Dubai Cable Company (Ducab), the Middle East's power cable and wires manufacturing major, will invest around AED 1 billion in two new facilities in the region to meet the growing demand for its products, a top Ducab official told Zawya.
Andrew Shaw, managing director of Ducab, said the expansion plans were part of the company's 5-year plan, which has been approved by the Ducab's board of directors. "We are going to invest in two manufacturing units overseas in the coming five years and it will be a greenfield development," he said, adding that the area of investment could include the Gulf Cooperation Council (GCC) and Middle East and North Africa (MENA) region.
"Iraq and Libya are good markets for our sales, but due to the current turmoil we wouldn't favor setting up manufacturing operations over there, but look for alternative opportunities in neighboring countries such as Turkey, which could act as a gateway to the Iraqi market, and can be an ideal location for our operations," he added.
"We have two main objectives at the moment, that is to add more specialized cables to our production and expand into overseas markets in the foreseeable future," he explained.
He said the funding for the new facilities will be a combination of internally generated funds and bank loans. "We will partly rely on bank finance, in addition to sufficient internal funds from our revenues. In the company's more than 30-year history we have always been managing this way and have never requested funding from our shareholders," said Shaw.
"When we talk investments, it's not just putting money into a physical asset, but also investing in raw materials, including copper, aluminum, and other materials," he explained.
According to Shaw, Ducab, whose ownership is equally split between the governments of Abu Dhabi and Dubai, is the second top cables manufacturer in the GCC, following Riyadh Cables, and the third in the Middle East after Electro Cable Egypt Company.
Since its inception, Ducab has been steadily growing and now offers the complete range of power cables, accessories and services up to 400KV from six state-of-the-art facilities in the UAE.
"We are a vertical business and offer whatever is related to wires, cables, conductors, twisted strands, you name it. We even sell copper wires and copper rods to other cable makers," he said.
Shaw said fluctuating copper prices affect the company's performance in terms of value, but high volumes make up for any differences. "Cable manufacturing uses 60% of the total global copper demand," he explained. Although Chile is the largest exporter of copper, Ducab sources its supplies from the Democratic Republic of the Congo.
According to Shaw, Ducab, currently dominates the UAE's domestic market with a 50% share, and seeks to boost its GCC market share from 10% to between 15 and 20% in the foreseeable.
"Overall, we expect to cross the AED 5 billion mark in sales this year, with a 20% growth rate to be achieved by exploring new markets," explained Shaw.
More than half of Ducab's current annual production is exported to worldwide markets, which mostly include fast emerging Asian markets such as Hong Kong, India and Indonesia besides rapidly developing countries in North Africa. "Ducab has also done some sales in Azerbaijan which can be another promising market in the future," said Shaw.
© Zawya 2013
