Distilleries Co. Sept. profits down on lower sales

The liquor sales dropped quite drastically during the three months ended in September, as Distilleries Company of Sri Lanka PLC (DCSL) reported some sharp drop in its top line in its fiscal second quarter ended in September while the government continues to hammer the industry via more taxes. 

DCSL, which commands 70 percent of the country’s liquor market, reported revenues of Rs.20.78 billion in the July-September quarter, slumping 18.6 percent from the same period last year, as the lockdowns and compulsory closures of liquor outlets by the authorities, to prevent the virus from spreading, erased a large chunk of the sales. 
A proposal to sell liquor online, albeit receiving the Finance Ministry nod, was subsequently shot down by the virus-controlling task force a few months ago, with no clear rationale. 

The September quarter sales were also down from their previous quarter revenues of Rs.21.72 billion reported in the three months to June, which was also hurt by the month-long lockdowns during that period. 

The company reported earnings of 55 cents a share or Rs.2.51 billion, compared to 57 cents a share or Rs.2.62 billion in the same quarter last year. 

For the six months to September, the company reported earnings of 86 cents a share on total profit of Rs.3.97 billion, on revenues of Rs.42.5 billion, compared to 78 cents a share in earnings and Rs.40.08 billion in revenues reported, respectively in the comparable six month-period in 2020. 

Despite the repeated calls by the broader alcoholic beverages industry, which includes the beer industry as well to lessen the taxes on the legal alcobev industry, both to prevent the sprawling moonshine and also to enhance the state revenues through the legit distilling and brewing, the government raised the excise duty on the sector from the budget presented this month.  Further, the industry is also among five others, which will come under the proposed Special Goods and Services Tax (SGST), which is expected to go into effect from January, next year. According to early information, the SGST is expected to come as a composite tax in place of the other taxes on these sectors but the rate/s, collecting authority and other specifics are still in ambiguity. 

Currently, alcohol and cigarette are taxed at the 8 percent value-added tax (VAT) and excise duty, under different rates. 

Leading up to the budget, the industry voiced concerns that it would not be too long before the ethnic coconut arrack would become the privilege of a few, as the repeatedly raised taxes and levies on the industry had pushed their prices beyond the reach of many. 

Sri Lankans for decades live under the false notion that a righteous society is an alcohol and tobacco-free society but the latter is rotting to the core, due to such repressive and backward policies, forcing people into unhygienically distilled moonshine and trapping a majority in eternal poverty.