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Avurudhu bonanza

Abans' Nakath Vasi Avurudu sale now on at Abans showrooms  promises to give their customers value for money with discounts of upto a third of the value slashed from the original selling price.

And that's not all, customers can also enjoy many other benefits like  "Hatrick Offer,"  "Twenty-20 Offer," "Free Hit Offer" and a chance to be one of 10 lucky customers to win free air tickets to England for the World Twenty-20 Cricket Tournament in June 2009 with accommodation and match tickets to cheer our cricketers.

And what's more, Abans "No Poli-More Jolly" interest free instalment terms are available to customers to help them shop to their hearts content without worrying about their budget.

To celebrate LG's sponsorship of the World Twenty-20 Cricket, Abans, the sole agent for LG products in Sri Lanka, launched the Abans LG Twenty-20 Win Win promotion which coincides with Abans' Naketh Vasi sale.

A customer who buys any product for Rs.5,000 or over will be entitled to a chance to win an air ticket to England with accommodation and match tickets for World Twenty-20.  A total of 10 air tickets will be on offer for those who shop at Abans upto April 15, 2009.

Abans offer you the opportunity of being a multiple winner!

When you buy a product from Abans you are not only assured that you have bought a world class product with a guarantee of quality and after-sales-service, but also excellent value for your money and the chance of a lifetime to visit England in Summer and watch our world class cricketers participate in a world class tournament.

Visit your nearest Abans Showroom to view the wide range of LG's innovative energy saving appliances  and guaranteed quality appliances from the world's best brands. The widest selection of fridges, televisions, washing machines, air conditioners, cookers, ovens, vacuum cleaners, floor polishers and more. Also affordable, fuel-saving scooters and motorcycles from Jialing, LML and Piaggio, with advanced Italian design and Honda technology.

Will get only 60-80% of capital outstanding

Depositors in two F&G cos. to forego interest receivables

Investors in two troubled Finance & Guarantee (F&G) Group companies will not get any interest payments on their deposits, reporters were told at a press conference on Tuesday.

Those two companies are F&G Real Estate Co., Ltd., (RECL) and F&G Property Developers Ltd. (FPDL), two unregulated finance companies with a total deposit base of Rs. 8.1 billion.

Janaka Ratnayake, Chairman of the majority government controlled Merchant Bank of Sri Lanka (MBSL), appointed by the Central Bank (CB) to manage the affairs of F&G Group to prevent it from total collapse told reporters on Tuesday that a number of depositors from such companies used to  collect their interest on a monthly basis.

Further, depositors in these two companies with deposits above Rs. 50,000 in value will only get 60-80% of their capital, while only those with deposits of Rs. 50,000 and under will get the full value of their capital.

The F&G Group, a Ceylinco company, is facing a liquidity crunch because of a run on its deposits after the collapse of its associate company Golden Key last year, wiping out some Rs. 26 billion in deposits value in a financial scam involving the latter company. The F&G Group comprises three companies with a total deposit base of Rs. 11.3 billion. They are F&G Ltd. (F&G), a registered finance company (RFC): with a Rs. 3.2 billion deposit base, RECL (Rs. 3.5 billion) and FPDL (Rs. 4.6 billion).

The Group has a 7,000 strong depositor base. The individual breakdown of depositors in each of these three companies was not immediately available.

"The bigger depositor value bases in the two unregulated F&G companies was because they were offering a higher return on deposits," Ratnayake said.

Some of those companies were paying an interest rate as high as 40% on deposits, he added.

While it's learnt that RECL and FPDL will go into liquidation after paying off its liabilities, the parent company, F&G, an RFC, will continue as a going concern.

Meanwhile revised depositor payment schemes offered for F&G include, in the event of deposit renewals with accrued interest, say for a further one year period, interest payable on maturity at a ceiling of 20%.

The payment scheme in regard to F&G, a regulated finance company includes, as per a company statement, at maturity, if the depositor wishes to take the interest but keep the capital, say for another year, interest payable is 12% while the difference (as per the interest displayed on the certificate) will be paid after a year.

Payment schemes offered for F&G also include, as per the statement: Renewal of deposits for a year at 20% on maturity or at 17% on a monthly basis after making/releasing interest payment for arrears from the date of maturity till the date of renewal at 12%.

Exchange of property for maturity value at the discretion of the depositor.

However if "some" depositors insist on immediate payment of deposit value, for deposits on maturity interest of under a year, 90% of capital will be paid within a six month period as full and final settlement, and in regard to monthly interest terms of under a year, then 75% of the capital will be paid as full payment within six months.

Payment of interest on future maturities will be at the rate of 12% with a promissory note to the value of the difference, with capital amount to be renewed for a further one year period.

Depositors are also given the option to get property in exchange for the maturity value of deposits.

Interest for existing depositors in monthly category will be paid their monthly interest at the rate of 12% until the deposit is matured and separate promissory notes will be given for the difference in interest (rate said in the certificate less 12%). Each promissory note will be paid after a year.

Capital amount on deposits on maturity will be renewed on the following basis: 50% of capital amount on maturity interest basis and balance on monthly interest basis. Monthly interest is paid at the rate of 17% and maturity rate, at the rate of 20%. These customers are also given the option to get property in lieu of deposits even before the period of maturity.

If the company is able to obtain a loan of Rs. 500 million from the CB, then those promissory notes will be settled prematurely.

Meanwhile, payment scheme for RECL depositors, deposits upto Rs. 50,000: Payment in full.

Those deposits beyond that value will be paid 80% of the value at maturity, and monthly category, 70% of the value.

Values of deposits of between Rs. 50,001-250,000; in regard to maturity deposits, Rs. 6,667 monthly (instalments) and in the monthly category, in monthly instalments to the value of Rs. 5,833 each.

Between Rs. 250,001-500,000; in regard to maturity deposits, Rs. 8,333 monthly and in the monthly category, in monthly instalments to the value of Rs. 7,292 each. And Rs.500,001 and above-properties in lieu of deposits.

Payment scheme for depositors of FPDL: Upto Rs. 50,000: 60% in one instalment. Between Rs. 50,001-100,000: 60% payment in maximum of 12 monthly instalments of Rs. 5,000 each and between Rs. 100,001-Rs. 250,000; Payment to the 60% of value only in a maximum of 24 monthly instalments of Rs. 4,167 each, with the balance dues to be paid from the sale of properties belonging to the Group.

And Rs. 250,001 and above, assignment of properties and part payment proportionate to the deposit value at the time of disposing of assets.

Initially transferring of properties are limited to 60% of the deposit liability. Letter of comfort to be issued for the balance capital amount which will be settled after a year if the company successfully divests its long term investment in Fingara Town and Country Club (book value of Rs. one billion) and Fingara Cricket Academy.

Market looks for rate direction

Treasury (T) Bills and Bond trading in the secondary market was quiet on Friday, with investors adopting a "wait and see" attitude, awaiting the outcome of this week's T Bill auction before making their next move.

T Bill rates at last week's auction fell, with the benchmark 364 day Bill falling by 33 basis points. "If that maturity falls by another 25 basis points (bps) at this week's auction that may give a signal to the market that rates are on a downward trend, possibly leading to a flurry of activity," market sources said.

All indications however are that rates are on a downward spiral, with victory in the war seemingly at hand and the possibility of the government obtaining a US$ 1.9 billion IMF loan equally strong, they said. 

With exporters encashing their dollars in lieu of the expected IMF facility that gave a thrust to the rupee, which saw the greenback depreciate by 20 Sri Lanka cents against the local currency at Friday's trading.

"The dollar which opened on Friday morning at Rs. 114/10/20 in two way quotes, strengthened to Rs. 113/90/114 as a result," the sources said. Another reason for the strengthening of the rupee is that the government has stayed away from the foreign exchange market since March 9, thereby easing pressure on the local currency, they said.

However, government borrowing was visible in the rupee market, with the market, on a net overnight basis being short by Rs. 6.6 billion on Friday, the sources added.

Promoting sterilised milk

Whilst promoting liquid pasteurized milk in the country may be a problem due to expensive infrastructure investments required, particularly because such milk goes bad very quickly, the alternative is to promote sterilized liquid milk that can be kept bereft of refrigeration for weeks, a manager said.

Malin De Mel, General Manager Unical (Ceylon) Ltd., a company which is into veterinary pharmaceuticals however told The Sunday Leader that because the powdered milk lobby in the country was powerful, government's efforts to promote liquid milk in the country will not be an easy task.

It's estimated that 80% of the milk consumed in the country comes in the form of imported powdered milk and only 20% in the form of liquid milk.

One multinational company (MNC) converted a liquid milk plant here to process coconut milk, whilst at the same time indulging in buying liquid milk locally from the farmer, and converting the same into powdered milk, alleged De Mel.

Another MNC which also has a strong presence in the powdered milk market here ran a joint venture in China to promote liquid milk consumption there, but was cheated by its local partner who added the banned melamine substance to strengthen that milk's protein content, alleged De Mel.

He however said that there are checks and balances in place to detect the addition of such harmful substances to milk.


Colombo Stock Exchange listing rules  have been revised subsequent to obtaining comments from stakeholders.

The revised Listing Rules will be effective from April 1, 2009.

Changes arising from the new Companies Act have been incorporated in the new rules.

The name "Second Board" has been changed to "Diri Savi Board" in the new rules for listing of shares. The eligibility criteria to list equity and debentures of a company have been revised.

New rules have been incorporated to list units of closed-end funds, scrip dividends, re-purchase of shares, redemptions, minority buyouts and the further issue of shares by a listed entity through public subscription. Rules relating to the further issue of securities, such as Rights issues, Capitalization of reserves, Share Swaps and Warrants have also been revised.

The current requirement of dispatching interim financial statements to all security holders or publishing in the newspaper has been removed. This will be available on the CSE website. Listed companies have been given the option of forwarding  annual reports to security holders in the form of CD-ROMs.

Double Standards

It's good for the Government to speedily veto a Supreme Court (SC) ruling on the grounds that it would affect Government revenue, but not good enough to take punitive action to immediately stop the operation of illegal finance companies despite the fact that the voter or the public having had lost an amount totalling Rs. 41 billion in the space of a few months by investing their monies in only three such scam operations.

No one appears to know how many more of such illegal operations, run by seemingly goody goodies, generous with public money and hob knobbing with the powers that be, like the smiling and cherubic Lalth Kotelawala, now in remand after the Rs. 26 billion Golden Key scandal, are still up and about, milking the guileless public of their hard earned savings, by offering them the carrot of a higher return.

Government needs to move fast, in the same speed as it did when it vetoed the SC order to lower petroleum prices commensurate with falling global prices that sought to give the suffering consumer some relief, on the grounds that it will hurt State revenue.   In the same vein the Cabinet of Ministers led by the President should immediately put a stop to the operation of such illegal deposit taking institutions on a Cabinet decision.

But that same speed is sadly missing when it comes to taking action to prevent several more scandals similar to the Sakvithi and Golden Key scams from taking place that has left several thousands of depositors destitute overnight as a result.

Is it that the government simply doesn't care about the plight of the innocent depositor?

The Rs. 26 billion Golden Key scam took place in November 2008, the Rs. five billion Sakvithi scam a few months earlier and the exposure of the Danduwan Mudalali scam in the South, almost at the same time, with the latter scam valued at Rs. 10 billion.

But even after a lapse of four months since the Golden Key scandal, the Government and the regulator-the Central Bank (CB) appear to be dragging their feet in banning such schemes.

Double standards.

Is this lethargy where Rs. 41 billion of public money was swallowed up by only three illegal institutions in a space of a few months considered too small, the cause for this indifference? And their knock on effect on other financial institutions, both regulated and unregulated, of no consequence, despite the numerous press conferences held by the CB to the contrary, the reason for of this nonchalance?

Or, are the authorities waiting for the loss of another Rs. 41 billion in public money through the operation of such illegal schemes, probably this year, before waking up, like Rip Wan Winkle, to take punitive action against such operators?

Or, is it due to crony capitalism, the plague of Third World nations such as Sri Lanka, the cause for this indifference? There are so many unanswered questions, and the public have the right to know the reason why?

No one, neither the Government nor the CB appears to be accountable for the proliferation of such illegal deposit taking schemes. The Government, the Cabinet of Ministers and CB officers need to be aware that they are paid and sustained by tax payers' monies, monies paid by such people who have been defrauded, and it's their bounden duty, other than educating the public about the danger in investing in such illegal schemes to put a stop to such operations and safeguard those monies, so as to prevent any untoward socio-economic consequences.

As Merchant Bank of Sri Lanka Chairman Janaka Ratnayake told reporters on Tuesday (March 17), the spawning of illegal finance companies took place after the opening of the economy 32 years ago in 1977.

Since then people have had got their fingers burnt by depositing their hard earned savings in such illegal schemes because of the higher rate of return those institutions promise over that of registered financial institutions. And action is being taken only after the horse has bolted.

CB Governor Ajith Nivard Cabraal says that they are still in the process of finalizing or enacting the necessary laws to prevent the operation of such illegal schemes.

The necessary legislation against the operation of pyramid schemes was however passed quickly.

Is it that there are a bunch of powerful and influential persons closely connected to the powers that be, behind the operation of such illegal schemes that prevents the CB from taking action against such miscreants?

Sri Lanka does not have a culture (unlike neighbouring India) of heads of institutions and ministries resigning on a matter of principle.

This reporter can however recall of only one such incident here, way back in the early 1980s, of a public officer resigning from office due to the obstruction to his duties by a senior cabinet minister of that time.

This officer who served as the general manager of the then State owned Ceylon Hotels Corporation (CHC) effected a transfer scheme for CHC rest house keepers. CHC at that time functioned under the Minister of State. The State Minister of the day summoned that officer and gave him instructions not to transfer a particular rest house keeper on the grounds that that was an order from another senior cabinet minister.

This officer said that he cannot make exceptions and submitted his resignation on a matter of principle.

Regrettably, the country may have now descended into an era of bootlickers and hangers on who only believe in clinging on to office at any cost regardless of principles, with the public having to pay the ultimate price for the sins of omission and commission that thereby continue unchecked, committed by the powers that be.


HSBC announced the launch of a campaign to save paper and help reduce felling of trees in a bid to encourage its customers to migrate from paper statements to estatements.

The campaign which is now on will continue to reward customers till April 20, 2009, once a customer registers through the Bank's Personal Internet Banking service.

 The promotion will reward a total of 25 winners, with five grand prizes of two night stays on double board basis at Heritance Kandalama. The prizes comprise a free excursion to the Eco Park.  Ipods and pen drives will be awarded as consolation prizes to 20 other winners.

HSBC was one of the first banks in the country to launch the epaper facility, in 2003 for its personal banking customers and consequently the facility was made available to credit card customers in December 2007.

Sales and Retail Distribution Head Nadeesha Senaratne said, "HSBC is today delivering on its promise to offer top quality service and innovative products. You will now be able to view your statement from the comfort of your living room, office or holiday resort - from anywhere at anytime. Our customers will be able to access their statement immediately as it is sent, through an email notification to advice that the statement is ready for viewing which will make it easier for customers to keep abreast of their account activity."

The estatement is another initiative by HSBC to offer customers the flexibility and convenience of banking. Other banking services designed for customer convenience include Internet banking facilities, a designated Call Centre offering free phone banking services, handling of enquiries and processing orders for credit cards and other products.

Customers can register for e-statements.

Linked to Cirrus

Sinhaputhra savings accountholders can now access 610,000 Cirrus ATMs worldwide and 27 million Maestro points of sale terminals.

In Sri Lanka there are 150 Maestro POS terminals, and Sinhaputhra savings accountholders can access their funds at petrol sheds, supermarkets and shopping malls depicting the Maestro or Cirrus signs.

This announcement was made by AGM Savings and IT Implementation Nalin Jayasundera and Consultant Investment Promotions Michael Cooke at a recent press meeting at Sinhaputhra Headquarters, Kandy. 

With one of the largest fixed deposit bases in the Central Province amongs Registered Finance Companies (RFCs), the Company hopes to primarily attract its own deposit base, whilst opening this product to customers islandwide.

Sinhaputhra Savings also has a unique SMS system and a payment system called "Simpay," allowing Sinhaputhra Savers to transact business via SMS with selected outlets and enjoy discounts on products rather than incurring a cost to merchants.  The SMS facility allows for balance inquiry and transfer of funds whilst the website will allow access to monthly statements through a secured pathway.

As an added service to the citizens of Kandy, Sinhaputhra Finance has extended the advantage of its central location in close proximity to the Kandy Municipal Council, Kachcheri, Dialog, CEB and leading Banks to settle a variety of bills and maintain all records for savings accountholders.The Company celebrated its 30 years of service to the finance industry in February 2009.

Interest on interest

Commercial Bank of Ceylon (Com Bank) has begun crediting a 20% "interest on interest" (in rupee terms) to its NRFC and RFC account holders in a response to a Central Bank (CB) directive.

"This new initiative will further promote inward remittances and help build up foreign exchange reserves to a higher level while allowing accountholders to earn bonuses on top of the interest rates paid by our bank," Commercial Bank's Deputy General Manager (International) Jegan Durairatnam said.

For instance, if an account holder receives an interest of US$ 100 on his or her NRFC account, Com Bank will pay the rupee equivalent of US$ 20 as a bonus.

"Just as the interest paid on NRFC accounts, the interest bonus too will be exempt from any tax deductions," he said.

Durairatnam said the logistics of delivering this service involved opening over 40,000 special accounts which was carried out in one week-end.

 "All this was possible because of the superior software and the technical capabilities of the Bank. The bonus interest calculated using the monthly average exchange rate of the previous month published in CB's web site will be paid to the accountholder on the same day on which the foreign currency interest is paid," he added.


American Express (AmEx) Credit Card, "acquired" and issued solely by Nations Trust Bank PLC (NTB), partnered with Keells Super recently to give card members the chance to win 50,000 Nexus points as well as 50,000 Membership Rewards points each month.

"This exclusive promotion entitles all AmEx card members who shop at Keells Super outlets to enter the 50,000 points draw" said NTB Sales and Marketing DGM Priyantha Talwatte.

Card members also have the opportunity to transfer their Membership Rewards points to international Frequent Flyer programme Asia Miles and to Frequent Guest programmes such as Hilton HHonors and Priority Club. Points could also be redeemed at Mackinnons AmEx Travel and at over 40 local merchants for dining, shopping, leisure, beauty and wellness offers and gift items.

The Nexus points offered through the Keells Super Chain and the partner outlets may be redeemed at the outlet or used together with the Membership rewards points.

Imports 42% more than exports

The country's import cost in January was 42.3% more than its export earnings, Central Bank (CB) statistics showed.

While imports in January costed US$ 698.8 million, export earnings amounted to US$ 491.1 million.

However the trade deficit contracted by 66.5% year-on-year (YoY) to US $ 208 million in January 2009 led by lower trade volumes, CB said.  

Both the agriculture and industrial sectors which were affected by the decline in commodity prices contributed to the reduction in growth in export earnings.  Lower demand emanating from the global economic downturn also had an impact on export volumes.  Decline in agricultural exports contributed to more than 50% of the decline in exports in January 2009.  Tea and rubber prices decreased by 9.7% and 45.9% respectively.  However, the performance in the exports of textiles and garments is encouraging as it grew by 4.5% despite "reduced external demand."  But this growth was not sufficient to compensate for the depressed performance of the other sub sectors within the industrial sector. Overall, industrial exports declined by 5.2% to US$ 385 million.

Import expenditure declined by 40.5% to US$ 699 million in January 2009.  The broadbased decline in imports was led by petroleum contributing more than 40% to this decline.  The average price of crude oil imports declined by 55% to US$ 41.71 per barrel in January 2009 from US$ 92.71 per barrel in January 2008.  Expenditure on investment and consumer goods also declined by 42.1% and 23.6% respectively in January 2009.  The current trend in external trade is likely to prevail throughout a greater part of 2009 in response to the deepening global economic crisis.

Private remittances decreased by 6.6%, from US$ 274 million recorded in January 2008 to US$ 256 million in January 2009.  A considerable part of remittances are denominated in UK pounds, euro, Australian dollar and Korean won, all of which have depreciated sharply against the US dollar, contributing to the decline in remittances in US dollar terms.  Remittances in January have been 123% of the trade deficit, easing  pressure on the current account balance. In consideration of these developments, both current and expected, the margin deposit requirements (100%) on certain non-essential imports imposed in October 2008 have been removed, while reducing the same (from 200% to 100%) on certain categories of motor vehicles.  This trend is expected to continue throughout the year leading to much lower trade and current account deficits in 2009, easing the pressure on the foreign exchange market. 

Gross official reserves with and without Asian Clearing Union (ACU) funds recorded US$ 1,703 million and US$ 1,415 million respectively by end January 2009.  Based on the previous 12 month average imports (US$ 1,128 million per month), these reserve values are equivalent to 1.5 and 1.3 months of imports respectively.   However, in view of the current and expected low imports resulting from the sharp reduction in oil and petroleum product import bills, the actual number of months of imports is much higher.

Unprecedented economic crisis

"I think the first thing that we need to recognise is that there is a global crisis-both an economic recession and a financial meltdown.

It's an unprecedented crisis," NDB Bank CEO Eran Wickramaratne told Benchmark last Sunday.

He was discussing the downplaying of the negative fallout of the global crisis by some top-ranking officials and its effects on our financial and economic landscape.

"The world economy in 2007 grew at about 5.2%. In 2009 it's going to grow at about 0.5% (latest estimates are that it will shrink by 0.5-1%).

Advanced economies grew at about 2.7%. They are going to contract by 2%. Developing economies like ours grew at 8.3%, and in 2009 they are going to grow at 3.3%. So it's a huge recession. It cuts across every market. It's a global recession which virtually covers all geographies and markets, so it will impact Sri Lanka," he added.

Commenting on how Sri Lanka will be affected, Wickramaratne noted: "We are integrated into the world economy. Our exports are going into the US markets, the European markets, the Middle East and elsewhere. These economies are all suffering from the recession and our exporters are feeling it. So, certainly, businesses are having cash-flow problems and we have to cope with it."

 So, what can be done about macroeconomic and governance issues? The show's Special Correspondent Savithri Rodrigo asked. Wickramaratne pointed out that it was important to look at corporate governance in relation to the wider issue of governance.

"There is an inability on the part of our state, for example, to reconcile majority rule with minority aspirations-that's why there is a conflict in this country-if you look at the corporate governance framework, it's similar. It's the majority stakeholder versus the minority shareholder. But I would like to say that something positive has happened over the last 18 to 24 months, particularly in the banking sector," he said.

"You can't have islands of excellence with regard to governance.

Governance is a culture; it's the soft issues. It's not just ticking the box on compliance and regulatory issues, it's a cultural issue. And that is why the whole governance culture in the country needs to change. And corporate governance then becomes a subset of that," Wickramaratne told the widely-watched business programme.

Benchmark is presented by LMD and airs on TNL-on Sundays at noon, with a repeat at 9.05 p.m. The programme is also carried over DialogTV as well as on LBN and on Bloomberg Channel on Mondays at 10 p.m. The weekly biz show is produced by the wrap factory.

Ailing Ceylinco finance cos.

Nine months to revive

Registered finance companies (RFCs) under the Ceylinco Group that has got into difficulties may be revived by the year end, a commercial lawyer told reporters on Monday.

"The other alternative is for those companies to go in to liquidation which would result in depositors getting only a fraction of their savings," Arittha Wickramanayake, one of four experts appointed by Central Bank (CB) to oversee the restructuring of these ailing companies said.

They are The Finance Company PLC (TFC), The Finance & Guarantee Co., Ltd., Seylan Merchant Leasing Co., Ltd., Ceylinco Investment Realty and Asian Finance.

The expert group appointed in this connection will be working sans salaries, said Wickramanayake.

The other members of this group are accountant Nishan Fernando, banker Henanayake Bandara and corporate manager Ajith Devasurendra.

TFC is the biggest and oldest RFC in Sri Lanka with a Rs. 28 billion deposit base.

As a further measure to bring stability to these companies, CB has dissolved their executive boards and has removed their names from the companies' payrolls.

CB Governor Ajith Nivard Cabraal in his briefing said that TFC employees had agreed to take a cut in their salaries while some of its managers as a confidence building measure have agreed to place part of their salaries as deposits with TFC.

Four of its former directors have been retained as executives, while Guy De Silva, a retired Bank of Ceylon deputy general manager has been appointed to oversee the affairs of TFC.

Those executives are K.J. Yatawara, Mrs. N.C. Rupesinghe, Mrs. Y.W. Dissanayake and T. B. Ekanayake.

Meanwhile, the Government through the State run Lankaputhra Development Bank will issue Treasury Bonds to the value of Rs. 2.2 billion and of a two year maturity (discountable in secondary market trading) to buy those troubled RFCs real estate at 67% of its market value, as a measure to infuse liquidity into those companies.

As a further stimulous, CB will underwrite guarantees worth Rs. two billion to banks which have suspended their facilities to those ailing RFCs in order to revive the same.

Cabraal also said that seized assets of lessees for failure to pay their lease instalments would be released to them without any penalties provided they make a 25% down payment on the lease outstanding with the balance to be paid in two years time.(See also main story on page 21)


Ceylon Chamber of Commerce (CCC) in association with the Hong Kong Trade Development Council (HKTDC) will hold a briefing session on "How to use Hong Kong and HKTDC Food Expo for tapping the Chinese Mainland and Asia market?" at CCC on March 26.


Brandix is one of three nominees for the Energy Globe World Award in the 'Air' category at next month's  award presentation in Prague for its "green" factory at Seeduwa.  Brandix Group CEO Ashroff Omar said,  "It shows the world that tough economic conditions and the domestic conflict notwithstanding, there are manufacturers in Sri Lanka who remain committed to ideals and standards."

Last year's Energy Globe Award winners were from Peru (Earth), Spain (Fire), Mozambique (Water), Austria (Air) and South Africa (Youth).

SL sells 301 mn. kg.

Sri Lanka sold a total of 300.7 mn. kg. of tea at the auctions in 2008, marginally higher than the quantity of 299.3 mn. kg. sold the previous year.

Of this quantity, 264.8 mn. kg. was sold through the public auction, a 9% year on year (YoY) increase. With the collapse of the market in Q4 2008, Sri Lanka Tea Board and the industry collectively agreed to ban private sales of orthodox leaf tea outside the auction.

Market for orthodox black tea is the foundation for Sri Lanka's tea industry.

Petro dollar economies of Russia/CIS and Middle East/North Africa have always paid a premium for Orthodox Ceylon's.

As a result, tea sold by private contract declined by 38% YoY to 34 mn. kg. in 2008. This step proved effective and concentrated all demand in the auction room. The trading restriction curtailing freedom of buyers and sellers has remained in place in Q1 2009 and may well be continued thereafter. (Asia Siyaka Commodities)

Tea to decline 12%

Annual average tea prices at the Colombo Auctions this year is expected to decline by 11.8% year on year (YoY) to US$ 2.459 a kilo.

The other two primary tea auction centres in the world are also expected to suffer a similar fate. Average tea auction prices at the Kolkota Auctions are expected to fall by 14.7% YoY to US$ 1.924 a kg. and at the Mombasa auctions by 1.1% to US$ 2.1930 a kg. 

Meanwhile, the price of the highest paying beverage in this segment, namely Coffee, Arabica, is also expected to suffer a dip in prices. Its prices are expected to come down by 8.2% YoY to US$ 2.829/kg. this year. (World Bank/ Asia Siyaka Commodities)

Downward revision in earnings

Sri Lanka shipped 319.7 mn. kg. of tea last year, a volume second only to the record 327.4 mn. kg. shipped in 2006.

The country exported 311.7 mn. kg. in 2007.

Export value of US$ 1.27 bn. last year is higher than the landmark figure of US$ one bn. earned in 2007.

However, considering the disastrous 4th quarter following the global credit crisis, it's unlikely that the country would have received full proceeds as declared in shipment data.

Many shippers were compelled to renegotiate or refund agreed values following the market crash and some are yet to receive proceeds from customers who have changed settlement terms.

Last year Kenya exported 383 mn. kg. at a unit value of US$ 2.34. Sri Lanka achieved an FOB value of US$ 3.97 on a quantity of 319.7 mn. kg. Total Kenyan earnings is around  US$ 896 mn.

Meanwhile, India upped exports 10% YoY to 196 mn. kg. last year. China's export figures should exceed a record 300 mn. kg., of which 78% is green tea and about 19% black tea. Indonesian figures are projected at 90-95 mn. kg., 13% of which is green. (Asia Siyaka Commodities)

Triple A

 Fitch Ratings on Friday affirmed the National Long-term rating of Sri Lanka's John Keells Holdings PLC (JKH) at 'AAA(lka)'.

Fitch has also affirmed the National Long-term rating on JKH's senior unsecured notes at 'AAA(lka)'. The Outlook remains Stable.

JKH's rating reflects the diversified nature of its businesses, the currently strong financial profile driven in part by its high cash position (estimated at LKR10 bn. as of March 3 , 2009 at the holding company), continued strong operating cash generating ability and the dominant market share of some subsidiaries.

$ 700,000 for seafarers

National Union of Seafarers' Sri Lanka (NUSS) in affiliation with the International Transport Workers' Federation (ITF) recently launched a welfare fund for the benefit of the Sri Lankan seafarer community.

ITF General Secretary David Cockroft speaking at the occasion said that support extended by ITF to the local seafarers to date amounted to US$ 700,000. ITF Inspector and NUSS secretary Ranjan Perera was also present at this occasion.

14 year old wins Montero

B. Kandasamy (14), an HNB Singithi accountholder won the Pathum Vimana 2008 Grand Draw prize, a luxury Mitsubishi Montero Jeep worth over Rs. 11 million.

Kandasamy is the   son of Mr.  & Mrs. S. Kandasamy of Bambalpitiya and maintained his Singithi account at HNB City Office.

HNB Pathum Vimana is the biggest deposit draw in Sri Lanka with prizes worth more than Rs. 120 million on offer. Those include Rs. 20,000 up for grabs daily through the daily draw and Rs. one million on offer weekly thorough the weekly draw.

HNB customers also have the opportunity to take part in the HNB Pathum Vimana TV Game Show where there are no losers and win cash prizes weekly, ranging from Rs. 5,000 to Rs.100,000. Regional draw also known as Gamin Gamata has a total of eight Suzuki Alto cars to be won- each worth Rs. 1, 600,000. The year end grand draw has on offer a house worth Rs 10 million and the year-end premium draw prize is a brand-new Mercedes Benz 'E' Class car valued at Rs.30 million.

SL not isolated from recession

"I think 2009 is going to be a very difficult year. By the second half, we'll see the direct repercussions of the global recession-even in a country that is small but not isolated from the global economy," corporate leader Mahendra Amarasuriya told the widely-watched business TV programme BENCHMARK recently.

 Commenting on the school of thought in some quarters that Sri Lanka will be insulated from the crisis, he pointed out that it is important to face reality.

"Sri Lanka's foreign exchange comes primarily from the 'three Ts'- textiles, tourism and transfers of funds from overseas.

With the developed world in recession, the purchase of garments will drop.

Although some are saying that tourism will develop on a grand scale after the war, people in larger economies won't have money to spend.

As for transfers, it's likely that Middle Eastern countries will reduce employment too, since oil prices have dropped," he said.

 Discussing the steps taken by the Central Bank (CB) to mitigate the fallout, Amarasuriya told the show's Special Correspondent Savithri Rodrigo that Sri Lanka is not only facing a "serious financial crisis," but that the country's reserves had also dropped.

"CB says US$ 2.6 billion, but it's still inadequate to meet our import requirements for more than six weeks. We don't have the reserves to play around with," he noted, asserting that Sri Lanka could not afford to borrow anymore.

Commenting on wasteful expenditure, Amarasuriya said that "the Government must curtail expenditure in public enterprises and any wasteful expenditure in running the country politically. We cannot embark on projects like Mihin Lanka, which is obviously already having problems. It is apparent that Mihin Lanka cannot be resuscitated. To put good money after bad isn't a wise economic policy."

 On whether the military successes would lead to a junta-like state, he affirmed that this was a possibility, unless the Government followed this up with a peace package. "Unless an acceptable peace package follows, I think Tamils will be disillusioned and will react in various ways.

Military success has to be followed by a political package which is acceptable to the majority of the Tamil-speaking people and the Muslims," he said. Benchmark is presented by LMD and airs on TNL on Sundays at noon with a repeat at 9.05 p.m. The programme is also carried over DialogTV as well as on LBN and on Bloomberg Channel on Mondays at 10 p.m. The weekly biz show is produced by the wrap factory.

Eee Box

EPSI Computers, authorized distributor in Sri Lanka for Asus announced the launch of the world's greenest, quietest and the most cost effective desktop PC in Asus Eee Box, which measures only "1L" in size, consumes 90% less power than normal desktop PCs and is one of the quietest desktop PCs with only 26 decibels sound emission, said a statement. This product is targeted at the Small and Medium Enterprise,  Home Users  and educational sectors.

Speaking on this launch, Epsi group product manager Sankha Jayaratne said: "With ever increasing concern over global warming and the looming threat to the environment, Asus has taken multiple initiatives in manufacturing green, eco-friendly products. These initiatives are part of our social and environmental responsibilities as well as part of Asus' strategic goal to tap the potential that 'Green Industry' has in future. "He added that Asus' substantial investments in R&D for green technology ensures a continuous  roll out of products manufactured from environment friendly materials, consuming much less power and conforming to RoHS and WEEE standards.

Jayaratne's said that the Eee Box is yet another revolutionary product from Asus in the "Eee" product range. The product will help boost sales in the overall desktop market in Sri Lanka because of the advantages it provides in terms of size and power saving, adding that the Eee Box uses Intel Atom N270 (1.6 GHz) processor based on new architecture designed from the "ground up," specifically for low power and performance in an ultra-small package. The Intel Atom processor packs more than 47million transistors into a single piece of silicon measuring less than 25mmę and has a thermal design power specification in the 0.6-2.5 Watt range. It is the smallest processor built with the world's smallest transistors and a fundamental shift in design, small yet powerful enough to enable a big internet experience on devices such as the Eee Box.

114th branch

Sampath Bank reached another milestone in expanding their corporate network by opening up their latest branch in Embuldeniya recently.

The new branch is the 114th of Sampath's electronically linked islandwide branch network that offers accessibility to banking facilities from anywhere in the country.

The branch is equipped with state-of-the-art technologies and staff to provide cutting edge financial solutions and hassle free banking services to the customers in the locality.

Addressing the gathering at the opening ceremony, Sampath Bank Chairman I. W. Senanayake assured that the bank will make every effort to deliver the highest level of customer service, cutting edge financial solutions, flexibility with a focus on customer needs and the technology of tomorrow, today.

The bank completed a successful year 2008 with a profit increase of 26.9% and is standing strong amidst a turbulent industry.

Sustainability awards

Judges have now finalised the winners for the ACCA Sri Lanka Sustainability Reporting Awards 2008 to be held for the fifth consecutive year. 

The high profile event which showcases the importance of sustainability reporting within corporates built on the global criteria pertaining to GRI guidelines and based on the concept of triple bottom line reporting will be held on Wednesday (March 25) at Cinnamon Grand.

Chief Guest will be Export Development and International Trade Minister Prof. G L Peiris and Guest of Honour will be Sri Lanka Tourism former Chairman and avid sustainable development advocate Renton de Alwis. 

Last year's awards saw Holcim Lanka win the large category award while Union Assurance won the medium category award.  Commendation awards were also presented to Ceylon Tobacco Company for continuous and consistent focus on sustainability and Sampath Bank for innovative projects integrating sustainability principles.

The awards, which is a global initiative and is based on judging guidelines established by ACCA worldwide, is currently held in over 25 countries and is open to any type of organisation encompassing all business sizes.  Comprehensiveness, credibility and communication, identifying and rewarding innovative attempts to communicate corporate performance which are all aligned to the sustainability concept are a part of the marking scheme and according to ACCA Sri Lanka President Nandika Buddhipala, it is notable that companies in Sri Lanka now consider sustainability reporting a part of their everyday workings.

"Proper sustainability reporting is challenging at the best of times, as while it does implement and establish uniform accountable and transparent guidelines on how economic, social and environmental impacts of an organisation should be reported, it also means that employees from top to bottom, must be made conscious of these reporting procedures.

While most multinational companies around the world consider sustainability reporting as a responsibility towards their stakeholders, what we find most exciting in Sri Lanka is the fact that we have an increasing number of Sri Lankan based companies that are entering and winning  awards.  This is admirable and an assurance that local companies are permeating global best practices into their corporate DNA." 

The ACCA Sustainability Reporting Awards are already functional in Australia, Canada, Hong Kong, Ireland, Malaysia, New Zealand, Pakistan, Singapore, South Africa, Sri Lanka, UK and USA with similar awards largely based on the ACCA criteria existing in Belgium, Denmark, Finland, France, Germany, Holland, Italy, Luxembourg, Norway, Portugal, Spain, Sweden andÿSwitzerland. .

In Brief

UNP politico's son in "land grab"

Privileged depositors of the troubled F&G Group were able to obtain valuable properties in lieu of deposits which were worth more than the value of the monies due to them.

Those included a businessman and the son of a prominent UNP politico.

These exchanges took place before the government controlled Merchant Bank of Sri Lanka (MBSL) stepped into to restructure this failing company.

"We have put a stop to such cronyism," MBSL Chairman Janaka Ratnayake told reporters on Tuesday.

F&G Chairman Mervyn Jayasinghe (he succeeded Lalith Kotelawala now in custody for alleged fraud) told reporters on Tuesday  that they were pressured to give these properties in lieu of maturing deposits that had been dishonoured by the company due to a liquidity crisis.

Jayasinghe and other F&G directors are currently working in the company after taking pay cuts. His son is also a Group Director.

Ratnayake said that if these properties were to be redeemed back to the company (they had been given on mortgage), F&G would have to pay back to those cronies sums very much higher than the actual values of their deposits.

Ceylinco's stated capital: Rs. 70

Ceylinco Consolidated( close to near collapse after a Rs. 26 billion financial scandal in one of its subsidiaries), comprises more than 100 subsidiaries with 30,000 employees.It however has a stated capital of only Rs. 70, a manager alleged.

Janaka Ratnayake, chairman of State controlled Merchant Bank of Sri Lanka (MBSL) which has been appointed as managing agent to restructure a number of ailing Ceylinco finance companies including the F&G Group alleged that this Rs. 70 capital is held by seven individuals, split into seven shares, each with a value of Rs 10 a share.

The shareholders include the now disgraced Lalith Kotelawala (in remand custody) and his wife Sicille-who is allegedly absconding from the law.

"Their liabilities, despite dealing in billions of rupees, many of it customers' money, was restricted to only Rs. 70," said Ratnayake.

They did their expansion works with other people's monies, he alleged.

 Ceylinco operated a number of finance companies which are facing a liquidity crunch after the Rs. 26 billion scandal at Golden Key, one of the Group's unregulated finance companies.

Migration is good

Lifting people out of poverty requires shifting populations from villages to cities.

This process of migration should be welcomed and encouraged, says the World Bank's 2009 World Development Report (WDR).

The findings are relevant for Sri Lanka, a country where some view Western Province's growth as a source of concern, rather than as a source of encouragement.

Globally as well as nationally people move in order to reduce distance to markets that are prospering. At the turn of the century, the leading western province accounted for 1.5 million internal migrants in Sri Lanka, or around 45% of all migrants in the country.

The most effective policies for promoting long-term growth are those that facilitate geographic concentration and economic integration, both within and across countries.

The new Report makes a strong case for international integration through trade. Its findings and policy messages are especially pertinent these days as the financial crisis has been encouraging protectionist tendencies in both developing and developed countries.  These will jeopardize both the recovery and longer term progress. 

Ripe for revolution

Estimates from more than 100 living standard surveys indicates that households in the most prosperous areas of developing countries such as Brazil, Bulgaria, Ghana, Indonesia, Morocco and Sri Lanka, have an average consumption almost 75% higher than that of similar households in the lagging areas of those countries.

Compare this with less than 25% for developed countries such as Canada, Japan and the USA. (World Bank)

"Breakneck" leap

It appears that the management of Bank of Ceylon (BoC) Mount Lavinia Branch had wanted to test the high jump capabilities of its customers, especially women and the old, by stringing a two feet high steel chain round its compound on Sunday March 8.

However, yours truly was still fit enough to clear that hurdle when he went there to make a transaction from its ATM machine that day.

The ATM has a video display called "Leap," relating to a partnership it has with a public quoted commercial bank. Considering the obstacles placed by BoC Mt. Lavinia to reach its ATM machine especially on a Sunday, "Breakneck" Leap may be a more appropriate a title.

Having said that, last Sunday , the height of this chain was however fixed at height much lower than the previous Sunday, but, probably still high enough to cause a problem to some of the aged and the women, coming to transact business from this branch on a week-end, or, more appropriately, to make some urgent withdrawals.

WAYs fall steeply

Weighted average yields (WAYs) at last week's Treasury (T)  Bill auction saw the WAY of 91 day maturity T Bills decline by 52 basis points (bps)  week on week to 14.94%, WAY of 182 day maturity by  40 bps to 16.47% and those of 364 day T Bills by 33 bps to 17.36%.

This auction was for the re-issue of Rs. 7,000 million worth of maturing T Bills of which Rs. 9,855 million worth of bids were accepted from the market.

Rs. 27.50 tax on industrial LPG

Whilst commodity prices, including LPG, a fuel used by both industry and households are falling due to the global recession, the government which is cash strapped on account of the war and of the recession, has slapped a tax of Rs. 27.50 a kilo for LPG imports for industrial use.

This tax, known as an excise levy, was originally Rs. 8 per kg., effective from December 31, 2008, but was increased by more than three fold to Rs. 27.50 effective from February 28.

However, industries in the country, especially the ceramic sector has protected against this tax, saying that the additional cost would make their products uncompetitive in the global market.

Bidders get 5.4% margins on SLDBs

Central Bank last week  accepted US$ 184.25 million worth of bids from the total of US$ 200 million worth of Sri Lanka Development Bonds offered to the market at US$ 6 month LIBOR + 5.40% (weighted average margin), with the US$ 6 month LIBOR rate being 1.88% at the time of selection.

Cheap proteins too expensive

Sri Lanka's per capita chicken consumption has remained stagnant at 3.5 kilos for the past three years due to economic reasons, Malin De Mel, General Manager Unical (Ceylon) Ltd., a veterinary pharmaceuticals company told The Sunday Leader.

He said that chicken and eggs are the cheapest source of animal protein available in the country.

The company recently introduced vaccines from Inve, Belgium, a manufacturer of veterinary pharmaceuticals, with the promise of fattening chickens to the pot at a faster and at a more economical rate.

MBSL takes-over CDB

Majority government owned Merchant Bank of Sri Lanka (MBSL) has been appointed managing agent to the troubled Ceylinco Development Bank (CDB), a registered specialized bank, Central Bank Governor Ajith Nivard Cabraal told reporters on Monday.

CDB has a Rs. 1.7 billion strong deposit base.

Further, Lankaputhra Development Bank has been appointed as managing agent for Ceylinco Investment Realty and Asian Finance, two registered finance companies (RFCs), whilst Seylan Merchant Leasing, another RFC belonging to the Ceylinco Group will be acquired by People's Leasing Company, a subsidiary of State owned People's Bank.


Institute of Chartered Accountants of Sri Lanka (ICASL) announces changes to the effective date of adoption of SLASs 44 and 45.

In order to provide financial statement preparers with adequate time, the Institute has decided to make it effective for the Annual Periods beginning on or after January 1, 2011 (and not January 1, 2009 as communicated earlier) with early adoption being encouraged. In recognising the need of having Standards in the area of Financial Instruments, the Institute has adopted SLAS 44-Financial Instruments: Presentation and SLAS 45- Recognition and Measurement which are the corresponding local standards to International Accounting Standards (IASs) 32 and 39.

Under Sri Lanka Accounting and Auditing Standards Act No 15 of 1995, ICASL is empowered to adopt Accounting and Auditing Standards in Sri Lanka.

The Institute develops and adopts Standards based on International Standards to improve Financial Reporting in Sri Lanka.

Financial Awareness

Chartered Institute of Management Accountants (CIMA) Sri Lanka Division in collaboration with Institute of Personnel Management in Sri Lanka conducted a Financial Awareness Programme for HR Managers at the CIMA Auditorium recently.

CIMA Regional Director for South Asia and Middle East Bradley Emerson and IPM Sri Lanka Chief Executive  Dyan Seneviratne were present at the inauguration ceremony.

The course was outlined and presented by Richard Pieris & Co PLC Group Finance Manager Mallik De Silva who has local as well as international exposure in training non financial professionals in improving their financial skills.

The main modules were on Understanding Financial Statements, Shareholder Value, Generating Cash and Profits, Adding Value with Finance focusing on Taxation of employees and preparing Budgets for the HR Department.

This programme was organized by CIMA Sri Lanka Division Member Services unit.

Green living

These days you probably feel flooded by dire-sounding environmental news and endless suggestions for greener living. But fret not, we're here to help sort things out and get your eco show on the road.

If you have a friend, relative, or a colleague who needs a little help on the green front, send them this way to Nivasie at Galle Road, Colombo (Close to the Galleface Green) to get to know more about "eco friendly green homes surrounded by green in all its splendour at Eco Town-Victoria Range, nestled in nature amongst lush green forests, and towering majestic peaks.

Speak to Nivasie Developers (Pvt.) Ltd Assistant General Manager Dilan Senevirathne in this regard.

Nivasie is the only eco friendly-green home project developer in the country. Or contact Priyashan or Janaka for details.

Three awards

Walkers Tours Ltd (the leisure arm of the John Keells Group) won three Bronze awards for Promoting Eco Tourism in Sri Lanka, Travel Photography-"Gathering" and Website (Consumer Travel)- Your Travel Partner in Sri Lanka at the 3rd annual Asia Travel and Tourism Creative Awards 2008, organised by AdAsia, a leading magazine in the advertising and marketing field.


In today's competitive world, it is important for youth to learn the international Language, English to enhance their career prospects in order to be competitive and have that extra edge.

In collaboration with world renowned brand "City & Guilds" PATHE Academy introduces the World recognised ESOL and SESOL courses for the people who want to learn English.

 PATHE at Kirulapana expanded its capacity aimed at starting a new course schedule through quality upgrading. With spacious classrooms equipped with the latest technologies for teaching English.

The centre is accessible by public transport and also has a lot of space for those who travel by vehicles. It caters to  small group classes, thereby focusing more attention on students.


Dominos Pizza introduced a new hotline for its customers-the'Hunger Helpline'in partnership with Dialog Broadband Networks, the international restaurant chain's local telecoms partner.

Associated at this event were Dialog Broadband Networks (Pvt) Ltd. Channel Sales Manager Hareen Jaimon, Senior Executive Faiz Subiyan, Dominos Operations Manager Roshan Ferdinan and Managing Director Maxwell Gihan Fernando.


 In Brief







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