04/11/2010 (LBO) - Sri Lanka's Watawala Plantations September 2010 quarter net profit rose 14 percent to 10.7 million rupees from a year ago with gains from palm oil and rubber, a stock exchange filing said.

Group sales grew three percent to 1.3 billion rupees while earnings per share were 0.45 rupees for the quarter compared with 0.40 the previous year.

The firm, a unit of India's Tata Tea, had made a 146 million profit in the June 2010 quarter.

In the six months ending September 30, 2010, Watawala Plantations' net profit rose 235 percent to 157 million rupees with sales up 14 percent to 2.8 billion rupees from the year before.

According to a segmental analysis for the six months, its plantations business unit made a net profit of 101 million rupees against a loss of 6.7 million the year before.

Profit from marketing was almost flat at 56 million while the firm's diversification into banana cultivation turned profitable, with a modest profit of 161,000 rupees compared with a loss of 5.6 million the previous year.

Group Managing Director Vish Govindasamy said the palm oil business made a "reasonable profit" as the company continued to develop the crop in the Udugama area.

Palm oil profit rose to 136 million rupees from 123 million the year before.

"The profits continued to grow in the first half of the year," Govindasamy said.

"The company has now moved one step ahead by beginning to refine Crude Palm Oil to market our own bottled produce which is now sold in the brand name of Oliate."

Rubber made a profit of 39 million rupees compared with a loss of 24 million the year before.

Turnover of rubber grew by 173 percent to 122.5 million rupees as the rubber prices improved by 114 percent during the period under review, Govindasamy said.

"The weather in the Udugama area appeared to be marginally better than the same period previous year and as a result the production too had a marginal improvement."

Watawala Plantations' tea production grew 14 percent in the first six months of 2010 compared to the same period the previous year although the net sales average price was slightly lower.

"The loss in the tea segment was 140 million rupees which was a 15 percent improvement from the same period last year," Govindasamy said.

"The cost of production of tea showed a drop due to better productivity. At present all efforts are being made to improve the quality of tea."

Exports during the period consisted of a small quantity of bulk tea exports to Tetley of UK and the loss was due to the export division being unable to meet the fixed overheads of this division, he said.

"The gross margins on bulk tea exports very minimal. However, the company has now been able to secure a large order of value added tea to Tetley and the first container has already left Sri Lanka."