3rd June 2001
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  • Treasury secretary urges banks to cut interest rates
  • More than 50% of local households have Singer
  • Meegoda to stay on Vanik chairman
  • Sri Lanka needs to be a global centre for garments
  • UAL registers net income growth of 134.3%
  • DMS launches equipment for garment industry
  • British Airways redefines business travel 
  • New range from 3M complements auto market 
  • Small industries chamber completes 38 years
  • New director at Central Finance
  • ISO 9002 award for Niranjan computers
  • CTC first for 4th successive year
  • Asian Alliance takes on giants in insurance field
  • Lanka Bell posts record performance
  • Rubber wood more popular
  • Eagle Insurance soars high
  • Launch of D-Cafe by Dialog GSM
  • Investor shares her misery
  • Performance is doubled on new HP line-up
  • Emirates' non-stop service to Hyderabad
  • BOI status for Ceylinco's cancer-screening centre
  • Zonta and WIN in new children's programme
  • BOI approves Rs.800 mn worth investment projects in April
  • Ceylinco Savings Bank pledge to fulfil aspirations of clients 
  • Eco-drive from LOLC 
  • China's organic tea plans brew worries in India
  • Trade Minister to sort out problems under Free Trade Agreement
  • Suntel now Internet Service Provider
  • IT for Ceylinco Life 
  • Solar power for rural Sri Lanka
  • Culinary Art 2001
  • NCE help to raise skills of exporters
  • New CEO at Breweries (Ceylon) Limited 
  • LB Finance opens new branch
  • New industrial forum improves relations
  • Stock market report
  • Hayleys Photoprint's turnover up by 8% 
  • Dialog GSM and Nexus launch Loyalty Card
  • Audio Industry goes digital!
  • CIM to reward best Marketers
  • Arpico Suhada Hamuwa
  • New financial package designed for NGO's
  • Treasury secretary urges banks to cut interest rates

    Treasury Secretary, Dr. P. B. Jayasundara last week criticised private commercial banks for waiting for state banks to trigger interest rate cuts first instead of doing it themselves.

    Sri Lankan commercial banks maintain a margin of around 7 percent, between lending and borrowing which is far wider than the margins of around 2 percent in developed countries and in the region.

    Private commercial banks have defended their stance by pointing out that high margins are maintained by the two state banks (People's bank and Bank of Ceylon), which control a 50 percent stake in the market. The two state banks in return say they are forced to maintain high margins to cover their high intermediary costs caused mainly by politically influenced bad debt portfolios.

    Dr. Jayasundara denied these claims strongly. "If the private banks said this ten years ago it would have been an acceptable excuse. But, today the private commercial banks stake in the market has risen to 51%. Why should they wait for the BoC (for instance) to lower interest rates?" 

    He was speaking at a discussion organised by the Society for International Development on the budget and future trends in the economy. 

    Economists and Central Bank officials have pointed out, on many occasions, high margins as a fundamental reason for the inefficiency in the Sri Lankan financial sector.

    Chairman of the Sampath Bank, Edgar Gunatunga, reacting strongly to the treasury secretary's comments said commercial banks have to exercise a high degree of collective responsibility and should not undercut each other on interest rates. "If we lower our interest rates today what will happen to the BoC?" he questioned Dr. Jayasundara.

    The finance secretary in return thanked him for the concern for his state competitor, but assured that the government could take care of the state banks if private banks cut rates - and noted that it was upto private banks to take up the challenge and lower the interest rate margins for the greater benefit of the economy.

    Meanwhile, First Capital CEO Ajith Devasurendra said interest rates could decline towards late 2001 if the government is able to mobilise foreign commercial borrowing.

    Dollar interest rates show a downward trend and is expected to ease further due to a slowdown in the US economy. This has created an opportunity for the government to mobilise foreign commercial loans at lower rates than raising them in the domestic market.

    Mr. Devasurendra, addressing the Sri Lanka Economic Association, also said the government should consider other means of defending the currency, other than resorting to maintaining high interest rates. "The Bank of England tried to defend the sterling through interest rates and failed. There are arguments for and against, but the reality is high interest rates are not the only way of defending the currency," he added

    He forecasted one-year T-bill rates to reach 15%-16% at the end of 2001, provided the same macro economic conditions prevailed without any external shocks and without an escalation of the war.

    More than 50% of local households have Singer

    Singer Sri Lanka is using a 500-million rupee commercial paper programme to aggressively expand its Hire Purchase (HP) scheme, company chairman Hemaka Amarasuriya said.

    The in-house HP scheme is considered Singer's strongest competitive weapon. Combined with its islandwide distribution network, the company has become the market leader in "white" goods in Sri Lanka, industry analysts said.

    Credit ratings agency, Fitch Ratings Lanka Ltd, which assigned a SL F 1 credit rating to Singer's commercial paper, has given top marks for the HP scheme. "Singer has a well established system evolved over decades to offer in-house HP facilities and maintains a healthy HP portfolio with a low default rate of 2%," Fitch said .

    The commercial paper programme will also finance the estimated overall growth of 15% for Singer in 2001, Mr. Amarasuriya said.

    Singer, in its 2000/2001 annual report, said it had captured a major portion of the Sri Lankan market with 50 percent of local households making a Singer purchase in the last three years.

    The company has 550 retail outlets across the country covering 20 districts. It said repeat purchases have been and is still common among all economic classes it had a customer base of more than two million households.

    Mr. Amarasuriya said the company welcomed the confidence expressed by the Central Bank that the economy will surge in the second half of the year "and look forward to a stable external environment as we move through the upcoming months."

    He said the external environment remained difficult to manage due to the "clouds shrouding the economy." 

    The company said it was currently developing a low cost 14" colour TV with exceptional features aimed at the wholesale trade with test marketing scheduled for this month.

    Meegoda to stay on Vanik chairman

    With reference to The Sunday Times Business story last week headlined, "Vanik's Meegoda to be replaced?" Vanik chairman Dr. W. M. Tilakaratne said in a letter that there are no plans to replace Mr. Meegoda.

    He said the consortium of banks has no jurisdiction to appoint a CEO. Such a change can be made only by the board of directors. Dr. Tilakaratne said Mr. Meegoda's revival plan has met with a positive response from the banks.

    Business Editor's note: We stand by our story.

    Sri Lanka needs to be a global centre for garments

    A leading player in the garment industry highlighted the need for branding to develop a long-term competitive advantage.

    As with wines from California, casinos in Las Vegas and IT products from Silicon Valley, Sri Lanka needs to be identified as a centre for apparel, Chairman, MAS Holdings (Pvt) Ltd., Mahesh Amalean said at a recent conference organised by the Chartered Institute of Management Accountants.

    Mr. Amalean presented a paper titled, "Apparels - stitching the future".

    In working towards the goal of becoming an apparel hub Mr. Amalean sees the need for organisations to specialise in chosen customer categories or product categories and develop clusters that envelope backward and forward channels that support the industry.

    Such clusters would develop the apparel manufacturing sector and supporting industries. Thus Sri Lanka would have to attract more fabric mills, accessory manufacturers, marketing and training institutions and design centres, all linked as in a virtual state, Mr. Amalean said.

    The strategies to make Sri Lanka synonymous with world-class apparel include offering excellent quality, service and competitive prices and developing a full service industry. It is also essential that the best international brands manufacture or source their brands from Sri Lanka.

    Although Sri Lanka counts among its strengths quality standards, it needs to improve efficiency and productivity. While average efficiencies in China range from 70-90 percent, Sri Lankan efficiencies have a long way to go, he said.

    The local industry also needs to develop into a full service industry although it presently lacks design capability, marketing and a strong raw material base. Despite a high import dependency for raw materials, India - Sri Lanka's closest supply base - provides only two percent of fabrics. Mr. Amalean stressed the need for at least two world-class woven fabric mills to be set up in Sri Lanka.

    It is also essential for firms to engage in aggressive direct marketing and to work in close liaison with marketing institutions and universities to create a pool of trained marketers conversant in industry practice.

    UAL registers net income growth of 134.3%

    Union Assurance Ltd. (UAL) said the company's increasing profits trend has continued into the first quarter of 2001. UAL's net income grew by a steep 134.3% to Rs. 36.5 million in the three months ending March 31, 2001, from Rs. 15.6 million in the corresponding period of the previous year.

    Gross revenue has also increased by 10.3% from Rs. 481.9 million to Rs. 531.3 million. 

    The company is of the opinion that this quarter's results has set a very positive trend for the future, considering the far from ideal economic environment and increasing competition in a market that is experiencing very limited growth.

    Union Assurance's CEO, Sarath Wikramanayake said, "Our success is a result of having the right focus, which is giving our customers an excellent service through a superb team that concentrates on using all resources effectively to deliver an efficient and cost-effective service."

    The outstanding figures are mainly due to good underwriting results relative to last year.

    The first quarter's performance is very creditable; given the one-off cost of investing in the production of advertising material that took place in the first quarter, an increase in depreciation from investing in a new office system that has resulted in significant space saving which will be used for on-going expansion; and a further increase in depreciation on account of new systems that will be the cornerstone of the company's IT strategy, a company statement said.

    DMS launches equipment for garment industry

    DMS Garment Technologies (Pvt) Ltd, one of the leading garment equipment importers in Sri Lanka, has been appointed the local agent for ZSK Stickmaschinen Gmbh of Germany, a leading manufacturer of embroidery systems for the garment industry.

    The ZSK embroidery machine is one of the most sophisticated machines that enhances productivity in the long term, ZSK chairman Dr S. Zons told reporters at a press conference last week.

    The multi-coloured computerised embroidery machine is a top piece of equipment in the technological world capable of creating a revolution in the garment industry, he added.

    DMS chief Ruvan Ratnatunga said it was essential that the garment industry adopts the latest technology to face intense competition once the multi-fibre agreement ends in 2005.

    British Airways redefines business travel 

    In the process of launching their biggest ever programme of product innovations both on the ground and in the air, British Airways (BA) is redefining business travel for the 21st century.

    Created to cater to their many business and leisure customers who travel regularly and requested for more comfort and space at an affordable price, British Airways has created the World Traveller Plus, which has all the benefits of World Traveller with added features to ensure more comfort on board.

    Every cabin has a new look and feel and offers the cost-conscious business traveller more choice, a BA statement said.

    Providing extra comfort at value for money prices, the World Traveller Plus with a maximum of only five rows, creates a spacious, quieter new economy class in a completely separate cabin. A brand-new seat with greater recline, wider than standard economy class, has a 38" pitch providing 7" more legroom than World Traveller. This provides passengers more space to stretch and enjoy 12 channels of entertainment on seat-back video. The choice of entertainment includes latest movies, dramas, news and sports. An adjustable headrest, legrest and lumbar support provides added comfort, the statement added.

    Other benefits available to World Traveller passengers are also applicable to World Traveller Plus. They include telephone check-in for Executive Club members and fast baggage drop and Central London check-in at Paddington for London Heathrow and Victoria for London Gatwick. 

    New range from 3M complements auto market 

    3M Lanka (Pvt) Ltd, together with its business partners, Chemical Industries (Colombo) Ltd. and CIC Paints (Pvt) Ltd. introduced the 3M wetordry TM waterproof paper and hand polishing systems to their distributors and dealers at Hotel Taj Samudra recently.

    These new additions, namely the 3M Wetordry along with their wetordry technology products, including the Finesse-it Marine Paste, the Premium Liquid Wax and the Imperial Hand Glaze promise to stand clear of the competition with its ultra-productive features that will save time and money for its users, as the wetordry technology coated abrasives would last longer and halve cutting time.

    Speaking at the conference, 3M Managing Director, Mr. Kishore Rao said that the new range of products would complement the automotive market in Sri Lanka. He added that 3M's diversified business interest in industry, telecommunications, healthcare and traffic helped the company provide a comprehensive and reliable range of over 50,000 products.

    Small industries chamber completes 38 years

    The Sri Lanka Chamber of Small Industries celebrates its 38th anniversary on June 6 with a gala ceremony at the BMICH.

    The association, launched in 1963, has come a long way in promoting small industries in Sri Lanka and fighting for industry rights and needs. Industrial Development Minister Prof. G.L. Peiris and a host of political, diplomatic and industry personalities are expected to attend the meeting.

    A chamber statement said that current association president, Aloy Jayawardene, who has served the chamber as a founder member, would be felicitated while the chamber will also recognise Industries Secretary W.V. Dheerasekera for his 35 years of service to the industry.
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    New director at Central Finance

    Mr. Gamini Wijeyesinghe has been appointed to the board of the Central Finance Co. Ltd, with effect from 1st June 2001. Mr. Wijeyesinghe, former Precedent Partner of KPMG Ford Rhodes Thornton & Company, Chartered Accountants is also on the Board of other public quoted companies.

    He is a Fellow of the Institute of Chartered Accountants - Sri Lanka, and a fellow of the Association of Authorised Public Accountants, UK. He has been a past president of the Institute of Chartered Accountants of Sri Lanka and the Organisation of Professional Associations of Sri Lanka.

    ISO 9002 award for Niranjan computers

    The ISO 9002 quality certificate was awarded recently to Niranjan Computer International Limited operating as a BOI project.

    Mr. Kingsley T. Wickramaratne, presidential advisor on foreign and internal trade, addressing the certification ceremony remarked that Niranjan Computer International Limited, already a regional multinational, would very soon become a multinational with worldwide recognition.

    Dr. Niranjan Nanayakkara, chairman of Tec Sri Lanka, stated that it is their aim to develop Sri Lanka as a inter-regional technical and technological production centre assembling Japanese, Korean and Chinese products based on Sri Lanka's strategic location on international sea routes.

    CTC first for 4th successive year

    Ceylon Tobacco Company was adjudged "Winner" of the best annual report in the Food and Beverage sector at the annual awards ceremony organised by the Institute of Chartered Accountants of Sri Lanka.

    Under the theme, "The value of responsibility", the report focuses on the winds of change as the company spearheads towards the turn of the century.

    This makes it the 4th consecutive award to be won by the company in the Food and Beverage category. 

    Asian Alliance takes on giants in insurance field

    The company's aspirations are built on being the most efficient and effective insurance company providing a quality service in all aspects of its operation.

    Asian Alliance Insurance, a relatively new player in the insurance industry, took a bold step forward last week with an entry into the life insurance segment taking on a host of other insurance giants in the same field.

    Introducing life insurance cover on June 1, the company said three new products were launched after a careful analysis of prevailing customer needs in the market.

    "A parent's first concern is their children and their education. Even if the breadwinner dies, the children must continue their education. 

    The Alliance Child Plan is designed with this in mind. Healthcare and a regular family income in the event of a tragedy is another aspect of concern that gives stability to the average family," a company statement said.

    The Alliance Retirement Plan provides flexible retirement benefits to those planning a worry-free retirement. All schemes are offered at very competitive rates.

    Last week's launch would be followed by the opening of four regional distribution offices in Kurunegala, Gampaha, Panadura and Negombo later this month.

    The company's aspirations are built on being the most efficient and effective insurance company providing a quality service in all aspects of its operation, thus striving to be a benchmark in the local insurance industry. Careful screening has gone into the selection and recruitment of their entire team.

    "Professionally, life insurance sales involve an individual customer need analysis, a financial analysis and a family aspiration analysis. That is the reason why people with high competency levels should be hired to handle a job function of this nature," said Mr. Ranjith Weerasinha, a consultant at Asian Alliance Insurance with several years of experience in the insurance field.

    The company hopes to expand its distribution network through the opening of franchise offices islandwide. "Our sales force will be professionally trained and certified to practice the profession. We will have less sales numbers, but high quality people," Mr. Weerasinha said.

    Lanka Bell posts record performance

    Lanka Bell (Private) Limited, one of the two Wireless Local Loop (WLL) operators in the country, posted a record increase in productivity for the fiscal year 2000/2001, with a growth in revenue of 62% amounting to Rs. 1.4 billion.

    The net revenue per working line increased by 32%, while the net revenue per employee increased by 74%.

    In addition, the net revenue increased by 59% when compared to the last fiscal year, with the company's operating income increasing by a phenomenal 900%.

    Furthermore, the operating income as a percentage of total revenue increased by almost 95% when compared with last year's figures. Operational Expenditure (OPEX) per working line improved by 25% while OPEX per employee improved to 102%, a company statement said.

    During the last fiscal year Lanka Bell was able to maintain the same number of employees and in fact recorded the lowest manpower complement in its operating history since its inception.

    According to a company spokesman, this remarkable performance could be attributed to focused marketing, prudent fiscal policies, staff productivity, process efficiency, improved quality of service and the appropriate choice of investments.

    "The key business processes of the company were constantly reviewed and improved," he said.

    Despite the prevailing economic situation where exchange rate stabilisation is the key to sustaining growth, Lanka Bell is positive that they would be able to continue their performance during the forthcoming fiscal year as well.

    Rubber wood more popular

    With natural rubber prices remaining depressed rubber wood could be used to offset part of the losses in rubber estates, industry analysts said.

    Analysts said the use of rubber wood as an industrial raw material began in the late 1970s and rapidly gained popularity. In 1979, only 900 cubic metres of rubber wood with a value of US$55,000 had been imported from Malaysia. But eight years later, imports rose to about 178,000 cubic metres of sawn rubber wood at a value of US$ 39 million!

    Rubber wood is a light to medium hardwood. It is easy to saw and crosscut although latex may clog the saw teeth. Moreover, the wood is suitable for producing plywood and veneer. The nailing and gluing properties are rated as good. However, unless the logs and sawn timber are treated with boron the timber is likely to suffer from fungus attacks and borers, analysts said. Apart from furniture making, the timber is used for interior finishing, wall panelling, picture frames, drawer guides, cabinet handles, etc. It can also be used for parquet flooring and pallets. Glue laminated timber is used for staircases, doors and window components.

    Eagle Insurance soars high

    Eagle Insurance once again commenced the first quarter of 2001 by recording a 11% increase in revenue in comparison to the corresponding period last year and Rs. 33 million in profit after taxation, which reflects a 25% increase over the previous year.

    Life premium income growth of 5% over the corresponding period last year to Rs. 449 million is mainly due to the success of the Eagle Investment Plan. Non-life premium increased marginally to Rs. 231 million with renewed focus on profitable business segments. Asset management operations continued to yield positive results, the company said.

    Launch of D-Cafe by Dialog GSM

    Dialog GSM recently launched its first cybercafe or Internet Cafe called D-Cafe at 39, Plaza Complex, Wellawatte. This is the first such internet facility which is powered by i(Dialog Internet) and will be a boon to all Internet surfers with all the great extra benefits, such as free 1/2 hour surfing time and speedier connection at their disposal.

    Investor shares her misery

    As a holder of a substantial number shares of the Hatton National Bank, one thing I hate doing these days is to read the Stock Market Report in the daily newspaper. 

    It has now become routine to read by how much it has come down compared to the previous day. 

    For me the "last straw" was when the price dropped below Rs. 30/- at which rate it had been hovering for the past few months. At least the voting shares of HNB has seen a few "ups" now and then, but with the non-voting shares it has been only one way and that is "down".

    I feel particularly sad about this situation because my decision to invest was solely influenced by the manager of the HNB branch who persuaded me to convert my fixed deposits into shares at Rs. 70. My fears were allayed when he explained that the value would double in no time and that dividends of around 40% would be paid.

    He also admitted that all branches had been given targets in respect of share sales and that I would be helping him to win an award should I invest in HNB shares. 

    Being a very helpful and friendly person I invested in their shares. 

    Instead of doubling in value it has been steadily declining in value. 

    Even the 40% dividend promised has come down to about 6% because it had been 40% on the Rs. 10 share and not on the Rs. 70 purchase price.

    Within a few months the manager and a number of employees of this branch were suspended or transferred. 

    I related my plight to the present manager who was very sympathetic but said he is helpless. 

    My request to borrow against the shares had been rejected even though I am certain that they said at the time the shares were purchased that it would be possible to borrow against it if the need arises.

    I am in a terrible position as a good part of my capital has been wiped out mainly due to the wrong advice of the HNB branch manager. 

    The HNB is now denying any liability and offering me only sympathy. 

    I understand that several depositors of this bank had been misled in this manner and they are now regretting their decision.

    Can a responsible officer from HNB advise through this column what avenues are open to us to recover our monies and what action is being taken to stop the value of this share from falling further?

    Mrs. K.A.N. Jayalath,


    Performance is doubled on new HP line-up

    Hewlett-Packard (HP) launched three new series laser printers, almost doubling performance rates of its existing models in the Sri Lankan market recently. 

    The new models will replace the older printers and will be marketed at the same price.

    The new series HP 1200 personal desktop printer, HP 2200 for small businesses and HP 4100 for advanced work groups have many of the older optional features as standard features. 

    The HP 1200 personal desktop model's speed has been increased from 8 ppm to 14 ppm (pages per minute) while its printing density has been increased from 600 dpi to 1200 dpi (dots per inch). 

    Similar improvements have been made on all models in terms of speed, memory capacity, network speed, duplexors, USB connectivity, etc.

    The newer features on the HP 4100 network printer are the preventive toner notification and the proof and hold printing facility. 

    The preventive toner notification uses a smart chip to indicate to the user the amount of copies that can be printed before the toner runs out. The proof and hold printing facility allows the user to hold printing of confidential documents until he/she can walk up to the printer on the network and personally release the document for printing.

    The new range will be marketed locally through HP's authorised reseller and dealer network. 

    HP is the leading global provider of computing and imaging solutions and services. 

    HP is represented locally through its fully-owned subsidiary, Hewlett-Packard (Sri Lanka) Ltd.

    Emirates' non-stop service to Hyderabad

    Emirates will begin a new, non-stop service eight-times-weekly between Dubai and Hyderabad, one of India's leading IT centres, on July 1. 

    The new service will offer both early morning and late night departures from Dubai.

    The flights will be operated with Airbus A330-200 aircraft in three-class configuration offering 18 seats in First, 42 in Business and 183 in Economy Class.

    BOI status for Ceylinco's cancer-screening centre

    Ceylinco Life, the largest private sector life insurer in Sri Lanka, has been granted approval by the Board of Investment of Sri Lanka (BOI) for the company's ground-breaking project to set up a comprehensive screening facility in Sri Lanka for cancer, one of the most common causes of death in the country.

    Ceylinco Health Care Services Ltd., a subsidiary of Ceylinco Life will initially invest Rs.50 million to set up a modern specialist cancer-screening centre which will provide counselling and professional services on screening.

    Zonta and WIN in new children's programme

    The Zonta Club of Colombo in partnership with Women In Need (WIN) has received a US$ 20,000 grant from Zonta International to teach conflict resolution techniques to children. The programme is aimed at male and female students of primary and secondary schools between 7 and 14 years, a WIN press release stated.

    The project aims to disseminate knowledge and create awareness in schools and the community. 

    It will also work to create links between schools, law enforcement agencies and the community to maintain awareness and work towards violence against women and children through counselling, advocacy and mediation.

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