In the wake of challenging times amongst plantation companies, the Chairman of Lankem Ceylon Plc, A. Rajaratnam says their management has made a conscious decision to diversify the crops planted on the estates of the Group’s two plantation Companies Kotagala Plantations PLC and Agarapatana Plantations Ltd in order to mitigate some of the risks involved in the Plantation sector. In his message to stakeholders at the release of the group’s Annual Report 2011/2012, the Chairman said that with this strategy in mind Kotagala Plantations PLC is replanting nearly 1000 hectare of low yielding rubber with oil palm and Agarapatana Plantations Ltd is replanting some low yielding tea areas with rubber and cinnamon.
“During the course of the past financial year Kotagala Plantations PLC was also successful in obtaining the approval from relevant Government regulators 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”, Lankem Chairman, Rajaratnam confided.
He noted that during the year under review, the Group’s two plantation companies Kotagala Plantations PLC and Agarapatana Plantations Ltd faced challenging times with a decrease in profits to Rs. 438.6m in the case of Kotagala Plantations PLC and a loss of Rs. 555.3m in the case of Agarapatana Plantations Ltd.
“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 secure the future viability of the Plantation sector in Sri Lanka, any future wage increases must be linked to increased levels of productivity”, he suggested adding that the Companies continue to rationalize their workforces in both Companies to ensure that profit levels can be maintained in the future
“The profitability of both Companies was also impacted by the volatility of commodity prices seen during the year. The performance of Agarapatana Plantations Ltd was severely impacted by the low tea prices fetched at the auctions”, he further pointed out.
Lankem Ceylon PLC at Group level recorded a turnover of Rs. 24.1bn and a profit after tax of Rs. 1,232.3m. At company level turnover improved to Rs. 5.8bn and profit after tax increased to Rs. 730.3m.
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