Business
JAT Holdings Posts Highest-Ever Revenue in Q1 2023
In the face of unprecedented challenges
- Revenue growth by 39% and gross profit growth by 37%
- Highest ever PAT for the 1st quarter
- Secures over eight months of raw material as inventory for uninter rupted production
- Commenced manufacturing operations in Bangladesh under fully-owned subsidiary, Asia Coatings (Pvt) Ltd
- Financial relief schemes provided to safeguard employees
Guided by its highly-experienced and skilled corporate management team, JAT Holdings PLC has achieved its highest-ever first-quarter revenue in FY 2022/23. The Group has also performed exceptionally well, across a range of other financial performance indicators, defying industry trends, amidst a highly challenging economic environment, a company news release said last week.
Financial Performance Overview
Total Revenue for Q1 grew by a very handsome 39% to LKR 1.935 billion, against LKR 1.396 billion in the corresponding quarter in the prior year, while Gross Profit in absolute terms rose by 37% to LKR 525.6 million, against LKR 382.6 million in Q1 of FY 2021/22.
Gross Profit Margins were maintained unchanged at 27%, despite mounting domestic and external challenges such as Sri Lanka’s multiple crises of economy, energy and foreign exchange, compounded by a global scarcity of raw materials, the company said.
Meanwhile, operating profit grew by 50% during the period under review to LKR 280.2 million, up from LKR 186.75 million in the corresponding period. However, Operating Profit Margin growth was subdued, but still recorded an expansion to 14%, up from 13%, it added.
“This was as a result of various economic relief packages and facilities provided to employees making it the highest ever increase in salaries within the company, coupled with rising inflation costs and exchange rate volatility,” the release said.
“Profit Before Tax (PBT) grew by 18%, demonstrating a sustained momentum of recovery, to LKR 198.8 million, compared with 168.9 million earlier, although Margins contracted slightly, from 12% in the corresponding period, to 10% during the period under review, as a result of the worsening economic environment.”
Discussing the strategic positioning of the Group and its Q1 performance, CEO, Nishal Ferdinando said, “Through our skillful and agile maneuvering, and by leveraging the expertise and experience of our management team, we have continued to deliver exceptional excellence to all our stakeholders, including our customers, amidst the worst economic crisis that Sri Lanka, or we as an organization, have ever faced.
“Through foresight and experience, we anticipated the present crises, based on economic indicators and on-ground information. Thus, we immediately rallied our people and our supply chain partners to secure adequate raw material stocks for at least eight months, which we were able to achieve thanks to our strong financial position, which was further consolidated as a result of our IPO.
In fact, the cash infusion from our IPO, has ensured low gearing, thus a reduction in financing costs, helping us to remain relatively unburdened amid a tightening monetary environment.”
Just over a year ago, in July 2021, JAT Holdings launched its IPO, which saw the Company successfully raise LKR 2.2 billion, in an oversubscribed issue, through the sale of 82.9 million ordinary shares at a price of LKR 27.00 per share. These funds have since been used for setting up an R&D centre, commissioning a manufacturing facility in Bangladesh and channeled towards market development initiatives for the Group’s new flagship brand, WHITE by JAT, the release said.
“We also have gone above and beyond, as an employer of choice, to ensure that our people are provided with adequate cushioning during the crisis,” added Mr. Ferdinando, “We have provided financial relief schemes, along with relief in other forms such as flexible work, access to essential items, moral and emotional support, and an overall sense of security in employment. This has helped us to work better as a team and continue to deliver what is expected of us, by customers and all other stakeholders.”
Revenue Breakdown
“Group Export Revenues dipped slightly during Q1, by 12%, as a result of reorganization due to the commencement of operations at the Group’s manufacturing facility in Bangladesh, owned and operated through its fully-owned subsidiary, Asia Coatings (Pvt) Ltd., the release said.
“However, export revenues are forecast to improve drastically as operations at the new facility get up to speed. Additionally, the Group has placed a strategic focus on developing its export operations, in order to further consolidate its financial and operating position over the rest of the year.
“Revenues from the Group’s Sri Lankan operations expanded by a significant 59% to LKR 1.576 billion in Q1 of FY 2022/23, up from LKR 989.3 million in the corresponding period. This was driven by increased sales, coupled with the effects of input price inflation.”
Progress on IPO Objectives
One year since the Issue, JAT Holdings PLC has fulfilled its promises to investors with regard to its IPO Objectives, the release said.Commenting on the progress, Founder and Managing Director of JAT Holdings PLC, Aelian Gunawardene said, “We are pleased to communicate to investors that we have made excellent progress with regard to our IPO Objectives. Construction on our Bangladesh manufacturing facility has been completed, and the facility commissioned, ahead of schedule.
“We look forward to reaping the benefits of enhanced production capacity and capability at our new facility in the coming months. Work has also already begun on our R&D centre, and we expect it to be completed within the next two months, again ahead of schedule and much lower than was initially budgeted. We have also used funds from the IPO to add value and build our flagship WHITE by JAT brand, and this has paid off handsomely.”
As agreed with the Sri Lanka Banks’ Association (Guarantee) Ltd. (SLBA), to provide relief measures to affected SMEs by licensed commercial banks and licensed specialised banks, Circular No. 04 of 2024 dated 19.12.2024, and its addendum, Circular No. 01 of 2025 dated 01.01.2025 were issued by the Central Bank of Sri Lanka to ensure the effective implementation of the relief measures specified in the cited Circulars in a consistent manner across all licensed banks.
In case of any rejections or disputes, borrowers are requested to contact the respective banks and to appeal to the Director, Financial Consumer Relations Department of CBSL (FCRD), if required through the following channels:
Based on the repayment capacity and the submission of an acceptable business revival plan by the borrower, the relief measures extended to affected SMEs include rescheduling of credit facilities up to a period of 10 years, extending the time to commence repayments based on the capital outstanding, waiving off unpaid interest subject to conditions, and providing new working capital loans. Despite the availability of the above relief measures, limited number of borrowers had approached licensed banks to avail themselves of these benefits to date.
In addition to the above measures, with the gradual recovery of the economy, in order to facilitate the sustainable revival of businesses that were adversely affected during the recent past, several other measures were taken by CBSL together with the banking industry.
Accordingly, inter alia, strengthening the Post Covid 19 revival units of licensed banks, CBSL issued Circular No. 02 of 2024 dated 28.03.2024 on “Guidelines for the Establishment of Business Revival Units of Licensed Banks” mandating banks to establish Business Revival Units (BRUs) to assist viable businesses that are facing financial and operational difficulties.
Under BRUs, banks may provide support to viable businesses, such as restructuring and rescheduling of credit facilities including the adjustment of interest rates, maturity extensions, providing interim financing, advisory services etc., subject to the condition that such borrowers are required to submit acceptable business plans and feasible repayment plans. As reported by banks, by the end of 2024, around 6,000 facilities had been facilitated through these BRUs.
The above cited Circulars and Guidelines can be accessed via https://www.cbsl.gov.lk
Visa (NYSE: V), the global leader in digital payments reiterated its support to women entrepreneurs across Sri Lanka as a part of its International Women’s Month celebrations across the world, by stating a firm commitment towards financial inclusion and digitization of women-led businesses, and hosted women from different walks of life in a specially curated event at Colombo.
Avanthi Colombage, Country Manager for Visa in Sri Lanka and Maldives stated, “At Visa, we believe in being the best way to pay and be paid by uplifting everyone, everywhere. This year, we celebrated International Women’s Month to support the very capable businesswomen in our country, with an event titled ‘Overcoming Barriers to Growth’ along with Square Hub, an incubator and business accelerator.”
The event by Visa brought together 35 upcoming women entrepreneurs across various sectors, including fashion, e-commerce, fintech, technology, manufacturing, and agriculture. While prominent industry experts shared views, learnings and experiences from their own journeys, the event also facilitated open discussions and networking among entrepreneurs, on how they can build and sustain thriving businesses.
Avanthi elaborates that Visa has built a firm foundation in supporting female entrepreneurship and the empowerment of women in Sri Lanka and understands the challenges women-owned businesses face when seeking capital, access, networks and guidance and continues to actively uplift women in Sri Lanka. Globally and in Sri Lanka, Visa believes that the participation of women is key to the growth of an economy. Avanthi adds, “Two years ago, when we celebrated 35 years of Visa in Sri Lanka, we announced a grant for The Asia Foundation to assist women-led small and medium businesses (SMBs) throughout the country. This initiative offered vital seed funding, skills training, and financial inclusion opportunities for women entrepreneurs, helping remove some major barriers to their success,” she recalled.
Environmental groups, including the Wildlife and Nature Protection Society (WNPS), the Centre for Environmental Justice (CEJ) and the Environmental Foundation Ltd. (EFL), are raising renewed concerns about the potential ecological impact of large-scale wind energy development on Mannar Island. Conservationists argue that the island, home to a unique and sensitive ecosystem, faces serious risks from industrial projects that may disrupt biodiversity and endanger local wildlife.
At the heart of the controversy is whether the environmental issues raised by Adani Group’s proposed wind energy project in Mannar were being adequately considered. Critics argue that tariff negotiations and economic interests overshadowed ecological assessments, potentially leading to a project that might compromise the island’s rich natural heritage.
“Can wind energy coexist with Mannar Island’s fragile ecosystem? asked environmental scientist Hemantha Withanage of the CEJ.
He told The Island Financial Review: “We must ensure that our transition to renewable energy does not come at the cost of irreplaceable biodiversity.”
Other conservationists have pointed out that environmentalists are often misrepresented as obstructionists in debates over development. “Are we being painted as enemies of progress, or is the public being misled about the real consequences of such projects? questioned Dr. Rohan Pethiyagoda, a leading environmental advocate.
With Adani’s possible withdrawal from the project, there is now an opportunity to reevaluate Sri Lanka’s approach to sustainable energy. Experts emphasize the need for a smarter, science-driven path that prioritizes both renewable energy and environmental conservation.
A joint media conference, scheduled for today at the Dutch Burgher Union, Colombo, aims to address these concerns. Organized by WNPS, CEJ, EFL and Pethiyagoda, the event will explore questions such as whether the project might resurface under a new guise and who the true beneficiaries of such large-scale energy initiatives are.
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