Lanka Sugar Company hits new targets in production in both sugar and ethanol since 2020
Daily FT: Lanka Sugar Company Ltd. (LSCPL), under which the Pelwatta and Sevanagala factories operate, has been hitting new targets in production in both sugar and ethanol since 2020, making profits and addressing long-standing issues faced by the around 6,000 workers attached to these two entities.
Janaka Nimalachandra who took over as Chairman of this fully Government owned company in 2020 which comes under the Ministry of Plantation Industries and Export Agriculture, has embarked on getting Pelwatta and Sevenagala factories to operate to their full capacity while motivating and encouraging the workers by making them part and parcel of the new phase of development of the two factories located in Monaragala where they are the biggest employer of residents of the district.
The Government took over both Pelwatta and Sevanagala factories in 2011 under the Revival of Under-performing Enterprises or Underutilized Assets Act passed by Parliament after nearly a decade under private ownership. In August 2012 Lanka Sugar Company Ltd., was incorporated bringing the two factories under one company.
Nimalachandra, who moved from the private sector to work in the state sector as the company’s Chairman, in an interview with the Daily FT said that while he faced many challenges early on which included increasing the area under the cultivation of sugarcane as well as motivating workers while dealing with the onset of the COVID pandemic, the results by the end of 2021 has been extremely good and encouraging.
“When I took over in 2020, I was given a company with Rs. 1.3 billion loss and no money to pay salaries to the farmers for their sugarcane and with zero stocks of sugar. My first hurdle was to find money to pay the salaries of the around 6,000 workers (4,500 at Pelwatta and 1,200 at Sevenagala). There are also around 10,000 farmers who directly supply the two factories but at any given time there are around 15,000 farmers, of whom 5,000 are outgrowers. Altogether in the Monaragala District, around 25,000 families depend on these two entities for their livelihood with the cultivated land spanning 35,000 acres.”
To address the immediate issue of worker salaries, Namalchandra decided to opt for a bank loan. The salary bill for Pelwatta was around Rs. 500 million while it was as close to Rs. 200 million at Sevenagala.
When he took over as Chairman, both factories combined had an overdraft of about Rs. 800 million but by the middle of last year, every single loan had been paid back and the Overdraft had come almost to zero. “We have the OD facility but we are not utilising it,” he added.
He also had to address many other issues faced by the workers and farmers other than settling salaries. “They had a mountain of issues. Some of the things are just shocking. There were employees who had worked for 30 years without getting permanent employment but were casual and contract workers. In the past two years 2,500 employees out of 6,000 have got a permanent job.
“Within one-week last year, 1,100 new accounts were opened at the Bank of Ceylon in Pelwatta. With secure employment they were able to take bank loans. Some bought bikes, others three-wheelers and there has been a transformation,” Nimalachandra added.
The problems of the farmers who provide the crop too had to be addressed. “The price paid by farmers for a metric ton of sugar cane had not been increased for years. At the time we took over they were paid Rs. 5,000. Immediately we increased it by 10% and in the past one and a half years we have increased it by Rs. 1,250 making it Rs. 6,250. We also increased the transport fee by 10%. We have reduced the interest on farmer loans from 12% to 8% last year and also frozen Rs. 480 million farmer loans.”
Even amidst the global Covid 19 pandemic, many business establishments in Sri Lanka recorded profits. This is indicative of the overall strength and growth of the country’s economy as well as the business potential in the country. Sri Lanka’s geographical positioning in the Indian Ocean, the many trade agreements as well as concessions enjoyed by the country and the business conducive environment have all helped boost Sri Lanka’s attraction as a growing business destination in the South Asian region. Also, the country’s overall economic expansion has been boosted by the ongoing development programme. All these have opened up a host of new business/investment opportunities in Sri Lanka. Foreign businesses/investors while exploring the expanding opportunities in Sri Lanka could also look at forming partnerships or joint ventures with local businesses.
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