Cargills Square opens in Jaffna
View(s):The landmark Rs. 500 million worth mall project in Jaffna by Cargills (Ceylon) PLC was opened for operations as ‘Cargills Square’ late last year, a media statement by the company said.
The 74,000 square foot mini-mall comprising a cineplex with 3 screens including a 3 D cinema, food court, a Cargills Food City Supermarket, KFC and a range of shops was opened in the last quarter ended 31st December 2013, the statement said. Apart from te latest investment, Cargills in the past year has pumped over Rs. 200 million to open outlets in the Northern region including one in the once LTTE dominated Kilinochchi.
During the quarter ended 31st December 2013 Cargills received shareholder approval for its proposed restructuring exercise as a major transaction under the Companies Act No 7 of 2007. “The Retail operations that were partly under the Company are carried out by a wholly owned subsidiary Cargills Foods Company (Pvt) Limited with effect from 1st October 2013. This restructuring process would establish business specific companies and strengthen the efforts of the management to optimize resources, expertise and opportunities for value creation,” the statement added.
Cargills says that the reduction in policy rates and stability ininflation is yet to reflect in consumer spend. However in an environment of restrained consumption our businesses have reported a satisfactory revenue growth. “The Retail Sector is particularly challenged by the newly imposed cap on VAT-liable turnover. However being the price leader for essential items largely comprising of unbranded commodities, Cargills Food City remains committed to this positioning.”
The statement said that while the retail team has made a concerted effort to enhance its operational efficiency to mitigate the continued impact of VAT, the management is pleased to note the consistent and equitable policy direction of the Government with regard to the VAT and looks forward to an increasingly inclusive trading environment in the near term.
“Steps taken by the Retail team to adapt to the changed policy environment has resulted in a growth of 12 per cent in net turnover to Rs 38.3 billion while operating profit is also up by 31 per cent at Rs. 1.8 billion.” The operating and finance costs of new ventures in the FMCG sector have weighed down the profitability of the segment which has also been adversely affected by the VAT and this sector reported a growth in net turnover of 17.4 per cent at Rs 8.1 billion for the first 9 months while the sector reports a Net Loss for the period. The Restaurants segment meanwhile is experiencing a downturn from low consumer demand. While turnover is 9.5 per cent up for the period, operating profit in the segment is below last year at Rs 83.6 million.
The Cargills Group recorded net revenue of Rs 48.1 billion, which is a growth of 12.7 per cent for the nine months. Operating profit for the period is marginally down to reach Rs 1.8 billion while net profit saw a 28 per cent decline at Rs 329.5 million. Group results have been impacted by a sharp increase in operating costs, and taxation while finance costs see a marginal decline, the statement said.