Hayleys and the Three Wise Men

Collectively, these three wise men of Hayleys have logged in 114 years of experience with the company. Therefore, when Rajan Yatawara – Chairman and CEO, who retires at the end of this month, N. G. Wickremeratne – Chairman designate and A. M. Pandithage - Group Director shared the story of Hayleys’ success with a select gathering last week, it was an evening to remember.`

At the recent CSR awards ceremony, Hayleys had been selected as the Best Corporate Citizen for the third successive year. The session of ‘Knowledge Sharing with the Best Corporate Citizen of Sri Lanka’ was organized by The Sri Lanka Shippers’ Council, an affiliate of the Ceylon Chamber of Commerce. Starting off the proceedings, Yatawara exuded a paternalistic sense of pride in the organisation that he joined in 1966. He reminisced about the pioneering days of 1973 when Haycarb imported three kilns “to make charcoal in a modern fashion”. The onus of making a success of the project fell upon his able shoulders.

In his anecdotal style, Yatawara led the audience on a walk down memory lane of Haycarb’s checkered history. He emphasised that the company really began to grow only after they attempted to transform themselves from a commodity trading business to a value addition business. He described encounters with uninterested governments and inebriated clerks, with incomprehensible formulae and quality standards that were conspicuous by their absence. He spoke of various project reports that Hayleys toyed with before shelving them – toothpicks and clothes pegs! - and one that saw the light of day - rubber gloves.

The tempo changed from flamboyant nostalgia to fact-based analysis when Wickremeratne took the podium to speak on the impact of the macro economic environment and government policy on export growth. The fundamental reason why ‘we’ need exports, he said, is to earn foreign exchange to pay for imports.

Wickremeratne also described how dramatically the composition of Sri Lanka’s imports has altered over the past decades. Consumer goods constituted over 60% of the country’s import basket in 1960. However, with some degree of self-sufficiency having been achieved in consumer goods, the country’s imports are more in the nature of ‘intermediate goods’ now.

According to Wickremeratne, Sri Lanka’s post-independence economic history has had three distinct phases. The 1948 to 1956 period was when the commodity boom ensured that tea and rubber exports were more than adequate to fund our imports. However, declining commodity prices during 1956 to 1977 led to large and unsustainable current account deficits – and import restrictions.

The post-1977 era was when the late J R Jayawardene changed the orientation of state policy and had the foresight to lay the foundation for a liberalized economy. However, subsequent developments have resulted in other Asian countries (who started later) forging ahead and stealing a march over Sri Lanka.

Broadly, Wickremeratne clustered the country’s economic problems into two sets: (a) low capital formation due to a plethora of reasons and (b) an artificially over-valued exchange rate that puts Sri Lankan exporters at a price disadvantage. He suggested that containment of inflation, and “reduced influence of state” on the currency and labour markets would remedy these problems to a significant extent.

With Sri Lanka’s strategic geographical location, the transportation sector will continue to be of paramount importance to the country - as well as to Hayleys - in the future. Pandithage, the Chief Executive of Hayleys Advantis, went on to conduct a virtual SWOT Analysis of the sector as it exists today. In an overview that was brilliant for its comprehensiveness, he indicated what would be required for the country to continue to garner a sizeable chunk of future transportation business. He also spoke of the new gateways and investments expected under the ‘Mahinda Randora Infrastructure Development Initiative’.

Pandithage highlighted the criticality of Colombo South Harbour to Sri Lanka, as well as the strategic fit of the Southern International Airport at Weerawila. Talking of competition, he said that Sri Lanka currently has the upper hand on productivity. He emphasised, however, that infrastructure needed to be enhanced to counter moves of competing ports like Vallarpadam (Kochi), Jebel Ali Free Zone and Port Klang Free Trade Zone.