Dankotuwa Porcelain poised for next wave of growth

Dankotuwa which made its impact in the Export Awards in the 1990s by winning the Presidential Exports Awards for 3 years in 1990, 1991 & 1993 and winning at least a merit continuously from 1989 to 1994 and then going on to win the National Chamber of Exporters Award “Sri Lanka’s Most Outstanding Exporter of the year” for two years in succession and then again in 2004 and winning at least a merit award since 1995 onwards except in 2001 has bounced back to the top slot winning the top most award at the Presidential Export Awards 2005. At the ceremony held on 23 August 2007 Dankotuwa was awarded the most prestigious award.

Dankotuwa’s continuous performance in exports is mainly due to its ability to adjust to the changing demands of International customers. In the early 1990’s it was famous for its quality and the competition was not as intense as it is today. “With a smaller marketing budget we were able to gain the confidence of customers. Foreign buyers would hear of our quality and come looking for us” said Sunil G Wijesinha, Chairman/Managing Director.

This has changed over the years, today Dankotuwa has to be much more responsive to customer needs and have to follow customer trends very closely.

In the early 1990s Dankotuwa began making heavy gold decorated items especially for the USA market. Getting the quality right became a difficult task and as a result the decorated rejects increased and the margins were almost non existence. However, with the encouragement of the main Japanese shareholders at that time Dankotuwa kept on with the attempts to perfect this type of decoration and finally succeeded. Dankotuwa gained world wide recognition as one of the best in heavy gold decorations. Unfortunately by late 1990s gold decorations went out of fashion and in came the casual inglaze decorations. Once again Dankotuwa responded to this change and purchased an inglaze kiln. However, the casual designs were not complicated and margins reduced.
By the late 1990s the European customers kept pressing us to improve the whiteness.

They warned that with the whiter porcelains being produced in many countries we may loose the market. Dankotuwa teamed up with a supplier with research capabilities and worked on a whiter body. The new white body was introduced in 2000. To produce this new body with superior characteristics the imported component of raw materials went up. Around the same time the trend began developing for new shapes for which Dankotuwa adjusted, purchased new machinery, commissioned new shape designers from UK and responded well to the market.

When China entered the market with rock bottom prices and with every conceivable shape, many customers were looking at China. Agents with whom long-term relationship had been built up were still faithful to Dankotuwa but they too were under pressure from their competitors. Over the last few years competition was at its highest. “The first part of this year was very tough for us and we had to double our marketing efforts” says Chief Operating Officer Sarath Mallawa Arachchi. He adds that there are signs that the market is bouncing back. For example Spain where the volumes dipped during beginning of the year is once again coming back. The UK market too is improving and we have been commissioned to produce a “Kelly Hoppen” range. In 1989 we exported to only 7 countries but today the export destinations are fast reaching 30 he said. This year Dankotuwa penetrated three new destinations Pakistan, Egypt and the Czech Republic and are hopeful that the market will be strong in the months to come.

Before the end of this year Dankotuwa will launch a new hotel ware range which is now under development. Sarath Mallawa Arachchi confirmed that already there are strong inquiries for the new hotel ware range.

Dankotuwa which ran up losses in 2005 and 2006 has stabilized now having recorded a slight profit so far this year. The increase in energy cost, bank interest and labour cost have had an impact on the company but has been partly mitigated by the depreciation of the Rupee. As part of its restructuring efforts Dankotuwa proposed a capital reduction which was approved by the shareholders last week. Discussions are going on with the labour unions regarding amendments to the collective agreement which are expected to be concluded before the end of the year. The only issue which is still not resolved definitively is the failed kiln.

Therefore Dankotuwa is looking forward to overcoming the present problems and coming out strongly in the year 2008. The recognition granted by the Presidential Exporter Awards has had a great impact in enhancing the Company’s image in the overseas markets. Being the only listed tableware company and the only tableware company to be awarded Superbrand status Dankotuwa will take steps to further promote its “Dankotuwa” brand in the local and international markets.