17 March 2017 10:03 am
Sri Lanka’s only private sector liquid petroleum gas (LPG) supplier, Laugfs Holdings PLC, is currently planning to expand its operations to Myanmar and the Maldives, while its US$ 100 million expansion plan in Bangladesh is also progressing the group’s Chairman said recently.
“In Myanmar we’re going for LPG. It’s still under discussions. In the Maldives we’re looking at supplying lubricants. That is also under discussion,” W. H. K Wegapitiya said at the re-launch of the Laugfs Gas and lubricant brands.
Laugfs has a thriving LPG business in Sri Lanka which was started in 1998, while it is lubricant business, which began in 2008, started local manufacturing and research and development in 2015 with a Rs.600 million facility that could manufacture 18 million litres of lubricant on a single shift basis per annum.
Wegapitiya also noted that the US$ 100 million expansion plan of Laugfs’ Bangladesh operations is currently ongoing. “That is progressing,” he said. Last November Wegapitiya told Mirror Business that the expansion plan will be focusing on mid-stream operations, such as storage, distribution and filling plants in regional capitals such as Chittagong, Bogra and a few other places. Prior to the execution of the expansion plan, Laugfs had a regional filling plant in Dhaka, and a LPG import facility it the Mongla Port. Laugfs had entered Bangladesh by purchasing the country’s oldest downstream player, Petredec Elpiji Ltd. (PEL), for US$ 18.75 million in late 2015. The group had increased its investment to US$ 30 million in late 2016.The conglomerate is hoping to become a regional LPG distributor, and has acquired three LPG tanker ships in the past 3 years; two with 3,500 metric tonne capacity and the remainder, which was registered this year, with a capacity of 3,000 metric tonnes.
The group last year started the construction of a LPG terminal at the Hambantota Port. The first phase of the project, which has a 30,000 metric tonne capacity with an investment of US$ 51.5 million, is set to become operational in April 2018. The second phase would add 15,000 metric tonnes more with an investment of US$ 28.5 million. The expansion plans were undertaken during 2016 when the Central Bank hiked its policy rates twice. This appears to have a bearing on Laugfs as the group’s finance costs for the first 9 months of FY17 tripled to Rs.971.06 million, compared to 2016.
Economists and bankers are expecting a further interest rate hike this month. Laugfs’ total long and short-term interest bearing borrowings as at December 31, 2016, increased to Rs.16.75 billion from Rs.11.66 billion at the start of the financial year. The group’s net profits for the 9 months ended December 31, 2016, fell 90 percent Year-on-Year to Rs.120.29 million due to higher finance and operational costs. (CW)