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Corporate Report

Published on: May 1, 2022, 7:34 p.m.
RR Kabel builds traction
  • RR Kabel is aiming for revenue of Rs10,000 crore in the next 2-3 years

By Arbind Gupta. Assistant Editor, Business India

Private equity firm TPG Capital-backed homegrown wires and cables manufacturer, RR Kabel Ltd is betting big on the fast-growing domestic electrical goods sector. The Rs4,300-crore, Mumbai-headquartered company, a flagship entity of the Rs9,000-crore, diversified RR Global Group (formerly the Ram Ratna Group), has created an extraordinary track record for itself, growing at a CAGR of over 30 per cent in the last over two decades of its existence. 

In fact, the last few years have been quite a transformative period for the company as it has aggressively tried to ramp up its portfolio of offerings by also diversifying into fast moving electrical goods such as lighting equipment, fans, switches, water heater, irons and air coolers. Global PE player, TPG picked up 21 per cent in RR Kabel in September 2018 for Rs630 crore. 

The company, promoted by the Kabra family which also has a listed business, the Rs1,500-crore Ram Ratna Wires Ltd (brand: RR Shramik; the second largest manufacturer of super enamelled copper winding wire in the country), is looking to create a global brand in RR Kabel. Set up in 1999, with five manufacturing facilities, including Waghodia near Vadodara; Silvassa and Roorkee, Uttarakhand, the company exports almost 20 per cent of its portfolio and has a presence in over 80 countries. 

Currently, it is the fourth largest player in the R50,000 crore domestic wires & cables space where it manufactures a wide range of premium wires and cables for various residential, commercial, industrial and infrastructure purposes. RR Kabel is also increasing its presence in value-added wires & cables, manufacturing low smoke, zero halogen wires, fire survival wires & cables and others. While house wires contribute over 70 per cent to its revenue, the company is also ramping up its cable portfolio; it entered LT cable manufacturing in 2010 and then also started HT cable manufacturing in 2020.

“While building up our portfolio, our primary objective has always been to create best quality products using the latest advances in wire design and engineering. Today, we offer a wide range of premium wires and cables for various residential, commercial, industrial and infrastructure purposes. We started our journey with a vision to provide quality products to our customers with safety being a key aspect for us. Going ahead, we will continue with a similar vision and look to expand our share in a market which is also evolving in favour of quality and safer products,” says Shreegopal Kabra, 63, managing director, RR Kabel Ltd and Group president, RR Global. 

RR Kabel is an ISO 9001, ISO 14001 and ISO 45001 certified company, offering more than 100 varied ranges of wires and cables. Known for its high-quality standards and innovation, the company’s products are globally certified to BASEC for the UK, UL for the US, CSA (Canada), VDE (Germany) and TÜVRheinland for Germany. The products are also compliant with REACH (Registration Evaluation Authorisation of Chemical Substances) and RoHS (Restriction of Hazardous Substances). In fact, it is the only company in India, which is REACH-compliant. The company has a NABL-approved laboratory.

While RR Kabel has ramped up its manufacturing capacities by investing over Rs200 crore in the last three-four years, it recently acquired Luminous Power’s home electricals business from French major Schneider Electric. Luminous’s home electrical business has a portfolio of fans and lighting. The deal will help the company ramp up its consumer electrical business inorganically and also enter the premium segment of the business, something which was a missing link for the company so far. Luminous’s home electrical business has a portfolio of premium designer fans and lighting, while RR Kabel manufactures basic fans and lighting products. 

  • Kabra:  embarking on an exciting journey

    Kabra: embarking on an exciting journey

Under this category, Luminous recently introduced its series of energy-efficient star-rated premium designer fans in India. As part of the deal, RR Kabel will also have the right to use the Luminous brand for four years for the existing product lines of fans and lighting under a brand licensing agreement.

In 2013, Schneider acquired 74 per cent stake of Luminous Power and later in 2017, it acquired the balance 26 per cent. The Luminous divestment from Schneider comes more than 1.5 years after it had bought out the electrical and automation business of Larsen & Toubro for Rs14,000 crore.

With this deal, RR Kabel will now have access to the Rs300-crore revenue lighting and fan business of Luminous, taking its total home electrical business to around Rs700 crore. The company will also acquire Luminous’s fan-manufacturing facility in Himachal Pradesh (which has the capacity to make two lakh fans a month), R&D centre and sales infrastructure related to the home electrical business.

Before the Luminous deal, the company, in 2020, just before Covid, acquired a commercial LED lighting brand, Arraystorm, from Kores India. The brand has a manufacturing facility in Bengaluru. 

RR Kabel currently has its own facility at Roorkee in Uttarakhand for fans and lighting (fan capacity:1.25 lakhs per month), while it has recently set up a new facility for switches in Gujarat at an investment of around Rs50 crore. With all this, the company, also planning an IPO some time at the end of 2023, is looking to expand its home electrical goods business to around Rs2,000 crore in the next five-six years, while backed by other organic efforts in the wire & cables business.

It is aiming to take its total revenue to around Rs10,000 crore in the next two-three years from around Rs4,300 crore in FY22. It also plans to set up a new wire facility in Silvassa for a total outlay of around Rs100 crore. 

Inorganic growth

“We are on an exciting journey of expanding a value-added consumer-centric business, which outpaced the industry growth in FY22 by over 3x. Looking forward, the Luminous home electricals business will be a strong addition to our new chapter of growth, by leveraging its valued capabilities, including R&D strength, a state-of-the-art manufacturing facility, admired product portfolio and most importantly, a dedicated and highly capable team and channel partner network. This acquisition is an important milestone in our ambition of creating one of the leading national portfolios in the home electricals category over the next five-six years,” says Vivek Abrol, CEO, Consumer (FMEG) Business, RR Kabel.

“We are delighted to welcome the Luminous home electricals team and associates into the RR Global family and embark on a new journey together. Leveraging each other’s strengths, we are confident the collaboration will help expand our services and create greater value for all of our customers. At RR Kabel, we have always upheld the highest quality and safety standards for our customers, and Schneider’s faith in transferring their home electricals business to us stands as a testament to that. As a major player and innovation leader in the wire and cable industry, we believe the acquisition will further our leading position in India’s fast-growing home electrical industry,” states Kabra whose father Rameshwarlal Kabra (awarded the Padma Shri in 2018 by the President of India, Ram Nath Kovind, for his work in rural and tribal societies), the founder of the RR Global group, started the family business way back in 1963 in Indore, setting up a small retail shop for copper winding wire. 

  • The company is expanding its portfolio in a big way

In fact, his grandfather, Jagannath Kabra, had a textile trading business in Bangladesh. However, during Partition, the Marwari family shifted to Nepal. In 1963, his father, Rameshwarlal, separated from his father’s business and decided to come to India. The family shifted to Mumbai from Indore and put up a winding wire wholesale business in Mumbai’s famous Lohar Chawl area in 1966. Their first manufacturing foray happened in 1968 when they set up a small facility for making Double Cotton Cover (DCC) for copper winding wire in the Wadala area of Mumbai. 

This was followed by an aluminium winding wire making facility in Mumbai’s Bhandup area in 1969 and thereafter a copper winding wire facility in Vadodara in 1975 under the banner Shramik Winding Wire Pvt Ltd. This was followed by the country’s first dust-free winding wire facility at Waghodia near Vadodara (where RR Kabel currently has its wires and cables facility) in 1989. Meanwhile, the Kabra family also got into exports of textile and leather chemicals (Ram Ratna International) in 1991 and the business turned out to be a money spinner. 

Having made money from their exports business, in 1994 they set up a new winding wire facility in Silvassa under a new company, Ram Ratna Wires Ltd, which also got listed the same year and is currently the second largest super enamelled winding wire player in the country. In 1999, the family got into the wires and cables business, setting up a facility in Silvassa under the aegis of Ram Ratna Agroplast Ltd, which was later (in 2001) renamed RR Kabel Ltd. 

In 2010, the company set up another wire and cables facility in Waghodia. Thereafter, in the last few years, the company has ramped up its manufacturing capability in a big way. Apart from these two facilities for wires and cables, it also has a fans and lighting facility in Roorkee, Uttarakhand, which it brought under its fold by merging one of its group companies, Ram Ratna Electricals Ltd, in 2018. It has also brought another fans and lighting facility in Himachal Pradesh under its belt following the recent Luminous deal. It also has a commercial LED lighting unit in Bengaluru, which is the result of the Arraystorm deal. 

“We as a company have always believed in trusting our abilities which has also transpired into our brand ethos of quality, innovation and transparency. As a young man, I always had the dream of representing the brand and the company and my country on the global map which only became possible through RR Global. I always believe that a brand with a strong purpose is an ambitious brand and have always been a go-getter; every event brings an opportunity with it. Starting with a small trading company and now being one of the leading brands in the electrical sector, our journey has been full of memorable experiences and learnings.  My mantra is to always aim for the moon and if you miss it, you may hit a star,” says Rameshwarlal Kabra, 89, founder chairman, RR Global, who, though not involved in the business for some time now, has always been a guiding force for the family. 

Trustworthy brand

“Our brand, RR Kabel, was established with the aim of providing safety to everyone. Till today, it is our brand purpose to make safety a mandate whenever we talk about wires and cables. To be a successful and trustworthy brand, we should always focus on the bigger picture and yet be flexible in our approach. I always believe in investing in ideas that create sustainable business models. Our aim is to establish RR Kabel as the most trusted brand globally. For the same, we take special efforts to invest a lot in proper training and development, research and innovation and also in promoting talent. If innovation and quality is weaved in a key fabric in the DNA of the product, it becomes a global brand,” says Kabra whose two elder brothers, Tribhuvan Kabra and Mahendra Kabra, are also involved in the family business as chairman (RR Global) and joint managing director (RR Global), respectively.

  • The company, also planning an IPO some time at the end of 2023, is looking to expand its home electrical goods business to around Rs2,000 crore in the next five-six years, while backed by other organic efforts in the wire & cables business

While the company ramps up its portfolio, it is also strengthening its presence in the market where it competes with players like Polycab, Havells, KEI, Finolex Cables and others in the Rs50,000-crore wires and cables market which has been growing at 9-12 per cent per annum. In the fast-moving electrical goods space (domestic market size: Rs30,000 crore; growing at around 10 per cent) where it currently has a very small presence (though looking to increase its share in a big way going ahead), it is faced with a large number of national and regional brands ranging from Bajaj Electricals to Philips, and many more.

In fact, some of its wire and cable peers are now also present in this segment in a big way. RR Kabel is also looking to increase its presence in the cable business, in which, against the market mix of 60:40 in favour of cable, it has a 70 per cent portfolio in wires. However, it is increasing its exposure to cable. The company serves the market through 1,500-odd dealers and 30,000 retailers across the country; north and western regions are its stronghold. 

“RR Kabel has done quite well in the last few years, particularly since Akshay Kumar has come on board as its brand ambassador. Visibility has gone up significantly. Over the last few years, the company has also ramped up its portfolio in a big way. Most importantly, the company has shown a great deal of zeal and flexibility to adapt to market needs,” says Aditya Agarwal of Sun Shine Distributors, Jaipur which has been RR Kabel’s distributor for the last 10 years now.

With all these developments in place, RR Kabel is all set to strengthen its presence in the wires & cables space. In a strategic move, the company is now also aggressively diversifying into the fast-moving home electrical goods market, which will make its overall portfolio quite attractive and help build a strong brand in a market which is expanding.

The promoters have shown their ability and boast of a proven track record by having already set up a large business in electrical winding wire. They also have other successful businesses within the group and have shown excellent entrepreneurship skill over the years. Though RR Kabel is a relatively new business for the group, it is shaping up quite nicely. PE major TPG’s decision to pick up 21 per cent aptly validates their efforts and accomplishments.

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