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18th October 1998

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Venture capital: a people's business

By Shafraz Farook

The Sri Lanka business communities while being comfortable with the industrial lenders are yet to fully realize the existence of and the role of industrial equity investors. The market is also not aware of other products of venture capitalists including management buyouts (mbos), management buyins (mbis), expansion funding and other methods of investments that have both debt and equity characteristics. Hence the Venture Capitalist is not restricted to start up equity financing

Sri Lanka's relatively small venture capital industry is largely restricted by its numbers in making an impact on the market. To add to this, most local businessmen are reluctant to share management,an essential requirement in venture capital.

Moreover, present stock market conditions have almost locked up the traditional exit for VC companies.

The Sunday Times Business spoke to four venture capital companies about their problems, and progress in a difficult market.

It must be noted that the investment strategy followed by each VC company is different from each other and different reasons exist for the performance of VC companies.

Venture capital companies in SL have been around for over 10 years. But formally introduced to Sri Lanka only in 1989. Prior to this there were a few institutions like the DFCC, the NDB and the CDIC playing a quasi- venture capital role. The problems are with the new breed of VC companies. Unfortunately the track record with regard to profitability of these companies has not been impressive so far.

The main problem they seem to have is coming out of an investment or in VC company terms exiting from an investment. This is a VC company's main source of income. The traditional method of exit, through the stock exchange, which at the moment is not doing too well, seems to hamper effective exits. An alternative to this method is to sell the shares back to the promoters. This too has its own drawbacks.

Harim Pieris, Senior Investment Analyst of Ayojana Fund Management Private Limited, who are the managers for NDB Venture Investment and Ayojana Fund, feels that although the present performance of the stock exchange is bleak, when it is time to exit the investment it might be performing well. "The venture capital industry as a whole is moving away from a sale of shares back to the promoters of the business. This is because it is not the most profitable exit mechanism," he said.

Mr. Samantha Rajapaksa, CEO of CF Venture Fund, managed by Central Finance Private Limited feels that Sri Lanka has very few exit mechanisms. "The present performance of the stock market is a reason for this, this hampers exit mechanism," he said

"If exiting is a problem, the next practical argument is a buy back mechanism,"

Mr. Ariyarathne the CEO of Lanka Ventures a subsidiary of DFCC said," In theory buy backs at a fixed rate is good, but in practice it is not so. The promoters would buy back if the company is doing well. Promoters usually prefer to let go of the company after a while. We have to adjust to suit these conditions," he said

The People's Venture Investment Company Private Limited (PVIC) jointly owned by the People's Bank and the National Insurance Corporation Limited though feels differently about exits. "Firstly we should adapt to Sri Lankan conditions. We cannot call the present condition a problem, it is inherent," Nissanka Weerasekera, CEO of PVIC said. Exits should be thought of at the time of investment and not at the time of the exit. Usually a preferred exit from investee company is around the fifth or the sixth year," Mr. Weerasekera said.

This being the case with exits from existing funds, the areas available for new investments seem to be limited too. According to the companies, the guidelines issued by the Inland Revenue Department is the main factor restricting investment opportunities. The reluctance of the entrepreneurs to share management too contributes to this problem.

The Sri Lanka business communities while being comfortable with the industrial lenders is yet to fully realize the existence of and the role of industrial equity investors. The market is also not aware of other products of venture capitalists including management buyouts (mbos), management buyins (mbis), expansion funding and other methods of investments that have both debt and equity characteristics. Hence the Venture Capitalist is not restricted to start up equity financing

"The guidelines, with regard to the Inland Revenue Act do impose restrictions on the sector in which venture capital funds may invest to benefit from the tax relief's available in the Act," Mr.Pieris said. However, Ayojana's response to these restrictions has been to create Ayojana Fund, which does not avail itself from the tax relief and hence disregards the guidelines. "The venture capitalist as an institutional equity partner takes an active interest in the business and seeks an active participatory role in key areas that impact the long term fortunes of the business but avoid functioning in an executive capacity. This role is often not understood by investee companies who are accustomed to the passive monitoring style of institutional lenders. Overall Sri Lanka does not have major structural hindrance to private equity investors. In an economy, which is growing at approximately 5.5 per cent per annum, the opportunities for investment always exists," he said.

Mr. Rajapaksa feels real estate and tourism to be key areas to invest in, therefore thinks that they should be allowed.

"The guidelines were relevant at the time they were issued as it helped specific sectors but now it limits flexibility. It was also relevant when deal flow was good," Mr. Ariyarathne said. He believes that they should be allowed to go into bigger projects"

Mr. Weerasekera though feels differently about this issue. "Actually it is not restricting, most of the proposals are within the guidelines," he said. "Venture Capitalists usually look for high growth investments that would give high returns, hence the lack of investment opportunities. My own impression is that for the last two and half years the deal flow has come down. But only compared to the initial deal flows," he said. He feels that this is because quality deals are lacking. "Proposals with adequate Promoter's commitment are few in number. Most promoters expect a larger share of the risk to be borne by the institutional investor. VC is all about risk sharing rather than underwriting," Mr. Weraasekera said.

Another aspect affecting investments is the deal flow or the amount of money flowing into the organization for investment. Some feel that there is a drop in deal flow in recent times. Some others feel that quality deal flows have to be sought for rather than expecting it to walk through the door.

To add to this it seems that our legal system is outdated, the political system unstable and the accounting system inefficient. It is not up to the standard they would like it to be

"The political and macro economic environment that the venture capital industry faces is equally applicable to the entire business community at large. However the long-term nature of venture capitals investment and the resultant long-term outlook of venture capitalists make short term fluctuations in economic conditions less relevant to the VC industry," Mr. Peiris said.

"All industries should have political stability. The legal framework is outdated and slow. If there is a dispute of some nature, there is a major process for recovery. There are no specific accounting standards for venture capitalists," Mr. Rajapaksa Said.

"Though for a small organization it seems to be sufficient, in management of larger companies it is not. It is insufficient to make strong measures unlike in developed countries. The accounting standards too are not sufficient. Accounting and auditing standards are not enough for this field. Even small and medium scale industry's accounting policies are not sufficient," Mr. Ariyarathna said.

"Certain situations are unfavorable. Conditions such as limited company being unable to buy back its own shares," Mr. Weerasekera said.

All of this come to the management of these funds. 'To play the market' as they say, one should have the knowledge and experience to get the best return for the investment. This is another factor which they have to adjust to, as most of the VC companies do not have the full experience in the field.

"Fund management, venture capital or otherwise is a people business. The only productive resource of a fund management company is its human resource. However the long-term nature of venture capital investment and the resultant long-term outlook of venture capitalists make short term fluctuations in economic conditions less relevant to the VC industry," Mr. Peiris said. Ayojana has a flat organizational structure and an open style of management with emphasis to team- work.

"'We are in the process of developing experienced Venture Capitalists. When it comes to management we use a hands-on approach, although it is very costly," Mr. Rajapaksa said. He feels that there should be more market research and training in this field.

"We use a hands-on approach internally and externally but we are careful not to cross certain lines i,e; not take managerial levels," Mr. Ariyarathna said.

"Management is on a case by case basis," Mr. Weerasekera said. An experienced staff is important, but since VC companies are still young we don't have as many experienced people as we would like, especially people experienced in this field.

The exit mechanism, the guidelines, the reluctance of entrepreneurs to share management, the deal flow and the legal, political and accounting system all causing problems to the investments of the new breed of VC companies. The VC Association of Sri Lanka is formulating proposals to lobby the Government for less or no restrictions on the sectors in which VC funds may invest .In future we might see the new breed of VC companies in a whole new light..

The Origins of the Asian currency Crisis

The bulk of outflows followed rather than led the initial currency depreciations. The ensuing liquidity squeeze created a downward spiral of exchange rate depreciations and credit quality that fed on one another, magnifying price movements relatively long after the initial depreciations.

By Bankim Chadha and Subir Lall

The dynamics of the Asian crisis and the spillover across countries and regions have been the subject of much speculation among market participants and analysts.

What led to the enormous pressures in foreign exchange markets? What role did different investor groups play? And how were these disturbances channelled rapidly and forcefully across markets?

Chapter 2 of the IMF's International Capital Markets report examines the build-up and spread of the crisis and suggests several elements that played prominent roles:

Forward foreign exchange market intervention at modest interest differentials - essentially the offering of cheap oneway bets by the Bank of Thailand - fuelled the attack on the baht and precipitated the subsequent tumble of the other regional currencies.

The unwinding of "carry trades" ( by which international commercial and investment banks borrowed fixed rate funds in dollar and yen market and on-lent them in higher-yielding Asian local currency instrument), the rush by domestic banks and corporations to hedge their substantial on -and off-balance sheet exposures, and the thinness of foreign exchange markets magnified the initial depreciations.

The bulk of outflows followed rather than led the initial currency depreciations. The ensuing liquidity squeeze created a downward spiral of exchange rate depreciations and credit quality that fed on one another, magnifying price movements relatively long after the initial depreciations.

The form and structure of international finance had a direct bearing on the dynamics of the crisis and its spillover.

Leveraged positions on emerging market instruments - particularly debt and foreign exchange but also equity - and the margin calls in response to price movements in emerging market instrument, the subsequent rapid deleveraging, and the substantial size of financial flows and linkages within emerging markets all played critical roles in propagating and transmitting the crisis across markets.

The "contagion" was thus not merely a manifestation of the souring of mature market investors' sentiment but also direct result of the nature of financial linkages across markets.

Growth of investment banking in Asia

Commercial and investment banks aggressively expanded into Asia in the 1990s. The search for higher yields led to strong growth in bank lending flows and a spectacular growth of a Asian fixed income and foreign exchange markets during the 1990s.

The treasuries of commercial and investment banks resorted to carry trades as part of their regular funding operations.

The carry trade too a number of forms, with flows invested in first, sovereign credit, then the top-tier domestic commercial bans, followed by the lower-tier commercial banks and finance companies, gradually becoming more and more aggressive, moving into the corporate sector and then down the corporate credit spectrum.

The due dilligence performed by international lenders was conditional on the implicit and explicit guarantees offered by the authorities. The behavior of domestic entities also reflected a firm belief in the official stances on exchange rates.

Hedge funds played a very limited role in the fixed-income carry trade, focusing instead on more traditional long equity investments.

Dynamics of the currency crisis

Episodes of notable pressure on the Thai baht occurred as early as July 1996, but the most severe attack came on Wednesday, May 7 1997, when reports circulated that the Hong Kong SAR branch of a major Thai bank had become a large seller of baht for dollars and the Bank of Thailand was offering to sell forward dollars in exchange for baht.

In the subsequent days, most Bank of Thailand interventions were reportedly carried out in the forward market.

During this period, three and six months interest differential vis-a-vis US dollar rates were less than 3 percent so that the cost of taking a short position against the baht for three months was a mere 3/4 of 1 percentage point.

On Wednesday, May 14, the speculative attack reached its peak, with the Bank of Thailand estimated to have sold over $10 billion on that day alone. This - almost a week after the attack had begun - is when the bulk of positions, including those of hedge funds, were reportedly taken.

The following day, the Bank of Thailand stopped intervening, let interest rates rise, and instituted capital controls segmenting the on and offshore market.

The subsequent squeeze drastically raised the cost of carrying positions overnight, and the scramble for bhat caused an increase in the Bank of Thailand's reserves.

The squeeze was felt more by those proprietary trading desks of commercial and investment banks that had taken shorter-dated positions than by the hedge funds whose longer-dated positions were well funded.

While initial reactions to the float were favourable, market sentiment quickly deteriorated due to concerns about the impact of the devaluation and high interest rates on the financial sector and the view that the Bank of Thailand's massive buildup of forward foreign exchange liabilities had limited its ability to intervene further in support of the baht.

By the time the baht was floated, the foreign exchange and proprietary trading desks of the commercial and investment banks reportedly had short foreign exchange positions on the baht and so profited from its devaluation, as did several macro hedge funds. Commercial and investment banks, however, incurred losses on their inventories of fixed income instruments as spreads deteriorated.

With the float of the baht, market par ticipants perceived a need for competitive devaluations among regional currencies and prompted investors to take a closer look at the similar albeit of different degrees, financial sector weaknesses elsewhere.

Most hedge fund positions appear to have been taken only when other major investor groups had already begun to get out of the baht and when the Bank of Thailand began offering large positions against the currency.

The one other simultaneous buildup of hedge fund positions appears to have been long positions on the Indonesian rupiah, taken after its initial depreciation, reflecting the view that the rupiah had overshot.

Apparently, only a few hedge funds took modest positions for short periods, at differing points in time, on the Malaysian ringgit.

Turbulence in Hong Kong SAR

Following the initial depreciations of the baht, pesoringgit and rupiah, pressures intensified, attributable to mostly country-specific factors. In the week preceding October 20, 1997, the Taiwan Province of China authorities decided to stop intervening in support of their currency, leading to speculation that the Hong Kong monetary Authority ( HKMA) might do likewise.

Initial sales of Hong Kong dollars were broad based and included domestic residents, although the importance of foreign investors increased over time.

A popular account of the turmoil was that the number of large investors in particular, the macro hedge funds - took small short positions against the Hong Kong dollar, "attacking it a little"; aware, however, of the HKMAs commitment to the peg, they predicted a sharp increase in interest rates and took much larger short positions in interest rate-sensitive instruments in particular the equity market.

But there appears to be no evidence of a concerted strategy to short the Hong Kong dollar and equity markets simultaneously something referred in more recent discussions as a "double play".

Spillover effects on Brazil

Brazil was perhaps the most severely affected by the turbulence in Hong Kong SAR. In the week following October 24, Brazilian Brady bonds fell by 18 percent, the stock market index fell by 22 percent, and the real came under severe pressure.

Market participants unanimously reported that the exchange rate pressures were generated predominantly by domestic entities.

Market participants estimated that margin calls on highly leveraged positions of Brazilian financial institutions particularly investment bank, on Brazilian Brady bonds with the major international investment houses accounted for 40-50 percent or more of the capital outflows during the period.

These outflows and the effects of deleveraging sparked a wave of pressure on equity futures, and foreign exchange markets.

Deleveraging through sales of existing holdings exacerbated price pressures on the Brady market, while the liquidation of their domestic equity holdings pushed down the stock market. Increased margin requirements resulted in still further margin calls.

The lack of Chinese and fire walls (precautions taken to prevent market-sensitive information reaching traders from other parts of financial institutions that may have confidential contracts with client companies) between the investment banks' proprietary and fund management desks caused clearing banks in New York to reduce their credit lines thus adding further pressures for deleveraging.

Substantial Korean holdings of Brazilian Brady bonds, and their anticipated "dumping" in response to pressures at home also aggravated the downward spiral in prices.

In defense of the real the central bank doubled its basic lending rates and conducted spread auctions of foreign exchange on the spot market.

Market participants also reported that on the currency futures market, the federally owned Banco do Brasil took substantial positions against prevailing market sentiment, and the central bank increased the sale of dollar-linked bonds, with the explicit intention of providing a hedge to those seeking one.

In a key contrast with the Bank of Thailand's forward market intervention in May 1997, Brazil substantially raised interest rates. Market participants perceived significantly increased two-way risk from taking positions at these rates.

Even if the real were to devalue, a short real futures contract would not necessarily yield a positive return. And as settlement was in local currency these liabilities were not perceived to be a claim on reserves, and market reaction was not particularly negative.

Though Korea succumbed to the crisis only in the period following the turbulence in Hong Kong SAR's financial markets in late October, pressures had begun to build much earlier in 1997 amid concerns about Hanbo Steel's bankruptcy the placement of Kia under bankruptcy protection, and the government announcement that it would provide liquidity support to troubled merchant banks.

In response to large capital inflows in the 1990s part of a program of gradual capital account liberalization, the government of Korea had liberalized regulations on capital outflows.

The high returns available in Korea relative to world capital markets meant, however, that Korean capital outflows systematically sought out high-yield high risk investment.

The deterioration in sentiment against the emerging markets that accompanied the turbulence in Hong Kong SAR's financial markets compounded by the downgrading of Thailand and Korea's sovereign credit ratings on October 24, and the consequent widening of spreads resulted in margin calls to Korean financial institutions.

While these margin calls were in themselves not large, when combined with the liquidity pressures that Korean banks already faced, they created substantial pressures on them to deleverage and liquidate their foreign assets.

This exacerbated price pressures on emerging market debt instruments held by Korean banks. The turmoil in emerging debt maket during the period was thus magnified by the size and composition of Korean financial institutions' foreign assets.

International investors' awareness of Korean financial institutions' losses on these assets heightened concerns and encouraged the subsequent rapid retrenchment of international bank claims - in large part, extensive credit lines extended to Korean banks.

As the won began to depreciate highly indebted domestic corporations rushed to hedge exacerbating the downward pressure.

With pressures being felt on the exchange rate, uncertainty about the 'usable" reserves of the central bank, and the large demand for hedging and covering of margins by domestic entities, market participants were operating in an environment with great uncertainty and lack of information.

The ensuing panic-driven rush by domestic entities into the foreign exchange market exacerbated price pressures on Korea in November and December.


Ultimately, Thailand which effectively offered cheap one-way bets againts the Thai baht in the forward markets fuelled the attack on its currency.

In contrast the reported intervention by the Banco do Brasil in the futures market in support of the real was perceived to hold significant two-way risks for speculators and helped mitigate speculative pressures.

The attack on the real also demonstrated that capital outflows need not derive from a loss of confidence by domestic residents or short position-taking by foreign investors.

With regard to hedge funds, the dynamics of the Asian crisis appear to offer little evidence of concerted action in either instigating attacks on currencies or generating subsequent massive depreciations.

The chain of events in Asia and elsewhere, also suggests that contagion across emerging markets is frequently reflective of actual underlying financial market linkages rather than of a collective loss of confidence.

(The writers work in the IMF Research Department)

Corporate Profile

Sugar production: no big increase

by Company Watcher

While sugar consumption in Sri Lanka has sharply increased, local production of sugar has not shown any appreciable increase over the past few years. While last year's consumption rose to an all time high of 609,055 metric tons, the local production accounted only for 63, 897 metric tons representing a mere 11% of the total consumption. This meant that 545,158 metric tons or 89% of the consumption had been imported.

During the previous two years, sugar consumption was less than 500,000 metric tons each year. 1997 was the first year that it has shot up over the 600,000 metric ton mark.

Pelwatte Sugar Industries Limited, the major producer of sugar in Sri Lanka showed a marginal increase in production during 1997/98 recording 44,150 metric tons, 590 metric tons more than the previous year. While it boasts of Sri Lanka's "largest and most technologically advanced sugar factory" with a capacity of 60,000 tonnes of cane sugar per year, the annual production has exceeded 50,000 metric tons only once in the 12-year history of the company. That was in 1994/95 when 50,050 metric tons were recorded. Then it dropped to 43,226 (1995/96), 43,560 (1996/97) and 44,150 (1997/98) metric tons.

The other two factories at Sevanagala and Hingurana accounted for a mere 4% of the production. Kantale has not been in production since 1992.

Meanwhile, Chairman of Pelwatte, Mahinda P. B Senanayake says that climatic conditions experienced during last year were favourable for cane production of standing crop compared with the previous year. Actual rainfall for the year averaged 2,154 mm against the expected 1,417 mm facilitating 52% more rainfall. He comments that however, excessive rains during Maha 97 adversely affected cane growth of new plants.

According to the annual accounts just released for the year 1997/98, the company recorded a net profit of Rs. 109 million as against the profit of Rs. 123 million made the previous year. The turnover recorded was Rs. 1,400 million as against Rs. 1,134 million.

Commenting on the supply of cane from the nucleus estate, Mr. Senanayake says that a total of 55,621 metric tons of cane was supplied to the factory from 1,328 hectares averaging a cane yield of 42 metric tons which was significantly higher than 29 Mt/Ha during 1996/97. He attributes this to the improved crop management practices associated with favourable climatic conditions. However, full potential of the nucleus estate is yet to be realised.

As regards the settler scheme, total harvested during the year amounted to 98,297 metric tons from 2,261 hectares with an average yield of 44 Mt/Ha, slightly less than the previous year. Of the 1,464 families who harvested their cane, 3% earned a net income of over Rs. 100,000 from their plot, 20% earned Rs. 50,000 -100,000, 35% between Rs. 20,000 - 50,000 and 42% less than Rs. 20,000.

Outgrower farmers were increasingly participating in cane production and remain as the dominant suppliers of sugarcane to the factory accounting for 71%.

While the company has a staff of 1,212 permanent employees, it has around 6,000 registered casual workers and 7,000 to 8,000 outgrower cane farmers. The amount disbursed as payment for cane supplied, wages and services amounted to Rs. 850 million last year.

Referring to the Pelwatte Sugar Distilleries (Pvt) Ltd., Mr. Senanayake says that since the inception of the sugar project, the disposal of molasses has posed problems. Whilst small quantities were sold for a range of uses, bulk of it was discharged into ground pits and hence wasted. The capital cost of the new distillery erected to produce premium grade potable alcohol required an investment of Rs 500 million. While Rs 320 million was invested by Pelwatte Sugar Industries from its own resources, the balance was provided through a loan from People's Bank.

Once fully opertational, the distillery is expected to generate a return of 20% or better. The composting plant attached to the distillery will produce 25,000 metric tons of compost fertiliser per year, all of which will be required for the cane being grown on the plantation.

"The whole project is environmentally friendly and the cycle will be complete if what is derived out of the soil is returned to the same soil", Mr. Senanayake says.


Half year performance of plantation companies

By P.M.N. Bandara

Almost all the privatised plantation companies continue to show an improved performance during the half year ended June 30, 1998. The three plantation companies - Balangoda Plantations Limited, Madulsima Plantations Limited and Kelani Valley Plantations Limited - under review also had no exception.

Balangoda Plantations Limited

Turnover of Balangoda Plantations Limited for the half year ended June 30, 1998 amounted to Rs. 750.6 m., a 19% increase over the corresponding period of the previous year figure of Rs. 625.6 m. Profit with zero taxation amounted to Rs. 171.0 m. compared to Rs. 126.1 m. in the previous year. This is an increase of 35%.

Shareholders' funds as on June 30, 1998 stood at Rs. 654.6 m. which shows an increase of 72%. This is largely due to increase of undistributed profits.

Madulsima Plantations Limited

Madulsima Plantations Limited reported 22% increase of turnover from Rs. 388.8 m. to Rs. 475.3 m. Profit before taxation amounted to Rs. 150.2m., a 37.8% increase over the previous year. Profit after taxation increased from Rs. 108.9 m. to Rs. 138.2 m. reflecting an increase of 26.8%.

Shareholders' funds as on June 30, 1998 has shown an increase of 35% from Rs. 363.9 m. to Rs. 492.6 m.

Kelani Valley Plantations Limited

Kelani Valley Plantations Limited reported 22% increase of Turnover from Rs. 495.0 m. to Rs. 605.2 m. during the period under review. Company's profit with zero taxation amounted to Rs. 119.0 m., a 28.5% increase over the previous year.

Shareholders' funds increased from Rs. 431.8 m. to Rs. 810.9 m. showing an increase of 87%. This increase is largely due to increase of revenue reserve by Rs. 200.0 m. and increase of share capital by Rs. 140.0 m.

ISO 9000 family of 20 standards cut down to four

The Current ISO 9000 family of standards containing some 20 standards and technical documents will be reduced to 4 standards supported by a number of technical reports from the year 2000. The Technical Committee ISO / TC 176 responsible for these standards is presently revising these standards based on the experiences gained by the users of these standards, as well as to keep in line with the ISO 14000 standards on Environmental Management Systems, a press release said.

The 4 primary standards under the revised programme would be:

ISO 9000 Quality Management Systems - Concepts and VocabularyISO 9001 Quality Management Systems - Requirements

ISO 9004 Quality Management Systems - Guidelines

ISO 10011 Guidelines for Auditing Quality Systems

The current ISO 9001, ISO 9002 and ISO 9003 standards will be consolidated into a single (revised) ISO 9001 standards. The organizations who seek certification to ISO 9002 and ISO 9003 may omit those requirements given in the new ISO 9001 which are not applicable to them.

The revised ISO 9004 standard will cover a comprehensive Quality Management System based on 8 Quality Management Principles; customer focus, leadership, involvement of people, process approach, system approach to management, continual improvement, factual approach to decision making and mutually beneficial supplier relationship. Both ISO 9001 and ISO 9004 are developed using a simple process based structure as opposed to the current 20 element structure used in ISO 9001. The process based structure is more generic than the current 20 element structure and adopts the process management approach widely used in business today.

Also the new process based structure is consistent with the plan - do -check-action improvement cycle used in the ISO 14000 standard on Environmental Management Systems.

The main objective of the revision is to ensure that ISO 9000 and 14000 series of standards are implemented in a shared manner in whole or in part by organizations without unnecessary duplication or imposition of conflicting requirements.

Business Diary

Seminars on 'How to export'

The National Chamber of Exporters of Sri Lanka (NCE) has organized to hold a series of Provincial Seminars on ''How to Export" under the export promotional programme launched jointly with the Bank of Ceylon and the Sri Lanka Export Credit Insurance Corporation (SLECIC).

The Seminars are conducted as an awareness programme directed at the Potential Exporters, Small and Medium Exporters and Industrialists in the Provinces to induce confidence and encouragement to undertake profitable export business in the future.

The first Seminar under the above programme will be held on October 24 at the Kandyan Reach Hotel, Kurunegala from 8.30 a.m. to 4.30 p.m. Three other Seminars are also lined up to be held in November and December this year in Galle, Kandy and Gampaha districts.

Major revolution in IT

The entire world is now engaged in a hectic technological development process, electronic commercialization and globalisation revolutionising the world. In a timely move Minister of Internal and International Trade and Food, Kingsley T Wickramaratne has introduced Mr Neil Fairhead, an expert from the internationally famed American Company - Microsoft Corporation at a workshop held recently at Taj Samudra, Colombo,to get those here acquainted and to be aware of the achievements in information technology and understand the nature of the future world.

The Minister said that a major revolution is on the move on information technology today, with computers being turned out that could more or less replace the human brain. He said that computers are replacing the human brain in formulating plans, creations, and production that enables electronic commercialization in an amazing way.

Many identify internet as the technological revolution. But Mr Wickramaratne saw it as a trade revolution. If anyone wanted to advertise a product, obtain information about a product or service, to order it he need not go to the country in which the product is available, but sitting in his office he could complete the entire transaction through the internet.

Mr. Wickramaratne said that Microsoft Corporation of USA is a world renowned computer firm and its President, Bill Gates too has become famous due to the internationally reputed products that it turns out.

Celltel to provide exclusive cellular services to Vanik

Vanik Incorporation Limited and Celltel Lanka Limited last week signed an agreement under which Celltel will provide exclusive mobile communications services to the diversified Vanik Group.

The agreement, which initially covers 68 cellular phones, is similar to several others that Celltel has with entities in the corporate sector, to which the company is a major service provider.

Celltel is a major force in providing cellular communications to the corporate sector, said Serge Guevel, the company's Chief Executive Officer. "The demand for cellular facilities in the business community continues to grow at an encouraging rate".

Celltel's Commercial Director Steve Torode said that the company had set up a dedicated corporate account service team and devised special tariff corporate plans for the corporate sector to ensure that Celltel remained the sector's preferred choice.

Speaking at the signing of the agreement, Vanik's President and Chief Executive Officer Justin Meegoda said his group was committed to use Information Technology as a strategy, and was therefore happy to be associated with Celltel, which is the pioneer of cellular communications in Sri Lanka. "We chose Celltel because of the excellent service the company provides, and because it has offered us very good technology," Mr Meegoda said.

Celltel Lanka Limited, which is the largest cellular operator in the country, has a base of more than 70,000 subscribers.

Lions to set up model village

A model village with 48 houses provided with civic amenities will be a major project that will come up in the Batteramulla area funded by the Lions Club District 306 C.

A meeting was held recently at the Ministry of Internal and International Commerce and Food with Minister Kingsley T. Wickramaratne in the chair, to bring about close co-ordination with the Kaduwela Pradeshiya Sabha enabling early realization of the project.

Speaking at the meeting, the District Governor of Lions 306C said the total cost of the project is estimated to be about Rs. 4.8 million and they hope to raise at least Rs. 1.5 million through a musical fiesta at which world renowned Indian Artiste Asha Bhosle will be on stage.

"We have already received US$ 75000 from Lions Club International Foundation. Lion International President Kajith Habanandan is expected in the island mid-November and we hope to commence work when he arrives," he said.

Mr. Wickramaratne while appreciating the initiative taken by Lions Club requested the Chairman of the Kaduwela Pradeshiya Sabha to extend his fullest co-operation to the club.

Digital thunder at Epsi show

The Epsi Digital Arcade set up at Infotel by Epsi Computers presented digital shows on a movie screen with room-shaking thunder and cinema-like Surround Sound using a board with the same chip that was used to create the award-winning movie "TITANIC". The shows demonstrated the future generation of digital home entertainment with technologies and experience totally unprecedented on the PC today. It was "Environment Audio" by Creative who is the creator of Sound Blaster and the world leader in multimedia upgrade kits. Environmental Audio so real it has to Live!

Epsi displayed various state of the art View Sonic Display products. ViewSonic is the leader in the US computer display industry. ViewSonic is proud of 180 editorial awards won in 1997 and more than 400 accumulated since its entry in to the display market, offers high quality and better value with a commitment to explore new technologies. The display, in addition to the high quality monitors varying from 14" to 24", included the new Active matrix LCD flat ViewPanel VP145 which is 6.3 cms thick, weighing mere12.5 Ibs with a viewable a area of fifteen inches. This is the first time the ViewPanel is being displayed in Sri Lanka. The ViewPanel produces sharp, clear images of extraordinary brilliance. It is another innovative display product from ViewSonic.

Epsi blasts with creative Sound Blasters and their innovations using Epsi Computer systems with the world leading ViewSonic monitors and display systems.

New chief executive for Citibank N. A.

Mr. Kapila Jayawardena has taken over as the new Chief Executive (CEO) and Country Corporate Officer of Citibank N. A. Sri Lanka.

Mr. Jayawardena functioned as the Vice President (Treasury and Financial Institutions) of Citibank N. A. Colombo prior to this appointment.

He is an old boy of Trinity College, Kandy and Royal College, Colombo and holds a MBA in Financial Management, a company release said.

Citibank N. A. is the largest Bank in the United States. The Bank has been operating in Sri Lanka since 1979 and offers a wide range of banking services. Citibank N. A. also operates a joint venture (Citi National Investment Bank) with National Development Bank (NDB) specializing in Corporate Finance Activities.

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