Royal Flush
8 August 2005 18:40 hours
@LBO
The best seats in the house could be in your toilets, with some homeowners literally flushing as much as Rs. 600,000 down their toilets just for the two to three piece sanitaryware.
Royal ceramics last week sold a 140 perch Nawala property to Seylan Developments to raise Rs. 209.2 million, partly paying for its expansion into sanitaryware.
An HNB Stockbrokers report on Monday said that the original purchase value of the land was Rs.55.4 million resulting in a profit of Rs.153.7 million for the company.
The gain reportedly will be tax-free since the company has not claimed for depreciation allowance over the previous years.
Quote:
Down the Toilet
Industry watchers say Sri Lankan home owners are building larger toilets, creating an environment for rest and relaxation.
The trend is reportedly more prevalent in the in the upper middle and high end housing segments.
This has ensured a place for the baited or the pony as the French call it – usually left out of most toilets due to space constraints.
Homes are also fitted with water closets (aka: toilets or commode) replacing the Asian type toilets or the good old squatting pan.
Home owners are also paying big money for their toilets- as much as Rs. 600,000, considering them as a showpiece – in addition to its undisputed relief services.
The Asian type toilet meanwhile are not entirely lost to water closets– but are still in use in all homes, with the low cost homes using it for their own needs while the more affluent fitting one for their household helpers.
The Rs. 550 million projects due for completion by mid 2006, will churn out an annual 250,000 pieces of sanitaryware – including washbasins and bidets.
Royal Ceramics Director T. G. Thoradeniya says the factory will have an initial capacity of 250,000 pieces annually with room to expand to one million pieces.
The balance Rs. 341 million is be bridged with retained earning and if needed further asset sales and borrowing.
Thoradeniya says the company is expected to post a very positive after tax profit for 2005, while also having a listed stock and property portfolio which could be liquidated for additional funding requirement.
The output meanwhile, will sell in the local market which consumes an estimated 600,000 pieces of sanitaryware annually.
Thoradeniya says the local market for sanitaryware is expected to grow 25 percent – pegged with the growth rates ported by the construction industry.
Priced between Rs. 20,000 and Rs. 75,000, Thoradeniya says Royal Ceramic’s sanitaryware range will be marketed as a mid range, high quality segment.
Industry analysts say the project is pending Board of Investment approval and land in the Colombo District from the Industrial Development Ministry.
Royal Ceramics is also setting up a tile plant with a RS. 450 million investment. The factory is expected to begin commercial production by February 2006.
Royal Ceramics shares closed Monday trading flat at Rs. 4.25 on trades of 194,800 shares. The the current price the stock has a Rs. 2.35 billion market capitalisation.
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