East West’s Nahil eyes control of Dankotuwa Porcelain

East West Properties Ltd, owned by business tycoon Nahil Wijesuriya, is eyeing a bigger stake in Dankotuwa Porcelain Ltd (DPL) and is confident of making a ‘difference’ in the company with his engineering background.

“It is nice to have control of a company,” he said, in response to the question whether he was looking to buy more shares of DPL.

Presently he has a 12.98 percent of the issued capital amounting to 5,873,300 ordinary voting shares through his company, a stake he bought last Friday, at an average price of Rs 11 from the Employees Trust Fund. “I visited the factory and was convinced that with my engineering background that I would be able to make a difference to the place,” Wijesuriya said. DPL, in a bid to clean up the balance sheet had a capital reduction from Rs.476 million to Rs.232 million and brought down ordinary shares to 22.6 million from 45.2 million, recently.

By wiping off the retained losses the company wanted to enhance its solvency test that is stipulated by the new Companies’ Act, where its assets will be greater than the liabilities and the stated capital (reserves). This is a fast way of cleaning up the balance sheet and with this capital reduction, Rs.244 million worth of the company’s accumulated losses (which appeared in the balance sheet as at 31st March 2007 ) was made zero. A stockbroker said that DPL had to take this decision because they underwent production interruption, lower yield in production and increases in cost per unit increases.

“In 2005 they switched to a ‘fast firing’ kiln because they had a problem with their capacity, but with the issues they faced, in 2006 DPL had to switch back to what they originally had,” he said.