Phoenix, leading plastic manufacturer in Sri Lanka

Indunil HEWAGE

Phoenix Industries Ltd., Sri Lanka's household brand name for plastic, is the leading and the largest plastic-manufacturing company in the island. Established in 1976, Phoenix was the first company in South-East Asia to introduce the novel high-tech in mould labeling.

The products of Phoenix cover an extensive range of plasticware, including furniture, crates, household articles, tooth brushes, rigid packaging, etc. In an interview with the Daily News Business, Phoenix Industries Ltd., CEO Hasith Prematillake, speaks about himself and his future outlook for the local plastic manufacturing industry.

Excerpts of the interview:

Q: How did Phoenix Industries' journey begin?

A: Nayagam which is a derelict factory equipped with outdated machinery, had been auctioned by the Department of Inland Revenue due to various tax issues and Phoenix chairman M.H Omar had bidden against all the bidders who had been in the plastic industry, paying more than the value of the property. His vision was to resurrect it and convert it into a splendid, state of the art manufacturing facility to produce an extensive range of plastic products. Since then, Omar and his two sons Ashroff Omar and Aslam Omar have teamed up in developing Phoenix Plastic and true to its name, Phoenix today is Sri Lanka's leading manufacturer of plastic.

Phoenix produces an extensive range of plasticware, including furniture, crates, household articles, toothbrushes.

The products of Phoenix comes under three main categories, namely, industrial packaging, consumer household products and consumer hardware.

Hasith prematillake. Picture by Ruwan De Silva

The industrial packaging includes tubs for Ice cream, Margarine; bottles for Shampoo, Milk, Detergent, juices and crates for soft drinks and hard liquor and consumer household products include plastic furniture, buckets and basins, baskets, etc. Phoenix has recently moved into a new area of furniture to manufacture sofas.

With this initiative, the company expects to move on to other segments of plastic in hardware.

Q: What are the local companies Phoenix is working with?

A: In Sri Lanka, Phoenix has been working with approximately 20 companies and the local client portfolio of Phoenix includes Unilever, Caltex, Elephant House Cargills, Hemas, Pepsi, Lion Brewery, DCSL, Reckitt & Benckiser, Nature Secrets, Smack, ANE Lanka, Nestle and GlaxoSmithKline.

We do exports to several countries in small quantities and the reason for not progressing exports was that the company did not have enough capacity for last year up to until this year.

It was only this year that our capacity was opened for export markets and it was not as profitable as the local market. Phoenix has been exporting products to Australia, South Africa and the Maldives from time to time and Bangladesh is a regular customer for thread cone. This year Phoenix is planning to export flower pots to the USA, while the first consignment would leave the country in November this year.

Phoenix has a state of the art facility at the Industrial Zone in Makandura and has two other mini manufacturing units outside Makandura. One facility is dedicated to manufacture tooth brushes for Signal and Clogard, while the other facility manufactures' plastic cans for 'Just in Time.'

Q: How has 2012 been so far for your company?

A: Year 2011 has been the best year for Phoenix where we had a very good growth rate in turnover and profits. The company had also recorded a satisfactory growth rate during the first five months of this year. However, starting from June, the market was sluggish and there was a little difficulty in achieving our targets.

However, this year's performance was much better than last year.

Phoenix's overall market share has grown over 10 - 15% and our growth rate has been at 40% year on year.

Q: Achievements?

A: Phoenix Industries Limited was recently accorded the "Gold Flame" for our energy conservation initiatives at a ceremony organised by Sri Lanka Sustainable Energy Authority, which was the highest rated facility in the 'Large Scale Manufacturing' category.

In 2011, Phoenix received the bronze flame and the company has committed themselves to keep up the momentum with continuous improvements in the area of energy management.

Q: With many new foreign plastic manufacturing companies, specially Indian companies arriving in Sri Lanka, how do you see their presence? Will this have an impact on local plastic manufacturers?

A: Nilkamal is the only Indian company that manufactures plastic based product in the Sri Lankan market.

There are about 56 Indian companies who produce plastic more than the annual plastic consumption of Sri Lanka.

The total plastic consumption of the country is 180,000 metric tons per annum. In India, there are five to six companies who are very close to this level. Nevertheless, per capita in India and Sri Lanka is equal.

Indian companies looking into avenues in Sri Lanka have to set up manufacturing units here,

unless the industry is well protected through duty.

There is high duty on plastic imports and there is no competition with the imported plastic, the competition is only within local industries.

We intend to be two steps ahead of the competition and have proven it over the past years by introducing new technology, particularly, In Mould Labeling (IML) technology.

Q: What trends could be identified in the global plastic manufacturing industry?

A: Plastic is a 100% oil based product with an overall oil consumption in the world, 50% goes to transport, 11% for energy and another 11% for plastic manufacturing. The plastic manufacturing industry is growing year on year while more plants are coming up, especially in the Middle East and East.

Like the economy is shifting from west to east, the plastic industry too is shifting from west to east. It is an identified fact that plastic consumption of industrialized countries has been very high and plastic is heavily used in industrialized equipments.

Day by day, a lot of innovative plastic or engineering plastic is coming in and this trend would replace most of the alternatives such as metal, glass and paper.

Glass has been mostly replaced with plastic transparent sheets and Phoenix, as a responsible company, has done a lot of innovations on the energy side. Plastic consumes a fair amount of energy and if a paper bag is recycled, it would consume twice the energy compared to recycling a plastic bag.

Glass or energy consumes more energy than recycling plastics. That is another method where plastic is being environment friendly. Energy saving is one area we have focused on and Phoenix has installed hybrid machines which consumes less energy than the conventional machines.

We have re-engineered plastic by introducing high strength materials to replace low strength materials, which reduces the weight of the products. So we have taken various initiatives to increase the efficiency by way of reducing energy consumption.

Q: what sort of investment plan does your company have in mind. What innovations could we look forward to?

A: The company will lay the foundation stone on August 31, to start a new facility in the Horana Industrial Zone, adjoining the Unilever Facility at a cost of Rs 350 million.

The plant is being dedicated to supply the packaging requirements of Unilever Sri Lanka.

In addditon, Phoenix has invested Rs 2 billion for the Makandura Factory during the year 2010-2011 and it is expected to invest another billion this year and have already invested half a billion rupees for the Makandura facility.

Phoenix recently introduced a health friendly CPVC pipe which is produced without a led stabilizer. CPVC pipes prevent sedimentation of various materials and the product had been approved by the National Science Foundation. The company will be moving into the Thermoforming technology which would be commissioning in a couple of months time and Phoenix expects to manufacture disposable cups and trays through this technology.

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