Having joined Hatton National Bank with a dream of becoming a Banker, Harsha Jayatunga changed his career path to become the Chief Executive Officer of Sierra Cables PLC. He brings with him two decades of a wide range of experience across Financial Management, Taxation, Administration, Logistics, Supply Chain, Project Management, Sales & Marketing, and Operations disciplines predominantly in Construction, Property Development, Real Estate, Telecommunication and Manufacturing sectors.
Before joining Sierra Cables, Harsha held the post of General Manager – Finance & Administration of Civil Engineering, Property Development, Electrical Engineering Construction Sectors of Sierra Holdings. He played an instrumental role when Sierra, as the construction contractor forming Joint Venture operations with foreign leading construction companies such as Shapoorji Pallonji MidEast LLC in UAE, Gold Mantis China, Toda Corporation Japan for some major landmark construction projects in Sri Lanka.
He is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka, Fellow Member of Chartered Institute of Management Accountants (CIMA-UK) and Chartered Global Management Accountants, USA. He is also an Associate Member of the Certified Public Accountants, Australia. In addition to these professional qualifications, he holds a Bachelor of Business Administration Degree from the University of Colombo. He has an MBA In General Management from the same University where he was awarded the Gold Medal Sponsored by Brandix Group for Tax Planning and Management subject.
Construction is an important sector that contributes greatly in the economic growth of a nation. Accordingly, Harsha stated that the sector is expected to demonstrate resilience compared to other industries in the country, and that the sector’s performance has declined due to the COVID-19 pandemic. He, however, stated that the ongoing construction projects will gradually pick up pace and remain within the original timelines.
“Government funded projects experienced a slowdown due to delays in payments.. Relatively, the payments are now being released for the contractors and as a result construction companies are likely to continue their momentum.
“While the country’s high reliance on imports for the sector can pose value chain disruption risks given the strict trade controls, the current domestic raw material production level and inventories are sufficient to sustain ongoing projects.
“Over the past several years, China and India emerged as the main import markets for raw materials for the local Construction industry and accounted for 53% of the total imports for the construction industry. The country also imports capital goods such as machinery required for the construction. However, most imports for the industry have alternatives in Sri Lanka. However, higher value-added input imports such as steel structures, energy efficient air conditioners have no viable alternatives in Sri Lanka. The Government may need to lift the import restrictions for such product categories, considering the significance of this industry in the economy.”
Speaking further Harsha stated that the industry must work on cost reduction strategies as the hike in the global metal and polymer prices is the main challenge to the Cable industry, and hence the margins of the industry players have eroded.
“Companies can adopt backward integration strategies with the raw material suppliers so that local value addition of the production can also be increased. Companies should work aggressively on controlling overheads, improving productivity of labour, minimising wastage, reworks, using renewable energy sources such as solar for power generation etc. Companies can even apply AI to do real time monitoring of the production process.
“Capacity limitations is a core issue right now in the Pipe industry, as all players find it hard to satisfy the demand from the Water Board. Hence, companies should take immediate steps to enhance the production capacity. Small players in the Pipe industry have an immense opportunity to grow in light of the increased demand for uPVC and HDPE pipes in the local market under the ‘Water for All’ national plan. Also, existing players should aim to produce fittings that are currently being imported.
“Trade war between China and the USA has created a market opportunity for countries like Sri Lanka. Due to China’s tariff/ political policy changes, companies tend to look for backup plans and other options and will be a good timing for local material suppliers to gain a foothold.”
Explaining how Sri Lankan firms are geared to cater to the demand in the future and what improvements are needed, the industry expert stated, “All players will expand their production capacities as the government policy to source raw materials from local suppliers predominantly has created an opportunity for the manufacturers. Market size has increased noticeably due to this so that existing players will aim to satisfy this.
“Having seen the market potential, foreign companies will be likely to set up production facilities in Sri Lanka. Local companies may tie up with foreign partners in various forms to expand their businesses. Low interest rate environment induces investors to search for investment opportunities delivering meaningful returns. Also, Sri Lankan firms might have to seek technical assistance from foreign firms to introduce new products that are currently being imported to the market.
The industry expert continued to state that the efficiency of the logistics of the country should be improved as logistics has become extremely cumbersome during the COVID-19 pandemic, and hence local manufacturers have struggled to bring down raw materials
“Now conventional approaches to supply chain management don’t seem to be effective and instead firms should adopt more practical solutions in this area.”
Describing the new trends in the industry and customer purchasing patterns, Harsha stated three key points:
Increased demand for fire-resistant cables
Fire-resistant cables limit both the spread of fire and the release of toxic gas. As the construction industry grows, these cables will find increasing use in new large residential, commercial and manufacturing buildings.
Customised products
Wire and cable customization services allow manufacturers to provide products tailored to a customer’s application that save time, money and space. For these reasons, custom wire, cable and wire harnesses received a recent uptick in customer interest.
Green initiatives
As awareness builds around environmental protection and sustainability, more people are striving to reduce the emission of potentially hazardous chemicals and increase the use of natural and recycled/recyclable products. One effect this initiative has had on consumers is rapid growth in the demand for hybrid and electric vehicles. As this market continues to expand, so too does the need for wires, cables, and wire harnesses to outfit the cars.
Increased demand for solar cables triggered by the government policy to increasingly use renewable energy and inhouse manufacturing of solar cables by the industry players to stringent specifications rather than depending on imported brands.
Divulging the future opportunities of the company, Harsha affirmed, “Increased market size in the pipe industry will create an opportunity for our company as currently we are focused only on uPVC pipes and there is growth in demand for HDPE pipes. As the HDPE pipe market has expanded, our company can focus on that segment of the pipe market and that is the segment having highest potential in the future. uPVC pipes market is now in the saturation stage and no much prospects in years to come as Water Board is gradually moving towards HDPE pipes due to lower servicing requirements, trouble-free installation, flexibility, resistance to chemicals and a host of other qualities that are hard to be met by uPVC pipes.
On a final note, the CEO emphasised that import restrictions of non-essential items to protect local manufacturers should be sustained without any lenience and at the same time necessary measures such as tax incentives should be introduced to companies engaged in the manufacturing of import substitutes so that in the long run competitiveness of local products will not be affected. If not, continuation of import restrictions could lead to a stagnation of growth and a decrease in exports over the medium term due to a lack of competitiveness.