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| Sunday, 5 October 2003 |
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Lanka Cement plans stronger ventures Lanka Cement Ltd (LCL) plans to increase its turnover to one billion rupees next year and profits to around five million rupees, through efficient marketing, higher quality and improved productivity of the staff. Chairman Anil Koswatte said it is a very realistic target, but "we cannot generate more employment since we do not want to be a burden to the Treasury". He said: "We are expecting a turnover of Rs 750 million this year, but there will be a net loss of Rs 38 million since we have to pay interest on outstanding loans. "Earlier, LCL got an annual grant from the Treasury, but not anymore as we know that we can now compete with other products and increase our market share due to the quality of our product and the marketing strategy adopted by us." The company presently enjoys a market share of five per cent (12,000 metric tons a month), which is expected to increase to 7.5 per cent by the end of the year. Plans are underway to increase this to 10 per cent next year. Seventeen brands and four major international players are competing in Sri Lanka's cement market. Even the market leader does not enjoy a 30 per cent share, Koswatte noted. "Our trading activities have recorded a huge increase since the re-launch of the Lanka Cement brand in June 2002. Upto now, the sales volume has exceeded 56,000 metric tonnes and is estimated to pass 100,000 metric tonnes by the end of the year. It is a major increase compared to 33,000 metric tonnes and 13,000 metric tonnes recorded in 2002 and 2001 respectively," he said. Koswatte said the decision to re-launch the brand name, which was not used for 12 years, has definitely paid off. The re-launch together with positive consumer response, SLS certification, government institutions buying from LCL and availability have resulted in increased sales growth. The 50 distributors and five depots will be linked to the head office in the near future. LCL achieved a turnover of Rs 202 million and a net loss of Rs 53 million last year. The Chairman said though the company has always achieved operational profits in trading activities due to provisioning for heavy interest on bank loans (obtained for the now defunct plant in Kankasanthurai), it constantly recorded net losses. Several foreign investors have expressed interest in reopening the Kankasanthurai cement factory and the Public Enterprise Reforms Commission has commenced negotiations with potential investors. The discussions may see results if the peace process succeeds, Koswatte said. The LCL share price has risen from Rs 1.25 to Rs 8.50 after Koswatte took over in March last year. Lanka Cement started in 1980 and was listed on the Colombo Stock Exchange in 1983 with an authorised share capital of Rs 180 million. The ethnic crisis which erupted in 1983 aggravated the company's situation since production at the Kankasanthurai factory was affected. It continued in a small way before finally halting production in June 1990. Koswatte said there will not be any new recruitment, but the existing staff will be motivated and trained in all aspects to perform better as they are the lifeline of the organisation. |
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