Dec. I, 1897.] 
THE TROPICAL AGRICULTURIS f. 
401 
CRITICISM OF CEYLON COMPANIES. 
We felt sure that, sooner or later, the famous In- 
vestors' Review, edited by A. J. Wilson, was likely 
to find a text in some one or other of our Ceylon 
Companies ; and sure enough in the October number 
just to hand we find three pages devoted to “A 
Weak Tea Company”; while an editorial note dis- 
cusses the Company identilicd with its Chaii- 
man Mr. James Sinclair in anything but favour- 
able terms. We can do no more in this issue 
than quote : — 
A ■ftTSAK TEA COMPANY. 
It is not a sign of prosperity, we regret to say, to 
find a particular industry honoured by a company 
formed under the fostering care of Messrs. Antony 
Gibbs & Sons. Whether it be the high and lofty ideals 
of the bank parlour, or the innate “cussedness” of 
things in general, that are against the firm, it is a 
fact that hardly a venture brought out by 
it of late years has been a success. Yet 
the firm does not weary in well-doing, and despite 
the malevolent way in which the nitrate, gun-making, 
and brewing industries have foiled its efforts in the 
past, it is now giving the reflected glory of its finan- 
cial aureole to the tea-growing industry, by standing 
sponsor to a tea-growing concern. This Com- 
pany— the Tea Corporation Limited (Ceylon) -was 
brought out at the end of July with a capital of £181,000 
divided into £65,000 of Five per Cent. Debenture Stock, 
£65,000 of Six per Cent. Preference Shares, a. d 
£51,000 of Ordinary Shares. The object of the Com- 
pany was to buy up a number of tea-growing estates 
in Ceylon, with a total area of 7,033 acres, of which 
3361 acres were under cultivation. The price to be 
paid for this property, after allowing £5 per acre for 
uncultivated land, worked out at about £45 per cul- 
tivated acre. It does not seem to be a high price, as 
Ceylon tea companies go, but this is perhaps the 
best that can be said about the issue, for the pros- 
pectus is drawing up on the free-handed system. 
A list of thirteen estates to be purchased is given, and 
it is set forth in big type that considerable economy 
will be effected by working them in one combination. 
But the prospectus rhetorician does not mention that 
four of these estates have for years back been worked 
as one company, that three others had been similarly 
handled, and that two more were one in all but name. 
As a fact, the Loudon market knew these nine estates 
as three, and therefore the economy of combination bad 
already been in force to a great extent. Then al- 
though the 3,211 acres under tea to be purchased 
was mature, except as to 282 acres, no record of 
past working is set forth in the prospectus. Now, to 
have such a mature area implies that the estates 
must have been worked for a number of years ; 
why, therefore, this mystery of silence ? 
Most probably the reason for this omission is the 
fact that no satisfactory statement of past profits 
could be drawn up. The estates in several cases are 
poor, four of them having formed the Lauderdale 
Tea Estates Company, which after having been in 
existence a good many years, paid, we believe, its 
first and only dividend of 2 per cent, last year ; 
and two others to the Asiatic Produce Company, 
which has the still more unenviable record of never 
having i<..id any dividend. A number of the es- 
tates, iucluding the Lauderdale group, have to our 
knowledge been offered about the City with a view 
to inclusion in a company, but no one who had a 
knowledge of the industry would take them over at 
the prices asked. 
Ti e only piece of information voitchsafed as to 
the past by the gracious sponsors is that the crop 
for the year ended .30th June last amounted to 
1,060,463 lb. But while no information is affouled, 
there' is a wealth of estimates, and by the dexterous 
use of this childish device, a visionary dividend of 10 
per cent, on the Ordinary Shares is brought out. 
These estimates, by the bye, are made by Mr 
F. Tatham, who is to be managing director in 
Ceylon, and who, therefore, must be considered 
not wholly unbiassed in his judgment. Ee 
starts with the amazing surmise that in the current 
year the crop will be 1,250,000 lb., or just 189,537 
lbs. more than in the preceding year. This is an 
increase 18 per cent., produced by an area that 
has less than 3 per cent, of tea shrubs only in par- 
tial bearing upon it. Why such an increase should 
be expected we fail to discover, except that it comes 
in hardy to swell the estimate of coining profit. 
Then this 1,250,000 lb. of tea is figured out to pro- 
duce 6d per lb. nett , and from the gross revenue of 
£31,250 thus triumphantly reached, the deductions of 
working expenses and interest charges are made, so 
that it is all plain sailing. Now, the majority of 
the estates are situated in districts of Ceylon that 
produce a low-priced tea, and yet such a nett price 
would imply that the Company must dispose of its 
tea at an average gross price of at least 7d per lb., 
in order to cover the freight, landing, warehouse, and 
sale charges that go to make up the difference. In 
the most recent Mincing Lane sales the produce from 
six of these estates has been selling’ at 5Jd per lb. gross; 
of one at 6id per lb. gross ; and of another at 7d per 
lb. gross, and only the produce of three of the estates 
has produced more than the indispensable 7d per lb. 
gross. Finally, the exchange for the purposes of the 
estimate was taken at Is 2Jd, yet the day the prospec- 
tus was issued the Indian exchange stood at Is 3|d, a 
difference of gd per rupee, which would probably mean -'P 
a loss to this Company of £1,800 per annum at least, 
and since then the quotation has been forced higher 
still. 
Too hopeful an exchange is therefore assumed, 
the increased production seems to be taken at too 
high a figure, and the nett price to be obtained appears 
sanguine. What this combination of favourableestimates 
means can be discovered if we assume more mode- 
rate figures. Should the Company produce in the 
current year 1,1(1 ((l 1 . (j j‘ lb., more than 
last year, a very fair increase on an acreage of this 
character, and if this crop yield 5Jd. per ib. nett, ’ 
which is by no means a low estimate, and if the ex- 
change rules at Is 3^d — it is now Is 4d — the Com- 
pany would find its nett revenue amount only to 
£5,370 instead of the £12,970 set forth in the pros- 
pectus. Were such to be the case, and from (he 
present condition of affairs our estimate seems more 
likely to be fulfilled than that of Mr. F. Tatham, 
the Tea Corporation would not be in a position to 
pay the full interest upon its Preference capital, 
to say nothing about a dividend on its Ordinary 
Shares. Of course we do not say that this will be 
the result of the first year’s working, but if esti- 
mates can be varied so easily, no one can wonder 
that we prefer to have hard facts as to past work- 
ing. The remainder of the prospectus is filled up 
with windy generalities about the enormous 
increase in the consumption of tea, and a state- 
ment of dividends paid by Ceylon tea com- 
panies, which is not entirely correct. We note, 
however, that the vendors give themselves the 
option of taking the whole £169,000 of the purchase 
price in cash, if the public be foolish enough to 
subscribe the whole ot u,e capital. Therefore, al- 
though the Company possesses the benefit of a sou of 
the Governor of the Bank of England as director, and 
has a so other high-class banking connections upon 
its Board we should strongly dissuade the public 
from touching any pint of its capital. It is com- 
panies nich as these, and there are too many now 
being formed, that will bring disrepute upon the 
tea-growing community, which of late years has been 
rather free from wild-c..t creations. 
* 
Now we come to the first of “Company Notes” 
as follows : — 
Dimbula Valley (Ceylon) Tea Company. — In our 
article about Ceylon tea companies, we advised the 
public not to be sanguine about the future of some 
of the newer companies. This is one of the newer 
conip-nies, and in reference to it we might even go 
a step farther and say that we regard its future with 
extreme apprehension. Established |in January 1896, 
its first report shows that with £150,000 of share 
