Touchwood profit before tax Rs. 357m

by Thulasi MUTTULINGAM

People, planet profits - that's the slogan that Touchwood Investments PLC says it operates by.
The idea is that as there is money to be made from conserving the environment, desire to sustain the environment must be cashed on.

'Save the Rainforests and earn Millions' proclaims a board in one of the company's estate offices in Gomaragala.

Touchwood is the brainchild of its Chairman, Roscoe Maloney who figured out in the 1990s that there was money to be made in the managed forestry business. The company has plantations in Sri Lanka, Thailand and Australia where it grows trees noted for their economic value mahogany, teak, bamboo and sandalwood. These are grown and then harvested rather than deplete existing forests.

Though launched in 1999, the company has yet to see its products mature. Trees they take time to grow. Their first harvest is due next year, when bamboo and agarwood trees will be harvested in Thailand.

In Sri Lanka, the crops grown mahogany, teak, vanilla and sandalwood will take awhile yet to mature. The first harvest of mahogany trees is expected in 2017. To mark Environment Day, Touchwood organized a media outing to some of its plantations to showcase its commitment to preserving the environment.

Environmental protection is company policy. "We don't use polythene, we use compost, not artificial fertiliser and we do not disturb the biodiversity of our plantations by cutting down other trees growing on the land. We allow them to flourish while cultivating our own," said Touchwood's Agriculture Consultant, Dhammika Mahipala.

He said this at the Kukleganga estate in Mathugama, just 92 km away from Colombo, which is completely rural in its tone and so far untouched as to have neither electricity nor telephone/mobile services in its vicinity.
The village priest noted that the company kept a good rapport with the villagers, some of whom were employed on its estate. It was good for the villagers to have a source of income close by as well as have their land developed in such an environmentally friendly manner.

The sentiment was echoed by a local employee, who said that the land had been abused by other plantation companies.
According to Mahipala, it is also company policy to buy land that has been abused or is underdeveloped (one of the main reasons being the relatively cheaper cost) and then to develop it using agri technology.
He said that the company spent 30 - 40 percent of its investment on research on agri technology and developing the land; the lands in the varying estates needed differing treatment depending on their nutrition levels and water retention capacities.

Head of Plantations Prageeth Herath said, "the company has 28 estates in six districts and employs some 165 staff and 360 skilled workers."
"We don't call our ground level workers, labourers. "We train them. They are skilled workers who know and understand what they are doing" said Mahipala.

The company was highly lauded by workers, villagers and village priests of all the four estates we visited; the picture they gave was of a highly ethical company that went out of its way to be of service to the rural communities.

Gomaragala estate, a villager mentioned that paddy plots at a lower elevation had been dry through scarcity of water. When Touchwood developed their estate soil to retain water, the benefits flowed to the lands below. Overall, Touchwood on this visit, emerged as an innovative, community conscious and environment conscious company.

It seems to have landed on the wrong side of the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB) however, which released a statement that Touchwood had indulged in fraudulent accounting practices, a few years ago, garnering the company a lot of negative attention as well as a drop in their share prices.

The company took the issue to Courts where the Court of Appeal upheld the company's accounts. SLAASMB has taken the case to the Supreme Court where the case is pending.
Meanwhile, Touchwood is going about its business, with a reported profit before tax for the financial year ended 2010 of Rs. 357 million.

It plans to have its own sandalwood oil processing factory in Balangoda. Sandalwood oil is a very expensive commodity. The sandalwood, a highly revered tree on the Indian subcontinent, is a parasite. Attempts to have it grown commercially have often met with failure. It requires a lot of botanical know how which Touchwood brought down from India.

With most of the world's natural vanilla disappearing rapidly due to heavy demand, confectionary industries now depend on artificial vanilla said, Mahipala.

"There's a huge demand for natural vanilla in the market, a gap we seek to serve with the 100,000 vanilla vines we are currently growing". "Growing Vanilla is labour intensive. It involves artificial pollination (the bees that pollinate the vines are found only in Mexico), which has to be done by hand, over a period of just 2-3 hours. The demand is such today that one kilo of processed vanilla beans fetches Rs. 15,000 on the market. Three years ago, it went up to Rs. 50,000."

"We are experimenting with growing spices cinnamon, pepper and cardamom on 50 acres of land.
"We are also experimenting with the possibility of buying forests in Thailand in order to enter the field of carbon trading," said Mahipala.

source - www.sundayobserver.lk