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Hard liquor giant moving into soft liquor manufacture

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Distilleries acquire Heineken’s SL business for over Rs. 4 bn.

Distilleries Company of Sri Lanka PLC (DCSL) has concluded a major acquisition of the Sri Lanka operation of Heineken, a major player in the global beer industry at a consideration of Euro 12 million, (over Rs. 4.2 billion), DCSL announced last week in a stock exchange filing.

This will bring the Harry Jayawardena company, the lead player in the country’s alcohol industry, into competition with Lion Brewery PLC which dominates the beer brewing and marketing industry at present. In an earlier era, the Ceylon Brewery, now Ceylon Beverage Holdings PLC, led the beer market share with its Lion beer with Three Coins, manufactured by McCallum Brewery, trailing behind.

This brings a deal which was in the pipeline since mid-November last year, as disclosed by DCSL in a stock exchange filing, to finality. Fitch ratings said last November when news of the pending transaction broke that Lion could face more competition in the medium term once the deal was done.

“Heineken is a distant second in Sri Lanka’s beer market for now, but we believe DIST has the industry know-how, market access and financial strength to elevate Heineken’s operations to a level that could weigh on Lion’s market share,” Fitch said.

“We believe a large capacity expansion at Heineken Lanka would be required to compete effectively with Lion. We estimate the expansion will require significant capital outlay and at least two-to-three years to complete. We believe DIST has the financial strength to fund the expansion, with its annual free cash flow, excluding dividends, averaging LKR10 billion-12 billion. DIST, as the largest spirits manufacturer in the country, already has extensive market access covering all forms of retail channels, providing easy market penetration compared with a new entrant,” Fitch said.

“However, we expect DIST to face near-term challenges in terms of brand building given the complete ban on media advertising on alcoholic beverages by the government. Lion already has a very strong brand presence in the market compared with Heineken due to the greater mass-market appeal of its products, with cheaper pricing and customization to local preferences.”

Fitch expected the acquisition to be positive for DIST as it will help the company to strengthen its market position with a presence in both hard and soft liquor markets. The acquisition will also allow DIST to take advantage of the lower excise duties applicable to beer on an alcohol-equivalent basis.

There has been a shift to beer from hard liquor in recent months due to the significant increase in excise duties. DIST could also benefit from the revival in Sri Lanka’s tourism industry, as beer is more popular among tourists than locally made hard liquor, the rating agency said.



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President calls on Atamasthanadipathi Thero

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President Anura Kumara Dissanayake called on the Atamasthanadhipathi, Chief Sanghanayake of Nuwara Kalaviya, Most Venerable Pallegama Hemarathana Nayake Thero, this morning (07) for a brief discussion.

During the meeting, the President apprised the Thero of the measures being implemented by the government to provide relief to the affected people and to restore normalcy in their daily lives.

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US deploys two C-130J Super Hercules aircraft and personnel to assist in relief measures

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The United States has extended humanitarian assistance to Sri Lanka to support nationwide relief efforts in the aftermath of Cyclone Ditwah, which caused severe damage across multiple regions of Sri Lanka.

The latest round of assistance, included the deployment of two C-130J Super Hercules aircraft, equipment and US Air Force personnel. The US contingent will provide vital transportation and logistics support in areas identified by the Disaster Management Centre.

A formal handover took place this afternoon (07) at the Bandaranaike International Airport (BIA) with the support officially received on behalf of the Sri Lankan government by Minister of Science and Technology Prof. Chrishantha Abeysena, Deputy Minister of Ports and Civil Aviation, Janitha Ruwan Kodithuwakku and Deputy Minister of Defence Maj. Gen. Aruna Jayasekara (Rtd).

The assistance was presented by the United States through Julie Chung, Ambassador of the United States to Sri Lanka, and Lt. Col. Van Pinxteren of the United States Air Force.

As part of the support package, the United States contingent will provide logistics capacities needed to transport humanitarian supplies to affected communities in the Northern, Eastern and Central regions.

Sri Lankan officials expressed their gratitude for the timely support, which will bolster ongoing national efforts to reach displaced families and restore essential services in cyclone-affected areas.

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Government prepares Anuradhapura farmers for Maha Season

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President Anura Kumara Dissanayake instructed officials to prepare the farmers in the Anuradhapura District whose paddy cultivation was destroyed due to floods to re-cultivate during the upcoming Maha season.

Highlighting the need for all relevant institutions to work in proper coordination, treating this as a national necessity, the President instructed the authorities to provide compensation to farmers without delay and to ensure temporary irrigation water supply through provisional repairs.

The President further noted that the government is providing the highest amount of compensation in the country’s history for crop damages, with the expectation that cultivation activities will be commenced again promptly.

President Anura Kumara Dissanayake gave these instructions this morning (07) while attending a special coordination committee meeting at the Anuradhapura District Secretariat to review the programme being implemented to restore normalcy to the lives of people affected by the disaster situation and to rehabilitate damaged infrastructure in the district.

The President instructed officials to present, before this Friday, a report detailing the number of farmers who were completely affected, the extent of damaged farmland and the required financial allocations. He emphasised that compensation must be granted only to those who are genuinely entitled and that no one should receive it unjustly.

The President stated that the government is committed to providing compensation to the farming community and directed officials to foster confidence among farmers so that they will be encouraged to resume cultivation.

The President also inquired, separately, from the relevant institutions about the measures taken for the development of the district’s infrastructure including highways, irrigation and communication networks.

The President examined the programme for reopening obstructed roads and instructed that temporary repairs be expedited to meet the public’s transportation needs until permanent road development plans are implemented.

Officials of the Ceylon Electricity Board informed the meeting that 473 out of the 580 electricity transformers damaged due to the disaster have already been restored and that full electricity supply to the district could be achieved by tomorrow.

They further stated that 49,000 water connections had been affected, of which about 99% have now been restored, while water is being supplied by bowsers to the remaining areas. They noted that total restoration of water supply is expected within the next two days. Damaged community water projects are also being restored.

Well-cleaning activities are currently being carried out with the support of the Navy and the President instructed officials to complete these tasks swiftly through community participation coordinated by Divisional Secretariats.

Discussions were also held regarding the provision of compensation for crops such as Maize, restarting cultivation, restoring the livelihoods of those engaged in animal husbandry, normalising health services and rehabilitating religious sites including damaged temples.

The floods have caused total damage to 228 houses in the district. The President instructed officials to gather accurate information on whether affected families should be resettled on the same land or relocated elsewhere and to begin identifying suitable land for resettlement.

Officials reported that all schools in the district could reopen by 16 December. The President instructed that the Rs. 15,000 allowance promised by the Treasury for schoolchildren affected by the disaster be fully distributed before 31 December and that the list of beneficiaries be prepared without delay.

The President also expressed his gratitude to government officials, the Police and the Tri-Forces for their service in providing relief to the public and restoring infrastructure.

The meeting was attended by Co-Chair of the Anuradhapura District Development Committee, Minister of Trade, Commerce, Food Security and Cooperative Development Wasantha Samarasinghe, Minister of Housing, Construction and Water Supply Susil Ranasinghe , Anuradhapura District MPs Susantha Kumara Navaratna and Sena Nanayakkara, North Central Province Governor Wasantha Jinadasa, Chief Secretary J.M.R.P. Jayasinghe, representatives of local authorities; Secretary to the Treasury Dr Harshana Suriyapperuma, Anuradhapura District Secretary K.G.R. Wimalasuriya, ministry secretaries and other government officials.

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