While unpredictable and adverse weather patterns reduced the area under cultivation in both the Yala and Maha agricultural seasons, the crop protection business was hampered by the misleading information spread about the safety of crop protection solutions marketed by all players in the industry, the company said in its year-end 2011-12 annual report.
“As a result of this, we as well as our competitors were unable to bring in the necessary chemicals for several months. I would like to re-iterate that Lankem has always been at the forefront of retailing safe crop protection solutions. I would like to thank our many foreign partners for the hard work in providing the necessary toxicological data to prove that their products, which Lankem distributes, are amongst the safest in the world,” noted company chairman A. Rajaratnam.
“All crop protection solutions in Sri Lanka go through one of the most vigorous testing and registration exercises in the world before these products can be retailed to Sri Lankan farmers. We stand by the safety of all our products,” he assured.
The Lankem group recorded a turnover of Rs. 24.1 billion and a post-tax profit of Rs. 1.2 billion. At company level turnover improved to Rs. 5.8 billion and post-tax profit rose to Rs. 730.3 million.
The report said Lankem aims to further develop its domestic trading business when it launches its own brand of tea for the local market in the first quarter of 2012.
On its leisure sector, Lankem said it has investments in five hotel properties across the country. The decision to upgrade the three existing established properties at Marawilla, Sigiriya and Beruwala has now paid dividends. Profits across all three properties have risen significantly.
Lankem’s two plantation companies - Kotagala Plantations and Agarapatana Plantations Ltd faced challenging times with a drop in profits to Rs. 438.6 million (Kotagala) and a loss of Rs. 555.3 million (Agarapatana). The wage hike that was granted to workers in the early part of the financial year was a major strain on the profitability of both companies.
In order to mitigate some of the risks involved in the plantation sector, the management decided to diversify the crops planted on the estates of both companies. Kotagala is replanting nearly 1000 Ha of low yielding rubber with oil palm while Agarapatana is replanting some low yielding tea areas with rubber and cinnamon.
The report said Kotagala was also successful in obtaining government approval to plant 20,000 Ha of rubber in Cambodia. Once the entire extent of land is planted, this will represent a five-fold increase in the acreage of rubber under cultivation for the company. “With significantly lower wage costs, and higher yielding lands, the profit per acre from the Cambodian estates will be much higher than the equivalent estates in Sri Lanka,” the report said.