Laugfs, Sri Lanka’s second LP Gas (LPG) player with Shell, estimates that the LPG market will grow by 25% in the next few years from a current 15% and usage among 30% of a total four million households in the country, is also set to rise.
“The demand will rise with a change in incomes and improving quality of life following the end of the conflict,” W.K.H. Wegapitiya, Chairman and CEO of Laugfs Group told the Business Times soon after the company’s 6-month results to September 2010 were released on Monday.
According to the results, Laugfs and its subsidiaries reported a post-tax profit of Rs 422.9 million, up by 46% from Rs 288.9 million in the same period last year.
The results posted on the Colombo Stock Exchange website, was the first time Laugfs made its accounts public, primarily because it going public. The Sri Lankan-owned LP gas provider on Thursday opened its Initial Public Offering (IPO), offering Rs 2.5 billion worth of shares (127 million shares in the voting and non-voting category category at Rs 23 and Rs 15, respectively). The issue, amounting to 26 % of Laugfs’ total shareholding, though scheduled to close on November 25, was oversubscribed on day one (Thursday) itself. Laugfs is also making a pitch for the management of Shell Gas which is in negotiations to strike a deal with the Sri Lankan Government for the sale of a 51 % stake.
The Government said in an announcement recently that it has agreed to buy this stake for $63 million, taking 100% control of the company, and that 49 % will be offered to the public. On Wednesday, Shell said it had signed a Sales Purchase Agreement with the Government.
According to Central Bank statistics, 195,000 metric tonnes of LPG were consumed in 2009 with this figure expected to rise to 225,000 MT in 2010.
Mr Wegapitiya said they estimate consumption will rise to 250,000 MT in 2011-12.
According to the results announcement, Laugfs said its aggressive promotional campaign in September contributed largely to the growth in revenue and this resulted in the forecasted figures being overtaken during this period.
The domestic, industrial and commercial segments of the LP gas market is expected to expand further with the economic upturn and corresponding impact on the quality of life of the population of the country, it said.
Laugfs said it has plans to capture a larger share of all segments of the market through a penetration strategy encompassing price competitiveness and value added services in the immediate future
It said the most dramatic growth of revenue in the group with a record 231.5% growth came from Laugfs Eco Sri (Pvt) Ltd after a government decision to make eco-tests of relevant vehicles mandatory across the country except in the Northern and Eastern provinces. It is expected however that the scheme will be operational islandwide.
“We are optimistic about the general outlook of the economy and investment climate in the aftermath of the three decades-long conflict and the prevailing political stability of the country. In the backdrop of this, Laugfs Gas Ltd and its subsidiaries are expected to improve the performance in the months to come,” Mr Wegapitiya said in the report. |
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