Sirra Cable PLC annual report 2012/2013 said this financial year challenges from many fronts, like A depreciating currency, inflationary pressure, liquid financial markets and rising interest rates combined to exert pressure on margins and served to dampen the results.
Country Economy
A slowed Economy (6.4% in 2012)
Construction sector's share in overall GDP rose significantly from 7.1% (2011) to 8.1% in (2012)
The construction sector emerged as the key driver in industry sector growth that underpinned economic growth during the year.
Fuelled by large-scale infrastructure development projects such as power, road, port and airport development projects and, to a lesser extent, by hotel and housing development projects, the subsector recorded its highest growth rate in a decade, expanding by 21.6% during 2012 compared to 14.2% a year ago.
Financial Performance
Major Challenges faces
* The reduction in consumer purchasing power led to deferment of house construction and private sector construction activities, our key market segments
* Tariff hikes and the weaker currency led
* post-tax profits of the Company were badly hurt, plummeting from Rs.128.73 million a year ago to Rs.16.52 million this year, a drop of 87.2.%,
* Group post-tax profits plunged
from Rs.120.33 million in 2012 to reflect a loss of Rs.23.18 million this year, a steep drop of 119.2%.
Nonetheless,
* Shareholder worth measured in terms of Group net assets per share steadily appreciated from Rs.2.45 in 2010/11 to Rs.2.50 last year and now to Rs.3.08 this year
Strategy and Prospects
* To improve operational efficiency and reduce operating costs. These include measures to improve our collections and reduce the risk of debtor default, as well as cost reduction measures. These strategies are expected to yield results in the ensuing year.
* renewed business model we initiated in previous years, centered on a paradigm shift from a single product offering to diversified investments, thus creating long-term value for our shareholders.
This year we increased our holding in Sierra Power (Pvt) Limited to approximately 88%, which thereby becomes a subsidiary of the Company. Sierra Power (Pvt) Limited is engaged in mini-hydro project activities, with commercial operations expected to commence in 2013.
* Our other major investment in Sierra Industries (Pvt) Limited, a company set up for the manufacture of PVC Pipes, primarily for distribution of portable water, is expected to commence business shortly.
Lost Local market by foreign Contractors
The construction industry gathered momentum this year, with massive infrastructure projects underway across the country, primarily in the areas of road development, port, power, airport and rural infrastructure development, alongside several large scale hotels, shopping mall and con dominium projects. However, the anticipated gain to local cable manufacturers, regrettably, failed to materialize. Infrastructure projects were in the main awarded to foreign contractors, particularly China, who were clearly inclined to import core construction material such as wires and cables from their own country, leaving local manufacturers out of the fray.
Moreover,
the lackluster macroeconomic conditions hampered the growth of our key market segments such as housing, while on-going construction projects were mainly focused on road development and water supply.
Sierra Cables Performance 2012/2013
4/
5
Oleh
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