Annual Report 2010-2011 - Colombo Stock Exchange

Sector Review - Plantations
average yield per hectare (YPH) for rubber was recorded
at 936 kg while national increase in tea production was
recorded at 27%, Kegalle Plantations recorded growth stood
at 12%. Nevertheless, this is a commendable achievement
when considered in the light of the unfavourable weather
conditions that persisted in the Udapussellawa region. It was
also desirable to note that the tea prices in the Udapussellawa
region remained encouraging during the year.
All factories of the Company were able to maintain an
acceptable NSA. This is reflected in the Gampaha factory
obtaining 63 top prices, Luckyland 57 top prices and Doteloya
32 top prices during the year. Kirklees and Yataderiya recorded
6 and 3 top prices respectively.
The Company continued its replanting programme and
accordingly 23.15 hectares of tea and 147 hectares of rubber
were replanted with expenditure of Rs. 145 mn. The year also
saw the commencement of the upgrading of the Doteloya
factory at an investment of Rs. 18 mn. The Company’s practice
of embracing new inventions in order to improve productivity,
such as using rain guards in rubber extents, was also
continued.
Overall, the Company’s revenue for the period was recorded at
Rs. 2.99 billion, a 35% rise from the previous year. The largest
contributor to revenue was rubber, with a 65% share, while
tea contributed to 30.3%. A 4% contribution was received from
other crops and the sale of rubber trees. Revenue from rubber
recorded a handsome 54% increase, while revenue from tea
improved by 5%.
NAMUNUKULA PLANTATIONS PLC
Namunukula Plantations PLC is the most diversified plantation
company in the group, with interests in more than 5 main
crops. The year 2010/2011 is recorded as the best performing
year in its history, where growth in both revenue and profits
was witnessed despite the adverse impact of weather on all
its crops. Such an outcome is largely attributable to the high
prices obtained in the market for its three main crops, namely
tea, rubber and oil palm. Company profits were recorded at
its highest ever of Rs. 409.3 mn, more than 179% higher than
profits recorded in the preceding year. Revenue was recorded
at Rs. 2.1 billion.
Bought tea leaf operations, on which depends approximately
82% of the Company’s tea production, continued to be
challenging due to the operation of private estates in
surrounding areas. Nevertheless, in comparison to the previous
year, a nominal increase was observed in bought tea leaf
operations.
While low grown tea continued to stabilize at existing NSA’s,
rubber and oil palm NSA’s were recorded at an all time high.
Rubber prices were recorded at Rs. 491.26, which is an 85%
increase from the previous year. Yatadola Estate fetched a price
of Rs. 630.00 per kg of Latex Crepe Grade 1X, the highest
recorded in the history of the plantation sector. Oil palm prices
too remained vibrant, recording an all-time high of Rs. 28.82
per fresh fruit bunch in February. This trend is expected to
continue in the coming year as well, due to low production
levels both locally and internationally.
During the year the Company replanted 2.5 hectares of tea
and 104 hectares of oil palm at a total investment of Rs. 47.5
mn. Maintenance expenditure on immature fields was recorded
at Rs. 48.3 mn. The Company is currently involved with the
development of a tea factory at the Baddegama Estate at a
total investment of Rs. 56 mn. Upon completion, the factory will
increase the processing capacity of the Company to 1.20 mn kg
per annum.
MASKELIYA PLANTATIONS PLC
The year ended with Maskeliya Plantations recording both crop
and price gains in its high grown tea production. Out of the total
tea production of 9.13 mn kg, 8.45 mn kg was from estate leaf,
which is approximately 7% higher than the production of the
same in the previous year. Bought leaf quantities increased by
150% in comparison to the previous year. Cultivation has also
improved, with the yield per hectare increasing by 8% to 1525
kg.
By recording 130 top prices for six of its estates, the Company
was able to secure its supremacy in the high grown tea
segment. Some garden marks topped by recording prices as
high as Rs. 510 per kg during the year. The Western High NSA
was recorded at Rs. 368.52 per kg, with Elevation average at
Rs. 353.64. In the Uva High Category, the Company’s average
was recorded at Rs. 316.85, while the Elevation average was
Rs. 312.28 per kg.
The Company invested Rs. 162 mn on replanting 55 hectares,
while a further Rs. 7 mn was spent on maintenance of
immature plants. It successfully established a 7 hectare
rubber plantation in the lower sections of the Poonagalla
Estate, and plans are underway to expand this venture further.
Furthermore, a rambutan and duriyan cultivation of 2 hectares
was also undertaken in the Ampittiakande Estate. In order to
accommodate market preferences via enhanced manufacturing
flexibility, the Company has commenced factory developments
in Poonagalla, Ampittiakande, Craig, St. Clair and Talawakelle
with an investment worth Rs. 66 mn.
All fourteen factories of the Company were certified under
‘Ethical Tea Partnership UK’ whose members include some of
UK’s leading buyers. Moreover, twelve factories have obtained
the ISO 22000 (Food and Safety System Certification),
while four have continued to maintain the Fair trade Labeling
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Annual Report 2010/2011 | Richard Pieris and Company PLC