Sri Lanka’s Agalawatte Plantations, gets Rs2.5bn injection, begins re-planting
ECONOMYNEXT – Sri Lanka’s Agalawatte Plantations Pc, a rubber, tea and oil palm company, has got a 2.5 billion rupees cash injection after a change of ownership, and the firm has now started replanting, shareholders were told.
Control of Agalawatte Plantations was sold to Sri Lanka’s Damro group following a take-over battle where shareholders of the former owner, Colombo-based Mackwoods group traded charges of mis-management.
D R Investments (Pvt) Ltd now owns 61 percent of the company. At the time the group also bought into FLMC Plantations, the managing agents for another commercial farm, Pussellawa Plantations.
Both firms have rubber estates, which is a raw material for furniture making.
DR Investments had given a temporary advance of 1,094 million rupees, D R Furniture Manufacturing Pvt Ltd 505.6 million, D R Export (Pvt) Ltd 45.5 million, Piyestra Furniture (Pvt) Ltd 572.29 million rupees and FLMC Plantations (Pvt) Ltd 365 million rupees.
"The change in controlling shareholder in March 2017 has resulted in renewed focus on performance improvement and longer term growth," the firm’s new chairman, Anil Amarasuriya, a respected former banker, told shareholders.
"Prior to the acquisition the company was in severe financial crisis…"
"The employees were highly dissatisfied and demotivated due to the lack of future prospects."
He said the firm had unpaid provident fund liabilities, lease rentals to the government and bankers were trying to take the firm to court.
The 2.5 billion rupee cash injection had been used to settle over 800 million in bank loans and other liabilities.
"With some of the burdens of the past lifted and overdue payments no longer weighing the company down, sights were set on reinvigorating the company," Amarasuriya said.
"The company has commenced re-planting of rubber and tea in selected bare land and low-yielding fields."
The firm plans to plant 1,087 hectare of rubber in the give year to 2021, along with 218 hectares of tea and some oil palm.
In 2017, 132 hectares of rubber had been planted and 42,000 plants had been in-filled in tea.
In 2017, 450 million rupees had been invested, Amarasuriya said.
Factories were also being upgraded. The firm has spent 65 million rupees on plant and machinery 129 million rupees on essential vehicles and 96 million rupees in a tea centre.
Rubber output had grown 7 percent to 85 million kilogram in 2017, while prices had also moved up.
In the year to December revenues had grown to 2,016 million rupees from 1,405.7 million rupees while cost of sales grew to 1,896 million from 1,549 million giving a gross profit of 119 million rupees.
Finance costs fell from 409 million rupees to 157 million rupees.
The firm also reported other income of 651 million rupees, up from 145 million rupees a year earlier, which included a reversal of 392 million rupees of payables, which the new management found was not backed by documents.
The auditors said they were unable to say how accurate the opening balance of the accounts in 2017 as the 2016 accounts had been disclaimed. They were also unable to comment on the reversal of payables as documentation was not available.
The firms liabilities were 1.66 billion rupees larger than its liabilities, which the auditors said indicated a "material uncertainity2 about the ability continue as a going concern.
However the new management had already made arrangements to inject 2.0 billion rupees through a rights issue.
The rights issue proceeds would be used to settle the temporary advances.
In the March 2018 quarter, revenues grew 14 percent to 639.7 million rupees, and cost of sales grew 20 percent to 599 million rupees generating a gross profit of 40 million rupees, down from 59 million a year earlier, in unaudited accounts filed with the Colombo Stock Exchange.
Finance costs fell to 27 million rupees from 102 million a year earlier. The firm reported a loss of 37.1 million rupees for the quarter, down from a loss of 121 million a year earlier. (Colombo/June04/2018)