2nd June 2000
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  • More barge power to our grid 
  • Sri Lanka should look closer home 
  • SEC warns CDIC
  • JKH boosts fridays trading - Market report
  • FTA with Egypt on the cardsTea Update
  • Worldview enhances knowledge
  • ADB to fund forest management
  • IFC to work with NGO
  • Punchihewa case settled with a fine
  • UAL declares life bonus for 12th consecutive year
  • Cathay says "Bye" to Michael and "Hi" to Mark! 
  • Direct flights to Dhaka and Milan from SriLankan 
  • First European on-line portal takes off
  • Galileo offers 'virtual agency' product 
  • Hi-tech tinting & dispensing system at Delmege Paints 

  • More barge power to our grid 

    By Tharuka Dissanaike
    A Japanese-owned barge-mounted power plant, began commercial operations yesterday, selling power to the national grid. The diesel plant, permanently sunken in the Colombo Harbour has a capacity of 60 Mw. The owning company, Colombo Power (Pvt) Ltd., has signed a 15-year contract with the government to supply electricity. According to the power purchase agreement the Ceylon Electricity Board (CEB) will be paying approximately US 6 Cents per kilowatt hour (one unit) at present for the power supplied by the barge-mounted plant.

    The new power plant has been operating for nearly two weeks, running reliability tests, supplying electricity to the grid at cost. According to CEB sources the barge-mounted power plant has come into service at a crucial time for the Board. Drastically low reservoir levels have forced the CEB to run all its thermal power plants to meet the demand for electricity. Over 60 percent of the daily electricity requirement of 18-19 Gigawatt hours (Gwh) is now met with thermal power.

    "This is a brand new power plant, assembled for this project," said Akitsu Odagaki, Chairman and Managing Director of Colombo Power (Pvt) Ltd, a joint venture between Mitsui Engineering and Shipbuilding and Commercial Corporation, both of Japan.

    The barge containing the power plant will be permanently moored in the harbour for the duration of the contract.

    Sri Lanka should look closer home 

    Sri Lanka and the Asian region is being edged out of their biggest apparel market the USA, by its neighbours Mexico and the Caribbean Basin, a top garment manufacturer said. 

    While USA is the world's biggest apparel buyer, Mexico was USA's top supplier in 1999, with a 14.84% market share, which reflects a YOY growth of 16.08%. In contrast, Sri Lanka has slipped down one position from 15 to 16, clutching onto a market share of just 2.49%, a negative YOY growth of -3.02%. 

    China, Hong, Kong, Taiwan and Korea which collectively held 63% of the total US apparel market in 1984 has dropped to 21% in 1999. Comparatively, Mexico and the CBI, which had just 6% of the market in 1984 now, controls 41%. 

    All other suppliers who held 31% of the US market in 1984 now have 38%. 

    MAS Holdings Group chief, Mr. Mahesh Amalean who was re-elected for the third consecutive year as the Chairman of the Sri Lanka Apparel Exporters' Association, made a timely warning that the USA has changed its sourcing strategy in his address to a high powered audience including chief guest, US ambassador Mr. Shaun Donnelley, guest of honour IMF's resident representative, Mr. Nadeem Ul Haq, BOI chief, Mr. Tilan Wijesinghe and a host of apparel exporters. 

    The apparel trade has changed from a suppliers' market to a buyers' market with short lead times dominating trade, he said. Hence Mexico and the Caribbean's geographical advantage in the US market.

    Compounding this factor is other favoured country and regional status that give a distinct advantage to suppliers in apparel markets.

    For example the historic China Bill in the US congress and the possibility of China becoming a fully-fledged member of the WTO, with a most favoured nation status would make smaller countries like Sri Lanka more vulnerable, he said.

    The recent Sub Saharan initiative by the US government will open duty and quota free access to US for African countries. There is also the Caribbean Basin Initiative, NAFTA and a special bi-lateral trade agreement with Israel and Jordan to contend with, he said. 

    Similarly in the EU preferential trade agreements with East European suppliers, Mediterranean countries and even Bangladesh and Cambodia have been forged. India will also soon receive a privileged partner status in EU in both economic and political terms. It is painfully clear the Sri Lanka has to look to other markets and closer home, Mr. Amalean said. With the FTA in operation Sri Lanka can export eight million units of apparel to India annually. But this figure should grow to about 30 - 50 million units to capture the true potential of the Indian market, Amalean said.

    Recommended by the Apparel Exports Association the government has appointed Kurt Salmon Associates of India to conduct a survey on the Indian retail market. The company will also conduct a diagnostic gap analysis of ten member enterprises benchmarking them against international competition.

    To protect and develop our apparel market a effective caucus in Washington, Brussels, and Delhi needs to be set up for bi- lateral negotiations and special trading concessions similar to those granted by US and EU to competitors, Amalean said.

    He also called for a world class team of negotiators under the head of the state, to ensure best terms and conditions and trade negotiations. 

    A competent public relations team is also necessary he said to position Sri Lanka as a supplier base in the minds of the right customers in target countries. 

    US ambassador, Mr. Shaun Donnelly in his address said that Sri Lanka fits somewhat awkwardly in the geography of the world. Neighbours forming special relationships is a world reality, he said with reference to Mexico and the Caribbean's status in the US. Donnelley pointed out that our good working conditions was a factor that would ride us through competition. Sri Lanka has no scandals of sweatshops and child labour abuse which is the nightmare that top apparel labels most fear being exposed.

    SEC warns CDIC

    The Securities and Exchange Commission has warned CDIC Sassoon Cumberbatch Stockbrokers (Pvt) Ltd for its faillure to get its consent before changing its ownership structure.

    The SEC said in a statement that any further breaches by the company could result in legal action being taken against the firm, and the firm's licence being cancelled or suspended.

    Under the SEC Act, stockbroking companies are required to inform the SEC and obtain its consent, before undergoing a change in its ownership structure. A contravention of this rule is an offence punishable under the SEC Act. 

    "Obtaining approval of the SEC in this instance is important to ensure that the criteria prescribed in the granting of a licence is continuously met by the company, and that good standards are maintained throughout," the statement said. SEC in July last year informed all stock broking companies, including CDIC Sassoon, of the importance of ensuring compliance with the Act. In September last year, the SEC warned CDIC for a similar contravention.

    Market Report

    JKH boosts fridays trading

    The excitement of the Sampath Bank AGM had a negative effect on its shares as it shed Rs. 3.75 to close at Rs. 56.25 on Friday. The AGM itself turned out to be uneventful, defying all speculation. 

    However a quantum gain in the John Keells Holding (JKH) share prices held up the market. Fridays close was mainly pushed up by price pressure on JKH created by the script issue announcement by the company. As a result 572,000 JKH shares changed hands at Rs. 140, gaining Rs. 30 over the previous trading price. The 2 for 1 bonus issue announcement is subject to approval. 

    The indices on the other hand managed modest gains. The ASPI passed the 500 hundred market closing at 523.55 points after gaining 14.82 points from the previous day. The Milanka gained 40.22 points to close at 853.17 points while the MBSL MIDCAP rose 13.28 points to close at 883.83 points. 

    During the week, active trading of DFCC, JKH, NDB and Commercial Bank in addition to a few others, created ripples in the market. 

    Tea Update

    FTA with Egypt on the cards

    Sri Lanka might regain the Egyptian tea market if both parties can come to an amicable agreement. It is understood that the Egyptian Minister of Economy and Trade, Dr. Youssef Boutros Ghali and our Minister of Commerce and Food, Kingsley T. Wickremaratne agreed to peruse a free trade pact. 

    However, while tea is high on our list for free trade, local officials query as to what Egypt can export to Sri Lanka. 

    Officials said that since Egypt already had trade agreements with the COMESA trade block and hence had little to export to Sri Lanka in return. However, if talks prove successful, Sri Lanka might regain a small part of their lost tea market. 

    Meanwhile, the latest statistics on the industry show CIS at the top of the importers list followed closely by UAE and Turkey. However, it is noticeable that value added tea exports continue to decline. Total tea exported increased only marginally from 103 mn kilos to 106 mn kilos for the first five months of the year. The imported re-exported category also saw some impressive gains going up to 3.5 mn kilos from 2.1 mn kilos in the previous year. 

    In auction news, the recent devaluation of the rupee pushed the price difference between the best grades and its poorer counterparts further apart at the auction. Brokers said that while price gains recorded for poorer varieties in previous auctions were wiped out, the better varieties gained on their previous prices. 

    Following auctions will see a reduction in quantity offer as a result of the recent work go slow by the plantation workers. However, with workers resuming normal activity from mid last week, the quantity on offer will return to normal levels at the end of the month. 

    Worldview enhances knowledge

    Introducing an E-Learning and a degree programme in business studies will be the key immediate tasks of the Worldview Institute in its efforts of "continuous enhancement of knowledge and competency levels of people" Mr. Jan B Ommundsen, Chairman elect of the Institute said at a recent a media conference. Mr. Nalin Jayasuriya, Managing Director/CEO and Mr. Sam Stembo, Director/General Manager were also present at the briefing. 

    Mr. Ommundsen said that this expansion had been achieved within the short period of one year. 

    Speaking of the programmes offered by WI, Mr. Nalin Jayasuriya MD/CEO said that WI operates in three main areas. Corporate Division handles programmes that are tailor-made for a specific organisation. 

    These programmes can range from a one off training programme to a total corporate development effort including the development of strategic and marketing plans, procedure manuals, process development and even to the extent of involving in managing day to day operations. He said that as at today WI has a strong client base of over 25 corporate entities. 

    The Education division, under the direction of the Education Headquarters in Oslo, manages Worldview Preliminary Certificate in Business Management and the Worldview Graduate Diploma in Business Management. The latter is a degree level programme. 

    And those who are successful in the final examination will be eligible to enter several Masters Degree programmes conducted by several reputed universities in UK and Australia. Mr. Sam Stembo said that there are several certificate level programmes that would be introduced by WI shortly. 

    The public business and competancy development programmes are held periodically utilising the expertise of international and local resource persons. Mr Jayasuriya cited the programme carried out for the CEO's of the country last year, as the first such programme for the CEO's, conducted in collaboration with the University of California. 

    He added that a professor from the School of Tourism and Hotel Management is currently in the country sharing her experience and providing new insights for those who are in the hospitality industry. 

    ADB to fund forest management

    Sustainable forest management in Sri Lanka is being promoted by a US$27 million soft loan approved today by the Asian Development Bank. The Forest Resources Management Sector Project uses a participatory approach that creates livelihood opportunities for poor local communities while improving forest protection and wood production, a news release said.

    The project establishes a policy and governance framework for forest development and management to address the increasingly-degraded state forest-lands. It supports the government's 1995 Forestry Sector Master Plan.

    The project includes planning, management and awareness campaigns involving all stakeholders to ensure agreement over forest boundaries and how forests should be managed and used. Agroforestry and woodlot plots will be set up in degraded forests to increase food security and reduce poverty among forest-dependent communities. Some 50,000 poor households are expected to benefit. The project will also improve the technical knowledge to establish best conservation and resource management practices among Forest Department staff, participating beneficiaries, NGOs and community-based organizations.

    The executing agency, the Ministry of Forestry and Environment, will implement the project in 10 areas. 

    The ADB loan will come from its concessional Asian Development Fund. It will be repayable over 32 years, including a grace period of 8 years. It will carry an interest charge of one percent per annum during the grace period and 1.5 percent per annum thereafter, payable semiannually

    IFC to work with NGO

    The International Finance Council (IFC) will work with Non- Governmental Organisations (NGO's) to help small and medium enterprises (SME's) obtain finance. It is expensive for banks to asses small projects and the IFC is looking at NGO's to help build a fort, Consultant, IFC, Dr. Anton de Wilde said at a recent forum organised by the Sewa Lanka Foundation for SME stakeholders. 

    NGO's have development and commercial objectives which ensure their suitability, de Wilde said. It would be possible to establish internet training units within NGO's to train personnel from SME's. NGO's could also subcontract with training firms to develop training.

    Sri Lanka's high literacy rate, relatively good climate and soil, improving telecom industry and potentially good export import facilities lend itself to the development of SME's.

    However de Wilde pointed out that the lack of financing, unreliable utilities such as electricity, lack of research and development support and relatively low levels of individual entrepreneurship were a disadvantage to SME development.

    Punchihewa case settled with a fine

    The Securities and Exchange Commission has found a former Managing Director Pure Beverages Co. Ltd (PBC) guilty of insider dealing and imposed a fine of Rs. 481,980 on him.

    The SEC said in a statement that consequent to this, the SEC had withdrawn a case against former PBC managing director Ana Punchihewa in the Fort Magistrate's Court.

    SEC initiated an investigation into certain trades executed on the Colombo Stock Exchange in respect of PBC's shares on January 29, 1993. 

    The investigations found that Mr. Punchihewa, the then managing director, sold 20,000 shares of the company at Rs. 53.50 per share on January 29, 1993, soon after a January 28 board meeting where the accounts for November and December 1992 were tabled.These accounts showed a significant loss for the company. At the time Mr. Punchihewa disposed of his shares, the details were price sensitive information, the SEC said.

    The case in this matter proceeded for almost four years in the Fort Magistrate's Court. In March this year, Mr. Punchihewa requested the Commission to compound the offence against him in terms of section 51A of the SEC Act.

    UAL declares life bonus for 12th consecutive year

    Union Assurance Limited (UAL) declared bonuses to their Life policyholders for the 12th consecutive year. All holders of participating policies are entitled to this bonus. The company has been awarding bonuses to its life policyholders since inception in 1988 a news release said.

    In the current environment of low interest rates and severe competition throughtout the financial sector, UAL has continued to maintain steady growth in Life business. In addition to the usual reversionary bonus declared annually, UAL, this year, declared a terminal bonus to reward loyal customers.

    The Life Surplus after provision has been made for bonus payments and future liabilities, is Rs. 20 m. this year. The Life Insurance Premium increased from Rs. 419.2 m in 1998 to Rs. 529.5m in 1999, reflecting a growth of over 26% during the year. This can be considered well above the market average. Life bonuses are based on the profitability of the Life fund, which increased from Rs. 498.7 in 1998 to Rs. 680.3 m in 1999.

    Bonuses declared annually give the Life policy a high maturity value. UAL regulations specify that all life policy holders entitled to a bonus are issued a bonus certificate setting out the amount credited to their policy in the current bonus declaration as well as the sum accrued to them on their policy since commencement.

    Cathay says "Bye" to Michael and "Hi" to Mark! 

    Michael Yuen, Cathay Pacific Airways Country Manager for Sri Lanka and the Maldives leaves this weekend to take up a new posting at the airlines head offices in Hong Kong. Taking his place in Colombo is Mark Sutch, who comes to Sri Lanka from his previous posting in Seoul, Korea.

    James Finlay and Co., (Colombo) Limited are the General Sales Agents for Cathay Pacific Airways in Colombo.

    Direct flights to Dhaka and Milan from SriLankan 

    SriLankan Airlines will launch services to Dhaka and Milan and increase weekly flights to London, on July 1.

    Non-stop services to the Bangladeshi capital will operate every Monday and Saturday, while flights to Milan will operate every Monday, Tuesday and Saturday in combination with Rome. (The Tuesday flight will be an additional service to Rome too).

    From 1 July, SriLankan Airlines enhances its daily service to London with two additional flights each week, on Wednesdays and Saturdays. These will operate via Dubai, giving passengers the opportunity of a stop at this popular duty-free port. The airline will fly its brand new Airbus A330 to Milan and Rome as well as on the two new London flights.

    The A330s offer some of the best in inflight conveniences and comforts. All seats are fitted with personal telephones, 17 channel personal TVs and a 22 channel audio service. Business Class seats also have video players and a library of over 40 videos to choose from. Air-to-ground fax facilities are also available, a news release said.

    First European on-line portal takes off

    British Airways is to join forces with ten major airlines to create the first European multi-airline, on-line travel agency. The new site will offer the general public access to the most up-to- date fare information including the airlines' lowest brand fares. It is expected to attract a significant proportion of total on-line travel sales in Europe within the next two years.

    The other partners in the new venture are Air France, Lufthansa, Alitalia, KLM, Iberia, SAS, Aer Lingus, Austrian Airlines Group, British Midlands and Finnair. The ground-breaking site - to be named in the coming months - will offer independent travellers the most comprehensive and competitively priced range of flights to, from and within Europe. They will also be able to book hotels, car hire, insurance and other travel services through the site, a news release said. 

    Galileo offers 'virtual agency' product 

    Sri Lankan travel agencies have been advised to tap into the vast potential of the Internet to offer their clientele real-time on line services through a "Virtual Agency" network.

    The concept has been made possible through a new product travelpoint. com unveiled in Colombo by Galileo Global Distribution System (GDS) in collaboration with Emirates, the international airline of the UAE.

    Galileo Sri Lanka Manager Mahendra Balasuriya said in a news release that offered travel agencies and their clients access to 540 airlines, 450,000 hotels and a host of support services such as car rentals and message services, enabling them to make, and change their travel arrangements at any time, from anywhere in the world.

    He said Sri Lanka travel agencies should take note of emerging trends like the effect of the Internet on the way business is done, the proliferation of e-services, the increasing number of vendor alliances, and the fact that an increasing number of frequent travellers carry their own Computing platform.

    Galileo set up its National Distribution Centre in Sri Lanka in November 1998 and commenced operations here in January 1999. More than 70 per cent of IATA agencies in Sri Lanka now use Galileo products.

    Hi-tech tinting & dispensing system at Delmege Paints 

    Asian Paints, the Indian paint giant that holds a controlling stake in Delmege Forsyth & Co. (Paints) Ltd., has introduced a state-of-the-art automatic dispensing system that will revolutionise the way paint is bought and sold in Sri Lanka. 

    The first of its kind in this country, the new tinting system offers customers of Delmege Paints instant access to an unlimited range of colours. 

    It is coupled with Asian Paints' proprietary interactive software programme " Colour World " that allows consumers to try out shades and shade combinations of their choice on real rooms before buying the paint, says a company news release.

    According to Mr S. Mohandas, Chief Executive of Delmege Paints, the first of the new dispensers imported from Fluid Management of the Netherlands, has been installed at the Delmege Paints factory at Moratuwa. 

    The company plans to install many more at dealer outlets in the months ahead, he said. With the unique " Colour World" programme, customers can call up on screen a wide range of pre-drawn exteriors and interiors and select those that are the closest match to their own homes. 

    They can then experiment with an unlimited range of colours in emulsion and enamel, and see the visual effect of the colours of their choice on these exteriors and interiors.

    The programme also provides a budget and volume calculator that helps customers work out the quantities of paint they need and the cost, and the dispenser then produces the required paint, using a Gyroshaker to mix the required paints and colourants.

    Asian Paints acquired a 76 percent stake in Delmege Paints in October 1999. 

    The company, which reported a turnover of US$270 million (about Rs.21 Billion) last year, is the market leader in paints in India, selling twice as much paint as any other manufacturer in that country.

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