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Sunil Mendis
focuses on several areas needing urgent government
intervention Mr. Sunil Mendis, the chairman and chief executives of Hayleys Ltd., widely acknowledged as being among the country's most creative and best run businesses, has expressed concern about Sri Lanka's "restrictive'' labour laws which have compromised and continues to compromise the country's competitiveness in the region. Mendis who made reference to this issue in the last annual report of his company has returned to it in the just published report for fiscal 1997/98 which posted a highest ever after tax profit of Rs. 804 million, up 51% from Rs. 530 million earned the previous year. The profit attributable to the shareholders of Hayleys was Rs. 419 million, up 48% from the previous year's Rs. 283 million. Hayleys today is one of the country's largest and most diversified business groups accounting for 1.7% of Sri Lanka's export income, 2.8% of its domestic value addition and 7% of the market capitalisation on the Colombo Stock Exchange. Now a multi-national, it has offices in Japan, USA, UK, Australia and Holland and a production base in Thailand.
"Sri Lanka's restrictive labour laws need to be aligned to the needs of the free market economy it espouses. The authorities have been slow to recognise and respond to this need, and thereby have compromised and continue to compromise, Sri Lanka's competitiveness vis-a-vis competitors in the region.'' He also complained about the unrealistic approach of the authorities on environmental controls. "Whilst fully appreciating and supporting the need to protect the environment, we believe that the environmental standards applied must be appropriate to Sri Lanka's state of development and must not hold back the growth of industry and therefore the economy, as they have sometimes threatened to do.'' Hayleys which exited from a loss making textile factory last year, has seen its two remaining textile companies, Hayleys ADC Textiles and Hayleys MGT Knitting Mills, performing well during the year. Mendis said that further investment is being made to increase production and raise productivity to counter the threat of cheaper imports. Haychem Ltd., a Hayleys subsidiary, has been granted a license by its principal, Bayer AG, to market Bayer's crop protection products in Bangladesh. A separate subsidiary, Haychem (Bangladesh) Ltd., has been floated to undertake this activity. This company will be operational this year. The company, though disappointed by lack of sufficient government support to the agricultural sector, continues to invest in this sector despite negligible margins. Mendis who said that their agricultural activity had created 10,000 jobs through outgrower schemes remains optimistic about establishing a competitive edge in t medium to long term. He said they were giving the "greatest emphasis'' to retail-packed finished products (gherkins, green chillies and silver skin onions). Among the problems they face is an unrealistic exchange rate, lack of incentives similar to those available elsewhere in South Asia and lack of adequate agricultural productivity. "Higher yielding seed varieties and improved cultivation practices are urgently called for. Limited government assistance is now being extended to vegetable and foliage exporters in the form of freight subsidy. Whilst this is appreciated, it is by itself quite inadequate to redress the balance,'' Mendis said. He also made pointed reference to smuggling and similar activity that have grown worryingly in the recent past through the inflow, "in huge volumes,'' of goods cleared duty-free through unaccompanied passenger baggage warehouses. Of the products they deal in, consumer electronics/domestic appliances and photographic film were "particularly severely affected.'' Urging that the only real solution was to rationalise import and other tariffs in the affected areas, he argued that high tariffs made no sense when they brought in little government revenue. Lower tariffs would both level the playing field and increase revenue for government. Repeated representations have been made for urgent remedial action. "Despite these being accepted as logical and meaningful, there has regrettably been little action taken to correct the balance. This must change. The authorities must also accept that there is a far more urgent need for tariff reform in the areas that are affected by unscrupulous competition,'' Mendis said. He also complained of the "arbitrary manner'' in which duty free shops in the arrivals terminal of the airport duty free complex are being allocated. "Hayleys Electronics is a long-standing applicant for a shop; we are distressed that several others have been assigned shops while we have to remain in line,'' he said. The directors of the company are: Messrs. S. Mendis (Chairman/CEO), M.J.C. Amarasuriya (deputy chairman), M.T.L. Fernando, S. Krishnananthan, R. Yatawara, R.A. Ebell, S.S. Jayawickrama and Dr. W.M. Tilakaratna. |
Government too
gets lot of the cream Employees of John Keells Holdings Ltd. (JKH), the bluest of the blue chips quoted on the Colombo Stock Exchange, have been the principal beneficiary of the company's earnings by receiving the lion's share of the value added in the business. In its just published annual report, JKH which established a new record by becoming the first quoted company in Sri Lanka to crack the billion rupee after-tax profit barrier, quantified the value added in the business in fiscal 1997/98 at Rs. 3.45 billion. Of this sum, the company's 7,280 employees (excluding plantation workers) have received as remuneration Rs. 1.16 billion translating to 33.5% of the total. Next comes the government which had received Rs. 0.84 billion (24.2%) as taxes. Minority interest has absorbed Rs. 0.34 billion (9.8%), while shareholders have received Rs. 155.8 million as dividends (4.5%). Rs. 314.9 million (9.1%) has been retained in the business as depreciation and Rs. 652.8 million (18.9%) as reserves. Directors and employees have a real stake in JKH as substantial shareholders. According to the published information, 13 directors and their spouses own a total of 3.9 million shares in the company - 9.76%. 92 executives, staff and other connected persons own 3.3 million shares (8.2%) and 2,709 resident members of the public own 9.3 million shares (23.2%). As in most of Sri Lanka's blue chips, foreign funds, individuals etc. are the major shareholder. This category numbering 171 owns 22.3 million shares (55.5%). The company's balance equity of 3.4% (1.4 million shares) are represented by global depository receipts (GDRs), an instrument JKH pioneered here in 1994 when the Colombo stock market was riding high to attract foreign investors paying a very high premium for the company's shares. The GDR cash infusion has enabled JKH to operate without borrowings and interest payments to lenders. |
CTC boosts exports, but hurt by smuggled and 'white' cigarettes Although the Ceylon Tobacco Co. Ltd. has seen higher than expected export volumes during the first quarter of the current financial year, it continues to be hurt by an increased influx of smuggled cigarettes and illicitly manufactured 'white' cigarettes available on the local market, shareholders have been told. "The authorities have agreed to enact legislation expeditiously to counter this problem,'' a quarterly statement says. Ceylon Tobacco has been complaining about cigarette smuggling for a number of years. The untaxed `white' cigarettes are a newer problem. The quarter under review had seen turnover growing to Rs. 4.8 billion, up 12.1% from a year earlier, thanks to exports plus a price increase last June. But sales growth domestically had remained inhibited as a result of smuggled cigarettes and the illicitly manufactured `whites'. Despite the growth in turnover, the first quarter profit of Rs. 143.7 was up only 1.2% from a year earlier due to heavy restructuring charges. The after tax figure of Rs. 107.5 million was better due to an anticipated reduction in the effective tax rate "arising from the continued and aggressive capital investment programme.'' The company which in recent years have been selling off what it considers under-utilized assets including its head office building, the chairman's bungalow and other prime property, has continued this exercise deriving an after-tax profit of Rs. 82.2 million from the sale of under-utilized properties during the quarter under review. This has been written into the accounts as an extraordinary item. "These disposals are part of a radical restructuring initiative designed to reduce costs, re-allocate resources and ensure that the company is in a strong position to face the challenges that will undoubtedly arise in the future,'' the statement said. The directors reiterated their commitment to ensuring "a satisfactory return to all stakeholders'' in 1998. CTC was carrying Rs. 203.5 million unappropriated profits in its books as at March 31, 1998. |
Reduced tax helps Colombo Land profit Colombo Land and Development Co. Ltd. owners of the Liberty Plaza, has seen a slight decline in its trading profit despite turnover growth in the first quarter of the current financial year, a provisional statement to shareholders reveal. Group turnover was up to Rs. 16.6 million from Rs. 12.5 million a year earlier while the trading profit was down to Rs. 6.2 million from Rs. 6.9 million in the comparative quarter the previous year. But growth in other income and reduced provision for taxation enabled an after-tax profit of Rs. 6.1 million, up from Rs. 5.6 million a year earlier. Colombo Land has not been paying dividends in recent years, but instead redeeming zero interest share-linked debentures issued in lieu of tax exempt profits available for distribution at the end of the company's tax holiday. A sum equivalent to a 25% dividend has been annually paid on this account in recent years. Outstanding debentures redeemable before Feb. 2001 stand at Rs. 65.1 million and the company's profit available for appropriation at Rs. 122.6 million as at March 31, 1998. |
Cargo Boat Development back in the black Cargo Boat Development Co. Ltd., the first of the Central Bank's neighbours to get their bomb devastated building operational after the Jan. 1996 terrorist attack, has posted a Rs. 16 million profit for the financial year ended March 31, 1998, shareholders have been told in a provisional statement. The operational profit during the year under review was Rs. 9.8 million, up from a loss of Rs. 3.4 million a year earlier, but the company had a non-operating income of Rs. 4.6 million (Rs. 2 million the previous year), and an exceptional item of Rs. 3.5 million. Cargo Boat which suffered the bad luck of being affected both by the attack on the Central Bank and the Galadari bomb a year later had the compensation of recovering a bad debt that had been written off previously during the year in review. This had been written into the profit and loss account as an exceptional item. However, the company had to provide Rs. 1.2 million for building rehabilitation after the Galadari bomb as the Rs. 2.8-million insurance received did not fully cover the repairs. The 1997/98 earnings had enabled erasing retained losses of Rs. 9.5 million arising from the bomb damage. The company had Rs. 5.3 million available for appropriation as at March 31, 1998, according to the unaudited statement. No taxes have been provided for as there were brought forward tax losses. The directors have said that they have not yet considered appropriations as yet. |
Two senior bank executives quit under a cloud Two senior managers of a foreign commercial bank long in business in Colombo have quit following what the bank's chief executive has called "a clear breach by them of the bank's policies, rules and regulations.'' Well informed sources said that no financial irregularity was part of the stricture. The resignations have been conveyed by way of a communication by the bank's chief executive here to all staff. In this internal memo he has said: "I wish to make it clear to all members of the staff that strict adherence to the bank's policies, rules and regulations is a basic requirement expected from all the bank's employees, without exception.'' |
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Shalimar Estates Ltd., a Sri Lanka incorporated company with plantation interests in Malaysia, has announced one of the biggest bonus share issues in memory on the Colombo bourse by proposing the issue of 109 bonus shares for every 10 held - slightly less than 11 new shares for each existing share. The proposal by Shalimar, a company under the Carsons agency, is subject to the approval of shareholders. Three other Carsons companies incorporated here and with plantation interests in Malaysia have also proposed 1 for 1 bonus share issues which await shareholders' approval. These companies are Selinsing, Good Hope and Indo - Malay. |
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Four directors of Metalix Engineering Co. Ltd. have quit the board with effect from May 23, the Colombo Stock Exchange has reported. A fifth director had resigned a few days earlier. They are Messrs. M.M. Udeshi, Mrs. P.N. Bhatt, W.N.D. Chandraratne, A.H. Udeshi and A.M.D. Wijesinghe. Messrs. M.M. Udeshi and Chandraratne were appointed to the Metalix board on May 13 and Mr. Udeshi named joint managing director on that day. The Commonwealth Development Corporation has named two new directors to the board of Vanik Incorporation Ltd. They are Mr. Steven Enderby and Mr. R. A. Siddiqi who succeed Messrs. Stephen Potter and Naim Farooqui. Messrs. Ashley. T. Herat and S.G. Wijesinha have been appointed to the boards of Hapugastenne Plantations Ltd. and Udapussellawa Plantations Ltd. Mr. Henry. A. Pieris has been appointed to the board of Kelani Valley Plantations Ltd. Mr. G.K. Seneviratne has been appointed to the board of Dipped Products Ltd. Mr. Nihal Abeysekera and Mr. L.N. de S. Wijeyratne have been appointed to the board of Richard Pieris Exports Ltd. Mr. Singha Weerasekera has been appointed managing director of Parquet (Ceylon) Ltd., succeeding Mr. Kamil Weerasekera who has resigned. Mr. Stanley Wanigasekera has also resigned from the Parquet board. Mr. N.D.C. Austin has been appointed to the board of James Finlay and Co. (Colombo) Ltd. Mr. Suren Wickramasinghe, the former chairman of the UDA, has resigned from the board of Colombo Land and Development Co. Ltd. of which he was previously chairman. The UDA has a substantial stake in this company. |
| Fast-Track trade agreement with India by Kanes As SAPTA has failed to stimulate Sri Lanka's exports to India (the largest country market in SAPTA) and as the pace of trade liberalization in SAPTA is rather slow and the coverage of traded goods limited, Sri Lanka has taken the initiative to propose a bilateral trade agreement with India to create a fast-track trade liberalization programme between the two countries in addition to the general trade liberalization undertaken by all members under SAPTA. Sri Lanka has requested India to eliminate all tariff and non-tariff restrictions on all commodities and services exported by Sri Lanka to India except a reviewable negative list of items which India may wish to exclude. Sri Lanka wants India to launch this liberalization process by immediately eliminating tariff and non-tariff restrictions on 182 export products of Sri Lanka. Further, a request has been made to India to relax the current rules of origin in order to reduce to 50 per cent value added criteria to 25 per cent. At present, SAPTA tariff preferences can be enjoyed by those preferential items in which the domestic value added is 50 per cent. As the import content of many of Sri Lankan industrial exports is fairly high, the 50 per cent value added rule disqualifies a number of Sri Lankan exports from receiving tariff preferences. India's Import
Liberalization of 106 Products It may be argued that the unilateral non-tariff concessions to Sri Lanka and other SAPTA members have been extended by India under the Gujral doctrine that India does not ask for reciprocity from her neighbours but gives and accommodates what it can in good faith and trust. On the other hand, it needs to be pointed out that India's unilateral removal of import restrictions on 106 products is actually a reciprocity to Sri Lanka's liberalized import regime which had for many years allowed Indian as well as other country imports free access without import restriction. It may be recalled that Sri Lanka had reduced her import tariffs to very low levels and removed import restrictions on 5,700 out of 6,000 items at Six-digit Harmonised System Code (HSC) level unilaterally while India was maintaining higher tariff and tight import control. Thus the recent relaxation of India's import restrictions is in effect a recognition of this fact. However, it is important to note that the relaxation falls far short of full reciprocity, for while Sri Lanka has removed non-tariff barriers on 5,700 or 95 per cent of its imports, India has done so only in respect of 106 items. Bilateral Trade
Undermines SAPTA The main problem with bilateral trade agreements, such as the one proposed by Sri Lanka to India, is that they tend to undermine and eventually destroy the multilateralism of SAPTA. If India concedes such an arrangement to Sri Lanka, other SAPTA members are likely to demand similar concessions. Some of them - Bangladesh, Bhutan and Nepal - are already enjoying trade preferences extended unilaterally to them by India on specific products, and being least developed countries, they have stronger case for fast-track liberalization for their exports, than Sri Lanka. If India concludes fast-track trade liberalization agreements with Sri Lanka, Bangladesh, Bhutan, Maldives and Nepal, SAPTA would then become irrelevant in South Asian regional trade. What matters then would be bilateral trade agreements between two countries not multilateral trade arrangements among a group of countries. Such agreements would also alienate Pakistan further from SAPTA as it is unlikely to negotiate such an agreement with India under the existing conditions. SAPTA would then have lost its raison d'etre. In this situation, it would appear to be difficult for India to agree with Sri Lanka's request for a fast-track bilateral agreement. This is confirmed by the fact that India has not responded yet to the request made as early as January 1997 for such an agreement - to remove all tariff and non-tariff barriers on 182 items immediately as a prelude to total liberalization for all Sri Lanka's exports other than those on a negative list. The recent removal of non-tariff restrictions on 106 products of export interest to Sri Lanka and requested by Sri Lanka not on a bilateral but on a multilateral basis within the SAPTA framework too bear testimony to India's preference for a multilateral rather than a bilateral framework for regional trade negotiations. If India proceeds very rapidly with import liberalization to provide greater access to exports of SAPTA members under the SAPTA framework, it would be as effective as fast-track bilateral trade agreements, but recent developments in India, however, seem to cast a dark shadow on India's capacity to liberalize its import regime to meet the requirements of the SAPTA members. Protectionist
Tendencies US Economic Sanctions Rules of Origin Trade Preferences Alone
are Inadequate The opportunities of market access created by liberalization can be exploited only if there is a expanding demand for products in India and Sri Lanka can meet that demand with regular exports, competitive in quality and price. But is this the case? We tend to forget that India has been able to double its volume of exports to Sri Lanka in the last five years from Rs. 16.5 billion to Rs. 33 billion not because of trade preferences but because it had the goods required by Sri Lanka and was able to supply them on a regular basis at competitive prices. It needs to be admitted that Sri Lanka has only a limited range of export products demanded in India, mainly because its industries are few. The way out of the difficulty, lies in creating a broad based industrial structure by both private and State investment as private investment alone will not be able to achieve this within a short time frame. Such investment should also include joint ventures with Indian business houses which provide the best link with the Indian market. |
| ‘Good governance’ needed to check
corruption by
Analyst The IMF recently issued some guidelines on good governance; which it will invoke in its negotiations with governments under Article 4 consultations. ''Financial assistance from the IMF could be suspended or delayed on account of poor governance, if there is reason to believe it could have significant macro-economic implications that threaten the successful implementation of the programme or if it puts in doubt the purpose of the use of IMF resources'' states the guidelines. Last year the IMF suspended a three year $220 million soft loan package to Kenya owing to the corruption in the MOI regime. The IMF says it can demand changes in boards of publicly owned institutions and even ministers. So the government will have to look sharp not to fall foul of the IMF by ensuring good governance. The public should be happy about this new attitude and policy of the IMF. It should encourage social interest civic groups to take up issues of corruption with better chances of success. As Mr. Gujral has pointed out, it is the public that must protest against corruption. It takes two to tango. There will be no bribery or corruption if the giver refuses to offer the bribe. Corrupt are defiant There is no doubt that previous Ministers too may have resorted to this improper practice. It is also evident that many other Ministers milk the corporations under their Ministry in similar ways. Often the foreign travel expenses and other creature comforts of Ministers not only abroad but even locally are met by corporations. Corporation vehicles and their Holiday homes are grabbed by the Ministers as if it is their birth-right. There are apparently circulars against this malpractice by Ministers. But who is to querry the Minister? Who is to enforce rules against the Ministers. The public will have to wait for a change of government. Even then it is selective justice and the public feel the commissions of inquiry which will then be set up will be politically partisan. Moral code and
corruption What is more important however is corruption in government, although ''arms length relationships'' in the private sector are also necessary for the efficient functioning of a market economy. The term corruption comes from the Latin word which means to break, implying that something is broken. In this instance it is the moral code that is broken. It is essential that the moral code or rules must be precise and transparent. This was done in the Leadership code of Papua New Guinea. In an article written in the Lawasia 93 Greg Toop says ''No-one can do more to set the tone and style of the nation than the leaders. Contrari-wise no-one in the nation can do more to lower the standards than the leader. Both by inaction and improper action the leaders can betray the people's confidence in them''. A leadership code was incorporated in the Papua-New Guinea constitution which was drafted by Australians. The holders of public office are treated as leaders for the purposes of the leadership code in the constitution and include the Prime Minister the Ministers as well as heads of government departments, members of Boards and Statutory Authorities and all personal staff of the Ministers, Judges etc. A person bound by the Leadership code under section 2 of the constitution has to conduct himself in a way, both in public and private life, to avoid placing himself in a position where there could be a conflict of interests between his public duty and private interests. He should not demean his office or allow his public or official integrity or his personal integrity to be called in question or to endanger respect for and confidence in the integrity of the government''. It is in the interest of the President to see that the integrity of her government is not affected adversely by the behaviour of her Ministers. The Leadership Code goes on to state that a leader should not use his office for personal gain. Nor should his spouse or children act in a way to cast doubt in the public mind that he is complying with his obligations under the relevant section of the constitution. He is also obliged to publicly dissociate himself from any activity or enterprise of any of his associates that might give rise to a doubt about his compliance with the section. A leader who fails to comply with any of the obligations imposed under this section of the constitution is guilty of misconduct in office. It is not enough to pass a moral code into law. It must be enforced. Section 2 of the Papua New Guinea constitution has been enforced. There have been several prosecutions for violations of the Leadership Code. Leaders guilty of misconduct in office have been tried by a tribunal and sacked from office. There is an Ombudsman commission, an independent commission whose job is to enforce the leadership code Declarations of Assets by political and public servants is to be made to the commission. Apart from the constitutional provisions, there is also the Organic Law on the Duties and Responsibilities of Leadership which spell out in detail their obligations and identifies specific offences. A leader is guilty of misconduct in office if he misappropriates government funds, uses his or her office for personal benefit, fails to disclose his interest in a matter dealt with in his official capacity. He is not expected to deal with a matter in his official capacity if he has a material interest in its outcome. Of course taking bribes, accepting a holiday or holding any beneficial interest in a government contract, accepting gifts or loans from a person which could compromise him in the discharge of his public duties, are all instances of misconduct in public office. The leader is personally responsible if his family member is personally engaged in such conduct and can be prosecuted for misconduct in office even if there is no personal involvement by him in the alleged misconduct. It may sometimes be difficult to establish a direct link between an act that could be assumed to reflect corruption and a particular payment for it. An official elected or appointed who does a favour may be rewarded immediately by a bribe or alternatively he may be compensated at a much later date. If one has attended a wedding of a son or daughter of some customs officials one cannot fail to see the large number of businessmen in attendance and note the large gift parcels that change hands. In many such cases the ''corruptor'' and the ''corrupted'' may not have discussed the payment at all. It may be an unseated assumption that a favour granted today creates an obligation for a reciprocal favour tomorrow. Such is the nature of corruption that public men are prohibited by regulations to accept gifts. There are men who are not even in power but in politics who are cultivated by businessmen as an investment for the future. Favours are granted to such men even if they are no-bodies today, with the hope that they will be VIPs tomorrow. The politicians must realise that they should not feel themselves under any obligation to reward such ''corruptors''. Their public duty should over-ride any personal obligation. They should not feel bad that they could not give a contract to some one who had helped them in the past. Public office cannot be used to pay-off personal obligations. It would be a false sense of gratitude if a public man were to feel that he must do a favour to somebody because such person has helped him. Public office is a trust and the beneficiary is the general public. Public duties have to be carried out only for the benefit of the general public not for friends, relations or crony business-men. Social intimacy creates the environment that promotes corruption and that is why ministers and public officials should stay away from the cocktail circuit. Ministers and officials are acting in a fiduciary capacity and are expected to avoid situations which give rise to conflict of interest. Permanent Commission in
Bribery and Corruption The Commission consists of three Members of whom two have to be retired Supreme Court Judges and one a person experienced in investigations. They are to be appointed by the President on the recommendation of the Prime Minister and in consultation with the speaker of Parliament. They have a fixed term of five years and are not eligible for re-appointment. They can be removed only by a resolution passed in parliament by a two-third majority. This is the same provision as applicable to supreme court judges. Independence of
the commission An interesting situation has arisen. The President is reported to have called for the resignation of the Members. The Members of the Commission have taken their stand on the law; that they can be removed only by parliament and have apparently refused to comply with the request. The Commissioner of Elections, the Auditor General, Supreme Court Judges have all been granted secure tenure of office to ensure their independence from the Executive. Can they be called upon by the Executive to resign? Should they comply with such requests for resignation if they were to be made? A worthy and much respected Auditor General was forced out of office by a previous president should the public acquiesal in such Presidential action? Alexander Hamilton one of the Founding Fathers, of the American Constitution said that if men were angels no government would be necessary and if men were governed by angels no checks and balances would be necessary. But men are not angels and Presidents are not angels either. So checks and balances are a sine qua non of democracy and the rule of law. No one is above the law. Not even the President inspite of legal immunity. It is unfortunate that President Jayewardene was allowed to enact a constitution which gives absolute legal immunity to the President for both private and official actions. The Attorney General and the Inspector General of Police, have withdrawn their staff crippling the working of the commission. There is provision in the law for acts of contempt against the commission to be dealt with in the Supreme Court. Would the public interest require the Members of the Commission to resign as requested? Would it not put in jeopardy the whole principle of independence of certain public office holders like the Supreme Court Judges, the Commissioner of Elections, the Auditor General? If the Members of the Commission were to resign would it send the wrong signal to others present and future holders of such protected posts? The President must have some good reasons to call upon the Members of the Commission to resign. But should she not disclose such reasons to the speaker of Parliament who had to be consulted before their appointments. Would not the Opposition support a resolution to remove the commissioners if they are faulted? The Opposition in a democracy is required to act in the public interest. Their duty is not to oppose or obstruct purely to embarrass the government. The public expects them to uphold good governance. If good governance requires that the Members of the Commission should go then the Opposition will have to support the decision of the government. In the process the public will get to know the facts, the reasons why the commissioners are being called upon to resign. The World Bank has stressed the need for transparency. The public's right to know is now recognised in the Western democracies. Canada has passed the Freedom of Information Act. New Zealand has passed the Official Information Act. Britain too will have a Freedom of Information Act as promised by the Labour government. The World Bank in its World Development Report made one key point: that an effective state is essential for development for a prosperous economy. Effective institutions, says the Report, matter as much as sensible policies. The present government has followed sensible policies and earned the praise of the World Bank. But it must devote its attention to institution building as well. The rule of law is the foundation for good governance. The government has set up an institution to tackle bribery and corruption. It must safeguard this institution and assist it to function effectively. Moral code |
| Carsons
report satisfactory growth Carson Cumber-batch & Co. Limited, reported a satisfactory growth based on the corporate results for the year ended 31st March, 1998. The Group turnover was Rs.2.25bn, up from Rs.1.94bn over the preceding year. The main sectors which contributed substantially towards the Group turnover were beverage, investments, oil palms and real estate. Beverage sector turnover grew by 15%, whilst investment sector showed a significant growth of 200% in the period under review. Oil palm sector too, contributed significantly towards the Group turnover recording an increase of 16% over the preceding year whilst the real estate and property development sector grew by 22%. A press release from the company said that in the year under review, operating profits of the Group showed a 47% growth from Rs. 319.0mn of the previous year to Rs. 469.89mn mainly due to the improved performance of the aforementioned sectors. Profits of beverage sector grew by 15%, and investment sector by 149% whilst the real estate sector recorded a 49% increase over the same period. Furthermore, oil palm sector too, recorded a growth of 27% as against the preceding year. However, Rs. 71.25mn was incurred as finance charges thus achieving Group profit after interest of Rs. 398.64mn. Furthermore the Group's pre-tax profits recorded a 38% growth from Rs. 309.25mn of the previous year to Rs.427.83mn. After making a tax provision of Rs. 104.80mn (Rs. 94.39mn the preceding year), the Group was left with a post tax profit of Rs. 323.02mn, up from Rs. 214.86mn from the previous year. The effective tax rate of the Group was 24% compared to the normal tax rate of 35%. After adjusting the minority interest of Rs. 191.7mn (Rs. 108.24mn in 96/97), net profit attributable to the shareholders of Carson Cumberbatch & Co. Ltd was Rs. 133.83mn, up from Rs.116.34mn of the previous year. With retained profits of Rs. 348.90mn brought forward from the preceding year, a sum of Rs. 482.73mn was available for appropriation. The total cost of the Group's investment portfolio as at 31st March 1998 was Rs. 1.15bn compared to Rs.1.0bn in the previous year. Group's net assets increased by 24%, up from Rs. 2.07bn in the preceding year to Rs. 2.57bn. The market value of the investment portfolio including the Group's subsidiaries amounted to Rs. 6.21bn of which Carsons Group holds 10% of Ceylon Cold Stores Ltd, 7.5% of Hayleys Ltd, 9.5% of John Keells Ltd, 7.1% of Hunter & Co. Ltd and 5.0% of Richard Peiris & Co. Ltd. Resultantly, the Group's reserves stood at Rs. 1.19bn comprising capital reserves of Rs. 478.48mn and revenue reserves of Rs. 718.33mn. The directors of the Company are Messrs. Wijaya Unamboowe (Chairman), Hari Selvanathan (Deputy Chairman), Mano Selvanathan, Israel Paulraj, D.Chandima R.Gunawardena and Mrs. R.L. Nanayak-kara. The Directors of Carsons Management Services (Pvt) Ltd - The management services arm of Carson Cumberbatch & Co. Ltd, are Messrs. Hari Selvanathan (Chairman) Mano Selva-nathan, D.Chandima R. Gunawardena, Suresh K. Shah, A. Kenneth Sellayah, Wijaya Unamboowe, Israel Paulraj, Sunil P. Dissanayake and Mrs. M.N. De Silva. |
New Sinhala
magazine for the small businessman N.U. Jayawardena, the patriarch of Sri Lankan business who is 90-years old and still batting strong has some sage advice for small entrepreneurs: Start small. No business that neglects its customers has a future. Don't cheat. Treat your competitors as good friends. Strike out the words "No'' and "Can't'' from your lexicon and don't accept them from anybody else either. His final gem: Do today what should be done tomorrow. An interview with Jayawardena is part of what is on offer in Athwela, a new business monthly in Sinhala reaching towards small businessmen whose English is marginal or non-existent - people who have no access to available literature on management. Nihal Dissanayake who last worked for National Asset Management Ltd. (NAMAL), the DFCC Bank's Unit Trust management company, who has launched Athwela with a few associates, says that the journal has two main objectives: give small businessman and opportunity to build a positive attitude towards business and increase their knowledge of basic management. The maiden issue priced at Rs. 100 (subsequent issues will be priced at Rs. 125 but subscribers can get their copies at Rs. 80 per month) includes a look into the future of the economy if peace becomes a reality in the north and east. "If that happens, there could be mega-cities with ultra-modern buildings and facilities similar to Singapore. Malaysia and Hongkong. If the Colombo banks do not make satisfactory arrangements to transfer and invest the money that flows in to develop the Jaffna peninsula, the development of an advanced financial and stock market in the north, competing with Colombo, cannot be ruled out,'' he said. Lucidly written, well printed and illustrated with some colour photos, the magazine plans to feature success stories including from among women entrepreneurs. The first such, an interview with Anoma Wijesuriya who has successfully set up as an optician in Nugegoda, meshes comfortably with a variety of other articles and features. One of these is an interview with Industrial Development Minister C.V. Gooneratne who talks of the government's policy on small industry. The publishers believe that there is a market for the product they offer. But whether they can sustain the journal at a price which is by no means exorbitant, but may not be affordable by the market segment they wish to reach, remains to be seen. This is particularly so because the publishers only want to take advertisements with ``a message to small businessmen.'' "Ours is essentially an educational magazine,'' says Dissanayake. "So the articles and advertisements we carry should help small business people to improve their knowledge and productivity.'' It's a bit of a tall order. But it' a brave endeavour which deserves encouragement and support. Good luck! |
PIM executive habit survey Sri Lanka's senior executives lack skills and habits of interpersonal effectiveness in managing, according to a recent survey of executive habits conducted by the Postgraduate Institute of Management (PIM). The survey finds that many senior managers are weak in interpersonal leadership, effective communication, and creative co-operation which are the cornerstones of team building and transforming employees from independent behaviour to interdependent and synergistic behaviour. Professor Gunapala Nanayakkara, Director PIM, who has directed the study of 245 executives in a cross-section of industry and services sector, says that the findings support PIM's previous study conclusions that a large segment of Sri Lanka's senior managers need better skills in human resources management and modern leadership outlook. The survey has been based on Stephen Covey's best seller, The Seven habits of Highly Effective People. Covey's famous seven habits focused two principal dimensions of highly effective people, namely the habits of personal effectiveness and the habits of interpersonal effectiveness. Personal effectiveness is reflected in three basic habits. Being proactive, begin with the end in mind, and put first things first. These habits in a work situation are expected to change employees from dependence to independence. The Sri Lankan study finds that the surveyed managers are relatively better in this area of effectiveness. Interpersonal effectiveness is seen in a manager's win-win attitude with regard to gain sharing. Seeking first to understand others rather than making oneself understood, and synergizing, meaning seeing and appreciating that differences in relationship can be a source of information and creativity. Among the managers surveyed, 56% showed below average skills and practice of these habits which are effective in building productive interpersonal relations. Professor Nanayakkara says that the study was conducted by about 50 managers who over a period of one month carefully observed the work of the senior managers that they had chosen to assess by using Covey's study criteria. Lack of professionalism among managers, Professor Nanayakkara says, is often a cause of low morale among employees, problems of quality, ineffective business communication, and poor customer service. Free market forces alone are not sufficient to build competitive business, a deliberate effort at human resource development is very much at the centre of any business development strategy. |
Celltel, first telecom provider to offer free IDD facility Celltel Lanka Limited, the pioneer cellular company in Sri Lanka, has announced that effective this month, the company will provide free IDD connections to all subscribers who request the facility. The offer, a first by any telecommunications company in Sri Lanka, gives subscribers an opportunity of making IDD calls without paying the customary deposit for the facility. This charge is usually more than Rs.15,000. "We decided to give this valuable benefit to our customers to allow them to make IDD calls even if their need for IDD is occasional and comes on an ad hoc basis. There are instances where customers have requested IDD facilities for just a couple of hours and they do not wish to tie up a large amount of money for the deposit", said Mr.Serge Guevel, Chief Executive Officer of Celltel. There is no change or adjustment needed to the subscribers phone, all a customer has to do is bring his or her handset to Celltel, pay a one off activation fee of Rs.600 and in a matter of seconds the facility will be available, he explained. Mr.Stephen Torode, Commercial Director of Celltel said: "We are the only telephone company in Sri Lanka able to offer this facility on a personal phone. This beneficial facility is made possible by routing all these calls via a pre-paid platform even if all the subscribers non-IDD calls are made utilizing our usual monthly account payment service. Of course, at the end of the month only the non-IDD will show up on the bill as all IDD calls have been made on the pre-paid platform. "This facility adds more value to our service and is another good reason to belong to our network", Torode said. "Meanwhile subscribers who prefer to pay a deposit for the IDD facility in order not to have to use the pre-paid platform may continue to do so". Since April 1, Celltel has also provided free incoming calls within the network, regardless of the time of day or duration resulting in a substantial growth in its subscriber base. The company, which has the largest subscriber base of over 60,000 provides the widest coverage among the country's four cellular operators, a company news release claimed. The Celltel network now covers Greater Colombo, the coastal region from Puttalam to Kataragama, most of the hill country including Kandy, Nuwara-Eliya, Gampola, Matale, Badulla, Bandarawela, Ratnapura and the north western and north central regions including Kurunegala, Dambulla, Anuradhapura, Polonnaruwa, Kuliyapitiya and Tambuttegama. |
Higher taxes do not inhibit Tea Smallholders' profit growth Buoyant tea prices throughout last year has enabled Tea Smallholder Factories Ltd., a company in which John Keells Holdings and Central Finance are the biggest shareholders, to boost both turnover and profit during the financial year ended March 31, 1998. Turnover was up to Rs. 922.8 million from Rs. 701.5 million a year earlier while the pre-tax profit grew to Rs. 130.1 million from Rs. 100.1 million the previous year. The company's tax liability was up 51% from Rs. 17.3 million to Rs. 26.2 million. Nevertheless, its after tax profit of Rs. 103.9 million for the year under review compared well with the Rs. 82.8 million earned a year earlier. The company which has an issued capital of Rs. 150 million is now in the process of completing a new factory at Nivitigala in the Sabaragamuwa province. |
Issued capital
to be doubled by 1 for 1 bonus issue John Keells Ltd., the produce and share broking company which spawned the massive John Keells Holdings (JKH) conglomerate, has reported its best ever result with an after tax profit of Rs. 61.1 million, up 53% from the Rs. 39.8 million earned the previous year. The consolidated after-tax profit attributable to John Keells at Rs. 76.3 million, was up was up 71% from Rs. 44.7 million earned the previous year. In addition to its broking business, John Keells are the owners of the group's Glennie Street headquarters. The group's stockbroking arm, John Keells Stock Brokers is a subsidiary and Keells Realtors, owning prime property in Navam Mawatha and Mattakuliya and International Tourists and Hoteliers Ltd., owners of Hotel Bayroo in Beruwela, are associates. The company which has an issued share capital of Rs. 38 million has adopted a resolution of doubling this figure to Rs. 76 million by a bonus issue of one new share every share held. Its real estate holdings alone have been valued at Rs. 443.9 million. JKH and its subidiaries own 74% of John Keells Ltd. Reporting to shareholders on the results of the year ended March 31, 1998, the company's chairman, Mr. Ken Balendra, said that the tea industry had enjoyed "another excellent year'' in terms of both crop and crop and prices. Crop was up 7% while Colombo auction tea prices gained a further 15% over the previous year's 44%. "Rubber prices were not as attractive as in the previous year but were at reasonable levels. Brokerage income on rubber however barely covered overheads,'' Balendra said. He reported that their stockbroking subsidiary had continued to be ranked No. 1 in terms of brokerage earnings for the second successive year and had also been ranked "Stock Broker of the Year 1997'' by the Asia Money magazine. "The company had a profitable year,'' the chairman reported. Balendra said that the company has not yet decided on a final dividend for the year pending finalisation of the increase in capital by the 1` for 1 bonus. A 10% interim dividend was paid in February. The directors of the company are Messrs. K. Balendra, V. Lintotawela, C.J. Fernando. Ms. A. Coomaraswamy, L.D. Ramanayake (managing director) S.A. Jayawickrame, S.C. Munasinghe, V.A.A. Perera and M.F.S.P. Senadhira. |
NDB's first quarter profits down marginally Despite its income growing by 16% in the first quarter of the current financial year, higher operating expenses had depressed the National Development Bank's operating profit during this period slightly lower than earnings in the comparable period the previous year. According to an interim statement incorporating provisional unaudited results, shareholders have been told that the NDB's income at Rs. 903.3 for the period under review was up 15.9% from Rs. 779.5 million a year earlier. The operating profit was Rs. 205.3 million was down marginally from the Rs. 207.6 million earned in the comparative quarter in 1997. But the NDB Group saw first quarter profit growth although the group too, like the bank, had to carry higher personnel costs, loan loss and investment value diminution provisions and other administrative and general expenses. The group operating profit of Rs. 223.8 million was up from Rs. 213.5 million a year earlier. The group post-tax profit of Rs. 177.1 million too for the period under review was up from Rs. 155.1 million in the first quarter of 1997. Operating expenses of the bank had risen due to higher personnel costs, up to Rs. 42.9 million from Rs. 32.5 million a year earlier. Provision for bad and doubtful debts and fall in value of investments had more than trebled to Rs. 48.6 million from Rs. 14.1 million in the first quarter of 1997. Other administrative expenses too were up by Rs. 3.1 million. An NDB spokesman said that provisioning was related to the volume of lending and increases in the loan portfolio, regardless of the risk, led to higher provisions. The bank was re-examining this procedure. The NDB's after tax profit for the first quarter was Rs. 145.8 million, down from Rs. 149.9 million a year earlier. With brought forward earnings, the bank was carrying a retained profit of Rs. 153.5 million in its books as at March 31, 1998. |
| Dorset
Chamber makes second visit The Dorset Chamber of Commerce and Industry will be making their second visit here within a year when a 23-member business delegation offering a wide range of goods and services arrives in Colombo on June 15 on a 5-day visit. "They will be exploring new business and investment opportunities in Sri Lanka. Calls on the Ceylon Chamber of Commerce and probably Trade Minister Kingsley. T. Wickramaratne will be made,'' a news release said. Products and services on offer will include machine tools, laboratory chemicals, power generators, automobile and industrial maintenance consumables, healthcare products, uniform clothing, garment accessories, bakery equipment, administration and accounting software, industrial products catalogues, human resources training, business consultancy, training in crime investigation and market development services. The mission members will be staying at the Hotel Lanka Oberoi. A British High Commission news release said that Sri Lankan businessmen interested in meeting them should either contact them direct at the hotel (Tel. 320001) or leave messages at the commercial section of the British High Commission (Tel. 437336, Fax 941-430308) |
| Regnis
does nicely in first quarter Regnis (Lanka) Ltd., the Singer subsidiary, has boosted both turnover and profits during the first quarter of the current financial year ended March 31, 1998, with profit growth outpacing increased sales. Sales were up 11% to Rs. 103.3 million from the previous year's Rs. 92.1 million while the post-tax profit of Rs. 4.5 million for the quarter under review was up 25% from Rs. 3.6 million earned during the comparative quarter the previous year. |
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