Comprehensive SWOT Analysis of Polycab India – India’s Leading Manufacturer Of Cables & Wires

Quick Stats on Polycab India

Founder	Girdhari T. Jaisinghani
Year Founded	1964
Origin	Mumbai, India
No. of Employees	175,000+
Company Type	Public
Market Cap	Rs 39,107.78 Crore (2022)
Annual Revenue	Rs 3.37T Crore (2021)
Net Income/ Profit	Rs 314.51 Crore (2021)

 

Products by Polycab India

They manufacture and sell a diverse range of wires and cables and their key products in the wires and cables segment are:

• Control and power cables
• Instrumentation cables
• Building wires and green wires
• Welding cables

Competitors of Polycab India

The world is a competitive place so even Polycab India has its competitors as follows:

• KEI industries
• Sterlite Techno
• Finolex cables
• Precision wires
• Universal cable

Now that we know everything we need to know about Polycab India, let’s start with the SWOT analysis of Polycab India.

SWOT Analysis Of Polycab India

SWOT analysis is like a formula for identifying Strengths, Weaknesses, Opportunities, and Threats (SWOT) that a market possesses for a company. The main objective of this analysis is to help us, as investors and the company, to make business decisions wisely.

By using this method, we analyze where the company is falling short, where it is excelling, and what needs to be worked upon.

To better understand the SWOT analysis of Polycab India, refer to the infographic below:

 

So let us first start by looking at the strengths of Polycab India from the SWOT analysis of Polycab India

Strengths of Polycab India

The strengths of a firm can be positive qualities that help the company to maintain goodwill in the market or give it a competitive advantage. Mentioned below are some of Polycab India’s strengths:

• Robust Distribution Network: The company has 4100 dealers and distributors, who in turn sell products to more than 1,65,000 retail outlets. For perspective, note that KEI Industries has only 1600 dealers and Finolex and Orient Electric have 3500+ dealers, their retail outlets reach is less than 1,00,000.
• Backward Integration: Polycab India Limited has built manufacturing capacities for all the key raw materials such as copper rods, aluminium rods, various grades of PVC, rubber, GI wire and strip, and XLPE compounds.
• Financial Strength: The company’s W&C segment’s sales have grown at an average of 9 percent over the last five years, while the FMEG segment’s sales have grown at an average of 44 percent over the same period.
• Strong Growth in Revenues & Margins: Polycab India has been growing revenues by a comfortable 14 percent on average every year. The company’s net profit has been growing at a stellar 50 percent rate on average every year.
• High & Increasing Return Ratios: Polycab has been consistently increasing its ROCE or return on capital employed. Ideally, a company is considered to be doing very well if its ROCE is greater than the cost of capital. Its ROE or returns on equity has also been rising for five years.  This is especially positive given that it does not come on the back of high debt.
• Legacy in its Sector: For over 4 decades, Polycab India has been the largest manufacturer of cables & wires in the world. Also, it is the fastest-growing company in the Indian Cables sector. These achievements are one of the biggest strengths of Polycab India.
• Strong Base in Engineering: Since it has a strong base in engineering, it is stable in the market and industrial relationships. It is the largest manufacturer of cables & wires and works on a wide range of consumer electrical products like Fans, Switches, Switchgear, LED lights and Luminaries, Solar Inverters and Pumps

Weaknesses of Polycab India

Weaknesses are negative aspects and attributes which have little control over. These are the areas where the business needs to improve to remain competitive.

• Exposure to Intense Competition: The wires and electrical cables industry is highly fragmented with a large number of unorganized players constraining the pricing power of organized players. Apart from the unorganized sector, PIL faces competition from organized players such as Havells India Ltd, Finolex Cables Ltd and KEI Industries Ltd.
• Switchgear Segment: Although Polycab India’s lights, switchgear, and fans are preferred by household contractors, still Polycab India has a weak place in the overall industrial switchgear segment or we can say on a global scale.
• Operational Complexity: With an increasing audience, the group is providing a large number of consumer goods as much as they can. While making adjustments, a small change can make an unexpected impact on operational complexity. Providing a variety of products is causing operational complexity for the group. 
• The Processing Chain is Quite Long: Having a huge customer following delays the process of ongoing functions like maintaining a large scale of client records & keeping them up to date every time takes time and while doing all the work simultaneously it delays the ongoing processes. 
• Susceptibility to Economic Downturns: PIL is susceptible to the economic environment in India. Growth in these industries is linked to the economic environment, and any economic slowdown could lead to moderation in demand.
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Opportunities for Polycab India

Opportunities refer to convenient external factors that could grant the organisation a competitive advantage. Some of the opportunities for Polycab India are listed below:

• Initiatives by the Government: Government initiatives in power and infrastructure to remain major contributors to growth in future. Polycab India is also working closely with major power utilities, oil and gas, IT parks, metro rail, infrastructure, metal and non-metal, cement and EPC companies that operate in India and abroad. It includes institutional clients such as L&T Construction and government clients such as Konkan Railway Corporation Ltd.
• Advantage of Being Leading: Polycab is India’s leading brand in terms of electronic equipment and this can be taken as an advantage by Polycab to extend its acquisition of other companies such as recently Polycab acquired Silvan Innovation Labs.
• Construction Sector: construction sector activity is led by investment in the infrastructure segment to boost growth in the cables and wires industry.
• Accelerated Technological Innovations & Advances: Rapid technical advancements are increasing industry productivity, allowing suppliers to provide a wider range of products and services. This may enable Polycab India to expand its product portfolio dramatically.
• Upcoming Projects: Tamil Nadu FibreNet Corp signs an agreement with Polycab for BharatNet project implementation at ₹509 crores. This big project will generate huge revenues for the company.

Threats to Polycab India

These are the factors that have the potential to harm an organization. Threats are uncontrollable external factors that might overcome or damage the strength and opportunities.

• High Competition: Polycab India’s stable profitability has increased many competitors in the industry over the last two years which has put downward pressure on not only profitability but also on overall sales, so this is one of the biggest threats for Polycab India. 
• Competitors Advance Technologies: New technologies developed by competitors or market disruptors could be a serious threat to the industry in the medium to long term future. This is because due to the new technologies developed by the competitors they would be able to do more production, and because of more production, they would be able to supply more as per the demand. New technologies also help in reducing the cost of production.
• The Pressure on Environment Bodies: The company’s heavy manufacturing of electronic equipment at its 23 manufacturing plants led to increasing pressure from environmental activists and several lawsuits against Polycab India for exploiting the environment.  
• Local Distributors & Contractors: Distributors and contractors taking contracts for fitting electronic components in Indian households are using local or duplicate electronic components to save higher margins and to increase their profit. This has been a huge threat to Polycab India because local manufacturers and distributors are capturing the market at a faster pace by providing higher margins to such contractors. 
• Huge Dependence on Indian Market: Polycab India is hugely dependent on the economic movements of the Indian market because the business seeks maximum profit from India and a sudden uneven economic condition can lead to Polycab India seeing some bad days.

This ends our elaborative SWOT analysis of Havells India. Let us conclude our learning below.