Kotmale Holdings set for expansion

Kotmale Holdings Ltd announced a Private Placement to issue 12,560,000 ordinary shares, which will be offered at a par value of Rs. 10 per share.

The issue opens today, just after the Extra-ordinary General Meeting on June 13, which also saw the name change of the company from Lambretta (Ceylon) Ltd to Kotmale Holdings Ltd.

Following Sri Lanka's first-ever reverse takeover by its parent company Lambretta (Ceylon) Ltd, Kotmale Holdings Ltd has become one of the largest dairy processors nationally.

Kotmale Holdings Ltd has a track record of steady growth. The last four years saw the company recording an accumulated growth rate of 200% in turnover. For the year ended December 31, 2004, its consolidated profit after tax was approximately Rs. 20 million.

"Based on the company's current growth rates and the forthcoming infusion of new capital, we would anticipate Kotmale Holdings Ltd to record a profit in the region of Rs. 40 million for the year 2005. That in turn would increase the attractiveness of the share," Chief Executive of Kotmale Holdings Ltd Ramesh Schaffter said.

This share issue is a part of Kotmale Holdings Ltd's expansion strategy. The net proceeds from the offering will be utilized to strengthen the company's balance sheet, broad-base ownership of the company and finance expansion. An estimated Rs. 30 million will be invested in strategic corporate enhancement such as upgrading the production facilities at Kotmale and Colombo.

A further Rs. 60 million will be used on debt repayment and to develop the company's distribution network to an islandwide reach. The balance will be used to finance working capital requirements. With this offer, Kotmale Holdings Ltd intends to consolidate its presence in the Sri Lankan market, where the company sees substantial potential for profitable growth.

The share issue would also allow the company's current employees to participate by becoming shareholders of the company. A 10% of the shares will be available to employees at a par value of Rs. 10 per share thereby enabling them to purchase shares without any restrictions.