Laxapana’s diversification yields results

Two consecutive dividends after long period of nil returns

June 13, 2015, 6:50 pm 

Laxapana Batteries Plc., a company founded 59 years ago as Elephant Lite Corporation Ltd. to manufacture torch and transistor batteries in Sri Lanka has ended a long spell of loss making and difficult years and succeeded in declaring its second consecutive dividend in the year ended March 31,2015.

Laxapana Chairman S D R Arudpragasam had said in the company’s just released annual report that it had continued to grow recording a turnover of Rs. 190 million in the year under review, up 81% from the Rs. 105 million achieved the previous year.

The pre-tax profit had also improved 44% to Rs. 19.5 million from the previous years, Rs. 13.5 million as a result of the adoption of new strategies to diversify the businesses to include a range of new products contributing to the growth of both turnover and profits.

"The decision to diversify and thereby achieve the business objectives of the company resulted in a higher emphasis on quality; the quality of our products surpassed the competitor standards and sales were supported by a judicious marketing campaign, all of which bore fruit," Arudpragasam said.

He explained that the company which was a dedicated torch and transistor battery manufacturer in the past had to adapt to changes in the dry cell battery market with rural electrification affecting local purchasing patterns of portable lighting.

"The company’s performance had been falling and it was imperative that the management made bold decisions to diversify the business, to arrest the decline and propel the business on a new upward path to achieve the desired growth," he said.

He had reported in the previous annual report that they had begun assembling CFL bulbs in their factory. This project has been successfully implemented and plans are afoot to widen the product range and improve market share by the end of the next financial year.

With investment in laboratory testing facilities, Laxapana has been able to impose very strict quality control to ensure the high standard of quality of their CFL bulbs. Research and development was an ongoing function with emphasis on offering innovative high-tech products providing better lighting at low energy consumption levels.

Arudpragasam noted that the dividend of 25 cents per share for the year under review "would be the second successive year in which a dividend is being paid after a long lapse."

Laxapana continues to market zinc chloride and alkaline type AA and AAA batteries, CFL bulbs, safety wax matches and sanitary napkins under the Lily brand name. It has also introduced a Laxapana brand re-chargeable torch to the market during the year.

The company’s factory and office are located on three and half acres of freehold land in Colombo.

The company has a stated capital of Rs. 138 million and retained earnings of Rs. 22.7 million in its books. Total assets ran at Rs. 268.2 million and total liabilities at Rs. 107.5 million.

E B Creasy and company with 51.58 % is the controlling shareholder.

All other shareholders individually hold less than 6.5%.

The company has 1,963 shareholders on its register with the majority holding between 1001 and 10,000 shares. The Laxapana share closed at Rs. 4.60 in the year under review trading between a low of RS. 3.40 and a high of Rs.6.70. This compared to a close of Rs. 3.50 the previous year on a trading range of Rs. 3.40- Rs. 6.20.

The directors of the company are, S D R Arudpragasam, Chairman, K D Sumanasekera (CEO), R N Bopearatchy, S Rajaratnam, R C A Welikala, P M A Sirimanne, A R Rasiah, S M P Palihena, A M Mubarak and S W Gunawardena.

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