7th December 1997


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Giant plant awaits clearance

By Mel Gunasekera

Approval has been given by the BOI for Rs. 600 mn. clinker milling plant capable of producing six million bags of cement a year.

But the plant to be sited in the Peliyagoda Industrial Park is still awaiting clearance from the Central Environmental Authority.

"This plant is one of eight proposed cement factories approved by the BOI," a top BOI official told The Sunday Business.

In its second stage the plant will also use solid waste from the proposed coal fired power plant in Kalpitiya.

The estimated total capacity of the project is 300,000 metric tonnes (MT) per annum - six million 50 kg cement bags. Ground clinker and gypsum will be imported direct from China and mixed in Sri Lanka into 50 kg bags. "The plant will ease the ever increasing demand for ordinary Portland cement," the official said.

The factory will be primarily financed by a Chinese company, Yantai Fushan Corporation of Shandong, Yantai Province, China, in collaboration with their local agents Impala Property Development (Pvt) Ltd., Kandy and the IDB, to set up a company called, Impala-Shuang JI Industrial Corporation (Pvt) Ltd.

The Chinese have a 43 percent stake in the project, whilst Impala Property Development has 56 percent and the IDB holds 1 percent.

"The IDB will provide technical guidance, monitoring and consultancy services to the project," an IDB official said.

The company has obtained approval from the Urban Development Authority to lease 10 acres of marshy land, which will be reclaimed by the Chinese and leased on a long term basis.

Another factory in Chilaw, in the projects second stage, would utilise local raw materials like Miocene limestone, clay, and fly-ash to be produced from the proposed coal fired thermal power plant in Kalpitiya.

"When the Kalpitiya plant comes into operation around 240,000 MT of fly-ash will be produced annually. Fly-ash is used to reduce the calcium carbonate content, which would in turn increase the quality of cement," the IDB official said.

At present, European countries like Britain, France and Germany insist their cement should contain 10-20 percent of fly-ash. "We recycle the use of fly-ash, thus solving environmental problems for the Kalpitiya people."

During the second phase, the company also intends to use gypsum to be produced from the Eppawala Phosphate project and the salterns in Northern and Southern Sri Lanka.

The total project cost is estimated to be around Rs. 1 bn.

Stage three would be the utilisation of dolomites limestone found in abundance in the central province, north central province and sabaragamuwa province. The plant will be installed near the dolomite limestone deposits of Haragama middle marsh area, near Kandy. The project is estimated to cost around Rs. 1.4 bn. "We are hoping to complete all three stages in 5 years time," the official added.

The government is also hoping to promote the setting up of several mini cement plants in the future. "Our estimates show, the total cost of a mini cement plant, including machinery would be around Rs.200 mn. We are looking for prospective local investors for this project," he said.

The concept of mini cement plants was developed by the Cement Research Institute of India. "They informed us that such projects were suitable where limestone is in abundance, but spread in many places, in minor deposits," he said.

A mini cement plant has a capacity of producing around 20-200 MT per day. "Our research shows that 50 MT is more suitable to Sri Lanka."

Sri Lankan cement requirement for 1997 is estimated to be around 2 mn MT. The present local cement production amounts to around 950,000 MT, the rest is imported from India, China, Indonesia, the UAE, Oman and Kenya. According to a recent survey, the demand for cement is expected to rise to 6 percent annually. "If the anticipated peace process in the north and east comes into place, the demand for cement could exceed the estimated 6 percent," an analyst said.

At present, Puttalam Cement is the only fully integrated cement making plant in the country. Ruhunu Cement, Mahaweli Marine and Tokyo Cement import their raw materials or import cement in bulk and bag it in Sri Lanka.

Observers say unscrupulous importers are preventing the local investors from coming forward to invest in the industry by selling low quality cement at rock bottom prices.

Plastic money pioneers among Sampath customers

In a pioneering move towards broadbasing cashless banking among Sri Lankans, Sampath Bank recently introduced the SET/CIRRUS/MAESTRO Debit Card.

The new card is an enhanced version of the SET Card launched 10 years ago and will be issued free of charge to all Sampath Bank customers.

Assistant General Manager, Sampath Bank Card Centre, Palitha Kannangara said that the Debit Card will enable a card holder to pay for goods on line by directly debiting his bank account at Point Of Sale (POS) machines installed in shopping centres etc, without having to withdraw money from the nearest teller machine.

The new card comes with a Personal Identification Number (PIN) which could be used either to pay for goods or to withdraw cash from any Automated Teller Machine around the world.

He said that so far 300 POS Machines have been installed in various parts of the country and that the bank plans to install a total of 1000 machines shortly.

The machine is initially being installed free of charge at leading groceries, super markets, petrol stations, hospitals etc, though each machine would be costing the bank Rs 75,000 he said.

Sampath Bank's 310,000 SET Card Holders will be issued the new cards shortly. Mr. Kannangara added that the new card will also provide access to 315,000 Automated Teller Machines and 2.7 million POS Machines installed all over the world due to the tie up with the International CIRRUS/MAESTRO Card system.

FPA calls for quality control in contraceptives

The Family Planning Association of Sri Lanka (FPASL) has expressed concern over the "very poor quality" of some of the brands of contraceptives sold in the market.

The FPA annual report for 1996 says that new brands entering the market in response to the increased demand are helpful but will damage the reputation in relation to quality that is currently provided.

The FPA warns that this could lead to serious doubts on the effectiveness of using condoms.

The contraceptive social Retail Marketing Programme. (CRS), the main contributory work programme in the improvement of accessabilty for pills and condoms throughout the country maintained its position in the market as the leading supplier of condoms and pills in the past years, according to the Annual Report.

The limiting factors, the FPA identifies as constraints to their market operations during the period are threefold; The war in the North and East, overall deciline in the eonomy and the foreign exchange parity.

FPA also highlights yet another major the problem, refugees in the country and urges expedited attention.

"The war has created a new group of poeple Refugees. The government finances their well-being. They have a low purchasing power and low discretinary income. Unless controlled this may give rise to a population explosion (within the groups). "

The CRS has been active in the refugee areas in a limited capacity. Like every other enterprise in business, the FPA too faced competition during the year under review with the entrance of a new silkier brand of condoms introduced by a leading company, with a very aggressive marketing strategey.

Although the new brand has not captured even a 10% of the market FPA admits that it would remain a threat to the CRS.

In this wake FPA too added variety to its range of rubber with two more brands.

The Association points out that since the latter is sold on consignment basis where the supplier is paid only on what is sold and also as the cost of advertising of the particular condom is borne by the supplier, the FPA "Will incur no losses even if the product fails."

The prices of the whole range of contraceptives was hiked during '96 enabling the association to achieve a final cost recovery rate of 90%. The objective for the year was a rate of 82%.

The sales operations were further boosted by the introduction of the new distribution channel of 'vending machines.' Whilst four machines were installed in colombo one was introduced in Hambantota.

During the year under consideration the CRS also recorded an all time high income of Rs 39.68 million.


By Business Bug

Lesson Learnt

Last week's phenomenal success of Watawala Plantations in the Stock Market has given much food for thought for boys at the Treasury.

The consensus now is that plantation stocks were under-priced in their primary issues, so many investors made a fast buck in next to no time.

So, when the next plantation stocks are on offer the primary issue price will be a little higher....


Recently there was much confusion concerning Sri Lankan workers in the Middle East, with some of them being asked to catch a return flight home.

Yet, it is still possible for private agencies to engage in the lucrative trade of sending manpower to the Middle East.

But, soon new laws will be enacted that will make it mandatory for all workers bound for the Middle East to be cleared by a government authority....

Double Blow

Tourist hotels were in a bad way ever since the October 15 bomb blast ripped through the city centre.

Despite this setback, they solidered on depending on sales from the restaurants they operated.

Now with a cholera epidemic raging, 'eating out' is not very fashionable and hoteliers have been dealt a double blow.

Most of them are eagerly awaiting the financial aid package promised by the government....

Two In One

Remember the one with a heart who went on a media rampage as to how the other banking brethren charged their customers heartlessly a few months back?

Well, suddenly this hearty one too has started levying Rs. 25 and (Rs. 50 for business folks) on accounts that are current with an average balance less than Rs. 2500.

And the customers had two shocks in one - one to hear this from their one who shouted from the roof top about others and the other the amount.

Because even the stately ones charge only Rs. 10/ and Rs. 15/-. And even that for ones with a balance less than a mere Rs. 1000/-.

Continue to Business page 2  *  Tobacco sales take unprecedented plunge  *  Inter-firm comparison a precedent to Credit Rating

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