Finance costs rose to 176 million rupees during the year up from 23 million rupees a year earlier, due to higher borrowings and a 77 million forex loss. At company level the forex loss was 84 million rupees.
"An increase in furnace oil prices in February 2012, combined with a hike in January of electricity tariffs and wage increases… will impose an additional estimated cost of over Rs 175 million per annum," Haycarb managing director Rajitha Kariyawasan said in a statement.
"The significant devaluation of the Sri Lankan currency will help us to offset some of these cost challenges in Sri Lanka, our largest manufacturing base."
An export firm can make more rupees on dollar priced exports and make more rupee profits by effectively paying lower real wages to workers nullifying wage increases.Even domestic raw materials which are not internationally traded, will eventually catch up to the currency depreciation and prices of traded raw materials will catch up very quickly. Real wages can also catch up.
A firm will also have to spend more money on capital expenditure in the future though it may benefit from an effective real lowering of rupee denominated loans.
Sri Lanka's rupee fell partly due delayed increases in energy prices, where state enterprises used credit to pay for imported petroleum, putting pressure on a dollar peg.
Group revenues in the quarter rose 56 percent to 2.6 billion rupees, and costs rose at a faster 64 percent to 2.0 billion rupees, but the group managed to grow gross margins by a slower 31 percent to 570 million rupees.
The firm had invested 782 million in capital expenditure and was planning new plants in Indonesia and India.
Group long term loans denominated in rupees rose to 366 million rupees from 12.5 billion a year earlier, and short term borrowing to 1.3 billion rupees from 423 million rupees.
"The demand outlook for Haycarb’s high quality activated carbon from all our facilities remains strong," Kariyawasan said.
"With maximum capacity utilization we are concentrating more and more on high value and high margin products, applications and strategic customers, providing a much better value proposition."