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| Sunday, 4 April 2004 |
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| News Business Features Editorial
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Keells out of plantation business ? by Hiran H. Senewiratne John Keells Holdings Ltd (JKHL), the premier blue chip company in the country, will make its exit from plantation business with the sale of its Regional Plantation Management Companies (RPM). The company will lose its control in the plantation sector with the disposal of its stakes in main RPMs, said JKHL Joint-Managing Director Susantha Ratnayake. The company had already signed a Memorandum of Understanding with Misty Mountains Holdings (MMH) to negotiate dealings on RPMs including RPK Management Services and JKPMS, Ratnayake said. After these divestures, the company would have controlling stakes only in Tea Small Holdings Company Ltd, he added. According to company sources, it had already disposed of 50 per cent stake in RPK Management Services, which had controlling stake in Kegalle and Maskeliya Plantations, worth Rs 465 million. The company had entered into a sale- and- purchase agreement with MMH, an international player, with the aim of selling its 100 per cent stake in JKPMS Ltd for Rs 400 million. Consequent to this deal, JKPMS would have 58 per cent stake in Namunukula Plantations upon realisation of this deal, a spokesman for the company said. The proceeds of the deal would be added on to JKHL's revenue, which would altogether change the current valuation to a more positive level. JKH would dispose of some of their properties, which did not yield adequate Return on Investment (ROI), a company source revealed. The Group's plantations sector is primarily engaged in the business of growing, manufacturing, brokering and marketing tea and rubber. The plantations comprise a total area of 32,000 hectares with a 40,000 workforce on these lands, which account for approximately 10 per cent of the country's tea and rubber production. The company had diversified into other crops such as oil palm, timber and cinnamon, which yielded better results and it was concentrating to boost their growth as well as productivity. It had also continued with factory up-grading programmes to meet food grade manufacturing standards, most of which are now ISO certified, while all plantations are operating with IT connectivity. |
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