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| Tuesday, 14 September 2004 |
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Royal Ceramics turnover up 44% to Rs. 1.3 billion, profits decline Royal ceramics Lanka Ltd recorded a Rs. 85,080 million for the financial year ended April 31, 2004. The company announced a 10% dividend to shareholders. Though the profits have declined when compared to the previous year, the sales turnover has increased by 44% to Rs. 1.3 billion. The company attributes increased output from the Horana factory and changes in administrative and marketing tactics as factors from growth in turnover.
Chairman, Royal Ceramics, A. M. Weerasinghe in his review on annual performance said that with the controlling interest passing on to Dhammika Perera the company underwent a strategic paradigm shift, in line with consolidation of processes and a more pragmatic overview of future direction. This prompted the entry of Chief Executive Officer, J. K. Menon whose impressive track record with the Maharajah Organisation as CEO of S-Lon is ample proof of being the right choice to lead a company on the threshold of change. "On a synopsis of the company's financial performance, I am pleased to announce the declaration of a 10% dividend to our shareholders based on the significant progress we have made during the year under review, even though our profits declined when compared to the previous year. Our sales turnover increased by 44% to Rs. 1.3 billion, which can be mainly attributed to the increase output from the Horana factory as well as the changes in administrative and marketing tactics undertaken by the company during the year. Earnings Per Share too saw a decline from Rs. 1.62 last year to Rs. 1.54," Weerasinghe said. "In keeping with the theme of this year's annual report as being truly Sri Lankan, we have endeavoured to create for the company and the country, an image of excellence. Rocell's image building exercise begun last year has borne fruit and can be attributed to the increase in sales as well as the slowly expanding export portfolio. Recognition of the brand as well as our input into exports has been acknowledged at a number of fora, culminating in a National Award for Export Excellence as well as an unprecedented number of four awards for a brand as young as ours at the SLIM Awards 2004, certainly achievements to be proud of. Our new initiatives have also led to a complete modernisation of our showrooms and an expansion of the network to 27, giving customers a unique experience in shopping for tiles. With the investment into infrastructure, plant and machinery at the Eheliyagoda and the Horana factories, our processes too have been upgraded, allowing us to experiment with newer designs and different sizes, he said. CEO of Royal Ceramics J. K. Menon said that the year 2003/2004 was a mixed one for Royal Ceramics Lanka Limited. It was a year of substantial growth yet we could not deliver on the promise made last year. We reflected on our past strategies, took stock and planned for newer and better things. We are, however, moving towards achieving our objectives of transforming the company from being simply a player in the floor tiles industry to one which will perform competitively and productively in an increasingly challenging market. "I am pleased to say that we have seen some success in this area, becoming market leader holding a 40% market share during the year. We have been able to transform the company and move it towards the objectives we have set for ourselves, concentrating on strengthening efforts in areas of quality, productivity, cost reduction, improved efficiencies and focused marketing." "With only two serious local players in the floor tile industry and a third competitor by way of the considerable number of importers as a Group, sales volumes remain almost equally divided between the three. However, volumes of low priced imports do make a significant impact in the market. Unfortunately, imports of all qualities now flood the local market and the average customer cannot distinguish between the good and inferior qualities at a glance. It may be argued that low cost tiles meet the requirements of the budget customer whose requirements and expectations rest on affordability, but in the long-run it will end up shortchanging the genuine quality seeker. Cheaper imports do fill the need for upgrading cement floors to the more durable tile floors but there is a prevalent danger of the market balance being upset, as a lower price cannot guarantee durability, thereby shaking public confidence in the industry as a whole. It is imperative therefore that quality certifications become mandatory for tile imports and some sort of an awareness campaign be lunched so that the public can differentiate between different quality products," Menon said. "Our top line increased by 44% to Rs. 1.3. billion, a direct result of the substantial increased output from our new plant being available for sales. We have seen a total increase in overall sales, though falling marginally short of budgets and expectations. The bottom line slowed significantly due to a number of factors, which we have begun addressing immediately, the results of which will be positively reflected in totality in the coming year. Increased marketing and distribution costs, higher interest costs arising from sub optimal management of working capital and stock build up leading to a higher degree of promotional and discounted sales, can be attributed to the lower realisations, leading in turn to lower than expected profits. But despite these factors, our sales volume continues to be encouraging and our image building exercise has borne fruit with Rocell now being the preferred brand synonymous with quality and value", he said. - SP |
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