Business

Ceramic stocks plummet after import relaxation

Sri Lanka’s ceramic stocks have declined to a considerable extent yesterday (2), as the Government announced the lifting of the ban it imposed last year on ceramic items as a part of its prolonged stringent import restrictions. 

Yesterday, Prime Minister Mahinda Rajapaksa in his capacity as the Minister of Finance, issuing a gazette notification “deleted” the ceramic items from “Schedule I” of the Imports and Exports (Control) Regulation No. 04 of 2020, published in the Gazette Extraordinary No. 21841/21 dated 16 July 2020, and included them in “Schedule II” of said Gazette. 

Schedule II stipulates that items can be imported only on a minimum 180-day credit facility provided by the foreign supplier, from the date of Bill of Lading or Airway Bill of said goods.

On the same day of the announcement of import ban relaxation, the share price of Lanka Tiles PLC dropped by 19.93% compared to Monday (1) and closed at Rs. 224. Meanwhile Lanka Walltiles PLC dropped by 19.87% yesterday compared to the previous day and closed at Rs. 221.75. Royal Ceramics Lanka PLC share prices dropped by 16.51% compared to the previous day and closed at Rs. 319.75. It should be noted that Sri Lankan entrepreneur Dhammika Perera is the Chairman of all three aforementioned companies. However, all our attempts to reach Perera for a comment yesterday proved futile. 

Lanka Walltiles is the market leader in wall tile manufacturing in Sri Lanka and has the capacity to produce 2.3 million square metres of tiles annually, and exports to a number of countries.

In May 2020, Lanka Walltiles stated that it believes the 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) in May 2020, Lanka Walltiles PLC Managing Director J.A.P.M. Jayasekera said that the imports ban, which included tiles and related accessories, is expected to have a positive effect on the company’s operations in the medium term.

Speaking to The Morning, local ceramic manufacturer Mackson Tiles Lanka Managing Director Mohamed Mizver welcomed the move, and added that local manufacturers can only cater to about 50 – 60% of the country’s ceramic requirements. 

“The government told us earlier that they want to enhance the local production of tiles. We have ordered new machinery to increase the production capacity. The problem in the tile industry is the production cannot be increased at a rapid phase because the machinery is a bit complicated and it has to come from Italy which will take at least about 5 – 6 months until we get the machinery installed and start the production. Ceramic prices in the local market will stabilise now,” Mizver added. 

To avoid a possible foreign exchange crisis, in mid-March last year, 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 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.