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Singapore’s Duxton Asset Management exits Sri Lanka dairy business

ECONOMYNEXT – Duxton Asset Management, which has operations in Singapore, Australia and Germany has exited a dairy farm it started with Sri Lanka’s Watawala Plantations, which was still making losses.

The dairy farm made a 234.6 million rupee loss in 2019, up from 90.8 million rupees in 2018 when it started operations.

A Duxton official in Singapore declined to comment whether it was a decision to exit all agri-businesses or it was specific to Sri Lanka.

Duxton said in its website that it had a global dairy investment portfolio of 700 million US dollars.

Watawala Plantations Chief Executive Binesh Pananwala told EconomyNext that Duxton had exited after it completed its initial role in providing technical assistance.

During the first year of operations, Duxton had provided WDL with a herd expert and an operations expert from South Africa to help set up the farm.

Duxton sold its shares in WDL at a discount.

"Duxton bought 32 percent of WDL for 2 million US dollars, so they did sell to us at a discount," he said.

Duxton on June 06 divested the shares for 180 million rupees or just over 1 million US dollars. (1 USD = 176 rupees).

But the rupee had also collapsed in the intervening period because Sri Lanka’s soft-pegged central bank follows contradictory policy, defending a peg and then printing money.

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Last year alone the rupee collapsed from 153 to 182 to the US dollar.

The Watawala Plantations share closed 20 cents down at 18.50 rupees a share yesterday, after the deal was announced.

Pananwala said that the WDL farm has been running for over a year with locals, after the Duxton experts left.

The losses widened in 2019 due to higher finance costs, as the farm started to repay debt undertaken for start-up, he said.

WDL also had to pay more to source high quality maize when supply was short during the fall armyworm attack on crops, Pananwala said.

The farm was expected to make losses for 3-4 years when it was set up, and the projections have not changed, he said. (Colombo/Jun07/2019)

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