PACRA assigns Initial Ratings to Newage Cables (Private) Limited

Newage Cables (Pvt.) Limited (the ‘Company’ or ‘Newage’) is amongst the largest and oldest cable manufacturers in Pakistan. The production facility of the Company is spanned over 113 Acres, in Sheikhupura. The Company has recently installed a new production plant, with the most technological advanced machinery, and has also laid down a 66KV CDCC CCV Maillefer Line. The Company also has state of art cable testing facility of up-to 120KV, highest voltage cable testing. The ratings assigned to the Company derives its strength from it’s experienced sponsors having longstanding in the local wire and cable industry. The cables industry of Pakistan relies on import of key raw material. Owing to deteriorating macroeconomic conditions, with limited foreign exchange availability and currency devaluation, procurement of essential raw materials has been strained. Moreover, high levels of inflation also impacted the demand drivers of the industry. However, the demand from the Government with respect to improvement in power sector, development of housing societies and solarization gives cushion to the industry’s demand. The assigned ratings take into consideration the financial performance and reflects the financial and business position of the Company in the oligopolistic nature of the industry, one of the three dominant firms, collectively holding 60% of the market share. Newage's product range includes transmission & distribution conductors, power cables, and solar & housing wiring. Conductors contributed around 44% to the total revenue, whereas cable & wiring contributed 55%. The company’s sales are also well diversified among customers across diverse industries, government and export customers however, majorly inclined towards government projects and very minimal exports. During FY23, the Company’s topline increased to PKR 27bln (FY22: 23bln) on the back of increase in prices and has captured ~22% of the market share. However, the margins of the Company over the years have remained weak. During FY23, the margins showed a similar trend, gross margins stood at 11.6% (FY22: 9.6%) whereas, net margins stood at 3% (FY22: 3%). The Company’s financial profile is characterized by adequate working capital management supported by considerable borrowing cushion along with strong debt cover and capital structure braced by revaluation surplus.
The ratings are dependent upon sustenance of volumes under the current challenges in the local economy. keeping up with a stable financial risk profile remains imperative for the ratings. Newage being a family owned and operated company, is led by an experienced management team but formal governance and organization structure needs improvement.

About the Entity
Newage Cables (Pvt.) Limited (the ‘Company’ or ‘Newage’) was incorporated in September, 1978 as a Private Limited Company. Major shareholding resides with the Azam brothers and the remaining stake is held by their sons. Mr. Asim Jalil Azam (39.67%), Mr. Amer Bakht Azam (39%), Mr. Adnan Jalil Azam (7.34%), Mr. Alman Jalil Azam (7.33%) and Ali Amer Azam (6.67%). The Company is involved in manufacturing and selling of Transmission & distribution conductors, power cables, solar & house wiring, steel wires and calcium carbonate. Mr. Asim Jalil Azam is the CEO of the Company and Mr. Amer Bakht Azam is the Director of Manufacturing. They are supported by a team of professionals with vast experience in the respective fields.