Generating continuous power for public consumption has often been a challenge due to various social, economic and political issues. Public Private Partnerships (PPPs) have helped the country achieve 100 percent electricity generation at present.
(LTL) which was formed with the co-operation of the Ceylon Electricity Board (CEB) and financial and technical assistance from Bonar Long Limited of Scotland, continues to produce high quality transformers to the local market supporting the power generation of the country.
Apart from a capital investment of Rs 105 million made by the CEB in 1996, there were no further investments or extended financial assistance to LTL.
“LTL has been profitable for the past 35 years. Last year we recorded a group profit of Rs. 4.7 billion after tax against a turnover of Rs. 17.7 billion. Right now about 60% of our turnover is derived from offshore operations. Our long term contracts with Bangladesh power utilities are still young. Besides we are scheduled to start work on 115MW thermal project in Feni Bangladesh, 10 MW hydro project in Nepal and 350 MW Kerawalapitiya LNG Combined Cycle thermal project in Sri Lanka in 2018. All these are more than 20 year contracts. We therefore expect LTL to be profitable long time in to the future as well”, LTL Holdings Chief Financial Officer Ravindra Pitigalage said.
“In Bangladesh we have invested as equity approx. US $ 20 million and have the control stake for 105MW thermal generating capacity. Remaining investments came from long term debt. This year we will invest US $ 10 million in Nepal and US $ 30 million in Bangladesh. Our acquisition in India for a switchgear factory in 2016 was US $ 6.5 million. These are the most recent investments of our portfolio,” he said.
“We plan to bring Rs. 2.3 billion in net profits for the year 2018/2019. In the initial years dividend flow will be restricted due to debt service costs for the current and new projects. We typically leverage up to about 75%. However all our equity investments will provide a minimum of 15% average return annually”, he said.
“We have about 500 dedicated workforce. Over 70% of our permanent cadre is working offshore. We will continue to seek opportunities in the power sector in politically stable, fast developing countries, with poor electricity infrastructure.
We will expand our presence in Africa and Asia within next five years to have a revenue of US $ 500 million”, he said.
“We are limited in our capacity to finance our growth due to the shareholding structure. We are already worth more than Rs. 20 billion, but our shareholder’s investment is still Rs. 150 million.
‘‘If we have access to the stock market we can look at more opportunities. The CEB being our main shareholder cannot make any increase of its investments in LTL due to its liquidity problems. We are hamstrung by this,” he pointed out.
“We think the CEB should realize its value created by LTL through a listing of LTL’s shares in CSE. LTL is an ideal case for an IPO of a PPP.That will allow the average Sri Lankan also to benefit from the success of a Sri Lankan company that has a global brand. Further, we will look at all opportunities on a viability and risk return perspective. At the moment we are well diversified within the broader power sector,” he said.
The LTL group consists of nine companies which have diverse business activities. LTL Transformers (Pvt.) Ltd. manufactures transformers and switchgear for local and export markets; LTL Galvanizers (Pvt.) Ltd. is into galvanizing and fabrication of power and telecom towers and construction materials; Nividhu (Pvt.) Ltd operating 2.5MW mini hydro project; Nividhu Assupiniella (Pvt.) Ltd operating 4MW mini hydro project; Pavandhanavi Ltd. operating 10MW wind power project; Lakdhanavi Ltd. EPC and O and M contractor and investing arm for thermal power projects; Raj Lanka Power Company Ltd., Bangladesh operating 2.2 MW thermal power plant; Rajshahi – Bangladesh, Lakdhanavi Bangla Power Ltd., Bangladesh operating 52.2 MW thermal power plant; Comilla- Bangladesh, Asiatic Electrical Switchgear Limited, India manufacture and export of medium voltage switchgear and Makari-Gad Hydro Power Limited, Nepal operating 10MW hydro project in Nepal.