TESS AGRO returns to profit owing to GSP+ return
View(s):The return of GSP+ concessions has propelled TESS AGRO to a winning position from losses earlier.
Dilshan Fernando, company Director/CEO, said in a media release that TESS AGRO recorded a sharp growth in its profits during the last quarter of 2017 ending December 31.
The operating profit grew by 297 per cent to Rs. 8.27 million from an operating loss of Rs. 4.18 million in the previous quarter.
This increase in profits and turnover for this quarter can be largely attributed to the company sourcing its product from Sri Lanka as a result of the GSP + concession that Sri Lanka obtained in June 2017 by the European Union, he said.
The company has announced to its shareholders the plan to go for a rights issue subject to regulatory approval. The main reason for the plan is to infuse working capital to strengthen its purchases from Sri Lanka as local exports has increased significantly in 2017 after the GSP + concession.
“During the EU ban the company continued to carry out its business with the help of its Belgium branch by importing from other neighbouring countries such as the Maldives and the Philippines hoping that when Sri Lanka is back in business we would still hold on to our market share,” he said.
In 2016 the company purchased almost 90 per cent of its requirement from these neighbouring countries which meant that only seven per cent was purchased from Sri Lanka. Since June 2017 after the GSP+ return, Sri Lankan exports have increased by 40 per cent while 60 per cent was purchased from neighbouring countries.
In January 2018 the company has purchased more than 80 per cent from Sri Lanka.
The company is expected to raise Rs. 59 million through this rights issue for which Rs. 32 million will be used for working capital needs to procure fish from Sri Lanka while the balance will be used to retire debt.