Import ban to minimise Covid impact on Lanka Tiles
By Madhusha Thavapalakumar
Sri Lankan tile manufacturer Lanka Walltiles PLC believes the recent restrictions imposed on imports, if persisted by the Government, will serve to minimise the impact of the Covid-19 pandemic on its business.
In a disclosure to the Colombo Stock Exchange (CSE) on 11 May, Lanka Walltiles PLC Managing Director J.A.P.M. Jayasekera said that this ban, which includes tiles and related accessories, is expected to have a positive effect on the company’s operations in the medium term.
To avoid a possible foreign exchange crisis, in mid-March at the beginning of the local spread of the virus, the Sri Lankan Government brought in import restrictions on non-essential items. However, on 1 April, this was revised to further include all import items except pharmaceuticals and fuel. Despite the restriction, necessary raw material required for export purposes were allowed to be brought into the country. The current restrictions on imports are expected to be in effect till 15 July.
Regardless of the potential benefits from the import restrictions, in this financial year, the company expects a 30% reduction in turnover, which would reflect in lower profits. This is mainly due to the company’s inability to operate their businesses in full force as their manufacturing units and main offices are located in the Western Province where the curfew is still in effect, giving leeway only for one-third of the private and public employees to go to work since last Monday.
However, district to district travel still remains prohibited and most of the employees who work in offices and manufacturing facilities in Colombo are from other districts. These issues have tremendously affected the company’s cash flow as the season that passed during the last two months is usually the peak season for tile sales.
To mitigate the impact of the pandemic in the company’s performance further, the management has opted for a number of measures which include deferring and restructuring debt repayments to manage cash flow and deferring payments to business partners for the same purpose.
In addition to this, the company has also reduced and controlled non-priority costs, serviced customers in non-curfew areas, obtained approval from government authorities to operate factories to meet export orders, and continuously reviewed operations to reduce financial and operational risks.
Lanka Walltiles PLC is the market leader in wall tile manufacturing in Sri Lanka, with businessman Dhammika Perera as its Chairman and controlling shareholder. The company has the capacity to produce 2.3 million square metres of tiles annually and exports to a number of countries.