COLOMBO, 31 August 2026 – Kotagala Plantations PLC (KPPLC), a leading entity in Sri Lanka’s esteemed plantation sector, has announced a strong financial performance for the fiscal year ended 31st March 2026. The company’s latest Annual Report, released on 28th August 2026, highlights a pivotal year marked by a successful rights issue, substantial debt reduction, and a return to positive retained earnings, underscoring its resilience and strategic foresight amidst a challenging operating environment.
Financial Fortification: Rights Issue Fuels Strong Performance
FY 2025/26 proved to be a transformative period for KPPLC’s financial health. A highly successful rights issue in October 2025, which was oversubscribed and raised Rs. 761 million, significantly strengthened the company’s balance sheet. This capital infusion was strategically deployed to reduce high-interest debt obligations, resulting in total borrowings declining from Rs. 1,170 million to Rs. 813 million. Consequently, the company’s gearing ratio improved impressively from 0.48 to 0.23, demonstrating enhanced financial stability and investor confidence.
For the fifth consecutive year, Kotagala Plantations PLC maintained its profitability, effectively wiping off accumulated retained losses and restoring a positive retained earnings position. The company reported a commendable 10% year-on-year revenue increase to Rs. 5,600 million, driven by higher crop volumes across its diverse portfolio. Profit after tax also saw a substantial rise of 32% year-on-year, reaching Rs. 473 million. Capital investments for the year amounted to Rs. 477 million, channeled into operational efficiency improvements, manufacturing capacity enhancements, and long-term agricultural sustainability.
Operational Excellence and Strategic Diversification
KPPLC’s strategic initiatives in operational management have yielded significant results. The company continued its focus on precision agriculture methods, engaging an experienced agri-scientist to guide its estates. Investments were made in large-scale mechanization in upcountry estates, with approximately 30% of tea plucking now mechanised and plans to double this proportion. This addresses persistent labour shortages and aims to boost productivity. Furthermore, efforts are underway to implement a cloud-based Enterprise Resource Planning (ERP) system for real-time data access and improved operational controls.
Crop diversification remains a cornerstone of KPPLC’s growth strategy. While traditional tea and rubber operations continue to be refined, the company is actively expanding into oil palm, coconut, and cinnamon cultivation. Notably, a further 1,500 hectares have been allocated for oil palm, awaiting the lifting of the cultivation ban. Value addition initiatives, such as the commissioning of a sawmill at Mount Vernon Estate for timber processing and the establishment of a vehicle servicing and maintenance centre, are generating new revenue streams and cost savings. The company is also leveraging its scenic properties for tourism, with the successful launch of the Rosita Tea House and plans for developing five estate bungalows.
Navigating Macroeconomic Headwinds with Resilience
The operating environment presented several challenges during the fiscal year. Sri Lanka’s economy, while on a recovery trajectory, experienced disruptions from Cyclone Ditwah, which impacted upcountry estates but was effectively mitigated by KPPLC’s proactive measures, resulting in no fatalities. The company also absorbed two significant wage increases within two years, impacting production costs. Declining tea prices at the Colombo Tea Auctions and ongoing geopolitical instability, particularly in Iran, posed risks to revenue and export volumes. Policy uncertainties regarding RPC lease extensions and the oil palm cultivation ban also continued to create an unpredictable landscape.
Despite these challenges, Kotagala Plantations PLC demonstrated strong resilience, adapting its strategies to strengthen internal capabilities and capitalize on emerging opportunities. The Board maintained continuous oversight of compliance with all applicable laws and regulations, ensuring timely statutory payments and adherence to governance best practices.
Pioneering Sustainability and ESG Integration
KPPLC has reaffirmed its commitment to embedding Environmental, Social, and Governance (ESG) principles across its operations. The company has adopted the SLFRS Sustainability Disclosure Standards (SLFRS S1 and S2) and established a dedicated ESG Management Committee to oversee compliance and drive its Net Zero roadmap. Emission monitoring has commenced, and significant investments have been made in renewable energy, with all nine upcountry tea factories now utilizing solar power.
The company maintains a comprehensive suite of international accreditations, including Rainforest Alliance certification for all upcountry estates and ISO 22000:2018 Food Safety and ISO 9001:2015 Quality Management Systems for its factories. Efforts are also underway for EU Deforestation Regulation (EUDR) and Forest Stewardship Council (FSC) certifications for its rubber operations, enhancing market access and reflecting a strong commitment to environmental responsibility.
Commitment to Human Capital and Community Welfare
Recognizing its workforce as its greatest asset, Kotagala Plantations PLC continued to invest in employee welfare, skill development, and retention strategies. Despite a continuous outflow of estate workers, the company introduced productivity committees, enhanced remuneration structures, and provided extensive training programmes covering areas from gender equality to occupational health and safety. Significant progress was also made in the KPPLC Worker Housing Initiative, in collaboration with the Plantation Human Development Trust (PHDT), with 25 housing units commenced during the year. Community engagement remained a priority, with timely support provided to estate residents affected by Cyclone Ditwah and ongoing education and healthcare initiatives.
Forward Outlook: Sustained Growth Trajectory
Looking ahead, Kotagala Plantations PLC is confident of sustained growth. The company plans further investments in its tea production capabilities to align with national objectives and will continue expanding mechanization and factory modernization. The lifting of the oil palm ban is anticipated to unlock significant diversification opportunities. With its strengthened financial position, robust governance framework, and unwavering commitment to sustainable and ethical practices, KPPLC is well-positioned for long-term value creation for all stakeholders.
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