Lanka Tiles PLC to set up a fibre cement plant
Lanka Tiles PLC (Tiles) is to set up a fibre cement plant in a 100 acre land in Divulapitiya in a bid to diversify its operations, officials said. The company invested in Beyond Paradise Collection (Pvt) Ltd in FY 2016 which owns this property, they said adding this firm was bought to solely develop the land. “We will sell all production in the local market,” an official said. He said that the company’s focus continues to be on the local market with local sales as the core revenue generator with a contribution of 96 per cent during the last quarter and 97 per cent for FY 2016. Local sales grew 4 per cent year on year (YoY) to Rs. 5.93 billion in FY 2016 aided by the overall growth in the local tile market.
“A reduction in capacity to produce bigger tiles caused a dip in local sales revenue during the quarter. But local demand picked up substantially in 2015 owing to higher demand for housing and urban infrastructure,” he said. He said that the company would be expanding its capacity in FY 2017E to cater to the growing demand for larger format tiles. Medium-term price estimates for construction materials such as steel, copper, aluminum, iron indicate only moderate growth, implying that the costs of construction are likely to remain low, according to industry analysts who said that in this scenario,
Tiles will benefit in terms of projects initiated by the previous Government (namely the Colombo Port City Project, the extension of the Southern Expressway to Hambantota, the extension of railways from Beliatta to Kataragama) re-launched in late 2015/early 2016 while these projects are likely to stimulate the overall construction industry once implementation begins. They also said that new infrastructure development plans such as the Western Province Megapolis Development and the 1000-acre industrial zone in Hambantota are likely to boost the domestic construction industry further. “Tiles will benefit from these future prospects in long term infrastructure projects and the potential spillovers into construction-related activities,” an analyst said. The bottom line of the company fell 43 per cent YoY to Rs.174 million due to a 115 per cent rise in tax charge to Rs. 221 million.