Aditya Birla Group's Latest Gamble: Can UltraTech Shake Up the Wires & Cables Market?
UltraTech Cement, a crown jewel of the Aditya Birla Group, is stepping into unfamiliar territory with a bold ?1,800 crore investment plan in India’s ?82,000 crore wires and cables industry. Following the disruptive success of Grasim Industries in the paints segment, many are left wondering—can UltraTech replicate this strategy in a highly fragmented and structurally different market?
This blog dives deep into the opportunities, challenges, and ripple effects of UltraTech’s foray, answering whether it can shake up the ecosystem or if existing players like Polycab, KEI Industries, and Havells remain immune to disruption.
Why Wires and Cables? UltraTech's Strategic Motivation
Aditya Birla Group has a track record of targeted diversification, and UltraTech’s entry into a non-cement business follows a similar blueprint. But why the wires and cables market?
The ?82,000 crore market shows consistent growth, supported by infrastructure projects, the electrification push, and real estate expansion across urban and rural contexts. Additionally, the organized sector commands 70% of the market, offering headroom for new players to expand.
UltraTech has its sights set on capitalizing on the increasing demand for wires (35% of market) and electrical cables in both B2C and B2B spaces, carving out a slice of this high-growth industry.
However, the real question is whether UltraTech, armed with ?1,800 crore, will shake up the market the same way Grasim Industries upset the dominance of industry giants like Asian Paints in the paints segment.
Can Grasim’s Playbook Be Repeated?
Grasim’s Disruption in the Paints Market
When Grasim's Birla Opus entered the paints sector, it stunned the market with aggressive pricing, offering products at 17% lower rates than competitors and providing extended credit terms to distributors. This forced industry leaders like Asian Paints and Berger to rethink their strategies.
The result? A rapid dent in the market that left competitors scrambling.
But can this playbook work in wires and cables? The short answer is—it’s complicated.
Structural Differences Between Paints and Wires & Cables
One key reason Grasim could disrupt the paints market was the high level of market concentration, with the top 6 players controlling 90% of the segment in FY24. Conversely, the wires and cables industry is far more fragmented, with the top 6 players holding just 51% of the market.
(Source: Nuvama Research)
UltraTech is entering a fragmented market where smaller unorganized players still account for 30% of the pie. This makes pricing wars less effective and market-share gains harder to achieve compared to paints.
Challenges Ahead for UltraTech
Though its entry has rattled investors—causing share prices of Polycab, KEI Industries, and Havells to drop by 6-21%—UltraTech faces several hurdles as it attempts to make its mark.
1. Lower Margins Compared to Paints
Unlike paints, which is a high-margin business, the wires and cables sector has thinner profit margins.
(Source: JM Financial)
The lower margin structure means UltraTech may lack the financial wiggle room to undercut competitors with steep discounts, as it did in paints.
2. Lack of Existing Distribution Network
Grasim leveraged Aditya Birla’s existing cement and putty channels to distribute its paints. UltraTech, however, does not have a comparable network for wires and cables. Building one from scratch will require significant time and resources, potentially delaying market-share growth.
3. Investor Concerns on Diversification
UltraTech’s ?1,800 crore investment represents just 10% of its annual capex. While this is a relatively small percentage, investors remain wary of the business pivot. Skeptics question whether the move diverts focus away from UltraTech’s core cement business, much like initial concerns about Grasim's foray into paints.
Winners, Losers, and Market Ripples
Incumbents Most at Risk
UltraTech’s entry is expected to primarily affect the organized sector, which controls 70% of the market. Within that, the housing wire and B2C segments—dominated by brands like Havells and Finolex—are likely to see the highest impact.
Estimated Market Share by Revenue (FY25)
Market Share %
Polycab
21%
KEI Industries
10%
Havells
8%
Finolex Cables
5%
Other Organized Players
26%
Unorganized Players
30%
(Source: Jefferies Estimates)
However, Polycab, which derives 65-70% of its revenue from B2B cables, may be less impacted, as UltraTech is likely to focus more aggressively on B2C housing wires in its initial phase.
Price Pressure on Margins
The wires and cables sector already operates at a razor-thin margin, and UltraTech’s entry could exacerbate this. JM Financial predicts heightened pricing pressure, which may lead to narrower margins across the board. However, ICICI Securities suggests that UltraTech could still capture 5% market share by FY30 with an aggressive pricing strategy.
Can UltraTech Cement Its Position in Wires and Cables?
While UltraTech’s name brings significant brand equity to the wires and cables space, its foray faces greater challenges than Grasim’s entry into paints.
Challenges such as fragmented competition, lower profit margins, and the lack of an existing distribution network could slow UltraTech’s momentum. However, the company’s association with Hindalco—a leading producer of aluminum and copper—could provide vital cost advantages in raw materials.
Ultimately, whether UltraTech can disrupt this market as it did with Grasim in paints remains an open-ended question. One thing is clear, though—India’s wires and cables market is set for an interesting shakeup as a new heavyweight enters the ring.
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Disclaimer
This article should not be interpreted as investment advice. For any investment decisions, consult a reputable financial advisor. The author and publisher are not responsible for any losses incurred by investors or traders based on the information provided.