Industrial Asphalts (Ceylon) gets shareholders’ nod to new capital infusion

Pioneer Sri Lankan-owned entity to produce specialist bituminous products in the post-independent era, Colombo Stock Exchange listed Industrial Asphalts (Ceylon) PLC (IAC) got the company’s shareholders’ approval to the capital raising exercise to raise over Rs. 149 million to strengthen company’s future expansion via the recently announced rights issue. 

Accordingly, the rights issue was passed by the shareholders of IAC at the Extraordinary General Meeting (EGM) held on Monday. The issue of shares will open an opportunity for all investors to participate by purchasing the rights shares and through application for additional shares. 

IAC with a 56-year history in the bituminous products industry is in the forefront of innovation in South and South East Asian region as producer of a range of Bituminous products with deep knowledge in the industry. 

Since its inception, IAC is the proud owner of some of the most iconic brands in the bituminous market including NOLEAK, BRITEX, SEALKOTE, EXCHEMIE bituminous products and surface coatings that address the needs for a broad range of industry and household use as leading household bituminous products with an undisputed demand for the quality assured. 

Today most of IAC products are more specific to industries and functionalities. These brands popularity and brand strength can be measured by the fact that it has achieved a status of generic reference to the functionality of the brands denote. The bitumen has superior quality and durability which makes it a widely adopted material for road construction and development. 

Growing demand for bitumen from various construction and other industrial applications such as roadways, insulation, waterproofing, and adhesives is predominantly fuelling the market growth of the bitumen. Bitumen is a very important product that acts as a binder in roadways applications for providing higher strength, flexibility, and durability. Thus, growing demand for bitumen for various industrial applications will favour the market growth.

The company sees significant improvement in its core business of bitumen and coatings in the months to come as the country emerges from the global pandemic COVID-19 countermeasures, since significant effort by the incumbent Government to stimulate the economy would be related to construction sector in general and infrastructure development in particular. 

With this IAC is being positioned to capture the increased level of economic activities. With the inflow of funds from the rights issue IAC intends to improve the working capital cycle to be further strengthened to support the increase level of activities in company’s core activities. 

Infrastructure sector in general and roads sector in specific will be experiencing significantly higher growth rates in during the years 2021 to 2025. The company foresees rapid investment in infrastructure on the back of the Government’s development initiatives. 

The extensive development of the roads is the primary thrust through which the Country’s infrastructure is being developed. The roads themselves are developed through multiple levels, providing more consistent growth in IAC’s products relating to the road construction and insulating from uncertainties stemming from funding issues and lockdowns introduced due to countermeasures to combat COVID-19. 

Global bitumen market and was valued at $ 24.2 billion in 2019 and is projected to grow with a Cumulative Annual Growth Rate of 2.2% from 2020 to 2027.  The increase in construction activities in the Asia-Pacific region is expected to drive the growth of the market. Asia Pacific region will remain at the forefront stoked by rapid urbanisation. 

The developing nations, such as Sri Lanka and largely India and China, and South Korea are the major contributors to growth. Industry consolidations and rapid urbanisation in these countries would also affect the market positively. On the basis of end use, Road Construction segment dominated the global bitumen market in 2019.

The decline in the Sri Lankan economy experienced during 2015 to 2019 is now being met with progressive policies which is reflected in the infrastructure development projects planned and executed currently. 

The significant increase in such projects has motivated the Board of Industrial Asphalts (Ceylon) PLC to announce the rights issue with an objective of strengthening its balance sheet. A stronger balance sheet would enable IAC to capture the emerging opportunities in both road construction space and the protective coatings segment. The rights issue is well priced at 20 cents per share enabling wide range of investors to take the opportunity to invest in the growth of the Company.