Milk production increase by 20% expected:

Pelwatte Dairy launches Rs. 450 million IPO

Ravi Ladduwahetty

Pelwatte Dairy Industries PLC, a subsidiary of Pelwatte Sugar Industries PLC will launch a Rs. 450 million Initial Public Offer this month where Rs. 450 million shares will be offered at Rs. 1 each.

“We are in the process of finalising the deal. We are offering 20% of the company’s Rs. 2.5 billion capital to the public,” Pelwatte Dairy Industries PLC Chairman Ariyaseela Wickremanayake told Daily News Business yesterday.

He said that the Rs. 2.5 billion also includes the milk processing factory and an animal feed production factory which is the only such factory in the country where the other dairy farmers also had the option of purchasing the company manufactured products.

Asked why he was going for an IPO at this stage where the market conditions were depressed, he said that there was ample scope for milk national production and was also upbeat on producing 20% of the national milk requirement.

Further rationales underpinning the Pelwatte Dairies IPO was the saving of foreign exchange where 80% of the national milk production was currently being imported and also to give the parent company’s sugar cane farmers additional and supplementary incomes, who otherwise draw their incomes from sugar cane only on an annual basis.

Pelwatte Dairies has 2000 cows grazing in the Pelwatte Sugar premises while the company is currently procuring its fresh milk supplies from Ampara, Badulla, Uda Walawe but the herd will be expanded by April for meeting the increased demand in production.

He also explained that the machinery was being installed and the modern factory was going in for production by April this year were the company would have an islandwide distribution network akin to the sugar.

The animal feed factory is now in operation and any one could buy their requirements from us, he said

Wickramanayake who is also Managing Director of the parent company Pelwatte Sugar Industries PLC said that the company’s sugar cane has recovered from the parasite Woolly Aphid and that the performances and the profits were back on track.

He also lamented about the tax structures operating in the country today.

“This is an absurd situation where Prima is asking for Rs. 15 billion from the Government as a tax rebate having imported wheat flour while Pelwatte has paid Rs. 1.1 billion in VAT for manufacturing products locally having obtained the raw materials also locally,” he quipped.