Litro Gas Lanka ends 2018 on a high note

Litro Gas Lanka, Sri Lanka’s largest importer and supplier of LP Gas, won numerous awards and accolades for its performance excellence, dedication to sustainability and successful implementation of standardisation in 2018. The lineup of awards signifies the success of the company’s core intent to ensure long-term success and viability through profitability, performance excellence and standardisation. 

Litro Gas Lanka and Litro Gas Terminal Lanka Managing Director  Muditha Peiris

Illustrating the company’s business performance and brand power, Litro won the Gold award in the National Level State Services Sector at the Ceylon National Chamber of Industries Award 2018 and the Golden Globe Tigers 2018 Market Leadership Award for excellence in branding and marketing. The company also won the Gold Award in the extra-large Category at the Achiever Awards by the Ceylon National Chamber of Industries (CNCI). Proving the company’s digital prowess, Litro clinched the ZeroOne Award for Best website in the Manufacturing, Transportation, Storage and Logistic Sector and the ZeroOne Runner’s up Award for Best use of Mobile in the Manufacturing, Transportation, Storage and Logistic Sector. Litro’s impactful endeavours to ensure sustainability of operations in terms environment, monetary and safety received recognition when the Company won the CA Sri Lanka Compliance Award 2018 and the National Green Award 2018 for Chemical Industries.  In 2018, Litro received ISO 14001 and OHSAS 18001 certification for the storage facility and bulk filling of LPG in Kerawalapitiya. 

“During the period between 2014 and 2018, the Company made a strategic shift in its business model. In place of a profit-centric model it adopted a customer centric approach, starting from 2015. The result was enhanced brand value which in turn created value for all stakeholders. In spite of overwhelming challenges that the company had to manage, Litro succeeded in turning around company performance to evolve from being a mere trading-house to become a strong corporate entity with equally strong brand equity. 

“In numeric terms, the company achieved an unprecedented volume growth of over 90% in spite of the challenges such as rising cost of LPG Contract Price (CP) and rupee devaluation. The core reasons behind the success of the company are the right and visionary strategies adopted by the Chairman and board-of-directors backed by the able leadership of our Managing Director Muditha Peiris along with the capable and professional management and staff,” commented the Director – Sales, Marketing and Corporate Affairs of Litro Gas Lanka Ltd.

Sri Lanka’s LPG industry faces a unique challenge where all four key variables that collectively contribute to profitability remain beyond the control of local LPG companies. The four variables include, LPG world prices, the retail selling price of a cylinder in the local market, the dollar fluctuation and the freight and shipping cost. 

World gas prices commonly acknowledged as the Contract Prices (CP) regulated and steered by Saudi Aramco was at a comparatively a modest level of 431 $ per metric tonne during 2015. In October 2016 the CP started to increase gradually never to return to the price ranges between the years of 2015 except in July 2018 when CP decreased marginally for a brief period. 

Revealing how domestic challenges affected LPG players in Sri Lanka, Managing Director Muditha Peiris said, “CP price increase occurred at a time when the government and regulatory bodies drastically reduced the retail price of a domestic LPG cylinder. Price regulations affected the entire LPG industry in Sri Lanka causing, LPG companies to sell domestic gas cylinders at a loss of Rs. 100 to Rs. 470 per cylinder depending on the monthly CP.”

Global LPG price (CP) is based on USD. As the value of rupee continues to drop against the US dollar, the cost of purchase, transportation and inward customs clearance too keeps on increasing. Consequently, unprecedented exchange rate fluctuations experienced in Sri Lanka had a negative operational and financial impact on the local LPG industry. 

“Freight and shipping cost too plays a critical role in determining the financial performance of LPG companies. While freight and shipping cost is largely out of control of LPG players, we effectively managed to bring down this particular cost to a record low rate. The main strategies used to achieve cost efficiency were the transparent tender procedure and working in line with the 19th amendment procurement guidelines. As a result, the financial performance of Litro Gas Lanka improved during the period between 2015 and 2018,” revealed Managing Director Muditha Peiris.

Speaking further, Peiris said, “Striving to address the challenges, we adopted a well-defined, cohesive growth strategy to achieve sustainable progress and to build the Litro brand. We launched a considerable brand building campaign to connect the Litro brand with the psyche of Sri Lankan consumers.  Seeking to strengthen industry relations, we implemented concrete channel development strategies. As a result Litro Gas Lanka now possesses a robust channel partner network which grew threefold during the period between 2015 and 2018.” 

The overall success of the strategic shift is evidenced in the resulting volume growth from 171,000MT in 2014 to 326,000MT as at end of 2018. Penetration from 2014 (new customer acquisition calculated by new cylinder sales) increased by over 2.4 million as of 2018, posting a growth rate of 80% (all segments). The fact that this growth occurred during a period when the average exchange rate fluctuated from Rs. 130 to Rs. 181 in 2018, reveals the effectiveness of the overall Litro growth strategy. 

For the first time in history, the sister company of Litro Gas Lanka Ltd. – Litro Gas Terminal Lanka Ltd. (LTLL) recorded a revenue generation of Rs. 2 billion and a Profit-Before-Tax of Rs. 1.5 billion (unaudited), driven by the volume increase gained by Litro Gas throughput. LTLL is a state-of-the-art facility which enjoys a minimal operating cost. The facility operates with a staff of approximately 23 individuals, a silent testimony to its efficiency.

In non-monetary terms, Litro evolved into an influential corporate entity with far reaching brand equity and a strong channel partner network. Reaching beyond merely progressing as a corporate entity, Litro Gas Lanka contributed to nation building efforts with dividend payments to the treasury through Sri Lanka Insurance Corporation (SLIC). In 2016 alone, Litro Gas Lanka paid Rs. 5.75 billion in dividend payments to the treasury through SLIC while Litro Gas Terminals contributed Rs. 2.5 billion in dividend payments. LTLL has already paid an interim dividend of Rs. 1 billion for the year 2018 to the Treasury through SLIC.

The company achieved these unprecedented feats through shifting gear from a profit centric approach to a more sustainable customer centric approach.