The handouts in the January Interim Budget increased the demand for the fast moving consumer goods sector and Piramal capitalized on the local market, at the expense of achieving the full export potential.
“The company had to curtail some exports to facilitate the domestic market. Thus the real potential of the international market was not exploited to its fullest,” a statement said.
Revenue increased 23 percent yoy to Rs. 1.52 billion. The domestic receipts increased 24 percent yoy to 1.23 billion, while export income too grew 15 percent yoy to Rs. 290 million. Piramal said that the curtailing of export volumes was overcome by focusing on high value niche product exports.
The company added that it will invest in improving infrastructure and technology early next year to bring flexibility and variety to the jar product range which facilitates the virgin coconut oil industry of Sri Lanka--exports of which have grown in the past year.
Gross profits jumped to Rs. 332.86 million from Rs. 260.64 million yoy. Piramal said that cost of production could be improved if furnace oil prices were reduced—as promised by both regimes—in line with the reduction in crude prices. Piramal said that 90 percent of the furnace oil produced in Sri Lanka is exported, which is charged 30 percent less compared to local industry consumers.
Distribution expenses rose to Rs. 30.67 million from Rs. 19.28 million yoy, while administrative expenses marginally decreased to Rs. 97.64 million, leading to an operating profit of Rs. 205.59 million, up from Rs. 143.04 million yoy.
Company assets fell marginally to Rs. 6.24 billion in 1Q16 from Rs. 6.47 billion in 4Q15 due to decreased values in property, plant and equipment, and lower inventories and receivables.
Long and short term interest bearing borrowings decreased to Rs. 1.36 billion from Rs. 1.7 billion, while retained borrowings increased to Rs. 2.11 billion from Rs. 1.96 billion in the same period.
Piramal Glass owns the only glass bottle manufacturing plant in the country, located in Horana. Piramal Glass Limited of India owns 56.45 percent of the shares in the company, while the EPF owns 9.51 percent of shares.