Cheaper cable manufacturers threat to market welllbeing
ACL Cables PLC, a major player in the manufacture and distribution of electrical cables in the country, had seen a marginal increase in group turnover during the year ended March 31, 2014 but seen profit before tax decline mainly due to intense competition with foreign suppliers for large local projects.
The company’s Chairman, Mr. U.G. Madanayake has said in the annual report that group turnover was up to Rs.11.4 billion from Rs.11.3 billion the previous year while profit before tax declined from Rs.753 million to Rs.688 million.
"The metal prices have been relatively stable during the year and therefore, gains or losses from procurement have not been significant," he said.
ACL group comprises three listed companies, ACL Cables PLC, Kelani Cables PLC and ACL Plastics PLC as well as unlisted ACL Kelani Magnet Wire (Pvt) Limited, Ceylon Bulbs and Electricals Limited, ACL Metals and Alloys (Pvt) Limited, Ceylon Copper (Pvt) Limited and ACL Electric (Pvt) Limited.
Madanayake said that government focus on infrastructure development gives the group confidence to look forward to increase in demand for cables and other electrical products.
"These favourable predictions and proposed development of the five hubs concept of the government gives us confidence to invest in technology and capacity expansion to meet future demand," he said.
"The current policy of the government is to increase liquidity in the market by lowering of interest rates with the hope of increasing demand for consumption and investment goods. Lower cost of capital will help existing industries to invest more and also to create a new set of entrepreneurs, thereby widening the industrial base in Sri Lanka. These are favourable trends for our industry,"
He noted that although the number of electricity consumers had grown by 4.5% according to CEB statistics, the demand for electricity was down 2% reflecting energy conservation practices adopted in response to electricity price increases.
However, sales to hotels and general purpose categories have increased by 5% and 5.2% respectively reflecting continuous growth in the tourism industry and other business activities.
In the industrial sector, there was a 1.9% increase in electricity consumption although that sector too would have adopted conservation methods to reduce expenditure on electricity, Madanayake said.
"These positive trends in demand will enhance our confidence that demand for cables by utilities and industries will continue to increase," he added.
The company’s Managing Director, Mr. Suren Madanayake attributed the drop in profitability and turnover of ACL compared to the previous year mainly due to some of the large orders they had undertaken the previous year tailing off during the year.
However, they were confident that this situation would be more than corrected from the second quarter of the current financial year.
The company’s turnover was down to Rs.6.3 billion from the previous year’s Rs.6.7 billion and its profit after tax down to Rs.98 million from the previous year’s Rs.161 million.
"Stiff competition in the market, the slight reduction in turnover and the lower margin we earned on some of the large orders are the key reasons for the reduction in profitability," he said.
"Even though margins were relatively lower, many large-scale projects helped us to maintain our turnover above Rs.6 billion. A gradual reduction of interest rates during the year helped us to keep the financial costs lower compared to those of the last year.
"The CEB continued to remain active during the year under review which helped us to maintain a satisfactory turnover from that segment. It was encouraging to see that exports showed a growth in turnover to expected levels," Madanayake said.
He explained that relative stability of the metal market was indeed favourable and prevented them from losing money; had this market been volatile it would have created unexpected gains or losses.
"Cheaper cable manufacturers continued to remain a threat for the well-being of the cable market and safety standards of the country though their activities were less prominent in the year," he said.
ACL had introduced a range of switches that would be considered an effort towards filling a void in the market place which lacked high quality products in line with original international standards.
They had already received a large order for the supply of Aerial Bundled Cables as a result of the government’s desire to modernize infrastructure while supporting the local industry. They congratulated the government for this initiative and sincerely believed that this trend of supporting the local industry will be a more regular feature.
ACL Cables has a stated capital of Rs.299.5 million, a capital reserve of Rs.1.44 billion and general reserve of Rs.1.12 billion in addition to Rs.3.24 billion retained earnings in its books.
Total assets ran at Rs.12.05 billion and total liabilities at Rs.5.2 billion.
Net assets per share were up to Rs.101.84 from Rs.95.48 a year earlier and the share closed the period under review at Rs.61 against Rs.65.50 a year earlier.
Mr. U.G. Madanayake with 38.13% and Mr. Suren Madanayake with 22.21% are the major shareholders with the EPF (5.24%), SLIC Life Fund (3.51%), NSB (2.13%), ETF (1.86%) and Mrs. N.C. Madanayake (1.72%) among the top 20 shareholders.
The directors of the company are: Messrs. U.G. Madanayake (Chairman), Suren Madanayake (MD), Mrs. N.C. Madanayake, A.M.S. de S. Jayaratne, Hemaka Amarasuriya, D.D. Wahalatantiri and P.S.R. Casie Chitty.
www.island.lk
ACL Cables PLC, a major player in the manufacture and distribution of electrical cables in the country, had seen a marginal increase in group turnover during the year ended March 31, 2014 but seen profit before tax decline mainly due to intense competition with foreign suppliers for large local projects.
The company’s Chairman, Mr. U.G. Madanayake has said in the annual report that group turnover was up to Rs.11.4 billion from Rs.11.3 billion the previous year while profit before tax declined from Rs.753 million to Rs.688 million.
"The metal prices have been relatively stable during the year and therefore, gains or losses from procurement have not been significant," he said.
ACL group comprises three listed companies, ACL Cables PLC, Kelani Cables PLC and ACL Plastics PLC as well as unlisted ACL Kelani Magnet Wire (Pvt) Limited, Ceylon Bulbs and Electricals Limited, ACL Metals and Alloys (Pvt) Limited, Ceylon Copper (Pvt) Limited and ACL Electric (Pvt) Limited.
Madanayake said that government focus on infrastructure development gives the group confidence to look forward to increase in demand for cables and other electrical products.
"These favourable predictions and proposed development of the five hubs concept of the government gives us confidence to invest in technology and capacity expansion to meet future demand," he said.
"The current policy of the government is to increase liquidity in the market by lowering of interest rates with the hope of increasing demand for consumption and investment goods. Lower cost of capital will help existing industries to invest more and also to create a new set of entrepreneurs, thereby widening the industrial base in Sri Lanka. These are favourable trends for our industry,"
He noted that although the number of electricity consumers had grown by 4.5% according to CEB statistics, the demand for electricity was down 2% reflecting energy conservation practices adopted in response to electricity price increases.
However, sales to hotels and general purpose categories have increased by 5% and 5.2% respectively reflecting continuous growth in the tourism industry and other business activities.
In the industrial sector, there was a 1.9% increase in electricity consumption although that sector too would have adopted conservation methods to reduce expenditure on electricity, Madanayake said.
"These positive trends in demand will enhance our confidence that demand for cables by utilities and industries will continue to increase," he added.
The company’s Managing Director, Mr. Suren Madanayake attributed the drop in profitability and turnover of ACL compared to the previous year mainly due to some of the large orders they had undertaken the previous year tailing off during the year.
However, they were confident that this situation would be more than corrected from the second quarter of the current financial year.
The company’s turnover was down to Rs.6.3 billion from the previous year’s Rs.6.7 billion and its profit after tax down to Rs.98 million from the previous year’s Rs.161 million.
"Stiff competition in the market, the slight reduction in turnover and the lower margin we earned on some of the large orders are the key reasons for the reduction in profitability," he said.
"Even though margins were relatively lower, many large-scale projects helped us to maintain our turnover above Rs.6 billion. A gradual reduction of interest rates during the year helped us to keep the financial costs lower compared to those of the last year.
"The CEB continued to remain active during the year under review which helped us to maintain a satisfactory turnover from that segment. It was encouraging to see that exports showed a growth in turnover to expected levels," Madanayake said.
He explained that relative stability of the metal market was indeed favourable and prevented them from losing money; had this market been volatile it would have created unexpected gains or losses.
"Cheaper cable manufacturers continued to remain a threat for the well-being of the cable market and safety standards of the country though their activities were less prominent in the year," he said.
ACL had introduced a range of switches that would be considered an effort towards filling a void in the market place which lacked high quality products in line with original international standards.
They had already received a large order for the supply of Aerial Bundled Cables as a result of the government’s desire to modernize infrastructure while supporting the local industry. They congratulated the government for this initiative and sincerely believed that this trend of supporting the local industry will be a more regular feature.
ACL Cables has a stated capital of Rs.299.5 million, a capital reserve of Rs.1.44 billion and general reserve of Rs.1.12 billion in addition to Rs.3.24 billion retained earnings in its books.
Total assets ran at Rs.12.05 billion and total liabilities at Rs.5.2 billion.
Net assets per share were up to Rs.101.84 from Rs.95.48 a year earlier and the share closed the period under review at Rs.61 against Rs.65.50 a year earlier.
Mr. U.G. Madanayake with 38.13% and Mr. Suren Madanayake with 22.21% are the major shareholders with the EPF (5.24%), SLIC Life Fund (3.51%), NSB (2.13%), ETF (1.86%) and Mrs. N.C. Madanayake (1.72%) among the top 20 shareholders.
The directors of the company are: Messrs. U.G. Madanayake (Chairman), Suren Madanayake (MD), Mrs. N.C. Madanayake, A.M.S. de S. Jayaratne, Hemaka Amarasuriya, D.D. Wahalatantiri and P.S.R. Casie Chitty.
www.island.lk
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