10th September 2000
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CEB to construct transmission line

Ceylon Electricity Board recently signed a contract with ENERGIE Gmbh & Company KG of Germany to construct a transmission line linking the Kukule Ganga Hydro Power Station with the national grid. The 132 kv, double circuit, three phase, transmission line of 27 kms, interconnects at Matugama. The Project is financed with a loan Rs. 200mn from the Japan Bank for International Co-operation. 

ENERGIE Gmbh & Company KG of Biberach, Germany will provide Lanka Transformers the required tower designs under a Technical Co-operation agreement between them. 

Kukule Ganga Power Station is expected to be completed in year 2003. The power lines will be ready in advance for the connection, a Ceylon Electricity Board press release said. Lanka Transformers Ltd., has worked with international contractors, in the construction of transmission lines and grid substations. They recently established a state-of-the-art galvanizing plant at Sapugaskanda and a large steel fabrication plant with computer controlled precision equipment at Bandaragama in the Kalutara district. 

Mr. Arjun Deraniyagala, Chairman, CEB and Mr. Bjorn Edwardsen, Director Asia region of ENERGIE signed the contract at a simple ceremony held at the Headquarters of the CEB.

Millennium Motor Show 2000

The much awaited Millennium Motor Show 2000 will be held at the BMICH on 22nd, 23rd and 24th of September 2000.

As in previous years, the Ceylon Motor Trader's Association is teaming up with the Classic Car Club of Ceylon to present a breathtaking array of motor cars from vintage versions to the sleek lines of today's modern automobiles, a news release said. 

The membership of the Ceylon Motor Trader's Association comprises brand new franchise holders. The Association was founded in 1919 and is affiliated to the Ceylon Chamber of Commerce which is in existence in Sri Lanka for 161 years being the oldest Chamber. The Association has a representative in the Main Chamber Committee. 

Over this long period of 81 years the Association has been in the forefront of the development of the Motor Industry in Sri Lanka and has always acted in the National interest.

Helping put the glitter on this show are four of Sri Lanka's new lubricant brands BP, Mobil, Shell and Valvoline. 

These international giants are pooling their resources to make this years Millennium Motor Show 2000 an event to be long remembered, the release says.

Among the new car exhibitors at the show will be Sri Lanka's premier automobile companies; DIMO, Prestige, Car Mart, Car Plan, Brown & Co., IWS Holdings, Toyota Lanka, Stafford Motors, United Motors, Senok Automobiles, Sathosa Motors, Associated Motorways, Premier Automobiles, David Pieris Motor Co., Swedish Trading and Uni Walkers.

SriLankan Airlines introduces psychometric testing 

The Human Resources Division of SriLankan Airlines has introduced "Psychometric Testing" and Assessment Centre Interview Technique," which are two sophisticated tools that will streamline and enhance human resource recruitment and development at the national carrier, said Sunil Dissanayake, Head of Human Resources, says in a news release. 

There are different types of psychological tests used in the personality assessment process that has been specifically designed to elicit behaviours and preferences that are appropriate to the work place. 

The P.A. Preference Inventory (PAPI) is a type of Psychometric testing that was first introduced by Dr. Max Martin Kostick in the United States in the early sixties. In 1966, the PA Consultancy Group of the United Kingdom acquired the rights to it outside the US, and worldwide in 1979. 

PAPI is now used by over 500 organizations worldwide, and PA Consultancy has 50 offices in 20 countries. It helps to assess the personality of individuals at management, professional and executive levels by exploring their preferred roles and needs and focuses solely on the personality at work. 

SriLankan Airlines is using pyschometric testing as a tool at the recruitment level, and is also looking at using it as a development tool for staff. 

SriLankan Airlines also uses different types of personality tests on the recruitment of cabin crew, technical crew and other categories of service related personnel. According to Ms. Menik Dias Amaratunga, Manager Human Resources of SriLankan Airlines, the second new recruitment tool, Assessment Centre Interview Techniques, is a procedure of behaviour and personality assessment based on a standard of behavioural indicators. Assessment Centre Interview Technique recognizes that emotional competence or "soft skills" is a vital component of the management philosophy of any organization, with academic abilities being largely irrelevant. The focus is on personal qualities such as leadership, innovation, creativeness, teamwork, empathy and adaptability. Identifying these qualities allows SriLankan Airlines to find star performers among equally qualified persons. Eighteen members of the airline's management and senior management group earlier participated in a workshop on how to conduct Assessment Centre Interviews, where an external trainer trained them on the techniques. 

The assessors observe candidates perform various activities and identify management potential through observations of behaviour. 

SriLankan Airlines has already begun using both Psychometric Testing and Assessment Centre Interview Techniques in the recruitment of new management.

SriLankan Airlines opens outstation office in Galle
Mr.S.K.Wickremesinghe told the media that the office was opened to provide the best service to its customers with minimum inconvenience. 

Many customers book tickets through travelling agencies but have to collect the ticket from Colombo, Mr.Wickremasinghe said pointing out the need of a ticketing office in outstations. Galle was chosen taking into consideration the demand from the Middle Eastern workers in the South. 

Customers purchasing tickets from the new office during September will be entered into a raffle draw for three sets of return air tickets to fly to any destination served by the airline.

The office will be open till 5.00p.m.It will not include cargo handling which will be included if there is a demand. The airline which has expanded to around 35 destinations hopes to open its next ticketing office in Dambulla and Anuradhapura during the year Mr.Chandana De Silva, Manager Sri Lanka and Maldives said.

Cathay spreads its wings
Effective September 2000, Cathay Pacific Airways, Colombo, will change their flight schedule to accommodate a flight departing on Wednesday mornings at 2.15 a.m. This new schedule effectively makes Cathay Pacific the only airline to offer passengers the option of departing from Colombo to Bangkok and Hongkong on a Wednesday, and arriving in Colombo on a Tuesday, Thursday or Saturday.

All passengers will fly on a state-of-the-art Airbus A 330 aircraft to the airline's Super Hub in Hong Kong to make convenient connections out of Hong Kong to any one of the airline's 50 destinations worldwide, an airline release said.

They can enjoy personal TV's in both Business and Economy class and choose from a wide array of specially prepared meal options. A multi national crew including Sri Lankans will be on hand to deliver genuine Asian warmth in the skies.

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

HNB leads tier one capital strength 

Hatton National Bank has been ranked 1365th in the world in terms of Tier 1 capital strength by "The Banker" magazine published by Financial Times. The Banker magazine, in their August 2000 issue has given the rankings beyond the 1000 strongest banks in the world in terms of Tier 1 capital strength. 

HNB by virtue of being the 1365th strongest in the world becomes the strongest private sector commercial bank in Sri Lanka. The Commercial Bank of Ceylon has been ranked 1481st and the People's Bank as the 1644th strongest bank in the world. The Tier 1 capital of HNB of US $65 million as at 31st December is the largest amongst the private sector commercial banks in Sri Lanka, a bank release said. 

Hatton National Bank also has been featured in the top 10 banks in Asia that has shown an appreciable increase in its Tier 1 capital. In terms of the growth in Tier 1 capital, Hatton National Bank has shown a 46.96% growth in comparison to the Tier 1 capital as at 31st December 1998, largely due to the injection of new capital through the non-voting ordinary share issue in latter part of last year and its retained profits for the year. Hatton National Bank is the only Sri Lankan bank which has been featured in the top 10 in Asia, in terms of growth in Tier 1 capital, in the survey carried out by "The Banker".

New SAARC Women Entrepreneur Council 

Sri Lanka's Women's Chamber of Industry & Commerce, the first all women Chamber of Commerce in the world was appointed as the lead organization to set up the SAARC Women Entrepreneur Council (SWEC) at the recently concluded South Asian Business Leader's Summit, 2000, held in Bangalore. The enthusiastic response received means that SWEC should be a reality by the end of this year, which, if it happens would be unique as most member states of the SAARC region do not have a women's Chamber of Commerce, a news release said. 

The SWEC idea has been there ever since SAARC came into existence in 1986. However, things started shaping up only last year when the Federation of Chambers of Commerce & Industry Sri Lanka (FCCISL) of which WCIC is a member, mooted the concept and got it ratified at an Executive Committee meeting in Male early this year.

WCIC, a 125 member organization, started out in 1985 with the sole objective of promoting the special interests of the woman entrepreneur and incorporating them into the mainstream of business activity in the country. The membership comprises of women in business and management.

Three Coins Beer lead new trend

Eight months after it launched Sri Lanka's first locally canned beer, the Three Coins Beer Company has reported that burgeoning demand has resulted in about 25 per cent of its total production now being retailed in cans.

The company in a news release says its investment in a hi-tech canning plant, as part of a Rs 400 million modernisation programme has been the much-needed catalyst for the local beverage industry to take cognizance of a long felt consumer need for affordable canned drinks.

The two-piece, 330-ml. Three Coins cans are made of recyclable aluminium and retailed at less than half the price of their imported counterparts, the release adds. 

Consumers who wanted the convenience of canned beer were forced to buy imported brands at about Rs 90 - 100, because, having lacked the necessary incentives, the local brewers had been too parochial in their orientation to pay much attention to consumer needs - the inevitable outcome of a virtual monopolistic situation, the release says. 

The Group Brand Manager of Three Coins, Ramesh Nonis added: "There was a clear segment of the market that was asking for the utility of the cans, but the industry was dictating terms to the consumers, denying them of the technology that had been around for decades. But, the industry will now find it increasingly difficult to suppress the freedom of choice."

He said the obvious advantages of the cans no deposit as in the case of bottles, easier to store and chill because they take up less space, no breakages, and easy disposability are the key elements that make them attractive in terms of cost: value. Mr Nonis also pointed out that "with giants like Coca-Cola and Elephant House following us in taking the option of canned beverages for the local market seriously, a recycling plant may soon become viable for an investor."

Money Market Update                              First Capital Ltd

The inter-bank call money market and the overnight repo market
As the liquidity shortfall in the market was brought down, the call money rate lowered during the week ended 7th September. The Central Bank pumped Rs. 3bn to the system on the first day of the month through a special bill issue. With the new inflow, we estimate the liquidity shortfall to reduce to Rs. 4-Rs.5bn as compared with the Rs.7- in the previous week. Once again as the liquidity shortfall in the market was addressed by term reverse repos of the Central Bank, the pressure on the overnight money market was reduced. During the week, the call money rate was moving between the boundaries of 14.25% and 12.25%,. However, as most of the transactions were in region of 13%-14%, the weekly call money average plummeted by 68 basis points to close at 13.66%. Following the downfall in the call money rate, a reduction was witnessed in the overnight repo market rates and was in the range of 13%-13.5%. 
Central Bank open market operations
The Central Bank overnight repo and reverse repo rates remained unchanged at 11.75% and 15% respectively. Given the reduced liquidity shortfall, the reverse repo amounts on the Central Bank window saw a decline. On Tuesday, Central Bank reverse repo window released Rs. 4.3bn, and was the only significant amount reported. As the market was generally squared during the reminder of the week no considerable amounts were recorded at the open market operations. 

From next week onwards the Central Bank will be calling for bids from the market for repos and reverse repos. The overnight repo and reverse repo rate will be decided by the market, based on their bids. There will not be any term reverse repos. 

The treasury bill auction.
Rs. 3104mn worth of treasury bills matured during the week and the entire amount was offered to the market. Though the auction in general was oversubscribed the bids received for 91 days was very poor. Given the comparatively higher market repo rates for the same period, investors were reluctant to bid for the 91 days. In spite of Central Bank buying approximately Rs.1000 worth, the treasury bill yield saw spectacular rise. The gap between the one year and two year rate was narrowed. However, the gap between one year and three months yield still remains anomalous. 
Treasury bond auction
In the auction held in the week, Rs.1000mn worth of three year bonds were offered. Though the auction was over subscribed by 5 times, the yield rose. 

However, the cut-out limit was less than the previous week. In the absence of a clear view of the financing of widened budget deficit, investors are likely to be cautious. 

The secondary market activities witnessed a slight improvement as some investors who booked bonds at higher yield sold to the parties who missed, taking immediate capital gains. However, this activity was mostly restricted to two and three year bonds.

Foreign exchange - dollar spot movement
The Central Bank continued further with the unchanged dollar/rupee trading band, buying at Rs. 75.60 and selling at Rs. 79.47. The rupee tumbled against the dollar during the week as the inter-bank call money rate eased. During the week the spot reached as high as Rs. 78.44 before closing at Rs. 78.33/78.39. Three months forward was quoted at Rs. 79.95 to Rs. 80.05, while six months was at Rs. 81.45 to Rs. 81.60. 


Crying out for research 

By Chanakya Dissanayake
The increasing demand for Ayurveda medicine in the USA, European Union and East Asia cries out for a modern research and development facility for the herbal and ayurveda drug industry. This is due to the high demand for ayurveda drugs in the USA, European Union and East Asia. 

Ayurveda drugs are increasingly being tested as remedies for diabetes and certain types of cancer. However, unlike in the case of over the counter herbal medicines often used as dietary supplements, ayurveda remedies that are expected to be used as prescribed medicines need to be approved by the relevant drug authorities. In order to obtain the approval of a state agency such as FDA of USA, the effectiveness and the safety of the drug should be proved in a series of tests.

The main barrier is the high cost of establishing a R& D facility. Managing Director, Link Herbal Products, Dr. Devapriya Nugawela told The Sunday Times Business, the cost of establishing a modern R&D facility geared towards satisfing the international requirements, cannot be borne by either the private sector or the government alone. What we need is a research project jointly financed by both sectors. 

If we are successful in getting the approval for one of our ayurveda drugs, the potential forex earnings will be huge. Many multinationals are already spending millions of dollars on research on herbal Imagemedicines, because they know that the future market is for herbal medicine. He also added that the investment required will be in the range of $40 to $50 million. 

World demand for herbal products has been growing steadily at a rate of between 10% to 15% per annum. Sri Lanka has earned a reputation for high quality herbal products, which are now even being exported to India.

A leading ayurveda/ herbal product exporter speaking to the Sunday Times Business said that "the international demand for our Ayurveda and herbal products depend upon their quality. The quality is mainly determined by the quality of raw materials available to the producer. 

There is a urgent need for a Standard Raw Material Quality Maintaining Authority to independently verify the authenticity of raw materials supplied." Another very important aspect is that the description in the packaging should correspond with the actual ingredient content. For a example Sri Lanka does not have Rath Hadun, so we do not produce any products that require Rath Hadun, but some other manufacturers has been advertising their products containing this ingredient. These bogus products can kill the industry. The recent price inflation of herbs has also created difficulties for herbal medicine exporters. This is mainly due to the short supply arising out of a lack of properly planned herb cultivation in Sri Lanka. 

However some herbal medicine producers including Link Natural Products has entered into outgrower schemes with farmers in rural areas with the assistance of the Central Bank. The technical assistance and the know- how will be provided to the farmer and the cultivation will be done on a buy back agreement.

Dr. Nugawela also added the importance of practising proper advertising ethics in marketing herbal products. 

The distinction between herbal products and ayurveda medicines should be maintained. There is nothing called an ayurveda toothpaste, but if you are using herbs to manufacture it you can call it a Herbal toothpaste. The image and goodwill ayurveda carried for thousands of years should not be tarnished.

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