Watawala Plantations PLC (Watawala), a part of the Sunshine group, will be segregating its tea business in order to list it under a new company on the Colombo Stock Exchange, a disclosure to the trading floor of the bourse said.
According to a Watawala board decision taken last week, operational assets and liabilities of the tea business segment will be transferred to the new company, while all employees in the segment will also be transferred and retained by the new entity.
The tea segment had Rs.3.20 billion in assets and Rs.2.45 billion in liabilities out of Watawala’s total assets of Rs. 9.11 billion and Rs.3.06 billion liabilities as at March 31, 2017,. The director board said that the new company will have a mirrored shareholding to Watawala.
Estate Management Services (Pvt) Ltd owns 75.65 percent of shares in Watawala while high net worth investor Dr. T. Senthilverl owns another 10.93 percent of the shares. The segregations must be approved in court under the Companies Act No.7 of 2007.
Watawala’s tea business made Rs. 6.29 million after-tax profits for the 2017 financial year compared to a Rs. 314.20 million loss year-on-year (YoY) although revenue fell to Rs.3.91 billion from Rs.4.12 billion YoY.
The tea business had a minor effect on Watawala’s bottom line, which expanded 137 percent YoY to Rs.1.23 billion, with 84 percent of the net profits coming from palm oil.
Since Watwala discontinued its rubber operations during the previous financial year, the company will now consist mainly of its palm oil operations, the newly expanding dairy business and some exports.