A ``mere liquor manufacturer’’ now a blue chip conglomerate
Distilleries Company ``one of the world’s greatest privatisation stories’’

The Distilleries Company of Sri Lanka (DCSL) is one of the great success stories of privatisation in the world, the company’s chairman, Mr. Harry Jayawardena has said in the DCSL’s latest annual report for the year ended March 31, 2005.

"A mere liquor manufacturer with an asset value of Rs.169 million, a Rs.3.6 billion turnover and contributing Rs.2.9 billion tax income to the state, was sold for Rs.1.6 billion in competitive bidding in the Colombo Stock Exchange (CSE). This sale in 1992 was termed as the largest ever transaction in the history of CSE,’’ Jayawardena said.

"In 13 years, the group now records an annual turnover of Rs.25 billion, with cumulated tax payment of Rs.200 billion and annual tax income to state over Rs.9 billion.’’

Jayawardena pointed out that the company, through strategic acquisitions, had diversified into many sectors including food and beverages, tourism, power generation and infrastructure development, destinations management, cargo logistics, hotels and hotel management, plantations, telecommunications, fabric processing, garment s, insurance and shipping.

"The DCSL group is now considered as a well diversified blue chip in the CSE and has been a very popular share among local and foreign shareholders. DCSL is one of the most consistent shares in the basket of stocks that is tracked to compute the Milanka price index of CSE,’’ he said.

DCSL’s subsidiaries include Sri Lanka Insurance Corporation Limited (DCSL), Balangoda Plantations Limited, Madulsima Plantations Limited and Lanka Bell (Pvt) Limited while Aitken Spence & Company Limited is an associate.

Among the unquoted companies under its umbrella, Milford Holdings is a subsidiary while Periceyl (Pvt) Limited, a jointly controlled entity and Beruwela Distillery, a subsidiary as is Texpro Industries and Timpex (Pvt) Limited.

DCSL’s parent company is Milford Exports (Ceylon) Limited which with 41.49% is the biggest single shareholder followed by Lanka Milk Foods (12.65%) and members of the Yaseen family and connected companies. Other Harry Jayawardena companies too are in the list of 20 largest shareholders.

Dr. V.P. Vittachi, the chairman of the company said that the year under review had a successful one in terms of performance for the company although the group profit of Rs.1.6 billion was down from Rs.1.8 billion the previous year.

Vittachi explained that a share trading profit of Rs.885 million in the previous financial year due to portfolio realignment distorted the comparison.

Jayawardena said that the beverage sector had fared better than expected contributing the major profits of the group. While several revisions of excise duty and import duty on rectified spirits had pushed prices up, with an impact on volumes, stringent cost controls and significant enhancement of productivity levels enabled this sector to achieve the budgeted results.

"The consistency of taste, bouquet and quality has been the main advantage the company has against the cheaper substitutes available in the market,’’ Jayawardena said.

He also reported that DCSL had done better than expected through their joint venture to cater to the up-market beverage sector with additional market share gained in the locally manufactured foreign liquor segment.

Reporting a post balance sheet development, he said that DCSL through its investment arm, Milford Holdings, had acquired 99% of Lanka Bell, the third largest fixed line phone operator in the country in June/July this year.

This company had pioneered CDMA technology in the country that will completely change the telecommunications landscape here, Jayawardena said.

""Long waits for fixed telephone lines are no longer necessary and a Lanka Bell CDMA phone can be purchased off the shelf and used immediately,’’ he said.

"With very high voice quality and versatility Lanka Bell CDMA telephones will provide the level of service in Sri Lanka that telephony customers from developed countries are used to.’’

DCSL has an issued capital of Rs.300 million, capital reserves of Rs.872.9 million and revenue reserves of Rs.6.7 billion in its books.

Group earnings per one-rupee share at Rs.5.32 was down from Rs.5.97 the previous year while the dividend level of 50% of the previous year was maintained.

DCSL has nearly 14,500 shareholders in its register with the vast majority (13,968) owning up to 10,000 one-rupee shares.

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



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