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For South East Asian Market:

Bogala Graphite into lubricants

Bogala Graphite PLC will produce graphite lubricants in Sri Lanka for the South East Asian market in the near future.

Bogala Graphite Chairman Vijaya Malalasekara said there is a good potential to capture this market with quality graphite lubricants which will boost the company’s export sales increasing profitability.

He said that the parent company agreed to locate a lubricant processing plant at Bogala last year but the installation of it could not be completed during that period as planned but it will come into operation end of the first quarter this year.

The company has achieved the highest recorded profit and the second highest turnover since its privatization in 2000 and the future appears to be more positive consequent to the recovery of the international economy.

The company has earned Rs 1.49 per share against a negative profit of Rs 2.70 last year. The sales of the company increased by 59 percent while gross profit increased to Rs 131 million and the profit after tax stands at Rs 70 million in the financial year 2010.

Malalasekara said that the voluntary retirement scheme which was in operation is now complete and it helped in reducing the company’s cost base. The finance costs reduced considerably during the period under review from Rs 50 million to Rs 16 million which was the lowest since 2000. This was possible as a result of obtaining a loan from the parent company at a lower rate of interest enabling payment of all short-term overdraft facilities.

Group turnover grew by 59 percent to Rs 386 million on a reduced volume of exports which stood at 2671 metric tons in 2010. Increased demand for high grades and high valued graphite products was the reason for this. Despite the revenue growth, cost of sales grew only by 14 percent due to leaner manning levels introduced during the past two years.

Meanwhile, the boom in the country’s stock market has had a positive impact on the share performance of Bogala Graphite Lanka which has appreciated by more than 100 percent. The share had been trading at a closing of Rs 58.50 during the year compared to Rs 18 last year reflecting the confidence of the public.

However, the directors have not recommended a dividend this year for the shareholders since the company has decided to utilize the internally generated funds for the planned capital expenditure to strengthen the capital reserves which in turn will add value to shareholders.

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