Pakistan Cables Limited
Pakistan Cables Limited (PCAL) was established in 1953 as a joint venture with BICC. Over the course of the past six decades, it has become the market leader as a premier cable manufacturer in Pakistan. Pakistan Cables is part of the Chinoy Group of Companies, which includes International Industries (IIL) and International Steels Limited (ISL)
In 2010, General Cable Corporation acquired a 24.6 percent stake through its subsidiary GK Technologies Inc., USA in PCAL. General Cable is a Fortune 500 company and is one of the largest cable companies in the world with annual revenues in 2014 of US$6.0 billion and 57 manufacturing units in 26 countries around the world.
The affiliation with General Cable provides PCAL with an upper hand over its competitors, including the ability to source almost any type of cable for customers, access to cutting edge technology, technical support and procurement advantages and export opportunities.
Its product portfolio includes cables and wires, copper rods, ALUMEX as well as PVC compound. The company has a state-of-the-art manufacturing facility dedicated to manufacturing wires for the automobile industry. It also manufactures telephone, intercom, coaxial and numerous types of special cables.
Pakistan Cables is ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certified company. The company also has its cables type tested by the world-renowned KEMA Laboratory in Netherlands.
Historical financial performance
PCAL’s product portfolio is used across a variety of sectors such as construction, maintenance, engineering, infrastructure, petrochemical fertilizer and textile. A particular challenge for the company is the competition with the massive influx of low-quality cables from China and other informal manufacturers during the past. The company operates in a sector that has a large grey market presence with almost half the share being unreported.
It continues to have a significant effect on house wiring and some low-voltage segments, which are being supplied by low tech informal backyard manufactures mainly using low-quality raw material or scrap in their production. PCAL is also sensitive to the fluctuations in the prices of metals, particularly of copper and aluminum, which has a great impact on the bottom line of the company.
The company witnessed an increase in the sales during FY14. It achieved a top line of Rs6.6 billion, which was 7 percent higher than compared to Rs6.2 billion of FY13. Pakistan Cable took advantage of the rising demand in the housing sector and commercial projects that attributed to low-interest rates, low inflation and growing demands for housing by the middle class in the country.
Thanks to decent growth in top line and reasonable increase in costs, the cable and wire giant increased its profit margins in FY14. With a significant 29 percent increase in its net profits, this reached to Rs222.3 million during FY14, compared to Rs172.9 million in FY13.
During FY15, the company managed to procure large orders from the projects segment as well as tenders from utility companies and significant export orders. The Alumex segment has showed a positive growth trajectory with new business being brought in from various project sectors. However, local as well as international competition has remained tough.
The company’s revenue showed mediocre growth while the bottom-line also presented a lacklustre picture. PCAL recorded 5 percent growth in revenue during the year, while gross profit for the year took a dip from 13.3 in FY14 to 12.5 percent in FY15. The lower gross profit was attributed to intense competition in the market, which has kept the margins under pressure.
PCAL’s top line dipped in FY16 with a drop of 2 percent in revenue as compared to the previous year. Falling international copper prices were primarily behind the fall. The increased competition from domestic as well as Chinese competitors also played a role in this revenue dip. However, during FY16 PCAL was able to boost its EPS to Rs9.29 from Rs6.65 in FY15 due to an improved sales mix, better margins and higher volumes.
FY17 was a good year for the company. PCAL recorded its highest ever revenue mark, while on a year-on-year basis the company registered an 18 percent increase in its top line. The growth came on account of the strong performance across its wire and cable product portfolio. Gross profitability margins showed negligible change as compared to FY16.
Stock performance
PCAL underperformed the benchmark KSE-100 in the past year by some margin. The script narrowed the gap from May-17 to Aug-17 after which it has continued to slide lower. However, the company posted a good FY17 result and fundamentals remain sound.
Future prospects
PCAL has the opportunity to take advantage of various up-gradation projects of electrical infrastructure by transmission companies and DISCOs. Furthermore, fast paced expansion in the cement and textile industries will allow the company to procure a large number of orders from these sectors.
However, increased competition from international players’ especially Chinese counterparts as well as domestic suppliers might put downward pressure on PCAL’s margins.
The company is fighting back with aggressive investment in improving its operational efficiency.
Capacity expansion has also been undertaken along with introduction and PCAL has also introduced new technology by an American company.
In an interview with BR Research last year, PCAL’s CEO disclosed that the technology can be used on current towers being light on weight and is able to cover very long distances such as river crossings and mountainous terrain.
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Pakistan Cables Limited: Pattern of shareholding Percentage
share held
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Directors, CEO & their spouse/minor children 41.09
Associated Companies and Related Parties 8.52
Banks, DFI's, NBFIs, insurance/takaful firms & Modarabas and pension funds 0.52
Mutual Funds 8.65
Shareholders having 5 percent or more voting rights 24.22
General public 15.75
Others 0.73
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Total 100
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Source: Company accounts
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Pakistan Cables Limited (PCAL)
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Rs (Mn) FY12 FY13 FY14 FY15 FY16 FY17
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Net Sales 5,345 6,165 6,600 6,957 6,850 8,084
Gross profit 688 703 877 869 1,083 1,268
PAT 140 173 222 189 264 479
EPS (Rs/share) 4.92 6.08 7.81 6.65 9.29 17
Gross margin % 12.9 11.4 13.3 12.5 15.8 15.7
Net margin % 2.6 2.8 3.4 2.7 3.8 5.9
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Source: Company Accounts
