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| Friday, 14 May 2004 |
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Export-led growth adds zest to Watawala results Watawala Plantations, manufacturer and marketer of "Zesta", one of the top value-added tea brands in the country, has achieved a record turnover of Rs 2.2 Billion for the year ended March 31, 2004, and converted its 2002-03 net loss of Rs 25.9 million to a post tax profit of Rs 40 million. The company's annual report released to shareholders and the Colombo Stock Exchange this week, reports that despite a drop in production of tea, its main source of revenue, better net sales averages, a healthy growth in export volumes and improved rubber prices had raised Watawala's bottom line. The company has also reported a record Rs 181 million in revenue from retail marketing following a 47 per cent growth in domestic sales of its two flagship branded teas 'Zesta' and 'Watawala Kahata' achieved by taking distribution islandwide. Watawala's tie-up with the prestigious Tetley Group of UK, the second largest global marketer of tea, and Tata India has also resulted in the company functioning as a major tea sourcing hub in a strong supply chain that delivers Watawala teas to Tetley customers throughout the world. Tea exports to the Tetley Group alone grew by an impressive 120 per cent in the year under review to 2.3 million kilograms. A stronger focus on quality through various strategies including compromising on volume, enabled the company to achieve a 10 per cent improvement on its net selling average in tea, from Rs 136.53 per kg last year to Rs 149.85 per kg in the year under review. On the back of these achievements, the board of directors of Watawala Plantations has recommended the payment of a 7.5 per cent dividend. Commenting on the results, Watawala Plantations Chairman G. Sathasivam said that the company had to contend with cost escalations that limited the increase in profits. He said that lower levels of production in tea and the absence of a substantial improvement in labour productivity to mitigate cost escalations were added constraints. "Since wages are not linked to productivity, the drop in field and factory productivity with no corresponding adjustment in daily wages also added to per-kilo costs," Sathasivam said. "This heightens concerns that the plantation industry cannot sustain further wage increases unless they are linked to productivity gains." "The company continued to pursue the best practices in agricultural, manufacturing operations and processes that favoured a sustained increase in product quality and consistency with the objective of largely offsetting the impact of the fluctuation in market prices and escalating costs of production," he said. |
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