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FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » KGAL interim financial statement 30/06/2011

KGAL interim financial statement 30/06/2011

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mission


Manager - Equity Analytics
Manager - Equity Analytics
http://www.cse.lk/cmt/upload_report_file/711_1313139996503.pdf
EPS for the quarter = 1.27
(refer note 7)

RockStock


Manager - Equity Analytics
Manager - Equity Analytics
Plantation GURU of the forum has hidden under the bed

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@RockStock wrote:Plantation GURU of the forum has hidden under the bed

Poor rajitha.

can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@mono wrote:

can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year


162m gratuity increase = wages for quarter + arrears of from April to May

In June 2011, as per the Collective Agreement, wage rate was increased from Rs. 447.75 to Rs. 572.00 with retrospective effect from April
2011. Arrears payment from April to May 2011 is payable in August 2011. Total impact of the wage arrears and increase in gratuity
provision amounting to Rs. 162 mn was charged to Cost of Sales as at 30 June 2011 as follows;

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@slstock wrote:
@mono wrote:

can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year


162m gratuity increase = wages for quarter + arrears of from April to May

In June 2011, as per the Collective Agreement, wage rate was increased from Rs. 447.75 to Rs. 572.00 with retrospective effect from April
2011. Arrears payment from April to May 2011 is payable in August 2011. Total impact of the wage arrears and increase in gratuity
provision amounting to Rs. 162 mn was charged to Cost of Sales as at 30 June 2011 as follows;

I'm not getting this. aren't April & May part of the quarter

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@mono wrote:
@slstock wrote:
@mono wrote:

can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year


162m gratuity increase = wages for quarter + arrears of from April to May

In June 2011, as per the Collective Agreement, wage rate was increased from Rs. 447.75 to Rs. 572.00 with retrospective effect from April
2011. Arrears payment from April to May 2011 is payable in August 2011. Total impact of the wage arrears and increase in gratuity
provision amounting to Rs. 162 mn was charged to Cost of Sales as at 30 June 2011 as follows;

I'm not getting this. aren't April & May part of the quarter

Remember the agreement was passed in end of May. These could be backdated incentives ( on top of basic wages there are other incentives) which were probably not paid. Hence the smaller number. Am not postive in the internal workings. This is a educated guess

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
@mono wrote:
can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year



ok let me take a stab at this-

in June the basic plantation sector worker's wage was increased from 450 to 570. since the increase is applicable from April there is a wage arrear that needed to be taken to the financials. The GRATUITY part is different from this, according to local labour laws if someone completes 5 years of service he is entitled to 1/2 months basic salary * number of years served WHEN he retires however this needs to be accounted for in the financials.

So the plantation company adds up all employees who have completed 5 years and calculates the gratuity provision.

At the end of March the gratuity was calculated on the basic salary of 450, at the end of June the reasonable management teams re-calculated the gratuity provision based on the new salary of 570 and took the new increased amount to their accounts.

Certain "dodgy" management teams have not taken the new calculation yet because they have the option of waiting till the audited accounts are prepared in Dec or March (eg-MAL and BALA does not seem to have taken the gratuity provision hit yet).

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@innam wrote:
@mono wrote:
can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year



ok let me take a stab at this-

in June the basic plantation sector worker's wage was increased from 450 to 570. since the increase is applicable from April there is a wage arrear that needed to be taken to the financials. The GRATUITY part is different from this, according to local labour laws if someone completes 5 years of service he is entitled to 1/2 months basic salary * number of years served WHEN he retires however this needs to be accounted for in the financials.

So the plantation company adds up all employees who have completed 5 years and calculates the gratuity provision.

At the end of March the gratuity was calculated on the basic salary of 450, at the end of June the reasonable management teams re-calculated the gratuity provision based on the new salary of 570 and took the new increased amount to their accounts.

Certain "dodgy" management teams have not taken the new calculation yet because they have the option of waiting till the audited accounts are prepared in Dec or March (eg-MAL and BALA does not seem to have taken the gratuity provision hit yet).

That would explain MAL rather decent performance this quarter compared to peers. I expected MAL to be hit harder, as their June Eps is not bad at all given the wage issue. The report does explain about the wage effect.



Last edited by slstock on Fri Aug 12, 2011 6:34 pm; edited 1 time in total

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
@ mono

the arrears in wages figue that is given in KGAL statements is probably a presentation issue

eg- April-May wages calculated at 450= xxxx

June wages calculated at 570 =xxx

April- May arrear (570-450) =xxxx



usual case of accountants just complicating things.

glad


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
Also remember Gratuity is a provisional book entry and only gets into cash flow when someone leaves after working for 5 years. The money is actually with the company and if the management is smart enough they can make it work in their favour. EPF and ETF the company forwards it to govt. I dont know whether it works differently for plantations.

innam

innam
Manager - Equity Analytics
Manager - Equity Analytics
@glad wrote:Also remember Gratuity is a provisional book entry and only gets into cash flow when someone leaves after working for 5 years. The money is actually with the company and if the management is smart enough they can make it work in their favour. EPF and ETF the company forwards it to govt. I dont know whether it works differently for plantations.



yes but eventually everyone leaves or falls dead at work, when that happens the money has to go out. Because the money WILL go out, companies have to take the hit in the financials.

Gaja


Associate Director - Equity Analytics
Associate Director - Equity Analytics
@innam wrote:
@mono wrote:
can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year



ok let me take a stab at this-

in June the basic plantation sector worker's wage was increased from 450 to 570. since the increase is applicable from April there is a wage arrear that needed to be taken to the financials. The GRATUITY part is different from this, according to local labour laws if someone completes 5 years of service he is entitled to 1/2 months basic salary * number of years served WHEN he retires however this needs to be accounted for in the financials.

So the plantation company adds up all employees who have completed 5 years and calculates the gratuity provision.

At the end of March the gratuity was calculated on the basic salary of 450, at the end of June the reasonable management teams re-calculated the gratuity provision based on the new salary of 570 and took the new increased amount to their accounts.

Certain "dodgy" management teams have not taken the new calculation yet because they have the option of waiting till the audited accounts are prepared in Dec or March (eg-MAL and BALA does not seem to have taken the gratuity provision hit yet).

Friend i need a small clarification, as per the law Gratutity is payable for the employees who have completed at least 5 years in service, but the provision required even if they completed one year of service? or this the provision need to be made for the employees who completed 5 years in service?

glad


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
I think the law requires that the company pays gratuity for anyone who has worked for over 5 years, and the company can work out how to provide for it.
Please correct me if I am wrong.

Genting


Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
What most companies do is they make a provision for gratuity. When a employee gets permanent, the company sets aside some amount of money on behalf of that persons gratuity. When a person who is entitle for gratuity leaves, that persons gratuity is going to be given out from the money in gratuity provision.

The trick is not all the people leaving are entitle for gratuity. The employee has to stay for 5 years or more to get gratuity. When someone leaves before that, the money that has been set aside for him will not be given to that person. So, usually this provision grows and grows.

invest-abc


Manager - Equity Analytics
Manager - Equity Analytics
@Gaja wrote:
@innam wrote:
@mono wrote:
can someone explain to me how this gratuity thing exactly works. is this the gratuity for the entire year



ok let me take a stab at this-

in June the basic plantation sector worker's wage was increased from 450 to 570. since the increase is applicable from April there is a wage arrear that needed to be taken to the financials. The GRATUITY part is different from this, according to local labour laws if someone completes 5 years of service he is entitled to 1/2 months basic salary * number of years served WHEN he retires however this needs to be accounted for in the financials.

So the plantation company adds up all employees who have completed 5 years and calculates the gratuity provision.

At the end of March the gratuity was calculated on the basic salary of 450, at the end of June the reasonable management teams re-calculated the gratuity provision based on the new salary of 570 and took the new increased amount to their accounts.

Certain "dodgy" management teams have not taken the new calculation yet because they have the option of waiting till the audited accounts are prepared in Dec or March (eg-MAL and BALA does not seem to have taken the gratuity provision hit yet).

Friend i need a small clarification, as per the law Gratutity is payable for the employees who have completed at least 5 years in service, but the provision required even if they completed one year of service? or this the provision need to be made for the employees who completed 5 years in service?

Now we are adopting the basis of IAS-19 for Gratuity valuation. As per IAS - 19, gratuity provision should be decided based on an actuarial valuation. This is a much complicated method than the previous valuations. This takes in to consideration contingencies such as natural attrition rate, mortality rate, expected salary growth rate etc...But the effort behind all this is to fairly value the gratuity liability that would materialize in the future on account of the current employees of the organisation. Actual gratuity liability arises on exit after 5 years of service and on death irrespective of length of past service.

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
Thanks Innam. I got a similar explanation from a nother source as well.

Rajitha

Rajitha
Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics
@RockStock wrote:Plantation GURU of the forum has hidden under the bed

LOL if you referring to me you must have some serious problem as most people don't camp here and do have a life and a job! I just got home today after work at around 9pm and never had a chance to check even todays market!

Also whats the problem ? Are the people here gone again so retard can't even read a proper finical statement ?
From my 1st glance I'm spot on with the EPS for the quarter! Go check what I posted before please about these plantations!
They have posted EPS of rs 1.25 that's with adding costs for gratuity and arrears ! Without that is the EPS is Rs 7.68 or gross profit of rs 192 million!

What i posted even like a week ago was considering no addition of extra chargers like MAL did they should EPS of Rs 6.50 -8! In fact they have shown EPS towards the top end range of my expectations! So I'm quite happy with the results and so would anyone with a brain who knows anything about the industry! We will be able to see how the company keep performing here after the wage hike and I have quite a big faith in the company with the current rubber prices!

Hopefully for the next financial year the EPS would be Rs 20-30! which means a really undervalued company in CSE considering no wage hike for 2 more years!

PS:- You should actually praise people like me who rightly predict all reports beforehand as I did for DIMO KGAL and BFL among many others, compared with the retard lot here that keep on promoting same stocks with false numbers and theories!

mono

mono
Vice President - Equity Analytics
Vice President - Equity Analytics
@Rajitha wrote:
@RockStock wrote:Plantation GURU of the forum has hidden under the bed

LOL if you referring to me you must have some serious problem as most people don't camp here and do have a life and a job! I just got home today after work at around 9pm and never had a chance to check even todays market!

Also whats the problem ? Are the people here gone again so retard can't even read a proper finical statement ?
From my 1st glance I'm spot on with the EPS for the quarter! Go check what I posted before please about these plantations!
They have posted EPS of rs 1.25 that's with adding costs for gratuity and arrears ! Without that is the EPS is Rs 7.68 or gross profit of rs 192 million!

What i posted even like a week ago was considering no addition of extra chargers like MAL did they should EPS of Rs 6.50 -8! In fact they have shown EPS towards the top end range of my expectations! So I'm quite happy with the results and so would anyone with a brain who knows anything about the industry! We will be able to see how the company keep performing here after the wage hike and I have quite a big faith in the company with the current rubber prices!

Hopefully for the next financial year the EPS would be Rs 20-30! which means a really undervalued company in CSE considering no wage hike for 2 more years!

PS:- You should actually praise people like me who rightly predict all reports beforehand as I did for DIMO KGAL and BFL among many others, compared with the retard lot here that keep on promoting same stocks with false numbers and theories!

Rajitha, it must be really dark where your head is right now.



Last edited by mono on Sat Aug 13, 2011 12:35 am; edited 1 time in total

Aamiable


Vice President - Equity Analytics
Vice President - Equity Analytics
KGAL might bring much better results next time... these fluctuations were expected

Carolis


Manager - Equity Analytics
Manager - Equity Analytics
Is it ok to buy KGAL & NAMU at these prices or is it better to wait till close to next quarter?

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