After two years of losses Dankotuwa Porcelain saw a turn around in the first quarter of 2007 with a modest profit. It recorded an after tax profit of LKR 7.1 Million for the first 09 months of 2007. This is in contrast to the loss of LKR 112.7 Million for the corresponding period in 2006. Turnover during this period has increased 11% over the corresponding period in 2006, while manufacturing costs have declined. In Dollar terms too the turnover increased but the major increase was from the depreciation of the Rupee.

The Company in a recent letter to the Colombo Stock Exchange (CSE) stated that the Board has decided to revalue the land as per the Sri Lanka Accounting Standard SLAS 18 (Revised 2005) and accordingly the value of the land has increased by 227% to LKR 133,997,000/- which will be reflected in the balance sheet as at 31 December 2007. This has led to a revaluation surplus of LKR 92,997,000/-.

Dankotuwa is a BOI Company and is mainly export oriented with 85% of its production being exported to over 25 countries. Dankotuwa was also awarded the most prestigious highest Presidential Export Award last year. “The order situation has considerably improved due to a number of reasons said Chairman/Managing Director, Sunil G Wijesinha commenting that the financial recovery, improvement in timely deliveries and improvements made to the factory have induced more confidence amongst the buyers. The period when we made losses caused some concern to the foreign buyers because they were unsure about their future supplies, but now we are past that, and the buyers are now increasing their orders.”

Dankotuwa has been gradually upgrading its products towards the upper end of the market and this too seems to have paid off. The whiteness of the products produced by Dankotuwa and design development has been the competitive advantages of Dankotuwa. Although costs have been going up continuously with steep increases in gas and diesel, Dankotuwa has been gradually improving its productivity and yield, thereby over-coming the cost escalations. Dankotuwa added Pakistan, Egypt and the Czech Republic to its marketing network last year and also found that some of the newer markets such as Dubai and India growing extremely well.

Dankotuwa participated at the Ambiente fair in Frankfurt which ended on 14 February 2008. Ambiente fair is the most popular trade fair with buyers from all over the world coming to see the latest designs on display. This fair which has other categories in lifestyle products and house-wares had approximately 87 countries participating with over 4,500 exhibitors out of whom over 2,000 exhibitors were in the tableware and kitchenware category. An estimated 150,000 visitors attended the trade fair.

There are many stands by Chinese manufacturers who go for volume while there are stands such as Dankotuwa which focus on niche middle markets. The top brands also have their presence at the fair. “This is an occasion we meet the entire fraternity in the business. Our international agents bring their own customers who are either wholesalers or retailers. This is not a trade fair where you just display your products, it is a relationship building one where we meet our customers and discuss projects to manufacture according to their requirements” said Wijesinha.

At this fair several new relationships commenced, with Dankotuwa being talked about by many of the buyers as a great factory with great potential. Many customers commented on the quality of the products and complimented the factory staff on their ability to make complicated designs. Dankotuwa claims that the interest shown would keep the factory busy for the rest of the year.

Being export oriented Dankotuwa products conform to Food Safety Guidelines and therefore, its products are completely safe for food. In fact, its standards are even more stringent than the standards set by the Food and Drugs Agency [FDA] of the USA.

Although only 15% is put out locally, the market has begun to accept Dankotuwa for its body, quality and design variety. “The B to B market has expanded significantly and we do quite a lot of special orders for hotels, embassies, corporate gifts etc., and this seems to be a growing market because more and more people want customized products with their own design or logo.” says Sunil G Wijesinha. Recently, Dankotuwa commenced supplying to big retail chains like Arpico and most of the local market designs would be available through Arpico Showrooms. Dankotuwa also supplies through a Dealer network of 60 Dealers. However, it retains its most prestigious and expensive designs only for its own showrooms located at Galle Road, Kollupitiya, High Level Road, Kurulapone, Negombo Road, Kandana and the Factory Outlet at Dankotuwa. “With Chinese imported porcelain becoming more expensive, many dealers who left us to deal with Chinese products now want to come back, but we are unable to accommodate them unless we expand capacity” added Sunil G Wijesinha.

Dankotuwa recently launched a new hotel ware shape and is already receiving very encouraging orders.

The only concern for Dankotuwa is the energy price increases. Many of the improvements in productivity, value addition and yields have not become visible because they had been eroded by the increasing energy costs. Dankotuwa had hoped to go for a Rights Issue, but it’s still not finalised.