Sadaharitha advocates regulating forestry investments sector
Sadaharitha Plantations Ltd has urged the Central Bank (CB) to regulate the forestry investment firms in the country in a bid to advocate better practices into this industry, officials said.
“We approached CB about a year ago and they were quite interested,” H. Rohana, CEO Sadaharitha told the Business Times on the sidelines of a media conference this week by the company. He added that this was positively considered by CB and they understood the concept of Sadaharitha and the importance in promoting a green economy in Sri Lanka by way of encouraging investments in
Sathis Nawaratne
‘Commercial Forestry’.
“These ventures are an ideal investment to upgrade the financial strength of micro-level investors and a lucrative form of earning much needed foreign exchange for the country’s economy without harming the environment,” Sathis Nawaratne Chairman Sadaharitha said.
He said that during the recent past the “Commercial Forestry Industry” has come under a lot of criticism and scrutiny due to various reasons and has begun to lose its credibility among investors and potential investors.
“Lack of intervention and rulings to regulate the industry, lack of guarantee on the return on investment, lack of transparency and poor management practices adopted by the companies that are operating in the industry and unethical business practices by companies seeking short-term benefits are some reasons,” Mr. Nawaratne added.
He said that this was a major reason why some 10 to 15 per cent of their plantation business was affected after the recent crisis at a similar (forestry) company. “We cater to the middle class and lower middle class clientele, who have a major understanding of the plants and plantations. But we also cater to a portion of high networth clientele who are also clients of those forestry firms which went through a crisis recently,” he said. He added that some of these clients approached Sadaharitha requesting them to take over some
H. Rohana
plantations out of Sri Lanka. “But certain best practices hadn’t been adopted in these plantations and we declined,” he said. In two years time the company aims to go public in a bid to expand, he added.
Mr. Rohana said that from the moment a land is selected for commercial forestry project by Sadaharitha Plantations, to the point of selling the trees after their stipulated maturity period, all operational, managerial, investment and eminence decisions are carried out with utmost transparency, in partnership with their investors. “Come selling time, the investors are given the opportunity either to sell the trees to Sadaharitha Plantations or to any other buyer of their choice. As there is a clear legal assurance issued by the company to cover the period between the investment and the return on investment, there is high transparency and absolute security for one’s investment. A deed with a title clearance is issued to the investor to ensure the credibility of the investment and this gives the investor the absolute ownership of the plot of land where his trees are planted,” he said.
At present there are more than 20000 investors registered with Sadaharitha plantations and more than 2000 acres of land that has been cultivated. These plantations comprise of tea, sandalwood and rambutan.
Sadaharitha Plantations is in the process of propagating “Agarwood” cultivation in Sri Lanka under an out-growers model. This project is identified by the Ministry of Economic Development as a very successful project to draw high levels of foreign exchange to the country and a study is being done to assess the feasibility of promoting “Agarwood” cultivation under the “Divi Neguma” scheme.
The Sadaharitha group comprises its flagship company Sadaharitha Plantations Ltd, Sadaharitha Water Management Services Ltd, Sadaharitha Agro Forestry Exports Ltd, Sadaharitha Marketing Ltd, Asia Tree and Three Six Merchant Ltd.
The other main forestry investment company, Touchwood has been faced with a series of crises in recent times with its founders, the Maloney couple selling out to new investors and leaving the country. The company, which is to yet come up with a viable and credible operation, is facing a winding-up application filed by an investor in court which it is contesting.