Mar 08, 2012 (LBO) – Sri Lanka’s Watalawa Plantations Plc said cash from the sale of a marketing arm will be used to expand oil palm, boost efficiencies in its tea estates and cut debt, as interest rates continued to rise. Shortly before the budget, through an ad hominen law the state took back land leases and assets of several firms.
Though only the land leases were listed the in the law, the state has also taken back management and related business. There have been no legal challenges so far.
Watawala Plantations told shareholders, the profits from rubber and oil palm was not enough to cover losses in tea.
The firm said a wage hike at the beginning of the year and rising interest costs were eroding margins in tea which were already negative. Gratuity liabilities were also up. Its debt to equity ratio was 41 percent by December 2011.
“Long term debts and other borrowing need to be at least partially settled and if possible re-structured to bring down the interest burden and funding costs,” the first said.
“The performance of the current period leaves no room to achieve the plans that requires to be carried out due to shortages of funds.”
“the rising interest cost coupled with negati