Milking growth

Friday, 7 January 2011 01:24 - - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Dairy farmers are preparing to milk their advantage after the Cabinet yesterday decided to increase the purchase price and suspended all taxes for importing cows and industry equipment in a bid to make Sri Lanka self-sufficient in milk by 2016. In two separate Cabinet proposals that were approved on Wednesday it was decided that the government would buy milk at Rs.50 per litre from dairy farmers.

The Cabinet paper was presented by the Livestock and Rural Community Development Arumugam Thondaman in keeping with the 2011 Budget proposals that seek to make Sri Lanka self-sufficient in dairy production by 2016.

“There was contention that from a commercial perspective it is more profitable to dig a well and bottle mineral water rather than take to dairy farming. The government spent Rs.19 billion on milk imports last year. In a country that has land, the right weather and human resource there is no excuse for the underdevelopment of the dairy sector,” Media Minister Keheliya Rambukwella noted.

He added that in a pincer policy move the government will also suspend all taxes for import of dairy cows and equipment needed for the development of the industry. “Surveys have shown that Sri Lanka needs to import 100, 000 cows of different varieties to expand dairy production and set up large and small factories, which would need equipment that can be imported free of taxes.”

Sri Lanka is currently 35% self-sufficient in dairy. The new policy changes are expected to change this radically and make the country self-reliant of milk within the next five years.

Kotmale share price hits all time high on Cargills’ moves

Kotmale Holdings Plc’s share price yesterday hit an all time high as investors toasted its new owner Cargills Ceylon’s decision to enlist former Nestle Lanka’s Managing Director Stuart Young as Chairman. The stock peaked to Rs. 68.50 before closing at Rs. 64.20, still up by a hefty Rs. 16.50 and beat the previous all time high of Rs. 48.50. It also topped the list of gainers percentage wise with 34.6% increase.

In comparison to 669,600 shares traded entirety of last week, the Bourse also saw a high 1.54 million shares of Kotmale Holdings changing hands yesterday.

On Wednesday the share price gained by only Rs. 1.60 with 82,400 shares traded.

After the market was closed Cargills announced yesterday a restructured Board of Directors of Kotmale Holdings, controlling stake (73%) of which it acquired in November for over Rs. 900 million. Subsequently a further 8.3% stake was acquired via the mandatory offer at Rs. 43 per share.

Chairman of the new Board at Kotamale is Stuart Young who served as Managing Director of Nestlé Lanka a few years ago whilst he also accounts for over three decades of experience in sales, marketing and management. Cargills also retained Kotmale’s Director and CEO Jude Fernando in the Board.

The new owners are confident that under the leadership of Stuart Young, Kotmale would enhance industry benchmarks and develop into a lead player.