Piramal Glass optimistic of future despite Rs. 261m loss in 2008/09

Piramal Glass (successor to Ceylon Glass Company) last week expressed optimism over its future prospects despite suffering a Rs. 261 million loss in 2008/9 financial year largely owing to rise in costs including debt.
Addressing the media, Chairman Piramal Glass, Vijay Shah, said that the Company had reported a sales value of Sri Lankan Rs 2,936 million as against last year’s sales of Rs 2,014 million, reflecting a growth of 46%.
“As against the profit before tax of Rs 49 million in the previous year, a loss of Rs 261 million has been reported during the year under review, however the company has succeeded in maintaining a 20% GP margin as against 22% of the previous year” said Shah.

Dr Bandula Perera – Director, Vijay Shah – Chairman and Sanjay Tiwari – CEO and Executive Director, of Piramal Glass Ceylon PLC

CEO and Executive Director Piramal Glass, Sanjay Tiwari said that the company has shown a record turnover growth of 46%, despite the prevailing discouraging global economic environment.
“It is indeed a very positive sign to note the Company’s healthy growth not only in the domestic market but also in the export market, where once again we have demonstrated our capability of going global by achieving an encouraging growth of over 110% in export sales as against that of the previous year, with total export sales increasing to around 15% of total revenue, as against the figure of 10% of the previous year”.
During the year under review, Piramal Glass exported a total volume of almost 7,000 tonnes, consisting of over 25 million bottles, to markets as diverse as India, Australia, Europe and South Africa.
“The product portfolio of our exports too has widened, with the company having made inroads into the food & beverages sectors during the year under review” said Tiwari. The present portfolio for exports consists of liquor, beer, food & soft drinks in varying shades and sizes.
Shah emphasised the fact that this was the Company’s first full year of operation of its new plant at Horana. This was a Greenfield Project and had to face several hurdles during its implementation as well as during the first year of its operations. “We were able to run at full capacity only after November 2008, yet despite this the Company is now on a very firm footing. The facility is now fully geared with all five lines in operation and is drawing on the full capacity of its furnace”.
Two of these production lines also have a colouring facility enabling the manufacture of bottles of different colours, shapes and sizes, and is supported by the latest quality inspection machines, packing machines and glass laboratory equipment, which are comparable with that of any modern global infrastructure facility.
Shah said that the year under review had been an exceptional one from a global economic point of view as well. The high fluctuation in energy rates had increased the cost of production drastically, with gas prices going up by a further 5%, furnace oil prices increasing by 17% and diesel by a monumental 40%.
“These prices stabilised to a certain extent only in the 4th quarter of the financial year, while the CEB unit rate went up by 14% in the month of November 2008 alone, a fact which had a substantial impact on our energy costs”.
The interest costs which increased four fold due to rate and volume also impacted the Company’s margins negatively. The year ended with a net loss of Rs 261 million, due to higher interest costs and depreciation. However, a substantial growth in PBIDT from 18% in the year 2008, to 25% in the year 2009 has been achieved.
“It was the high sales volumes that helped the company to retain its operating margins” said Shah.
“The management is very positive about the future of the Company. With the entire infrastructure now in place, the Company is fully geared to attain great heights not merely in the local market but in the international markets as well in the very near future”.
Explaining the marketing strategy of the current year, Shah added that the current trend would lead to a three fold increase in the export turnover by aggressively marketing the additional tonnage in the international market. This would also ensure the full utilisation of installed capacity, thereby reducing the cost of production to compete in the mass market segment.
“Furthermore in the near future, we intend focussing our attention on carving a niche market in the high valued colour segment. This market would be explored by trying to capitalise on our specialisation in producing different shades of bottles in the colouring facility.”