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Sri Lanka's Noorani Estates plans expansion, possible listing
30 May, 2014 10:26:54
By Anushika Kamburugamuwa
May 30, 2014 (LBO) - Sri Lanka's Noorani Estates (Pvt) Ltd, a poultry firm that operates under the brand Nelfarms is planning to invest over one billion rupees over three years to expand, with a possible stock exchange listing also on the cards, a top official said.
"We are very bullish about the industry," Noordeen Sethwala, Executive Director of Noorani Estates (Pvt) Limited said.

"Consumption in Sri Lanka is still small compared to other countries. So we have long way to go."

The company sells eggs and day old chicks but it wants to move into the broiler sector with meat and sausage and ready to eat meat processing.

"We are planning to invest about one billion rupees over the next two to three years to expand the business on broiler processing and to make ready-to-eat meat."

Sethwala said the business the family business had now grown with several generations being involved and a listing on the stock market is also being considered.

"We are also looking for other finance opportunities apart from our own funding as well," he said.

"Now we have 440 shareholders. They all are tied into this company and there might be people who want to exit."

The firm launched a new brand this week.

The company was also in talks with an international poultry firm. The tie-up is expected to be finalized in August, Sethwala said, without elaborating.

According to Central Bank data, egg production in Sri Lanka rose sharply to 1.942 billion in 2013 from 1.457 billion in 2013 in country with a population of 20.4 million people.

In addition to local consumers, the tourist trade also pushes up the demand for eggs.

Rising incomes could also increase the demand for eggs.

The prices of the eggs have been varying from 15 to 20 Sri Lankan rupees.

"Our main business is packed eggs," Sethwala said. "We do not have much control over the price of the market. We maintain the price consistently throughout the year.

"But there are many small scale farmers and groups subject to price volatility. But at the moment there is an excess supply."

The company has two commercial layer farms located in Sevenhills in Nuwara Eliya and Mangala Eliya employing about 400 employees.

Sethwala said the company had a 40 percent market share in the layer breeder sector.

The firm is also looking at compost fertilizer.

"Due to the subsidy given by the government (for fertilizer) it has been difficult to market our poultry litter," he said.

"Now since it’s slowly beginning to be phased out. I think poultry litter and poultry compost will be highly attractive," Sethwala said.

"So we are looking for being one of the first entries to this industry. We already have the raw materials. We just need to start processing it."

Analysts have said Sri Lanka's autarky in maize and soya, the main ingredients in poultry feed has pushed up cost of production in chicken and protein prices generally in the country, which may contribute to malnutrition of poor children.

Meanwhile price controls in chicken meat prices have also increased business risks for farmers.

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READER COMMENT(S)
1. indika.h May 30
Is it possible to have 440 shareholders and be a pvt limited liability company ?