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A significant drop of pre-tax and post-tax profit has been reported by Lanka Tiles Ltd., for the year ended 31st December, 1995 despite the increase of its turnover by 13.55% from Rs. 246 million to Rs. 279 million.
The Company's pre-tax and post-tax profit dropped by 75% and 82% respectively.
According to the Chairman M. Tennakoon continued inflationary trends affected adversely on the performance of the Company during the period under review.
Eden Hotel Lanka Limited which commenced business in 1995 has reported a net loss of Rs. 59,329,000 for the nine months ended December 31, 1995 inspite of an operating profit of Rs. 15,707,000. The net loss was mainly due to heavy burden on interest.
Favourable financial performance has been reported by the Sathosa Motors. Ltd., for the nine months ended December 31, 1995.
Company's turnover was up by 50% from Rs. 353 million to Rs. 544 million while pre-tax and post- tax profit was up by 40% and 27% respectively.
The year ended December 31, 1995 was not a favourable period for Lanka Ceramic Ltd., in terms of turnover and profit.
Company's turnover dropped by 9% from Rs. 1176 million to Rs. 1072 million and pre-tax and post- tax dropped by 38% and 47% during the period under review.
"The politically instigated crisis which rendered the Company's main production facility at Piliyandala non-operational for over six months during the year 1995, had adversely affected the profitability", Chairman of the Company says.
"An expected recovery in its two key businesses, Haycarb and Dipped Products, coupled with improved performance in the transportation and automobile sectors, will see an earnings growth of 15% in year 1996", according to the "Conglomer Research" issued by the C.T. Smith Brokers Ltd.
The report further states that Haycarb and Dipped Products, accounting for 35% of the Hayleys Group's operating profits, performed poorly in 1993 and 1994, but are expected to rebound strongly in 1996 due to steady supply of low cost raw material and increased demand in major European markets.
Everyone knows that the tourist industry is now down in the dumps, and the hoteliers know it best.
The trade is now asking for concessions from taxes, so they could tide over a difficult period.
So, several tax holidays for hotels may be extended, we hear...
A major private bank which concentrated on strengthening their existing network rather than expanding it will sift gears this financial year.
Their research has told them that while they have a sound deposit base and a good financial performance, they are virtually unheard of in rural areas. Their competitors meanwhile are making good profits.
Therefore, at least a few more branches will be opened this year, the management has decided.
The "bull run" in the Colombo market was nipped in the bud and the bears have taken over, or so it seems.
This trend will continue until late this year, most fund managers have advised their overseas clients.
The power cuts, ethnic war, labour unrest and unstable security conditions will not sustain the market at the 700-level, they say.
By Rajika Jayatilake
The present energy fiasco throttling the economy makes a strong case for privatising the power and energy industry, says Sri Lanka's private sector.
Big and small time industrialists say if the private sector had been running the industry rain or no rain, the country would not be faced with these acute power shortages, for electricity is a commercially providable utility.
A clear case of political inaptitude it is only to be expected that one political party should blame the other. So the PA which has been in power since mid-1994 blames the UNP which cannot shelve the blame completely for power shortages in the mid-1990s were foreseen in the late 1980s, yet nothing was done about it. Industrialists feel that the various politicians who handle the Ministry of Power and Energy over the years have bungled.
There are also the inherent conditions of the power industry that leave access for corruption. Industrialists say large projects inevitably bring with them big bucks for individuals. When a large project surfaces, what becomes priority is not the deal that is best for the country but the one that benefits an individual most, they say.
The other side of the coin is when corruption gets exposed, no decision is taken at all. A case in point is the barge-mounted power plant that would have generated 50 megawatt of power by June this year. Well informed sources say five bids were forwarded for the project at the beginning of 1995. Daewoo Corporation backed by Maharaja group had allegedly won the tender although it is said it was not the most beneficial in terms of national interest. The political pressure here was negated by the outraged Japanese bidder who lodged a protest through another influential politician. Result - no decision has been taken to-date on the issue and the project has been conveniently swept under the carpet, say informed sources.
Patrick Amarasinghe, Chairman of Woodplex and Furnifit and President of FCCISL said in a private sector organisation there is accountability all along the way at every level of decision-making. When the government runs the show, there is nobody responsible for anything, he said.
This is probably why Ceylon Electricity Board Chairman Leslie Herath lashed out at his engineers a few days ago for the prevailing crisis, although being head of the organisation, he is ultimately responsible for the decisions taken by the CEB. It seems to be well-known in business circles that the Engineers Union of the CEB had advised power cuts somewhere in November last year but as a CEB official said the sanction to implement that was not given from the top.
"Politicians and senior Directors of the CEB must take the blame for what has happened." The view was echoed and re-echoed by industrialists. CEO of Asia Capital, Ian Hardy voiced another common opinion, "The middle ranks of the CEB are really good and dedicated."
Many industrialists voiced their discontent as the unsatisfactoriness of the present power and energy setup with a Minister whose preoccupation with national security leaves him no time to even meet representatives of the private sector.
They say it is ultimately the parochial views of the Ministry and CEB officials who have axes to grind, that prevail, to the detriment of the national economy.
The private sector in general finds the CEB attitude difficult to stomach, by blaming consumers now for getting on with their lives when the CEB has acted so irresponsibly all this while. "Why did CEB Chairman who at a BOI seminar last November reportedly spoke of imminent power shortages in 1996, do nothing till the country had come within sight of a total blackout? asked many industrialists (Others say CEB planning has been less than professional, assuming that consumers will let their lives grind to a halt. Even a child would have assumed people will work their programmes around the power cuts, they say.
A Director of a blue chip company commented, "Poor business principles have been involved in all this." Apparently a lot of businessmen who imported generators are still only using them as a stand-by facility. Thus the pressure on the national grid has not been reduced. Industrialists say, CEB instead of offering concessions, should have bought up the generator capacity from the private sector.
Small entrepreneurs say most of them cannot afford generators and it makes no sense investing in them as they bring no return. Lanka Monthly Digest Managing Editor, Hiran Hewavisenti said small entrepreneurs are deeply disappointed with the government. "Promises were made on the political platform to assist small businessmen but they have been simply ignored in this power fiasco," he said.
Mr. Hewavisenti said a lot of time seems to be wasted in Parliament on bribery and corruption and going into past assassinations. But very little is being talked about the power crisis and what must be done to counter it. Businessmen feel the government and opposition prefer to ignore the issue till the catchment areas fill up and the situation is not critical any more. Mr. Hewavisenti says the chaos in government planning could not be more telling than the pronunciation of 1996 as "Productivity Year". "And all the while the government was aware 1994-95 and 1995-96 were predicted to be critical years for energy in the country. Why couldn't they have delayed "Productivity Year" and instead have made this "Energy Year?" he asks.
Most industrialists are critical about the non-existence of a national energy policy. Governments may come and go but the national energy plan has to be implemented whoever holds the reign of power, they say. "There must be a vision first and then planned action to make the dream come true," said a Director of a blue chip company.
The private sector in general is critical of Sri Lanka's over-dependence on hydro power, specially the large projects. They advocate mini-hydro power schemes, the use of coal power, solar power and wind power, which are all practical projects. Industrialists are heavily critical of environmentalist lobbies which suppressed a 'long overdue' coal power project.
They say Sri Lanka cannot afford to take the same stand on environment as the developed west which is now on a different plataeu of growth and development and long since passed the stage we are in. "There has to be a definite balance between environment and development," says Patrick Amarasinghe. Most entrepreneurs feel as long as we minimise damage and stick to international norms, environmentalists should have no say in the matter.
Most industrialists agree there is hardly any purpose blaming individuals or political parties or harping on past misdoings and corruption. "Now, the main issue is to take a decision and see it through." They advocate calling for international tenders and cutting down on bureaucracy and getting down to business. "Things should not be allowed to drift so it becomes like another project where financial negotiations have been going on for the past five years," said a well-informed source.
The private sector says politics and politicians should stay out of this issue, as they should in most issues, and leave it to the professionals to implement policy decision. "Political bungling has always been the order of the day in Sri Lanka", said one angry industrialist who can barely operate his factory more than three hours a day, these days.
However, deeper-thinking entrepreneurs, although they whole-heartedly agree privatising the energy industry, would increase efficiency, say it, "should be done carefully and cautiously" in the interests of the less privileged people of the country.
Yet, with all the pros and cons of privatising, the energy situation in the country could hardly be worse, with the economy in very real danger of grinding to a standstill.
One infuriated industrialist said, "Before privatising energy, why don't we privatise politics and make it more efficient, so it will get things moving".
Most industrialists feel the government should play a more focused role in the power and energy issue streamlining and reducing bureaucracy, so things will get started and also making the public more aware of the gravity of the situation, so they would become more-committed to power conservation and seek alternate sources of power.
"If I were the government, I would get up and get on with an energy plan. Things ought to get better for they surely cannot get any worse than this," said CEO Asia Capital, Ian Hardy.Continue to Business page 2
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