The Sunday TimesBusiness

1st, September 1996





Ceylon Oxygen - Moves Upward

Ceylon Oxygen Ltd., has reported a favourable performance for the six months ended 30th June 1996, as against the same period in the previous year.

According to the provisional financial statements the company's turnover was up by 14.8% from Rs. 192.7 m. to Rs. 221.3 m. Profit before taxation increased by 12.7% from Rs. 33.6 m. to Rs. 37.9 m. profit after tax was Rs. 25.9 m. and it shows 19.9% increase over the same period in the previous year.

As a result of the rising profit, carry forward profit & loss account balance increased from Rs. 74.0 m. to Rs. 105.3 m. during the period under review. This has been the main factor contributed to increase shareholders' funds by 16.5% from Rs. 189.3 m. to Rs. 220.6 m.

On'ally Holding operates with success

On'ally Holding Limited has reported favourable operating results for the year ended 31st March 1996.

According to the published financial statement; the company's turnover increased by 8% from Rs. 24.2 m. to Rs. 26.2 m. Profit before taxation increased by 14.3% from Rs.18.8 m. to Rs. 21.5 m. Profit after taxation increased by 13.7% from Rs.18.0 m. to 20.4 m.

Chairman S. Wickramasinghe says that he is happy with the performance of the company during the period under review as the company was able to have 100% occupancy at Unity Plaza.

The company has declared a dividend of Rs.1.40 per share during the year. This is an increase of 16.6% over the previous year's figure. There had been a marginal increase of shareholders' funds due to decrease of retained profits.

Dankotuwa records high turnover

According to the interim report for the six months ended 31st June, 1996, Dankotuwa Porcelain Limited has recorded 13% increase in turnover from Rs. 243.1 m to Rs. 275.2 m.

The company's pre-tax profit and post-tax profit were Rs. 49,045 m. and Rs. 60,926 m. respectively. It shows an increase of 24% and 6% respectively compared to the same period in previous year. As a result of this the shareholders' funds increased from Rs. 360,624 m. to Rs. 427.4 m. recording 18.5% growth.

Central Securities turnover takes nosedive

Decline in turnover followed by net loss has been the significant feature of performance of Central Securities Limited according to the published accounts for the year ended 31st March,1996.

Company's turnover dropped by 59% from Rs. 50.6 m. to Rs. 20.6 m. Company incurred Rs. 7.0 m. loss during the year under review as against previous years' Rs. 21.7 m. pre-tax profit. Due to the loss incurred, shareholders' funds decreased from Rs.77.6 m. to Rs.66.8 m.

Despite these dismal results, directors have recommended a first and final dividend of 7.5%.

"With the continued decline of the Stock Market over 1995/96 the all share price index declining by 18.9%, the company's portfolio again reflected a disappointing negative growth of 22.45% says Chairman C. Wijenaike commenting on performance. He further adds "Net profit for the first time in its history was negative, a loss of Rs. 7 million after making a provision of Rs.15.9 million for the fall in value of shares. The market was driven by increasing political risk and uncertainty arising from significant acts of terrorism in the city of Colombo itself and the negative sentiment of the private sector which responded to industrial unrest and perceived lack of a clear cut economic agenda".

International Distillers :brews Profit

International Distillers Ltd., was able to convert its net loss of Rs. 743,000 to Rs. 490,000 profit during the 9 months ended 30th June, 1996.

However, the Company's turnover dropped by 5% from Rs. 374.7 m. to Rs. 354.8 m. during this period according to the unaudited accounts. Profit before taxation was Rs.1,020,000 compared to the loss of Rs. 743,000 previous year. As a result of accumulated loss carried forward, shareholders' funds reduced from Rs.124.8 m. to Rs.112.4 m.

Mind Your Business

By Business Bug

What price bread?

Even after the alarming increase in the price of bread, satellite was heard to say that if the total subsidy on bread was withdrawn, the price would rise to eleven rupees.

That sent alarm bells ringing. Is that eventually on the cards, many wanted to know.

No, say the Treasury Boys; the price will stay at seven rupees at least till the end of the year.

Less number of flights

The flights of the Bird of Paradise to Mandela country continue to bring heavy losses, despite the schedule being trimmed to once a week.

Now, the question is, how can the flights be discreetly done away with without much embarrassment to all concerned?

The top people at the airline have been asked to devise a way of doing just that, we hear...

To live by the Diyawanna

If there was a final "incentive" for the flight of investors from the country, it was the announcement that high rise building projects in Colombo were to be stopped for security reasons.

A lot of money was at stake, so there was frantic lobbying in the corridors of power to get the decision reversed.

Finally, sanity prevailed and the VIPs agreed to move to the suburbs, so construction could go on in the city, but the "move" would take some months...

Case for arbitration

Sri Lanka's law courts are known for its delays. There are backlogs at every stage of the system, from filing a case to delivering a judgment and it is not unusual for even relatively straightforward cases to see many a year (and many a judge) come and go before it is settled.

These delays constitute a considerable waste of resources to the Sri Lankan economy. Firms and individuals are forced to spend inordinate amounts of time in courts and similarly excessive amounts of money on their attorneys. In addition, many firms and individuals end up paying informal "transaction costs" to provide financial incentives to expedite the process. The sum total is that the present state of our legal system result not only in inefficiency but also in uncertainty. In commercial cases, decisions on optimal resource allocation may have to be postponed for years until the courts issue a judgment. Since this situation discourages people from going to court, firms are more likely to engage in illegalities and unfair business practices.

For many of the reasons mentioned above (particularly the time and cost factors), corporate Sri Lanka is increasingly turning to alternative methods of commercial dispute resolution. One of the alternatives that is growing both in popularity and sophistication is arbitration. In comparison with the ordeal of going to court, arbitration is cheaper, easier, more discreet, and as (or maybe more) fair and effective. Sri Lankan law provides arbitration with a comprehensive framework and strong backing. The Arbitration Act of 1995 beefs up the procedure to enforce awards made in arbitrations.

Even before the new Arbitration Act, disputing parties could opt for arbitration, by mutual agreement and on the advice of their attorneys. They then could appoint an arbitrator each and both agree on a third arbitrator ("umpire"). Under provisions in the civil procedure, judges could also refer commercial disputes for arbitration. In addition to this, the Ceylon Chamber of Commerce coordinates arbitrations to resolve commercial disputes that arise over commodity transactions and other issues.

There is now another option that firms in Sri Lanka choose to facilitate the resolution of commercial disputes: the newly-established Arbitration Centre of the Institute for the Development of Commercial Law and Practice of Sri Lanka (ICLP). The ICLP is an organisation of business leaders that seeks to build a sound legal framework for the smooth functioning of the market economy. The Arbitration Centre will resolve domestic and international commercial disputes in a speedy and professional manner. The two conflicting sides both have an equal role to play in the appointment of arbitrators in order to ensure an impartial judgment. The Arbitration Centre will also be able to recommend as arbitrators, technical experts in the fields relevant to each case so that well-informed judgments can be made and that the time spent on technical explanations minimised.

The fact that the two major institutions coordinating commercial arbitrations - the Ceylon Chamber of Commerce and the ICLP - are run by the private sector is encouraging because this means they will remain sensitive to the needs of private enterprise. The enhancement of arbitration capabilities to facilitate commercial dispute resolution is both a reaction to the growth of the Sri Lankan economy and an anticipation of a boom in foreign investment and economic growth. The current gloomy investment climate (among a host of other things) casts a dark cloud over the desire for rapid economic growth. However, that should not stop us from building the legal and policy infrastructure required for future economic expansion.

New position for contraceptives

The marketing campaign of the Family Planning Association's (FPA), retail contraceptive sales project has been re-positioned during the last year, its annual report said.

In the past condoms have been positioned as an instrument of family planning, but with the spread of AIDS, condoms have become a protection against the killer disease, the FPA said.

With the change in positioning, the product image also had to be changed as the target market now included the young virile male, in addition to the mature married man.

The FPA therefore, changed its advertising campaign.

This was achieved through the use of younger models and for the first time it was implied that the condom was not only for the married, but for any person who wants to enjoy sex, the FPA said.

A girl had also been included for the first time in the condom advertisement.

Total revenue from sales of condoms (Preethi, Moon Beam, Rough Rider, Stimula, Sultan brands), oral contraceptives (Mithuri), foam (Neo Sampoon) and injectables (Depo Provera) had topped the Rs. 30 m mark.

The distribution network had been strengthened to 7,931, with the addition of 197 new pharmacies.

Competitors too were coming in strong with new brands of condoms attractively packed and priced very competitively, the FPA said.

The main threat was the contraceptives issued by the government programme, which were highly subsidized.

However the FPA said most of its customers had remained faithful to FPA brands.

Pentafour joins Electronic Data

Pentafour Software and Exports Ltd. (PESL), an Indian software giant has tied up with Electronic Data Systems (EDS) Sri Lanka to distribute a business application package known as SYSTEM 21, an EDS press release states.

Assistant Manager, (International Business Division) Pentafour Shyam Sundar, stated in a press release in Madras: "We chose product because JBA has far more installations around the world than any other solutions provider."

System 21, a truly international product is better known as Business/400 in the United States and European countries, while in the Asia-Pacific region it is marketed as FAMAS/400.

System 21 caters to a wide range of business areas such as Financial, Manufacturing, Dristribution, Logistics, Inventory and Sales to name but a few. It has a strong presence in the Asia Pacific Region with over 500 sites and has over 3000 clients worldwide including Whirlpool, Honda, Toyota, Glaxo, Minolta, Good Year, Epson, Kenwood, Sony, Sanyo, Parker, Phillips etc., Pentafour's business partner relationship with Tata Information System Ltd., (TISL) will facilitate value adding sales of AS/400, RS/6000 with System 21.

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