SRI LANKA: Tokyo Cement completes amalgamation with Fuji Cement

Tokyo Cement Lanka, one of the premiere cement manufacturers in Sri Lanka has completed its amalgamation process with Fuji Cement Lanka, the company said in a stock exchange filing.

The Registrar General of Companies has issued the certificate of amalgamation on 13th March 2015.

Accordingly, all shares of Fuji Cement Lanka represented the stated capital of the company has been cancelled and Tokyo Cement Lanka will succeed to all the assets and liabilities of Fuji Cement Lanka.

The Company said the amalgamation would enable both companies to realize benefits of greater synergies between these businesses.

The registered office of the amalgamated company Tokyo Cement Company (Lanka) PLC will remain same and be at 469-1/1, Galle road Colombo3.

SRI LANKA: Maha cement to enter SL market

Maha Cement of My Home Industries Limited (MHIL) – a part of the INR 23 billion conglomerate operating from Hyderabad, India, has planned a major penetration into the Sri Lankan market.

A launch meet in this regard was held at Hilton, Colombo, recently where Sri Lanka Standards Institution Director General Lalith Senaweera was the chief guest.

Speaking at the launch, Sabasiva Rao, Executive Director, MIHL said, "Maha cement is known for its brand and latest technology. We are expanding our business to SAARC nations and other countries. This is why we are going to enter the Sri Lankan market in a big way", he said.

"Sri Lanka Standards Institute (SLSI) has awarded SLS certificate to Maha cement after ensuring that our quality control processes are as per the requirements of the SLS."

"MHIL‘s Maha cement is one of the top brands in about 10 states in South and East India. Maha cement is a preferred brand of cement used in infrastructure projects and government projects there."

"MHIL currently has 8.40 million tonnes cement production capacity and will increase it to 10 million tonnes by 2015."

"It has also been proposed to set up a cement plant in Tamil Nadu which is in close proximity to Sri Lanka," he said.

SRI LANKA: Singha cement terminal to be completed next year

Singha Cement (Pvt) Limited is constructing a multi-million-dollar new state-of-the-art cement terminal, which is due to be completed next year. As a result of the new expansion, the Company will double its existing capacity. 

“The reason for this expansion is to meet the high demand for Singha cement in the country as well as to provide an enhanced, quality service to our customers,” said Colin Nelson, Managing Director of the company.

Meanwhile, Singha Cement, marketers of the popular Singha cement brand, and a member of the Italcementi Group, which is among the top five largest producers of cement in the world based in Italy, felicitated employees who have been with the company for over ten years. 

The Italcementi Group is also one of Italy’s ten largest industries, with operations in 22 countries and 46 cement plants worldwide.

The employees who have completed ten years service were Lalith Piyathissa, W. A. K. Piyadasa, K. R. A. Bandara, P. G. Aanda Tissa and W. A. Prasanna, all of whom received generous cash rewards from Managing Director, Colin Nelson. 

“We take this opportunity to thank our employees for their long term service and contribution. More than 35% of our employees have completed ten years of service so far and we are so proud of having a loyal and a committed workforce. Whilst we appreciate our employees, we wish to thank our customers for their tremendous contribution towards the growth of Singha Cement,” said Nelson.

Singha Cement currently operates and maintains a land based terminal at Peliyagoda, equipped with the necessary technology to receive and handle both bulk as well as bagged cement in the most efficient manner.

The company is ISO 9001 certified and its cement is in compliance with SLS 107, meeting all required regulatory standards of Sri Lanka. 

The Italcementi Group is a member of the World Business Council for Sustainable Development (WBCSD) and has signed the Cement Sustainability Initiative’s Agenda for action.

“At Singha Cement we aim to maximise customer satisfaction, with continuous improvement in all spheres of activity” said Nelson, who adopts a ‘hands on’ approach.

SRI LANKA: Thatta Cement grinding plant on hold

Thatta Cement said in a Karachchi stock exchange filing that Sri Lanka Ports Authority has not executed a land lease agreement with the company, despite "basic engineering being completed."

The cement plant is expected to have "operational conflicts" with a car transshipment facility, the filing said.

An environmental impact study is being conducted on industries around the port.

It was feared that cement dust from the plant would settle on new Indian-made cars being transshipped via the port.

An official familiar with Thatta Cement said the company respected environmental regulations and will comply with any requirements in Sri Lanka and they awaited the final environmental report.

However it was difficult to completely eliminate dust, he said.

Sri Lanka Ports Authority Chairman Priyath Wickrema said they were trying to find a solution to the problem as Sri Lanka still imported a lot of cement and it could use another grinding plant.

SRI LANKA: Sri Lanka Tokyo Cement profit flat amid higher taxes

Sri Lanka's Tokyo Cement (Lanka) Plc, the island’s biggest cement manufacturer said net profits for the March quarter rose just two percent to 130.24 million rupees from a year earlier, held back by a steep increase in taxes. 

The group, which includes a packing plant and biomass power subsidiary, reported earnings of 43 cents per share for the quarter.

For the financial year ended March 31, 2012, Tokyo reported earnings of 3.22 rupees per share on profits of 978.90 million rupees, up 14 percent, interim accounts filed with the Colombo Stock Exchange showed.

The company's voting stock closed up 20 cents to 28.40 rupees, while the non-voting share slipped 40 cents to 19.00 rupees, on Tuesday.

The Japanese-Sri Lanka joint venture, said revenues rose sharply by 61 percent to 6.81 billion rupees in the March 2012 quarter, lifted by the post-war construction boom.

Gross profits also rose 36 percent to 832 million rupees, but steep increase in income tax to 177 million rupees in the March 2012 quarter from just 14 million rupees a year earlier, kept profits nearly flat.

Full-year revenues grew 41percent to 22.93 billion rupees, while gross profits grew at much slower 16 percent to 3.90 billion rupees.

Tokyo Cement, which marks 30-years of operations this year has it main manufacturing facility is situated at the eastern seaport town of Trincomalee.

Sri Lanka’s total cement usage in 2011, rose 21.6 percent to 4,588 metric tonnes, according to Central Bank of Sri Lanka figures.

Domestic production rose 13.6 percent to 1,974 metric tonnes, while cement imports was up 28.4 percent to 2,584 metric tonnes.

Much of the cement demand came from government-related projects, to build roads, bridges, a port in the south, an airport in the south and large-scale projects in the north and east.

Tokyo imports clinker, which is ground and mixed at the Trincomalee plant. It also has a packing plant. The company’s production costs have come under pressure from a weak rupee since late last year.

Sri Lanka also has price controls on cement, which is part of a series of restrictions placed on private business in recent years.

Analysts say the price controls are a threat both to producers of cement who are denied the right price that is available to their foreign counterparts and also the construction industry which faces delays when importers halt shipments to escape losses from state intervention.

SRI LANKA: Sri Lanka port gets U$15mn cement plant

Sri Lanka has approved a 15.6 million US dollar cement plant by Pakistan's Thatta cement to be built on an industrial zone next to Hambantota port in the island's south, an official said.

Sri Lanka Ports Authority chairman said the cabinet of ministers had approved the plant this week.

The industrial zone had already attracted a chemical plant from Singapore's Peak Energy (Pvt) Ltd which will invest 434.5 million US dollars which will build a PET resin plant and a sugar refinery by Sri Renuka Sugar of India which will invest 220 million dollars.

A fertilizer plant connected to Sri Lanka's Hayleys Advantis group will also invest 7.2 million dollars.

Wickrema said there were also several smaller projects in the pipeline amounting to around 100 million dollars.

SRI LANKA: Sri Lanka cement crisis continues amid price controls

Sri Lanka's construction industry is facing a shortage of about a million 50 kilogram sacks of cement a month, a media report said as price controls limit supplies and threaten the island's construction sector.

Amid the shortages created by price controls, state enterprises have got into the act like in the 'closed economy' days of 1970s when price controls and shortages of even foods were common.

One state agency has also got into a controversy for importing substandard cement.

"At the moment we can estimate that there are about Rs.1 billion worth of contracts being carried out," Sri Lanka's Daily FT newspaper quoted Rohan Karunaratne, president of the Ceylon Institute of Builders as saying.

"The imports by the government are inadequate. On average the government imports range around 200, 000 bags per month and this is even less than 20 percent of the required amount.

"We met with the Chairman of the Sri Lanka Cement Corporation on Tuesday morning and stressed that around 1 million bags are needed urgently to offset the shortage."

World cement prices have moved up amid a weakening dollar that has sent most commodities rising to new highs. Energy - a key ingredient of cement - is also high.

The Daily FT newspaper said local producers Holcim Lanka and Tokyo Cement can only supply 60 percent of the market.

But a part of Holcim's production and almost all of Tokyo cement is made by grinding imported clinker.

Cement firms have requested Sri Lanka's Consumer Affairs Authority to increase retail price of cement to 785 rupees per 50 kilo bag. But the agency and consumer affairs minister Johnston Fernando has denied the price increase.

The newspaper said suppliers from countries like Pakistan where a bulk of Sri Lanka's cement is imported have 'better offers' from other countries.

SRI LANKA: Cement Corp to venture into new businesses

Sri Lanka Cement Corporation (SLCC) has sought Port Authority approval to set up a cement packaging plant in the Ruhunu Magampura Port to provide sufficient cement for development activities in the country by reducing the prevailing congestion at the Colombo port .

Sri Lanka Cement Corporation Chairman Sisira Jinendra Paranagama said that SLCC has cleared a land in Kollupitiya to build a 25-storeyed building in Kollupitiya with Rs 5 billion and is expected to start construction work shortly.

The building will consist of a 5,000 seat capacity banquet hall, rotating restaurant, three underground car parks, leading food chains, luxury apartments.

The remaining space of the building is to be rented for banks, private and government organizations.

The KKS cement factory in Kankesanthurai that comes under the governance of SLCC and Lanka Cement Ltd (LCL) is in the process of manufacturing pavement blocks, cement blocks, telecom and electricity posts to cater to the development drive in the Northern province and SLCC and LCL will invest Rs 10 million in the coming months to increase the capacity of the factory.

The factory provides employment opportunities for 100 youth in Jaffna and SLCC is hopeful of increasing the present employee base upto 200 by next year.

Selected students in schools in Jaffna will be provided training to manufacture cement based products under the guidance of SLCC and will find the market for their products.

SRI LANKA: Sri Lanka cement supplies disrupted amid price controls

Sri Lanka's cement supplies remain disrupted amid price controls and posturing by rulers and the co-operative sector involved in another controversy, in a repetition of a similar debacle in the poultry sector.

The Daily Mirror newspaper said Monday three cement firms have written to Sri Lanka's consumer affairs agency which has imposed price controls on cement to raise prices by 35 rupees to 785 rupees a per 50 kilogram sack.

The newspaper said the firms said world market prices and raw material prices have increased.

On Tuesday the Daily FT newspaper said the authority had denied the request.

Sri Lanka's construction industry has been hit by cement shortages in the past few weeks as world prices went up.

A 'shortage' happens only when prices are controlled by the state as it prevents new supplies, especially through imports coming in at higher prices to bridge supply gaps.

The price controls also automatically create a 'black market'.

In the 1970s when Sri Lanka was a controlled economy price controls, shortages, black-markets and queues.

At the time grandstanding by rulers and officials about 'hoarders' and black marketers were common.

Media reports said the consumer authority had 'raided' 800 retailers.

The co-operative movement which got supplies backed by the state and issued the goods under 'rations' ruled the roost. Reports of 'leaked' goods abounded.

Similar dramas are now being played out.

The Sunday Times newspaper said Sri Lanka National Co-operatives Board, a state entity with connections to the ministry of trade had imported substandard cement from Pakistan and a large stock has been 'leaked'.

Construction industry officials have warned that the import of substandard cement could lead to bad construction, building collapses and lives being lost.

In July Sri Lanka's media reported a case where Lanka Sathosa Limited another state entity had 'leaked' chicken imported from India.

The co-operative and state enterprises get tax breaks and financial support backed by taxes charged from the people to be in business.

Sri Lanka's poultry industry was also disrupted by state price controls on one side and restriction on the import of maize on the other.

Many chicken farmers were driven out of business by high maize prices during a downturn in 2009. But a recovery in the industry was delayed due to price controls.

At one time chicken disappeared from super market shelves and were only available in the 'black market'.

SRI LANKA: Cement with no standard certificate sold with false seal of standards

The controversy surrounding a stock of cement imported from Pakistan has deepened when Sri Lanka's state-owned National Cooperatives Trust has reportedly released for sale the stock, without the Sri Lanka Standards (SLS) Certificate, through its cooperative network.

Sri Lanka Standards Institute (SLSI) has declined to issue the SLS certificate on the grounds of quality for the stock of 100,000 cement bags imported by the National Cooperatives Trust to alleviate the prevailing shortage of cement in the country.

Sri Lanka construction industry professionals point out that the sale of cement without the SLS certificate is a violation of law.

However, the cement is now on sale through the state-owned cooperative network with the printed SLS seal on the bag.

Printing SLS seal falsely is a clear violation of law, the construction industry says.The 5 million kilogram stock was held in the Customs until the SLSI approval.

Director in charge of goods inspection of Sri Lanka Customs S.D.S. Gunathunga told media that the Customs has not permitted the National Cooperative Trust to release the stock of cement they imported to the market.

He said the Customs only permitted the state importers to take the stock to their stores keeping only the specimens in the custody of Customs Department. Accordingly, out of the 25 containers of cement, 22 were moved away from the Customs.

The official said the containers are needed to be opened before a relevant authority of the Customs Department and no such official had gone to the stores.

He further stated that the cement could not be issued to the market without the SLS certificate. He pointed out that legal action should be initiated against the persons if anyone had opened the containers and issued the cement to the market without SLS certificate.

Under the Customs Ordinance, such stocks should be either sent back to the destination of its origin or be destroyed.

Ironically, the importers and retailers are both belonged to the Ministry of Cooperatives and Internal Trade and the Consumer Affairs Authority that is to act against such violations also comes under the same Ministry.

SRI LANKA: Cement stock in red-tape tangle

A consignment of 100,000 bags of cement which arrived at the Colombo Port could not be released to the local market due to some bureaucratic hassle in obtaining the SLS certification," National Cooperative Council's chairman Bandu Ranawaka said.

He said that the cement consignment had been imported by the National Cooperative Council to alleviate an existing cement shortage in the country. But officials who are supposed to issue SLS certification have dragged their feet.

He said that cement under the brand "Co-op cement" imported from Pakistan was distributed to the market by the National Cooperative Council at a concessionary rate of Rs 635 per 50kg bag.

"We have been awaiting SLS certification for the last six months, but the SLS certification was not granted by the relevant authorities.

"But one of the private companies that imported cement from the same company in Pakistan had received its SLS certification.

So it is open to question whether some private elements were conspiring with certain parties to create an artificial cement shortage," he said.

Ranawaka further said if the available cement was released to the market, it will end the current cement shortage in the country.

SRI LANKA: Stronger Bond

Sri Lanka Belgium trade associations cement link

Trade associations representing businesses in Sri Lanka and Belgium had inked a deal to expand economic links between the two countries, the island's embassy in Brussels said.

The memorandum of understanding was signed in Brussels between signed between BelgoLux Sri Lanka Business Council and Ceylon Chamber of Commerce's Benelux Business Council.

Sri Lanka's ambassador to Belgium, Luxembourg and European Union Ravinatha Ariyasinha was quoted as saying that the link builds on a successful business forum in Colombo on November 2010 with 40 Belgian companies.

Two-way trade between Sri Lanka and Belgium had grown from 501 million US dollars in 2005 to 645 million in 2010. Trade had peaked in 2009 to 743 million but is now recovering from a dip to 624 million dollars in 2009 amid an economic downturn.

In 2010 Sri Lanka had exported 386 million dollars worth of goods to Belgium and Imported 645 million dollars.

Cut and polished diamonds had accounted for 58 percent of total imports from Sri Lank in 2010, followed by Apparel (23 percent) rubber products, mainly rubber gloves (7 percent) rubber tires (5 percent) tea (3 percent) and others (4 percent.).

BelgoLux Sri Lanka Business Council has 23 large Belgium companies, the embassy said.

R D S Kumaratne who heads the mission's economic and commercial affairs says Belgium could be used as a transit hub for the EU.

There was a demand for bicycles, vehicle accessories, spices, toys, footwear, garden decor, gems and jewellery, wood and coconut products.

Madhuka Wickramarachchi, second secretary says Belgian tourist arrivals to Sri Lanka grew by 228 percent in the six months to June 2011 and charter and regular flights between the two countries had increased.

"Belgium is increasingly becoming one of the key suppliers of high end tourists to Sri Lanka," Wickramarachchi was quoted as saying.

"Also the Belgian firms are also keen to have their meetings and conferences in Sri Lanka."

SRI LANKA: Sri Lanka cement firm in talks for $45mn building complex

Sri Lanka's listed Lanka Cement PLC is in talks with a Chinese firm to construct a 25-storey office and shopping complex and is also looking for a local investor to re-build a defunct cement factory, officials said.

The planned property project is valued at about 5.0 billion rupees (45 million US dollars), Lanka Cement chairman S J Paranagama said.

The building is expected to come up on land belonging to Lanka Cement in Kollupitiya, an upmarket commercial suburb in Colombo.

"The government took a decision to develop this 95 perch land belonging to Lanka Cement on a 25-year build, operate and transfer basis," secretary to the ministry of state resources Willie Gamage said.

"At the moment we are having discussions with a Chinese company to build a 25-storey office and shopping complex within the premises."

Lanka Cement also owns a factory in Sri Lanka's northern Jaffna peninsula in which several foreign investors have expressed interest. The factory was closed during a 30-year war which ended in May 2009.

But the firm is now looking for a local partner.

"Due to security measures our preference is only for a local investor," Gamage said. "We also want to avoid any kind of monopoly.

"The premises are at present occupied by the Sri Lanka Army and they will vacate it soon."

Lanka Cement is controlled by the government through a 62 percent stake held by Sri Lanka Cement Corporation, also a state entity.

SRI LANKA: Cement firm reveals losses

Lanka Cement, a state owned firm with a defunct factory in northern Sri Lanka, has revealed heavy losses and plans to revive production in its latest accounts which the auditors have refused to give an opinion on.

According to a stock exchange filing the firm made a loss of LKR 9.9 million in the nine months ending September 30th 2010 compared with a profit of 18 million the previous year. Sales fell to LKR 159 million from almost LKR 500 million the year before.

According to unaudited accounts filed with the stock exchange, the firm made a loss of LKR 3.4 million for the September 2010 quarter against a loss of LKR 2.5 million the previous year with sales falling to 50 million rupees from LKR 123 million.

The Colombo Stock Exchange moved Lanka Cement out of the bourse's default board, where it had been for not presenting accounts, after it submitted financial statements for the March, June and September quarters of 2010.

Lanka Cement has accumulated losses of LKR 1.7 billion according to its annual report for the year ending December 31st 2009, the latest available, which auditors KPMG Ford Rhodes Thornton & Co said raise doubt that the company will be able to continue as a going concern.

The auditors have refused to give an opinion on the accounts for the year ending December 31st 2009 and have also drawn attention to their inability to verify several transactions in the accounts.

Lanka Cement shares have seen bouts of heavy trading from time to time owing to interest by foreign cement firms in reviving a defunct cement plant sitting on a rich deposit of limestone in northern Jaffna.

With the end of the island's 30 year ethnic war in 2009, demand for cement is recovering, especially in rebuilding in the war-torn north and east, along with construction elsewhere as economic growth accelerates.

KPMG Ford Rhodes Thornton & Co noted that Lanka Cement's net assets are less than half of its stated capital and that it faces a serious loss of capital.

The auditors said they were unable to verify property, plant and equipment with a carrying value of LKR 859 million as at December 31st 2009 and that they were unable to verify the existence, completeness and accuracy of local cement purchases amounting to LKR 186 million.

They also said they were unable to verify the completeness and accuracy of sales in northern Jaffna worth LKR 313 million due to improper documentation.

KPMG Ford Rhodes Thornton & Co said that "We were unable to verify the accuracy and completeness of the recording cash receipt and the cash payments since the company doesn’t maintain proper double entry system of accounting / control accounts and reconciliations when recording cash receipt and the cash payments."

They also said they were unable to verify the existence of a long term loan payable to the main shareholder Sri Lanka Cement Corporation amounting to LKR 757 million due to lack of documentation and that they were unable to assess the appropriateness of the classification of the loan as non-current liability.

Lanka Cement has said it intends setting up a packing and grinding plant at Kankesanthurai in Jaffna to increase profitability in the near future.

SRI LANKA: Cement Audit

Lanka Cement, a state-owned firm with a defunct factory in northern Sri Lanka, has revealed heavy losses and plans to revive production in its latest accounts which the auditors have refused to give an opinion on.

According to a stock exchange filing the firm made a loss of 9.9 million rupees in the nine months ending September 30, 2010 compared with a profit of 18 million the previous year. Sales fell to 159 million rupees from almost 500 million rupees the year before.

The firm made a loss of 3.4 million rupees for the September 2010 quarter against a loss of 2.5 million rupees the previous year with sales falling to 50 million rupees from 123 million rupees, according to unaudited accounts filed with the stock exchange.

The Colombo Stock Exchange moved Lanka Cement out of the bourse's default board, where it had been for not presenting accounts, after it submitted financial statements for the March, June and September quarters of 2010.

Lanka Cement has accumulated losses of 1.7 billion rupees according to its annual report for the year ending December 31, 2009, the latest available, which auditors KPMG Ford Rhodes Thornton & Co. said raise doubt that the company will be able to continue as a going concern.

The auditors have refused to give an opinion on the accounts for the year ending December 31, 2009 and have also drawn attention to their inability to verify several transactions in the accounts.

Lanka Cement shares have seen bouts of heavy trading from time to time owing to interest by foreign cement firms in reviving a defunct cement plant sitting on a rich deposit of limestone in northern Jaffna.

With the end of the island's 30-year ethnic war in 2009, demand for cement is recovering, especially in rebuilding in the war-torn north and east, along with construction elsewhere as economic growth accelerates.

KPMG Ford Rhodes Thornton & Co. noted that Lanka Cement's net assets are less than half of its stated capital and that it faces a serious loss of capital.

The auditors said they were unable to verify property, plant and equipment with a carrying value of 859 million rupees as at December 31, 2009 and that they were unable to verify the "existence, completeness and accuracy" of local cement purchases amounting to 186 million rupees.

They also said they were unable to verify the completeness and accuracy of sales in northern Jaffna worth 313 million rupees "due to improper documentation."

KPMG Ford Rhodes Thornton & Co. said: "We were unable to verify the accuracy and completeness of the recording cash receipt and the cash payments since the company doesn’t maintain proper double entry system of accounting / control accounts and reconciliations when recording cash receipt and the cash payments."

They also said they were unable to verify the existence of a long term loan payable to the main shareholder Sri Lanka Cement Corporation amounting to 757 million rupees "due to lack of documentation" and that they were "unable to assess the appropriateness of the classification of the loan as non-current liability."

Lanka Cement has said it intends setting up a packing and grinding plant at Kankesanthurai in Jaffna to increase profitability in the near future.

The plant, once commissioned, will reduce the cost of production enabling it to "under-price all competition to achieve market dominance," it said.

Its chairman S J Paranagama told shareholders the company would be "restructured and converted to a viable enterprise."

Lanka Cement is to re-commission cement manufacturing facilities at Kankesanthirai with a modern plant and also rebuild the Harbour View Hotel there to cater to increasing demand for accommodation in Jaffna, he said.

The company resumed cement imports and sales in 2008. The factory in Jaffna stopped manufacturing when the ethnic war intensified and it was damaged in the fighting.