Ducab, one of the leading manufacturers of high-quality power cables and wires in the Middle East, has taken a strategic initiative under the guidance from its Board of Directors to convert its conventional metals hedging practices into Islamic structures.
The initiative supports growth within the global Islamic finance industry, and is in line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai to set up a comprehensive platform of Islamic economy products and services. The Prime Minister envisages the UAE becoming a global hub for Islamic finance, a view which has further highlighted the need for such innovative and requisite Sharia-compliant products to be introduced into the field of metals hedging.
With regard to the development of this innovative hedging arrangement, Mr. Andrew Shaw, Managing Director of Ducab, stated, “Ducab is delighted to enter into this arrangement, particularly as we are the first regional cable manufacturing company to initiate metals hedging practices into Islamic structures, It is also gratifying to receive the support of respected financial institutions locally and internationally.” He added, “Strengthening Islamic economic principals are an integral part of our overall approach to growth and development, we will further continue to explore such ideas in other parts of our business. We hope that risk management practices globally in the metals industry will adopt these practices in the coming months.”
The ultimate objective of this initiative is to persuade global metal exchanges to adopt the product as one of the standard traded offerings. This new hedging opportunity will be placed under the spotlight at the 2013 Global Islamic Economy Summit, which will take place on 25 and 26 November, as Ducab seeks to promote the Sharia-compliant hedging to other major companies in the MENA region.
Ducab’s CFO Mr. Arif Choksy, stated, “Ducab pioneered the development of Sharia Compliant structure, This task was effectively achieved by dedicating Ducab’s senior finance team for a period of 8 months which involved continuous learning on sharia principals of hedging, in order to complete the development of the structure and required Islamic documentation, in co-operation with its “London Metal Exchange” Counterparts, Societe Generale’s strong support and dedication was commendable who took the lead amongst the “London Metal Exchange” counterparts in launching this development with Ducab.”
He added, “Ducab actively started using the sharia compliant metals hedging product since early 2013, for its major line of businesses and has successfully converted 70% of its existing hedging portfolio into Sharia-compliant structures with a dedicated back office involvement to manage the ongoing process.”
Mr. Francois Combes, Head of Metals Markets for Societe Generale, said, “We are very proud of being associated with Ducab in this initiative, This great achievement is the result of months of work and coordination between Ducab and Societe Generale.”
Mr. Mohamed Virani, Head of Islamic Products from Societe Generale further commented, “Societe Generale appreciates the exemplary work and expertise of Ducab in pioneering the development of sharia compliant structures for managing metals price risk, which will contribute towards the success and overall growth of Islamic hedging arrangements globally.”