Financial Times

Lanka Tiles expands output, warns of clay shortage
Lanka Tiles Ltd. has announced plans to expand production capacity by 10 percent in order to meet growing demand but sounded a warning that the ceramics industry might run out of clay.

Managing Director, Mahendra Jayasekera, said the project will cost Rs 130 million and be financed entirely by borrowings. The company has forecast total turnover in 2004/2005 at around Rs 1,440 million whilst the budgeted profit is Rs 140 million.

Jayasekera said in the company's annual report that it currently operates in a rather difficult environment. The ceramic industry is currently facing problems such as persistent difficulties in mining raw materials and the non-tariff policy framework that decidedly favours imports.

The industry is currently facing a severe shortage of ball clay due to the severe restrictions on mining ball clay, he said. This not only threatens the survival of existing ceramic companies but also inhibit future investments in the industry.

The group recorded a profit after tax of Rs 138 million this year, the highest the company has achieved in 20 years.

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