“Currently the industry is faced with a lack of liquidity due to the delayed subsidy settlement in excess of the agrreed payment period of six months,” Rohan Karunaratne, Chairman CEO told shareholders.
“Such delays have an adverse impact on working capital management and profitability resulting from high interest costs,” Karunaratne said.
Fertiliser subsidies were earlier given to rice, tea and selected crops. But the government decided to extend it to all crops in an effort to boost agriculture output.
While the government has promised to resolve the payment issue, fertiliser importers have been hurt by a weak rupee and rising interest rates.
The company’s Managing Director Pasad Weerasekara said interest rates have risen to more than 16 percent from 10-12 percent thereby increasing costs.
AgStar posted a revenue of 1.8 billion rupees for the financial year ended 2011/12 lower than 2.9 billion reported in breitling replica watches the previous year.
Turnover during the year was lower, but in reality this is not the case, explained Weerasekara.
“With the introduction of the new subsidy scheme in May 2011, the subsidy component is collected at the point of import, resulting in the sale being effected at a lower subsidised price. The resulted in drop in turnover by 35 percent during year under review,” Weerasekara said.
The group reported earnings of 1.01 per share.Agri Expansion
Weerasekara said the company was scouting for export opportunities and is investing 200 million rupees for its new agri-venture in Anuradhapura.
Starting off with rice milling, the company hopes to eventually get into all grains, maize, green gram and so forth.
The proposed fully-automated rice-milling plant, is designed for an output of 10 tonnes per hour but initially production will be five tonnes per hour. Weerasekara said plant equipment has been ordered with processing and marketing is scheduled to commence by next December.
Based on its success the group hopes to establish similar units in different parts of the country aimed at improve links with the farming community.
On the local front, under a new subsidiary AgStar Properties Private Limited, the group has invested 350 million rupees to acquire five acres of land at Kaduwela for a 100,000 square feet warehousing facility.