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With Rs. 3.7 b new plant Ceylon Glass to blow up
turnover and export sales
By Dinali Goonewardene
Ceylon Glass initiated production at its new Rs.3.7 bn plant with
plans to grow local turnover by 8-10% annually in terms of volumes
and export sales 25% in the next two years.
The new plant in Horana has doubled the company’s production
capacity, Gujarat Glass (P) Ltd, Chairman Ajay G. Piramal told The
Bottom Line. “The plant will initially have four manufacturing
lines in operation by December 2007, producing 205 tonnes a day,
while the fifth line will be commissioned during the first quarter
of FY 2008-09,” Ceylon Glass Company Ltd., Chief Executive
Officer, Sanjay Tiwari said.
The
production capacity would then go up to 250 tonnes per day, with
flint, amber and coloured bottles in a range of sizes.
The company’s sales rose 15% to Rs.973 during the first half
and export sales accounted for 10% of its total sales. Customers
in Sri Lanka include the Distilleries Corporation of Sri Lanka,
Ceylon Cold Stores, UniLevers and Glaxo.
The new plant was commissioned under the government’s 300 factory
programme, which enabled the company to benefit from incentives
such as duty free capital imports, a five year tax holiday and a
concessional tax scheme thereafter.
“Among the advantages of setting up this plant in Sri Lanka
is the skilled workforce borne out by the fact that in the last
three years we have only had three Indian expatriate staff in Sri
Lanka,” Piramal said. He also mentioned that the company had
expatriated personnel from Sri Lanka to India and the US. “The
old plant in Ratmalana has been mothballed and with the commissioning
of our new plant there will be employment generated to 500 people
both directly as well as indirectly,” Tiwari said. We
have signed a collective bargaining agreement with the inter-company
union for the next three years including the amicable relocation
of people, Tiwari said.
Funds for setting up the plant were generated through a Rs.752 mn
rights issue and the remainder funded entirely through bank borrowings.
The company has a weighted average cost of capital of 17%.
The growing worldwide demand for specialty glass containers has
presented opportunities for the company to enter the niche market
for coloured glass containers.
The
company is the sole supplier of blue bottles for a major brand of
the world’s second largest liquor producing company and is
currently exploring opportunities in India, the Philippines, Mauritius
and Australia.
According to Ceylon Glass Chairman Vijay Shah, the world market
for food and beverage glass is over US$ 12 bn and is growing at
12%, cosmetic and perfume glass is US$ 1.9 bn and growing at 5%,
while the pharmaceutical glass market is approximately US$ 2 bn.
Key markets for specialty food and drinks are the US and Europe,
which are forecasted to be US$125 bn by 2009 with a Compounded Annual
Growth Rate (CAGR) of 5%.
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