Financial Times

DCSL 'unaffected' by proposed liquor laws
By Duruthu Edirimuni
The Distilleries Company of Sri Lanka (DCSL), which virtually controls 75 percent of the liquor industry in the country, is unlikely to be affected by the proposed new laws on alcohol and tobacco. Stockbrokers said this was because the new Act was "not too different from the existing laws."

These proposed laws were submitted to parliament by the JHU as a private members bill. Bartleet Mallory Stockbrokers in a report said since the new Bill interferes with constitutional provisions relating to fundamental rights and is to be revised on an order of the Supreme Court, DCSL expects the new version if implemented not to have a notable effect on the company.

"The Bill had to be revised because liquor vendors went to courts challenging the prohibition of selling liquor near places of worship, schools and tuition classes, which will dent their liquor sales. The Supreme Court ruled against the Bill saying it is a violation of fundamental rights and currently a new Act is being drafted," a Bartleets broker said.

She said that since this provision in the proposed law was the main difference from the previous rules, DCSL along with other liquor vendors were largely worried and went to courts.

"Without this provision, they feel that the Act which is being drafted will not be 'very different' from the present one that is in place," she added. However other sources said the Health Ministry is considering bringing in separate but tougher laws than what exist at the moment. The Bartleets report said continuous revisions of applicable excise duties and other taxes resulted in DCSL currently paying a total average tax per bottle of liquor of a thumping 80 percent of the selling price reflecting a forecast figure of Rs.15.08 billion to be paid in total for the year which ended March 2006.

DCSL has two plants to distil spirits from coconut toddy - one in Seeduwa which is bigger in capacity and accepts toddy from the northern segment of the tapping belt in Sri Lanka, and the other being its subsidiary Beruwela Distillery, which accepts toddy from the southern segment.

The report says there are 20 players in the legal industry, with DCSL controlling 75 percent while others such as IDL, Rockland and Mendis take up the remaining 25 percent. Collectively, these registered companies produce about 35 million proof liters per annum.

The illicit sector totaling an annual 600 million litres a year, control a massive 60 percent of the market, while the legal trade accounts for the balance 40 percent, it said.

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