Processed meat leader posts loss due to sluggish economy
Keells Food hit back at Indian allegations in sausage war

Mr. Yasa Nadaraja, Managing Director of Keells Food Products Limited, has totally rejected what he has called "malicious statements" published in the Indian press about their chicken sausages now making an impact on the Indian market.

Keells Food Chairman V. Lintotawela described the Indian press articles as "a load of rubbish" and said that they have written to the concerned authorities about the misrepresentation. These included an allegation that Keells Food was using North American chicken legs dumped at throw away prices for their sausages.

Nadaraja has said that Indian manufacturers sell chicken sausages to hotels, restaurants etc. at Indian rupees 130 to 140 per kilo in Chennai and 160 to 170 per kilo in Bangalore inclusive of all sales taxes.

"We believe these prices are possible as the cost of production in India is very competitive," he has said drawing attention to the fact that in most parts of the world, chicken sausages may be bought at a supermarket at less than 3 dollars per kilo.

"Prices of chicken portions are determined on a basis similar to a commodity market, i.e. on supply and demand. It is surprising to hear from a major player of poultry industry in India that chicken legs, consisting of over 50% of the meat from a total bird, are considered unwanted," Nadaraja said.

"Manufacturers internationally use meat from different parts of a chicken to produce sausages and to manufacture an internationally accepted product, the ratio of meat to fat has to be consistently maintained."

Nadaraja also rejected charges that they used chicken meat either from North or South America, as alleged by the Indian hatcheries spokesman. He said that this could be confirmed from Customs data.

He said that Keells Food Products has an approximate 70% market leadership in the processed meat category offering a range of products including sausages, ham, bacon and cold meats. The company was ISO 9001 certified and has achieved the SLS certification for all products where documented standards exist.

"We are highly respected in Sri Lanka and around the world as being a company, which maintains very high ethical standards in its business practices," he said. "Moreover, we wish to highlight that our products are served in international hotel chains, airlines and are exported to many countries."

The Keells Food Managing Director stressed that all criteria laid by the Indo-Sri Lanka Free Trade Agreement are fully complied with by the company and all its products meet the highest international standards.

His letter has been copied to the Foreign Secretary here and Sri Lanka’s Deputy High Commissioner in Madras.

Keells Food Products began operations in India exporting its first refrigerated consignment last October and a team from Sri Lanka is actively engaged in sales and promotional activities.

The company said in its annual report that "the prospect of capturing and consolidating this new market seems very positive."

Lintotawela has said in the chairman’s review of the company’s annual report that their long term export strategy was to take advantage of regional opportunities beginning with an aggressive expansion with exports to the South Indian market.

Keells Food reported a "below par performance" after several successful years in the year ended March 31, 2002, with turnover dipping 4% to Rs. 864.8 million and posting a pre-tax loss of Rs. 14.2 million against a profit of Rs. 34.4 million a year earlier.

The after-tax loss was Rs. 13.1 million, down from a net profit of Rs. 18.6 million the previous year. No dividend has been declared for the year under review.

In the last 10 years, the company has posted losses only in the year under review and in the year ended March 31, 1994.

The directors of the company are: Messrs. V. Lintotawela (Chairman),, C. J. Fernando, S. C. Ratnayake, G. S. A. Gunasekera, Y. Nadaraja (MD), Ms. R. S. Goonewardena, Ms. D. A. R. C. Perera and Ms. D. C. Alagaratnam.