Business tycoon Harry Jayawardena-controlled Melstacorp PLC has invested a further Rs. 175 million for the upcoming cement bagging business via a joint venture.
The new venture, ‘Melsta Gama’, is with Pyramid Gama, a joint venture between Gama Corp. of Indonesia and Pyramid Holdings of Sri Lanka.
The latest investment is by way of enhancing capital. Originally Melstacorp’s stake in JV was Rs. 952 million and in FY20, it had increased to Rs. 1.127 billion.
The cement import and bagging venture is entering the business at a time when the Government has given a big boost to local manufacturers after increasing the CESS on imported cement.
However a pick-up in demand for cement is being forecast, which is likely to give room for new entrants, such as Melsta Gama.
In 2019, cement use declined by 6% as against a contraction of 1.3% in 2018. Local cement production declined by 1.2% in 2018 as against a growth of 7% in 2018. Cement imports declined by 19% in 2019, as against a contraction of 8.6% in the previous year. Share of imported cement declined to 46% from 53% in 2017, and local cement saw an increase to 54% from 47%.
The Gama Group is one of the largest cement players in the region, and currently manages one of the largest cement-producing operations. Pyramid Holdings owns Pyramid Wilmar, which is the leading edible oil and specialty fats syndicate in Sri Lanka.
Melsta’s investment in the cement venture comes under its diversified portfolio which includes healthcare, a sector where over Rs. 1 billion was made in FY20. Other interests include beverage, plantations, telecommunications, insurance, power generation, logistics, textiles, leisure, BPO, and media.
The Board of Directors of Melsta Gama comprises D. H. S. Jayawardena (Chairman), M. Sajad Mawzoon, Manilal Fernando, M. T. Siddique, Capt. K. J. Kahanda (Retd.), C. Singh, and D. Hasitha S. Jayawardena (alternate to D. H. S. Jayawardena).