The Lanka Walltile PLC (LWL) Group is gearing to expand its business into areas such as construction materials and industrial chemicals and is considering the future of the loss-making Balangoda plant, an LWL official said .
“We are also looking at a chemical processing plant to meet the local demand. We want to get into water proofing materials, detergents, chemicals in paint and chemicals in rubber industries. We see a shortage of local manufacturers in this field,” Mahendra Jayasekera, Managing Director LWL told the Business Times.
He added that currently LWL is conducting market research on this and the company has set a timeline of two years to start this.
“LWL has performed well (so far) for this year (2009-2010 March) but during the 2008-2009 financial year its Balangoda factory lost about Rs. 40 million. We still have some trouble with it and we will take a decision on it soon (to close or not),” he said, adding: “We lost Rs. 18 million from this factory this year (up to December) but hope to end the year on a breakeven note. Either we may shut it down and focus our attention on LWL’s Meepe factory or we will need to modernize it and cut staff in a bid to make it profitable.”
He said that the Balangoda factory is old with old technology, which is why it is not making profits. “The main demand for its products is from USA and Western Europe, but due to the economic recession this demand has toned down,” he said, adding that this factory is also quite labour intensive.
Meanwhile the Meepe factory is unable to meet the demand. “About nine months ago we could not sell the production from this factory, but during the last four to five months we are selling more than the production,” he said.
He said this is mainly due to the company acquiring market share from imported tile companies (mainly because their pricing has risen due to the increase in imported tile cess), the construction resurgence in the North and the East and the demand these products get from Australia (as the Australian government has granted concessions for first time house builders).
Mr. Jayasekera also said that LWL has an expansion plan (still on the drawing board) for their Meepe factory and it will be implemented by the middle of next year. He said the factory has started producing larger tiles and will introduce a 30 inch by 60 inch tile by February. He said the company will mainly target these for the local market.
“Our local sales are about Rs. 100 million a year while exports are about Rs. 60 million,” he said, adding that for 2008-2009 LWL made Rs. 126 million profit and Rs. 175 million profit is forecasted for this year.