The Distilleries Company of Sri Lanka PLC (DCSL), market leader in the alcohol and spirits and a diversified conglomerate, has earned almost 80% of group revenue in the year ended March 31, 2010 from its core alcohol sector, Mr. D.H.S. Jayawardena, the company’s Chairman/MD has told shareholders in its annual report.
He claimed an "impressive" overall performance for the DCSL group against the backdrop of a sluggish economy saying that the company’s turnover was up marginally to Rs.29.96 billion and net profits up 5% to Rs.2.81 billion during the period under review.
This has been achieved despite a reduction in disposable income among households in the country, Jayawardena noted.
"However, group profits declined from Rs.3.43 billion to Rs.2.15 billion (37%) as a result of the loss of profits due to the government taking over Sri Lanka Insurance Corporation (SLIC) and the poor performance of the telecom sector (Lanka Bell) due to intensive and self destructive price-based competition," he said.
Jayawardena expected compensation soon for the government takeover of SLIC following the Supreme Court ruling that there had been irregularities in the privatization process.
"We were disappointed by this ruling as within a short span of six years, SLIC had been built into a company with strong financials and dynamic profitability,’’ he said.
"While this loss has impacted overall group profitability in the year under review, I see this as a temporary setback."
He said that the compensation payment was "in the pipeline" and should be paid in full soon in accordance with the court order.
Jayawardena saw tourism and transportation as the two key sectors in the economy that would need immediate investment to reap the dividends of the end of the war and said that the Central Bank was making some right moves towards checking inflation and keeping foreign reserves healthy.
The future for the company is "very bright indeed," Jayawardena said. He could say so "with total sincerity".
"The beverage consumer in Sri Lanka is getting more sophisticated and demanding, and we at DCSL feel that we have been able to (predict) the likes and dislikes of the consumer to be able to come up with new product innovations on a regular basis, to retain our leadership position," he said.
"We will continue to focus on our core business while keeping a look out for business ventures that are in sync with our philosophy and expertise."
The launch of Continental Insurance (floated after SLIC reverted to the state) reflected the synergy and going by their success with SLIC, that company had much potential to emerge as a significant player in the insurance segment in the future, Jayawardena said.
The directors of DCSL whose other businesses include plantations (Balangoda and Madulsima), a textile subsidiary (Texpo) and telecommunications (Lanka Bell) have recommended a dividend of Rs.2.50 per share (Rs.2.25 previous year) costing Rs.750 million for the year under review.
The directors said that this was in accordance with the company’s policy of paying sustainable dividends linked to long-term performance keeping in view the company’s need for capital for its growth plans and the intent to finance such plans through internally generated funds.
The company has a stated capital of Rs.300 million, capital reserves of Rs.2.7 billion and revenue reserves of nearly Rs.17.3 billion in its books.
DCSL’s total assets were running at nearly Rs.34.9 billion and liabilities (current and non-current) at nearly Rs.13.4 billion.
The company’s main shareholders are Milford Exports (Ceylon) Ltd (41.49%), Lanka Milk Foods (12.65%), Mr. Muzaffar Ali Yaseen (9.23%) and Mrs. Lorraine Estelle Marlene Yaseen (8.27%). The Life Fund of SLIC owns 6.40% and the General Fund 2.43%.
The directors of the company are: Messrs. D.H.S. Jayawardena (Chairman/MD), R.K. Obeyesekere, C.R. Jansz, N. de S. Deva Aditya, Capt. K.J. Kahanda (Retd), C.F. Fernando, Dr. A.N. Balasuriya and Ms. V.J. Senaratne (Alternate to N. de S. Deva Aditya).
source - www.island.lk
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