Mr. Harry Jayawardena, Chairman of Madulsima Plantations PLC which is carrying over Rs. 2.1 billion in accumulated losses in its books, has told shareholders in the company’s annual report for the year ended Dec. 31, 2014 that he "regrets very much" to tell them that the directors were not recommending a dividend for the 13th consecutive year.
Although there was no dividend to shareholders, the company’s largest shareholder, Stassen Exports Ltd., with 35.17% of Madulsima has received a Managing Agent’s fee of Rs. 13.7 million in addition to rent of Rs. 2.28 million for its Colombo office.
While these figures are carried in the annual report under a note titled "transactions with parents and related entities", the director’s report elsewhere said that the management fee had been "reduced substantially to Rs. 12 million per annum" with effect from Jan. 1, 2009."
The report also says that the directors did not receive any remuneration or other benefits during the accounting period under review.
Madulsima has valued its timber reserves at Rs. 2.65 billion helping to keep its total assets above total liabilities despite the retained losses.
Stassen Exports and Melstacorp, a related company, with 31.20% of Madulsima are the controlling shareholders of the plantation company with a portfolio of mainly high grown tea, are the controlling shareholders. The Secretary to the Treasury holds 13.10% with other shareholders individually holding less than 1%.
Labour cost, the major cost in the tea industry, is going up with no effort to link wages to productivity as urged by the industry.
Jayawardena has said that production costs of the company, even prior to the last wage increase in April, were uneconomic. It was crucial that the industry moves away from the traditional wage model. The introduction of an out-grower system with worker participation was one approach that can be attempted.
He advocated measures such as mechanical harvesting, outsourcing and improving the living environment of the plantation worker saying these were areas in which the government had a key role to play as they must be implemented on a national scale.
"With fluctuations observed in the weather pattern which is affecting timing of agricultural practices and harvesting, the plantation industry is increasingly becoming a relatively volatile sector for investment," he said.
Madulsima saw revenue up to Rs. 2.2 billion in 2014 from Rs. 2.05 billion the previous year while it’s after tax loss of Rs. 277.7 million, up from a loss of Rs. 219.6 million a year earlier, translated to a loss per share of Rs. 9.58 (Rs. 7.57 the previous year).
The company has total assets of Rs. 4.87 billion and total liabilities of Rs. 3.29 billion in its books.
The directors of the company are Messrs. D.H.S. Jayawardena (Chairman/MD) R.K. Obeysekere, Zaki Alif, Dr. N.M. Abdul Gaffar, S.K.L. Obeysekere (Director/CEO), Dr. A. Shakthivale and D.S.K. Amarasekera.
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