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| Sunday, 24 April 2005 |
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Business |  |
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Talawakelle
Plantations posts Rs. 130.7 million after tax profit
Talawakelle Plantations Ltd has recorded an after tax profit of Rs 130.7 million, the second highest since privatisation. Turnover at Rs 1.5 billion was 10.6 percent above last year. The company has declared a dividend of 15%. Chairman of the company Rajan Yatawara in his review said that the year's result was achieved despite substantial wage increases during the year. The focus on quality helped the company to get good prices in a buoyant tea market. Good cost management and an emphasis on productivity helped mitigate the escalations in wage and energy costs. The reduction in the management fee levied by Hayleys Plantations Services Ltd also contributed significantly. The revised wage agreement came into effect in July 2004. Under this agreement the daily wage cost per employee including the attendance incentive as well as EPF and ETF increased by 21.2%. In addition a variable price share supplement was brought into supplement the daily wage. At current tea prices it represents a substantial additional payment to the employees. He said that the impact of the revised wage structure on the company was considerable. The additional wage cost for the six months excluding gratuity was Rs 51.7 million. The gratuity liability net of actuarial valuation increased by Rs 21.2 million. Yatawara said that this level of cost cannot be sustained unless the industry continues to enjoy very high sales prices. Given the cyclical nature of the industry, profitability is highly sensitive to sales prices. Tea production in the properties owned by the company was 7.63 million kilograms, a decrease of 0.7 million kilograms compared with the same period last year. High grown production was five million Kilograms and low grown production was 2.63 million kilograms. High growns recorded a crop reduction of 0.1 million kilograms mainly due to dry weather conditions. Low growns recorded a decrease of 0.6 million kilograms mainly due to a decline in bought leaf production. Yatawara said to ensure long-term sustainability, capital investments amounting to Rs 138.2 million was done despite concessionary funds being unavailable. The investment in field development was Rs 67 million while it was 71.2 million in non-field development. Initiatives to develop hydropower and grow bell peppers under greenhouse conditions were successful. The Radella power plant of 200Kw was commissioned while plans are under way to develop two more sites. The potential at these sites are estimated at 700Kw. The plants will meet the internal power requirements while the balance will be supplied to the national grid. Since bell pepper yields have improved the project will be expanded several fold. He said that increased wage costs would be a key challenge during the year with costs of production already at high levels. Therefore it is necessary to increase worker and land productivity for the sustainability of this industry, he said. |
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