Sector Reviews

Construction Materials

Business Domain

The Construction Materials Sector is presently focused on manufacturing aluminium extrusions for the domestic construction industry under the Alumex Group. Counting over 25 years of industry experience, the Alumex Group enjoys a 52% market share in Sri Lanka. The Sector comprises of four companies which are based locally.

Key Performance Indicators

Indicator	Measure	Unit	FYE 31st March
			2013	2012	2011
Growth	Revenue	Rs. mn	2,473	2,254	2,369
	Earnings Before Interest and Tax	Rs. mn	413	182	121
	Profit After Tax	Rs. mn	307	113	57
	Assets (Avg)	Rs. mn	1,718	1,577	1,622
	Capital Employed	Rs. mn	1,087	873	787
Profitability	Return on Average Capital Employed*	%	42	22	18
Liquidity	Current Ratio	Times	1.37	1.05	1.00
Stability	Gearing	%	9.44	19.04	22.54
Asset utilisation	Asset Turnover Ratio	Times	1.50	1.41	1.75
Productivity	Ebit per Employee	Rs. mn	1.09	0.45	0.30

* Excluding Real Estate

Operations

With the post-war construction boom continuing unabated and a strong market leadership in Sri Lanka, the Alumex Group has begun venturing regionally. Exploiting its competitive advantage in terms of superior product quality, higher production capacity, flexibility in manufacturing customised products, in-house die making capability and together with a strong financial position, the Alumex Group is now diversifying into manufacturing its own proprietary door and window systems.

Key challenges during the year were in managing raw material costs within reasonable levels against a backdrop of varying London Metal Exchange prices and volatile exchange rates. A change in the strategy of purchasing raw materials was effected during the year by booking futures in aluminum when prices were low.

Strategies in Action

Locally the Alumex Group is setting up warehousing facilities in all provinces to ensure distribution of products throughout Sri Lanka. It is also investing in equipment to improve the quality of dies and local billets and with it the quality of its profiles.

The ERP system used within the Alumex Group is also being upgraded to bring in better financial and inventory controls and expanded to cover manufacturing. This will enhance the production planning and control function and improve delivery times to customers.

We ventured into regional overseas markets - India, Maldives and Bangladesh - as a first step in expanding our global footprint for extruded aluminium products. And with its own proprietary window and door systems, Alumex hopes to make a mark in the South Asian region.

Outlook

While raw material prices are expected to increase gradually, the overall outlook for the Alumex Group is positive. Strong growth in local sales, exports to the South Asian region and developing proprietary door and window systems are expected to be the key drivers in the medium term, while an IPO for Alumex is also under consideration.