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Ex-pack gives up market leadership claim

21 Oct 2021

  • Agrees to be considered as ‘one of the largest’ in market 
BY Shenal Fernando  Ex-pack Corrugated Cartons Ltd. in a corporate disclosure dated 18 October, has given up its claim to market leadership in the corrugated cartons industry and has agreed to be merely considered as “one” of the largest corrugators in the market despite standing by its initial claim following the unverified competing claim for market leadership by the Lanka Corrugated Cartons Manufacturers’ Association (LCCMA).  Ex-pack’s initial issue is scheduled to open on 22 October and according to Ex-pack, it has given up its claim of market leadership in the industry made in the prospectus. It noted: “In the interest of time and the broader interest of the commitments we have made to our current and future public shareholders and other stakeholders, we do not envisage this to be a matter of any significance and hence, are happy to be considered as ‘one’ of the largest corrugators in the market.” Ex-pack further held that its strong financial performance, robust dividend policy, and maintenance of international standards of management practices and corporate governance had a larger bearing on the public issue and on the investment decisions of its prospective shareholders. Moreover, it noted that the reference to its market leadership and the approximate market share made in the prospectus was only relevant to demonstrate the company’s stature and extent of its presence in the corrugated cartons industry and according to Ex-pack “has relatively little or no bearing on the public issue” of their shares.  Regardless of this development, Ex-pack continues to reaffirm the credibility of its earlier claims relating to market leadership, market share, and other related information, which, according to the company, are based on the legitimate findings of the detailed internal research report on the Sri Lankan corrugated market which was carried out with reasonable care and in good faith.  According to Ex-pack, there is no formal data available or published with regard to market share and market positions in the corrugated cartons industry and such information therefore must necessarily be collected through research carried out internally or as commissioned with an external agency.  Based on this report, Ex-pack had earlier issued a letter to the Colombo Stock Exchange (CSE), stating: “We confirm that we are reasonably of the belief that we are market leaders in the corrugated cartons industry in Sri Lanka.”  The company further explained how the report arrived at this conclusion: “The computations of market leadership are based on a combination of methodologies that includes data in terms of: a) sales tonnage of each player by interviewing staff and internal stakeholders of the largest corrugators; b) monthly waste output of corrugators obtained from key players of the waste recycling industry in order to determine the monthly production of individual players; c) the volumes of paper consumed/utilised by us vis-à-vis the estimates of competitors’ usage as extracted from available sources; and d) based on analysis of the published information of a key competitor.”  Ex-pack claimed that except for one competitor, namely Unidil Packaging (Pvt.) Ltd., whose business volumes for the financial year 2020/2021 have been made public via their annual report, none of the other competitors in the industry have done so, but on the contrary, have chosen to closely guard such information from the public.  Moreover, in order to justify its claim of market leadership, Ex-pack had pointed out that Unidil, which is well known as the second largest player in the industry, had a revenue of Rs. 3 billion in FY2021 and a production volume of 23,292 metric tonnes (MT) as per published information; in contrast, Ex-pack’s revenue is Rs. 3.3 billion (excluding Neptune Papers) and has a production volume of 23,532 MT. Ex-pack started its operations as a profit centre of Expolanka Ltd. in 1998 and was incorporated as a separate legal entity fully owned by Aberdeen Holdings (Pvt.) Ltd in 2002. Under its initial public offering (IPO), it will be offering 25% of its shareholding for subscription to raise Rs. 700 million.  The IPO shall consist of 83.3 million shares at an offer price of Rs. 8.4 per share and the minimum subscription limit is 100.  The issue is expected to open on 22 October and close on 11 November. The funds raised from the IPO will be utilised to instal a new state-of-the-art manufacturing facility with a monthly capacity of 4,000 MT per month.


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