Newage Cables (Private) Limited (‘Newage’ or the ‘Company’) was incorporated on 21st September, 1978, as a Private Limited Company.

Newage Cables Pvt. Ltd. is a technologically advanced cable manufacturing company. It was established in 1956 with the vision of self-reliance and a commitment to contribute to the country’s development by supplying versatile products of the highest quality standard and safety, coupled with prompt services.  Through its policy of continuous expansion and improvement, Newage Cables has emerged as one of the largest cable manufacturers and the first in its category to be accredited with ISO 9001 in Pakistan.

The Company is engaged in the manufacturing of electric cables. The Company’s process of manufacturing starts with the melting of raw material. The Company’s main raw materials are imported copper and aluminum ingots. The products of the Company include copper & aluminum rods, transmission and distribution conductor cables, specialty cables, control cables, LSZH cables, medium voltage cables, house wiring, and solar cables. The production capacity of copper rod stands at 6,000 MT per year, aluminum rod stands at 44,000 MT per year, PVC compound stands at 8,000 MT per year, and steel wire & strands. Moreover, the Company is able to draw and assemble up to 25,000 km of transmission line conductors, 54,000 km of distribution conductors, and 85,680 km of control cables and wiring.

The Company’s major ownership resides within the family. 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's ownership stake has remained stable over the years with the entire shareholding held by the sponsoring family. The third generation of the sponsoring family is being integrated into the business, which ensures future stability of the ownership being held within the family.

The sponsors have a proven history of seven decades of operating in the local sector, which ensures their vast experience and knowledge of the sector. Furthermore, the current generation of sponsors has been associated with the Company for over three decades and has witnessed multiple business cycles. The sponsors have successfully evolved the Company over time and have become one of the market leaders in the sector.

The sponsors have built their financial muscle from the successful operations of the Company over the years. The Company's prior operating history of capacity expansions and strategic development is a testimony to the sponsor's commitment to providing support to the Company.

The Company’s board is dominated by the sponsoring family and includes five executive directors: Mr. Asim Jalil Azam, Mr. Amer Bakht Azam, Mr. Alman Jalil Azam, Mr. Adnan Jalil Azam, and Mr. Ali Amer Azam. Lack of independent oversight and diversity indicates a room for improvement in the Company’s governance structure.

Mr. Asim Jalil Azam, with over 4 decades of experience as well as an association with the Company, chairs the board of the Company. Mr. Asim also spearheads the Company as its CEO. Mr. Alman Jalil Azam holds the position of Director of Finance & Sales and has experience in managing working capital requirements and external audits to finalize income tax returns and statutory accounts. He has been associated with the Company since 2014.  Mr. Amer Bakht Azam, with over 3 decades of experience and a business graduate from the USA, spearheads the manufacturing side of the Company. Mr. Alman Jalil Azam is the Director of Finance/CFO and also the HOD of Sales. Mr. Adnan looks after the chemical side of the business, and Mr. Ali Amer assists his father, Mr. Amer, in the manufacturing side.

The Board conducts regular meetings during the fiscal year to discuss matters relating to the Company's operations along with future strategy, apart from finalizing and approving the financial statements. Furthermore, the Board is supported by its subcommittees, including the Audit Committee, Management Committee, and the Human Resource Committee.  The primary function of these committees is to assist the Board in the effective and efficient discharge of its functions and to provide feedback on matters of significant importance for the Board’s operations.

The external auditors of the Company, Shine Wing Hameed Chaudhri & Co. Chartered Accountants, have expressed an unqualified opinion on the financial statements of the Company for the year ended June 2024. The firm is QCR rated and is placed in category ‘B’ of the SBP panel of auditors.

The Company’s reporting line is divided into two mainstreams. One is business operations, and the other one is manufacturing. Each mainstream is headed by one executive director. Mr. Asim Jalil looks after the business operations while Mr. Amer Bakht looks after the manufacturing. The organizational structure has been optimized as per the organizational needs.

Mr. Asim Jalil Azam, with over 4 decades of experience as well as an association with the Company, spearheads the Company as its CEO. Mr. Asim is a graduate and has seen multiple business cycles and the growth of the Company and thus holds vast experience in the sector. The remaining senior management reporting to the CEO possesses the required qualifications and experience in the respective fields.

The management has implemented performance-based assessment criteria backed by rigorous KPI streams, which include leadership, managerial, and technical programs, which have been instrumental in fostering a culture of continuous learning. Moreover, proper segregation of duties along with well-defined reporting lines and a hierarchical structure leads to smooth functioning, ensuring informed decision-making.

The Company is continuously looking at ways to optimize systems to ensure proper visibility and monitoring of key metrics and is placing a greater emphasis on reporting through its ERP system. The implementation of ERP modules of payables and receivables & HR has been rolled out and implemented, thus expanding the suite of ERP now in use within the Company.

Newage cables continuously review and improve the effectiveness of its quality management. The system is in line with the objectives of achieving higher productivity, uncompromising quality, and maximum customer satisfaction. Quality assurance is an integral part of the order processing, which is maintained at every step of manufacturing. All quality assurance procedures are regularly audited by international standards organizations, and routine testing is carried out according to standards. To ensure the adequacy and effectiveness of the quality system, a management review is carried out periodically.  The decisions of this review are recorded and implemented by the concerned manager. The main purpose of the quality audit is to take necessary corrective action to eliminate deviations and further improve the system.

The cable and wire industry of Pakistan, encompassing insulated nonferrous wire, cable, fiber-optic, and other cable products, has seen significant growth and innovation driven by the expanding infrastructure and industrial development over the years. The performance of this sector is linked to the overall growth in the other sectors of the economy. Around 60-65% of market share is held by local manufacturers, including market leaders like Pakistan Cables, Newage Cables, and Fast Cables. The remaining market share is predominantly distributed among importers, including both regulated and unregulated entities, while the rest is served by numerous small to medium-sized manufacturers. The overall industry dynamics of the sector have remained under stress during FY24 due to lower construction and infrastructure development activity along with constraints of PSDP spending. The decline in interest rates in the recent period, along with subsiding inflationary pressures, might have some positive impact on the demand for the products. Additionally, increased demand from institutional clients including transmission and distribution companies in the future might provide some relief to the stressed demand.

Newage is among the oldest and leading cable manufacturers in the country. The Company has a presence all over Pakistan through a vast dealership network spread out in the North and South regions comprising over 300 dealers. The Company occupies ~22% market share of the local industry. Furthermore, the Company is also engaged in exporting its products to major projects in Qatar and Afghanistan.

The Company’s topline comprises revenue generated from the sale of transmission and distribution conductors, cables & wiring, steel wire, and calcium carbonate. The major portion of sales resides with cables & wiring and transmission & distribution conductors, holding ~55% and ~44%, respectively. During FY24, the Company reported Net Revenues of PKR ~26,263mln (FY23: ~27,017mln) showing a slight decline on a cumulative basis. The decline in overall sales was due to lower local demand during the year, resulting in a decline of 14.6% in value terms (FY24: ~27,016mln, FY23: ~31,647mln). Alternatively, export sales witnessed significant improvement, resulting in sales of PKR ~3,569mln during the year (FY23: ~54mln).

The Gross Profit Margin during FY24 witnessed negligible improvement to 12.0% from 11.6% during FY23 as a result of better pricing to account overall inflationary pressure and high cost of imported raw materials. The Company is focused on preserving the Gross Margins of the Company in ongoing industry conditions characterized by lower demand. Furthermore, the Net Profit Margins witnessed a slightly better improvement during the year and were recorded at 3.9% as compared to 3.0% during the same period the previous year. The continuous decline in interest rates provided some relief to the Company on a net basis in terms of lower finance costs.

Newage Cables has continuously been expanding its capacity, capability, and product range by improving and expanding existing manufacturing facilities and also setting up new, modernized manufacturing facilities to keep itself in line with requirements. With stressed demand in the local industry, the Company is looking out for opportunities to increase its exports while maintaining the quality standards.

The Company’s working capital management is managed through internal cash flows with minimal reliance on running finance and high reliance on LCs due to the import of raw materials. As of the end of Jun-24, the inventory days increased to 69 days (FY23: 51 days) due to overall lower demand. Moreover, on the back of prolonged receivables from government agencies, the receivable days increased to 101 days (FY23: 81 days). To manage the cash cycle, payable days were stretched to 68 days (FY23: 52 days). Overall, the Company’s net cash cycle stood at 102 days (FY23: 80 days).

The Company's FCFO during FY24 remained stable as compared to the previous year (FY24: 2,219mln, FY23: 2,319mln). Although better profitability was reported during the latest fiscal year, higher taxes paid resulted in a negligible decline in reported FCFO. Similarly, Interest Coverage (FCFO/Finance Cost) witnessed slight improvement from 2.7x during FY23 to 3.0x during FY24 as a result of a continuous decline in policy rates that provided some relief to the Company in the form of lower finance costs.

The Company has a moderately leveraged structure with the capitalization ratio standing at 37.1% as of June 24, witnessing a rise from 27.2% as of June 23. The Company has major reliance on short-term borrowings, which include import loans from various banks to fund the purchase of imported raw materials.