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Aug 02, 2011 (LBO) - Singer Sri Lanka, a top consumer durables retailer said profits rose 79.9 percent in the June 2011 quarter from a year earlier as sales grew rapidly after the state cut taxes on electrical home appliances.
The firm reported earnings per share of 2.34 rupees for the quarter.

Revenues in the June quarter rose 37.9 percent to 5.1 billion rupees. In the half year to June revenues were also up 37 percent to 10.26 billion rupees.

"Since the selling prices of most products are lower than last year due to reduction of duties and taxes, the volume growth is even higher than the growth in the revenue," chief executive Asoka Pieris told shareholders.

Sri Lanka's government cut taxes on consumer durables increasing the trade liberties of citizens.

Critics says that for years Sri Lanka's rulers had kept taxes on electrical appliances very high keeping them out of the reach of less wealthy citizens and claiming that they were 'luxury goods'.

The taxes were partly to help import substitution rackets which were engaged in tax arbitrage instead of producing genuinely competitive goods.

Import substitution businesses profit from selling to a citizenry whose freedom to choose had been stripped away by the coercive power of the state. Smugglers also engage in tax arbitrage in a similar fashion when import duties are high.

Meanwhile Singer said the 'grey market' had shrunk allowing its own sales to increase 64 percent in the Colombo district.

Singer said television sales grew by 69 percent in the first six months with gains coming from TVs with liquid crystal display (LCD) and light emitting diode (LED) screen technology.

Refrigerator sales had increased 35 percent, washing machines 33 percent, audio equipment 183 percent, computers 69 percent, air conditioners 151 percent, DVDs 39 percent, small kitchen appliances 53 percent and fans 79 percent.

"The Economy and the markets continued to be buoyant," the firm said. "The major setback was the floods that ravaged the country in the early part of the year destroying part of the harvest in some parts of the country.

"Most of these were in areas where Singer has a very strong presence.

"Our sales growth was low in the districts affected by the floods, but was overcome by achieving higher growths in other districts."