Ceylon Glass sees better future

Ceylon Glass says it’s confident of bouncing back after its new plant in Horana is fully operational after a drop in net profit and share price gyrations.

Ceylon Glass President and Managing Director, Sanjay Tiwari said the past two years has seen an all time high increase of LPG, diesel, furnace oil and electricity which has affected the production costs.

A stockmarket analyst noted that the share price has been a huge disappointment during the past three years. “In March 2005 the company posted Rs. 232 million net profit but since then it has gradually declined,” he said.

He noted that Ceylon Glass took a hit of Rs. 80 million last year on asset depreciation because they wrote off the furnace.

He said since the company is relocating from its Ratmalana site to the Horana plant it has to leave the furnace behind.

Tiwari said the furnace was built in 1993 with an installed capacity of 100 tonnes and that when a glass plant is put up it takes into consideration the capacities required for the next 8-10 years.

“This is so since once a furnace capacity is installed it would remain the same for the life time of the furnace and the capacity utilisation of the furnace gradually increased during the years and attained its peak in 2005.

Also the glass industry being a high fixed cost oriented industry, the profitability increases as it maximises its capacity utilisation,” he said.

He said that during this period the management decided to look out for enhancing the capacity looking to the continuous growth of domestic requiremesnt and the potential in the international market.

“This would be completed in the 3rd quarter of the current financial year 2007/08. With the completion of this project, the company’s current production capacity for manufacturing coloured bottles of different shapes would be more than doubled. ”