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30th August 1998

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Enough tiles to pave road from Fort to Wadduwa

By Company Watcher

Royal Ceramics Lanka Limited (RCL) con tinues to consolidate its position as a successful export oriented company providing high quality ceramic tiles. Now in its eighth year of operations, RCL has exceeded the installed production capacity and surpassed the exceptional figure of one million square metres last year.

The Company's General Manager, M.S.W. Fernando describes this achievement in a different perspective. According to him, area-wise this would have been sufficient to pave the Galle Road from Fort to Wadduwa or the Negombo Road from Fort to Negombo. He attributes this "phenomenal achievement" to increased efficiency and productivity whilst maintaining the highest quality standards.

Starting the last financial year with a moderate turnover of Rs. 37 million in April 1997, the first month of operations, the Company reached a peak of Rs. 73 million in November ending the year with a total turnover of Rs. 633.7 million.

"Although the global recession had an adverse impact on exports, the local market showed a promising 15% growth over the previous year", Mr. Fernando says. The total volume of sales of 1.25 million square metres during the year was 14% more than the volume of production in the previous year.

Profit after tax improved from Rs. 74.4 million to Rs. 81 million showing a steady improvement over the years, from Rs. 29.5 million in 1993 to Rs. 61 million in 1994 and Rs. 67.9 million in 1995. Last year was the best year for the Company achieving the highest ever turnover for both local and export sales.

"Due to the strenuous efforts of the energetic and dynamic sales and marketing teams, the Company not only sold the entire production output of the year but also substantially reduced the finished goods inventory brought forward from the previous year. The strategy we adopted of going to the doorsteps of customers through the regional sales, proved very successful in penetrating the local market", Mr. Fernando says in his annual review to shareholders.

Regional sales accounted for 26% of total output with showroom sales at the high level of 52% and export sales at 22%.

Equally successful were the few workshops conducted to educate architects, engineers, construction supervisors, contractors and other related personnel in proper selection and laying of floor tiles and in the application of tile grout.

Customer services and facilities at the main showroom at Nawala have been improved. In addition to refurbishing and modernizing the showroom, an on-line credit verification system was installed with an automated point-of-sale terminal for the speedy processing of credit card transactions.

New technology has been embraced and the company is being publicized on the Internet World Wide Web. A website has been created on the Internet for the benefit of existing and potential customers around the world. The company is now able to entertain inquiries and even process orders online, using an e-mail response system.

Export sales continue to maintain a healthy trend with the Asian region accounting for 58% of the sales.

Middle East accounts for 16% with Africa (11%), Australia and New Zealand (7%), USA and Canada (5%) and Europe (3%) taking the balance.

RCL is also paying much attention to research and development. New tile designs and finishes are being developed to expand the product portfolio, increase customer choice and cater to expanding market segments, both local and foreign. A new laboratory with state-of-the-art equipment for research and development, quality testing and control is under construction and will contribute to higher levels of quality than ever before.

"The resilience, profitability and encouraging results shown by the company and by the national economy during the year under review, especially when other countries of the region are facing economic difficulties, are good indications of the need for confidence and courage and the need to invest in the future", Mr. Fernando says.

A heavy capital investment budget is being planned in the ensuing year with 65% of the planned investments set apart for the development of existing and new products.

Further the sales promotion programmes planned and the improvement in tile laying efforts through the fully owned subsidiary Cerampro (Pvt) Limited in collaboration with Laticrete Limited of USA should help further improve the company's turnover and profits, according to Chairman F.P. de Alwis.

Looking at the future, he says that the company is conscious of the need to establish long term strategies in order to face the challenges of the 21st century. Steps have been taken to clear the 'millennium bug' and a new fully computerized operational system covering the accounting, inventory control, production planning and material resource planning has been planned. A new production expansion programme costing around Rs. 250 million will also be put into operation.

"With the expansion programmes we hope to implement in the next financial year providing new varieties and new improved designs combined with the continuing efforts of a dedicated workforce led by senior management, we could look forward to greater profitability and profits", Chairman de Alwis assures the shareholders.

A final tax free dividend of 10% has been proposed in addition to the interim dividend of 10%, thus keeping to the assurance given to shareholders that the Company would try its best to maintain a good dividend record.

Metropolitan marks 40 and wants to go public

By Feizal Samath

Another bastion of family control is falling to the allure of the Colombo Stock Exchange!

The Metropolitan group, the country's largest marketeer of office automation products, which celebrates 40 years of business this month, is planning to raise capital from the public through a share issue.

"Well, we want to expand and for this we need capital. Many employees of the company too have expressed an interest in owning a part of the company by investing in share capital," said Jawarhal Ambani, the group's managing director.

The DFCC is currently working out the technicalities of a public listing as a precursor to the move to go public but Ambani says that no date has been decided on as yet.

"In principle we have decided to widen the ownership but it is not prudent to do it now because of adverse market conditions," he said. "We will wait for the right time."

Many of Metropolitan's long-standing principals have also expressed interest in investing in the company, and stockmarket analysts said that raising capital from the public by a company with a commanding performance in its field of activity, won't be a problem. Thereby exciting times lie ahead for the Ambani family, forty years after their father Jamnadas Ambani, an accountant by profession, decided to venture out on his own after working for Adamjee Lukmanjee Ltd, a top commodities firm in the 1950s.

The elder Ambani moved into a house at Union Place, which today is still one of Metropolitan's offices that is spread out in the capital, Colombo.

When Metropolitan began its then modest venture, the other giants in the office equipment business were Freudenberg and Hayleys but today Metropolitan stands as the giant in its "old and faithful" business while the other two have spread their wings into other fields of activity.

The Ambani family consisted of six boys and three girls, with all the boys schooling at Ananda College and pursuing different vocations. Seven members of the family are professionals - among whom are three chartered accountants (including Jawarhal Ambani), a doctor, a lawyer and an engineer.

"With so many professionals in the family, we may have pursued our professions or gone into business on our own if our father hadn't started a business venture," Ambani said, reflecting on the past from his sixth floor office at the Metropolitan headquarters at Braybrooke Place.

The younger Ambani joined the firm as a 19 year-old articled clerk and has seen it through "thick and thin" in a 30 year period ranging from a closed doors economy to a open, liberalised one.

Metropolitan is today the biggest seller of office automation equipment; does business with some of the best names in the telecommunication field like Ericsson of Sweden and sells the Acer computer from Taiwan, which it says is the third or fourth largest computer vendor in the world.

One of the firm's keys to success, like any other successful group, has been its ability to adapt to change and changing environments.

Take for instance the 1960-65 period and the 1970-77 era, which brought forth restrictions and import controls. Metropolitan like many other firms were throttled with import restrictions and despite having the best brand names like Canon from Japan and Optima from East Germany, had to seek orders from the State Trading Corporation, the sole importer of office machines like typewriters.

Sensing a demand for second-hand or re-conditioned machines, Metropolitan moved into this field and very soon created a demand. There was a shortage since the STC could supply between 200-300 typewriters even though the market requirement was around 2,000. So customers went for the next best option - a good re-conditioned product.

Metropolitan was also able to clinch many orders from the STC with its Optima range of typewriters which had an unbeatable price and quality that could not be matched by other competitors.

Ambani says the then East German Ambassador and his wife, who were pro-business, were actively promoting East Germany and getting favourable prices from manufacturers there to promote their products here. 'We were able to get some good prices via the East German embassy intervention."

Another significant breakthrough was when Metropolitan secured a major contract from the Bank of Ceylon to install current account machines, breaking a monopoly held then by other western brands. Other banks like People's Bank, Hatton National Bank and Commercial Bank also became Metropolitan clients and in three years, it had sold 1,000 such machines.

In the mid-1970s as office automation moved into the electronics arena, Metropolitan began marketing Canon electronic calculators - the first to be introduced into Sri Lanka. "It was a runaway success," added Ambani.

Taslim Rahaman, a director of the company who was associated with Ambani in The Sunday Times Business interview, said that Metropolitan now sells 70,000 Canon calculators a year and Sri Lanka and Australia are said to be Canon's best performing markets in the world.

Rahaman said that Metropolitan also handles the entire Canon range of products like cash registers, fax machines, photocopiers, electric typewriters, bubble jet printers and the Sri Lankan company is one of the few Canon agencies that handles all the products. In most countries, Canon uses at least two or more agencies to sell its range of products but it has stuck to one company in Sri Lanka because of the success rate.

It was in the late 1970s - with the entry of the United National Party government and a liberalised trade policy - that Metropolitan really rolled its business machine, moving into a new era. It was a period for opportunities and Metropolitan, like many others, started expanding into connected areas.

"We are able to offer a complete and total office automation package today from typewriters, calculators, telephones to computers and so on," Ambani said.

And that is true. With giant trade names backing the Metropolitan empire, the firm is able to offer advanced technology in office equipment, telecommunications, computers and home entertainment products. The list goes on for the range of Metropolitan products.

Look at its brand names - Ericsson of Sweden (one of the world's biggest communications' providers which already accounts for 50 percent of Sri Lanka's telecommunication facilities), Canon (a Japanese-based world leader in office equipment), Suntel (in which Metropolitan has a 20 percent stake), and Rowenta, Kenwood and JVC among home entertainment products.

The company's philosophy is to grow in areas that would also help in the national economy in the advancement of knowledge and create job opportunities.

Ambani says the Metropolitan group - which has several companies handling its range of activities - has a number of qualified professionals particularly in the office automation business, many of whom are grabbed by other, newly emerging businesses with "fatter salaries".

"Quite a few companies eye our staff because of our expertise in some fields. But because we have a massive investment in human resource development and constant training and upgrading on skills, we are able to manage with the staff turnover."

He said that a top thinktank team of professionals from the firm is constantly on the look- out for new products and technology to expand the Metropolitan range of products. "This team also helps us to update our own knowledge of the business."

Industrial relations forum

Q: I have been employed as a music teacher in a Montessori school for the last five years. I was paid on daily basis and deductions for EPF never made. Recently I was requested to sign a letter drafted by the Director which I refused to sign, because it is legally harmful to my job. Later my service was terminated. I have filed a case in the Labour Tribunal requesting compensation for five years.

(a) Do I stand a chance to get compensation and how much finally?

(b) Can you please tell me according to the wages board how much must a trained Montessori teacher be paid according to the rules and regulations in Sri Lanka?

(a) You may receive compensation from the Labour Tribunal if you establish the fact that your termination is unjustifiable. The amount of the compensation is a matter to be determined by the L.T

(b) Your employment is not covered by any wages Board in Sri Lanka.

Q: In our company there is no Trade Union. Recently we received a letter from a Trade Union stating that they have formed a Trade Union Branch in our company and they claim that 50% of our employees are their members. They have also forwarded a list of demands requesting a discussion. We do not want to have any Trade Union in our company. What is the course of action you propose in this instance?

A trade union can be registered with seven or more employees. Therefore employees also can join any Trade Union as a Branch Union. However at present there is no legal requirement to recognise any trade union by the employers. If you are not prepared to recognise a trade union, you may ignore the letter received from the trade union. However, there may be a possibility of the said union taking steps to agitate for recognition of the branch union, creating an Industrial Dispute.

Q: Our company has a factory which operates 24hrs. As there is high possibility of an accident occurring in the factory we keep an emergency vehicle (with a driver) all the time in order to rush victims to the hospital. We employ this driver regularly, throughout the night to drive the vehicle in case of an accident. Is it necessary for us to pay overtime to this driver throughout the night.?

Overtime should be paid for the actual hours of work per formed. Therefore there is no necessity to pay overtime for the whole night. However, the driver should be compensated for the extra period he spent at the workplace during the night. As reported in your letter, he may receive overtime payments very rarely. As the driver is supposed to be ready for work at any time in the night, it is reasonable to make a payment for him for the period of standby duty. The amount of payment per hour should not be less than the salary the receives per hour.

Q: In our company, which involved in making is garments, certain employees refuse to do overtime. Normally their services were required when there is a shipment of garments. Can we take disciplinary action against them?

It is an implied condition of employment, that every employee should work reasonable overtime. Refusal to perform reasonable overtime amounts to misconduct, which may even justify dismissal.The reasonableness of the overtime required of an employee and his refusal to perform such overtime would depend on the circumstances; the conditions in the trade etc. In your case, the overtime is required for a shipment of garments and if you fail to do the shipment your business will be adversely affected. Therefore the employees are obliged to perform overtime provided that they are given sufficient notice. If they fail to perform overtime you can take disciplinary action against them.

Q: Our company dismissed one employee for misconduct. However, they made the application to the Labour Tribunal and after the inquiry, the Labour Tribunal ordered the re-instatement with back wages. We have not appealed against this order. This employee was out of service for two years. As he has not earned these two increments we have refused payment of the two increment. Now he has made a complaint to the Department of Labour about this. What is the course of action available to us?

The re-instatement means the action taken by you as the employer is illegal, wrongful or unjustified. Therefore the employee should receive back wages, increments, any bonus payments etc on the basis that he was in employment from the date of dismissal up to the date of reinstatement. Your employee is entitled to receive all the benefits enjoyed by other employees during the two year period; The course of action available to you is to grant his salary increments for the two years.

Q: My wife is employed by a reputed company for the purpose of bungalow maintenance. She was first paid a monthly salary of Rs.4, 500/= later increased by a sum of Rs.500/= from November 1997. Now she draws a monthly salary of Rs.5000/=. Earlier the company never got her to sign any documents on the acceptance of her monthly salary. Now for the past few months they got her to sign a voucher on a letter head of the company(on a Rs.2.50 stamp). During my wife's employment period (4 years) the company never made any deduction of EPF and ETF.

The other staff members including the driver, are enjoy the EPF and ETF together with other leave facilities but except my wife. She even doesn't have annual leave, casual leave, medical leave except for the Sunday- Poyadays.

What can she do to get all her facilities which are deprived her?

According to your letter your wife is employed in maintenance of Bungalow which is a private residence and this job belongs to domestic service. The domestic servants are exempted from the E.P.F. and E.T.F. Similarly they are not entitled to leave as they are not covered by shop and office employment act or wages board ordinance.

Q: Can an employer stop payment of increments to an employee as a punishment for misconduct.? What is the difference between stoppage of increment and deferment of increment.?

The employer can stop payment of increment as a punishment. Stoppage of increment involves a loss of an increment for the period of stoppage only. E.g. If the increment is RS100/=, the employee will not receive that for the period of stoppage. if the period is six months he will not be paid increment for the six months, but continue to receive increment during the balance period of six months. In the case of a deferment of an increment for six months the employee will not receive the increment during that period. Same as stoppage and in addition to that his date of increment will be postponed by six months during future years making it a recurring loss for the rest of his career.

Q:We have an employee who is attached to Volunteer Service in the Army. He gets absent frequently because of his involvement in the Army. Can we insist he resign from the Army.?

Under the Ceylon Army act you should not employ any service personnel in your organisation. If you fail to do so or penalise him in any way , you can be prosecuted by law.(Fine or imprisonment)

Seminar on Managing Employees for better results

The federation of Chambers of Commerce and Industry of Sri Lanka(FCCISL) has made arrangements to hold its next seminar on labour on 26th September, 1998(Saturday) at Sri Lanka Foundation Institute (SLFI), No 100, Independence square, Colombo.07.

The following matters are to be taken up for discussion at this seminar

1. better Performance through motivation of employees, by Mr. Gajaba Gunewardene, Management consultant.

2. Employee involvement for higher productivity, by Mr. Sunil Wijesinghe , Management Consultant, Former Chairman ETF and Dankotuwa Pocelain.

3. Employee training for better performance, by Mr. Gamini de Silva, FIPM, Human resources Director Singer (Sri Lanka) Ltd, and former President , IPM

4. Improving employer/employee relationship by understanding each other's obligations, by Mr. B.P Ratnayake, FIPM, Former President IPM, Consultant, Labour Advisory Service unit, FCCISL

The seminar is aimed at all entrepreneurs, department heads, Executives and others responsible for employee discipline. For more details please contact FCCISL

Managing People

Give your employees a life

Today's employees define success differently. They may be just as committed to their profession as earlier generations, but not at the expense of hearth, home, and hobbies, asserts Sam Deep and Lyle Sussman in Smart Moves for People in Charge.

Deep and Sussman suggest four ways to manage your employees so that careers are in harmony with home life:

Rethink the five-day work week. Flex time, job sharing, and telecommuting are ideas whose time has come.

Don't make your work habit the norm. you hurt your employees and your company by establishing a corporate culture of workaholics.

Invest in dependent day care. Employees with dependents can't give their total commitment to their work if they're worried above their children's or parents' care. Consider providing dependent care as a fringe benefit. When an employee sacrifices family for the company, give the family a present. Send a plant, tickets to the movie or a gift certificate. You will encourage the family through continued support of your hardworking employees.

World Executive's Digest

Ceylinco pays up Rs. 110m claim

Ceylinco Insurance Co. Ltd., paid a claim of (Rs. 110 million) to Gooryong Lanka (Pvt) Ltd., a Korean manufacturing company in the Katunayake Free Trade Zone destroyed completely by fire on June 24.

Officials of Ceylinco Insurance Co. arrived at the scene while the factory was on fire and experts from Resolve Loss Adjusters of UK were invited to Sri Lanka to assess the loss, a company release said.

Rs. 10 million was paid within four days for Gooryong Lanka to begin preliminary rebuilding work.

After assessing the loss the largest ever Insurance claim paid to a factory in the Free Trade Zone. Rs. 110,000,000 was paid by the Katunayake Branch of Ceylinco Insurance Co. Ltd., at a ceremony, held at the Airport Garden Hotel recently.

In the picture H. M. Gunaratne Banda, Director of Ceylinco Insurance, handing over the cheque to Yoon Sun Lee, MD of Gooryong Lanka Ltd.

LG's PN system refrigerators

LG, a world leader in refrigerators, introduces the preserve nutrition system (PN) for the first time in Sri Lanka.

LG also the first to introduce frost free, CFC free & rust free refrigerators has now introduced the unique PN system.

The PN system comprises the FIR lamp, the Moisture Controllers and the Deodorizers.

The three work together to counter factors that cause unpleasant odours, degeneration and staleness of food thus maintaining the natural flavour, freshness and nutritive value for longer periods.

This system is mostly effective with food that is moist.

LG in Sri Lanka gives you a wide range of refrigerators to blend with your home decor. They are a combination of elegant and aesthetic designs. The models range from the small mini bar fridge to the new jumbo sophisticated refrigerator and from the single door refrigerator to the double and three door refrigerators.

LG, is marketed by Abans with its efficient aftersales service and spares.

FIR Lamp: Light emitted from a special ceramic lamp in the chiller compartment strengthens oscillation of water molecules at their natural frequency through the resonance effect, slowing down protein degeneration by enzymes. Thus keeping freshness and taste for much longer periods.

Hemas brings health and help to forlorn village

Situated in the north eastern plains of Lanka the remote border village of Kandegama which is to the east of Aralaganwila, has been a target of attacks by the L.T.T.E .The people of this village have been reduced to mere dependence on assistance from the government and N.G.O's as they are unable to carry out their cultivation which is the only mode of income and survival, owning to fear of these sporadic attacks. Hemas pharmaceuticals initiated a community project with the main aim of helping these people.

The village, largely consists of widows and orphans, as the husbands who were mostly homeguards and cultivators, were either killed or abducted by the L.T.T.E. Minister of Mahaweli Development Maithripala Sirisena and officials along with the police and village authorities were present.

Over 1000 people attended the health camp with varying health problems and were treated by a dedicated team of doctors consisting of cardiologists, paediatricians, physicians and Medical officers who were supported by on site laboratory services made available by Mr. Thirunadarajah from Medichecks (Pvt) Limited, and his qualified technicians.

The bulk of the medicines used at this camp was donated by M/s Hemas Pharmaceuticals and positive contributions made by other Pharamaceutical organisations.

The eye camp examined 460 patients. A team of ophthalmologists from the Centre for Sight, Kandy, donated over 200 pairs of spectacles to those with visual defects.

They also found 51 patients with cataracts, 43 of whom were later operated at the Centre for Sight with transport arrangements sponsorded by Hemas.

Rs. 25,000 was donated to the local hospital to facilitate the purchase of required equipment.

Rs. 30,000 was donated by a manager of Hemas Pharmaceuticals towards the building of a community hall for the village.

Rs. 20,000 was donated towards the building of a house for a family whose breadwinner was killed by the L.T.T.E. The house was built with the assistance of the people by shramadana, and donated to the family during the programme.

Books, stationery and rubber slippers were distributed to the children of Kandegama Kanishta Vidyalaya upto Grade 4.

The pre-school building, and the children's playground were completely refurbished.

Hemas Pharmaceuticals also undertook the reponsibility of paying the salary of the pre-school teachers to continue school programmes.

Sports goods consisting of a football, volleyball, puttshot, discus, and others were also donated to the school to improve its recreational facilities.

Clothes and tennis/deck shoes were donated to the homeguard units deployed to protect this village.

SLIC chief for convention

Sri Lanka Insurance Corporation had a premium income of Rs.3 million during the first half of 1998.

General business premium income amounted to over Rs. 2 million and life premium amounted to Rs.1 million, a company release said.

The corporation has also benefited from the leadership of Prof. J.W. Wickremasinghe, its chairman, the release says. His vision has not been confined to the commercial aspects of insurance only but to help improve the living standards of the people of this country.

Prof. Wickremasinghe has been invited to deliver a lecture on "Globalization of Education and Practice of Live Insurance" by the Chairman, Club Life Insurance Corporation of India. This is the eleventh annual convention to be held by this institution.

The participants will represent the countries of Asia-Pacific region. This annual convention will be held from August 28 to 30 at Hotel Sayaji Indore and the theme is "Life Insurance Education and Practice".

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