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Damro acquires further 10% stake in Pussellawa for Rs.2bn


6 June 2017 12:01 am - 0     - {{hitsCtrl.values.hits}}


Browns Capital PLC (formerly known as FLC Holdings PLC) disposed its remaining 9.9 percent stake in FLMC Plantations (Pvt.) Ltd to Piyestra Furniture (Pvt.) Ltd, a unit of Damro Group, for a consideration of Rs.1.95 billion.

This March, Browns Capital sold a 45.1 percent stake in FLMC Plantations to Damro Group through a deal of Rs.4.7 billion. With the latest deal, Browns Group now has the control of FLMC Plantations with a 55 percent stake. The balance 45 percent of the company is held by a foreign shareholder.
FLMC Plantations is the managing agent of Pussellawa Plantations and Browns Capital’s management and investment company for plantations.
Pussellawa Plantations has a mix of tea and rubber plantations – with 2,492 hectares of tea and 3,371 hectares of rubber and the firm’s 13 estates are geographically located in the Colombo and Ratnapura Districts and 11 estates in the Pussellawa and Kandy areas.
Meanwhile, on the same day, in a separate but connected deal, Damro Group acquired 61 percent in Agalawatte Plantation PLC for Rs.275 million from Browns Power Holdings (Pvt.) Ltd, a subsidiary of Browns Capital. 

Analysts opine the key driver for these acquisitions for Damro Group was the ageing rubber trees, the main raw material Damro uses for furniture manufacturing. 
However, some analysts have raised eyebrows at the valuations the deals have taken place. The carrying value of Browns Capital’s 55 percent stake in FLMC Plantations in FY16 was Rs.600 million. 
Damro Group is believed to be the largest furniture manufacturer in South Asia and number one furniture retailer in Sri Lanka. The group has a significant presence in India. 
The latest divestment of shares by Browns Capital ends the Browns group’s interest in Pussellawa Plantations and significantly cuts the group’s exposure to the plantation sector. Browns Capital however owns 30 percent of Maturata Plantations, which has a carrying value of Rs.4 million by FY16.  


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