Cargills’ dairy sector consolidated
Kotmale Holdings PLC, a member of the Cargills group of companies, has seen group profits dip in the year ended March 31, 2014 to Rs.93.4 million from Rs.116.1 million a year earlier.
This followed the consolidation of the dairy sector operations within the Cargills group and capacity constraints where some of Kotmale’s branded products are now manufactured elsewhere.
However, the royalty fee is being paid to the Kotmale for the use of the brand, Mr. Stuart Young, Chairman of the company has said in the annual report.
This resulted in a revenue decline of 36% to Rs.783 million during the year under review with other income up by Rs.56.6 million as a result of the royalties.
Young, previously MD/CEO of Nestle Lanka from November 2002 to October 2008, reported an increasing trend in domestic milk production during the year with the total milk production in the country up 6.8% to 319.8 million litres in 2013.
"Consequently the importation of milk powder declined by 16.9% in 2013 in line with the state policy of achieving self-sufficiency in milk," he said.
This enabled the country to reduce the import of milk powder to 65.9 million kg from 79.4 million kg in 2012, he reported.
Increased milk production was supported by various initiatives such as improved chilling facilities, provision of financial assistance to smallholders and stable farm gate prices. There was also a shift in the market towards the consumption of local fresh milk and milk products.
Kotmale Holdings which collects fresh milk both for its own operations as well as those for other Cargills group companies is presently the second largest private sector milk collector in the country with an average daily collection of approximately 50,000 litres, Young said.
"Our network comprises over 98,000 farmers from the Central region of Sri Lanka who directly supply to the company through 330 collection centres connected to 15 chilling centres spread across the Central Province," he said.
During the year under review Kotmale had paid a total of Rs.790 million to smallholder farmers.
Young said that the trend in shifting from imported powder milk to local fresh milk created a substantial supply constraint within the domestic dairy sector particularly in relation to UHT (Ultra Heated Treated) milk.
Addressing this problem would require a long-term collaborative effort from the private and public sector to increase animal productivity, build farmer capacities, enhance feed and feed quality while developing the infrastructure to meet the increasing demand.
"Our parent company Cargills, having made substantial investments in adding capacity to its dairy sector is now focused on building the supply side towards sustainable growth," he said.
Young reported that yoghurt and the newly introduced ‘Yoguard’ as well as pasteurized and UHT milk categories are successfully marketed under the Kotmale brand and enjoyed wide consumer appeal.
Kotmale cheese wedges, a product of high quality, further strengthens the brand’s position in the cheese category, he said.
"The success of the ‘Kotmale’ brand is attributed to the strong distribution network of Cargills both in mass market and modern trade," Young said.
Kotmale has a stated capital of Rs.314 million, reserves of Rs.94.6 million and retained earnings of Rs.471.3 million in its books. Total assets ran at Rs.1.23 billion and total liabilities at Rs.352 million.
Cargills Quality Foods Limited with 94.07% of the company is the dominant shareholder with all other shareholders individually owning less than one percent.
Net assets per share were down to Rs.17.01 from Rs.17.41 a year earlier and the company’s share traded at a high of Rs.58 and a low of Rs.33.50. This compared with a trading range of Rs.47.10 to Rs.20 the previous year.
The directors of the company are: Messrs. Stuart Young (Chairman), V.R. Page (Deputy Chairman), M.I. Abdul Wahid (MD), P.S. Mathavan, A.T.P Edirisinghe, Sunil Mendis and J.C. Page.
www.island.lk
Kotmale Holdings PLC, a member of the Cargills group of companies, has seen group profits dip in the year ended March 31, 2014 to Rs.93.4 million from Rs.116.1 million a year earlier.
This followed the consolidation of the dairy sector operations within the Cargills group and capacity constraints where some of Kotmale’s branded products are now manufactured elsewhere.
However, the royalty fee is being paid to the Kotmale for the use of the brand, Mr. Stuart Young, Chairman of the company has said in the annual report.
This resulted in a revenue decline of 36% to Rs.783 million during the year under review with other income up by Rs.56.6 million as a result of the royalties.
Young, previously MD/CEO of Nestle Lanka from November 2002 to October 2008, reported an increasing trend in domestic milk production during the year with the total milk production in the country up 6.8% to 319.8 million litres in 2013.
"Consequently the importation of milk powder declined by 16.9% in 2013 in line with the state policy of achieving self-sufficiency in milk," he said.
This enabled the country to reduce the import of milk powder to 65.9 million kg from 79.4 million kg in 2012, he reported.
Increased milk production was supported by various initiatives such as improved chilling facilities, provision of financial assistance to smallholders and stable farm gate prices. There was also a shift in the market towards the consumption of local fresh milk and milk products.
Kotmale Holdings which collects fresh milk both for its own operations as well as those for other Cargills group companies is presently the second largest private sector milk collector in the country with an average daily collection of approximately 50,000 litres, Young said.
"Our network comprises over 98,000 farmers from the Central region of Sri Lanka who directly supply to the company through 330 collection centres connected to 15 chilling centres spread across the Central Province," he said.
During the year under review Kotmale had paid a total of Rs.790 million to smallholder farmers.
Young said that the trend in shifting from imported powder milk to local fresh milk created a substantial supply constraint within the domestic dairy sector particularly in relation to UHT (Ultra Heated Treated) milk.
Addressing this problem would require a long-term collaborative effort from the private and public sector to increase animal productivity, build farmer capacities, enhance feed and feed quality while developing the infrastructure to meet the increasing demand.
"Our parent company Cargills, having made substantial investments in adding capacity to its dairy sector is now focused on building the supply side towards sustainable growth," he said.
Young reported that yoghurt and the newly introduced ‘Yoguard’ as well as pasteurized and UHT milk categories are successfully marketed under the Kotmale brand and enjoyed wide consumer appeal.
Kotmale cheese wedges, a product of high quality, further strengthens the brand’s position in the cheese category, he said.
"The success of the ‘Kotmale’ brand is attributed to the strong distribution network of Cargills both in mass market and modern trade," Young said.
Kotmale has a stated capital of Rs.314 million, reserves of Rs.94.6 million and retained earnings of Rs.471.3 million in its books. Total assets ran at Rs.1.23 billion and total liabilities at Rs.352 million.
Cargills Quality Foods Limited with 94.07% of the company is the dominant shareholder with all other shareholders individually owning less than one percent.
Net assets per share were down to Rs.17.01 from Rs.17.41 a year earlier and the company’s share traded at a high of Rs.58 and a low of Rs.33.50. This compared with a trading range of Rs.47.10 to Rs.20 the previous year.
The directors of the company are: Messrs. Stuart Young (Chairman), V.R. Page (Deputy Chairman), M.I. Abdul Wahid (MD), P.S. Mathavan, A.T.P Edirisinghe, Sunil Mendis and J.C. Page.
www.island.lk
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