Pussellawa Plantations to go public this year
Pussellawa Plantations Ltd is to list on the Colombo Stock Exchange this year with the government planning to shed some of its stake in the company. “We hope to be listed on the stock market within the next six months because the government wants to divest some of its interests,” said CEO of Pussellawa Plantations, Lucille Wijewardena. At the moment the government owns about 33% of Pussellawa while the managing agents Free Lanka Management Company Pvt Ltd, owns about 59% of the plantation company. The balance shares are held by employees.
The plantation company has 9 factories for high, mid and low grown tea production and also rubber plantations and claims to be one of the most profitable operators in the plantation sector. For the financial year 2006, Pussellawa Plantations is expecting to record a net profit, after tax, of around Rs 250 million with a turnover of Rs 1.87 billion. In 2007, turnover is projected to increase to Rs 2.45 billion and the profits to Rs 350 million.
To sustain growth, the plantation company is investing in upgrading its tea factories to HACCP (Hazard Analysis Critical Control Point) standard. “We are the highest profit making company among the plantation companies at the moment and we are in an accelerated programme to improve quality of production. In this regard we are in the process of acquiring HACCP certification for our tea factories,” said Wijewardena.
HACCP is a food quality standard enforced by the European Union (EU) and food exports from Sri Lanka to the EU, are expected to comply with HACCP standards. Therefore, Sri Lankan tea factories have been forced to upgrade to HACCP standards to maintain European market share for tea. Given the importance of food safety, other countries too are expected to eventually demand HACCP standard tea from exporting countries.
Already 3 tea factories under Pussellawa Plantations are HACCP certified and 4 more will be certified by July this year. The move is expected to sustain tea sales and also improve quality of production. “Buyers demanding HACCP standard tea will bid for our tea first because we are HACCP certified. Also the certification helps indirectly as well, because it improves the quality of the product. After all, tea is a food item and is consumed. So cleaner production is always better. In addition we have noticed an improvement in worker motivation because the working environment has improved,” said Wijewardena.
In addition to investments in quality improvements, Pussellawa is looking at improving profits from tea in the face of increasing labour costs, by increasing production and capacity utilisation.
Tea factories under Pussellawa include Delta, Geragama, Melfort, Mooloya, Rothschild, Sanquhar, Pambegama and Keragala.
In 2006 rubber was the most profitable sector and is expected to sustain profitability in 2007. The company has already started an ambitious programme to replant over 1,000 hectares of rubber during the period 2005 to 2008. The plantation company is also concentrating on a renewable forestry programme to improve overall profitability as well as the environment by planting Eucalyptus Grandis in the high grown areas and Albizia in the low grown areas.