Rs. 337.4 mn. debt to HNB assigned to Darley Butler
Interest drag drives Elephant Lite retained losses up to Rs. 0.5 bn.

Elephant Lite Corporation Limited, makers of Laxapana flashlight batteries, has posted another loss of Rs. 21.3 million in the year ended March 31, 2001 increasing its accumulated losses to Rs. 505.8 million.

The company has been losing heavily over the years with interest charges being a continuing drag even though operational profits had been earned in some years. A 10-year summary published in the company’s latest annual report show a string of losses that began even earlier.

The year under review was no exception with the turnover dropping to Rs. 120.8 million from Rs. 136 million the previous year. There was an operating loss of Rs. 0.5 million against a profit of Rs. 1.4 million a year earlier.

The company’s Chairman, Mr. N. Jayasingam said that after interest, Elephant Lite has posted a loss of Rs. 21.3 million, up from a loss of Rs. 18.7 million the previous year.

Elephant Lite was incorporated as a public limited liability company in 1956 and was quoted on the Colombo Stock Exchange in 1982.

A pioneer manufacturer of dry cell batteries here, the company manufactures two types of D size dry cell batteries using modern technology under the Laxapana brand name. It holds the SLS certification from the Sri Lanka Standards Institution.

One of the company’s principal assets is its factory and office is located on a 8.5 acre of freehold site at Homagama. A total of 130 employees are on the payroll.

Jayasingam said that the depreciation of the rupee by 9.9% against the US dollar last year hiked raw material cost and impacted significantly on profitability.

The sale of franchised Laxapana products to Darley Butler & Company, a member of the E. B. Creasy group which is the largest shareholder of Elephant Lite, had generated an income of Rs. 13.7 million for the company during the year under review, up from Rs. 8.4 million a year earlier.

"The interest charges continue to be a heavy burden on the company as we continue to depend on debt finance for our short term funds," Jayasingam said.

He was pessimistic about the long term prospects of the company saying that these "do not seem encouraging" due to the influx of low cost imported batteries.

He said that Elephant Line will focus on upgrading its products, the chemical composition of which "is already on par with any imported battery".

The chairman said that the aesthetic appearance of the batteries too will be improved with a new PVC heat shrink label. They were continuing their efforts to increase productivity and reduce raw material cost.

Elephant Lite which has an issued capital of Rs. 32.4 million has 658 shareholders with E. B. Creasy (38.2%) and the Secretary to the Treasury (29.6%) holding the major shares. There are no other shareholders with over 5% of the company.

The chief asset on the balance sheet carrying Rs. 505.8 million of accumulated losses is a revaluation reserve of Rs. 151.4 million. The company has sort term borrowings of Rs. 25 million and bank overdrafts of Rs. 95.4 million in its books.

The company has valued its freehold land at Rs. 34.7 million. The property had cost only Rs. 42,784.

Elephant Lite has mortgaged its property, plant and equipment to the Hatton National Bank for the facilities obtained. But this mortgage has been assigned in favour of Darley Butler & Company as the debts owed to the Hatton National Bank totalling Rs. 337.4 million had been taken over by Darley Butler.

The directors of the company are: Messrs. N. Jayasingam (Chairman), G. Gunawickrama, S. D. R. Arudpragasam, A. Rajaratnam, A. . Wijeyesekera (Resigned 31.03.2001), A. C. Gunasinghe, R. N. Bopearatchy, R. C. A. Welikala and D. S. Abeyratna (Alternate to A. Rajaratnam - appointed 09.07.2001).