Litro loaded

Despite increases in global gas prices, Litro Gas Lanka Ltd. is buoyant about keeping prices stable. The company, despite not sticking to original plans to list on the stock exchange, is nonetheless going ahead by recording 12% growth, releasing 200,000 new gas cylinders to the market and restructuring its filling process.

Holding the mammoth share of the gas market in Sri Lanka, Litro was slated to be listed on the stock exchange three months after it was nationalised. Yet that deadline will now be extended by another four to five months, according to Litro Gas Chairman Gamini Senerath, who told Daily FT that they were wary of entering the market at this point.

His views were echoed by CEO P. Kudahalage, who insisted that the stock market was not favourable for an entry and the company was more focused on growing its business.

“Our business has grown by 12% since the takeover from Shell in November 2010,” he said, adding that the company had already released 50,000 cylinders to the market and planned to issue 50,000 more before 10 March.

“Our initial plan was to limit the number to 100,000 but we have realised that there is more demand and so we have doubled this amount. The remaining 100,000 will be released before July 2011,” he revealed.

The main reasons behind this increase, according to the CEO, are a 3%-4% annual increase, gaining new customers and bad weather conditions. “The annual increase is a given. However, most of our customers use both firewood and gas but with the rains they would have found it difficult to use hearths, resulting in more consumption of gas.”

Interestingly, the company has no plans to increase prices and stressed that it had already worked out a strategy that would help maintain prices.

“We have noticed that traditionally gas prices follow a cycle. From November to April prices are high due to the winter in Western countries. But prices drop after that. If we only took these amounts into consideration then we would need increase prices, but we are confident that the losses can be recouped when the global prices drop because domestic consumption is so high.”

He insisted that there were no plans to increase prices in the near future.

Litro is also calling tenders to move one of its two filling plants from Mabima to Kerawalapitiya so that transport costs can be saved. “At the moment they are about 15 km apart so we have received tenders from Denmark and Malaysian companies to shift machinery.”

This project will take about five more months and if the stock market listing happens at all, it will be after the process is completed, Kudahalage noted.

With the Government investing in a filling terminal in Hambantota, Litro is preparing to take it over after construction is completed and use it as a base for distribution to the north and east.

“This facility will double our current storage capacity by 8,000 tonnes. From Hambantota we will find it much easier to reach new markets in the Eastern Province.”