|Management fees higher than dividend payout
Madulsima profits halved by rise in production costs
Madulsima Plantations Limited, a member of the Stassen group of companies, has seen an increase in revenue during the year ended December 31, 2001, but seen profits dip to Rs. 40.1 million from Rs. 81.6 million in an year where the weather was "not-so-conducive and the wage bill increased substantially.
The companys chairman, Mr. V. P. Vittachi, said that the companys tea production had increased to 6.1 million kg. from 5.98 million kg. the previous year while the yield per hectare was also up to 1,422 kg. per hectare from 1,388 kg. a year earlier.
"Production, yield and prices increased during the year but operating income declined due to the increase in cost of production being much higher than the increase in prices. However the company made an overall profit as a result of other income, mainly from investments, Vittachi said.
He said that there had been a significant decline in the rainfall and the number of wet days during the year. But in the Bogawantalawa sub-district where the company had four estates, rainfall had improved although there were fewer wet days.
The company has a total of 12 plantations, 8 in Madulsima and 4 in Bogawantalawa with a cultivated extent of 3,877 hectares of tea.
Vittachi said that the increase in labour wages and labour related cost had added Rs. 49 million to the cost of production - a 54% increase. The cost of power and major inputs like fuel, fertilizer and packing material had also increased during the year during which 21,569 man-days had been lost as a result of strikes and work stoppages in March last year. The estimated crop loss from this was 35,000 kg. valued at approximately Rs. 5 million.
He said that a crop of 6.95 million kg. was projected for the current year "which is achievable provided trade union action does not hamper labour productivity. Weather too would be a decisive factor.
He expected wages to increase substantially with the collective agreement up for revision in July along with the rise in cost of major inputs including power. The company would have to face many challenges with opportunities for growth being demanding but achievable.
Stassen Exports Limited, the controlling shareholder of Madulsima, had been paid a managing agents fee of Rs. 35.7 million during the year under review. This compares with a dividend payout of Rs. 218 mn. (7.5%, down from 15% the previous year) to shareholders.
The management agreement with Stassen has been renewed for a further 5-year term from 2001.
The directors of the company are: Messrs. V. P. Vittachi (Chairman), D. H. S. Jayawardena (MD), R. K. Obeyesekere, Zaki Alif, N. M. Abdul Gaffar and S. K. I. Obeyesekere.
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