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| Tuesday, 6 April 2004 |
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Kelani Valley Plantations doubles pre-tax profits in 2003 Kelani Valley Plantations Limited (KVPL), the high-flying plantation sector company of the Dipped Products Group (DPL) more than doubled pre-tax profits in 2003 as a result of higher margins from rubber and a trend-bucking improvement in prices for its high grown teas. According to the company's annual report released to shareholders late March, KVPL's pre-tax profit grew a hefty 111 per cent to Rs 141 million. Profit after tax was up an invigorating 88 per cent to Rs 106 million, while turnover exceeded Rs 1.5 Billion (Rs 1.549 Billion) in the year under review. While increases in international rubber prices contributed most of the bounce to KVPL's results, the company also significantly achieved a 7 per cent improvement in its high grown tea prices, in contrast to a 2 per cent increase in the national sales average for the region. As a result of these factors, operating profit from the rubber sector doubled, and grew 14 per cent in the tea sector. Based on these results, the Board of Directors of KVPL has recommended a first and final dividend of 15 per cent, compared to 10 per cent paid last year. In his review of the company's performance KVPL Chairman Sunil Mendis has reported that although tea production contracted by 2.5 per cent due to a drop in the volume of bought leaf, KVPL's estate crop was the highest in ten years. This was despite the dry conditions in November and December 2003, and has to be viewed in the context of a 6 per cent decline in the country's high grown sector. Rubber production also fell by 7 per cent due to inclement weather during most of the year, but better international prices and higher margins from sales of latex to DPL's own rubber glove manufacturing operations, which accounted for 50 per cent of output, generated significant gains for KVPL. KVPL CEO Kavi Seneviratne said the acquisition of a 40 per cent stake in Mabroc Teas in August 2003 had entitled KVPL to a contribution of Rs 15 million to profits. The partnership with Mabroc Teas heralds a new opportunity for KVPL to deliver quality tea products to global tea markets, adding value with branding and superior packaging, he said. A highlight of the year under review is the progress made by the company in diversification. Significant developments include the commissioning of a 110 kW mini hydropower plant at the Battalagalla estate, and the incorporation of the Kalupahana Power Company (Pvt) Ltd., to construct a 1 MW mini hydropower plant costing Rs 125 million at Kalupahana estate. Construction of this plant is expected to commence in May 2004. A new company Kelani Valley Green Tea (Pvt) Ltd., was also incorporated in collaboration with Mabroc Teas for the manufacture of green tea at Oliphant estate, Nuwara Eliya. A significant feature of KVPL's performance is the continuing commitment to capital expenditure, Seneviratne said. Cumulative capital expenditure since privatisation of the estates rose to Rs 1,311 million, with three - fourths of this expenditure being incurred on replanting of tea and rubber and on machinery. KVPL's parent company Dipped Products Limited is a member of the Hayleys Group. DPL is a public listed company with net assets of Rs 1.65 Billion, and is today one of the largest non medical glove manufacturers in the world. |
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