4. ` KEY ISSUE IMPLICATIONS
Political The government's new policy in relation to Tax
Currently the government is changing fiscal policy related to
tax which can directly affect the business.
Increase of VAT to 15%, Imposing of SSCL, increase of
income tax from 18% to 30%, imposing of PAYE tax
New levy called SSCL is recovered directly from the end customers,
it might reduced the customer base of the org.
The increase of income tax rate will also affect company reserves.
Above two with the increase of VAT will greatly increase the final
cost of the product.
Impose of PAYE tax on employees may needs to be recovered from
customers by further increase of the unit price.
Government instability This may cause the temporary/permanent suspension of key
development projects and this will negatively impacted on both
fabrication & galvanizing jobs.
Environmental Effluent treatment waste disposal issue
There is only one service provider in the country for the safe
disposal of effluent treatment sludge. But their capacity of
disposal is smaller than our generation
A huge amount of sludge is accumulated inside the factory
premises. This may lead to the rejection of Scheduled waste
management license from CEA and finally for the temporary
suspension of operations.
The R&D progress of the pigment manufacturing from galvanizing
effluents is reaching its final phase. Preliminary discussions to begin
a mass scale manufacturing facility is underway.
Absence of White smoke extraction system It can be led to complaints from neighbors & causes legal issues
5. ` KEY ISSUE IMPLICATIONS
Increase of galvanizing price several times within a year. When a client starts a new project or job, he gets a quote from us
and determines the cost of that project or job. But if the price has
changed within a short period of time customer may not be able to
complete the project for the quoted price. Thereby we might not
receive the job for galvanizing
Attitudes & Skills - Loss of experienced labour
Due to this economic situation, the production has decreased
significantly. This has reduced the manpower requirement.
As a result, some workers have lost their jobs & they are moving out
and looking for other jobs. Doubtful to avail their services and
experience in future.
Lack of awareness and proper knowledge on galvanizing by most of
Most of the customer hasn't a full awareness & knowledge about the
galvanizing process. Thus, sometimes they use paint/oil/grease to
their materials during the fabrication knowingly or unknowingly. In
the hot dip galvanizing process, we cannot galvanize these kind of
material. As a result, we may need to charge extra for these surface
preparations such as blasting, flame cleaning, power or hand
cleaning, etc. Because of these costs, they tend to look for other
6. ` KEY ISSUE IMPLICATIONS
Technological Furnaces and their control system technologies are outdated.
Most control equipment including burner controllers, temperature
controllers, pressure switches, LPG flow controllers etc. used in
both galvanizing furnaces are obsolete.
These equipment may be impossible to purchase in the upcoming
years. The continuous operation of the furnaces since 1999 had
caused both mechanical and electrical degradations in these
equipment, thus making them prone to frequent breakdowns and
Significant production and financial losses may encounter due to
Preliminary discussions are underway to move toward a state-of-the-
art furnace system.
High galvanized coating thickness compared to the minimum
requirements specified in BS EN ISO 1461:2022 standard.
A higher coating thickness means we are consuming more zinc.
A technological improvement is in consideration to reduce the
coating thickness by adding Nickel cake to the bath with some other
Economic Due to the current economic situation of the country, major
construction projects are standstill.
Reduced number of jobs for both fabrication and galvanizing.
Shortage of foreign currency reserves in the company Risk of not allocating foreign currencies from banks to foreign
supplier payments. This will affect the going concern of the business
since our main raw materials such as Steel and Zinc may 100%
depending on imports.
Increase of foreign currency exchange rates A hike in the foreign exchange rate will directly impact on the
increase in the cost of production of the company. This will cause to
increase in the selling price of fabrication and Galvanizing to cover
up the margins of the company. So, there is a potential risk of
switching customers to other alternatives due to high selling prices.
7. ` KEY ISSUE IMPLICATIONS
Economical Increase of borrowing rates Increase of commercial banks’ borrowing rates will directly impact to
the financial performance of the business since this will cause to
increase the finance cost of the company in future.
Rejection of credit payment terms by the foreign suppliers
Suppliers, especially overseas suppliers are no longer allowing
credit payment terms. Due to this economic situation, the suppliers
are requesting 100% advanced payment. In the past, suppliers
allowed credit payment terms, letter of credit (LC), document
against payment (DP), document against acceptance (DA), etc.
According to the procurement manual, we have to get advance
payment guarantee from the suppliers above Rs. 500,000/-
payments. But most of the overseas suppliers do not agree with
Because of this, we don't have any guarantee whether the
purchased material receives or not.
Regulatory Import restrictions of raw material and capital goods to the
country due to the depreciation of foreign currency reserves
Many construction and infrastructure development projects in the
country may have temporarily suspended their activities due to high
price of raw material and import restrictions. As a result, the need for
fabrication and galvanizing may also have reduced. Import
restrictions on the other hand may directly affect the factory
The hot-dip galvanized structures are being imported from
overseas for lower cost
Lowering of jobs in future for both the fabrication and galvanizing.
Future sale volume might reduced.
9. Area Activity / Performance Implications & Key Learnings
Development of value-added products (Iron
oxide pigments & sludge bricks) from waste
Reduced cost of waste disposal, minimized
A pilot plant project was successful and now in a
process to build a pigment manufacturing facility.
Financial Implementation of Month end closure process
within the organization to complete the financial
reporting prior to 10th working day.
Successfully implemented the Tax changes
(SSCL and VAT) with the coordination of
customers and the company.
Carried out support function to AMS system
migration to cloud version from VPN version.
Accurate financial reporting.
With the crisis situations banks were not able to
issue foreign currencies for RM importation
purpose in last year.
Due to the increment of Exchange rate and LME
Zinc price we had to increase Galvanizing price
4 times in last year.
Improved productivity of the department.
Maintaining two-way communication within the
department and with other departments will
adding additional advantage on achieving set
Updated knowledge on new tax changes by
attending to tax seminars will help to do the
changes and share the knowledge within the
Gathered/captured new techniques to check and
verify the financial information’s to do accurate
reporting to management.
Gathered Industry knowledge with regarding to
With the crisis situation we are strategically
maintaining FC reserves to mitigate such risk in
Area Activity / Performance Implications & Key Learnings
We had to terminate some facilities
given to customers due to the COVID-
19 pandemic like refreshments, air-
conditioned waiting area, etc…
Even though there were some termination of facilities,
customer satisfaction was maintained in highest level by
process improvements considering the COVID-19 threats.
Re-establishment of such facilities needs to be done. A
separate customer waiting area will be arranged.
Safety A safety officer was appointed in late
2021. planned safety walk downs,
safety meetings implemented.
Considerable improvement in safety culture was observed
35 %Reduction of Galvanizing
production compared to year 2021.
Average 3rd party material receiving
dropped by 50% after April 2022
47 % Reduction of Fabrication plant
production compared to year 2021
Working hours per day reduced from 16 hrs to 8 hrs. Most of
the experienced subcontract workforce left their jobs. If we
increase the price to cover the loss, customer base may further
A comprehensive business plan is required to uplift this
situation. We need to get business by implementing a
systematic marketing plan. In addition to that we need to look
for similar new businesses.
Aluminum addition was closely
monitored in order to reduce the Zinc
carryout with the reduction of
transmission line tower jobs.
Average coating thickness of most of the article types reduced
during last few months.
But a technological improvement like Nickel addition is
required to reduce the Zinc carryout below 5.5 %
Area Activity / Performance Implications & Key Learnings
A comprehensive maintenance
program was introduced.
Minimal production affected
(below 2% of plant operation time)
New preventive measures were introduced to the plant &
equipment, timely execution of scheduled maintenances/PMs.
It was identified that there are some technological
improvements to be done in the furnace control system. Many
PMs have been neglected previously due to the lack of a
comprehensive maintenance management system. Still, we
need to have a software-based system for further
Procurement manual was finalized and
implemented in the plant.
A systematic procurement process is now in practice.
However, a software-based system is highly required to
minimize errors as well as save the time.
12. Key achievements
Production Maintenance Quality Assurance Procurement
• Average of 500
during past 06
months amidst the
• All the
jobs received from
• Decided to
fabricate LT Stay
assembly for the
• Minimal production
ance periods (below
2% of plant
• Timely risk
identification of the
• Implemented QC
according to ISO
• Average coating
reduced by about
• Required amount of
Zinc was purchased
amidst the financial
software for stores is
• Procurement Policy &
• Participated for 06
nos of local 33kV
tower tenders and
became lowest in all
• Rs. 2 billion turnover
and Rs. 795 million
NP from Jan-Dec
• 330 new customers
• We have a monopoly for Hot Dip Galvanizing
in the country
• We are there in the field of Steel Fabrication
& Hot Dip Galvanizing during past 32 years
with sound financial position and
• Possession of skilled and experienced staff
• Availability of an alternative solution for
• We consistently provide high quality
galvanized steel products which in line with all
applicable international standards
• The company has excellent reputation on
high quality products among major
contractors, consultants, architects and other
• Company owned state of the art machineries
for fabrication and galvanizing
• Increasing trend of use of
galvanized steel in road
development & building
construction, especially there are
opportunities in port city project.
• Can cater for the future renewable
energy market by manufacturing
solar panel structures.
• Enhance partnership with IESL,
Universities, and other Engineering
associations to create a recognition
• Still higher percentage of imported
steel use without Galvanizing &
there is a potential market
• Potential growing market in India,
Bangladesh and Africa region.
• Lack of a proper marketing strategy
and a marketing team
• Lack of technological innovations
• Lack of a proper ERP system to
integrate the processes
• Higher production cost compared to
Indian/Chinese companies doing same
type of production
• High consumption of Zinc compared
to international benchmark values
• Draining out of skilled workers
• Environmental constraints on disposal
of waste sludge and wastewater
generated form effluent treatment
• Reduction of jobs and payment delays due
to the financial crisis of CEB
• Increasing trend of both Zinc and steel
price in international market
• Acquiring of local projects by Chinese
companies due to political decisions and
hence they bring already galvanized steel
structures where there is a local potential
for both fabrication & galvanizing available
• New entrance of a competitor for
galvanizing of structural items.
• Unavailability of major raw materials due to
the depletion of foreign currency reserves.
• Reduced business in coming months due to
the financial crisis situation in the country