JAT Holdings moves ahead with plans to set up plants in B’desh and Africa

Encouraged by recent financial performances, JAT Holdings, Sri Lanka’s market leader in the wood coatings sphere and latest listing applicant on the Colombo Stock Exchange (CSE) is moving ahead with plans to set up a new state-of-the-art R&D facility and manufacturing plant in Bangladesh and Africa.  

In the second half of 2020/2021 financial year, the company reported Rs.621 million profit after tax, bouncing back from losses incurred in the first half, while increasing gross profit margins from 27.6 percent to 30.7 percent, and maintaining net profit margin at 11.2 percent, despite pandemic related challenges, import restrictions and unfavourable foreign exchange movements.

“The company’s primary near-term objectives include an Initial Public Offering (IPO) and listing on the Colombo Stock Exchange, in a bid to raise capital. These funds will be used to drive development activities such as the establishment of a new state-of-the-art R&D facility and the commissioning of a new manufacturing plant in Bangladesh, for which negotiations have been completed and initial implementation underway. 

.Discussions are also ongoing to commission a plant in Africa. Together, these new facilities will further consolidate the company’s position in these regional markets, while also contributing towards revenue and margin growth,” JAT Holdings said in a statement. 

Although, overall volumes declined 82 percent YoY as a result of the pandemic, the company noted that the outlook remains positive as economic recovery gets underway. The company has excess of Rs.1 billion worth projects that are expected to contribute to its topline over the coming years.

In FY 2020/21, JAT’s topline grew by 29 percent year-on-year (YoY) to its highest levels in the Sri Lankan market for wood coatings, paints and brushes. 

The company’s net cash flow was at Rs.490 million at the end of the year, leading to a net debt (cash)/equity ratio of negative 0.03. In the period under review, current and liquidity ratios increased to 3.26 and 2.29 respectively, against 2.61 and 1.76 from the previous year, while witnessing an easing to 9.07 percent over the period.

“Being the leader in wood coatings, possessing a strong product portfolio in paints, brushes, ergonomic office furniture, decking, ceilings, bespoke kitchens, etc.; in addition to having significant revenue streams from Bangladesh and other South Asian countries through multiple sales channels, enabled JAT to successfully mitigate the effects of the pandemic and remain resilient through 2020/21,” JAT Holdings CEO Nishal Ferdinando remarked.

In the financial year under review, JAT launched WHITE by JAT, a range of premium quality brilliant white emulsion paint and also secured approval from National Medicines Regulatory Authority (NMRA) to launch broad spectrum hand sanitizer and surface cleaner under the ‘JAT Care vertical’, to provide high-quality sanitization options to the local market. 

However, the company cited import restrictions and unfavourable exchange rate movements as key operational challenges that continue to prevail. 

“Major operational challenges were experienced due to import restrictions imposed on several raw materials and products in the project vertical. This was further exacerbated by unfavourable exchange rate movements, which put pressure on the bottom line. Unprecedented disruptions to distribution channels and supply chains served to further compound the operational quagmires of FY 2020/21,” it said.