By Ruwanthi Ratnayake
The Sunday Times Celltel Business Club had yet another informative meeting on May 20, at the Colombo Hilton. Registration took place as usual from 5.30 p.m. onwards and it was seen many of the members were not present, but those who did arrive, came after a hard day's work, giving this event priority in their busy schedules.
Ms. Sashi Fernando, Assistant Manager, Marketing Communications and Public Relations, Celltel, welcomed and thanked the members who had taken time off to attend the meeting.
Soon afterwards Bill Campbell spoke on "Computers in Advertising and Marketing Communications". Mr. Campbell jovial by nature and having many years of experience in advertising and marketing, made his presentation very interesting by conducting it on his Lap Top Computer and transferring it on to a screen through a projector. It was not the same old, boring transparencies, we could say.
He spoke of the impact of computers on people's lives. It is something that people have to face sooner or later, because computer technology is part of our day to day lives whether one likes it or not. Interactive television in Asia, Bar Codes, Satellite television, Magnetic Strips on credit cards, Micro Processors are all included in our day to day work. "However, in Sri Lanka, not a single establishment does bar coding", he said.
According to Mr. Campbell, in Singapore if one passes over a particular place, a transmitter in the car debits one's bank account for driving over the restricted area. This is how advanced technology operates at the moment and the people will have to come to terms with it, he observed. When discussing advertising and marketing, he emphasised an important message: "The sole purpose of a business venture is the creation and retention of a customer". This was an important message for the young members of the Business Club.
On the whole, the presentation was innovative and it had a certain flair which made it different from others, thanks to the easy rapport Mr. Campbell had with the audience.
At the end of the presentation, a Vote of Thanks was proposed by Ms. Fernando, where she asked the members to feel free with their suggestions and ideas as well as constructive criticism. That's not all, "There will be a very pleasant surprise from Celltel at the next meeting", she added. So, all you members who were absent, be sure to be there at the next meeting, to find out.
It was ironic to see some of the screaming headlines in last week’s newspapers’ screaming in opposite directions. Just inches away from a headline that read something like “Total Blackout Two Weeks Away” ran another that read something like “Sri Lankan Economy Set For Takeoff.”
This was not only ironic but also characteristic of the government’s approach to economic development and policy formulation. From what we’ve seen in the past few months, it seems that the government does not clearly understand the crucial link between good energy infrastructure (which means reliable power generation capacity) and economic development.
On one track, investment promotion missions move into high gear with the President herself travelling with the missions to hold high level meetings with her Chinese and Japanese counterparts. On the other track, the Ceylon Electricity Board (CEB) and the Ministry of Power & Energy, in the face of continued drought and a subsequent total blackout, lift the power cut for the entire Vesak week and allow (if not encourage) people to light countless numbers of coloured lights for several nights consecutively.
To resolve this power crisis in a sustainable manner, planners and policy makers must have a good understanding of the economic impact of the loss of power. This involves identifying the losses associated with power cuts and estimating the value of these losses. It is only by monetising these losses in such a manner that the government can more clearly understand that all the investment promotion, productivity enhancement, and other development related activities will be undermined by the huge power generation constraint.
Here are some of the losses that should be identified and valued under the “without power” scenario. The first thing that comes to mind is the revenue loss associated with reduced productivity. Under the current power cut, many factories and offices are working for fewer hours and at a lower level of efficiency. Another important factor is the cost of buying and operating a generator. Although this option reduces the loss of productivity the capital cost and operating cost associated with buying a generator are very high and have put many companies that are already in dire straits badly in debt. The third factor that can be identified is the revenue loss to the CEB. As it stands now, the entire island is experiencing 6 hours of power cuts per day, 4 of those hours at peak time. This will translate into a more than 25% reduction in the CEB’s revenue.
The previous paragraph outlines the direct impacts/costs of the power cuts. There are, however, many indirect impacts/costs that will increase in intensity the longer the power cuts continue. The revenue loss associated with decreasing productivity will result in a considerable drop in savings; this will translate into a similar drop in investment. Some of the smaller manufacturers that cannot bear the cost of buying and operating a generator will start losing their orders (particularly export orders) and might have to close down operations; this would translate into loss of employment, foreign exchange earnings, etc. If the revenue losses to the CEB continue, it will have to borrow heavily from the Treasury to make ends meet; this will result in increased government debt. All these impacts will build heavily on the already gloomy business climate prevailing in Sri Lanka and serve a deadly blow to investor confidence.
According to the 1995 Central Bank Annual Report, total sales of electricity has increased in the past few years by 10% each year while installed electricity generation capacity has stayed constant at 1,409 MW since 1992. It is, therefore, no surprise that we have finally come to the end of the road with our current electricity generation capacity. There can be no quick solution to this problem (contrary to popular opinion, the rains will not solve the problem but will only ease it temporarily). The only long term management strategy is to understand well the relationship between energy infrastructure and development potential and, on this basis, choose and develop the most cost effective and environmentally sound power generation alternatives.
International studies have come up with a very general estimation of a US $1 loss for every kilowatt hour of generation lost. It is a very appropriate time for an economic research outfit in Sri Lanka to take on the task of estimating the economic effects of the power lost as a result of the current crisis. It is a complex task but one which is necessary to give the government a foundation on which to build a sound and sustainable power plan.
By Ruwanthi Ratnayake
A new plant capable of meeting 25 per cent of the imported cement demand in Sri Lanka will be set up here with Japanese investment, the Tokyo Cement Company said last week.
The plant will be built by a subsidiary company, Fuji Cement Co. (Lanka) Ltd at a cost of Rs. 580mn. It will produce 250,000 metric tonnes of cement using imported clinker. Tokyo Cement Company itself produces around 250,000 metric tonnes of 'Mitsui' branded cement a year. "Currently about one million tonnes of cement are imported annually,' Tokyo Cement Joint Managing Director, S. R. Gnanam said. The production will amount to 25 per cent of the annual cement imports and will save around US$ 2.5mn (Rs. 130mn) a year when fully operational Mr. Gnanan added.
The plant will be located at Cod Bay, Trincomalee. The fully computerised plant, set up with BOI status will employ 150 persons. It will become operational in mid-1997. Finance is provided by equity and internally generated funds. Contracts for the supply of machinery has already been awarded, company officials said.
Tokyo Cement Company also announced a bonus issue of one share for every two existing shares. This will increase the issued capital of the company from the present Rs. 50mn to Rs. 75mn. It has also revalued its plant and machinery, creating a capital reserve of Rs. 275mn.
The new cement plant will have its own power generation plant with a capacity of around 3 Mega Watts. Mr. Gnanam said excess power will be sold to the CEB.
By Business Bug
Colombo's stock are holding steady at the 650-level even though the anticipated fallout from a hung parliament in India didn't materialise.
But this may not last long, analysts say.
One fund manager has advised investors that the crunch will come around August. Second quarter corporate performances will be known by then and they would be downhill due to the power cuts and stocks will dip even further, it has been predicted.
At least one Colombo blue chip is planning to launch a new marketing campaign - on the information superhighway.
This company feels promoting itself on the internet will bring more business, at least for this hotel industry subsidiary reeling from the effects of a decline in tourism.
So, the proposed great leap forward in marketing is planned for June.
It's no secret that beer sales have sky rocketed since a reduction in taxes late last year.
While brewaries are cashing in on the increased demand, other people in the industry are a worried lot.
One leading manufacturer of stronger spirits wants to reduce production, anticipating a lower demand this year. The alternative, of course, is to maintain production levels but target an export market, they say.
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