ISB-Vanik MoU boon to small business
An MoU was signed between the Industrial Services Bureau (ISB) of Kurunegala and Vanik Incorporation Ltd to promote computer software applications to small business enterprises to improve office productivity and management efficiency.

Both the institutions have so far developed application software for private (trading and manufacturing) and public institutions on inventory control, accounts management, distribution management, salaries/wages administration and human resource management. The ISB-Vanik joint venture will make these products available to the business community in the Wayamba region through the Vanik office in Kurunegala and ISB. The targeted small industry segments, initially, will be trading (wholesale and retail), manufacturing (small and medium garments sector, Tea, DC industry, etc.) and the services sector where up to-date product and clients information will be useful to the management.

Vajira Jayasinghe, Vice President of the IT division of Vanik explained that many small businesses fear using computer based applications due to the high cost on hardware and software, training requirements and because of the lack of continued support from developer and operator. In contrast the service package offered by the ISB-Vanik alliance will provide a total solution, from the system analysis to the after installation support at an affordable fee and on a modular basis. An awareness programme was held at ISB's Konrad Adenuear auditorium to brief the business community of Wayamba about these new developments.

VAT effective next month
Value Added Tax (VAT) that is set to come into effect on July 1 will be charged at the time of supply on taxable supplies of goods and services and on imports.

The tax will not be charged on the wholesale or retail supply of goods, according to the VAT bill introduced in parliament last week.

The 6.5 percent National Security Levy and the 12.5 percent Goods and Services Tax would be replaced by VAT which will be in two bands - 10 percent for consumer goods and 20 percent for luxury items.

Goods in customs bonded areas are exempt as are fabric, fibre, yarn, chemicals and dyes imported by Board of Investment garment manufacturers for export.

Under the Act, the time of the supply of goods is considered to be the issue of an invoice by the supplier, payment for the goods including any advance payment received by the supplier, or when the delivery of the goods has been effected.

The supply of services is considered the time the service was performed, a payment is received for the services rendered, or the time an invoice is issued in respect of the services rendered.

A supply of goods shall be zero rated where it is directly connected with property abroad, repair of foreign ships and aircraft, refurbishment of marine cargo containers or any other goods imported for the purpose of re-export.

Also zero rated are copyright, patent, trade mark or similar intellectual property rights for use outside Sri Lanka, international transportation including transshipment of goods or passengers, computer software development for use abroad and paid by foreign currency, and other services wholly consumed outside Sri Lanka and paid with foreign currency.

Among the supplies, services and imports exempt from VAT are unprocessed agricultural products other than key exports such as cinnamon, cloves and pepper, potatoes, onions and chillies, unprocessed fishing products, rice and wheat, bread, milk and infants milk powder, ships, aircraft and helicopters, educational services, books, kerosene, crude oil, bank accounts, exchange of currency, loans and advances, seed paddy, health services other than those under the BOI, and pearls, diamonds, gold coins and precious metals.

The tax in respect of any taxable period shall be paid not later than the last day of the month following the end of that taxable period, according to the bill.

The initial penalty for default is 10 percent of the amount in default. An assessor shall assess the amount of tax that ought to have been paid when tax payers fail to furnish returns, pay taxes or ask the Commissioner-General of Inland Revenue to alter their returns.

The assessor has to give reasons for not accepting a tax return.
Tax payers dissatisfied with an assessor's assessment or a penalty imposed under the Act, may appeal in writing to the Commissioner-General within 30 days after notice of such assessment has been served and the matter must be determined within three years.

The Commissioner-General has the power to summon people to give evidence in the case of an appeal as well as ask for and examine documents. Department officials have the power to enter and search buildings, seize books of accounts and other documents.

Where corporate bodies have not paid tax, the Commissioner-General can take action against company executives.

The Commissioner-General has to pay interest on the amount of tax refunds if there are delays in making tax refunds by the Inland Revenue Department.

A VAT refund fund is to be set up with 25 percent of the tax collected every month.
Tax dodgers who try to avoid paying tax shall be guilty of an offence and be liable to a fine consisting of a sum equal to twice the amount of tax that was evaded and a sum not exceeding Rs. 25,000 or imprisonment for six months.

Browns Group cuts fat, reduces losses
Browns and Co Ltd, one of the oldest asset rich companies in Sri Lanka, saw turnover down to Rs. 2.4 billion in the year to March 2002 from Rs. 2.7 billion in the previous year but was able to cut losses.

The group, according to an official statement, reported an increase in gross profits to Rs. 492.2 million from Rs. 474.6 million, a commendable achievement considering the turbulent economic conditions in the country.

Browns is a diversified company with interests ranging from consumer electronics, office automation, hardware, agriculture, batteries, motor vehicles, power systems, to consumer and commodity products.

The reduced loss for the year to March 2002 was Rs. 176.4 million which came after a financing cost of Rs. 298.2 million and dividend income being reduced to Rs. 20 million from Rs. 52 million in the previous year. The statement said this was mainly due to a lower dividend income from Browns' associate company, Hatton National Bank which is constructing a four billion-rupee head office complex.

Efforts to restructure, rationalise and streamline the company led to considerable cost reductions with operating expenses being cut by almost 25 percent to Rs. 395.5 million from Rs. 517.1 million.

Right of Reply
Keells sausages maintain high international standards
Keells Food Products has referred to the contents of an article by Hindu's Businessline which was reproduced in The Sunday Times Business last week headlined "Keells sausages raise hornet's nest in India", and says it is inaccurate.

In a letter, the company listed the following as facts:
"Indian manufacturers sell chicken sausages to institutions (hotels and restaurants) at Indian Rs. 130 to Rs. 140 per kilo in Chennai and Rs. 160 to Rs. 170 per kilo in Bangalore inclusive of all sales taxes. We believe these prices are possible as the cost of production in India is very competitive.

Also in most parts of the world, you could purchase chicken sausages at a price of less than three dollars per kilo from supermarkets.

Prices of chicken portions are determined on the basis similar to a commodity market based, i.e. on supply and demand. It is surprising to hear from a major player of poultry industry in India, that chicken legs consisting of over 50 percent of meat from a total bird, are considered unwanted.

Manufacturers internationally use meat from different parts of a chicken to produce sausages and to manufacture an internationally accepted product, the ratio of meat to fat has to be consistently maintained.

We do not use any chicken meat from either North or South America, and the same could be confirmed from statistics issued by Sri Lanka Customs.

Keells Food Products Ltd maintains market leadership with approximately 70 percent of the processed meat category. It offers a range of processed meat products such as sausages, ham, bacon and cold meat.

The company's commitment to its business is demonstrated by the achievement of ISO 9001 Quality System Certification. Furthermore, we have achieved the SLS mark product certification, awarded by the Sri Lanka Standards Institute for all products where documented standards exist.

We are highly respected in Sri Lanka and around the world as being a company, which maintains very high ethical standards in its business practices.

Our products are served in international hotel chains, airlines and are exported to many countries.

We categorically state that all criteria laid down by the Indo-Sri Lanka Free Trade Agreement (FTA) are fully complied with. All products manufactured by us meet the highest international standards."

LP gas unloading in Galle port: Warning
The Ceylon Chamber of Commerce has asked the Ministry of Power and Energy to ensure that new entrants to the liquid petroleum gas market comply with safety rules when using floating storage facilities and unloading LPG in the port of Galle.

The chamber said it was "seriously concerned" that proposed floating storage and port discharge operations may be detrimental to the safety and reputation of the country's ports.

Unloading LPG inside harbours was very risky and ports handling dangerous goods especially in bulk should be ideally located away from populated areas, it said.

The chamber statement came after Mundo Gas Lanka, which is providing competition to Shell Gas Lanka, announced plans to have a floating storage facility and to discharge LPG at the Galle harbour.

Since LPG vaporises immediately on release to the atmosphere, a leak during product discharging from tankers can create a highly flammable vapour cloud that remains hazardous for a greater distance as it is carried by wind, the chamber said.

"If ignited, depending on the vapour cloud size, the resultant effect would be a flash fire or explosion, fatal to anyone within the cloud vicinity and its thermal radiation likely to cause burns to those within hundreds of metres from the explosion," it said.

Floating storage presents additional hazards, such as the collision risk, which need to be carefully addressed, it said.


SL's paddy yields among lowest
Sri Lanka's paddy yields at 60 bushels per acre are among the lowest in Asia and need to be improved substantially, says Lakshman Fernando, chairman of the CIC group, whose seeds subsidiary received ISO recognition recently.

"It is extremely important for farmers to have access to top quality seeds for their production if they are to get the desired yields," said Fernando adding that CIC Seeds Ltd was conforming to the highest standards in quality.

CIC Seeds, the single largest paddy seed producer in the country, recently became the first Sri Lankan seed company to be awarded the ISO 9001:2000 certification by the Sri Lanka Standards Institution.

Fernando said in an interview with The Sunday Times Business that the company " has set new standards in the farms we manage".

CIC took over the management of three government farms in Hingurakgoda, Pelwehera and Talawa in the late 1990s and now produces a quarter of the country's requirements in seed paddy. Prior to this the Department of Agriculture produced the entire seed requirement. CIC has doubled the yields in all these farms following prudent management techniques.

The group which has seven companies under it is today the market leaders in pesticides, fertilizer and seed production.

PMB, Business Intelligence to manage the proposed Shell Gas Lanka IPO
The People's Merchant Bank (PMB) and Business Intelligence Limited (BIL) have been asked to manage the proposed IPO of Shell Gas Lanka Ltd (SGLL) at the request of PERC, a PMB statement said.

The government is divesting its 49 percent equity stake in SGLL.

PMB, mainly owned by People's Bank, Hatton National Bank and DFCC Bank, will provide merchant/investment banking expertise to this assignment, prepare the business valuation of SGLL and advise PERC on the pricing of the shares and strategy to be adopted. BIL a fully-owned subsidiary of Ernst and Young will perform the registrar activities pertaining to the proposed IPO.

This IPO is expected to generate considerable interest in the local stock market, being the first instance where shares in the island's leading gas company are being offered to the public. A controlling (51 percent) stake in the gas company was previously sold by the state to Shell Overseas Investments BV (SHELL) in 1995, where a price of approximately Rs. 90 per share was paid.

Under Shell management, local sales volumes of LPG have increased from 78,000 MT in 1996 to 146,000 MT in 2000.

Ingrin to admit foreign students
The Institute of Printing and Graphics of Sri Lanka Ltd (Ingrin) has decided to admit foreign students for its courses in future.

Chairman of Ingrin, Ananda Wickramaratne, said they would accept applications from foreign students in the region in the next three years.

"We are targeting school-leavers and employees who are attached to the printing and design field," he added.

The institute is making plans to open branches in the outstations and is also hoping to tie up with the European Printing School to introduce more courses. It has trained around 11,00 students so far.

The institute was established in 1994 at a cost of Rs. 85 million as a venture by the Ingrin Foundation of the Netherlands, Export Development Board, Printers' Association of Sri Lanka, International Advertising Association and the Sri Lanka Institute of Packaging.

Its aim is to cater to the demand for skilled and professional personnel from the printing and packaging industry in Sri Lanka.

The Director of Ingrin Foundation Netherlands, Dr. Robert Van Weldam, was in Sri Lanka last week on a tour to evaluate the Sri Lanka branch.

Sri Lanka's standards of printing have improved fast, he said.
"We are aware of the capabilities of the Sri Lankans and this is why we opened our only foreign branch in Colombo," he said.

Grindlays confirm NTB buying out Kandy branch
Standard Chartered Grindlays Bank announced last week plans to divest its customer portfolio in Kandy to the Nations Trust Bank (NTB).

This transaction involves the transfer of the Kandy customer portfolio only and is subject to receipt of necessary regulatory approvals (from the Central Bank), a bank statement said, a week after The Sunday Times Business broke the news of NTB taking over Grindlays' Kandy branch.

The bank has decided to close operations in Kandy so that greater emphasis can be placed on developing the consumer bank in the greater Colombo area. The statement said that the present network of 10 branches and 10 ATM's in Colombo provides the bank with adequate coverage and this will be supplemented with new ATM's and other channels in future, In June 2002 a new ATM will be installed at the CH and FC in Colombo.

"The choice of Nations Trust Bank as a partner in this transaction was done to ensure that Standard Chartered Grindlays customers are able to continue their banking in Kandy with a well known bank without any disruption, the bank noted.

Leo Burnett plans communication strategy for CSE
Leo Burnett Solutions Inc. was recently appointed as the official communication agency for the Colombo Stock Exchange (CSE) to plan and launch a new image. The business was awarded to Leo Burnett after a five-way pitch carried out by CSE earlier this year to choose a communications partner to fuel its endeavours.

Leo Burnett will support the CSE with a total communications approach ranging from media buying to public relations and relationship marketing to event activations. Leo Burnett will also bring in international expertise from the Leo Burnett Worldwide Network as globally the company has experience in handling international stock exchanges such as the SXG of Singapore, the Athens Stock Exchange and the public listing in Malaysia.

"We are looking forward to working with this prestigious account as it has a considerable impact on Sri Lanka's economy, "Brand Director of Leo Burnett Solutions Inc Michael Holsinger said. He said there is a need to make Sri Lankans aware of the importance of a stock exchange to a country.

"The Colombo Stock Exchange is one of the finest and first in South Asia, yet its image needs to be developed considerably."

UTA elects officials
New office bearers were elected at the recent AGM of the Unit Trust Association of Sri Lanka for 2002-2003. They are:

President- S. Jeyavarman, Vice President- Indrani Jayasinghe, Secretary- Rachini Rajapakse, Asst Secretary- Chitra Satkumara, Treasurer- Gehan Rajapakse, Asst. Treasurer- Namal Kamalgoda, Committee Members- Prabodha Samarasekera, Rohan Bogoda and Rajan Niles.

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