BUSINESS

US$ 53 million to be invested in flour mill project

Members of the Al Ghurair Group of Companies of Dubai - National Flour Mills (NFM) and Emirates Trading Agency (ETA)- plan on bringing a US$ 53 million (rupees five billion) investment into Sri Lanka through their joint venture, Serendib Flour Mills (Pvt) Ltd. (SFML).

Subsidiaries of one of Dubai's largest conglomerates, NFM and ETA together have a turnover in excess of US $ four billion. The investors have had a presence in the flour milling business in the UAE for the past 25 years, together with operations in the Middle East  and Africa. They will be combining their strengths in flour milling, ocean transport, commodity trading, logistics and local marketing in Sri Lanka.

The current demand for flour in Sri Lanka outstrips the supply. Industrial users like confectioners import their supplies due to non-availability of the required quality and quantity. The project envisages the establishment of a state-of-the-art flour mill in the Colombo port, within close proximity to the consumption centres. The plant will have an initial milling capacity of 1000 metric tons per day with a provision to increase production to 2000 metric tons per day.

The foreign exchange savings from importing wheat for milling flour locally, compared to importing flour for consumption, is almost  US$ 20 to US$ 30 per ton. With an initial milling capacity of 300,000 tons, SFML would help save US$ six million to US$ nine million in valuable foreign exchange annually.

Moreover, there would be potential to export both bran and flour (in case of excess capacity) in the future, bringing valuable foreign exchange into the country. Al Ghurair currently exports flour to Sri Lanka, Bangladesh, Male, Indonesia and Africa; which opportunity will be available to SFML.

The Sri Lankan market will undoubtedly benefit from this international expertise. Flour is an  essential commodity and the entry of a new miller ensures a regular supply of flour, avoiding stock-out situations. Customers stand to gain by way of competitive prices and a wider choice.

General Manager/CEO, National Flour Mills, Easa Abdulla Al Ghurair and Group Managing Director, ETA, Seyed M. Salahudeen said that the Al Ghurair Group has an eye on further investments in Sri Lanka as well. They are also confident that the success of the SFML project will encourage others both in the UAE and GCC member countries to seriously consider Sri Lanka as an investment option.

Career Crash 2002 seminar held

The Rotary Club of Mount Lavinia together with IT Lanka Academy, business partners of Aptech (the world's leading IT training organisation) organised a seminar - Career Crash 2002 - for the students of Colombo. Around 400 students, school principals, HR heads and education department representatives attended this seminar.

Aptech was the principal sponsor of the event. The company is present in 52 countries, with 2449 centers across 5 continents.

Channa De Silva of Eagle Insurance, Ananda Rajapakse of Ya TV, Tuan Ismail of Seylan Merchant Bank, Kumar Senaratne of Jetwing Hotels, Chandana Dalugoda of SLEA, Yashobana Wanigasekara of Clipsal Lanka, Faizal Salieh of Sri Lanka Chamber of Commerce and Nimmi Padmanabhan of Aptech comprised the panel of speakers. This programme has been designed to offer local youth an opportunity to interact with professionals and be advised and guided in their choice of careers. The speakers elaborated on the requirements in the IT industry and the relevance and scope of IT in various industries. It drew an overwhelming response from the participants.

Dr. Nanayakara, additional secretary to the Ministry of Education represented the minister for education. Also present at the event were experts from various industries who shared their experiences and responded to different queries raised by the young inquisitive students.

Speaking at the occasion, the chief guest Dr. Nanayakara said, "These kinds of seminars on counseling are very much in need for our future generation." He insisted on organising such seminars very frequently in Sri Lanka in order to give guidance to the youth of the country.

In Sri Lanka, information technology has become an integral part of any industry. Trained and quality human resources are the background of an IT Industry in any nation. Sri Lanka is a country rich in culture and literature and is on its way to becoming an IT power to reckon with. It is therefore imperative for students to equip themselves with the required IT training to get the right job. There are ample job opportunities available in these areas in the country and a need for training on IT skills will always be in demand.

Nimmi Padmanabhan, territory technical manager - Asia for Aptech, spoke on the latest courses offered by Aptech and said, "At Aptech our endeavor has constantly been to train our students on world class technologies. However, this is the first time that we have introduced a global curriculum, which is uniform to 52 countries. A student in Sri Lanka would be exposed to the same technology training as a student in the US, Germany, China, Russia or New Zealand. This would go a long way in facilitating global placement of Aptechites, which is our ultimate goal. The uniqueness of this course is its conduct methodology, the Hybrid Model. This is based on the traditional teaching methodology and Interactive Instructor-led Online Mentoring (IIOM)."

The ACCP 2003 program from Aptech is a comprehensive program designed in consultation with consultants and industry leaders through the Technology and Academic Advisory Group of Aptech (TAG) and alliance partners like Microsoft, NetG etc. This three year career program is designed in a modular approach, and enables a student to master the very latest technologies and prepare to face the challenges of the future workplace. The uniqueness of this career course is the detailed training offered in .Net and J2EE frameworks. At the pace at which the industry is changing, it is difficult to predict the kind of applications that will be developed in years to come. Hence, in the third year, students would move towards building such applications that are relevant to the time. The course incorporates additional information necessary in the form of new technologies or new tools.

The ACCP 2003 program course follows a unique modular structure that is based on concepts, tools and practicals which ensure a life time of learning and self exploring along with application - based projects. The course is built on the Hybrid Model for learning, incorporating a combination of instructor-led, Computer Based (CBT) and web-based instruction and learning - a hybrid form of learning. The student on enrolling has the benefits of both teacher led instruction and multimedia enriched web-based instruction. This is a unique learning methodology that has been well researched and brought out by the company and is currently being implemented across the centres. Apart from the interactive tutorials, the Hybrid Learning methodology includes assignments, drill type problem solving, simulations, and animations.

COPE must be more strategic

By Dinesh Weerakkody

The UNF government's decision to get SriLankan Airlines accountable to  parliament through COPE and also to get an opposition MP to head the Committee on Public Enterprise is a good thing.

In fact, the COPE  during the last parliament expressed considerable concern about the inefficiency of the public sector and discussed measures to ensure their effectiveness, both as sound business concerns and as instruments of development policy.

While they say performance improvement could be stimulated through professionalism of the internal management, the interference of politicians in tender procedures relating to procurement was cited by the former COPE Chairman, John Amaratunga, (now minister of interior affairs) as the main cause for last year's financial crisis in the CEB and the Petroleum Corporation.

According to reliable sources, the Petroleum Corporation had recorded a loss of Rs. 16 billion in 2000, 2001 is expected to be more, its debts are currently over Rs. 40 billion. On the other hand, CPC due to mismanagement in the past is running a huge debt and to overcome this crisis had agreed to peg fuel prices to the international market.

Government

In fact, the government and the minister in charge of an enterprise has an obligation to supervise, monitor and evaluate the performance of  the enterprise in order to ensure that the goals for which it was set up are achieved and also intervene when necessary to ensure that the institutions falling under his/her ministry are positive contributors towards national development.

If this is not happening the COPE has a responsibility to ensure that this takes place by regularly reviewing the performance of poor performing institutions.

Effectiveness

Considering the fact that COPE in the past has expressed considerable concern about the mismanagement and corruption in many of the public enterprises and also the need to increase the effectiveness of these enterprises, both as sound business concerns and also as a vehicle for promoting economic and social development, the newly appointed members of COPE should take steps to promote the 3Es or value for money within the public sector.

The term value for money has been used time and time again in relation to the public sector, where concern has been expressed officially about the cost, efficiency and effectiveness, of entities in the public sector.

The term 'value for money' is used to convey three aspects of  performance measurement, ie economy, efficiency and effectiveness.

In the public sector, 'value for money' implies the availability of a service which is economical, efficient, and effective. These three ingredients could be defined in simple terms in the following manner.

a) Economical - a cheap process or doing things cheap

b) Efficient - a job well done

c) Effective -  objective achieved

To elaborate a little more on the three ingredients  referred to above, one may say that 'economy' in relation to the subject under discussion is the acquisition of resources (raw materials) needed by the entity in appropriate quantities, without wastage, in keeping with required standards as far as quality is concerned and at the most compatible rate.

'Efficiency' is determined by the final result in comparing the quantity of the end product or service with the value of the resources fed into the process.

The objective to be achieved ideally is to increase productivity and lower unit cost. 'Effectiveness' is measured by the degree to which an activity has achieved its stated objectives and goals.

In this era of private ownership, we can see from utterances of some important public figures, the public sector is being placed under considerable pressure to demonstrate that they need to exist.

They have to show that they are giving the public 'value for their money.' Consultants and other advisors have constantly advocated good management practices such as the formulation of action plans to focus on achieving 'value for money.'

Obviously the purpose of this exercise is not to reduce the number of jobs in the public sector, which would be disastrous from a socio-economic point of view. It also does not mean that expenditure in the public sector be curtailed.

What it does mean is that the public sector should be mindful of how much it contributes towards the national coffers or by way of services in relation to the enormous sums swallowed up by the institutions within it.

Cost effective

We understand that widespread concern about the negative approach towards 'cost effective' on the part of certain institutions in the public sector has led to  some interest being shown in conducting 'value for money' audits.

This is a useful tool in achieving the avowed objective of the government, which is to make public enterprises viable or else to sell them to the private sector or even liquidate them where possible.

However, this would only be a first step and there should be a willingness on the part of such institutions and the minister to take meaningful steps to take corrective measures based on the results of such audits.

Corrective measures

The taking of corrective measures does not stop at putting down recommendations.

It should be followed up by training programmes for senior management, line managers and also workers, who are all in need of adequate motivation to achieve 'value for money.'

Another important matter to be kept in view is that there can be no universal formula for success.

What may be the perfect strategy for institution 'A' may not be desirable for institution 'B.'

One must always pay heed to the human factor, i.e., the needs and the aspirations of the workers and public, the environmental factor i.e. the location of the establishment and the effect on the public etc., and the cultural factor the types of persons affected by the utilities' products and services.

Finally, if the 'value for money' concept is to take root in the public sector, a distinction should be made between the exercise of political power as reflected in the making of national policies and the exercise of politicking power which is interference in the day to day management aimed at short-term political gain.

Suntel records profit of 23 million

Suntel Limited, Sri Lanka's largest private telecom operator, recorded Rs 1.6 billion in EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) for the year ended December 31, 2001, according to the audited  financial statements released to the Colombo Stock Exchange and its debenture holders recently.

The EBITDA achieved at 51% of turnover signifies a healthy position for the company and this reflects an increase of 32% over the EBITDA achieved in the previous year.

The company was therefore able to record a net profit of Rs. 23 million for the  year. Net revenues recorded amounted to Rs. 3.1 billion-up by 17% form the previous year.

This performance is commendable, given the fact that the regulatory environment remained unstable and unpredictable throughout 2001. Inability to implement the customary tariff revision during 2001, coupled with a difficult regulatory situation hindered better performance.

The result for 2001 could have been enhanced significantly had the climate been more conducive to the development of the telecommunications sector.

It deserves mention that in recording revenues in excess of Rs. 3 billion, Suntel has joined an elite band of corporate entities that achieve revenues at these levels.

Suntel, which completed its fifth year of operation in December 2001, is the largest private telecom operator in Sri Lanka. As of December 31, 2001, Suntel had invested over US$ 100 million in its extensive roll out which includes its own internet service.

These investments represent a significant proportion of the country's infrastructure investments during the past five years. Coverage currently includes Colombo, Greater Colombo, Kandy, Matale, Kurunegala, Anuradhapura, Badulla, Panadura, Galle, Matara, Negombo, Chilaw and Avissawella.

The company, which is deeply committed to Sri Lanka, continues to be concerned about the development of telecommunication policy in Sri Lanka.

Currently the shareholders and the board of directors are reluctant to allow further investments until the issue of the annual tariff revisions is resolved to satisfaction. The delay of the normal tariff revision as well as lack of any clear direction for this sector during 2001 has severely eroded investor confidence.

When this confidence is restored, Suntel will embark on further expansion, offering its comprehensive range of services for the benefit of the country. However, due to the nature of telecommunication investments it will take some time before the full effect of this will be seen.

Suntel is owned by Telia, the national telecom operator of Sweden, the Metropolitan Group of Companies, Townsend Ltd., of Hong Kong, National Development Bank and IFC (a member of the World Bank Group).

This combination of technical and operational expertise, supported by a sound financial base has helped create a company that is committed to being Sri Lanka's preferred telecommunication services provider, through service excellence and cost-effective delivery.

Interpharm Pvt Ltd. relaunches Paracetol

The analgesic Paracetol manufactured locally by Interpharm (Pvt) Ltd is gradually gaining market share. The company has obtained schedule 1A status for this brand of paracetamol tablets, under the Cosmetics Devices and Drugs Act. This means they can be even sold at retail outlets without the supervision of a pharmacist.

A  Paracetol tablet is priced at just one rupee, so the company is hopeful it will gain popularity since a similar product manufactured by a multinational is more expensive. The drug is claimed to provide quick relief from aches, pains and fevers.

Interpharm recently launched Paracetol in a new  pack after obtaining the approval of the Drugs Authority. This was done to circumvent the action of a competitor which obtained a court ruling preventing them from marketing the blister-packed tablets in the old pack which was allegedly similar to that of the competitor.

The new Paracetol packs are now available at pharmacies and retail outlets islandwide.

Interpharm is the only pharmaceutical company in Sri Lanka to have been accorded status as a pioneering industry by the government. It is an associate company of Gamma Pharmaceuticals (Pvt) Ltd., successors to Warner-Lambert Lanka (Pvt) Ltd.

Chairman, Gamma Pharmaceuticals, Gamani Hewamallika said Paracetol has been well-received by the local market, and sales are increasing daily. It was noted that doctors have also started prescribing the drug, which is now available islandwide including the north and east.

He charged that their main competitor is conducting an unethical campaign to besmirch their drug. Their representatives have allegedly gone around claiming that Paracetol is a poor quality counterfeit, is not  approved by the Drugs Authority, it is a banned drug, etc. There have also been other attempts at stifling them.

According to Hewamallika, none of these accusations are true. The Interpharm factory located down Madapatha Road in Piliyandala employs experts in the field of pharmaceutical manufacture and state-of-the-art machinery. It focuses on the production of generic tablets and capsules, such as Paracetol, Amoxycyllin, Prednisalone, Folic Acid, Diethylecarbamazine and Salbutamol.

Interpharm is a reputed supplier of generic pharmaceuticals to the state. In fact, most of its production goes to the State Pharmaceutical Corporation and the Director of Health Services. Only around 25% of the total production is marketed through the private sector.

According to Hewamallika, they have been engaged in Paracetol manufacture for the medical profession (on a wholesale basis) since 1998. The blister-packed tablets were available at eight Osu Sala outlets and their franchise outlets.

Gamma Pharmaceuticals is claimed to have the largest manufacturing facilities (mainly for liquids) in Sri Lanka. It manufactures a wide range of drugs including Feradol, Listerine, Benadryl, Paracetol Syrup, Nutrofil, Gelusil, Ponstan, Waterbury's Compound, Sloans Liniment and Massage, and Anusol.

Hewamallika said Interpharm and Gamma Pharmaceuticals plan to manufacture 15 more drugs including the antibiotic cepgelesporin. They are building a new factory (close to where the present factory stands) in order to expand their manufacturing capacity. They have ordered the latest technology for this factory which is expected to commence operations in around three months.

Drugs manufactured by Interpharm and Gamma Pharmaceuticals are put through a very strict quality control process which is constantly monitored by the Drug Authority. They are also planning to comply with the standards set by the World Health Organisation (WHO).

The companies have fully-qualified staff who have been trained overseas. At present they employ as many as 250 people directly and indirectly.

Hewamallika said they are licensees of Pfizer, Emcure and Umedica Laboratories. They also import a number of drugs. These include Streptokinise, Ceferoxime Axetil tablets, Ceferoxime Sodium injections, Omeprazole and Albendazole among others.

Gamma Pharmaceuticals and Interpharm also publish a newsletter called Pulse once every three months, for the benefit of medical professionals. It contains information on the treatment of diseases, human psychology, experiences of doctors, etc. The newsletter has been well received by the medical profession, according to Hewamallika.

The mission of the fully locally owned Gamma Pharmaceuticals is to achieve excellence and leadership in the healthcare industry of Sri Lanka by extending their services for the health and well-being of mankind. They firmly believe in technological innovations, research and development, human resources, environment and our heritage to fulfil this objective. This is also in keeping with the government's policy of providing healthcare for everybody.

Both Interpharm and Gamma Pharmaceuticals manufacture and supply drugs at low  costs for the benefit of consumers, in keeping with government policy.

The present board of management acquired full ownership of Warner Lambert (Lanka) Pvt. Ltd., in 1992 and transformed it to Gamma Pharmaceuticals, holding the franchise in Sri Lanka for manufacturing and marketing Warner Lambert/Parke Davis products.

However, even before the company became Warner Lambert (Lanka), it was known as Warner Hudnut (Lanka) Ltd. which was incorporated in 1962. Prior to that, the US-based Warner Hudnut operated through an accredited agent in Sri Lanka (then known as Ceylon) since the second world war. It decided to establish a company in Sri Lanka in view of the scope and national development policies. Thus it can be seen that Gamma pharmaceuticals can trace its roots to several decades back.

Coir Convention proves a success

The recently concluded international Coir Convention organised by the Sri Lanka Coir Cluster has come in for many accolades from the foreign funding agencies, resource personnel and participants. Secretary of the Inter-Governmental Group (IGG) on Hard Fibres of the FAO, Brian Moir concluded that having the convention in Sri Lanka was a good idea and very timely.

"The convention was very interesting and should be repeated, annually if possible, if the best results are to be obtained for the coir industry locally, regionally and internationally," he said. "The key issue is what has to be done from now on.  How is the industry going to work together? There should be a structure and this can only be worked out if the people in the industry have a forum to discuss and formulate it," he added.

The two day convention had a total of 12 papers presented by local and foreign experts to participants from 13 countries, which included the main coir producing nations such as Indonesia, India, Philippines, Sri Lanka and Thailand and was sponsored by the Common Fund for Commodities, FAO, Coconut Development Authority and the Competitiveness Initiative of USAID.

Moir, who presented a paper on 'Coir Globally: Status and Perspectives', declares that even though India and Sri Lanka are the major exporters of coir fibre and products and other exporters include Asian countries such as Thailand, China, the Philippines, Indonesia, and Singapore, as well as Mexico, Venezuela and Tanzania, the Sri Lankan coir industry is rather backward.

"It is apt then, that with conferences like these, the industry could be developed because even though global production of coir has expanded in recent years, particularly in India, fibre production in Sri Lanka has, at the same time, declined.  These trends in production are matched by export data, where we see some growth in total exports in recent years led by exports of mats and mattings from India, together with some expansion in exports of yarn, while fibre exports, largely from Sri Lanka, have continued to contract."

At present, Sri Lanka's major input into the global coir industry is through raw material.  Moir believes that be adding value to this product, it will help the economies of scale and improve the industry gradually.

"Things will happen slowly," he says.  "But it is not too late to start now.  The priority areas to work on now are for technology investment, knowledge enhancement and one or two key areas to add value to the fibres.  Start small, that is critical." An estimated 500,000 people, 80 percent of them women, are employed in the coir industry in India with a further 40,000 families in Sri Lanka depending on the coir industry as their main source of income.

Moir states that the main objective for the next conference should be the selling up of a structural organisation, which will act as a facilitator and motivator to the industry.  "There has to be a focused study on new product development, more value addition and international co-operation, which could either be co-operation between Sri Lanka and India (which might be a start), co-operation within the region or a multi-country one."

The expert resource panel comprised eminent personalities involved in the industry, R&D and marketing, from India, Germany, the USA, Netherlands, Rome and Sri Lanka and concluded with the formulation of an Action Plan for joint R&D programmes and marketing development with a more pro-active and market oriented focus for the survival of the coir industry.

HSBC introduces EDCA

HSBC recently introduced electronic documentary credit advising (EDCA) for the first time in Sri Lanka. This service which is offered free of charge is targeted at exporters who export under DCs. It is quick, efficient and convenient unlike the standard DC advising practice which can be time consuming.

Manager, Commercial Banking, HSBC. (Sri Lanka), Ajith Pasqual said EDCA is a quick and easy way for exporters to receive copies of export documentary credits in their favour direct to their office by e-mail or fax.

The moment an export DC is received by HSBC via the SWIFT network and recorded in their banking system, an automatic e-mail (or fax) will be generated to the beneficiary of the DC attaching a copy of the full text of the DC or amendment.

This service by HSBC combines the latest electronic banking technology with a highly practical solution for any exporter's requirements.

This unique service is guaranteed to provide exporters with the fastest access in the market to export DCs.

Pasqual said, "We at HSBC place service first and we are constantly developing banking solutions which address our customers' specific needs. We realised that exporters want fast access to their DCs so that they can commence manufacturing or other preparatory activities ASAP. EDCA caters precisely to that requirement."

Manager, Trade Services, HSBC (Sri Lanka) Shajeev Wanigasekara said they have signed on 17 customers to this service within the first two weeks of its soft launch on June 20. He expects their entire clientele engaged in exporting under DCs to use their service, because it is free of charge and offers many advantages such as speed, efficiency, convenience and flexibility. The recipient of the e-mail can forward it direct to their factories out of Colombo, make copies of attachments or even 'copy and paste' extracts of the text to facilitate the preparation of export documents.

Furthermore, because EDCA operates off ordinary e-mail, all the subscriber needs to have in order to utilise the service is a valid e-mail address.

This service is not restricted to HSBC's existing clients but is also available free of charge to non-customers.

Wanigasekara noted that EDCA is used widely in the Asia-pacific region which is highly export-oriented. It is also pertinent to mention that the internationally reputed Trade Finance  Magazine has selected HSBC as the best trade documentation bank for seven consecutive years.

Globally, HSBC Trade Services has played a prominent role in international commerce since 1865, when the Hong Kong and Shanghai Banking Corporation, the founding member of the HSBC Group, was set up to finance the growing trade between China, Europe and the United States.

Since then, HSBC Trade Services has constantly developed its products, services, people and global network to keep customers ahead in an increasingly complex trading world.

HSBC has also been in the forefront in introducing new banking technology to Sri Lanka. It installed the island's first ATM machine in 1986 and pioneered electronic online banking through the Hexagon system in 1991. Pasqual said they are working on a number of internet-based solutions for exporters, to assist in the preparation of documentation.

They intend introducing a new service called Document Express by the end of this year or somewhere next year. It will be particularly useful once Electronic Data Interchange (EDI) is introduced to Sri Lanka. HSBC also plans to introduce cheque outsourcing on a wider scale particularly for the issuing of dividend payments.

HSBC has operated in Sri Lanka for 110 years. It presently has 10 branches and 16 ATMs here, and employs around 780 people. The branches are located at Fort, Bauddhaloka Mawatha, Colpetty, Union Place, World  Trade Centre, Nawam Mawatha, Wellawatte, Nugegoda, Pelawatte and Kotugodella Veediya in Kandy.