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Worried workers of a State-owned rare business success flocked to the President’s office on 31 May bitterly complaining that after the operation was swapped to a different ministry from its parent, it now risks falling back as the ‘loss-making venture’ it used to be.
“Under Minister Bathiudeen’s leadership, Lanka Sugar turned around with Rs. 1 billion in profits in less than a year,” said Lanka Sugar Progressive Workers Union (LSPWU) Chairman Lalith Sripal, from Sevanagala Factory, leading a Lanka Sugar workers’ delegation to the President’s office and speaking of the demands they submitted to President Maithripala Sirisena that afternoon.
“Lanka Sugar has been removed from the Ministry of Industry and Commerce during the recent Cabinet reshuffle and now placed under a different Ministry. We believe this move would ruin Lanka Sugar’s progress. We believe that later on, Lanka Sugar would be re-transferred to someone else on the pretext of it being a loss-making venture.”
He said that under Bathiudeen’s leadership, Lanka Sugar turned around with Rs. 1 billion in profits in less than a year. “After Minister Bathiudeen took over, all the workers started receiving employee benefits too. Therefore we want Lanka Sugar to continue under Minister Bathiudeen, and to be re-gazetted under him. We handed over this demand to the President’s office and it was favourably received by officials there,” said Sripal.
Lanka Sugar Ltd., a fully Government-owned entity, has Sevanagala and Pelwatte production units under it. Lanka Sugar was brought under the Ministry of Industry and Commerce in December 2015 from the Plantations Ministry. At the time of this transfer, Lanka Sugar was reporting a huge loss of Rs. 1 billion. The losses of both Sevanagala and Pelwatte were such that there were no funds to pay employee wages, services, raw and even material (sugar cane).
Bathiudeen appointed a new management and Lanka Sugar proved that despite State ownership, such an enterprise can become viable through streamlined management and be a role-model for other State-Owned Enterprises (SOEs) as well.
Its net loss before tax at Rs. 1.05 b (2015) reversed to net profit before tax of Rs. 1.01 b (2016) and then surged to Rs. 1.18 b in 2017. This was despite the Government’s new tax on molasses (from November 2017) depressing its Rs. 1.18 b profits to Rs. 903 m.
The average selling price of sugar by Lanka Sugar at Rs. 62 per kg (2015) was increased to Rs. 96 and thereafter to Rs. 103 per kg. Ethanol, the major by-product of Lanka Sugar, fell significantly in 2015 to a low volume of 7.3 m litres but increased to highest-ever produced (2016) to 11.9 m litres.
Deteriorating factories (over three decades old) were repaired for the first time. Sevanagala Factory, which was only crushing 850 tonnes of canes per day, is now at 1,550 tonnes per day while Pelawatte Factory, which was crushing 2,000 tonnes of canes per day, is now at 3,000.
According to reports from Lanka Sugar, the success story included direct uplifting of the lives of staffers, farmer families, and business community including pavement hawkers in areas such as Moneragala, Buttala, Pelwatte, Wellawaya, Sevanagala and Embilitiya.
