Financial Times

Holcim project in Trincomalee
Holcim (Lanka) Ltd, the top cement maker, is seeking government approval for a project in Trincomalee - on the back of peace talks - and has asked the government for land in the harbour.

“We have requested the Ports Authority to give us a land at the Trincomalee harbour and the initial discussions with the Minister of Ports and Telecommunications, Mangala Samaraweera have gone very well,” Manilal Fernando, Chairman Holcim told The Sunday Times FT, on the sidelines of the company's 2005 annual results presentation last week.

Managing Director Peter Spirig, elaborating on the project, said the company plans to have a ‘total operation’ in Trincomalee. “We want to have packing, grinding, loading and unloading operation and the peace initiative in the country has helped us to plan this venture,” he said.

He said the investment for the venture has not been finalised as yet, but it will be ‘several million rupees’. “We have not really had any access in the Northeast area in the country and we feel that the time is right,” he added.
Holcim Lanka had a good 2005, marked by a top-line growth of another 30 percent to Rs.8.3 billion on account of a nine percent volume increase.

“Despite the fact that the government imposed a price control on cement at the end of August 2005 (and subsequently removed it again in January 2006), thus hampering the recovery of increasing cost, operating profits more than doubled to Rs.1.28,” Spirig said. He said that the net income however still remains below the full cost of capital, which has given the company the impetus for further investments in Sri Lanka.

The company’s cement dispatches grew along with the market in 2005, sustaining its market share at 30 percent. Last year, the construction sector grew by 6.2 percent and the cement market increased by 9 percent year-on-year, returning to a growth rate last seen in 2003.

Spirig said the impact of the 2004 tsunami will continue to influence the cement consumption rate of the country in the next few years, but the major drive is expected to come from healthy levels of general demand fuelled by an average GDP growth of six percent.

Back to Business