Ariyaseela Wickramanayake, Chairman Pelwatte Sugar PLC (PSP) says that it’s better to have ‘two horses’ to pull PSP than one, which is why he invited business tycoon Harry Jayawardena to purchase its controlling 51%.
“This transaction is still on and in a few days time, Mr. Jayawardena will complete the transaction (of upto 51%),” Mr. Wickramanayake told the Business Times. Mr. Jayawardena last week ago bought some 47% in PSP leaving major shareholder Ariyaseela Wickramanayake with 35% and the balance in the market. Mr. Wikramanayake said that his main aim by getting Mr. Jayawardena to buy PSP is to improve the country’s sugar production.
PSP produces 100% of brown sugar (20% of the country’s total demand) which is sold mainly to those who buy in large bulk. When asked why the company sees most of its demand from illicit liquor manufacturers, Mr. Wickramanayake said that his restrictions to enhance capacity as well as diversifying into retail business is a constraint to sell the produce to the retailers. “This is why it’s a constraint for me and if possible I want to double or treble the sugar production capacity and branch into retail. Then this problem won’t exist,” he said.
The company's by-products such as Molasses which are produced during the process of manufacturing sugar is used by its subsidiary, Pelwatte Sugar Distilleries Private Ltd to produce spirits which can be used for manufacturing alcohol. The company at the moment supplies spirits to many well known distillers in the country and analysts point out that Mr. Jayawardena’s interest in PSP is mainly due to this reason. Together Pelwatte and Sevanagala Sugar Ltd (which is the second largest sugar producer in the country) have the capacity to produce 70% of Sri Lanka’s spirits requirement.
Mr. Jayawardena will also have a board seat at PSP in due course. The company has 67.98 million shares in issue with Mr. Wickramanayake’s Master Divers holding 55.56 million shares or 85% stake as at last year. Some 2.66 million shares were sold on March 22, with other trades happening in early trade on March 24.
Mr. Wikramanayake said that PSP’s hotel that’s being constructed in Buttala will be six star class. “We are currently discussing with Richard Ellis, a multinational real estate corporation based in Los Angeles in the United States to manage it,” he added.
Mr. Wickramanayake noted that Pelwatte Dairy, a subsidiary is the first private sector dairy plant located in a 25 hectare land extent is now ready. “It has a complete range of dairy products, ranging from milk, milk powder, cheese, yoghurt, butter, flavoured milk and all sorts of ice creams,” he said.
He said the plant, which has the latest Danish technology has already started production.
Mr. Wickramanayake noted that the country loses US$ 300 million a year from importing milk. “This is the money required to build Hambantota harbour. This company will be a huge cost saving to the country,” he added.