Sri Lanka Bogala Graphite sees lubricant helping recovery from losses

April 9th, 2010
Sri Lanka's listed graphite miner and exporter Bogala Graphite said support from its German parent firm and manufacture of new lubricant products should help it recover from losses last year.
The company, a subsidiary of Graphit Krophmuhl AG of Germany, has seen a slight increase in orders in the last quarter of 2009 which heralds a turnaround, its chairman Vijaya Malalasekera said. Losses in the financial year ending December 31, 2009 rose to 127.7 million rupees from a loss of 100 million in 2008. The loss per share was 2.70 rupees in 2009 "We continued to suffer during the year under review as amply demonstrated in the declining of revenue from 383 million rupees to 241 million," Malalasekera told shareholders in the firm's annual report. "However, the orders we received in the last quarter showed a marginal increase and it appears to be a positive trend for the future." The company is one of the world's few vein graphite producers and used to export around 6,000 - 6,500 tonnes of value-added graphite each year before the global recession. Chief executive Amila Jayasinghe said Bogala Graphite last year broke away from the traditional grades of graphite and with help from the parent firm started a successful campaign in India to market graphite-based lubricants. The product will be initially produced in Germany from raw material exported by Bogala Graphite.
"We managed to convince one of the largest metal forging companies in the world to accept our products," Jayasinghe said. "The full benefit of these exercises is expected to bear fruit in the first quarter of 2011 when the manufacture of the lubricants is moved to Bogala Graphite from Graphit Kropfmuhl."
The relocation of a ball mill from the United Kingdom to Sri Lanka two years ago also enables Bogala Graphite to produce high value classified graphite powder. Jayasinghe said the firm cut costs last year and further reduced the work force to 183 at the end of 2009 from 295 in 2008.
The main shareholder Graphit Kropfmuhl gave a soft loan to fund the restructuring, including a voluntary retirement scheme, and helped repay high interest rupee loans. It also agreed to convert a 150 million-rupee loan taken by Bogala Graphite and technical fees payable to it into capital.