Nestlé hands over Polonnaruwa plant to the government

The Polonnaruwa processing plant of Nestle Lanka which was maintained to a high standard during Nestlé’s occupation, was handed back to the government last week, the company said in ‘perfect working order.’ This is part of a concerted effort by Nestlé, the government and MILCO to meaningfully increase the production capacity of evaporated and condensed products from local milk, the statement said.

Nestlé’s presence in Sri Lanka spans for over 100 years, but its first industrial venture took place in 1980 when it leased the milk manufacturing plant in Polonnaruwa from the government. Since then, Nestlé has processed fresh milk, collected from the rural vicinity, into a range of dairy products, whilst also being highly involved in the local community. Although the lease was expiring in 2010, Nestlé, after mutual discussions with the authorities, decided to vacate the premises.

The MoU between the three parties regarding the hand over was signed by Lalith de Silva, Deputy Secretary to the Treasury, Sunimal Seneratne, Secretary to the Ministry of Livestock Development and Stuart Young, Managing Director of Nestlé Lanka, in the presence of several representatives from the three organisations.

Nestlé Lanka has installed additional capacity at its Kurunegala Factory to process the 100,000 or so litres of fresh milk the company procures daily from dairy farmers island-wide. In 2007, the company spent over Rs 800 million in supporting the livelihoods of these rural people because of its long-term commitment to the local dairy sector as the country’s largest collector of fresh milk.
The two plants in Kurunegala and Polonnaruwa will now effectively double the fresh milk handling capacity of the island for the production of evaporated and condensed milk products.

Strong shareholders’ support expressed at Nestlé Lanka AGM

At the 27th Annual General Meeting (AGM) of Nestlé Lanka PLC, shareholders acknowledged the efforts of all employees in the company for ensuring the credible performance during the challenging year of 2007. Achieving a turnover of Rs 16.267 billion, Nestlé Lanka recorded an organic growth of 15% over the previous year. Moreover, the company contributed over 57% of its value added to the government of Sri Lanka as taxes/duties while approximately 26% was paid to shareholders as dividends, Nestle said in a statement.

All proposals of the Board of Directors, including approving the annual report and accounts, declaring the final dividend of Rs 16 per share, re-electing the directors and re-appointing the auditors, were voted with strong majorities, the company said. After an illustrious career spanning almost 24 years, Cubby Wijetunge retired from his function as Vice President–Corporate Affairs during 2007. He was appointed as Honorary Chairman Emeritus of Nestlé Lanka for life and re-elected by the shareholders to serve the company as a Non-Executive Director until June 30, 2008 when he reaches the age of 70.

Discussing the economic situation, Nestlé Lanka’s Managing Director Stuart Young said, “The year under review has been the most challenging that the company, and indeed the country, have faced in recent times. The effects of a testing security situation adversely affected the economy; in particular, the important tourist sector was severely compromised. The year also saw an unprecedented rise in the cost of energy and agricultural commodities globally, from which Sri Lanka was not immune. Household budgets came under extreme pressure, resulting in a reduction of aggregate demand for consumer products within the market as a whole.”

Nevertheless, the company continued its efforts in uplifting the rural economy through its extensive milk and coconut procurement operation as the largest private sector collector of fresh milk and the main industrial user of coconuts. In 2007, Nestlé Lanka purchased 34 million litres of milk from about 12,000 dairy farmers island-wide, which contributed Rs 803 million toward their livelihoods.

Achievements in 2007 include Nestlé Lanka’s investment in excess of Rs 600 million to expand production capacity as well as the Kurunegala Factory obtaining ISO 14001:2004 and OHSAS 18001:2007 certification for environmental management and occupational health and safety respectively.