Financial Times

DPL's management staff to buy remaining RPC stake
A group of management staff at Dipped Products Ltd (DPL) the Hayleys Group's rubber glove manufacturing venture, has announced plans to acquire the remaining DPL shares held by Richard Pieris and Company Ltd.

The Colombo Stock Exchange (CSE) was intimated of the move last week by the group, DPL said in a statement. This follows the divestiture last week by Richard Pieris of a tranche of 5.88 million DPL shares, representing 19.6 per cent of the capital of the company. These shares were purchased by Hayleys and its associates.

In a letter to the CSE, Dipped Products announced that over 110 of the company's management staff are in the course of finalising an agreement between themselves and Aureos South Asia Fund 1 LLC to establish a "special purpose vehicle" named DMH Capital Limited, to purchase 2,993,400 shares in the Company now owned by Richard Pieris & Company Ltd, at a price of Rs 117/50 per share.

"Aureos have advised us that they have already entered into an agreement with Richard Pieris & Company Ltd in this regard which anticipates that the proposed transaction will be completed by the 15th of December 2004," the announcement said.

The DPL Group which comprises rubber glove manufacturing, distribution and marketing and plantations posted a strong performance in the first half of 2004-05, with consolidated financial results showing noteworthy growth in turnover and profit.

The Group reported a post tax profit growth of 66 per cent over the first half of 2003, on a turnover of Rs 2.9 billion, which was up 18 percent. The hand protection segment contributed Rs 2.2 billion of this turnover (up 22.3 per cent) and the plantation sector represented by Kelani Valley Plantations Ltd., (KVPL) contributed Rs 779.2 million consequent to a growth of 6.3 percent.

Profits up consolidated pre tax profit totaled Rs 290.7 million, reflecting a growth of 43 per cent, while post tax profit topped Rs 255.9 million, an increase of Rs 101.5 million over the corresponding period last year. KVPL more than doubled its post tax profit, from Rs 40 million to Rs 89 million, as a result of buoyant rubber prices and consistent prices for tea.

DPL Managing Director N. G. Wickremeratne described the company's performance in the first half of the year as satisfactory in the backdrop of the cost overruns in the construction of its medical glove plant in Thailand. The completion of construction has been delayed by more than a month due to rain and DPL has had to seek the approval of the Central Bank of Sri Lanka to remit additional funds to meet a cost overrun of nearly 30 per cent, he disclosed. Meanwhile, there is also some concern about the outbreak of violence in the southern part of the country, although the Shongkhla Province where the DPL factory is situated has not been directly affected, Wickremeratne said.

Construction and installation of the plant is now expected to be completed by the end of the year, with trial production expected to commence by early January. Wickremeratne cautioned that the second half of the year could see other challenges. Anticipated earnings from the plantation sector, for example, would be adversely affected by the wage increase offered to estate workers in October this year.

However, the strong growth achieved by DPL's rubber glove manufacturing operations is noteworthy in the context of the increased rubber prices which affect their costs of production, he said.

The segment's results have been attributed partly to the growth in turnover of DPL's Italian distribution and marketing company ICO Guanti SpA, while exchange gains from the devaluation of the Rupee against the Dollar helped offset some of the escalation in production costs.

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