Bought leaf helps Sri Lankan tea firm turnaround
ECONOMYNEXT – Sri Lanka’s Agarapatana Plantations, which is making a cash call having suffered a serious loss of capital, has managed to return to profitability with the help of resumed bought leaf operations and the recovery in tea prices.
A stock exchange filing said the company is trying to raise cash through a rights issue of 227 million ordinary shares in the proportion of two for one existing share at Rs2 per share.
Agarapatana aims to raise Rs454 million to settle statutory liabilities, mainly pension payments.
The statement said current liabilities of Agarapatana Plantations, part o the Lankem group, exceed current assets by Rs1.8 billion.
But the board of directors have said they are confident of keeping the business going despite the serious loss of capital with the recovery in the tea market and more bank loans.
It had made a profit of Rs27.7 million for the year ended 31 March 2017 compared with a Rs207 million loss the previous year.
But the firm has recovered this year with a profit of Rs207 million for the three months ended 30 June 2017 as tea prices recovered and it reopened bought leaf production lines which had been closed during the last year.