|Sunday, 21 July 2002|
Aggressive expansion on the cards for supermarket chain
Cargills Ceylon is planning aggressive expansion of the Food City chain of supermarkets both in Colombo and the outstations, Chairman of the Group Anthony Page said.
The turnover and profit before tax of the group have grown by 24 per cent and 10 per cent over the previous year to Rs 3.53 billion and Rs 87.1 million respectively, he said in the Cargills (Ceylon) Ltd. annual report and accounts for 2002.
Part of the tax holiday of one subsidiary is over. Some of the tax losses brought forward from previous years have also been cleared. This has resulted in an increase in the tax charge for the year by Rs 11.4 million over the previous year. Therefore, profits attributable to shareholders have declined by Rs 3.2 million to Rs 60.8 million.
"The year was one of the most difficult in the recent past. In addition to the political upheavals, the alarming rise in inflation over the past few years and the inevitable reduction in the buying power of consumers are causes for grave concern," he said. Page, in his review, said that the impact will obviously be felt most by the middle and lower income groups.
The steps being taken by the Government to reduce inflation to manageable levels is indeed laudable, he added.
"The benefits to the consumer will be seen in the near future. We are working on the supply chain management to ensure that prices are kept to a minimum," he said. The group acquired the Walls Ice-cream plant from Unilever Ceylon for Rs 250 million. A new company, Cargills Quality Dairies was formed as a subsidiary of Cargills Quality Foods to handle operations.
The group has invested Rs 134 million in property, plant and equipment during 2002. In 2001 it was Rs 137.9 million.
The company received dividends amounting to Rs 7.3 million from CT Land Development Ltd. during the year under review.
An interim dividend of Rs 2.50 per share was paid, of which Rs 1.30 is tax-free. The directors have proposed a final dividend of Rs 3.50 per share which is expected to be paid on July 30.
"The abolition of the National Security Levy is most welcome. However, the inclusion of the retail trade sector (which was hitherto exempt from the Goods and Services tax) in the Value Added Tax (VAT) scheme should be approached with caution," he noted.
The VAT would avoid the cascading effect of taxes on prices of a wide range of consumer goods. However, its impact on the prices of food and other essentials should be given careful consideration prior to implementation, Page said.
Produced by Lake House