Kotagala to tap rubber in Cambodia with $ 70 m investment

In a major foray overseas, Kotagala Plantations Plc (KOTA) will soon set up operations to tap rubber in Cambodia with an investment of $70 million (nearly nine billion rupees).

The company said it has obtained approval from relevant authorities to plant 20,000 hectares of rubber in Cambodia.

The move, according to analysts, is to harness global rubber industry prospects better whilst minimising risks in Sri Lanka.

KOTA’s exposure to rubber in Sri Lanka is 1,200 hectares whilst the envisaged KOTA’s hectarage in Cambodia is 18 times bigger. The Cambodian exposure is also 17 per cent of Sri Lanka’s total extent under which rubber is cultivated which is 125,000 hectares or one per cent of the global hectarage.

KOTA’s announcement came after the market was closed. Its share price yesterday dipped by 30 cents to Rs.67.

Revenue from rubber for KOTA in the nine months of FY2012 was Rs.1.06 billion, up from Rs.946.3 million a year earlier. Gross profit was down to Rs.458 million from Rs.497 million.

The tea business suffered a loss of Rs.67 million in the nine months as against a profit of Rs.228 million in the previous financial year.

Overall due to higher costs, KOTA in the first nine months of the 2011/12 financial year reported a net profit of Rs.234.5 million, down from Rs.492.7 million a year earlier despite revenues growing to Rs.2.75 billion from Rs.2.64 billion in the first nine months of the 2010/11 financial year.





In the 2010/11 financial year, KOTA’s total rubber crop harvested was 2,995,712 kg, which was 21 per cent below the budget and 19 per cent below the crop harvested the previous year.

Against a budget of 240 days of tapping for the year, the company was able to tap only on 160 days; 4,500mm rain was experienced during the year - over 200 wet days.

In the 2010/11 annual report, KOTA said its rubber replanting programmes have been fully up to date and that their rubber is in very good agricultural condition. “Given normal weather, our rubber yields should be fully up to potential,” it added.

The company earned a record revenue of Rs.3.684 billion in 2010/11, with rubber accounting for Rs.1.43 billion and tea’s share being Rs.2.24 billion. Enjoying a national sales average of Rs.478.74 and a profit margin of Rs.250.12 per kg, KOTA’s rubber sector earned a record profit of Rs.668.7 million in 2010/11.