The world’s leading coconut shell based activated carbon manufacturer and exporter, Haycarb PLC has sustained performance in the fourth quarter of 2011-12 despite challenging external conditions and rising production costs to end the year on a positive note.
According to interim statements filed with the Colombo Stock Exchange, volume increases and continued focus on value added carbons enabled the Hayleys Group company to increase revenue by Rs 2.1 billion or 33 per cent to Rs 8.5 billion for the 12 months to 31st March 2012.
Profit before tax at Rs 724 million was on par with that of the previous year, principally due to the impact of high raw material prices in the first 9 months, resultant market conditions and rising conversion costs and overheads, the company said.
Net profit for the year improved by a marginal 3 per cent to Rs 590 million, and profit attributable to equity holders of the company increased nearly 7 per cent to Rs 539 million.
Describing the environment in which these results were achieved as “very challenging,” Haycarb and Hayleys Chairman Mr. Mohan Pandithage said the Haycarb Group had consolidated and sustained its performance.
“The consolidated profit of Rs. 724 million was achieved in the face of unprecedented increases in the price of the primary raw material, coconut charcoal, in all manufacturing locations,” he said, explaining that the Haycarb Group adopted bold initiatives in its procurement strategy to ensure continuity of raw material supplies even at significant cost penalties during the first half of the year to retain the confidence of strategic and loyal customers across the globe.
Haycarb Managing Director Rajitha Kariyawasan said that the FY 2011-12 result was noteworthy in the context of the challenging conditions and the external market dynamics. The unprecedented crisis affecting its key raw material with severe shortages and the resultant sharp increase in the prices, was a major challenge for the Group to reckon with, he said.
“An increase in furnace oil prices in February 2012, combined with a hike in January of electricity tariffs and wage increases that came in to effect in the last quarter, will impose an additional estimated cost of over Rs 175 million per annum. The significant devaluation of the Sri Lankan currency will help us to offset some of these cost challenges in Sri Lanka, our largest manufacturing base,” he said.
“We invested significantly in working capital, in building raw material inventory that enabled us to provide supply stability of activated carbon to our loyal customers ensuring stable customer pricing in the last quarter,” he said.
“The demand outlook for Haycarb’s high quality activated carbon from all our facilities remains strong. With maximum capacity utilization we are concentrating more and more on high value and high margin products, applications and strategic customers, providing a much better value proposition,” Mr. Kariyawasan added.
He disclosed that a capital expenditure programme totaling Rs 782 million encompassing value addition projects, capacity enhancement, plant upgrades and the implementation of SAP Enterprise Resource Planning (ERP) system would generate significant returns for the Haycarb Group in coming years.
Besides the introduction and successful implementation of SAP ERP system across the Group in Sri Lanka, highlights of the year included the accreditation and issuance of carbon credits for the Group’s Recogen plant at Badalgama for carbon trading under the Kyoto Protocol and the commissioning of ‘Lakdiyatha Passikudah’ a central sewage and waste water treatment plant built for the National Holiday Resort at a cost of Rs 185 million in partnership with Veolia Water India as the first Build Operate and Transfer (BOT) project in the waste water treatment sphere.
“We plan to invest further in expanding our supply chain by setting up new plants in Indonesia and India. We will also focus on geographic market expansion and key customer account enhancement to achieve the ambitious growth targets set for the next four to five year period,” Mr. Kariyawasan said.
The new value added carbon range and key initiatives to enter the Super Capacitor carbon market as an active player remains a high priority, he disclosed. Puritas Pvt Ltd, Haycarb’s Water Purification Systems Company will target an aggressive growth leveraging on the strategic partnership with Veolia Water, in the medium to large water purification systems business, primarily targeting emerging local opportunities in many parts of the country with a key emphasis on the North and East.
The pioneer manufacturer of activated carbon in any coconut producing country, Haycarb is also the world’s largest producer of coconut shell-based activated carbon. The Group, whose manufacturing facilities in Sri Lanka, Thailand and Indonesia are supported by marketing offices in the UK, Australia and USA, produces standard, washed and impregnated carbons in granular, pellet and powder form.
The Board of Directors of Haycarb PLC comprises Messrs A. M. Pandithage – Chairman, H. S. R. Kariyawasan - Managing Director, R. P. Peris, R. Seevaratnam, A. M. Senaratna, K. D. D. Perera, S. C. Ganegoda, Mrs. M. J. A. S. Abeyratne, D. E. Ranaraja, W. D. N. H. Perera and Dr. S. A. K. Abayawardana.
Photo - Mohan Pandithage & Rajitha Kariyawasan