Haycarb to strengthen coconut shell sourcing from industry

Haycarb PLC is planning a third plant in Indonesia, while considering plants in the Philippines and India in the medium term in a bid to meet growing demand, official said.

"Haycarb's strategy will be one of consolidation and restructuring Sri Lanka operations to develop, manufacture and market value added and specialized activated carbon products whilst having rapid expansions overseas for volume growth to increase its market share," Rajitha Kariyawasan, Managing Director Haycarb told the Business Times.

The company is planning on improving its relationship with suppliers in Indonesia to strengthen the sourcing of coconut shell charcoals to create a buffer stock, thereby reducing the dependence on India. "The raw material price increases impacted the Sri Lanka and overseas operational profitability adversely. The charcoal price levels in Sri Lanka and India, the primary sourcing locations for Sri Lanka factories, increased significantly for the past six months."

The cost of production increases could not be passed on to customers adequately due to market conditions and low priced competition from Philippines, Indonesia and India, he said. "We also strengthened the supply chain teams deployed in Indonesia, succesfully creating buffer stocks in this region thereby significantly reducing Sri Lanka's dependency on India."

As the leading manufacturer of high quality of carbon, Haycarb focuses on improving its direct marketing presence in USA through Haycarb USA, according to Mr. Kariyawasam.

The company’s Gross Profit margin increased to 22.6 per cent in 1QFY16 from 20.6 per cent in 1QFY15, despite increasing coconut shell charcoal prices, increased competition from small manufacturers in Philippines, Indonesia and India, and the downturn witnessed in gold mining industry.

Mr. Kariyawasan added that it's been a 'perennial' issue that capacity for charcoal has been insufficient. "We import almost 45 per cent of charcoal. Last year India was also struggling with its charcoal consumption (levels were high). Since Indonesia is one of the largest coconut producing countries and its price competitive, we are planning on sourcing charcoal from there," he added.