18th March 2001
Front Page
Editorial/Opinion| Plus| Business
Sports| Mirror Magazine
The Sunday Times on the Web

Beef sales have dropped from 150 kg a day to 100 kg a day, says this stall owner. Pic by J. Weerasekera

Contents Index Page
Front Page
Mirrror Magazine


Tea time in the plantations

By Feizal Samath

The tea industry heaved a sign of relief last week after a 25-day work stoppage, intimidation of superintendents and disruption of supplies by workers ended with unions winning demands for a wage rise but the problems are not yet over for the trade.

"We still have to counter concerns by overseas buyers of Colombo possibly becoming an unreliable centre in terms of ensuring regular supplies at shipments," said the head of a local tea brokerage. Colombo is the world's largest tea auction centre.

Sena Seneviratne, secretary-general of the Planters Association, noted that more than the financial fallout from the Ceylon Workers' Congress (CWC)-led protest, the trust built between workers and plantation managers since privatization would take a long time to mend.

"We see workers as partners and we have strived to build this relationship. It is sad that this protest has eroded this trust. There were no winners in the crisis. Only losers," he said. "We have to work together. We need each other if estates are to prosper."

The satyagraha and go-slow campaign by the CWC in lieu of a strike since a strike is barred under the collective agreement with plantation companies ended with Labour Minister Alavi Moulana, treasury officials, unions and companies thrashing out a deal after six hours of talks on Thursday.

Ramiah Yogarajan, a CWC spokesman, said estates had returned to normal at the weekend. According to the deal, plantation companies have agreed to a monthly supplementary wage ranging from 375 rupees to 500 rupees per worker, which the CWC said was satisfactory.

The CWC had been on a go-slow and protest campaign since February 19 in support of demands for a wage hike for close to 400,000 workers to offset rising living costs. The protest, extending to a strike in some estates, crippled tea production and triggered fears that the Colombo tea auction could eventually run out of supplies.

Plantation analysts said companies backed the government's call to end the strike but accused CWC leader Arumugam Thondaman of bullying the state into accepting the union's demands.

They said threats by Mr. Thondaman to resign from the government and the protest being held during the period of the budget were all attempts by the CWC to win their demands by hook or by crook, a claim not denied by the CWC. Government ministers were also worried that with President Chandrika Kumaratunga and Prime Minister Ratnasiri Wickremanayake being out of the country, the crisis could have deepened if the CWC's March 16 midnight deadline to meet their demands was not met.

"Mr. Thondaman walking out of the government with his five MPs could have precipitated a constitutional crisis and a possible collapse in the ruling People's Alliance," said one analyst.

The main opposition United National Party (UNP) watched from the sidelines as a crisis grew.

Mahendra Amarasuriya, chairman of the Planters Association, said losses to plantation companies during the protest was close to one billion rupees. "It was supposed to be a satyagraha but it was a go slow which was worse than a strike as we had to pay the workers for doing nothing."

He said if the crisis continued it would have been disastrous and resulted in a shortage in supplies at tea auctions later this month.

What was worse was the law and order situation and the police doing nothing about it." At least 10 planters were held hostage and supplies to Colombo blocked by workers.

R.L. Juriansz, chairman of the Colombo Tea Traders Association, said some international buyers began looking for other supply bases following fears that shipments would get affected. "It was a serious crisis and let's hope we won't another one like this." Tea brokers said Colombo was always known as a well-regulated, well-run and on-time market but the latest crisis has cast a shadow over the Colombo auction.

Last year there were three work stoppages in estates, which also disrupted supplies, forcing buyers then to purchase from other centres. "This is a situation we should avoid," said one broker. On the other hand the latest deal with the unions is no guarantee that, in case there is another sharp rise in the cost of living this year, workers would not demand a wage hike. "We have to start negotiating a fresh collective agreement by January since the current agreement ends in mid-year July. I hope there are no more demands till then," said Mr Amarasuriya.

Mind Your Business

Blue chip wage hike

The budget turned out to be a damp squib for the hoi-polloi and a headache for the corporate fat-cats who have been burdened with increased taxes.

As for the much promised wage hike, that was a non-event with the masses being told to tighten their belts probably until next year. The red unions see this as a blessing in disguise and want to continue their protest campaign for higher wages- beginning with the private sector.

But some blue chips are smarter and will soon announce salary increases for all grades we hear- the rationale being that prevention of labour disputes is better than curing them.

Hills cool down

But in the plantation sector, such generosity is conspicuous by its absence with the employers launching an electronic and print media campaign to prevent just such a thing.

Where will this dispute end?

Politically, the powers that be are said to be divided in their opinion with even the man in charge of the subject believing that the grandson is demanding too much.

Even so, instructions have already been issued to the boys in the treasury to do their arithmetic and calculate how much the four hundred-rupee wage hike is going to cost. And that is because the lady believes this is not the time to rock the ship of state.

(footnote the protest was called off on Thursday after a fresh deal between unions and estate managements)

Making hay

Whatever squabbles there may be with regard to the umpiring, cricket tourism seems to be becoming a tremendous boost to the hospitality industry.

The current English tour with its army of British supporters has gone on without a snag-in tourism, of course- and tour operators are receiving many queries from London so much so that some hotels are already booked for the winter season.

Others however are not very optimistic. All this is while the ceasefire lasts and the next bomb explodes, they believe.

Beef-eaters chicken out

Meat consumption falls, amidst cattle disease fears

By Hiran Senewiratne

Beef consumption may be falling in Sri Lanka but it is not entirely due to the scare over Mad Cow or Foot and Mouth diseases and fears that infected beef imports from Europe could still get through despite tight beef screening procedures here.

A combination of factors including high costs, religious sentiments, health concerns, the growing lobby by the vegetarian society and lastly fears over Mad Cow have led to a drop in beef consumption in some cases as much as 30 percent in this country, a Sunday Times Business survey found.

"Chicken has become the preferred meat in Sri Lanka and cost-wise too it is cheaper than beef or fish," says Dr. D.D. Wanasinghe, chairman of the All Island Poultry Association (AIPA).

Beef prices range from 140 to 170 rupees per kg at street stalls and supermarkets compared to chicken which retails at between 135 rupees to 145 rupees per kg.

Chicken prices have in fact risen in the past two months from the 125 to 130-rupee range as a result of rising demand due to the high cost price of fish.

But fears over Mad Cow and the Foot and Mouth outbreaks in Britain and possible imports to Sri Lanka - whatever authorities might say about a ban on beef imports from Europe - has triggered a general hesitancy about beef eating in a country where Buddhists and Hindus generally avoid eating beef.

"Is this meat imported?" asked a consumer, who was buying a meat sandwich at a Colombo restaurant last week. It is a common issue among many local consumers even though infected meat from Europe is strictly banned here unless it comes in secretly through a third country source under a bogus country label.

Dr. S.L.A. Daniel, Additional Secretary to the Ministry of Livestock Development and Estate Infrastructure, said there is no reason to panic over the UK crisis as foot and mouth has been prevailing for decades. British authorities said on Friday that more than 100,000 head of cattle had been destroyed due to a major outbreak of the Foot and Mouth disease, the worst in many years, and the possibility of thousands more being killed due to the infection.

Dr Daniel said that Sri Lanka has not imported meat from Europe since 1996 with imports only coming from Australia and New Zealand. But the ministry - like many Sri Lankans - is not taking chances. In a statement on Thursday, the ministry said it was taking preventive measures.

Among these is the screening of all passengers arriving on flights from UK for possible contact with infected animals, food items carried by them originating from animals to be destroyed, airline garbage to be properly disposed and pigs on farms which are likely to be infected being vaccinated in the event of the virus entering the country.

Beef stall owners at the Borella and Kollupitiya markets grumble that their sales had dropped by more than 30 percent due to the Mad Cow scare, resulting in a sharp drop too in income levels.

Stall owner M. Rajabdeen also believes that a financial crisis - the fact that people don't have much money in their hands - has led to a drop in sales in addition to many other factors. "My sales have fallen by 100 kg of beef per day from 150 kg," he said noting that people have become more health conscious because of worries that beef has high cholesterol content.

Y. Nelson, another beef trader said his sales had dropped by between 30 to 50 percent in recent months. He said the Colombo Municipal Council (CMC) kept on increasing official fees by 5 percent regularly, which puts more pressure on businesses.

He said their beef came from the government slaughter house at Dematagoda where strict precautions against disease are taken. CMC officials said the municipality releases 20,000 kg of beef a day to Colombo with an average of 75 head of cattle being slaughtered per day.

The average monthly household beef consumption is 548.04 grams, according to a 1995/96 survey by the Department of Census and Statistics. The data also showed that the percentage of households reported to be consuming beef was 14.4 percent of the country's population, while 19.8 percent consumed chicken, 3.1 percent mutton, 1.7 percent pork and 1.6 percent liver.

Kapila Hettiwala, senior Operations Manager at Keells Supermarkets, said there is a drop in beef consumption due to the epidemic outbreak in the UK which has affected local consumption patterns.

He said many of their customers switched to chicken or fish due to these fears. Keells imports small quantities of beef from Australia and New Zealand.

Executive Director of Bairaha Supermarket, M. Riyal said there has been a slight increase in chicken sales and believes this is because of fears over the UK beef crisis.

Sampath Weerakoon, manager at the Park and Shop supermarket, said the demand for beef had fallen due to health reasons and on religious grounds.

The McDonald's fast food outlet enlightens the public - through advertisements - on the safety of their meat products as a result of social responsibility and also to avoid any drop in sales. "People ask us whether the beef is from Europe," said McDonalds marketing manager F. Shakoor.

He said their meat products came from Australia with the Australian government's certification on beef imports.

AIPA's Wanasinghe said that intensive anti beef campaigns and the lobby of the vegetarian society also discouraged beef consumption. "Many people are also health conscious as doctors advice patients not to eat beef since it was high in cholesterol," he added.

New menu from Levers

Unilevers, the international consumer products conglomerate, will soon produce and sell jams, sauces, chicken soups and noodles, a company spokesperson said.

These products were handled by CPC Lanka Pvt Ltd, a Best Foods subsidiary. Best Foods, an international food chain, merged with UK-based Unilevers late last year but the deal was formalized this January.

Unilevers sells a range of popular soaps, toothpaste, Liptons tea and Walls ice cream, and controls a sizable share in the local market. The spokesperson said CPC Lanka products would now come under the Unilevers umbrella providing a bigger range of consumer products under the Unilever label. The Unilevers-Best Foods merger resulted in the formation of one of the biggest food conglomerates in the world. Kist, a famous local brand originally came under the Pure Beverages Ltd stable of products until the company sold out some of their products some years back.

Wanted: New laws for government to stick to budget deficits

The Sri Lankan government's constant inability to stick to proposed budget deficits, has given rise to the need for new laws to make the government fulfil its obligations via the budget.

Sri Lankan economist Arjuna Mahendran, head of research at SG Securities, Singapore, speaking at a budget seminar last week, said a "Fiscal Responsibility Act" - prevailing in some countries - is the best answer to government over-spending.

The Fiscal Responsibility Act is in use in New Zealand, India and Argentina. Once passed by parliament, it creates a legal responsibility for the government to maintain the fiscal deficit it proposes in the budget. If the government exceeds the approved deficit, action can be taken against the state.

In India, the Fiscal Responsibility Act creates a legal requirement for the government to reduce the budget deficit to two percent in four years.

According to analysts, this law could also prevent election extravaganzas of ruling governments. The Sri Lankan government in September and October last year (prior to general elections) exceeded the budgeted monthly fiscal deficit by 12 percent and 16 percent respectively. This is almost entirely due to an increase in current expenditure by way of election handouts given by the government. Sri Lankan economists have been pointing out that in recent years the government has been losing control of current expenditure and sacrificed capital expenditure to balance the budget. This trend is recognised as a major reason for the country's slow growth. The public investment in infrastructure has fallen from 7.4 percent of GDP in 1996 to 6.4 percent of GDP in 1999.

High licence fee: dialling-up for destruction

By Chanakya Dissanayake

The government's plan to raise $150 million through the issue of telecommunication licences, announced in the recent budget, could deter telecom infrastructure development and expansion of telephones in rural areas.

According to analysts, the massive licence fee could remove the only incentives for the telecommunication companies to invest in Sri Lanka's rural countryside.

The budget proposals envisage raising this revenue through an open bidding process for a second fixed wire line operator, and for a second international voice gateway (currently a monopoly enjoyed by SLT-Sri Lanka Telecom).

"Already the corporate market and the high net individuals in suburbs are well covered by existing telecom operators. The room for expansion lies in the rural areas," says Mahinda Ramasundara, technical director of Sri Lanka's largest private telecom operator, Suntel.

However he noted that the capital investment required for a rural expansion was massive. "The investment needed for a rural operation is very high, and the likelihood of recovering the investment from the rural domestic customer base is very low," he added.

According to Mr.Ramasundara, the only way to encourage private operators to invest in rural areas is to provide them with an additional revenue channel to offset losses on a rural operation. "The commercial viability can be improved by offering an incentive, maybe the international gateway, for an operator who is willing to invest in rural areas."

According to a leading telecom analyst, to recover a licence fee of $150 million, any operator would have to lay almost two million telephones which is highly unrealistic given the size of the market in Sri Lanka. After five years of operation both Suntel and Lanka Bell have only been able to install 72,000 and 28,000 telephone lines, respectively.

The licence fee also exceeds the current investment of many private operators. Suntel has invested $100 million so far and the mobile phone operators have invested $50 million-$60 million each.

As a global trend, governments are moving towards a low licence fee regime to promote long-term growth. Initially, when telecom licence bidding was introduced in Europe, governments oversold the licences to generate massive revenues to their coffers. However, many companies found that they were strapped for cash for investment after paying high licence fees.

Analysts also point out the Indian experience where the government initially sold licenses for very high prices but later realised the companies were cash strapped for crucial investment. The Indian government later rescheduled the fees to allow companies to retain funds for investment.

They said the rapid development of the telecom infrastructure on a countrywide basis, is an important prerequisite for the growth in the IT industry.

Sri Lankan IT experts have being trying to convince the government on this salient fact for many years. According to them, India's astonishing growth in the IT industry is mainly due to bold steps taken by the government to develop telecom infrastructure in rural areas.

"Infrastructure development should never be viewed as a short term revenue generation exercise for the government. In a developing nation like Sri Lanka, the focus should be on unleashing its growth potential by making infrastructure available everywhere," said Anura de Silva, an e-commerce consultant.

Only 25% of human potential used in organizations

By Akhry Ameer

"The biggest problem in organizations is that they presently use only 25% of their employees' human potential. This is because organizations and employees don't know who their employees really are," noted Herman Gothan, a corporate trainer from South Africa at the launch of a new corporate training programme in Colombo recently.

Mr. Gothan was introducing Human Progress Solutions (HPS), a re-engineering programme to make people gauge their potential, to be conducted by the Worldview Institute in Sri Lanka.

The HPS process is called Brain Profiling, a technique that maps the brain of an individual producing a detailed analysis of the individual's personality. Invented by a South African scientist, Dr. Kobeus Neethling, the brain profile categorises the brain into four quadrants associating certain preferences or strengths with each of them. These preferences include preciseness, proven structures and systems, opportunity to experiment, feeling focused, empathy, etc.

With the help of a patented software known as the Neethling Brain Instrument, data about an individual is collected using a set of questionnaires and is analysed and mapped by the software to produce a brain preference profile. The preferences are scored on a 300-point scale denoting an average of 75 per quadrant. Interpreting the scores, a quadrant scoring the highest above the average of 75 is considered to be a preference quadrant thus the individual is said to have the prescribed preferences of the quadrant.

As the profile is scientific in nature, expert counselling of a professional such as Mr. Gothan is required who would then interpret in detail and provide solutions to problems such as motivation, productivity, etc. Mr. Gothan in his HPS programme generates a preference profile using the Neethling Brain Instrument and counsels each employee while providing multidimensional exercises and monitoring their progress in keeping with the organizations goals.

"This is not only for employees in organizations, you could also analyse an individual wanting to become a pilot whether he has what it takes to become one" said Mr. Gothan, explaining its diverse applicability in a demonstration of a general profile on a member of the group that listened to the presentation.

The HPS will be conducted through the Worldview Institute who would collect the data and transmit electronically to Mr. Gothan in South Africa and receive the report on behalf of the local client before any counselling programmes are arranged.

Worldview Institute organizes and conducts intensive residential seminars, workshops, in-house training and project visits based on terms of reference and specifications from client organizations. It is a subsidiary of Worldview International Foundation, which is present in Oslo, Singapore, Karachi, Kuala Lumpur, etc. Locally it is a partner of a network of organizations that include YA-TV, Pan Lanka, Media Solution and Worldview Global Learning.

Reserves fall, output down in 2000 CB

Sri Lanka's balance of payments deteriorated, foreign reserves fell and agriculture output dropped sharply last year as a combination of factors including an expanding defence budget and adverse weather conditions dragged down the country's economy, the Central Bank said in a report.

The balance of payments deteriorated in 2000, showing a deficit of $ 516 million owing to an extra $400 million being spent on costlier oil imports and $285 million on a rising defence bill. "A turnaround is expected in the balance of payments with a surplus of $140 million in the overall budget in 2001," the Central Bank's report on recent economic developments based on the country's economic performance in 2000, noted.

Gross foreign reserves - which represents both government and Central Bank balances - fell to $596 million in 2000 from $1.0 billion in the previous year but the reserve position is expected to improve this year to $1.5 billion, the bank said. The reserves' position five years ago, in 1995, was $ 2 billion.

Sri Lanka's reserves fell sharply last year due to a shortfall in export proceeds and an increasing import bill. In January this year, the Central Bank allowed a free float of the rupee, helping authorities to build up foreign reserve positions Agriculture output grew by only 1.2 percent last year, decelerating from a growth rate of 4.5 percent in 1999 due to a fall in paddy and rubber production. The report noted that tea production however rose - as has been the case since 1992 - to 306 million kg last year from 284 million in 1999.This is the first time that tea - the main export crop - has surpassed the 300 million kg mark.

Deputy Finance Minister G.L. Peiris told parliament, while presenting the government budget, that economic growth may slow to 4.5 percent this year from 6 percent in 2000 due to lower agricultural and manufacturing production.

"A slow growth in agriculture due to adverse weather conditions, slower growth in manufacturing and an associated reduction in the growth rate in trade and other services are expected to be the major factors for lower growth in 2001," he said.

Rubber production eased by eight percent to 89 million kg in 2000 as depressed prices in previous years had a negative impact in fertilizer application. Production is expected to rise by seven percent to a projected 95 million kg in 2001 due to an improvement in prices last year, the report said.

Paddy output at 2.9 million tonnes, showed a marginal decline from 1999 trends with production further expected to fall this year due to adverse weather, the bank said adding that coconut output rose by eight percent to 3.1 million nuts in 2000 which was the best ever performance on record.

The report said that the average import price of crude oil rose sharply by 49 percent to $ 28.39 per barrel in 2000 as international oil prices remained high during the year. Auto diesel prices increased by 86 percent to 24.50 rupees (about $0.75 cents), which together with a more than 50 percent rise in household gas prices triggered a spiral effect in the cost of essential consumer goods.

The sharply rising cost of living has led to strikes, protests and demonstrations by trade unions and opposition parties, demanding a wage hike to offset high living costs.

The Central Bank said while the overall budget deficit was reduced to 7.5 percent of GDP in 1999 from 10.1 percent of GDP in 1995, the deficit last year rose to 9.8 percent mainly due to rising expenditure on the war.

Government spending which eased to 25.1 percent of GDP in 1999 from 30.5 percent of GDP in 1995, rose to 26.6 percent of GDP in 2000. Revenue collections fell to 16.4 percent of GDP in 2000 from 20.4 percent of GDP in 1999 partly due to the rationalisation of the tax system where the government has encouraged private investment and reduced the tax burden on the people, the report added.

Export earnings last year totalled $ 5.5 billion, up 20 percent from 1999 figures. Textiles and garments, tea, machinery, mechanical and electrical equipment, rubber based goods and diamond and jewellery were the main export items. Garments accounted for 54 percent of the value of exports while tea represented 13 percent of total export earnings. Import costs totalled $ 7.3 billion in 2000, up by 22 percent from 1999 mainly due to aircraft imports by national carrier SriLankan Airlines in the past two years.

The report said the trade deficit widened to $ 1.8 billion compared to a deficit of $1.4 billion in 1999. Private remittances, which consist of mainly remittances by Sri Lankans working in the Gulf, rose by nine percent to $1.1 billion in 2000 while foreign direct investment flows rose marginally to $203 million from $201 million in 1999.

Th report said that net foreign exchange earnings from services fell sharply to $ 38 million in 2000 from $ 147 million in the previous year due to an eight percent fall in tourism earnings, a two percent drop in transshipment cargo following rising competition from neighbouring ports and higher payments on freight services.

In a stockmarket hit by political and economic uncertainty, foreigners were net sellers with an outflow of $ 45 million in 2000 compared to $ 13 million in the earlier year, the report said adding however that with the restoration of macroeconomic stability, a net inflow of $ 25 million is expected this year.

Local firm launches new fruit packing

By Chanakya Dissanayake

For the first time a Sri Lankan packaging material manufacturer has introduced polyethylene packaging to reduce the high levels of transport and storage losses for fruits.

According to market research carried out by McBolon Polymer Ltd, 40 percent of the total fruit and vegetable production in Sri Lanka is wasted before it reaches the consumer. The damage sustained during the transport process and bad handling throughout the supply chain are cited as the main reasons for high level of wastage.

McBolon Polymer Ltd, a local subsidiary of Mclarens which is also the agent for Mobil oils, is manufacturing a polyethylene based packing branded "McForm Net", especially designed to protect vegetables and fruits. Polyethylene nets are a popular form of packaging for agro-produce in Australia and Europe.

The McForm Net has been test marketed amongst farmers in Embilipitiya, an agro-hub in Sri Lanka. Company officials have identified papaw and banana farmers as the main focal point in the marketing campaign. According to government figures, 100,000 tonnes of the banana harvest, amounting to Rs 200 million is wasted annually in Sri Lanka.

Percentagewise the wastage is highest in papaw, where 40 percent of the harvest is lost before it reaches the consumer.

"We are currently educating farmers on the economic benefits of presenting their produce in proper packaging to the market. Today the traders are discounting the wastage and offering a lower price to the farmer," Director, McBolon Polymer, Trevor Reckermann said.

"The farming community could easily attract a higher price for their produce by using proper packaging material," Reckermann added.

However, the company concedes that the Sri Lankan farmer's lack of financial resources was a major obstacle towards popularising packaging material. "Right now, we are supplying the Net at cost price to the farmers. But, we expect government agriculture officials to also join in, since this is a national issue," said a company official.

McBolon Polymer Ltd also held a workshop for farmers supplying their produce to the Dambulla Economic Centre, the main agro-hub in Sri Lanka. " We are teaching farmers the value of dressing the bride for the market. Farmers are supplying their produce at wholesale prices, without grading and they are complaining of low returns," said Harsha Karunarathna, Product Manager, McBolon. "As a market norm, quality always attracts a higher price".

Reckermann also points out the need to educate the consumer, on the difference between a fruit with the packing and one sans the packing. " The packing is an assurance of quality. The consumer could be sure that the fruit is not damaged during transport and it represents value for his money". He further added that once the consumer recognises the added value and is prepared to pay extra for it, the benefit could be passed down the supply chain to the farmer.

Money Market - First Capital

T Bill auction

Period [DD] 91 182 364

Last Week 18.63 18.77 18.47

This Week 18.62 18.52 18.45

Change [0.01] [0.25] [0.02]

The Inter-Bank Call money market and the Overnight Repo market

During the short week ended 15th March, the pressure in the inter-bank money market was slightly eased and the call money rated droped marginally. With the reduced borrowing amounts in the inter-bank money market, the gap between the call money rate and the Central Bank's reverse repo rate was squeezed. In the week ending Thursday, the gap was less than 100 basis points. With the availability of the revolving credit facility to the government, the liquidity shortfall in the market was reduced to Rs. 30-31Bn levels from Rs. 34-35Bn, of the previous week. The weekly call money average eased by approximately 17 basis points to 22.43% from 22.60% of the previous week. A similar trend was witnessed in the term money market too. One-month term money was quoted at 20.5-21.50%, as compared with the 21-22% of the week ago.

As the Central Bank Open Market rates remained same during the week, the market repo rate held between 21.75~22%. At the higher end most of the players reached the Central Bank.

Open market Op.

In spite of the market anticipation of a further reduction in the Central Bank's Open Market Rates, no change was witnessed. Hence, the Central Bank's repo and reverse repo remained unchanged at 19% and 22% respectively. Though the liquidity shortfall depicted a modest reduction, the Central Bank's reverse repo window had to release Rs. 131Bn, averaging Rs.32.8Bn a day in order to keep the market squared. The Central Bank will be the main lender in the market till the existence of the liquidity shortfall in the money market and it will continue to guide the interest rate structure.

T' Bill auction

Rs. 4240Mn worth of treasury bills were matured and offered in the auction held on Wednesday. As the investor sentiments towards the bills remained somewhat bullish, the auction was well subscribed by the investors. However, as usual most of the interest was for 364 days category.

Given the heavy demand caused by sustained investor interest for 364 days category, the treasury bill yields were inverted in the auction as the 364 days yield came under 91 days yield. As the market envisages that, any further reduction in Central Bank's open market Rates will help consolidate the investor sentiments.

T' Bond Auction

For yet another week, no bond auction was held during the week. However, the cautious buying interest pushed the two year bond yield slightly high to close at 19-19.25% as compared with the 18.00%~18.50 in the previous week. We expect the demand for bonds to remain same in the week ahead too.

Dollar movement

During the four days of the week the dollar/rupee rate was range bound at Rs. 85.50 level. Occasionally, the Central Bank intervened in the market to purchase dollars. As the rupee held strong, the rupee depreciation for the year as at end of the week was further reduced to at 3.24.% as against 3.57% of the previous week. The forward premiums too edged slightly with the lowering of the term interest rates. Three months forward was quoted at Rs. 88.55 to Rs. 88.80, while six months forward was quoted at Rs. 91.70 to Rs. 92.00.

Glaxo merger triggers changes

Sri Lankan subsidiaries of Glaxo Wellcome Plc and Smithkline Beecham Plc, two pharmaceutical giants which merged late last year to form the world's largest pharmaceutical group, are reviewing the operations and looking at ways of consolidation, officials said.

"The merger proper came into effect in January and we are now looking at how best the two companies could operate, whether we should continue to be two separate legal entities or whether we should combine into one," said Kosala Dissanayake, CEO of Smithkline Beecham Sri Lanka.

Under a restructuring phase that has already begun, Dissanayake has been appointed general manager of consumer health products in the two groups while Michael Andree, CEO at GlaxoWellcome Plc has been appointed general manager of pharmaceuticals.

Among other changes brought in to make the two entities more effective is the joint sharing of resources like finance, human resources, information technology, purchasing and warehousing.

Smithkline is well known as producers of Panadol, the fever healer and painkiller while Glaxo deals in a range of drugs and healthcare products. Both are market leaders in their own fields, officials said. Smithkline will continue to trade with over-the-counter products while Glaxo will handle prescribed drugs. Glaxo is listed at the Colombo Stock Exchange while Smithkline is a private entity and there are no immediate plans for the latter to seek a listing. "There are no plans to go the Glaxo way at present. We will share resources and other facilities but we would probably remain separate entities as of now," said Dissanayake. Some of Smithkline's staff handling pharmaceuticals have moved to Glaxo. Glaxo's Andree said that due to a conflict of interest, the company would be forced to give up its range of Heinz products which includes Farleys rusks and biscuits.

"As a result of the merger, Heinz will in due course make alternate distributor arrangements for their products in Sri Lanka. This action is as a result of conflict of interest of competing brands. This will have a material impact on sales and profits from 2001 onwards," the company's finance director said in a letter to the Colombo Stock Exchange.

Smithkline sells Horlicks biscuits which is similar to the Farleys range.

Jardine wants Lanka presence

Global investment banker JP Morgan, which pulled out of its 50 percent stake in Jardine Fleming-HNB Securities last month, wants to continue to maintain a presence in Sri Lanka.

Informed sources said Morgan has indicated that it would continue to work with HNB to handle future privatisation deals and to serve companies seeking overseas listings, even though they are selling of their stake in the stock brokerage.

J.P. Morgan said last month, it was pulling out of the Colombo bourse through its local subsidiary, due to a global restructuring programme.

The sources said HNB had expressed its willingness to buy the 50 percent owned by the investment banker. However, HNB is likely to downsize the research and back-office departments of the brokerage after the take-over. Currently, the brokerage's research department is the largest in Sri Lanka.

It has an analyst for each sector of the market and is the only brokerage that published extensive in-depth analysis on Sri Lanka, after a slump in the Colombo market in recent years.

Electronic labs for school inventors

The first electronic laboratory fitted with modern instruments required for the development of electronic based inventions of school children linked with the laboratory infrastructure of the Arthur C Clarke Institute was started at the Arthur C Clarke Institute for Modern Technologies, Katubedda, Moratuwa on March 5.

Three young inventors were selected for this very first workshop out of over 160 applications. Others will be given an opportunity later based on a waiting list prepared by a select committee. They will be supported by the Electronics, Communications and IT sector staff of the institute for their further development. Mrs. Champika Linayage, Electronics Engineer will be in-charge of this program. Funds for this program have been allocated from the Sri Lanka Inventors Commission.

Under the concept of the President to further develop and commercialize inventions of the local youth especially at the schools level for the development of the country; plans are under way to set up a similar workshop/incubator to further develop the mechanical and civil engineering based inventions of the inventors at the NERD Centre.

Delmege air services agent for Japan Tours System

Delmege Air Services appointed sole agent for Japan Tours System Travel from Sri Lanka to Japan for business or leisure has become significantly easier and more attractive in cost terms, following the appointment of Delmege Air Services (Pvt) Ltd., as the sole agent in Sri Lanka of Japan Tours System Co. (JTS) effective March 1.

The appointment, believed to be the first sole agency status granted by JTS anywhere in the world, will enable Delmege Air Services to provide a comprehensive range of tour packages as well as ground arrangements such as vehicle bookings, rail travel, hotel bookings and excursions to travellers to Japan at special prices through JTS.

As the sole agent for JTS, Delmege Air Services will market the company's complete range of individual and group tour packages through its own offices as well as through the network of outbound travel agencies in Sri Lanka, he said.

American Express official here

Brendan Walsh, senior Vice President & Head of American Express Global Foreign Exchange Services (FES)of American Express was due to arrive in Sri Lanka on Sunday on an official visit, the local office said.

Walsh is expected to review the Amex's Travel Related Services in Sri Lanka and would meet key government and private sector officials during his stay. Accompanying Walsh is Adnan Manazir, Director FES, Asia and Mark Zuklie, Director FES.

Products offered by American Express Foreign Exchange Services include sale and encashment of Amex Travellers Cheques and Foreign currency, moneygram business, cardmember services etc.

Sampath profits top Rs 400 mln

Sampath Bank has recorded the highest growth in after-tax profits in 2000 out of Sri Lanka's four major private commercial banks, bank officials said. They said Sampath's profits growth improved by 53.8 % in the year to December 2000 compared to 43.3 % by Seylan Bank, 42.2 % by Commercial Bank and 11.4 % by Hatton National Bank (HNB).

Sampath's post-tax profits was however the third highest among the four banks - at 401.7 million rupees last year against 261.1 million in the previous year while Commercial Bank topped the list at 936 million rupees, up from 658 million. HNB came second at 800 million rupees against 718 million in 1999 while Seylan reported figures of 245 million rupees versus 171 million. Despite troubled conditions for Sampath last year, the bank recorded a 24.2 % increase in the deposit base. Last year, HNB and its allied companies made a bid for a major stake in Sampath last year in a deal that turned sour and is now before courts. Sampath officials said the bank planned to expand its network with licenced dealers at various locations allowing account holders to withdraw money at these locations without stepping into a bank branch. There were also plans to expand the Internet banking facility with more added facilities.

Fat-free polkiri on the shelf

A Sri Lankan company, riding against a tide of criticism about coconut oil being a high cholesterol food, earlier this month introduced a "Ready to use" coconut milk product and coconut oil in sachets for local consumers.

SMF "Ready to use Coconut Milk" and oil together with other convenience foods under the SMF brand name are manufactured by Silvermill Foods, an associate company of the prestigious Giriulla Mills, one of the biggest privately owned conglomerates in Sri Lanka, the company said in a statement.

The coconut milk product is low fat and available in two sizes of redeemable glass bottles, ensuring that packaging is recycled and the consumer benefits finally by returning the bottle. Coconut oil, produced by the firm, is also in two sizes, and comes in attractive sachets for convenience and economy.

Among the range of other foods marketed under SMF is instant thosai, chappati, rotti and hopper mix, stringhopper mix, pure coconut vinegar, iodised salt, tea and a variety of ground flour.

"Coconut milk and coconut oil have been made out to be monsters in the past as having cholesterol and fat, but studies show that these theories are mere fallacies, propagated by interested parties to publicise other imported oils," argued Ranjith Wijesinha, Managing Director of Silvermill Trading (Pvt) Ltd.

He referred to a recent seminar organized by the Coconut Development Authority, where both cardiologist Dr D. P. Atukorale and Dr. U. P. de S. Waidyanatha, Chairman of the Coconut Research Board spoke of how the decline in the use of coconut products had not reduced heart ailments but rather increased heart problems.

"It is important that people are made to understand that coconut products, taken in moderation, provides the daily energy requirement for human beings. It should also be known that no plant product contains cholesterol. Because coconut is less oxidizable than other oils, being essentially saturated fat, food fried in coconut oil is more health friendly than food fried in polyunsaturated fats and soft margarines," Wijesinha said, quoting Dr Waidyanatha's presentation.

Giriulla Mills with over 80 years experience in the manufacture and export of premium quality food and beverage products provides unmatched hygiene, quality innovation and packaging to all SMF products that they manufacture.

Cellcard unlimited

Celltel lifts validity limit on CellCARDs Subscribers on Celltel's pre-paid system will receive a major windfall with the removal of the 45-day validity limit on all CellCARDs effective March 18, the company said.

As a result, subscribers who refresh their CellCARD accounts after March 18 will benefit by having the validity limit removed on their balances including on whatever amounts are currently lying in credit, it said.

Announcing the lifting of this restriction, Celltel's Commercial Director Aniljit Singh said the validity of CellCARDs would no longer be limited to a specific period, provided users make at least one call every 200 days.

This means that a CellCARD would be valid for an unlimited period or for a period of 200 days if the user does not use the phone during that period.

"Pre-paid subscribers can now use their CellCARDs to the last cent regardless of how long it takes," Mr. Singh said.

Dynavision distributor for CNN news

Turner Broadcasting System Asia Pacific Inc. has entered into an agreement with Dynavision Broadcasting Company (Pte) Ltd for the distribution of CNN International, in Sri Lanka. Under this agreement, Dynavision Broadcasting Company (Pte) Ltd will be permitted to license CNN's digitally encrypted service, CNN South Asia, to cable and satellite systems and hotels across Sri Lanka.

"This is the first time Turner has appointed an exclusive distributor for CNN in Sri Lanka which is an important market for us. The signing of the agreement demonstrates our long term commitment to provide quality news programming to television viewers in Sri Lanka," Steve Marcopoto, President and Managing Director, Turner Broadcasting System Asia Pacific Inc, said in a press release.

Arthur Senanayake, Group Chairman Dynavision Broadcasting Company (Pte) Ltd, said he was pleased with the opportunity to officially deliver the world's leading global news channel to Sri Lankan viewers.

HNB profits up despite investment

Hatton National Bank (HNB) posted a per-tax profit of Rs 949 million last year, up six percent from 1999 which was creditable given the heavy capital investments made by the bank, bank officials said at a press briefing last week.

The bank invested Rs 350 million to upgrade the IT infrastructure, Rs 3.5 billion in the head office complex, and made an investment in Sampath Bank shares. All these investments are expected to make a considerable return in the long run. The investment in IT is expected to increase the bank's cost efficiency in the future, the officials noted.

HNB also spent Rs 83 million on a voluntary staff retirement scheme for 60 long standing managers. This was part of its plan to infuse young blood to the bank, enabling it to react fast to changing economic trends, they said.

HNB has also made a bid to acquire a 51 percent stake in the National Insurance Corporation (NIC). If the bid is accepted, HNB is expected to obtain the expertise of a foreign insurance collaborator to enter the Sri Lankan Insurance market. NIC has a six percent stake in the insurance market in Sri Lanka.


More Business

Return to Business Contents


Business Archives

Front Page| News/Comment| Editorial/Opinion| Plus| Business| Sports| Mirror Magazine

Please send your comments and suggestions on this web site to 

The Sunday Times or to Information Laboratories (Pvt.) Ltd.

Presented on the World Wide Web by Infomation Laboratories (Pvt.) Ltd.
Hosted By LAcNet