Financial Times

Replanting rate worry for Finlays
The slow rate of replanting on former state-owned estates now under private ownership and management is a ‘matter of grave concern to the industry’, a Colombo business leader has said.

“The country needs a set of pragmatic plans for output growth with social equity within a framework of prudent fiscal management. Growth without fiscal discipline is not sustainable,” R. L. Juriansz, Chairman, James Finlays & Company (Colombo) Ltd has said.

His statement comes hard on the heels of another issue about lopsided government policies relating to plantations raised by Hayleys Group chairman Rajan Yatawara two weeks ago. Yatawara, also chairman of Kelani Valley Plantations Ltd, said the ‘paucity of explicit expressions of state support would be discouraging to investors seeking a long term involvement with the plantation industry and also inhibit the continued participation of established conglomerates.”

He said this uncertainty has become “disquietingly manifest in the recent withdrawal of major companies in the plantation sector.” The James Finlay Group recorded the highest ever volume produced in ‘Green Tea’ by its division in the year ended 31st December 2005 as a result of new markets gained during the year. The division actively promoted exports of Green Tea under its own brands – Alwazah and Istikan- with positive results being achieved. As a result Finlays strengthened its position as one of the foremost suppliers of Ceylon Tea during the year under review, having being placed among the top 10 tea exporters in terms of overall export volumes.

“Sri Lanka has very successfully diversified the range of teas it offers to the world, both in terms of quality as well as forms of packaging. This has resulted in increased competition at the Colombo Tea Auctions and prices that are the envy of other tea producing nations have gone up,” said Mr Juriansz.
Finlays, which succeeded in making steady progress in many fronts during the year under review, recorded a 28.6 percent increase in its revenue to Rs.3.32 billion from Rs.2.58 billion in the previous year mainly due to the substantial increase in the volume of tea exported. However, the profit before tax grew only marginally to Rs.311 million from Rs.306 million of 2004.

In other businesses, the Insurance Divisions recorded their best performance to date with a 40 percent increase in revenue and a 53 percent increase in profitability. One of the milestones of the company - a state-of-the-art Cold Storage facility that commenced operation in February 2005-succeeded in achieving 100 percent capacity utilization during the year.

BASF-Finlay (Pvt) Limited (the chemical company of Finlays) that contributed Rs.18 million to Finlays share of profits will focus on making greater inroads into markets such as India, Bangladesh and Pakistan in 2006.
Finlays Airline Division- which is the general sales agent for Cathay Pacific in Sri Lanka marked the first full year of daily operations experiencing a successful year despite the unexpected imposition of visa restrictions to or via Hong Kong that resulted in a drop of about 50 to 75 percent in transit traffic.
The group also succeeded in paying an interim divided of Rs 52 million for 2005 to its shareholders marking a strong performance.

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