Watawala Plantations PLC has posted strong results in the year ended March 31, 2008 on the back of excellent tea, rubber and palm oil prices as well as earnings from its export and local packeted tea marketing operations according to the company’s annual report.
The company’s profit after-tax had grown to Rs.405.9 million from Rs.221.7 million the previous year and the group after-tax profit was Rs.404.4 million.
The income statement reveals that these results had been recorded after paying management fees of Rs.75.4 million, up from Rs.51 million the previous year, to Estate Management Services (Pvt) Limited which with 58.75% of the company is its controlling shareholder.
In addition to its traditional plantation crops, Watawala has diversified into new projects including growing bananas for export initially to the Middle East with a plantation already established at Nakiadeniya Estate in the Galle District.
The initial harvest of 50,000 kg. was due to be taken last May and packing and cold storage facilities were due to be set up shortly, the report said. A 30 ha block where bananas have been successfully planted will be expanded by a further 20 ha for which land has been cleared, it added.
The company has also established a drinking water bottling project at Strathdon Estate, Watawala. Mini hydro power is being generated at Strathdon and Kenilworth estates by renovating and re-commissioning an old hydro power system.
It is anticipated that 40 KW of power could be generated at Kenilworth and approximately 125 KW at Strathdon which could easily meet the energy requirements of at least the tea factories of those estates.
Watawala was also planning to launch a new brand of purified, edible kernel palm oil in 500 ml. and 1,000 ml. bottles to be marketed by its fast moving consumer goods division.
"This new entrant to the market is expected to show significant growth in the years to come. Our market intelligence forecasts a good demand for bottled palm oil and your company expects to capitalize on this," the report said.
Watawala has also gone into dairy farming with 70 animals including milkers, heifers and calves being reared at a dairy farm with a milk production capacity of approximately 240 litres per day.
"Fodder grass and other components of cattle feed are grown in about 12 ha of land. This farm would also provide raw material for composting, a good source of organic material to develop degraded agriculture land/soils in the plantations of the company," the report said.
The company has also been able to enter into the high end tourism business by offering estate bungalows as exclusive homes and providing high income tourists a unique experience with considerable success reported by the Strathdon and Dickoya bungalows that command premium rates.
"Two other estate bungalows have also been leased on long term basis to two commercial private sector enterprises in Sri Lanka," the report said.
Estate Management Services Limited with 58.75% of the company is the major shareholder of Watawala followed by Mouldex Limited with over 21% and the Ceybank Unit Trust l7.04%.
The year under review had seen Watawala’s tea operating profit better than doubling to Rs.82.6 million, rubber moving up to Rs.72.4 million from Rs.68.9 million and palm oil posting a profit of Rs.57.9 million from a loss of Rs.4.3 million the previous year.
Export operating profits had grown to Rs.229.4 million from Rs.199.1 million, retail marketing to Rs.85 from Rs.29.8 million and other activities to Rs.18.5 million from Rs.1.2 million.
Net assets per share were up to Rs.67.56 from Rs.58.08 the previous year and the Watawala share traded at a high of Rs.107 and a low of Rs.45 during the year under review. This compared to a trading range of Rs.65 to Rs.30.50 a year earlier.
A fire at the Waltrim factory in Lindula on April 28 this year had destroyed the building, machinery and part of its tea stock. The carrying value of the factory was Rs.30.9 million and the estimated value of the tea destroyed was Rs.7.6 million. At the time of the destruction all assets had been fully insured.
The directors of the company are: Messrs. G. Sathasivam (Chairman), R.K. Krishna Kumar, V. Govindasamy (CEO), P. Siganporia, D.S. Ratnasingham, K. Venkataramanan and B.A. Hulangamuwa.