Bogawantalawa Tea Estates PLC (BTE PLC) in its annual report for 2009/10 financial year has stated that the group recorded a 159% increase in profits before tax and a 150% increase in profit after tax in the 2008/09 financial year.
Accordingly, in 2009/10 year the PBT recorded Rs. 134 million profit before tax and the earnings per share works out to Rs. 2.26 per share.
Despite the Sri Lankan national tea production reducing by 9% to 290 m kgs from the previous year, the company’s annual tea production recorded an increase from the previous year figure of 7.95 m kgs to 8.16 m kgs. The company also realised an overall net sales average of Rs. 362.22 per kg during the year in consideration against Rs. 273.68 of last year, recording a 32% increase.
However, the cost of production for 2009/10 year was Rs. 331.21 per kg against Rs.271.31 last year. This increase was mainly due to higher prices paid for green leaf, increased wages and escalated fuel and fertiliser prices.
Chairman Bogawantalawa Tea Estates PLC D.J. Ambani said: “Overall, BTE managed to record a 150% growth in after tax profits and ploughed back a sum of Rs. 203 million on capital development programme during the financial year.”
Ambani further stated that the key issue to be addressed by the regional plantation companies was the capital formation methodology to further invest in areas such as tea planting, soil building and agro-forestry and the marketing efforts in a sustainable manner, if Sri Lanka was to compete aggressively in the global tea market.
He further stated that an active intervention from the Government in developing the bond market would definitely ease the financial burdens of the tea industry.
The company continues to enhance facilities at the tea processing centers to meet high international standards. In addition, the implementation of efficient fuel utilisation systems, ongoing projects aimed at improving quality of work life of employees and efficient management systems have also contributed towards the growth of BTE during the financial year in consideration.
The company has made a considerable progress due to consistent marketing efforts which increased the market share especially in highly competitive markets such as US, Holland and Lithuania.
With the still looming global financial crisis and escalating fuel/fertiliser prices and possible wage increases, BTE PLC continuous to focus on diversification strategies such as eco-friendly leisure projects, mini hydro power projects, dairy farming, and forestry projects to maximise revenues from non-core business initiatives.
“This is where an innovative method of raising funds by way of a long term bond issue will come into play to address the much-needed capital formation issue,” Chairman said.