Kelani River Yard operational, client portfolio expands
Colombo Dockyard PLC, affected by the recession in the global shipping industry, has seen both revenue and profitability drop in the year ended December 31, 2011 with revenue down 12% to Rs.12.8 billion, the gross operating profit down 30% to Rs.2.3 billion and the profit after-tax down 13% to Rs.1.8 billion, the company’s annual report reveals.
The company founded in 1974 and presently operating as the country’s largest engineering facility is active in ship repairs, shipbuilding, heavy engineering and off-shore engineering.
Japan’s Onomichi Dockyard Company Limited with 51% of the equity is the controlling shareholder followed by the EPF (14.5%) and SLIC (nearly 10%) through its Life and General funds, the Sri Lanka Ports Authority (3.04%) and the ETF (1.68%).
The company’s Chairman, Mr. Akihiko Nakauchi, said that despite the downturn in the global shipping industry their order book was strong enough to ensure maintenance of revenue and profit this year. He said that business will be challenging as there is a significant reduction in container and tanker traffic with ship repairs too likely to be less.
In this context, they intended being very prudent in expenditure and will ensure strategies to reduce waste and management cost and increase productivity and efficiency.
"The increased activity in off-shore business is one area that Colombo Dockyard will be emphasizing in the coming year," he said.
Geographically the company could not be better placed in a hub of global sea routes and with this advantage they know that can consolidate their strengths and derive advantages.
Given the challenges, their ship building and ship repairs business had done well by remaining profitable although forecasted targets had not been achieved due to the global downturn affecting not only their company but the industry overall.
The company’s Managing Director, Mangala P.Yapa said that despite turnover and net profit falling below the previous year’s levels, they had done reasonably well compared to other shipyards in the region.
An important development within the year was the installation of their Kelani River Yard at a site close to but outside the Port premises. Commissioning this yard was imperative in the context of their having to work against numerous constraints including lack of space that prevented them from expanding to emerging new business areas.
India is the largest source of business for the company having accounted for Rs.4.3 billion of its revenue last year. However, Samoa contributed Rs.5 Billion revenue while Rs.1.3 billion came from locally from Sri Lanka and Rs.1.4 billion from Singapore.
Segmentally, ship repairs accounted for Rs.1.4 billion of the operating results, Rs.662 million came from shipbuilding, Rs.225.7 million from heavy engineering and Rs.30.4 million from material sales.
The order book as it stands covers the company with work till 2014, the report indicated.
The year under review saw 91 vessels repaired in the company’s dry docks against 76 handled the previous year, the afloat repairs too up to 74 vessels from 73 yhr ptrvious year with the total number of vessels repaired growing to 165 in 2011 from 149 the previous year.
The company had said it had built up a portfolio of new clients mainly from India, Greece, Singapore, China, Malaysia, the UK and Hong Kong.
Four new vessels were delivered during the year under review. These included a multipurpose platform supply vessel, Greatship Rashi to an Indian client and two anchor handling tug supply vessels, Executive Honour and Executive Pride to a Singapore client and a 100-passenger launch, Vada Tharakai 11 to the Road Development Authority.
Work in progress includes seven new multipurpose platform supply vessels and two passenger-cum-cargo vessels with the supply vessels destined for Singapore clients and the passenger/cargo vessels for clients in India.
Colombo Dockyard has a stated capital of Rs.684.4 million and retained earnings of Rs.8.28 billion in its books with total assets running at nearly Rs.14.6 billion, total non-current liabilities at Rs.1 billion and total current liabilities at Rs.4.58 billion.
The directors have authorized the payment of a first and final dividend of Rs.6 per share for the year under review and have also resolved that a sum of Rs.34.2 million from the retained earnings of the company be transferred to its stated capital so that approximately 3.4 million shares priced at Rs.10 each can be issued to sharehlders as a bonus in the proportion of one new share for twenty existing ordinary shares.
The directors of the company are: Messrs. A. Nakauchi (Chairman), Sarath de Costa (Vice Chairman), Mangala P.B. Yapa (MD/CEO), Lalith Ganlath, H.A.R.K. Wickramathilake, Y. Kijima, T. Nakabe, Janaki Kuruppu, P. Kudabalage, Y. Imai (Alternate Director) and N. Nishida (Alternate Director).
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