Sierra Cables to expand presence in Africa and Pacific
„Says Local electrical cabling market saturated „US $ 2mn already invested in cable manufacturing plant in Kenya „More investments into Kenyan plan in the pipeline
The Sierra Holdings electrical cabling and water piping subsidiary Sierra Cables PLC (SIRA) is hoping to expand and strengthen its presence in Africa and the Pacific through its latest investments, as the local market has saturated.
SIRA had invested US$ 2 million on a power transmission cable manufacturing plant in Kenya with a 500 tonne monthly capacity last year, and is now planning to invest 30 percent in a US $ 4 million joint venture cable manufacturing plant in Fiji with a 300 tonne monthly capacity.
“Kenya is a gateway to other land-locked countries like Uganda, Sudan, Ethiopia and Somalia. From Fiji we will have a larger market access to New Zealand, Australia, Papua New Guinea and other pacific countries,” SIRA Finance & Strategic Planning Manager Pasad Boralessa said.
SIRA Managing Director Shamendra Panditha noted that since it was the company’s first overseas expansion, SIRA did not want to take a huge risk in Kenya,
and resorted to leasing both the land and the buildings, with large commitments made only for the machinery.
“But that was phase 1, where we manufacture aluminium wires. Under phase 2, we are going to manufacture insulated cables. It will be another US$ 2 million investment,” he said.
The Kenyan operation received its first order for US$ 1 million just as the facility was opened for production this October.
After experiencing firsthand the ease of doing business for industrial manufacturers and the massive demand for electrification in Kenya, as well as the potential for growth in the rest of Africa, Panditha said that bigger investments will be made in the East African nation.
“We will be investing in a bigger factory in our own land in the future. It’s still in the conceptual stage,” he said.
Until now, local manufacturers in Kenya were able to supply only 30 percent of the demand, and the Kenyan government has given wide incentives for investors in the power sector.
Panditha noted that SIRA’S parent is interested in exploring opportunities for power generation in the region, similar to ventures made by other Sri Lankan power producers. While SIRA’S sole client in Kenya is the government, with its drive to make the country a middle-income industrial powerhouse in the coming decades, the operations in Fiji—where there is currently a monopoly in cable manufacturing—are geared towards private sector sales. “Our partners are some of the best known hardware dealers in Fiji, so we will have a large distribution network,” Boralessa said.
With Fiji’s duty free access to Australia, New Zealand and other pacific islands, Boralessa is expecting exports from Fiji to pick up fast. Panditha added that while initial production coming out of the two countries will be in the lower-ranges, SIRA will be exporting more sophisticated products in its portfolio to the markets from Sri Lanka.
SIRA’S exports for the first half of 2016 exceeded Rs.170 million, compared to just over Rs.50 million exported in the entirety of 2015, and less than half of that in 2014.
Boralessa noted that SIRA is seeking overseas expansions because the local market is too saturated.
“Electrification is over 90 percent. Unless they (Ceylon Electricity Board) change their method of electrification to maybe underground cabling, the market is more or less saturated,” he said.
Panditha noted that the pickup in local construction however, is good for the company’s water piping arm. “The future in Sri Lanka is for water, not power,” he said.