Plaza Wires Limited
Company
| Website 🔗 |  |
| Business Activity | Manufacture |
| Division | Electrical |
| Sub-class | Wires & Cables |
| Location | Baddi, Himachal Pradesh |
| Establishment Year | 2006 |
Management
| Managing Director | Mr. Sanjay Gupta |
| Educational Qualifications | Bachelor of Commerce from the University of Delhi |
| Experience | Approximately 26 years in the electrical industry |
| Annual Salary | ₹ 45 Lakhs |
| Total Number of Employees | 192 |
About
Plaza Wires Limited is an ISO-certified company involved in the manufacturing and sale of wires, and the sale and marketing of LT aluminium cables and fast-moving electrical goods (FMEG).
The company operates under its flagship brand, “PLAZA CABLES,” and also has home brands like “Action Wires” and “PCG.”
Products:
Wires and Cables: The company offers a wide range of wires and cables, including building wires, power cables, communication cables, flexible single/multi-core cables, and other specialized cables like submersible and solar cables.
FMEG Products: This category includes electric fans, water heaters, switches, switchgears, PVC insulated electrical tapes, and PVC conduit pipes & accessories.
Clients:
Plaza Wires caters to a diverse clientele across various sectors. The primary customer segments include:
Retail customers: Reached through a vast distribution network of dealers and distributors across India.
Government: The company secures government tenders for the supply of its products to government projects.
Infrastructure projects: Plaza Wires also directly supplies its products to various infrastructure projects.
Raw Materials and Suppliers:
The primary raw materials used in the manufacturing process are:
Copper rods
Insulation materials such as PVC compounds
The company procures its raw materials from local suppliers. It does not have any long-term agreements with suppliers and purchases are made on a spot order basis.
Manufacturing Process:
The company’s primary work involves manufacturing wires and cables up to 1.1 KV grade. The process includes:
Wire Drawing: Reducing the diameter of copper wire to its final size.
Annealing: Softening the hardened wires through heating and cooling.
Stranding/Bunching: Combining copper wires to form conductors.
Insulation: Applying an insulating cover to prevent current leakage.
Online Spark Testing: Checking for insulation defects during extrusion.
Laying Up: Grouping cores together to form a circular cable.
Outer Sheathing: Adding a protective PVC layer.
Cable Rewinding/Coiling: Winding the finished cable onto drums.
Testing: Conducting routine and acceptance tests to ensure quality.
Other Key Aspects
Manufacturing: The company manufactures wires and cables in-house and outsources the production of other products to third-party manufacturers.
Manufacturing Units: The company has an existing manufacturing unit in Baddi, Himachal Pradesh, and is setting up a new unit in the same region.
Distribution Network: The company has a strong distribution network comprising over 1249 authorized dealers and distributors across India.
Manufacturing Flowchart
Revenue – Category
Revenue – Region
Audit and Legal
Related Party Transactions:
The percentage of related party transactions relative to total revenues for the fiscal year ending March 31, 2024, is 5.5%
Non-Compliances and Other Issues:
Instances of non-compliance with regulatory filings: The company acknowledges certain procedural lapses in the past, such as delays or non-filing of forms related to corporate actions.
A high attrition rate of key managerial personnel and senior managerial personnel.
Auditor’s Remarks:
Qualification:
The qualification indicates that the managerial remuneration for the financial year 2022-23 exceeded the limit set under Section 197 of the Companies Act, 2013 by ₹21.2 Lakhs. However, the company has since obtained shareholder approval for this excess remuneration and is filing the necessary documents with the Registrar of Companies.
Contingent Liabilities:
Guarantees (excluding financial guarantees): ₹26.7 Lakhs. The company’s customers have availed channel financing facility from Adani Capital, and the company has provided guarantees for these facilities.
Other Contingent Liabilities: ₹1.96 Crores.
Legal Cases:
Criminal Complaints filed by the Company
The company has filed several criminal complaints (26 cases) under Sections 138 and 142 of the Negotiable Instruments Act, 1881, primarily related to dishonoured cheques. The cases involve various individuals and proprietorships who failed to make payments for goods purchased from the company with an aggregate amount of 1.3 Crore.
SWOT Analysis
Strengths
| Strong Distribution Network: The company’s extensive network of over 1249 authorized dealers and distributors, coupled with branch offices and warehouses across India, |
| Focus on Quality and Certifications: The company’s emphasis on quality is evident in its ISO 9001:2015 and 14001:2015 certifications, as well as its compliance with BIS and other quality standards. |
| Strong Financial Performance: The company has demonstrated consistent growth in revenue in recent years. |
Weaknesses
| Smaller Scale of Operations: Compared to some of its listed peers, the company operates on a smaller scale, which could limit its ability to achieve economies of scale and compete on price with larger players. The company may also face challenges in securing large-scale projects or contracts due to its relatively smaller size. |
| Dependence on Third-Party Manufacturers: The company outsources the production of certain products, which could lead to potential quality control issues and supply chain disruptions. |
| Reliance on Short-Term Borrowings: The company’s debt structure is heavily skewed towards short-term borrowings, primarily to finance working capital needs. This reliance on short-term debt could expose the company to refinancing risks and interest rate fluctuations. |
Opportunities
| Expansion into New Markets: The company’s plans to expand its dealer network and enter new geographical markets, particularly in southern and eastern India, can open up new avenues for growth and revenue generation. |
| Product Diversification: The company’s focus on developing and launching new products, such as fire-resistant wires, aluminum cables, and solar cables, can enable it to cater to a wider range of customer needs and tap into emerging market trends. |
| Product Diversification: The company’s focus on developing and launching new products, such as fire-resistant wires, aluminium cables, and solar cables, can enable it to cater to a wider range of customer needs and tap into emerging market trends. |
Threats
| Intense Competition: The wires and cables industry in India is highly competitive, with the presence of both large established players and smaller regional competitors. The company faces pricing pressures and needs to continuously innovate and differentiate its products to maintain its market position. |
| Raw Material Price Volatility: The prices of key raw materials like copper and PVC are subject to significant fluctuations in the global market. This volatility can impact the company’s production costs and profitability, especially in the absence of long-term supply contracts. |
Porter’s Five Forces1
| Threat of New Entrants | HIGH |
| Low barriers to entry, making the threat of new entrants high. |
| Bargaining Power of Suppliers | MODERATE – HIGH |
| The company’s reliance on copper and PVC, which are subject to price volatility and potential supply disruptions. The absence of long-term contracts with suppliers further strengthens them. |
| Bargaining Power of Buyers | MODERATE |
| While the company sells through a vast distribution network, it also deals with government tenders and direct sales to infrastructure projects, which could exert moderate bargaining power due to their potential for bulk orders and price negotiations. |
| Threat of Substitute Products or Services | LOW |
| There are very few replacements for copper and aluminium cables due to their conductivity and cost effectiveness. |
| Rivalry Among Existing Competitors | HIGH |
| The industry is highly competitive, with a mix of large players and smaller regional competitors, leading to high rivalry. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers can be observed in the following table, which presents the Key Performance Indicators (KPIs) for Plaza Wires Limited and its selected peer group for the fiscal year ending March 31, 2024
It can be observed from the below table that Plaza Wires Limited is faring poorly in comparison to its peers in terms of Operating Profit Margin (OPM), RoE, and RoCE.
| Accounting Ratio/Metrics | Plaza Wires Limited | Cords Cable Industries Ltd | Ultracab (India) Ltd | V-Marc India Limited | Dynamic Cables Limited | Paramount Communications Limited |
| Revenue (₹ in Crores) | 199.00 | 665.00 | 152.00 | 560.00 | 795.00 | 1,181.00 |
| Operating Profit Margin (%) | 4.5 | 6.28 | 9.73 | 11.8 | 9.89 | 8.4 |
| Return on Equity (ROE) (%) | 4.26 | 6.08 | 17.3 | 28.8 | 19.3 | 19.4 |
| Return on Capital Employed (ROCE) (%) | 7.54 | 15.4 | 15.9 | 28.9 | 24.1 | 15.3 |
| Debt/Equity Ratio | 0.35 | 0.5 | 1.38 | 1.32 | 0.56 | 0.17 |
Green Box
IPO Funds:
Funding Capital Expenditure for the New Manufacturing Unit:
The company aims to raise a significant portion of the funds (₹24.4 Crores) to finance the capital expenditure required for setting up a new manufacturing unit with an installed capacity of 837,000 coils per annum.
The company’s existing manufacturing unit has an installed capacity of 1,200,000 coils per annum.
This new facility will enable the company to expand its product portfolio by manufacturing fire-resistant wires & cables, aluminium cables, and solar cables, in addition to increasing its capacity for existing products.
Growth in the Housing Sector: The government’s “Housing for All” initiative, coupled with increasing urbanization and rising income levels, is driving the residential construction market. This surge in construction activity will directly translate into higher demand for cables and wires, particularly in the building wires segment.
Technology Adoption: The company’s adoption of technology, such as the mobile application for electricians and retailers, can improve operational efficiency, customer engagement, and sales growth.
Industry Outlook:
The Indian wires and cables market is projected to grow at a compound annual growth rate (CAGR) of approximately 14.50% in value terms between Fiscal 2021 and Fiscal 2026. This substantial growth is attributed to a combination of government initiatives, favourable demographics, and increasing demand across multiple sectors.
Expansion into New Geographical Markets: The company’s strategic focus on expanding its dealer network and entering new markets, particularly in southern and eastern India, can significantly broaden its customer base and contribute to revenue growth, leading to value appreciation.
Established Distribution Network: The company’s extensive distribution network, comprising over 1249 authorized dealers and distributors across India, provides a strong platform for reaching a wider market and ensuring product availability.
Amber Box
Quality and R&D:
Plaza Wires Limited has a dedicated Quality and R&D team, although it’s relatively small with only 8 employees as of March 31, 2023.
The company’s focus on research and development is evident in its track record of launching new products and brands.
2021: The company further expanded its product portfolio with miniature circuit breakers (MCBs) and distribution boards, along with launching the “Action Wires” brand for economical house wires.
2017: The company launched 3D Wires with enhanced features.
2018: The company ventured into the FMEG segment, marketing ceiling fans, ventilation fans, and other types of fans.
Debt:
The company’s Debt-to-Equity Ratio, as of March 31, 2024, is 0.35.
Red Box
Dependence on Third-Party Manufacturers: The company outsources the production of certain products, including FMEG products and some wires and cables, to third-party manufacturers. This reliance on external parties could lead to quality control issues, supply chain disruptions, and potential damage to the company’s reputation if the third-party manufacturers fail to meet the required standards.
Smaller Scale of Operations: Compared to its listed peers, Plaza Wires Limited has a considerably smaller scale of operations. This could limit the company’s ability to achieve economies of scale and compete effectively with larger players in terms of pricing and market reach.
Underperforming among Peers:
While the industry is growing at a healthy rate and its peers are taking advantage of it and improving revenue growth, OPM, ROE and ROCE, the company is lagging in performance.
Poor Relations with Buyers and Dealers:
The company has filed a large number of cases against multiple buyers and dealers for non-payment and dishonoured cheques on trade receivables indicating poor relations.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
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