Telecom Cables||Used for last mile connectivity.|
|Fire Alarm & Communication Cables||Used for fire detection & alert equipment.|
|Ethylene Propylene Rubber (EPR)-Chloro-Sulfonated||Used at high temperature in mines, steel, ship building & wind energygenerationindustry.|
|Polyethylene (CSP)-Polychloroprene (PCP)-Silicon Cables|
|Flexible and Building Wires||Building Wire cables-for building wiring on wall surface in conduit.|
|Industrial wiring cables-for wiring of panel & other electrical equipments including UPS cabling.|
|Low voltage Cables and Instrumentation and Control cables||Used for power transmission, Single Transmission|
|Aerial Bunch Cables||Used for power transmission and distribution|
|High Voltage Cables||Used for power transmission|
|Extra High Voltage Cables||Used for power transmission|
|Overhead Conductors||Used for power transmission and distribution|
Global economy - Caution is the key
Rowth in the global economy is expected to remain Gsteady at around 3% in 2019 and 2020. According to the World Economic Situation and Prospects 2019, this steady pace of growth disguises an increase in downside risks that could potentially challenges in many parts of the world,
Today, the global economy faces a range of challenges, capable of disrupting economic activity significant damage to long-term growth expectations. These could well lead to tightening of global financial conditions, trade disputes between countries and increased climate related risks.
It may be pointed out here that the growth rates in many developed countries have reached close to their potential while the rates of unemployment have seen a downward spiral for some time now. In fact, it is mostly the South and East regions that are still enjoying a rather robust growth trajectory due to encouraging domestic demand environments.
But, the truth is that in spite of some strong global indicators, economic growth has by and large been extremely dull in large parts of the world. The last few years, especially 2018, saw a sharp decline in the per capita income of many large developing Countries.worsen development
Trends further suggest that even amongst economies that have recorded impressive per capita income growth, the economic activity large urban centres, making rural and other fringe areas and causing lag behind.
Many countries in the world resorted to economic populism which may be a good policy in the short term. We can safely say that the next 12 months might well determine if countries will give further impetus to economic populism or will they begin to pull out of these policies.
Emerging political climate in Europe and will also play a vital role in shaping the world economy in the coming years.
Indian economy - Roar of the tiger
India has emerged as the faste in the world and is expected to emerge as one of the st growing major economy top three economic powers of the world over the next 10-15 years.
Indias GDP has grown steadily in the last few years. While it increased by 7.20% in 2017-18, in 2018 the growth was 7%. Indias foreign exchange reserves stand at an impressive US$ 405.64 Billion by March, 2019, as per the data released by the RBI.
In fact, a lot of this current slowdown is being attributed to weak private investment because of over leveraged private companies. Consumption, which often keeps the engine of economy moving smoothly, had begun to show a downward trend.
The newly elected Government of India promises to overturn this slowdown. The first step has been taken in this regard with the appointment of key ministry portfolios.
With these changes, the changes on the ground are immediately visible. GST collection trillion mark for the third consecutive month. In fact, the target for GST collection has been further revised upwards. GDP for the fourth quarter came in at 5.80% and for the full year 2018-19 at 6.80%. Its a definite slowdown and would act as a strong reason for RBI to cut rates. Plans to augment our manufacturing sector are also afoot. The Government and the newly appointed
Finance Minister are doing their best to boost this manufacturing sector for the long run.
Looking back, in the last five years, the initiatives taken by the Govt. Encouraged many global giants to set up facilities in India. This not only created a in the country but also benefited the Indian consumer.
During 2018-19 (up to February 2019), merchandise exports from India increased by as much as 8.85% year-on-year to US$ 298.47 Billion, while services exports grew 8.54% year-on-year to US$ 185.51 Billion. Nikkei India Manufacturing Purchasing Managers Index (PMI) reached a 14-month high in February 2019 and stood at 54.30%.
Our Country is also focussed on various renewable sources to generate energy. It is expected to attain 40% of its energy requirements from non-fossil sources by 2030 and also increase its renewable energy capacity to 175 GW by 2022.
With the Government of India now focusing on increased participation from the private sector and inflow of private investment, the road ahead for the Indian economy looks extremely encouraging and positive.
Indias gdp - on the upward swing
Indias GDP is expected to grow at 7.30% in 2019 and 7.50% in 2020, supported by the continued recovery
Of investment and robust consumption. GDP in India is expected to be US$ 2,900.00 Billion by the end of this quarter, according to Trading Economics global macro models and analysts expectations. In the long term, the Indian GDP is projected to trend around US$ 3,420.00 Billion in 2020, according to our econometric models. This will ensure, India remains the fastest growing major economy of the world.
In 2018, Indias growth rate was 7.10%, as against Chinas 6.60%.
In fact, Indias GDP is expected to reach US$ 6 trillion by FY 2027 and achieve upper-middle income status on the back of digitisation, globalisation, favourable demographics, and reforms. GDP from manufacturing in India increased to Rs. 6,167.49 Billion in the first quarter of 2019 from Rs. 5638.04 Billion in the fourth quarter of 2018.
GDP from manufacturing in India averaged Rs. 4,562.15 Billion from 2011 until 2019, reaching an all time high of Rs. 6,167.49 Billion in the low of Rs. 3,331.04 Billion in the third quarter of 2011. The contribution of the manufacturing sector to Indias GDP is expected to be almost 25% by the year 2025.
Make in India - towards self reliance in manufacturing
Rime Minister Narendra Modis vision to turn India into a manufacturing hub for every nation is slowly but surely coming Pto fruition.Under this scheme, India witnessed its highest-ever FDI flow of US$ 60 Billion in 2016-17.
The government has identified 25 priority sectors that shall be promoted under the Make In India initiative. These are the sectors where likelihood of FDI (Foreign Direct Investment) is the highest and investment shall be promoted by the Government of India.
The Make in India initiative is also expected to enhance job creation, skill development and industrial infrastructure substantially.
Global Wire and Cable market - Growth is inevitable
The estimated at US$ 186.09 Billion in 2017global wires and cables market size was
Is estimated to witness a CAGR of 6.40% the forecast period. Increasing reserves in smart grid technology, growing renewable energy production, and initiatives for upgrading the transmission and distribution systems are expected to drive this market. Adoption smart grid technology has fulfilled the rising need grid interconnections, investments in new submarine and underground cables. In addition, the market growth is attributed to the growing offshore windfarms and high voltage direct current links.
Smart grids reduce the overall costs including operational and the cost incurred due to loss of power, thereby reducing energy prices and customer bills.
Increased energy demands in Asia Pacific, Middle East, and South America have resulted in heavy investments in smart grids in these regions. This will fuel the demand for low voltage cables. Growth in the power distributionsector and applications non-automotive Urbanizationand industrialization major factors responsible for market growth. Need for power grid interconnections in areas that are densely populated is creating a demand for submarine and underground cables.
Regions, such as North America and Europe, are adopting underground cables as they reduce space required and offer reliable transmission of electricity Environmental regulations regarding the safety of electrical installations have led to the development of various innovative products, such as halogen-free flame retardant compounds. Have These regulations also encouraged the implementation of new processes with efficient use of raw materials and low energy consumption.
Indian Wire and Cable market - the future is promising
Tcomprisesoday, the nearlyindian 40%Wires of the electrical industry and is growing at a CAGR of 15% due to unprecedented growth in the power and of infrastructure segments in the last few years. Other significantly resulting in increased factors responsible for this impressive growth are development of Smart Cities across the country under Smart
Cities Mission coupled with increasing number of electronic devices per household and development of manufacturing industries under the Make in India initiative. Moreover, growing demand for reliable, efficient energy and data communication from rural areas and tier II and tier III cities and towns would positively influence the countrys wire and cable market.
Indias growing road infrastructure and its ever expanding inautomotiveand industrieswillalsodrivetheirdemand. Urban infrastructure also contributes significantly to the growth of this sector. Are also among the
The segment has also been witnessing extraordinary growth because of the impetus provided by the recent policy and regulatoryinitiatives as well as Government schemes like Ujjwal Discom Assurance Yojana (UDAY), the Deendayal Upadhyay Gram Jyoti Yojana (DDUGJY), the Integrated Power Development Scheme (IPDS) and the Pradhan Mantri Sahaj Bijli Har Ghar Yojana Saubhagya. Further, Indian Railway Mission 41K has generated the potential for Indian wires and cables industry through electrification of 38,000 km route. Under government has envisaged the electrification villages.
The market is forecast to grow at a CAGR of 10.30% through 2023, predominantly on account of growing government investments towards infrastructure development projects. Today, there is a growing need for the development of quality electrical infrastructure in India. This augurs well for the development of wires and cables industry in India. Being one of the key segments of power sector, wires and cables sector is experiencing an escalating demand owing to the growth in power generation infrastructure.
The Transmission and Distribution sector continues to remain in focus, especially, with the outlay of Rs. 2.6 lakhs crore announced by the Government for the five-year period ending FY2022. There is also a sharper focus on high voltage transmission lines along with the Governments aims to provide 247 power, which is opening up opportunities in the sector. DISCOMS which have joined the UDAY scheme are expected to improve their T&D infrastructure through renewed investments. The governments target of generation of 100 GW of solar energy by 2022 and measures such as excise duty exemption for ferro-silicon magnesium used for manufacturing components for wind-operated electric power generators have augmented the demand for electrical wires and cables.
Cable manufacturers, both power and telecom, have been shoring up their capacities growth. In fact, global investors are also envisaging India as the potential market for high voltage (HV) and extra high voltage (EHV) cables.
In the near future, there appears to be no viable alternative for cables for bulk power transmission. But trends such as Smart Grids or Distributed Generation have the potential to change the demand for cables, although they are yet to be fully established in terms of long term commercial viability.