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| Sunday, 1 August 2004 |
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Ceylon Leather must become niche-player - Chairman Ceylon Leather Products Ltd (CLPL) must become a niche player producing high value-added products at a premium price as far as exports are concerned in the future, states the Chairman Nimal Samarakkody in his annual review. " Though the company now possess the technical capability to produce high quality shoes for sophisticated markets, as a smalltime producer we lack the bargaining power to dictate prices. Therefore we have to become a niche player as far as exports are concerned," he states. In a move to pursue this plan the company is consolidating its relationships with the buyers in Japan and Netherlands. "As stated last year, one of our main objectives was to reduce the dependence on a single customer for our revenue and shift our strategic focus into developing new export markets. Although the company was able to increase exports by 94 percent from Rs 86 Mn to Rs 167Mn as far as footwear exports to Italy were concerned it was achieved at a prohibitive cost," Samarakkody states. The European shoe market is complex and competitive. The sources of supply have shifted to Asia and the Far East. According to Samarakkody there is however a significant difference between the ex-factory price received by the manufacturer and the final price paid by the end user. Therefore it is apparent that somewhere along the chain there are people who make substantial profits. According to the company's financial performance the CLPL group turnover has increased from Rs 410 Mn to 524.4 Mn. The pre-tax profit improved from Rs 14.9 Mn to Rs23.3 Mn. The company has recommended a dividend of 6.5 percent for the year as an expression of the commitment to provide shareholder value on a sustainable basis. The company realise that our base should be the domestic retail market. Therefore considerable management attention will be paid to a new business plan considering the present market trends. " The company will adopt a structured approach including a total redesigning of the brand image. Our greatest challenge is how best we should leverage our strategic position as the biggest domestic manufacturer of leather. The company has acquired two leather-based companies, Tanlanka Ltd and Nedlanka Ceylon Ltd to facilitate a complete restructuring of the group. Samarakkody states that once the Bata-Atha site is ready the company will proceed with a plan to integrate the operations. In his annual review Samarakkody has said that the tanning industry is frustrated over the impasse that has arisen in implementing the Bata Atha project. The authorities are unable to give a clear policy direction for the re-location of tanneries. In addition there is also grave uncertainty about the financial package promised by the BOI to assist the re-location. Foreign investors who paid participation fees and keen to open factories in the new industrial estate are now having second thoughts." Our own business plan for a joint venture with foreign participation has been put on hold Samarakkody states. The expectation that there would be a policy reorientation favouring the leather and footwear industry as a possible successor to the apparel industry never saw the light of the day due to the unsettled conditions and political stability, states a concerned Samarakkody. The board of Directors are Chairman Nimal Samarakkody, Deputy Chairman- M.N.R. De Silva, and Directors S.E. Satarasinghe, B.M.Amarasekera, Nihal Abeysekera, M.A.Abeynaike and Dr Uditha P.Liyanage. (SG) |
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