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S3312 Purchase of Ceylon Steel Corp.


Product data: Offers are invited from investors for purchase of 60 percent stake or 21 million ordinary shares. Quantity, U.S. dollar value, purchase needed: NA.

Response data: Language: English. Best way to respond: prospective investors should obtain bid documents/company information from Public Enterprise Reform

Commission, Bank of Ceylon, 30th Floor, Bank of Ceylon Mawatha, Colombo 1. A sealed package containing offer in duplicate and marked "Offer for purchase of shares of Ceylon Steel Corp." should be sent to address below on/before 1600 hrs Sri Lanka time on 11/10/95; offers will be opened in presence of bidders. From manufacturers only: NA. Information desired: background/ experience in manufacturing/marketing steel products, purchase price for shares, provision of a bid bond equivalent to 5 percent of offered price, valid for 60 days from date of submission of offer. Primary buying factor: NA. Offers made by telex or fax will not be accepted.

Company data: Manufacturer of rolled, wire, steel products. Established: 1961 as state venture. Employees: 1,346. Annual sales: 1,589 million rupees (US$31.8 million, 1994). Member of business chamber: NA. Bank ref: Bank of Ceylon, Sethsiripaya, Battaramulla; Peoples Bank, International Division, Lake House, 35 DR Wijewardena MW, Colombo 1; Peoples Bank, Battaramulla; Ceylan Bank, Upper Chatham Street branch, Colombo 1; Bank of Ceylon, Corporate branch, Colombo 1. U.S. firms represented: NA.

Post remarks: Company was established pursuant to a technical co-operation agreement between former USSR and government of Sri Lanka. Production facilities, located 32 km east of Colombo at Athurugiriya, consist of a rolling mill, wire mill, steel foundry. Rolling mill and wire mill were commissioned in 1967. Authorized and issued share capital of 350 million rupees consists of 35 million ordinary shares of par value 10 rupees. Secretary to Ministry of Finance is currently sole shareholder. Company is market leader in steel industry, commanding about 65 percent of overall market. However, there are a number of small scale manufacturers and importers, engaged in either one or two market segments in that company operates, who have recently captured a fair segment of market. Ceylon Steel is price setter in market, due to its position as largest producer. Company sells

bulk of its products through a network of 136 dealers and through its main installation at Athurugiriya. Rolled products account for 93 percent of output. Rolling mill, equipped with Russian machinery, has a capacity of 72,000 mt per year, expandable to 96,000 mt operating on three shifts. It has been in use for nearly 3 decades and plant modernization is required. Basic raw material is small sized mild steel billets imported from China. Products manufactured in rolling mill include hot rolled plain bars, angle flats, deformed bars, patented tor steel. Production in 1994 of 55,000 mt was highest on record. Wire mill was commissioned in 1967 along with rolling mill. Due to strong competition from imported products, plants capacity is considerably under utilized. Steel foundry, built in 1975, is one of largest in Sri Lanka. It undertakes ferrous and nonferrous castings according to customer specifications. Foundry also faces competition from imports. A melt shop was commissioned in 1982 but ceased operations in 1985. It is capable of producing mild steel billets from scrap iron. However, there is no adequate supply of scrap iron in Sri Lanka. According to company profile, fixed assets had a book value of 420 million rupees (US$8.4 million) as of 12/31/94. A major investment program is required for development and rehabilitation of Ceylon Steel Corp. A plant improvement program currently under way entails an investment of 100 million rupees (US$2 million). Tenders have been called for a galvanizing plant and mechanical descaling and pre-coating unit for wire mill.

Contact: Chairman, Public Enterprise Reform Commission, Bank of Ceylon, 30th Floor, No 4, Bank of Ceylon Mawatha, Colombo 1, Sri Lanka. Tel: 94 1 33 87 56 to 33 87 58. Fax: 94 1 32 61 16.

Please send a copy of your response to:

Commercial Section (TOP), American Embassy, Colombo, Department of State, Washington, D.C. 20521-6100. Refer to: T0034.

Sri Lanka - Other Investments