The impacts of the ongoing global recession

The impacts of the ongoing global recession on domestic industrialisation, already at a near standstill, have hurt the growth of the Tk 2,000 crore local wire and cable industry, market players said.

Power sector and industrial units are the two major consumers of the locally produced cables followed by households.

“We are facing a shortage of adequate buyers, particularly with power and industrial ones,” said Fardaws Alam, chief financial officer of Poly Cables, one of the fastest growing cable manufacturers in the country.

“Our sales came down by around 60 percent in the January-April period of this year compared to the same period last year,” said Azizur Rahman, chairman of Aziz Cables.

Rahman blamed this downtrend on the negative impacts of the global financial crisis.

“We are still doing good in power cable sales because we have some supply contracts in our hands,” said Mohammad Enamullah, business development manager of Paradise Cables, one of the largest wire and cable makers in the country.

Now the global and domestic gloomy economic situation is a cause for concern for us, he added.

Bangladesh had to depend on imported cables until the late 1980s. But the situation has started changing rapidly since 1990s when a good number of companies entered the market, industry people said.

Now around 50 companies are engaged in wire and cable manufacturing and meeting the rising domestic demand. Of those companies, BRB, Paradise and Eastern are the major players followed by Poly and Sun Shine.

Local manufacturers import copper, which is the main raw material for making wire and cables. Price of copper on international markets plunged by almost 40 percent in the last several months.

“Prices of locally produced cables also dropped proportionately,” said Fardaws Alam. But the price decline could not boost sales of the products in the local market, he said.

Rathindra Nath, assistant manager (marketing) of Aziz Cables, said: “The market is a bit sluggish now. There is no brisk business.”

“Our sales have dropped to Tk 20 lakh a day now from Tk 30 lakh a year ago,” said an official of BRB Cables at the company's Nawabpur showroom.

BRB's turnover was around Tk 300 crore last year, said the company officials.

Industry people said no diversification of the country's industrial sector is hampering the growth of the wire and cable business. Textile, garment and cement are the three sectors where Bangladesh has developed much. Now all these three sectors are saturated.

Industrial and power sector cables are the cash cow for the cable manufacturers. A metre of cable for using in industry or power sector costs up to Tk 20,000, whereas the price is a mere Tk 10-20 for the domestic use.

Electricity is a critical backbone of the modern economy. Bangladesh has taken important steps in connecting more and more outreach areas since independence. This has been possible by a well functioning support industry including a mushrooming cable companies.

Rural Electrification Board, Power Development Board, Dhaka Electric Supply Authority, Bangladesh Telecommunications Company Ltd, Bangladesh Railway, and pharmaceuticals and steel companies are the major buyers of industrial cables.