Sierra Cables PLC, a subsidiary of Sierra Holdings has decided to go into PVC pipes High-density polyethylene (HDPE) market, in a bid to further diversify their business to capitalise on the post-war boom in the construction industry, company officials say.
“We decided to set up a factory to manufacture these products through a 50% owned subsidiary, Sierra Industries Ltd. Sierra Holdings will hold the balance 50% stake in the venture. It is required to maintain a proper balance in our business portfolio and we think that these are good ventures to enter into and maintain the balance we require,” an official told the Business Times.
He went on to say that Sierra diversified its business into the power and leisure sectors and this will be its next step of diversification. "With the boom of the construction industry, the possibility of capturing this additional market we feel is possible," he said, adding that Sierra has plans to identify new markets in this segment. He also noted that the future of the PVC market in terms of exports reflects a positive outlook.
Analysts say that with the end of the war the construction sector is expected to grow at a rapid scale. The growth rate is to surpass the expected growth in GDP of 7-8% over the next six years. According to the Ministry of Finance and Planning, Construction related projects worth over Rs 700 billion is planned for 2010-2012. Along with this water supply and drainage sector is also to grow in the parallel direction.
“Especially the North and East still lack the supply of clean water for its population. In 2010 the investment made in this sector was about Rs. 28,183 million.
Such that a similar investment can be expected in the current and future years mainly funded through ADB, Japan Bank for International Cooperation etc,” the official said. Sierra invested Rs. 250 million on upgrading its plant facilities during the last two years to meet the capacity for Aerial Bundle Cables. "During the last two years as we rightly predicted that there will be a demand for such building wire. Now we do about 10,000 tonnes of both aluminum and copper wire per annum,” the official said. The company is bullish on the hydropower and leisure sectors and these projects are currently on the drawing board.