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‘Diversification vital for the long-term stability of the RPCs’

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4 years ago

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Should optimise assets, not limit themselves to being solely agriculture businesses

By Bhathiya Bulumulla

Over the past three decades, the Regional Plantation Companies (RPCs) have established themselves as a critical stakeholder of Sri Lanka’s plantation industry.

The RPCs were formed in 1992, primarily with the intention of bringing in the private sector, to improve the efficiency of the country’s large-scale estates involved in the cultivation of tea, rubber and other plantation crops. However, it is evident that the RPCs have gone beyond this mandate and that their actions have elevated Sri Lanka’s entire plantation sector.

This is evidenced by the numerous global certifications obtained by the RPCs, which have been critical in enabling Ceylon Tea to earn a premium over its competitors in the international market. The RPCs also contribute significantly to the country’s economy, both as a major employer and a generator of export earnings.

However, the RPCs are now facing challenges on multiple fronts. It is evident that the RPCs cannot focus solely on the production of commodities, especially given Sri Lanka’s high production costs. To be financially sustainable and to continue to contribute to the country’s economy, the RPCs must adopt a different business model.

In order to do so, firstly, RPCs must no longer see themselves as being solely agriculture businesses nor should they limit themselves to the plantation sector alone. They should instead diversify in a manner that optimises the economic benefit of the assets under their management. Many forward-thinking RPCs were quick to come to this realisation, diversifying into sectors like renewable energy, other profitable plantation crops and commercial forestry, as far back as early 2000s.

RPC-led vertical and horizontal integration

The RPCs must consider the feasibility of both horizontal and vertical integration, as well as product and market diversification. Prudent use of this approach has already yielded lucrative dividends for several RPCs. For instance, some have diversified within the plantation sector, successfully tapping into the high-value market for spices. Others have diversified into other industries, with many RPCs investing in hydro and solar energy projects.

The RPCs should also think out-of-the-box in these instances. For examples my company, Elpitiya Plantations PLC, partnered with a foreign company, to develop a state-of-the art adventure park as well as to cultivate and market strawberries. We are also testing the feasibility of growing several other types of berries in Sri Lanka, given the lucrative market for the product. Similarly, we are also establishing cultivations for hass avocado, which has a relatively long shelf life and hence is suitable for exports, pineapple and as well as bamboo – both edible types and those which can be used for fabric production.

Such diversification is vital to improve long-term business sustainability and avoid the proverbial risk of ‘putting all eggs in one basket’. These are strategies which will not only benefit RPCs but also their employees and the wider economy. Diversification would create new employment opportunities which are more aligned with the aspirations of the youth, who do not wish to engage in tea plucking or other similar activities. Addition of new high-value exports can assist in diversifying Sri Lanka’s export portfolio, which has been largely stagnant.

In addition to diversification, adoption of mechanisation is also important, particularly in addressing the labour shortage and high production costs in RPC estates. While mechanical harvesting cannot be used in all areas, given especially that many tea fields are located on elevations/slopes, the RPCs are cultivating new tea fields in a manner that would make them well-suited for mechanised plucking. Besides plucking, mechanisation has been used widely in field activities to overcome labour shortage and to increase productivity.

Broad stakeholder collaboration essential

RPCs cannot make such sweeping changes unilaterally. We require the total support of policymakers and all industry stakeholders – including the trade unions and local politicians. We must work together to develop a visionary framework for these reforms. Crucially, these measures must also be presented to employees, and the general public, so that further reforms are undertaken on the basis of an informed majority consensus.

Policy consistency is critical to enable the RPCs to make business decisions with confidence. This has been an area of concern in the recent past – particularly in terms of policies on importation and usage of agro-chemicals, synthetic fertilizers and the cultivation of oil palm.


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Business

Hemas posts resilient nine-month results

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8 hours ago

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2026/02/11

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Ashish Chandra, Group Chief Executive Officer

During the quarter, macroeconomic conditions reflected selective cost pressures alongside areas of stability, with a moderated net impact on the Group’s performance.

The Sri Lankan Rupee depreciated by 2.4%, driven by higher import-related foreign exchange outflows and cyclone-related economic disruption. This created some pressure on imported inputs, particularly in Consumer Brands and Healthcare, which was partially mitigated through pricing actions, procurement discipline and cost optimisation initiatives.

Monetary conditions tightened, with the Average Weighted Prime Lending Rate (AWPLR) rising by 89 basis points to 8.94%. The impact on the Group was contained due to its strong balance sheet, negative net gearing and disciplined funding strategy, limiting the effect on finance costs.

Inflation remained low at 2.1%, helping to contain operating cost escalation and preserve consumer affordability. In parallel, softer global palm oil and crude oil prices provided relief on input and energy costs, partially offsetting currency pressures.

In December 2025, the IMF approved US$ 206 million in emergency financing to support Sri Lanka’s cyclone recovery. Sovereign credit ratings were maintained during the period, supporting overall macro stability and business confidence.

Impact from Cyclone Ditwah

Cyclone Ditwah, which struck Sri Lanka on 25 November, was one of the most severe natural disasters experienced by the country in recent decades. The cyclone resulted in an estimated US$ 4.1 billion in direct economic damage—approximately 4% of national GDP—impacting homes, agriculture, infrastructure and livelihoods, with nearly two million people affected nationwide.

The Group’s manufacturing and service facilities did not sustain any direct physical damage, reflecting the effectiveness of proactive preparedness measures and robust business continuity frameworks across our operations. However, in the affected areas, the broader business ecosystems were significantly disrupted due to damage to personal assets, commercial premises, inventory losses, and disruptions to public transportation & logistics infrastructure, adversely impacting our employees, distributors and retail partners, including pharmacies.

These factors led to temporary supply-chain and distribution disruption during November and December, alongside a short-term deterioration in consumer sentiment. As a result, demand softness was observed during the latter part of the third quarter, particularly within the Consumer Brands and Healthcare sectors. Demand has since stabilised, with encouraging recovery trends evident, entering the fourth quarter.

In parallel, the Group mobilised a coordinated, multi-sector disaster response, working closely with government authorities, community organisations and local stakeholders. The Group committed approximately Rs. 30 million in financial and in-kind humanitarian assistance, focused on immediate relief for vulnerable communities. In addition, the Group has factored in Rs. 200 million for targeted support to small and medium enterprises across our value chain through extended credit terms, stock replenishment and business restoration initiatives. (Hemas)

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Aviyana Ceylon chairman Dr. Thisara Hewawasam wins 2025 People’s Award for Business Leadership

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9 hours ago

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2026/02/11

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By Ifham Nizam

At a time when Sri Lanka is seeking to reposition itself as a premium tourism destination amid economic recovery and declining mass-market margins, Dr. Thisara Hewawasam, Chairman and Founder of Aviyana Ceylon, has been recognised with the 2025 People’s Award – Lifetime Achievement (VIP Category) for his contribution to business leadership and tourism-led economic transformation.

Dr. Hewawasam received the award at the 2025 People’s Awards ceremony held recently in Colombo, in recognition of his role in pioneering Sri Lanka’s first seven-star hotel project, Aviyana Ceylon, and for advancing globally competitive standards within the local hospitality sector.

The award was presented by Vietnam’s Ambassador to Sri Lanka Trinh Thi Tam, along with Parliamentarian Harshana Rajakaruna and Iconic Awards Director Asanka Athapattu, reflecting growing diplomatic and regional attention to Sri Lanka’s private-sector-driven growth narrative.

According to the official citation, the honour recognises Dr. Hewawasam’s leadership as a homegrown entrepreneur who translated long-term vision, discipline and innovation into a hospitality venture designed to compete at the highest international level. His work was acknowledged for strengthening Sri Lanka’s tourism brand while supporting national economic recovery through high-value investment, skills development and employment creation.

Crucially, the citation highlights that Dr. Hewawasam’s contribution extends beyond a single project. By positioning Aviyana Ceylon at the ultra-luxury end of the market, he has helped shift the national tourism conversation away from volume-led growth towards value-based tourism, a model increasingly viewed by policymakers as essential for improving foreign exchange earnings without overburdening infrastructure or natural ecosystems.

Industry analysts note that Sri Lanka’s tourism sector is at an inflection point, where attracting fewer but higher-spending visitors has become a strategic necessity. In this context, flagship developments such as Aviyana Ceylon are seen as confidence signals to international investors, demonstrating that locally led projects can meet global benchmarks in design, service quality and brand ambition.

The People’s Award—conferred only once in a recipient’s lifetime—serves as a public endorsement of leadership that delivers sustained national impact.

In recognising Dr. Hewawasam, the award highlights the growing role of domestic entrepreneurs in shaping Sri Lanka’s post-crisis growth model, particularly in sectors capable of delivering long-term foreign exchange stability.

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Business

Corporate quarterly results continue to snag CSE vibrancy

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9 hours ago

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2026/02/11

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The CSE commenced on a positive note yesterday but later the All Share Price Index slumped due to corporate quarterly results not reaching expected levels, market analysts said.

Amid those developments both indices indicated mixed reactions. The All Share Price Index went down by 103.17 points, while the S and P SL20 rose by 2.48 points. Turnover stood at Rs 3.55 billion with seven crossings.

Those crossings were: Tokyo Cement 2.58 million shares crossed to the tune of Rs 268 million; its shares traded at Rs 104, ACL Cables one million shares crossed for Rs 100 million; its shares traded at Rs 100, Cargills Ceylon 75000 shares crossed for Rs 54.7 million; its shares traded at Rs 730, LB Finance 302000 shares crossed for Rs 49.5 million; its shares traded at Rs 164, Tokyo Cement (Non-Voting) 570,000 shares crossed for 49 million and its shares traded at Rs 85.90, Seylan Bank 430,000 shares crossed for Rs 47 million; its shares sold at Rs 109.50 and HNB (Non-Voting) 70600 shares crossed for Rs 28 million; its shares traded at Rs 369.

In the retail market top seven companies that mainly contributed to the turnover were; Cargills Rs 206.6 million (283,000 shares traded), Renuka Agri Rs 153.5 million (9.6 million shares traded), ACL Cables Rs 148 million (1.45 million shares traded), Easter Merchants Rs 140 million (8.11 million shares traded), TJ Lanka Rs 109 million (2.8 million shares traded), Ceylon Land and Equity Rs 106 million (4.9 million shares traded) and Colombo Dockyard Rs 76.6 million (517,000 shares traded). During the day 158 million share volumes changed hands in 34681 transactions.

It is said that construction related companies and manufacturing and financial services related companies performed well. Top negative contributors to the ASPI were Senkadagala Finance (down Rs 68.50 at 837), Cargills (Ceylon) (down Rs 21 at 730), and Dialog Axiata (down 60 cents at Rs 32.70).

Yesterday the rupee was quoted at Rs 309.50/55 to the US dollar in the spot market, from Rs 309.43/50 the previous day, dealers said, while bond yields dropped significantly.

A bond maturing on 15.12.2029 was quoted at 9.45/55 percent.

A bond maturing on 15.03.2031 was quoted at 9.82/87 percent.

A bond maturing on 01.10.2032 was quoted at 10.15/20 percent, down from 10.17/21 percent.

A bond maturing on 01.06.2033 was quoted at 10.45/50 percent, down from 10.50/54 percent.

A bond maturing on 01.11.2033 was quoted at 10.60/62 percent.

A bond maturing on 15.06.2034 was quoted at 10.65/70 percent, down from 10.77/81 percent.

A bond maturing on 15.06.2035 was quoted at 10.72/75 percent, down from 10.95/98 percent.

An auction of Rs. 90,000 million Treasury bills is scheduled to take place today and an auction of Rs 51,000 million Treasury bonds tomorrow.

By Hiran H Senewiratne

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