firm gets Iraqi contract
A Sri Lankan
heavy engineering company has succeeded in clinching a major sub-contract
in war-devastated Iraq, battling global giants in the business for
reconstruction work there.
by companies from India, the Philippines, Thailand, China, Singapore
and Britain among others for a slice of the sub-contracting work,
Sri Lanka's Vcom Heavy Engineers Pvt Ltd squeezed in with an assignment
from major US contractor Betchel Corp.
It is the first
local firm to win a construction contract in Iraq after US-led forces
drove out President Saddam Hussein's regime.
handling the bulk of the reconstruction phase estimated to cost
some $ 500 billion and is doling out sub-contracting assignments
to companies across the world. Vcom, which has been handling some
big projects in Sri Lanka and has a presence in Oman, Singapore
and Bangladesh, worked on the Iraqi deal through its Omani office.
is a major breakthrough for us and for Sri Lanka," noted a
delighted Jagath Navaratne, Vcom's chairman and managing director,
a marine engineer who set up the company eight years ago after extensive
hard to get this contract over many other foreign firms," he
said of the multi-million dollar assignment that involves repairing
mainly power projects and other infrastructure damaged during US
in 1995 as a mechanical engineering company, has completed several
projects and has new ones on line in its overseas locations. It
is the only Sri Lankan engineering firm with a presence in the Middle
who is preparing to fly to Iraq to sign the agreement with Betchel
Corp, said that he hoped to use staff from his company in Omani
in addition to Sri Lankans for the work in Iraqi.
branch is currently involved in a 300-mw power project and is helping
setting up a flourmill in Salalah while in Bangladesh it is handling
a fertilizer project. In Singapore it handles engineering services
and is currently looking at more opportunities in the Maldives.
The company is also eyeing work in Madagascar through its Oman office.
is a pioneer in steel fabrication, handles the installation of power
distribution systems, oil rig installations, design and manufacture
of petroleum storage tanks, manufacture of trailers and bowsers,
and installations of fire lines and sprinkler systems. In the past
three years it has handled work in Sri Lanka and the Maldives for
a range of clients including Skanska, SAGT, Unilever, John Keells,
two beer companies, PMB, CEB, Simco Petroleum in Male, Walls Ice
Cream, Aggreko and Aitken Spence's Wartsala power plant at Horana.
as a chief engineer on ships for many years before residing in Australia.
From there he moved to Hong Kong before returning to Sri Lanka in
1995 to start his own firm. (FS)
to be salvaged?
Pramuka Bank depositors last week presented to the Central
Bank a restructuring proposal aimed at reopening the failed bank
and were hoping for a favourable response from the authorities in
the next few weeks.
It is the first
ever plan offered to the Central Bank to salvage a bank that was
sealed by the Central Bank last October amidst mounting debts.
President, Pramuka Depositors' Association, said they handed over
the plan to Dr. P.M. Nagahawatte, Deputy Governor of the Central
to give details of the proposal but said its main focus would be
on the smaller depositors and their needs. It has been suggested
that half the deposits of major depositors be converted to shares
as part of equity as it would be 'something better than nothing'.
The new proposal
has suggested six new nominees as additional directors of the bank
while one more position is reserved to represent new investors to
offset the powers of the existing five directors in the decision-making
process. Arambawela indicated that if the restructuring proposal
is accepted, Central Bank too would most likely nominate directors
to the Bank board.
a respected industrialist and a well-known campaigner in the garment
industry through the 1980s, is helping the depositors association
in their efforts.
of insurance claims from flood damage
The extent of
the damage caused by raging floodwaters in the south became clearer
last week with the low grown tea industry, the mainstay of the Colombo
auctions, expected to lose upto 25 percent of production and take
2-3 months to recover.
A deluge of
insurance claims is expected particularly from tea factory and shop
Sri Lanka Insurance
Corporation officials said teams of assessors had fanned out into
affected areas to assess the damage caused by the floods, which
submerged tea smallholdings and factories, washed away roads and
brought down power and telephone lines.
also affected fast moving consumer goods as stocks were submerged,
distribution was disrupted and consumers made refugees.
chairman Ehsan Malik said there has been no material impact on the
overall business partly because the firm had significantly optimized
stock holdings of its distributors and the trade.
required we have taken steps to replace damaged stocks. We have
also enabled our distributors to supply our products on extended
(credit) terms," he said.
Floods destroyed 53,300 hectares of low grown tea out of 150,380
hectares cultivated by smallholders in the south, the Tea Smallholdings
Development Authority said.
feared that 20-25 percent of the total tea production was affected
by this calamity," it said in a statement. It estimated the
loss to the national economy from the damage caused by floods to
tea smallholdings at Rs. 2.8 billion.
take at least three months to bring low country tea production back
to normal, due to mud and animal carcass in dirty flood water."
Some of the
affected tea estates will take an estimated three months to resume
feared that tea lands in Ratnapura, Nivitigala, Iyagama, Elapatha,
Kalawana and Kuruwita, which were totally destroyed, may never be
cultivated again," the statement said.
tea smallholders, out of a total of 250,000 who account for 62 percent
of the annual crop, have been affected by the floods.
Niraj de Mel,
CEO of the Tea Association of Sri Lanka, said initial estimates
of a 60-80 percent drop in auction quantities in the weeks ahead
may have been on the high side.
required to ensure that the smallholders, who produce more than
half the island's crop, do not abandon damaged tea lands, he said.
lost a lot of made tea while leaf could not be immediately harvested
from bushes that were submerged for several days.
is hardy and will not die and most will come back to bearing in
a month or so, except those uprooted by landslides which was minimal,"
de Mel said.
to shake GSM market
Mobile operator Mobitel looks set to cause ripples in
the local mobile industry with a $200 million investment plan over
the next five years in rolling out a new service on the GSM standard.
$140 million of this investment would be utilized within three years
with the operator's aim of conquering the top spot in the industry
by 2007 with a target of one million subscribers.
The plan comes
on the heels of main rival Dialog's recent announcement of an additional
$90 million investment by its principals over the next three years.
That investment - bringing Dialog's total investment close to $200
million since its inception - is aimed at doubling its existing
600,000 customer base, 300 base-station island wide coverage, expanding
bandwidth and improving its customer service facilities.
of the Mobitel service is to take place in September this year with
an instant GSM coverage similar to that of its existing network,
Chief Executive Officer, Lalith de Silva told The Sunday Times FT
in an interview. It would also be launching all other value added
services such as Short Messaging Service (SMS), Multimedia Messaging
Service (MMS), Global Packet Radio Service (GPRS), Internet access
and other content services during the same period. A unique attribute
of this major development plan is Mobitel's commitment to maintain
its existing TDMA network for the next three years. Industry analysts
believe the fight for supremacy will depend on network availability,
attractive subscriber packages and customer service.
begin cutting lending rates
have announced cuts in lending rates after a meeting with Finance
Minister K.N. Choksy, which followed prolonged complaints from the
business sector of the high cost of borrowing.
But they rejected
criticism they were making excessive profits by maintaining a huge
spread between deposit and lending rates and said the existence
of "willful defaulters" was one of the reasons for the
high cost of borrowing.
also warned that the recent floods are likely to have a big impact
on banks as borrowers, from home builders to industrialists, face
difficulties in repaying loans after their houses and factories
were damaged or destroyed.
Bank Managing Director Rienzie Wijetilleke said they had brought
down lending rates in keeping with cuts in Central Bank interest
the last 2-3 months we brought down lending rates by 2-3 percentage
points," he said. "However, while we're aware of our social
obligations, banks must look at the risk and the price - at all
times we must bear in mind that we're lending other peoples' money
so the risk is important."
banks were keen to provide the best facilities to customers in the
form of attractive lending rates given the very competitive environment.
dismissed criticism that banks reduced lending rates only after
pressure from the government.
absolutely nothing like that - we go on the basis of supply and
demand," he declared.
is a certain group of borrowers who are very bad borrowers. We face
very high risks in lending to them since they have a bad track record
- a record of poor management of funds," Wijetilleke said.
are the people who are making a big noise about it - not genuine
borrowers. They are part of various chambers - banks must charge
very high rates from them because they take bank money with no intention
Secretary of the Sri Lanka Bankers' Association, warned that the
damage caused by floods was likely to affect bank profits as borrowers
find it difficult to repay loans.
the floods we face a still bigger risk," he said. "Our
provisions are going to mount. We will have to carry those losses."
banks have to be strong and be profitable to be able to withstand
shocks such as natural disasters, he said.
Director, Restructuring and Strategic Development of People's Bank,
said they had been cutting lending rates in line with cuts in Central
Bank repo rates but had to take into account the generally high
cost base of the banking sector and the huge amount of bad loans
accumulated by People's Bank over the years.
carrying huge historic losses which need to be covered up in the
interest of our customers and other stake holders," he said.
we are very determined to be very competitive in this market but
People's Bank historically had not been taking a risk-based approach
for lending and has only done so in the last year or so."
The bank was
making "good progress" in recovering some of these loans
but has now been forced to "go slow on recoveries" in
areas hit by floods.