Kamal Mahmood Amjad Mian is the Managing Director at Fast Cables Limited. He has more than 25 years of experience in local and international corporate and industrial sectors. He began his career as a corporate law attorney at Pakistan’s leading corporate law firm, Orr, Dignam & Co. Islamabad. Subsequently, he worked at Pakistan Telecom Authority (PTA), Islamabad, Albaraka Group, Jeddah, HSBC Bank, Dubai & Saudi Hollandi Bank, Riyadh in the Islamic corporate and investment banking field for more than 12 years.

Kamal Mian holds a Master of Laws degree specializing in corporate and international finance from Harvard Law School, Harvard University, USA. He obtained his LLB (Hons.) degree from the International Islamic University, Islamabad.

Following are the edited excerpts of a recent conversation BR Research had with him:

BR Research: Tell us about yourself and your journey with Fast Cables.

Kamal Mahmood: My professional career has been shaped by diverse experiences in the local and international corporate & industrial sectors over the last 25 years. I started my journey as a corporate law attorney at Pakistan’s leading corporate law firm, Orr, Dignam & Co. in Islamabad. After completing a Master of Laws degree specializing in corporate & international finance from Harvard Law School, I worked for more than 12 years in the Islamic corporate and investment banking sector in the Middle East. Subsequently, I returned to Pakistan to join our family business, Fast Cables, as it embarked on a phase of rapid development. Over the last decade, working in a manufacturing concern has also allowed me to focus on our contribution to our national economic development by introducing the latest manufacturing technology and certifications in Pakistan to bring our local industry to par with international standards. Simultaneously, we have been able to increase jobs, promote import substitution, and tap the export market.

BRR: How would you describe the current market for cables, conductors, and wires? What is the demand like globally and locally? Are you facing any supply-side challenges?

KM: The market in Pakistan has evolved in many ways over the last two decades. The post-9/11 period was a rough patch for local manufacturing because of heightened uncertainty, terrorism, and economic downturn. Investment in core businesses that form the backbone of economic development declined leading to stagnation in manufacturing capacity.

Despite these challenges, in the last decade, we were able to turn around the cables and conductor industry through investment in the latest technology for manufacturing cables. My return to Pakistan and joining Fast Cables was part of our family’s initiative to bring investment that could enhance our capacity building and drive expansion. Back in 2013, the cable technology being used in Pakistan was from the 1960s, unlike that used in our neighboring countries. So, we embarked on a journey of several 1st in Pakistan milestones in the industry. We became the 1st cable manufacturer in the country to set up a plant in 2014 for Catenary Continuous Vulcanization (CCV) Line Technology and Aluminum Alloy. When we launched this technology in Pakistan, there were already 5 similar operational lines in Bangladesh. Fast Cables’ first plant was commissioned in 2016 by the then Prime Minister of Pakistan, and a second CCV line was added after only 5 years for further capacity expansion. Today we are the only Pakistani company with 2 CCV lines in the country. Our heavy investment in state-of-the-art technology has distinguished us from others and made us the market leader. This not only helped to promote import substitution from China but also set a benchmark for other local players to follow and upgrade their technology and plants. KE which only used to procure MV cables from China, as local companies were not meeting international standards, became our main customer. This is the kind of trajectory that the local cable industry has taken where after a decade of no investment, significant developments have taken place over the last 10 years.

Back in 2008-12 the country was facing immense power shortfall seen in the form of load shedding. Economic activity was at its lowest and hence lack of demand also made capacity utilization inefficient. Later in 2015-16 when the government focused on increasing generation capacity and offered amnesty schemes, lower finance costs, and various other initiatives, the power demand picked up rapidly. Along with demand growth, the country started facing capacity constraints in the transmission and distribution network and import pressure due to a shortage of dollars and an economic downturn. It is in response to these challenges that the cable industry developed the most with growth in demand and market size. Currently, demand in the market is suppressed to some extent due to ongoing economic challenges at the national level, but in my opinion, there is still continuous baseline demand for cables, which will continue to increase in the coming years. An electrical cable is not a want, it is a need. Therefore, even in downturn periods, we have experienced double-digit growth. Moreover, going forward there will be a huge demand opportunity from the transmission and distribution sector as the aging national network needs to be upgraded. Privatization of some DISCOs will also contribute to the increase in demand. Conservative estimates put the cable industry’s growth at around 18 percent on average over the next 5 years or so.

Overall, the Global Wires and Cables market size was valued at $143.01 billion in 2020 and is expected to reach $250.8 billion by 2026, rising at a market growth of 5.4 percent CAGR during the forecast period.

BRR: Demand from the transmission and distribution side will only be addressed when there is investment in the T&D sector. Do you see that happening anytime soon?

KM: The authorities realize that this is a ‘do-or-die situation’. The government has also made the privatization of distribution companies a priority. So, it is very clear that investment in T&D is the only option for the government if it wants to make the power sector efficient and sustainable in the long run. It is imperative to upgrade the national transmission system and network, and for that, the latest and best-quality cables will be needed.

BRR: Last time we met, you mentioned how the lack of an import-export bank affects the export potential. Things have not improved since then. What is your view and where do your exports stand?

KM: Our key export markets include UAE, Saudi Arabia, Ghana, Tanzania, Uganda, Iraq, and Afghanistan. Currently, our exports are less than 5 percent of total revenue, but we plan to take our export share to 10 percent. The increase in exports is linked to some key factors such as keeping the cost of business low to remain competitive in the global market. The current regulatory structure allows for a rebate on exports. However, there is a Sindh Infrastructure Cess of 1.25 percent on all imports through Karachi Port that hinders our competitivity overseas, especially in the East African region where we compete with Egypt which has custom duties preferential with the African and Arab League countries. Therefore, the cable industry has been requesting the Sindh government to allow a rebate of this levy on exports to make our products regionally competitive.

Another challenge we face on the export front is the absence of an export-import bank from Pakistan, though there are some ongoing discussions around this topic. A lot of times when companies win projects abroad, they also use products from their home countries in those projects. This is what the Chinese companies have been doing. So, the absence of Pakistani banks abroad stops companies from getting performance bonds, bank guarantees, etc. If we want to grow our share in the export market, the government needs to encourage local banks to open branches in the regional markets. One such market is Saudi Arabia. This will help us export our labor and products to these markets and banks will also make good foreign revenues in these markets.

BRR: We have heard that Fast Cables is going public. Why did you decide to go public? How much are you going to rise through the IPO? What will the funds be used for?

KM: We have planned to raise PKR 3 billion in capital by issuing new shares. The main objective is the expansion of our existing manufacturing capacities. As per our 5-year plan, by the end of 2025, we will have some bottlenecks in our capacities, and therefore we want to plan and execute our strategy timely to remove any potential bottlenecks. In addition, we want to tap into emerging cable categories that are currently being imported. The book-building process will be held on the 15th and 16th May 2024, and the retail public offer will occur on May 22nd and 23rd. The Company plans to utilize the Initial Public Offering (IPO) proceeds to primarily fund plant and machinery and its related infrastructure.

Fast Cables continues to outperform its peers and has established itself as the market leader with over 2x the increase in revenue during the last two years in comparison to steady performance by the formal sector players. Our capacity expansion is targeted to meet growth and future demand while achieving economies of scale; increase contribution from exports by penetrating markets within the MENA region; pioneer production of new cable types for import substitution; enhance network outreach in line with the increase in scale of operations; adopt eco-friendly initiatives including energy conservation and renewable energy sources; and implement & maintain sustainable business practices coupled with social and community development programs.