Impact of "wage hike" to Plantation STOCK PRICES ...

factFINDER · 1 Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 9:11 pm

factFINDER

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Long waiting MOU has been signed between Plantation Trade Unions and Plantation Companies .... that end uncertainity prevailed for longtime ... its a good sign in one hand.

But ... what will be the impact to the Plantation Stocks? Positive or Negative?

Well .... no dought escalation of "wage" is negative for bottomlines of all plantation companies, as they are in a labour intensive industry.
However the impact of wage hike to "plantation stocks" is the diffrence between "expected wage hike" and "actual wage hike". Becouse the stock prices have already been adjusted for expected wage hike.

Actual wage hike is about 20% (will revise at the end of two years term -in 2013)
then ... what was the expected wage hike ?? 5%, 10%, 15%, 20%, 25% or 30% ....
If the expected rate was lesser than 20%, we can expect negative impact to stock prices, But the actual rate is par with the actual 20% or higher than that (pls note this wage hike is for 2 years period untill 2013) the impact should be Positive ..

What was your expectation ??

ipoguru

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I think most people expected wage hike of about 20%.

KGAL was pressed down by somebody and collected enough I guess. This may be the new story they have been waiting for to press the accelerator paddle.

kam2011

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Now it is clear. We are not in dark. I guess Plantation rally nwill start from tommorow.

Akalanka

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kam2011 wrote:Now it is clear. We are not in dark. I guess Plantation rally nwill start from tommorow.

It seems that kgal is ready for a run.. but who can predict it... Very Happy

According to the MACDs and RSI Kgal is oversold and is looking forward for a hike . and seems that is having a support at 200, it will make some move if it over come the previous resistance held at 230..
lets see , , Very Happy

Impact of "wage hike" to Plantation STOCK PRICES ... Kgall11

xhora

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according to news previous wage was Rs 385. New one is Rs.515
that is a 33% increase

FXX

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he basic daily wage of an estate worker has been increased from Rs.285 to Rs.380 while the total daily wage, including all other allowances, has been increased from Rs.405 to Rs.515, Sivalingam also the Deputy Minister of Economic Affairs told Ada Derana.

cse.alpha

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Profit margins on tea are very low at present, so with this wage hike, tea may become loss making for most companies, with tea prices falling recently. TPL and HAPU are 2 of the better tea plantations, but HAPU made a gross loss from tea in 1Q of 2011, and TPL made a GP margin of only 15%.

But rubber profit margins are much higher, so it may be better to look at plantations which are heavily exposed to rubber.

The gratuity impact of wage hike will depress most plantation results though in short term, once accounted for, with exact impact depending on labour force numbers and average age.

Mega

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xhora wrote:according to news previous wage was Rs 385. New one is Rs.515
that is a 33% increase

No. previous was Rs. 405. Wage hike is expected news and most unions demand 50% wage hike, but wage increased about 25%. So i think this is positive news for plantation sector.

DISCLAIMER:

The above statement is not meant to influence anyone's decision to buy/sell/hold/ rotate any stock.

invest-abc

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I think this is positive news, it's not an unreasonable increase. Also, we need to understand that any business whether it's plantations, manufacturing, services will have to have an increase in man power cost every year. It's just that in the plantation industry it's done through a collective agreement. Labor cost model of a plantation industry is bit similar to that of the garment industry. The increase in cost needs to be managed through increase in productivity and better prices.

TuskerLK

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Me too, this should be a good news to market. Now the wage issue is shorted out and uncertainty over the business continuity is no more. I think plantation companies have the capacity to absorb this hike while maintaining considerable level of profitability

milanka

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Wage increase is linked to productivty of the workers. there are controls. its not just an increase. I think its reasonable and fair. Also the agreement is for 2 yrs. Which means no inturruption for 2 more years. continous labour supply is assuared.

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Impact of "wage hike" to Plantation STOCK PRICES ...

1 Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 9:11 pm

factFINDER

2 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 9:33 pm

ipoguru

3 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 9:40 pm

kam2011

4 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 9:54 pm

Akalanka

5 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 10:09 pm

xhora

6 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Mon Jun 06, 2011 10:14 pm

FXX

7 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Tue Jun 07, 2011 8:39 am

cse.alpha

8 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Tue Jun 07, 2011 8:44 am

Mega

9 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Tue Jun 07, 2011 9:01 am

invest-abc

10 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Tue Jun 07, 2011 9:05 am

TuskerLK

11 Re: Impact of "wage hike" to Plantation STOCK PRICES ... Wed Jun 08, 2011 12:28 pm

milanka

12 Re: Impact of "wage hike" to Plantation STOCK PRICES ...

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