Roasted murunga leaf infused tea bags also on offer
HVA Foods PLC plans to introduce several new products including a newly developed king coconut water fortified with lemon juice and green tea into the isotonic beverage sector presently dominated by artificial beverages, the Company’s Chairman, Mr. Rohan Fernado has said in the company’s annual report.
Another innovation that is roasted moringa (murunga) leaves with a pleasant taste in easy to brew tea bags has been introduced this year and the company hopes to popularize it globally.
"A few other innovative products are also being tested for introduction in 2015," Fernando said. "It is also our intention to go after two of the biggest markets in the world, China and India, to have a strong foothold."
HVA has posted a total comprehensive loss of Rs. 1.86 million attributable to owners of the company during the year ended March 31, 2015, down from a profit of Rs. 24.66 million a year earlier. Retained loss of Rs.8.6 million is carried in the balance sheet.
Fernando said that the year under review had been one of the most difficult periods for the entire tea industry with Sri Lanka’s traditional importing countries continuing to experience economic hardships arising from war, civil commotion and trade sanctions imposed by the US and the Western allies.
"The countries affected are the largest buyers of Ceylon orthodox teas, namely, Russia, Ukraine, Iran, Syria, Libya and Iraq," he said. "Exports to these countries amount to more than 60% of the total exports out of Sri Lanka."
This has adversely affected the weekly prices at Colombo Tea Auction which is the most expensive auction centre in the world which has to make a course correction to stay active. This has to naturally filter down to small holders with a gradual reduction in revenue for green leaf.
Fernando was sharply critical of the guaranteed price of Rs. 80 per kilo of green leaf offered by government as an election promise. The new government installed in January, 2015 had to allocate nearly a billion rupees per month to "dole out this subsidiary."
"This has created a two tier operating system favouring only segment of the plantation industry. We sincerely hope the practice of handouts to a 150-year-old industry will be replaced by a system based on quality, coupled with productivity," Fernando said.
He declared that there was no need to panic over the current decline in tea prices as prices are directly linked to the global supply and demand position. Unfortunately, most people have not understood this economic phenomenon but blindly hold tea exporters responsible for the low price.
"Amidst this gloom and doom there are positive signs emerging. The prospects of a settlement to the long drawn political battle between the USA and Iran and the stabilizing of the Russian ruble will hopefully improve the demands for teas from these countries," he said.
Locally, the change of administration at the Ministry of Plantations and the Sri Lanka Tea Board has vastly improved the interaction between the officials and representatives of the trade. They have now understood the importance of promotion and marketing of indigenous tea brands in the global market place to entice consumers to buy Ceylon Tea.
"For five long years, when the tea prices enjoyed a premium at the Colombo Auction, the top bureaucrats were comfortable in assuming that prices would continue to maintain high levels and purposely delayed the global marketing campaign," Fernando said. "What we are seeing today are the ill effects of bad decisions taken in the past."
HVA has a stated capital of Rs. 333.9 million and total assets of Rs. 1.19 billion in its books. Total liabilities ran at Rs. 681.5 million.
HVA Lanka Exports (Pvt) Ltd through three accounts is the controlling shareholder of HVA Foods PLC with 61.10 %of its equity.
The Company’s share traded at a high of Rs. 13.30 and a low of Rs. 7.80 closing at Rs. 8 at the end of the year. This compared to a trading range of 14.40 to Rs.8.10 closing at Rs. 9.40 the previous year.
The Directors of the Company are Messrs A.R.H. Fernando (Chairman), W.I.H Fernando, Mrs. V.S. A Fernando, N.C. Vitarana and J.H.P Ratnayeke.
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