Sector Reviews
Plantations
Business Domain
Kelani Valley Plantations PLC (KVPL) and Talawakelle Tea Estates PLC (TTEL) are regional plantation companies established in 1992 which are engaged in the cultivation, processing and marketing of tea and rubber crops through the Management of 44 estates for the Hayleys Plantation Sector. KVPL Estates are situated in Nuwara-Eliya, Dickoya and Avissawella regions whilst TTEL Estates are situated in Nanu Oya, Lindula, Talawakelle, Deniyaya and Galle regions. The Hayleys Plantation Sector also includes Mabroc, a value added tea export company.
Key Performance Indicators
| Indicator | Measure | Unit | FYE 31st March | ||
| 2013 | 2012 | 2011 | |||
| Growth | Revenue | Rs. mn | 9,777 | 8,668 | 6,760 |
| EBIT | Rs. mn | 1,144 | 699 | 788 | |
| PAT | Rs. mn | 818 | 429 | 490 | |
| Assets (Avg) | Rs. mn | 9,932 | 9,228 | 8,496 | |
| Capital Employed | Rs. mn | 5,952 | 5,493 | 4,943 | |
| Profitability | Return on Average Capital Employed* | % | 19 | 11 | 16 |
| Liquidity | Current Ratio | Times | 1.47 | 1.25 | 1.40 |
| Stability | Gearing | % | 32 | 38 | 35 |
| Asset utilisation | Asset Turnover | Times | 1.00 | 0.95 | 0.83 |
| Productivity | Ebit per Employee | Rs. mn | 0.05 | 0.03 | 0.03 |
* Excluding Real Estate
Operations
Whilst recording the highest profit to date since privatisation, Hayleys Plantation Sector differentiates itself by producing internationally certified quality products for major buyers through world renowned single origin teas and rubber, and sole crepe and centrifuged latex manufacture.
The main challenges faced during the year were the fluctuations in global commodity prices due to economic downturn in key Western markets and political turmoil in Middle-Eastern markets, increased Cess on tea exports, changes in the weather patterns in the planting districts and increased finance costs.
Key activities during the year include diversification of productive land into fuel-wood, factory capacity stabilisation and worker deployment. By way of business development, we participated in seven trade fairs to seek new distributors and customers. Moving forward from thereon, we plan to invest in self sustainable energy projects, including mini hydropower and fuel wood plantations. We are also considering diversification into other economic crops and venturing in to the leisure sector, leveraging the strategic locations of our estates.
Strategies in Action
The development of the plantation community has been a major component in the KVPL and TTEL management strategy. Accordingly, KVPL launched a multi-dimensional initiative branded as ‘A Home for Every Plantation Worker’ in 2006. It is an on-going project designed to uplift the quality of life of the community within the KVPL plantations which has won recognition as a benchmark practice by the Global Compact Sri Lanka Network. Talawakelle Tea Estates and Kelani Valley Plantations have certified themselves through Rain Forest Alliance to pursue environmentally friendly sustainable agricultural practices and to consistently improve the overall quality of life in the plantation community. The two companies have also converted three black tea production factories in to green tea as a product diversification strategy, with Radella being the only UTZ certified green tea factory amongst the Regional Plantation Companies.
Outlook
The year ahead is a challenging one with volatility in the world commodity markets, uncertain weather patterns and escalating costs resulting from the increase in wages and the electricity tariff hike. These impacts will be mitigated through a strategic focus on continuous improvement in product quality, land and worker productivity and value addition by promoting single origin estate marks through Mabroc Teas (Pvt) Ltd. The sector will work towards self-sufficiency in energy usage for manufacture of tea and rubber by relying on the specifically grown fuel wood resources in our estates.
