April, 11, 2014
Bairaha Farrns Plc. has decided to collaborate in a new project to set up a large scale, state of the art commercial animal feed manufacturing factory together with raw materials procurement and modern post-harvest storage facilities.
The joint-venture known as Fortune Agro Industries (Pvt) Ltd is promoted by another poultry producer namely Farms Pride (Pvt) Ltd., which is a partner of Bairaha Farms Plc. in a company, named Fortune G-P Farms (Lanka) Ltd.
Fortune Agro Industries has already received the preliminary Letter of Approval from the Board of Investment wherein the 7 years Tax Holiday, subject to implementation of the project within 24 months, is mentioned. Furthermore, Fortune Agro Industries is entitled to import/purchase locally project related capital items free of Customs Duty during the stipulated project implementation period, However, the agreement between the joint-venture company Fortune Agro Industries and the Board of Investment is yet to be signed.
The total estimated cost of the new joint-venture Fortune Agro Industries is around Rs.1.65 billion, which includes Rs. 650 million for working capital. Bairaha Farms Plc intends to take up around 45% share of the equity in this new venture, which may take around 15 to 20 months to commence commercial operations.
The investment of Bairaha Farms in the joint venture is subject to the company obtaining the nececessary funds from financial institutions. Another 45% of the equity capital will be taken up by the promoters, namely Farmt Pride (Pvt) Ltd and the remaining 10% of the equity capital is to be offered to a partner who could add value to the new joint-venture.
However, in the event a suitable party is not identified to offer the remaining 10% of the shares, then it would be taken up equity by the two major shareholders, namely Bairaha Farms Plc. and Farms Pride (Pvt) Ltd.
Fortune Farms (Lanka) Ltd. enjoys nearly 50% market share of the broiler breeder parent chicks requirements of Sri Lanka. In other words, nearly 50% of the final broiler chicken meat produced and marketed in Sri Lanka originates from the grand, parent farm and hatchery of Fortune G-P Farms (Lanka) Ltd. in the form of broiler breeder parent chicks from which broiler chicks are produced by a number of breeder farms and hatchery operators.
Once this feed mill is in commercial operation, Bairaha Farms Plc. Would have a total vertically integrated poultry production operation.