Diesel leak cost Coke Rs. 137 million

2015 worst year in a decade, accumulated losses topping Rs. 1.9 billion

June 11, 2016, 7:35 pm 

The diesel leak from the plant of the Coca-Cola bottler here into the Kelani river had cost approximately Rs. 137 million in claims and expenses relating to the accident that had contributed to a loss of Rs. 640.9 million, up from Rs. 240.4 million a year earlier, of Coca Cola Beverages Sri Lanka Ltd., in the year ended Dec. 31, 2015.

The company’s chairman, Mr. Asoka Wickremesinghe, has said it had to face "an unprecedented and unfortunate situation" from the accidental diesel leakage from the plant in premises adjoining the river.

"However, in expending this amount (Rs. 137 million) your company worked closely with all the authorities and ensured compliance to all the recommendations of all the relevant authorities and demonstrated continued commitment towards environmental management," he has told shareholders.

Excluding the impact of that cost, the company had posted an operating profit of approx. Rs. 50 million against the previous year’s operating loss of approx. Rs. 35 million.

Over and above the diesel leak expense, the company had decided last year to discontinue an under-utilized production line that was operating sub-optimally and use that space for a new sparkling PET (plastic bottles) line.

"Subsequently, your company impaired and scrapped the sparkling and juice RGB line. The financial impact of this decision was approx. Rs. 349 million," Wickremasinghe said.

The end result was the loss which drove the company’s accumulated losses to Rs. 1.93 billion with a loss per share of Rs. 8.47, up from a loss per share of Rs. 1.41 the previous year, with net assets per share down to Rs. 4.55 from Rs. 4.88 the previous year.

Coca Cola continued to lead the country’s sparkling soft drink market gaining 0.3% market share during the year under review. Industry volume too had grown by 14.3% the report revealed.

Coca Cola Beverages is the business preparing, packaging, distributing and selling carbonated and non-carbonated soft drinks, fruit based drinks and fruit juices under various trade marks – Coca-Cola, Coke light, Fanta, Sprite, Minute Maid range of fruit juices and Schweppes owned by the Coca-Cola Company, Atlanta, USA.

The parent undertaking of the Sri Lanka operation is Coca-Cola Sabco (Asia) Ltd. incorporated in the UAE with ultimate control with the U.S. entity.

Despite the 2015 performance being the worst in a decade with losses posted for the last four consecutive years, the parent company had invested approx. Rs. 1.74 billion in the business during the year under review by way of a preference share issue paving the way for repayment of bank borrowings and funding new capital investment.

"Consequently, we laid an important foundation for the future by investing in a new production line," Wickremesinghe said. "Accordingly, your company is looking forward to strategic investments in the business for growing opportunities in the years ahead."

Coca Cola Beverages had total assets of Rs. 6.64 billion in its books on Dec. 31, 2015, with liabilities running at Rs. 2.35 billion.

The directors of the company are Messrs. Asoka Wickremesinghe, Sohli Captain, D.K. Welmillage (resigned Dec. 1, 2015), Mrs. Shukla Watson, J.S. Kuppuswamy, S. Ray, K. Thirumalai and H.K. Bhutani.

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