Oct 30, Colombo: Revenues of Sri Lanka's glove maker in the center of the drinking water dispute in Rathupaswala had declined for the first half of 2013, the company disclosed in a stock market release today.
The Dipped Products (DPL) Group's Hand Protection sector posted a decline in revenue due to the closure of its production operations at the Rathupaswala factory due to the protests by villagers who accuse that the effluents from the factory pollute the ground water in the area.
The Company said the Group's turnover in the Hand Protection sector declined by 6% year-on-year in the first half of 2013 to Rs. 6.903 billion from Rs. 7.305 billion in 2012.
However the Plantation Sector of the DPL Group grew by 15% to Rs. 5.413 billion in 1H 2013 from Rs. 4.694 billion in 2012 to buoy the loss from the Hand Protection Sector.
The Group recorded a marginal increase of 3% in revenues for 1H of 2013/2014 despite a 13% growth in the first quarter of 2013.
Group's profit before tax fell 13% to Rs. 837 million in 2013 from the Rs. 967 million of the previous year.
Contribution to the profit before tax from the Hand Protection sector, the main contributor to the profits under normal circumstances, declined to Rs. 521 million this year from Rs. 656 million last year.
The Dipped Products managing Director Dr. Mahesha Ranasoma has said that the closure of the facility in Weliweriya strained the production and reduced the Group's overall profits resulting in a decline of 16% in after tax profits to Rs. 639 million in 1H 2013 from Rs. 764 million recorded for 1H 2012.
The Company said the protests were based in the misconception that the low water pH in the area wells was caused by the treated effluent from the glove factory.
The Dipped Products (DPL) management was required to voluntarily suspend the production operations in order to appease the villagers while the government authorities commissioned several institutions to investigate the cause for low pH in the groundwater.
Although so far there was no evidence to indicate that the treated effluent from the factory is responsible for the acidity in the water, the factory remains closed.
Despite the redistribution of capacities to alternative production facilities and despite the support of long-standing customers, the current operating circumstances of the Hand Protection Sector have decelerated the growth momentum of the Group, the Managing Director said.
The Dipped Products, established in 1976, is one of the leading non-medical rubber glove manufacturers serving 5% of the world market and reaching 68 countries.