Glassmaker Piramal Glass Ceylon announced that it made a LKR 261 million (USD 2.3 million) loss in the financial year ended 31 March compared with a profit of LKR 35 million in 2008.
Chairman of the …
Glassmaker Piramal Glass Ceylon announced that it made a LKR 261 million (USD 2.3 million) loss in the financial year ended 31 March compared with a profit of LKR 35 million in 2008. Chairman of the Sri Lankan company Vijay Shah said sales rose 46% to LKR 2.9 billion but the firm suffered high interest, energy and raw material costs, and lower domestic demand. A company stock exchange filing demonstrated that finance costs shot up to LKR 659 million from LKR 163 million in 2009. In fact, Sri Lanka“s interest rates rose in 2008 and the company had invested almost LKR 4 billion to relocate its plant and double capacity to 250 tonnes a day by modernizing its furnace and installing new production lines. However, export sales are rising and Shah said the company hopes to become profitable by the third quarter of 2009 as it exploits its high value, niche-market bottle making skills. Piramal Glass Ceylon, which is a unit of India“s Gujarat Glass, maintained a gross profit margin of 20% compared to 22% the previous year, said Shah. According to chief executive Sanjay Tiwari, the company“s ability to increase sales by 46%, despite the prevailing discouraging global economic environment was a very positive sign”. Export sales increased 110%, more than doubling, compared to the previous year, while total export sales increased to about 15% of total revenue compared to 10% the previous year. Piramal Glass exported a total volume of almost 7,000 tonnes – over 25 million bottles – to India, Australia, Europe and South Africa, for uses in the liquor, beer, food and soft drinks markets. “The product portfolio of our exports too has widened, with the company having made inroads into the food and beverages sectors during the year under review,” said Tiwari. Shah said that last year was Piramal Glass“ first full year of operation of its new plant at Horana, south of Colombo. “We were able to run at full capacity only after November 2008. Yet, despite this, the company is now on a very firm footing. The facility is now fully geared with all five lines in operation and is drawing on the full capacity of its furnace.” The company has two production lines with a colouring facility for the manufacture of bottles of different colours, shapes and sizes, which, said Shah, gave Piramal Glass Ceylon an advantage over other glass manufacturers in Asia in making coloured bottles for niche markets. Shah added that the four-fold increase in interest costs caused by rising rates and higher borrowings hit the company“s profit margins and that the current trend would lead to a three-fold increase in export turnover. He also said that this would also ensure the full utilization of installed capacity, thus reducing production costs to compete in the mass-market segment. “Furthermore in the near future, we intend focusing our attention on carving a niche market in the high valued colour segment. “This market would be explored by trying to capitalize on our specialization in producing different shades of bottles in the colouring facility.”