Dankotuwa's sales centre in Coimbatore
Inflation, over-valued rupee hurting Sri Lankan tableware exporterSri Lankan fine porcelain maker Dankotuwa Porcelain has said sky-high domestic inflation rates and an over-valued rupee were making it difficult to compete in international tableware export markets.The company is hoping to make a cash call to shareholders and may even issue debentures to bridge a gap in its balance sheet after a defective kiln that drove it deep into the red last year.“The situation has stabilized now,” Dankotuwa Porcelain chairman Sunil Wijesinha told LBO.“We’re going for a fresh infusion of capital.”The company was also grappling with high energy costs, he said.“As an exporter, with the costs of a lot of inputs going up, it was the depreciation of the rupee that helped us stay competitive in export markets.”Exporters like Dankotuwa faced difficulties when the rupee appreciated with the inflow of foreign funds after the Asian tsunami.
The euro, which was 142 rupees then, went down to 118 and has only now gone back to the previous levels.“It was a huge drop. Most of our exports are in euro,” Wijesinha explained. “When you’re operating on very thin margins, it was a make or break situation. We’ll feel more comfortable if the rupee depreciates further.”Wijesinha also described inflation levels of 20 percent as a “killer”, saying it drove up wage costs on a monthly basis since salaries were linked to the cost of living index.Inflation has only now begun to fall after tough measures by the Central Bank to limit money printing.The bank has said it is taking every effort to bring inflation down further over the next few months. Wijesinha also said the company plans to open a sales centre next month in the Indian city of Coimbatore, in a region where he said there was a lot of “purchasing power” to complement its other two outlets in Chennai and Delhi.
