The Monetary Board of the Central Bank of Sri Lanka, at its meeting held on 31 May 2023, decided to reduce the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank by 250 basis points to 13.00 per cent and 14.00 per cent, respectively.

The Board arrived at this decision with a view to easing monetary conditions in line with the faster than expected slowing of inflation, gradual dissipation of inflationary pressures and further anchoring of inflation expectations. The commencing of such monetary easing is expected to provide an impetus for the economy to rebound from the historic contraction of activity witnessed in 2022, while easing pressures in the financial markets.

* Q1 Revenue grows 49.7% to Rs 1.489 billion

* Pre-tax profit up 44.6% to Rs 417.2 million

* Major investments in replanting of rubber and tea to continue in 2023

Agalawatte Plantations PLC (APL) has reported impressive revenue and profit growth in the first quarter of 2023, consolidating on the remarkable turnaround achieved subsequent to the acquisition of a majority stake in the Company by the Damro Group.

Revenue grew by 49.7% to Rs 1.489 billion for the three months ending 31st March 2023, with revenue from tea doubling to Rs 796.2 million over the first quarter of 2022, and revenue from oil palm up 57.5% to Rs 305.1 million. Rubber contributed Rs 216.9 million to the Company’s top line in the quarter reviewed.

Stable tea prices and an increased oil palm crop enabled APL to post pre-tax profit of Rs 417.2 million for the three months, reflecting growth of 44.6%. Total assets grew by 21.2% since end 2022 to Rs 6.448 billion as at 31st March 2023, and the Company’s net assets value per share improved by 23.5% to Rs 26.09.

Nalaka Gunathilake, Managing Director / CEO of Agalawatte Plantations described the growth achieved in the first quarter of 2023 as extremely encouraging in the context of the Company’s achievement of net profit of Rs 1.76 billion for the year ended 31st December 2022, the highest profit in its history.

Once debt-ridden and at risk of liquidation, Agalawatte Plantations became part of the Damro Group in 2017 when the latter acquired the majority stake in the Company and infused Rs 3.2 billion for the payment of unsettled dues and statutory obligations. Timely investments in replanting, factory modernisation, redefining strategic focus and leadership transformed the Company into the strong corporate it is today, Gunathilake said. Good management practices together with agricultural inputs and professional human resources management policies too played pivotal role in this turnaround.

APL produces around 2 million kgs of latex annually and the company has facilities to manufacture Latex Crepe, Ribbed Smoked Sheets (RSS) and Centrifuged latex depending on the demand in the market. The Company’s tea production is around 2 million kgs per year and this volume is expected to increase with the availability of chemical fertilizer and agrochemicals in the country. APL also produces more than 11 million kgs of oil palm crop annually, generating substantial returns for the Company.

With the Company’s acquisition by Damro Group a strategic management decision was taken to prioritise replanting across all estates under APL management. An extent of over 2,600 acres of aged and uneconomical rubber land has since been replanted with high yielding clones to ensure company’s productivity and sustainability in the years ahead.

The Company disclosed that a further extent of over 1,000 acres is to be replanted in 2023 and land preparation and preliminary work in these areas has already commenced. In order to support the company’s ambitious rubber replanting programme, Agalawatte Plantations has its own network of rubber nurseries and has established 400,000 seedlings in six regional nurseries to supply healthy and vigorous plants.

Between 2017-2022, an extent of over 263 acres of tea has also been replanted and the preliminary work on another 150 acres has been commenced in 2023. Five tea nurseries with 900,000 plants will supply the requirement of high yielding vigorous tea plants for the replanting programme.

APL said it is gearing up for a new phase of growth in the tea plantations by obtaining system and quality management certifications. The company has obtained the Rain Forest Alliance (RA) certification for its upcountry tea estates while all tea manufacturing facilities have obtained the ISO 22000 Food Safety Management System certification.

By Hiran H.Senewiratne

Lanka IOC shares appreciated by Rs 4 or three percent yesterday in anticipation of a probable fuel price revision/slash by the government shortly. Such market speculation increased the Lanka IOC share price to Rs 129.50 from Rs 125.50, market analysts said.

“Investors are expecting bank interest rates to come down along with inflation. That is why the market picked- up later in the day, an analyst said.

The main All- Share Price Index was up by 22.5 points, while the most liquid index S&P SL20 was up 8.85 points. Turnover stood at Rs 348.9 million without any crossings. In the retail market top seven companies that mainly contributed to the turnover were JKH Rs 36.1 million (266,000 shares traded), Lanka IOC Rs 31 million (241,000 shares traded), LOLC Finance Rs 25.1 million (5.4 million shares traded), Browns Investments Rs 22.4 million (4.6 million shares traded), Melstacorp Rs 20.7 million (390,000 shares traded), Expolanka Holdings Rs 16.5 million (124,000 shares traded) and CIC Rs 10.6 million (177,000 shares traded). During the day 33.9 million share volumes changed hands in 7477 transactions.

The rupee opened at Rs 293.25 /294.00 against the US dollar in the spot market yesterday, while bond yields were steady, dealers said.

The rupee closed at Rs 293.50/294.50 to the US dollar on Monday after opening around Rs 296.75 /297.25.

Sri Lanka’s rupee is appreciating amid negative private credit which has reduced outflows after the central bank hiked rates and stopped printing money, market sources said.