MESSAGE FROM THE CHAIRMAN
The Ceylon Fertilizer Company Limited has, for over five decades, been the foremost state agency servicing the agrarian input requirements of Sri Lanka’s farmers. In exercising its mandate it has constantly aligned itself with state policy with respect agriculture and specifically its policies on fertilizer. The year under review saw a paradigm shift in state policy that rejected completely, decades long agrarian practice with respect to the types of fertilizer to be used. Additionally, the new policy package removed the long standing fertilizer subsidy and required fertilizer manufacturers to compete equally in the open market. All of these were aimed at moving the nation away from the use of agrochemicals towards organics via the Toxin-Free Nation Program (TFNP). While recognizing the absolute importance of these initiatives to achieve development durability and align the nation with global thrusts towards sustainability, the almost overnight policy shift created a situation where the company had not only to add to and, in some instances change, its primary product range but also required it to change its business and marketing model to directly compete with the private sector. As has always been the case, the company responded immediately to the change in policy and did its utmost to reposition itself over a very short period of time to the changed business scenario. However, the shift in fertilizer types from chemical to organic, and more importantly, the provision of the fertilizer subsidy as cash directly to the farmer resulted in a significant drop in sales of all types of fertilizer across the fertilizer sector. This drop was compounded by drought conditions prevalent in some of the agricultural heartlands of the country. This combination of negatives resulted in drastic drops across all financial indicators. While there was a 44% increase in revenue over the year under review, administrative expenses saw a 7% increase. Low margins in a competitive and comparatively shrunk
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CEYLON FERTILIZER COMPANY LIMITED
Annual Report 2018
The year under review saw a paradigm shift in state policy that rejected completely, decades long agrarian practice with respect to the types of fertilizer to be used. market therefore saw a decrease in profit after tax of 69% against a drop of gross profit by as much as 87%. While the company’s assets remained strong at LKR 29.5 billion of which 8% are non-mobile, increasing sales, especially in organics, while reducing administrative costs and increasing margins through innovative products, improved automation and improved utilization of non-performing assets are high priority areas for the coming year. Towards this short-term goal, keeping in mind state policies and contributing to making Sri Lanka sustainable, I am confident that the long standing and highly experienced and capable management team of the company will continue to do their utmost to rapidly reverse the negative trends that have resulted from external operating environment changes and reposition the company at the apex of the fertilizer market primarily and other agricultural inputs secondarily. I am also fully cognizant of the key role played by our superbly enabled island-wide distribution network and at present, there is active engagement and discussion with them to optimize the process by increasing its efficiency while simultaneously, there is a strong awareness campaign conducted by the company to promote its organic range of products which are superior to most similar products that are currently available in the market. The effort of the management, staff and distributors deserves special accolades considering the difficult year that has
