Business
DCSL posts record profit
Distilleries Chairman urges arrack retailing by CWE and big supermarkets

barrels.jpg (17010 bytes)Distilleries Company of Sri Lanka Limited (DCSL) has posted its highest ever profit after-tax of Rs. 517.8 million in the year ended March 31, 2002, up from Rs. 420 million a year earlier enabling a 45% dividend to shareholders compared to 42.5% paid the previous year.

The company’s Chairman, Mr. V. P. Vittachi, has proposed revolutionising liquor retailing in the country by strongly urging that all CWE outlets countrywide be permitted to retail liquor without a licence.

Vittachi who said that he was making this proposal "to put a stop to mass-scale defrauding of excise revenue" said that this should be allowed only as long as the ownership of the CWE remained with the government.

He has also asked that supermarket chains with a declared annual turnover of over Rs. 100 million be granted liquor licences and urged that licences of retailers who had not sold economically viable volumes the previous year be cancelled.

The DCSL chairman who called for de-politicization of the liquor industry said that politicization specially in the appointment of retailers had resulted in a severe erosion of state revenue.

"Retail licences granted on political recommendations are mostly ‘sold’ to highest bidders. High costs of such licences compel operators to sell illegal arracks to recover acquisition cost," he said.

"In a regime where the manufacturers cannot appoint their own retailers this has disastrous consequences."

DCSL is one of the country’s richest companies with a consolidated gross turnover during the year under review hitting a massive Rs. 12.6 billion. But the lion’s share of this flowed into government coffers by way of duties, taxes and levies which reached a figure of Rs. 9 billion during the year under review — 230% over the Rs. 3.9 billion paid in 1992 when the company was privatised.

Vittachi noted that the total average tax per bottle of liquor sold now stood at 76% of the selling price.

DCSL’s jointly controlled entities, subsidiaries and associates include two plantation companies, Balangoda and Madulsima, and the conglomerate Aitken Spence.

Admitting that he was aware that the new government has given an undertaking that no new liquor licences would be issued, Vittachi said that this should not stop the state taking the steps that have to be taken to stop defrauding state revenue.

"If the state intends to keep the licences at the current number, the licences that are discontinued for either peddling illegal arrack or for not selling viable quantities or had been granted without adhering to correct procedure, should be allocated to the CWE and the large supermarkets," he said.

"The fact that the state gets Rs. 180/= for every bottle the CWE sells and thereby reduces from tax-unpaid sales, should be a convincing enough argument to revisit the matter of granting licences to all CWE shops and to large supermarket chains."

Vittachi welcomed the "slight reduction" in hard liquor taxes in the last budget saying that although this "marginal reduction" was unlikely to substantially reduce illicit liquor in the country, "we see this as a recognition by the state of the ills of continuously increasing taxes on liquor".

The major shareholder of DCSL is Milford Exports (Ceylon) Limited with 41.5%, followed by Lanka Milk Foods (12.7%) and Readywear Industries (12.1%). The controlling shareholders belong to the Stassen Group of Mr. D. H. S. Jayawardene, the managing director of the company.

The directors of the company are: Messrs. V. P. Vittachi (Chairman), D. H. S. Jayawardene (MD), R. K. Obeyesekere, C. R. Jansz and A. N. D. Balasuriya.


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