Financial Times

KVPL to make green tea, doubles profit
Kelani Valley Plantations Ltd. doubled its pre-tax profit last year owing to higher rubber prices and has set up a new subsidiary to make green tea. Sharply higher rubber prices helped Kelani Valley Plantations to more than double its pre-tax profit to Rs 141 million in the financial year ended December 31, 2003.

The company's revenue rose 11 percent to over Rs. 1.5 billion with that from rubber increasing 34 percent. The rubber market is likely to remain firm with strong growth in the automotive and tyre industries which absorb over 60 percent of global rubber production, chairman Sunil Mendis said in his annual report to shareholders.

The three biggest rubber producing countries, Thailand, Malaysia and Indonesia, are likely to renew their agreement to control supplies and keep prices at current levels. The strength of the euro and sterling is likely to stimulate demand for tea in Europe at existing price levels, Mendis said.

KVPL has set up a new company called Kelani Valley Green Tea (Pvt) Ltd in collaboration with Mabroc Teas to produce green tea at Oliphant Estate in Nuwara Eliya. This estate has the 'China jat' tea especially suitable for green tea manufacture.

The project, estimated to cost Rs 20 million, has been approved by the Board of Investment and has a five-year tax holiday. It is expected to start operating from April. KVPL acquired a 40 percent stake in Mabroc Teas for Rs 48 million in August 2003. Mendis said the alliance with Mabroc takes KVPL "closer to the end-user and has imparted a strong market orientation to the company's tea manufacture during the year."

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