BUSINESS

The Grand goes Indian

By Ranee Mohamed

It was a chance meeting - top hotelier cum business magnate Gerard Ondaatjie met Indian chef Kishore Reddy when he was dining at Kishore's Indian restaurant at the pavillion of the Crescat. Reddy was being nice to everybody - asking people 'whether they liked the food.'

But Gerard Ondaatjie and his wife, who were frequent diners at this Indian restaurant, liked more than the food. They were moved by Reddy's personal touch, and the food of course was delicious.

What Kishore Reddy did not know was that the casual diner in his restaurant was none other than Gerard Ondaatjie, Managing director of Grand Hotel and that at that time Ondaatjie was nursing the thought of opening a Chinese restaurant at his Grand Hotel in Nuwara Eliya.

But things change and they did with Kishore Reddy and his Indian food. Ondaatjie was seriously thinking of opening an Indian restaurant instead at his Grand Hotel.

And the business deal went through and on November 22, 2001 the doors of an Indian restaurant opened in the cool climes of Nuwara Eliya.

"It is one of a kind outside the city of Colombo. It concentrates on North Indian food but there is South Indian food and the tandoori varieties too," said Reddy. "What I wish to stress here is that the food is so reasonably priced," he added.

For Kishore Reddy, Indian celebrity chef in Sri Lanka for about six years and author of the book Cook with Kishore, the Indian restaurant at the Grand hotel is a remarkable achievement. For customers at the Grand Hotel are those who expect the finest things in life.

For Gerard Ondaatjie, this was another happy novelty at one of his hotels. Ondaatjie, the accountant who studied accountancy in USA for seven years, seems to have the inherent characteristic of hospitality in him.

"I have watched my grandfather and my father as a child build a hotel in the early 1970s and I have seen tourists come to them from voyages," he said.

Gerard who has walked into the rooms and seen roomboys tucking in bedsheets, walked into the kitchen and seen the cooks making the food and walked into the bar and seen what people were drinking, is today very much in the hotel trade. Modest, open and so down to earth, his plans are grandiose and unlike most grandiose plans, Ondaatjie has had the determination fo make them come true.

Managing director of the Colonial Grand Hotel, Gerard Ondaatjie however has no grand airs about him. The Ondaatjie's who steer great holiday places by the beach at the Tangerine Beach Hotel, Royal Palms and Nilaveli Beach Hotel seem to be hidden by the awe of the greatest holiday hotel by the hills - the grand hotel in Nuwara Eliya which is a landmark from time immemorial.

LAUGFS hit by court order

By Asgar Hussein

An unforeseen court order has compelled Gas Auto Lanka (LAUGFS) to close down their 11 filling stations.

Their competitors in the auto gas industry last week succeeded in obtaining an enjoining order from the Commercial High Court in Colombo. It restrains the company from selling LPG purchased from Ceylon Petroleum Corporation (CPC) as auto gas without CPC offering the same terms and conditions to them.

This interim order would be in force until February 7.

Chairman, Gas Auto Lanka (GAL) W.K.H. Wegapitiya charged that competitors purposely timed their legal action to ensure their lawyers cannot challenge the order over the weekend. He conceded that their tanks are filled with CPC LPG, which means they cannot be operated legally now. He said their auto gas stations in Kandy, Kurunegala, Galle, Gampaha, Negombo, Borella, Wattala, Col-5, Dehiwela, Moratuwa and Maharagama will remain closed until further notice.

Wegapitiya further claimed that there are no other auto gas stations in these locations, and requested motorists using LPG to make alternate arrangements when driving out of Colombo during the weekend.

He said the stations will be opened as soon as their lawyers get the order vacated.

The issue revolves around an agreement signed between GAL and CPC under which the company purchases the corporation's LPG output at a subsidised rate. The Auto Gas Association which represents its competitors says the company can utilize the CPC supply solely for the purpose of filling domestic cylinders, and hence using it as auto gas is illegal.

The members of this association are compelled to buy LPG from Shell at Rs. 41 per kilogram, while GAL purchases gas from CPC at less than half the price. Their position is that they face a serious competitive disadvantage arising from this situation.

Hony. Secretary of the Auto Gas Association Ajit Perera lamented that the government had turned a deaf ear to their appeals to prevent CPC from supplying subsidised LPG to GAL for sales in their auto gas filling stations, while they were compelled to buy imported LPG from Shell at much higher prices. He said four member companies were forced to resort to this legal action to avoid closure of their businesses, which would result in loss of investment and employment.

However, Wegapitiya countered that their rivals have not been affected in any manner as they sold auto gas at the same rate as the others. He felt that allegations of unfair competition would hold water only if they had sold at a lower price.

He said that until last week, they were buying auto gas from Shell at a higher price than their competitors who had signed an exclusive arrangement with the multinational which entitled them to a discount.

"Even it CPC agrees to sell them LPG, they can't buy because that arrangement is valid until 2004," he added.

Responding to a question whether the company had given an undertaking that they won't use the CPC output as auto gas, Wegapitiya said they have made a temporary arrangement with CPC which enables them to do so. In return, the company had offered to increase their purchasing price from Rs. 15 to Rs. 20 per kilogram.

Meanwhile, the association has alleged that GAL had taken advantage of the concessions granted by declaring that a free vehicle conversion would be offered to any customer who purchases LPG solely from LAUGFS stations. A conversion normally costs Rs. 30,000 - 40,000. It was charged that GAL intends to offer free conversion by pumping cheap CPC gas as they have already taken steps to cancel all orders with Shell. The association also suspects that the company will try to ensure that customers patronise only their stations by offering discounts on their auto gas.

However, Wegapitiya argued that if Shell could encourage their competitors to sign exclusive agreements, they too could have similar arrangements with customers. He also said a decision had not yet been taken to offer free conversions.

The Auto Gas Association recently called on the Minister of Commerce and Consumer Affairs Ravi Karunanayake to intervene and ensure that CPC supplies are not diverted for sale as auto gas.

They basically argued that GAL's actions would make it more powerful and its competitors will suffer the consequences. They also said that LPG which was originally meant for domestic use would be diverted in larger volumes to auto use. It was also claimed that "the proper conversion market which is already on its last legs would fold," and most existing autogas customers would obviously prefer to remove their existing units and install a LAUGFS unit since they would benefit through concessions granted on LPG.

The association also told Karunanayake that their associates of the LPG Bulk Users Association had informed them that they are more than prepared to take any excess CPC LPG if it cannot be used for domestic purposes.

However, it is learnt that the minister's response to their representations had been negative. Their letter sent last month to the Minister of Power and Energy Karu Jayasuriya has not even been acknowledged.

The Auto Gas Association had earlier alleged that the agreement between CPC and GAL (during the tail-end of the PA government rule) was reached in secrecy sans accepted tender procedure.

GAL is the major player in Sri Lanka's autogas industry, and has captured a market share exceeding 50%.

Janashakthi tops Rs.1 bn premium
income mark

Sri Lanka's fastest growing insurance company, Janashakthi Insurance Company Ltd., (JICL) has achieved a milestone by boosting its premium income to over Rs. 1 billion in the just concluded financial year ended 31st December 2001.

The company has been maintaining an exceptional annual growth rate since its inception in 1994, despite Janashakthi being in the insurance business for only seven years.

"Reaching a premium income of Rs. 1 billion reflects the confidence and the trust placed in Janashakthi by our customers. In deed we're honoured by this expression," JICL Managing Director and CEO, Chandra Schaffter said.

He pointed out that the milestone was reached in 2001 despite the year, by far, being the most difficult for the Sri Lankan economy. "The resilience of Janashakthi amidst economic turmoil and social instability and the growing confidence placed in the company and its products and services have strengthened our resolve to offer more excellence in our offerings to customers," Schaffter said. "We certainly don't believe in resting on our laurels but will go forward to achieve greater excellence," he added.

The road towards the Rs. 1 billion premium income mark had been well planned and researched. "Before we started Janashakthi, we did extensive research of the existing solutions available for people interested in insurance. We found out what makes customers happy and what drove them off from an insurance company. As we launched Janashakthi and progressed year-on-year since 1994, we have met diverse and discerning needs of the insurance market and provided them with innovative solutions. We have indeed reaped the benefits with a premium income of Rs. 1 billion," he noted.

"Right throughout this journey Janashakthi has been customer-oriented and focused in providing a personalised service and in many cases our levels of customer care has been the benchmark for the industry," said Schaffter. The company is credited for launching several innovative products to suit different market segments.

Schaffter also said that a key part of the success had been the highly motivated and committed employees, backed by a proactive network of 70 branches countrywide. "We have invested heavily in human resource development and we seek continuous improvement in everything we do. One of the main reasons for our achievement is the service standard we have been able to deliver to our customers which has kept them coming back to us," he added.

In a ground breaking move and charting a new horizon, JICL in mid last year acquired a 51% controlling stake of the National Insurance Corporation Ltd., for Rs. 450 million. Fuller benefits and synergies of this acquisition are expected to be felt in 2002 and Janashakthi is committed to add greater value to its customers and other stakeholders.

In 2001, Janashakthi's Life Operations Division also set an industry record by becoming the first in the insurance industry to achieve the prestigious ISO 9002 quality management systems certificate from Bureau Veritas Quality International (BVQI) of UK.

Reforming public enterprises

By Dinesh Weerakkody

There is today a new wave of interest in our public enterprises because the management of some of the key state enterprises are at last attempting to induce a new wave of efficiency and profitability. In addition they are also trying to bring about customer focus to their enterprises.

This is a good move because despite all the rhetoric that the private sector is the engine of growth, it is somewhat surprising that the formal private sector remains relatively small and has very little participation in some key sectors, such as ports, power generation, medical services, higher education and utilities. Therefore, whatever is still left of the public enterprises undoubtedly represents a basic cell of production relations as an integral part of our economy.

It is an important instrument for the implementation of government policy. Therefore, it is essential to promote the character and personality of public enterprises and to ensure corresponding autonomy of its activities within the social system. On the other hand, the government has been entrusted by legislation with the responsibility for coordinating, monitoring and controlling the public enterprises. Therefore, the government must ensure that the goals for which they were set up are actually being achieved. There is a general view that the effectiveness of a public enterprise depends largely on the person who runs it and on the minister in charge of it.

Therefore, the appointment of people with managerial experience and integrity is vital for the survival of all government enterprises. The move by certain ministers to run their public enterprises like a private sector business is a good thing and a step in the right direction. The positive steps taken by some of the state enterprises to improve services to customers has gone down well with the consumers. So it seems the new UNF government is attempting to re-engineer some of the key public enterprises to serve the public better and generate some income without being a burden on the tax payer.

In fact, profit should be seen as a sign of efficiency. Therefore, providing goods and services to the public at a loss serves no purpose; instead they should look at competitive pricing and where possible compete with the private sector to keep prices down. Furthermore, the performance of these public enterprises must also be measured using private sector criteria. That would thereby create a new culture within the public sector and will open up a whole new chapter of public enterprise reforms.

Performance

Performance evaluation is a subject of labyrinthine convolutions. It is made further complex in the case of public enterprise. This is because public enterprise goals are difficult to specify. Organisations without meaningful and quantifiable objectives have great difficulty in controlling efficiency. If poor performance is justified by the achievement of vague "socio-economic" objectives and no effort is made to distinguish between genuine reasons for poor commercial performance, the organisation then in effect tends to loose direction and inefficiency ensues. There is a clear case, therefore, for introducing a specific public enterprise performance evaluation system to assess whether public funds are being spent economically, efficiently and effectively. Often their performance has attracted much attention and criticism, often hostile, over the years. The critics have generally concentrated on their financial performance, usually on their failure to hit financial targets. However, financial results alone are inadequate and can be misleading.

Evaluating

When evaluating how well public enterprises are performing, questions should also be asked from the government whether or not there is a requirement for greater accountability from public enterprises, where performance cannot be fully tested using accounting information.

Disagreement between the many critics and parties involved in, or affected by public entities often stems from their differing views on how public entities should operate. Some people feel that industries should operate like companies in the private sector, with profit and profitability as the major objectives and measures of success. Others would accept 'reasonable profit' or 'minimum loss' to commensurate with the consideration of other objectives. On the other hand, the government would regard social goals as paramount and accept the resulting 'accounting losses' and concentrate on providing subsidies from public taxation and government coffers.

However, in recent years concern about the management of public resources and how public money is spent, including how well it is spent have led public sector entities to reconsider the desirability of any profitability criteria as a measure of assessing its performance. The objectives of each public enterprise are stated in the acts of parliament which establishes the industry. Therefore, these objectives should provide the broad criteria by which the performance of public enterprises are to be judged. However, though each public entity lays down obligations and duties specific to the particular industry, the following objectives are common to all state enterprises:

a. To provide on a continuing basis a particular product or service, e.g: Transport must extend to all rural areas

b. To break-even taking one year with another

c. To take into account the public interest, especially with regard to employees and the community.

The acceptance of multiple objectives and the use that governments make of public corporations in carrying out macro-economic and micro economic policies, mean that performance of state entities cannot be fully tested by any profitability criteria.

Given the wide range of objectives that are considered appropriate in state enterprises, it is clearly unrealistic to assess performance within the narrow framework of historical financial accounting. In a practical sense a wide range of performance indicators are necessary to assess the many different aspects of performance. Therefore, it is unrealistic to pass judgement as a whole, using a few key figures of profitability ratios.

Political change

Changes in the political power structure over the years have resulted in major changes in public enterprises due to the system of public accountability. In most enterprises three sets of criteria were provided by which performance would be judged.

a. Financial target: Decided industry by industry, the financial target is seen as the primary expression of financial performance.

b. An investment criteria: This takes the form of a required rate of return.

c. Non financial performance indicators to supplement the financial targets.

However, it is important to be mindful that the financial targets are clearly a critical measure of performance and corresponds closely to the financial measures used in the private sector. However, they need to be linked to performance in non financial terms that is achieved by the corporations.

The use of the performance indicators helps the public and the government to assess the performance of public enterprises more fully and realistically, than had been in the past using profitability criteria. It is also arguably part of the widening of the horizons of accounting.

State entities which are expected to be profit making, do not operate to achieve only commercial and financial objectives, therefore, they are obliged, to pursue policies which provide social welfare to society. Ideally, public enterprises should provide measures of their progress towards social goals such as:

a. Employment

b. Quality of goods and services produced

c. Benefits to society as a whole.

Finally, one factor which has to be accepted is that effects of pursuing 'uneconomic' policies should be shown separately in the profit and loss statement so that costs and benefits can be evaluated and the overall profit or loss interpreted with better understanding.

In conclusion, while stressing the importance of public enterprises in Sri Lanka as an instrument of government domestic and international policy, much of the existing state enterprises are being run inefficiently and are becoming an increasing burden on the tax payer. Performance improvement in state enterprises could be stimulated through the professionalism of internal management, including the participation of non political workers in decision making.

The shape and the direction of our economy and the success or otherwise of our ambitious national programmes are undoubtedly dependent upon the effectiveness of our public enterprises, and therefore, it is the duty of any government to manage these enterprises in the best interests of the general public.

Finally, the gradual move into a liberal world economic environment combined with technological advances would require new thinking and skills from those people managing these enterprises. Therefore, the effectiveness of our public enterprises will depend on whether the government can provide the educational retooling to those managers in key positions and employ competent and dynamic people to head these institutions.

The new UNF government should make every effort to commercialise (manage it like a private sector institution) some of the key state institutions and induce a new wave of efficiency and profitability.

SCB consumer banking services enhanced

Standard Chartered Bank (SCB) Sri Lanka is offering an enhanced range of consumer banking products. This includes 24-hour ATM facilities at Fort, Kollupitiya, Bambalapitiya, Kirulapone, Wellawatte, Moratuwa, Rajagiriya, Kandy and an off site ATM at the JAIC Hilton. In addition, Saturday Banking is available for those who are busy during the week between 9.30 am and 12.30 pm at Bambalapitiya, Rajagiriya, and Kandy.

Phone Banking: For those customers who prefer the convenience of banking from home or their desks, Phone Banking can be used. The Automatic Voice Recording (AVR) facility enables balance/account inquiries, cheque book requests, statement requests, details of last five transactions, transfer of funds (between your accounts in Sri Lankan rupees), and provides exchange rate information. With the Pay-by-Phone option, you can speak to a phone banker during weekdays 8.30 am to 5.15 pm and Saturdays 9.30 am to 12.30 pm, but excluding bank holidays. Through this option you can pay utility bills and credit cards, transfer funds, request for pay orders and undertake many other transactions. In addition the Call Centre is available for customers who have general enquiries.

Credit Cards: The bank also offers MasterCard or Visa credit cards, which provide up to 55 days' interest free credit. Flexible payment options include a minimum of 5% or up to 100% of your monthly bill and local and foreign currency payments can be settled in rupees. These cards can be used at more than 19 million outlets in over 170 countries - including 6,000 outlets in Sri Lanka. Supplementary cards are also available.

Overnite Loans (personal loans) are available from the bank within 24 hours. Those earning a monthly gross salary of Rs.20,000 or above and between 20 to 55 years of age are eligible. Up to six times of your gross salary as the total loan amount is available, or an amount from Rs.75,000 to Rs.600,000. Flexible repayment options of up to three years are available without any security.

Quik Overdrafts and Loans: A quick overdraft or loan can be obtained against fixed deposits from any of the branches. Repayment can be made within 12 installments at competitive interest rates. Overdraft or loans up to 90% of the local rupee fixed deposit or 85% of foreign currency fixed deposits are permitted.

Lockers: The bank also provides three grades of lockers at the Fort, Bambalapitiya and Kandy branches for customers who require safe keeping of valuables.

Any Branch Banking: Your account can be accessed from any of the branches during business hours. After business hours you can access your account via Phone Banking or through the ATM network.

Priority Banking: Those customers who have a relationship of at least Rs 5.0 million (deposits or advances) with the bank or USD 100,000 qualify for the exclusive Priority Banking. In addition to a dedicated customer relationship officer, the client will qualify for tariff waivers on selected products, receive special interest rates, a free credit card with enhanced limits. In addition they receive worldwide recognition of priority status at any of the branches worldwide.

Standard Chartered Bank has been in Sri Lanka since 1892. It was originally established as Standard Bank but subsequently teamed up with Chartered Bank to become Standard Chartered Bank. It was set up by the British to assist traders. In August 2000, the bank acquired ANZ Grindlays' network in the Middle East and South Asia, together with its private banking business.

The parent company Standard Chartered is a London based, international bank focused on the emerging markets of Asia, the Middle East, Africa and Latin America. It has significant operations in Hong Kong, Singapore, Malaysia, Thailand, the Indian subcontinent, Bangladesh, the United Arab Emirates and in Sub-Saharan Africa. Its key businesses are consumer banking - primarily credit cards, mortgages, personal loans and wealth management - and wholesale banking, where the bank specialises in the provision of cash management, trade finance, treasury and custody services. The group has a network of over 600 offices in more than 56 countries and a presence in Asia and Africa that goes back nearly 150 years.

Informatics in software export venture with Australian company

Informatics (Pvt) Ltd., signed a contract recently to establish an offshore software development centre with Parcelhouse, a global information solutions provider based in Australia and Sweden.

Parcelhouse has been impressed by the standard of professionalism at Informatics and selected them over other Indian IT companies, after going through a vigorous selection criteria. This resulted in their decision to establish its software development arm in Sri Lanka. Informatics will be developing a web-based transport, logistics and fulfillment processes system, which will be eventually deployed in transport and warehousing companies around the world. According to the agreement, Informatics will eventually be responsible for marketing of this product in Sri Lanka and in the Asian region.

Managing Director, Informatics Group, Gamini Wickramasinghe said "This partnership will ensure that Sri Lankan developed software will help global transport and logistics companies to simplify complex information, and allow them to focus on fulfillment areas that will deliver greater efficiency and cost savings."

Parcelhouse is an organisation engaged in providing IT solutions to transport and logistics companies worldwide, such as industry giants like DHL International and Tetra Pak International. The primary focus of Parcelhouse is to provide businesses with next generation integrated transport and fulfillment solutions.

Founded in 1983, Informatics is a leading systems integrator and a software solutions provider having the largest software house in Sri Lanka, employing over 400 software professionals. Their strategic business solutions units include banking and finance, telecom, hospitality, retail industries and core public sector businesses.

Informatics already has well-established joint venture projects with companies in Sweden and Norway for software development. They also have a varied clientele in diverse industry sectors, including international customer bases in Pakistan, Maldives, UK, USA, Germany, Netherlands and Bangladesh.

One of the major projects awarded to Informatics recently was by the Department of Immigration & Emigration to develop a fully-fledged border control system, having on-line links with the Katunayake Airport, Colombo Harbour and the Department, which will provide better services to local and foreign visitors.

Informatics claim that they are the first ever Sri Lankan software company to obtain ISO 9001 certification for software development from Det Norske Veritas Certification BV (DNV) of Netherlands, which is an internationally accredited certification body.

In 1990, Informatics embarked on a project in collaboration with Manchester Metropolitan University of U.K. to conduct BSc./BSc. (Hon) degree programmes in information systems, computer science and business administration. Two years ago Informatics awarded 180 scholarships valued at over Rs. 200 million to deserving students to follow this British degree programme at their Institute of Technology, while working in the industry under the "Learn While You Earn" programme. The institute also conducts UK's Keele University MSc. in Information Technology for non-IT graduates.

Further, Informatics conducts an American based computer-learning program for children of 4 to 14 years age group and an IT diploma course leading to a diploma from Holmesglen Institute of TAFE in Melbourne, Australia.

Seylan banking goes hi-tech

Development in the fields of Information Technology (IT) and telecommunication has brought many changes to society. In fact, every field, be it banking or shopping, has undergone changes to make life much easier for people.

The banking sector too has undergone many changes and is now in the process of introducing new concepts to fit the growing needs of their customers. Seylan Bank recently introduced their customers to the concept of perfect banking.

Brand Manager, Business Development Department, Seylan Bank, Thusitha Vitharana explained that the bank has introduced this 'perfect banking' concept through ATMs, and other facilities - Seylaphone, mobile banking from Mobitel and W@P banking from Dialog GSM.

Vitharana stated that at present Seylan Bank has 36 ATMs installed islandwide, and 32 of these ATMs are installed in Seylan Bank branches. The bank also has three off-site ATMs in areas where there are no Seylan Bank branches. The first such off-site ATM is situated at Welikada Plaza, Rajagiriya, said Vitharana. This, he said would help the people in the area as there are no Seylan bank branches in Rajagiriya. The second ATM was installed at the Asha Central Hospital in Horton Place, Colombo 7.

The third ATM is at Tissamaharama. This will be a facility for those living in the area as well as for those who travel to the deep south. Vitharana explained that even though there are ATMs, there are some who still prefer to go to a bank for their transactions.

Vitharana added that they would not stop there and would further enhance the network. He stated that they hope to increase the network by installing 20 more ATMs by March. The bank intends to cover all the 90 Seylan Bank branches in the near future.

Through Seylaphone, one could access a bank account from any part of the world, find out the bank balances, check out the last 10 transactions (credit or debit), transfer funds from one account to another, order a new cheque book, request statement of current account, find out interest rates on deposits and daily foreign exchange rates and leave a message for the bank manager. Current or savings account holders of Seylan Bank could use this facility by using his/her PIN number to access it. Vitharana said that even an ordinary person can gain access to interest rates and foreign currency rates by dialing 342555 from a land or mobile phone.

Vitharana explained that Seylan Bank has tied up with Mobitel to provide their customers with the mobile banking facility. An account holder with a Mobitel connection and who has the Short Message Service (SMS) facility could use their phones to check their account balances and unrealised cheques at a pre-determined time by prior registration with the bank.

Seylan Bank customers with W@P phones from Dialog GSM could access their account balances, foreign exchange rates and ATM locations of Seylan Banks by simply entering their personal PIN numbers. Vitharana stated that at present they have introduced W@P banking with these three facilities and will be adding more facilities with time.

With all these facilities at hand, gone are the days when you would have to rush to a bank, fill out forms and stand patiently in line to carry out your transactions.