Business Times

Climate change, restive workforce dogs Dankotuwa Porcelain

Crisis-hit Dankotuwa Porcelain Plc, grappling with a combination of a restive workforce and continuing losses for many years, was recently confronted with a fresh problem: climate change
The company’s raw material supply was affected after clay production slowed down in China due to unusual heavy rain that flooded mines. In Korea, which supplies pebbles, a sudden onslaught of snow in May hurt output, company sources said. “In addition to the usual problems, climate change also added to our headaches,” one source said.

On Wednesday, the Dankotuwa board of directors decided against plans to liquidate the factory after the two main unions inked an agreement to allow a new investor into the company under ‘certain’ agreed conditions. Discussions with the unnamed investor, a local firm which plans to take a majority stake in Dankotuwa, has been on for several months but worker demands over maintaining wage levels – what company officials have said in the past are unrealistic – have been an obstruction. The company source said the firm desperately needs new investment to pay off debts, buy new machinery and return to profitablity in an industry that is not attractive anymore.

Dankotuwa is a large producer of porcelain tableware used in fine dining which however is going out of vogue in most countries except Europe. “Fine dining is not seen anywhere in the US and only in Europe it remains but is fast fading,” the source said. The company also produces a small quantity of casualware but relies on tableware sales for better (profit) margins.

The company is hoping to wrap up the deal in coming weeks now that the unions have given the go-ahead. The source said the new investor, who he declined to name as negotiations have not been finalized, is likely to invest through a private placement or some other way in which the authorized capital would be increased. The present shareholders will remain under a new controlling shareholder while the current controlling stake of a consortium of Japanese investors would eventually get diluted if the investor comes in, the source said.

The company has been plagued with problems since 1990 mainly due to having a costly workforce. The source said salaries average Rs 20,000 per worker per month without fringe benefits – against market rates of Rs 10,000 to Rs 12,000 -- while bonus is equivalent to eight months pay.

The wage bill has been the biggest issue in the company turning profitable and losses have been recorded for the past six years. Of the 1,100 staff, 600 are, old permanent staff working for over 20 years and refusing to budge from benefits.

Top to the page  |  E-mail  |  views[1]
SocialTwist Tell-a-Friend
Other Business Times Articles
LTTE wipe-out curbs ‘Hawala’ trade
Climate change, restive workforce dogs Dankotuwa Porcelain
Confifi’s minority shareholders cry foul
Cabraal re-appointed Central Bank governor
Private managers essential to run Shell under state control
Comment - Govt: Stay out of business
Feature - Is Sri Lanka ready for future Golden Key scandals?
Feature - Annals of gullibility: Next Golden Key is around the corner
John Keells Group wins 9 Presidential Awards for Travel and Tourism
Infotel to kick off at the end of September
Import duty cuts pull down computer prices
LB Finance shows Rs 500 mln profit, unscathed from run on deposits
Malnutrition could affect future human resources
First for First Guardian Equities
Indian mobile phone maker Micromax enters the Sri Lankan market
Letter - Drilling for oil in the Gulf of Mannar
Letter - CEPA : A medical perspective
Factories closing? Think again
Seven insights for Corporate Managers
Hirdaramani Group diversifies into IT, looks at other investments
Offers to Tokyo Cement shareholders
Desktop PCs have come down to Rs 30,000 from Rs 90,000
Sri Lanka lags behind in education – Maldives businessman
Derivatives – the good , bad and the ugly
New website promotes Alien book and tourism in Sri Lanka
Asian Paints trains & accredits local painters
Heritance hotel team at Singaporean culinary challenge
Coke makes donation to Habitat for Humanity
UNIDO to recommend Brandix Seeduwa as green example
Top global accountant at CMA Summit
Sri Lanka to sell power to India
Worry over possible exploitation of Northeast workers
U.S. apparel retailers turn their gaze beyond China
CEAT records five-fold profit growth in Sri Lanka
Seylan Bank to implement Manpower Plan
Long wait for 100 GK depositors to get money back
Sunshine says had 'solid' performance in 2009-10
From rags to riches, Nawaloka Mudalali enters 90th year
BAM Holdings – TESCO join hands in Community Service
Sri Lankan management consultants for Maldives Electricity Board
Mobile app development portal launched
Dambatenne estate enhances living standards of estate community


Reproduction of articles permitted when used without any alterations to contents and a link to the source page.
© Copyright 2010 | Wijeya Newspapers Ltd.Colombo. Sri Lanka. All Rights Reserved.| Site best viewed in IE ver 6.0 @ 1024 x 768 resolution