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Efficient management, not ownership, determines success

15 November 2011 10:00 pm - 0     - {{hitsCtrl.values.hits}}

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By Achalie Kumarage
As acknowledged by experts, privatization of state-owned enterprises is one of the most radical policy developments of the last quarter century. It became a trend that gathered momentum in Sri Lanka after 1989 following the liberalizing of the economy. Today, the consequences of the trend have formed a common notion within the country, that privatization is the panacea for ills of state enterprises.
Disproving the common notion, some state enterprises have come forth quite competitively against the private sector, even outdoing them. Kurunegala Plantations Limited, an entity under the Ministry of Coconut Development and Janatha Estate Development, sets a fine example to prove this regard by winning two national awards at the National Agribusiness Awards 2011.
Competing shoulder to shoulder against the private sector, Kurunegala Plantations won the awards, National second Runner Up in Agri Business and the gold award for the Large Category Producer (Plantations). The gold Award in the National category in the awards ceremony was won by Watawala Plantation PLC while the 1st Runner up was Lucky Lanka Milk Processing Co. Ltd.
Following the achievement, the CEO of the plantation, S.K. Nillegoda told the Daily Mirror, “Privatization is no panacea for ills of State Enterprises but right management is. We have proved in no uncertain terms that the State Sector too can compete with the private plantation companies or even outdo them, managing the Plantation Companies with outstanding success.”
State owned-against
privatization
The most intriguing fact about Kurunegala plantations is that it was initially a public entity which was privatized in 1992 in expectance of profits and less redundancy on the government fiscals.
“The plantation,” said Mr. Nillegoda, “was under the private sector for nearly 14 years and had depicted a continuous down fall in its output. Owing to the conditions, the company was re-acquired by the government in 2005. There onwards, the plantation indicated a gradual growth with a new record of increasing profit every year.”
Consisting of 10 provincial estates of 5327 hectares, the plantation owns seven estates in Kurunegala District, two in Gampaha and one in Anuradhapura District with a work force of 1,499 employees. The main agri products of the plantation are coconut, rubber and other diversified inter-crops like cocoa, pineapple, duriyan and mango.
In recent times one do not come across a lot of public enterprises from which the government benefits. In such a status quo the public owned company contributed to the treasury instead of being a constraint.
“The plantation contributed to the treasury Rs.40 million for year 2010, totalling to Rs.100 million from 2007 to 2010,” Mr. Nillegoda revealed.
Stand out of the rest
“We are quite different from an ordinary plantation company in the country,” said Mr. Nillegoda. The company has been able to maintain a recorded highest income every year, more than what it earned the previous year since 2005.
According to Mr. Nillegoda, before 2005 was a contrast to after 2005, where the state appointed Management Board of the plantation accepted a challenge. The journey since then has not been a cakewalk.
“The Company was operating on Bank Overdrafts at the time of State take-over of the management in 2005. Insufficient Cash flow limited most important maintenance schedules, management practices on Re/Under Planting Programs on Company owned Estates.  We accepted the challenge of managing the Company as a self-financing and a viable entity.” 
“Moreover, this situation had created a thoroughly demoralized and frustrated set of employees, who had very poor aspirations of their future.  These were major challenges initially faced by us,” he said.
Giving reasons as to why they are not just another plantation the CEO said, “The true potential of the Company was identified which resulted in improved performance after the state took over.  The trend of progress should be considered a rare achievement in the Plantation Sector.” 
The plantation has not been stagnating in the same state after 2005. For their quick recovery and rapid progress they have adopted special strategies which have enabled the company to flourish in quite a short period.
A few mentioned are: Optimization of usage of resources- Optimizing land productivity through diversification and employee productivity improvement by performance based incentive schemes and continuous training and development of employees. Also, adoption of new technology, scientific agricultural practices and constant monitoring and evaluation has contributed the Company to reach up to the standards today.
Challenges before the plantation sector
As the market prices of agri- products fluctuate every now and then, especially the local producers face crisis. At one point they have to face the competition when imported agri goods are brought in to the country.
Cultivating coconuts- a daily consumable product, and rubber add more seriousness to the challenges. Mr. Nillegoda brought into attention a few of the challenges the sector has faced today.
“In my opinion, the highly unpredictable price fluctuations of products and prevailing unfavourable weather conditions are the key challenges faced by plantations. On top of that, recently emerged pest and diseases with limited compatibility to control/eradication are another threat for increasing the output every year.”
The scarcity of labour is another issue, as identified by the CEO.
“There is an acute shortage and a growing scarcity of skilled and semi-skilled labourers such as Pickers, Huskers, Curers, Tappers etc exists. There are two main issues for the current situation which are: poor replacement of labourers by youngsters and aging of present workforce. The labour shortage would definitely become a pressing issue of the sector in the near future.” Mr. Nillegoda said.
Contribution to the nation
nThe Coconut estates belonging to Kurunegala Plantations Limited are managed as model coconut plantations
nKurunegala Plantations Limited has become one of the main producers of high quality seed nuts to cater to the national requirement of coconut seedlings.
nThe Company has established new varieties of coconuts in collaboration with the Coconut Research Institute to enhance the production of seed nuts from these new varieties.
Kurunegala Plantations in the near future intends to explore foreign markets, apart from their diversified contribution and supply to the local market.
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