— Richard Lee, CEO — Asia Pacific, Lapp Group & Acting MD, Lapp India Pvt Ltd

Lapp India is a wholly-owned subsidiary of the Germany-based Lapp Group and manufactures cables, connectors, cable glands, conduits and accessories. Lapp India began operations by setting up a manufacturing facility in Bangalore in 1996. In this interaction Richard Lee speaks to Electrical Monitor shortly after Lapp announced the completion of the first phase of its second manufacturing plant, at Bhopal, Madhya Pradesh. Expanding operations in India only reflects Lapp Group’s bullishness on the subcontinent, feels Richard Lee.

At the outset, please tell us about the newly-commissioned Bhopal manufacturing plant of Lapp India. What type of cables will be manufactured here?
Lapp India recently announced the completion of Phase 1 of its second manufacturing plant in India. A total of Rs.150 crore is being invested to set up this four-phased cable manufacturing plant in Pilukedi, Rajgrah District of Bhopal. The Bhopal plant is the second Lapp India facility in India after Bangalore and is spread over an area of 117,000 sqm. The Bhopal plant construction is expected to be completed over a period of five years and will become Lapp Group’s largest facility globally.

With an initial investment of Rs.50 crore, the first phase of the plant will produce 1,000 km of single core cables daily, catering mainly to the Building Cable Segment (BCS).

How do you see the Bhopal plant improving Lapp India’s penetration in the north Indian markets?
Expanding our operations in India has been a key focus for us at Lapp Group, mainly due to promising growth opportunities presented by the country. This year Lapp India’s growth has increased to 23 per cent compared to last year and the setting up of this new facility in Bhopal will help us cater efficiently to growing customer demands. The market size for single core wires (in the building segment) today stands at approximately Rs.6,000 crore which indicates a large market opportunity in this sector. With respect to Lapp range of products, the addressable cable market in India is currently being valued at Rs.1,000 crore. We, at Lapp, have identified this opportunity in India for single core cables and are strengthening our base accordingly.

In terms of the location of the plant, Bhopal provides a strategic geographic advantage. Being centrally located in the heart of India, the facility in Bhopal will be well-equipped to meet the logistical requirements of the northern and eastern parts of India and cater to increased demand across India.

Tell us more on the future phase-wise expansion plan at the Bhopal unit.
The construction of the entire factory in Bhopal has been divided into four phases with the currently operational Phase-1 focusing on production of single core cable. The latter phases will focus on producing multi-core cables, aluminium cables and HT/LT cables respectively.

As mentioned earlier, the four-phased plant construction is expected to be completed over a period of five years and will become Lapp Group’s largest facility globally.

Tell us about your leading brand Olflex. Who are the major consumers of Olflex in India? How do you customize Olflex to meet Indian requirements?
In the 1950s, the upswing in industrialization led to a huge demand for cables and conductors. Faced with this development, Oskar Lapp asked himself a simple question: "How can I optimize the current method — the time-consuming manual inserting of single cores and switching strands into the outer sheaths?" His answer: to invent the first industrially produced flexible, colour-coded signal cable — ÖLFLEX®.

ÖLFLEX derives its name from Öl – meaning Oil in German and Flex – for flex cable. So therefore, ÖLFLEX means an oil resistant flexible connecting and control cable. In 1959, ÖLFLEX® was the very first control cable to be designed with colour-coded wires and was at the same time the first branded cable in the world. Today, ÖLFLEX® connecting and control cables are some of the most widely used in the world, and for good reason!

ÖLFLEX® are the universal cables used in control application and besides being the first multi core cable to be manufactured in the world, these cables are suitable for 3 axis rotation applications and also for applications with very high linear bending stress. ÖLFLEX cables are the only choice when it comes to machine tool applications as these are oil and chemical resistant. Just to add on, this world-renowned cable celebrated 50 great years of success recently in the year 2010.

When Oskar Lapp, the founder of the company invented the first industrially produced connecting and control cable under the name of ÖLFLEX® 50 years ago, people were little aware of the unique success story that this cable brand would go on to write. Used globally, from the mountains of Himalayas to the deserts in Egypt, testify the quality, all-purpose utility and resistance of this cable.

ÖLFLEX is LAPP’s flagship brand. It is a brand with which Lapp is largely synonymous with worldwide. We are trying to do the same in India, where we have had significant presence for the past 12 years. Many of our customers know "control cables" as ÖLFLEX; our pursuit to make ÖLFLEX a synonym with control cables continues. Apart from making the conventional Olflex cables as made in Germany, we are also making ÖLFLEX cables suited for the Indian market. We have made variants to comply with Indian standards.

We understand that Lapp India had formed a Building Solutions Segment for providing wiring solutions to the building segment. How is this new line of business doing?
With growing awareness about safety and efficient use of energy in the building sector, the Building Connectivity Solutions division of the organization is expected to be the next growth booster for Lapp India. In the last one year, we at Lapp India, have made substantial inroads into the building segment especially in projects for SEZs, gated communities, etc.

The market size for single core wires in the building segment today stands at approximately Rs.6,000 crore indicating a large market opportunity in this sector. With respect to LAPP range of products, the addressable cable market in India is currently being valued at Rs.1,000 crore. We, at LAPP, have identified this opportunity in India in the building segment and are strengthening our base accordingly by focusing on the production of single core cables targeted to the building segment through the set-up of phase one of the Bhopal facility.

The electrical equipment industry has seen a downturn this year. What is your overall view and what is your take on prospects for the cables industry?
At Lapp India, we manufacture cables catering to all connectivity requirements for an expanse of verticals including wind, solar, automation, automobile, building connectivity, machine tool, process, solar, and even public sector. Therefore, for Lapp India, the opportunity to grow will continue to exist as there will always be a continuous demand for cables irrespective of market conditions.

An initiative that is helping us stay resilient through change is The Lapp Operating System (LOS), a global initiative of the Lapp Group. The LOS is an organizational concept to manufacture the best of products for our customers with complete involvement of all the employees by eliminating wastage; ensuring the highest quality and on-time delivery. As the result of this activity, we hope to reduce up to 30 per cent overall inventory, thereby reducing overall operating expenses.

Furthermore, we are increasing our focus on customers; in line with our guiding principles of being customer centric, we are focusing on our customers’ connectivity requirements to improve efficiency of operations. Additionally, we are looking towards a thrust in terms of sales and also increasing our order inflow, which will continue our growth.

Please summarize key future plans of Lapp India and discuss India’s role in Lapp’s global business portfolio.
Lapp cables have large popularity in the machine tool industry, automobile sectors and our flagship product ÖLFLEX® is popular across the industries. Further, we are increasing capacity to focus on verticals like renewable (solar and wind), Building Connectivity Solutions and instrumentation cables for process industries. Our customized cables have applications across every domain, this coupled with quality we predict significant growth in our business.

Cables are a key component of solar panels and modules, with huge government thrust and subsidies for solar energy, this sector has huge business potential for us. While the Government has given out licences for lot of megawatt of solar energy, only a fraction of that has been deployed. However, now with states such as Gujarat, Karnataka, Madhya Pradesh and Rajasthan moving forward to deploy solar power plants, there is lot of scope for Lapp India in the domestic market.

Also, the Building Connectivity Solutions division is currently a key focus for us at Lapp India, in view of the huge market opportunity identified in this segment. In line with this, Lapp India has recently inaugurated phase one of its second cable manufacturing facility in Bhopal, Madhya Pradesh which will produce 1,000 km of single core cables daily, catering mainly to the BSC segment. The Bhopal plant has been divided into four phases and will be completed over a period of five years, post which it will become Lapp Group’s largest facility globally. As a result of this, Lapp India, being the second largest segment within the Lapp family, is well poised to become the biggest player in the Lapp Group in a few years time.

Further, with the state-of-the art manufacturing facility in Jigani, Bangalore nearing its full capacity we plan to invest in expansion of the Bangalore plant. This will help us gear up to meet India’s growing domestic needs. Further the tier-II and III cities have been developing vigorously and we have been witnessing good demand from these regions. Hence we are focusing our efforts on exploring the market potential in these regions by educating buyers about the significance of quality products as opposed to the low-priced sub-standard products.