— K.S. Varma, Chairman & Managing Director,
Arrow Cables Ltd
Arrow Cables is a premier manufacturer of cables and
conductors in south India, with a very wide range of product
offerings.
K.S. Varma, in an exclusive interaction with
Venugopal Pillai, offers keen insights into the cable and
conductor industry, whilst sharing his vision and plans for
Arrow Cables. Varma makes very pertinent observations of
the procurement process of government power utilities, and
maintains that the government could do much to bring in
transparency and healthy competition.
To begin with, please tell us in brief about the various types of cables and conductors
produced by Arrow Cables.
Arrow Cables Ltd is one of the premier manufacturers of cables and conductors in Andhra
Pradesh and south India. We deal in various types of cables and conductors, such as:
PVC Cables: These are traditional cables used by industry and buildings. Poly Vinyl
Chloride (PVC) is the most accepted insulation in the industry. But very recently there is a
shift from these traditional PVC cables to much superior HDPE (High Density Polyethylene)
cables, FRLS (Fire Retardant Low Smoke) cables and XLPE (Cross linked Polyethylene)
cables. ACL manufactures all PVC LT cables up to 1.1kV, control cables and mining cables up
to 3.3kV
XLPE Cables: These cables are the most recent, equipped with XLPE (Cross Linked
Polyethylene) insulation. This insulation is considered much superior to the PVC cables
because it is more resistant to stress cracking and also fights ageing in hot air. ACL
manufactures all XLPE LT cables up to 1.1kV, and control cables.
AB Cables: Ariel Bunched Cables is a very novel concept for overhead power distribution,
when compared to the conventional bare conductor overhead distribution system. AB Cables
provide higher safety and reliability, lower power losses and ultimate system economy by
reducing installation, maintenance and operative cost. This system is ideal for rural
distribution and especially attractive for installation in difficult terrains such as hilly areas,
forest areas, coastal areas etc. ACL manufactures all AB Cables up to 4 cores and 95 sqmm
ACSR Conductors: Aluminium Conductor Steel Reinforced conductors are the most
successful and widely used for LT and HT transmission lines. These conductors have a steel
core inside surrounded by strands of aluminium outside. ACL manufactures ACSR
Conductors up to 61 strands for 1.1kV and for extra high voltage up to 400kV.
AAA Conductors: All Aluminium Alloy Conductor is made from aluminium-magnesiumsilicon
alloy of high electrical conductivity to give better mechanical properties after treatment. ACL manufactures AAA conductors up to 61 strands for
voltages up to 1.1kV.
Given that the Indian power transmission sector is witnessing
substantial investment in the coming years, how do you gauge the
future demand for aluminium conductors? Are you planning any
capacity expansion to meet the growing demand?
Power is one of the most necessitated commodity these days. We
cannot think of the world without power. Power production is a
challenge and supplying to the customer is double the
challenge. The pace at which the power generation
capacity is being added is a clear indication of
our growing economy. But the power
generated should be transported to the
customer through the transmission
lines which off-late are being called
as "power super highways." India is
way behind the developed nations
in the creation and operation of
these power super highways.
The proof to this lies in the
transmission and distribution
(T&D) losses that we are
surviving with. These losses
are anywhere between 5 per
cent to 30 per cent. Thus, there
is So more scope in creation of
power infrastructure ahead of
meeting the huge power
generation which is to come by.
Regarding our capacity
expansion, ACL has a plant located
strategically in the Hyderabad which is
near center of the country giving it a
tremendous scope to spread to any side of
the nation. It has the capacity to manufacture
various types of cables and conductors thus
processing around 3,470 tonnes per year. The plant has
always been operating at more than 80 per cent capacity. ACL is now
planning to hike the capacity for conductors and cables with plans to
set up units in a phased manner across the country to meet
requirements of various power utility and distribution companies
In the industrial sector, which segments do you regard as your major
business drivers?
Industries which are always power-starved are considered as
business drivers for power and subsequently percolating to the
requirements of cables and conductors. We regard the
major energy consuming industries as being steel,
chemicals, non-ferrous metals and building
materials.
Several Indian cable manufacturers are
seen to be moving into production of
EHV cables, mostly with multinational
collaboration. Do you have any longterm
plans to this effect?
Extra high voltage cables command
premium in the market, which
comes with lot of sophistication in
technology thus inducing tie ups
and joint ventures with
multinational giants. It is most
common, in any field, to always
aim for import substitution and
bring latest technology to benefit
this large population. We also want
to be a part of it provided we get a
right partner who will understand our
priorities and values.
Arrow Cables has been catering to
government-owned power utilities as well as
private electrical contractors. What basic
"culture difference" do you perceive whilst dealing
with these two forms of ownership? ACL initially only dealt with government owned private utility
companies where everything was procured and installed by them. The
private electrical contractors have entered into electrical transmission
installations, when the power distribution and transmission utilities
have announced a turnkey mechanism. Culturally, it is a class apart to
deal with power utilities and private electrical contractors. Dealing
with power utilities involve high bureaucracy but on the advantageous
side is a financially-secured play. But dealing with electrical
contractors is always with finance-related struggles, but is
administratively very fast and result-oriented.
ACL personally favors dealing with government-owned power utility
companies and never minds to pass on the last penny to deal with them.
However many others seek to have a premium dealing with private
contractors for the financial risk that they bear with them.
Government utilities, as we perceive, are bound by the L1 criterion in
their procurement routines. This sometimes leads to compromise on
quality. What is your view or experience?
For any policy made, there are two sides and "L1" is no exception. The
L1 criterion secures the utility company of financial competitiveness,
but on the flip side, "may" affect quality. I am emphasizing on "may"
because we cannot say for sure that all material supplied at L1 rate
shall be of poor quality.
In India this L1 is also not transparent. Not that we are backward in
e-procurement, but on the other terms and conditions, which are
placed as qualification. The utility companies place some conditions
such as past performance which does not encourage new players and
on the other side the utility company also struggles with old suppliers.
It is like wanting experience without giving a job. If such performance
and qualifications are reviewed, you can have both L1 benefits and
zero-compromise on quality.
What are the typical challenges faced by the cable and conductor
industry? What type of government support would you seek to
overcome at least some of them?
It has been often told in many industry forums that the life of a cable
and conductor company is like a sandwich. You have the suppliers on
one side as primary metal and insulation material manufacturers and
customers on other being power utility companies (directly or through
private electrical contractors). You cannot dictate terms to your
suppliers who are Nalco, Balco and Hindalco for aluminium, Hindustan
Copper and Vedanta for copper, and finally Reliance and IPCL for
polymer products. At the same time you have to be diplomatic with your
customers who are government utility companies and private electrical
contractors who again serve the utility companies, except for few who
serve the private companies, industries etc
Yes, there is a lot for the government to do in this regard. On the
suppliers' side, the government has to see that the products which are
primary raw material to many industries like metals, polymers in our
case should have sufficient independent competitors and auto policing
should be fixed in such a way that any deviation will be punished with
imports. At the same time the government utility companies have
become too huge a size of manageability. They can be streamlined with
proper reforms and introduction of public private partnerships in the
field of transmission and distribution of power.
Arrow Cables, as we perceive, has been a south India-centric company.
What are your plans of spreading your geographical footprint?
Yes, ACL has been a south-centric company till recently. We are now in a
stage of spreading the wings to other parts of the country. Our plans to
establish small units in different parts of the country only emphasize this.
Requirements of the power utility companies of various states are different
and meeting them all is a challenge, which we have to face shortly.
Arrow Cables has been in the cable/conductor supply business for 15
years now. Do you have any plans of entering the power T&D
contracting space?
We are in the supply of cable and conductors for many years now. We
realize the importance of the scope for improvement. We still have a
long way to go in the supply business before venturing into any
contracting. In the near short to medium term, we are willing to
concentrate on our core strengths of supply.
Please summarize your growth plans and your corporate vision for the
next (say) five years.
Our focus during these years of existence has been to supply quality
products to power utility companies and departments. Our existence in
the private projects has been very limited. We would like to fill the
vacuum and venture for supply to many private projects and
contractors, while maintaining the ethics of quality intact.
Apart from this, we want to meet requirements of the Railways in the
near short term. As a long term plan, we would like to provide specialty
cables and conductors meeting the ever increasing needs of a variety
of customers.