18th January 1998


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Exemption from GST for travel trade

The travel trade is to be exempted from paying GST (Goods and Service Tax) for a two year period, a leading travel operator said.

"We have made representations to the Finance Ministry through the Tourism and Aviation Ministry, to extend us the same concessions as enjoyed by the hotel industry a two-year exemption," Travel Agents Association President Afghar Mohideen said.

Under the recent budget proposal, the hotel industry was exempted from paying GST for a two year period, as the industry was facing numerous hardships in the face of recent terrorist attacks and South-east Asian financial crisis. Tour operators too are pushing for a similar exemption from the finance ministry.

"We have been told that verbal approval has been given. But we are waiting for a formal approval in writing," he said.

The recent budget gave tour operators duty free concessions to import luxury coaches and motor vehicles for the development of the industry. In addition, the travel agents were given an exemption from paying BTT on all foreign sales for one year from October 1996. "The recent budget, extended this concession for a further one year period," a Finance Ministry official said.

Hapugastenne public offer opens next week

The public issue of Hapugastenne Plantations Ltd, a privatised regional plantations company owned by Plantations Investment Management Company (PIMC), opens on Thursday.

The majority stake of Hapugastenne Plantations was bought by PIMC on the Colombo stock exchange at Rs. 23.75 amidst much controversy.

At the time the company was managed by the James Finlay group.

After the deal, Finlay Plantations Management has been retained as the sub managing agent by the PIMC.

"Under the prevailing management agreement, PIMC has the authority to obtain the services of another party to carry out all its obligations as the managing agent at the cost of the company," the offer for sale document said.

"PIMC as the managing agent of the company (Hapugastenne Plantations) attends to the overall management of the assets and the business of the company at corporate level and supervises the sub managing agent with a view to ensuring that the latter carries out the day to day running of the company."

The PIMC has an issued capital of Rs 1,060 mn. Its major shareholders are Employees Trust Fund Board (47.2 per cent), Sri Lanka Insurance Corporation Ltd (28.3 per cent), National Insurance Corporation Ltd (14.1 per cent) and Merchant Bank of Sri Lanka (10.3 per cent).

PIMC also holds the majority stake of Udupussellawa Plantations Ltd.

The managing agent charges a fee of 4 per cent on turnover and 10 per cent of the profit of the company.

From January 1998 the sub-managing agent is to be paid a fee based on profits. For the first Rs 50 mn of profits a fee of 5 per cent, for the second Rs 50 mn 15 per cent, for the third Rs 50 mn 25 per cent and the balance 15 per cent.

For the year ended December 1996 the company had revenues of Rs 899 mn ( up from Rs 684 mn) and after-tax profits of Rs 6.1 mn. The managing agents and sub managing agents had been paid a fee of Rs 63 mn under the profit share scheme in force at the time. Employees were given a profit share of Rs 12 mn.

According to the unaudited results for the nine months ended September 1997 the company had a turnover of Rs 798 mn (up from Rs 661mn). After tax profits were Rs 70 mn.

The managing agents and sub-managing agents were paid Rs 105 mn. The company carries forward losses of Rs 107 mn.

Most of the company's revenue comes from tea. It comprises 22 estates with a total area of 16,746 hectares of which 5,894 is planted with tea, 1709 with rubber and 2767 hectares with other crops. The balance 6,376 includes uncultivated marginal land, forest reserves and roadways.

The estates are located in Ratnapura, Rakwana, Haliela and Passara.

A major hydro electric generation plant was being planned in the Ratnapura district and a dolomite extraction plant in Passara is under expansion, the offer for sale document said.

Risk factors included the heavy dependence on international tea prices, vulnerability to bad weather and the exposure to labour unrest given the politicisation of labour relations.

Mind Your Business

By Business Bug

The third in the ice-cream war

The cold war over ice-cream is hotting up. One party has increased it's product range while it's rivals are now having their back to the wall, forced to increase their prices.

Now, to this scenario comes the news that an American ice-cream chain is also keen to set up shop here.

Well, more the merrier and we hope the competition will make the consumer a king....

Ad man's misadventure

While 50th anniversary independence celebrations were being planned in the highest circles of power, someone with an advertising background suggested that the ceremonies should have sponsors.

Official photographers, official telecom network, official soft drink etc., he suggested, just like the Olympics.

But the others would have none of it and the ad-man had to forego his dream....

Contract is running

It's a New Year and it's time for all the contracts to be re-negotiated.

So, someone (no marks for guessing who) wanted the sponsorship contract of the silver sprint queen terminated.

But the blue chip's bosses would have none of it. And supporting them was the one who laboured earlier to keep the girl running.

So, she will be on an even keel for yet another year.

Continue to Business page 3 * Facing the international crisis * New travel trade head seeks active tourism promotion

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