INNOVATION & VALUE CREATION FOR GROWTH

BY Realty Plus

‘WE ARE ACTIVELY PURSUING A MULTI-PRONGED STRATEGY FOCUSED ON DISTRIBUTION EXPANSION, BRAND BUILDING, PRODUCT INNOVATION AND INFLUENCER MANAGEMENT TO EXPAND OUR FAST-MOVING ELECTRICAL GOODS (FMEG) BUSINESS ACROSS INDIA,’ SAYS INDER T. JAISINGHANI – CHAIRMAN AND MANAGING DIRECTOR, POLYCAB INDIA LTD IN CONVERSATION WITH REALTY+

What have been the highlight achievements under project - ‘Project LEAP’?

With our 5-year transformation project LEAP, we have moved on to a large-distributor model, where a large distributor, along with 8-10 sub-distributors, will cater to demand from a cluster of towns. This strategic shift has resulted in broader geographical availability of our products and increased reach to more retail outlets.

Under customer centricity, the merger of heavy-duty cable (HDC) and light-duty cable (LDC) verticals — undertaken during FY22 — enabled us to achieve highest ever volume growth in FY23, allowing us to post top-line growth. We also undertook mergers between the Fans vertical and the Lights vertical, as well as the Retail Wires vertical with the Switches and Switchgears verticals. Considering the significant overlap between our distributors and customers, these mergers are expected to be highly beneficial for both our customers and our revenue generation, while also proving to be cost-effective.

We have enhanced our understanding of our customers to provide better service, through the utilization of various tools and the appointment of dedicated key account managers. Furthermore, we have expanded our structured influencer management program to boost sales of our FMEG products.

Under our Go-To-Market (GTM) excellence initiative, we have concentrated our efforts on expanding our distribution reach in the B2C business while also increasing our presence in untapped areas for the B2B segment. We've introduced the Etira brand, specifically targeting Tier 3 to 5 towns across the country. We are also actively enhancing our presence across various channels, including e-commerce, modern trade stores, and canteen department stores. Furthermore, we are implementing geography-specific GTM strategies to tailor our approach to each region's unique needs and opportunities.

In terms of our new product strategy, we have largest R&D set-up in India for W&C, established partnerships with four international research houses to conduct research on polymers, strengthening our innovation capabilities and with the Silvan acquisition, our R&D efforts for the FMEG segment have improved, driving innovation and facilitating the development and launch of products across different price points to cater to diverse customer segments.

We set up our Digital vertical during the fiscal 2022-23 to transform the Company into a digital-first organization. The digital vertical is focused on complete digitalization of sales processes, improving customer experience, and utilizing data analytics to gain a better understanding of customer demand. To ensure the necessary expertise and leadership, we have recruited nearly 25 senior leaders over the past fiscal year, while also working on cultivating future leaders from within our organization.

What are the latest products introduced in the retail segment?

Notably, our fan portfolio has been revamped with the introduction of around 80 new SKUs since January 2023, covering designer, tech, green and celebration series, addressing a wide spectrum of customer preferences. In addition, introduced the 6kA MCBs (Miniature Circuit Breaker), enhancing our product lineup to provide better electrical safety solutions. To maintain competitiveness, we've also adjusted prices for the 10kA portfolio in this category. The 'Etira 4-In-1 Switch' under our low-cost 'Etira' brand, designed specifically for price-conscious customers is a unique and versatile product that offers value and demonstrates our dedication to catering to various customer needs. Looking ahead, we have an exciting pipeline of new product launches in various stages of development, including the imminent introduction of a fresh range of switches and the addition of new SKUs in the lighting category in the coming months.

What has been the Polycab geographical expansion strategy in India and globally?

We've transitioned from being primarily an institutional player to a distributor-led one, and now more than 94% of our domestic business is channeled through dealers and distributors. Thus, we have created one of the largest distribution networks in electrical space, encompassing over 4,300 dealers and distributors, along with 205,000-plus retail outlets spread across India. Looking ahead, we will expand our distribution network further,

targeting both 'whitespace' areas and 'under-indexed' geographies, where we have yet to establish a strong presence. This will enhance our market penetration, ensuring that Polycab products are easily accessible to customers across India.

Internationally, over the years, we have invested significant efforts and resources in building robust capabilities for business expansion. We have relevant certifications in place from a large number of geographies and have successfully expanded our global presence to 72 countries, with repeat orders pouring in from major customers worldwide. In fiscal year 2023, our international business witnessed an impressive 50% year-over-year increase, contributing ~10% of the Company’s top-line, driven by robust demand from key markets like the USA, Europe, and Asia.

Our strategic approach in the international arena revolves around positioning ourselves as the preferred provider of cable and wiring solutions by delivering superior products, offering exceptional service and establishing a robust distribution network. With substantial global investments in sectors such as Renewables, Oil & Gas, and Infrastructure, we are confident in our ability to further expand our international business and solidify our presence in various international markets. Going ahead, we plan to replicate our distribution-led model in international business as well. 

How do you foresee the market in the next few years?

Over the past 5 years, the government has more than doubled its capex support in Central Budgets, increasing infrastructure capex as a percentage of GDP, from ~1.4% in FY18 to ~3.3% in FY23.

Key sectors like railways, roadways, highways, defense, and housing, are expected to be the primary drivers of growth for the W&C industry. Government initiatives such as the National Infrastructure Pipeline (NIP), Jawaharlal Nehru National Urban Renewal Mission (JNNURM), and Pradhan Mantri Awas Yojana (PMAY) will further stimulate demand for W&C products.

Additionally, the robust growth of the manufacturing industry, driven by capacity utilization, the PLI scheme, and 'Make in India' initiatives, will create additional business opportunities for W&C players.

The ongoing upcycle in the Indian residential real estate market, supported by favorable policies and changing consumer preferences due to the Work-From- Home culture, along with long-term demand drivers like urbanization and affordability, will continue to boost demand for W&C industry. With a real-estate cycle generally being 6-8 years long, and a newly built residential unit implying not only increased demand for W&C but an installed base for replacement demand, the uptick in the residential real estate sector is set to be a long-term consistent growth driver for the W&C industry.

Looking ahead, what is your outlook and vision for the company?

We have developed strategic plans to tap into the potential offered by multiple sectors, including defense, railways, the electric vehicle industry, data centers, and telecommunications domains, among others. Looking ahead, our key growth catalysts include growth in the B2C business, sustained demand in the B2B segment, and expanding the international business. Under the FMEG category, our vision is to establish ourselves as a top-three player across all product categories. Our entry into the EHV segment also promises long-term potential. We are in the process of recalibrating Project LEAP targets as we believe we can achieve the Rs 200 billion target ahead of projected timeline.

Tags : INNOVATION VALUE CREATION GROWTH Project LEAP National Infrastructure Pipeline (NIP) Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Pradhan Mantri Awas Yojana (PMAY) heavy-duty cable