debt to reach Rs. 35 bn by year end
government has estimated the total debt of the Ceylon Electricity
Board (CEB) to increase to over Rs.35 billion by the end of this
year. According to sources, the CEB presently owes the Treasury
around Rs.25 billion.
and Energy Deputy Minister, Mahindananda Aluthgamage highlighted
the issue when he met CEB officials and union leaders last week.
According to sources, the Deputy Minister attributed the rocketing
debt mainly to the rising world crude oil prices.
had also stressed on the importance of restructuring the CEB to
reduce operational costs and the massive losses faced by the CEB.
Convener, All CEB Trade Unions, Ananda Nimalaratne told The Sunday
Leader the decision taken by the government to restructure the CEB
would not solve the crisis. He pointed out the only solution is
the Upper Kotmale and Norochcholai power plants, which the
government had failed to go ahead with to date.
the discussion held last Tuesday, Aluthgamage agreed to conduct a
full day workshop for employees and union representatives of the
CEB on November 14, to ascertain views of employees and make
amendments regarding the controversial CEB Reform Act passed in
parliament by the previous United National Front (UNF) regime in
accused the United People's Freedom Alliance (UPFA) government of
following the footsteps of the UNF government by privatising state
UPFA came to power promising they would not privatise state
entities. However, it is sad that they are following the UNF
privatisation policy which is against public interest,"
CEB Reform Act states the reasons for restructuring are to
increase efficiency, higher productivity and provide customers a
better service. However, Nimalaratne charged these are cover up
statements for the privatisation of the CEB.
are two clauses within the CEB Reforms Act that confuse employees.
First, the act enables the Treasury Secretary to sell shares of
the CEB to the private sector after parliamentary approval;
secondly, the act enables the Public Utilities Commission of Sri
Lanka (PUCSL) to decide on the tariff structure of the CEB.
to Nimalaratne, there would be no significant difference between
the Treasury selling shares of government entities with
parliamentary approval or without approval.
government would hold a majority in parliament. Therefore, it
would anyway be passed in parliament," he said, suggesting
that the requirement of a two third majority in parliament should
be in place before any shares are sold.
Nimalaratne expressed concerns regarding job security and other
employee benefits after the restructuring takes place.
Chairman, CEB, Ananda Gunasekara told The Sunday Leader the
restructuring of the CEB would not create any job losses.
the CEB is restructured, employees' rights would be secured and
there would not be any job losses," he said.
Nimalaratne pointed out that while authorities state there would
not be any job losses before a government entity is privatised,
once these entities are privatised, there are massive job cuts
after paying compensation.
he stressed, it is important to have a formal agreement with the
unions that there would not be any job losses after the
restructuring takes place. He also warned of severe trade union
action, which could lead to disaster, in the event there are any
unlikely boost for leasing business
increased import duty slapped on vehicles by the UPFA government
has brought about a huge increase in business for leasing
companies. The increase in tax and import duty on vehicles this
month resulted in a drastic increase in vehicle prices.
Manager, Operations, Commercial Leasing Company Limited, Hemal
Jayasooriya told The Sunday Leader that although the company
averaged a turnover of Rs. 250 million per month, this month the
company expected a turnover of Rs. 275 million due to the high
demand for vehicle leases.
is tremendous increase and we expect business to be booming till
end November, when the new taxes will be implemented through the
budget," Jayasooriya said.
added that although people were under the impression the public
would refrain from buying vehicles, people who have already
booked, reserved and paid advances on vehicles went ahead and
purchased the vehicles as many dealers still continued to sell
vehicles at earlier prices.
dealers have raised vehicle prices, the full price revision on
vehicles will be implemented only after the month of November. Due
to this, customers prefer to purchase their vehicles now,"
said since the day the government raised the tax, the company's
customer potential had increased, adding, "we did not expect
such an increase in volume."
Jayasooriya also said business was likely to decline in November,
December and January as people would have to adjust to the price
is only once people get used to the new price revisions that
business is likely to increase once again," Jayasooriya said.
maintained that while the prices of vehicles are continually
increasing, people still continue to purchase vehicles since they
are an essential item today.
because prices were increased, people did not stop purchasing
vehicles," he said.
other leasing companies, who wished to remain unnamed, also
maintained business had increased and targets were being met
despite the increased tax.
officials said although the tax increase has affected the
unregistered car market, the registered car market continued to
have "tremendous" sales.
dealers are selling their existing vehicles, they have not
implemented the full price revision yet. Therefore, people prefer
to purchase their vehicles now rather than wait until the new
budget is introduced," sources said.
tourism project initiated in Trinco
Industries and Investment Promotion Minister, Anura Bandaranaike
forwarded a cabinet paper for approval to develop Trincomalee as a
tourist destination titled 'Trincomalee: Where The Elephant Meets
The Whale' last week.
stated Trincomalee could be promoted as a destination for eco
tourism through the development of the area's natural resources.
Trincomalee is unique in that it is an area where the two largest
land and sea mammals - elephants and whales - are both present.
the weekly cabinet press briefing, Media Minister, Mangala
Samaraweera said Trincomalee, which is also known as the whale
capital owing to the large number of whales who inhabit the
surrounding seas, would be the ideal place to be promoted as an
eco tourism destination as well as a place to witness elephants
cabinet committee headed by Bandaranaike has been appointed to
further study the project and the final report is due in two
months. Members of the committee include Ministers Mangala
Samaraweera, Lakshman Kadirgamar, Dr. Sarath Amunugama, Dinesh
Gunewardena, Tissa Vitharana, Ferial Ashraff and M. Athaullah.
Mandana Ismail Abeywickrema
at the top is tougher"
Commercial Bank of Sri Lanka was recently awarded the 'Bank Of The
Year' award for the fourth time by The Banker magazine, UK.
"Reaching the top is at times easier than remaining there. To
remain at the top, we need to maintain a high level of investment
to ensure our continued superiority in operational, financial and
social responsibility areas. Of course we look upon it more as an
investment than a cost. Honours such as these naturally raise
customer expectations very high and it becomes essential that we
maintain the edge over others in our service standards," said
Managing Director, Commercial Bank, Amitha Gooneratne in an
Winning the 'Bank Of The Year' award for four successive years
certainly can't happen by chance. What has been the secret of
Commercial Bank's success.
I agree it wasn't by chance. I would primarily attribute the
repeated success to our commitment towards maintaining a strong
financial performance and our constant attention to both sides of
the balance sheet and the P&L. Together with it there was a
continuous and sustained effort towards meeting and wherever
possible exceeding, expectations of all our key stakeholders,
namely shareholders, staff, depositors, borrowers and other
policy has had the fullest blessing of our board of directors,
under whose guidance the corporate and senior management has
performed magnificently. This meeting of minds and understanding
of each other's concerns, I should say, has been an important
reason for our continued success.
Were there any specific strategies that you followed in order to
achieve the honour?
There had in fact been many strategies. At the operational level I
can think of our strategies to keep up with fast changing banking
technology by increasing investment in IT and applying IT to
achieve operational efficiencies in a cost effective manner. Then
there were the superior HR practices we adopted, better management
of assets and liabilities and timely re-pricing and management of
risks. All this contributed towards our success. I can say that
our decision to invest in Bangladesh embodied all these strategies
and enabled us to spread our risks over a larger geopolitical
What is the downside of being nominated as the best bank in Sri
As you will agree reaching the top is at times easier than
remaining there. To remain at the top, we need to maintain a high
level of investment in areas such as IT, HRD, CSR, etc. merely to
ensure our continued superiority in operational, financial and
social responsibility areas. Of course we look upon it more as an
investment than a cost. Honours such as these naturally raise
customer expectations very high and it becomes essential that we
maintain the edge over others in our service standards. It is a
difficult task and we believe there is always room for improvement
in this manner.
Cooperation of staff at all levels is essential to be successful.
How have you managed to motivate your staff towards excellence?
We firmly believe that a well contended, highly motivated,
exceptionally productive staff is a sine qua non for corporate
excellence. In this regard, we have focused attention on four
dimensions, namely, rewards, relationship, training and
development and working environment.
carry out an annual survey on employee compensation and benefits
and make every endeavour to be the best in the banking sector. Our
rewards are linked to performance and bank has established a
performance oriented culture where good performers are rewarded
better than others.
work on the theme 'One Bank - One Family' and have established
good relationship using appropriate HR techniques such as
grievance handling and counseling, always encouraging the team
spirit. We have built a conducive work environment where each
member of staff performs the duties entrusted competently, adding
value to the organisation and also looking forward to career
progression which depends on performance and value addition. All
of us are keen to learn and perform better and ours is a learning
has also played a significant role in building a high quality
workforce. We have adopted a scientific approach to training where
training is need based and competency focused. This approach has
helped us to build a high quality workforce and also achieve
employee productivity and leadership among banks where we average
21 employees per branch as against 28 for the closest competitor.
regard to human resources, our theme is to reach corporate
excellence through people power and our vision is to be the most
exemplary, caring and sought after employer in Sri Lanka.
What can be said about your profit performance during the past few
Each year, we aim to achieve a growth in profit in excess of the
rate of inflation and the GDP growth. A closer look at the income
statements for the past, say five years reveals that we have been
on target and both the profit before tax and the profit after tax
have grown at an average annual rate of over 20%, a rate which is
well in excess of the combined average growth of inflation and GDP
over the same period.
the year 2000, our profit before tax exceeded Rs. 1 bn. for the
first time while in the year 2001 our profit after tax too
exceeded Rs. 1 bn. Our group profit before tax exceeded Rs. 2 bn.
2003. In fact, we take it very seriously right from the point of
preparing the corporate plan and the budget up to the
implementation of the strategies prioritised therein.
Clearly, the staff and shareholders have benefited. But what about
They too have benefited because the benefits cannot be narrowed
down to any one segment. The good results and the honours are
shared by all stakeholders. It is highly reassuring for every
depositor to know that, while earning highly competitive rates of
interest, he or she is banking with the country's best bank, which
also enjoys the highest credit rating (AA+ Sri) among local
private sector banks.
through awards such as 'Bank of the Year' and 'Best Bank in Sri
Lanka' also provides an assurance that Commercial Bank has abided
by the many different criteria - statutory, regulatory and
prudential needed to operate a successful bank
What has your bank's success meant to the country and the national
We have always been contributing in many ways to the national
economy. As a strong national bank, we contribute positively to
the entire banking sector in Sri Lanka and a strong banking sector
is a basic need for the success of any economy. The initiatives
taken by us in upgrading the level of banking services,
introduction of latest technology, enhancing standards of training
for bankers by tying up with bodies such as AIT of Bangkok, are
all a part of our contribution to the banking sector and through
it to the national economy.
major tangible contribution is the taxes that we pay to the state
coffers. For example, in the year 2003 alone, Commercial Bank has
paid over Rs. 527 mn as direct taxes and over Rs. 1 bn as indirect
have also launched a special social responsibility trust to
undertake activities aimed at fulfilling our CSR objectives and
have already agreed to rehabilitate irrigation tanks in the
Wayamba and North Central Provinces under this programme.
Our nomination as 'Best Bank in Sri Lanka' for a record
fourth time will only encourage us more to make even greater
What can be said about your plans for the future ?
To reinforce our image as a strong national bank by further
expanding our branch network in Sri Lanka by establishing branches
in rural and under banked areas. Our medium term vision is to
build up on our entry into Bangladesh and expand our presence in
South Asia, particularly India and other neighbouring countries.
would focus on technology driven products to minimise delivery
costs, eg: bill payments and opening of accounts through internet,
etc. Building on the Udara Senior Citizens Account already
launched, we would also focus on serving the needs of the senior
citizens of our community and would structure appropriate
the area of corporate social responsibility, we hope to further
enhance our involvement through the Special Trust that we set-up
for such purposes into which we would be contributing upto 1% of
our profits every year.
from Media magazine for Leo Burnett
Burnett Solutions Inc. received a special commendation under the
'Most Effective Use Of Public Relations' category at the Asian
Brand Marketing Effectiveness Awards 2004 presented by Media
leading advertising solutions firm in Sri Lanka, Leo Burnett
received the commendation for the campaign it did for the Joint
Apparel Association Forum (JAAF). Described as 'A Tribute To The
Daughters Of Our Nation,' the campaign aims to recognise the
garment workers' efforts, which have brought economic gain and
fame to Sri Lanka.
to The Sunday Leader about the campaign, Director (Client
Services), Leo Burnett Solutions Inc., Michael Holsinger said,
"This campaign was quite a challenge for us from the very
start, because the manner in which we approached it was totally
different from traditional advertising. We used the medium of song
to get the message through."
to Holsinger, the problem was that the apparel industry workers,
or juki girls as they are called, were being treated badly by
society and they were facing many problems.
main culprit as it were who were dragging their image into the mud
were the tele-dramas, by portraying these girls as villains. These
girls come from villages to get jobs in the garment industry and
they are most often the breadwinners in their families. But
unfortunately, when they go back to the villages, they are seen as
not marriageable and considered to have loose morals. Our real
enemy in this sense was tele-drama. We had to combat the power of
tele-drama through advertising, so we got good artistes to perform
songs for us," he said.
artistes featured in the campaign are Rukantha Goonetilleke,
Deepika Priyadharshini, Bathiya and Santhush, Victor Ratnayake,
Amarasiri Peiris and Nirosha Virajini and the songs revolved
around six themes: Bread Winner, Economy Driver, Working
Conditions, Creator Of Neighbourhoods, 21st Century Girls For A
21st Century Challenge and Made In Sri Lanka All Over The World.
approached the artistes to do this as a project together with us
and they put their heart and soul into it. The campaign was born
and we called it 'A Tribute To The Apparel Worker.' It was
launched at Sugathadasa Stadium with all the featured artistes
performing live and was telecast over Rupavahini channel,"
campaign went on auto-pilot from thereon and the featured songs
received wide publicity, being aired on radio and the videos were
featured on TV constantly, proving the campaign's effectiveness in
touching the lives of many and making a difference in the lives of
the juki girls.
the essence of public relations. Public relations is not about
merely getting an article in the papers; it is about finding some
kind of method to solve a problem. The campaign winning an award
in an international competition is probably the first award Sri
Lanka has won in the public relations industry. To our industry,
it's like winning a Golden Globe or an Oscar. People live for
that," asserted Holsinger.
Media magazine awards supplement had this to say about the
Lanka's leading lyricists, musicians, and singers were enlisted to
restore dignity to the country's apparel workers, portrayed in
soaps and the media as juki girls - temptresses and exploited sex
workers. The resulting songs and videos - each focusing on a girl
and her true values - gained wide exposure and entered the charts.
The public saw the workers in a new light, whilst the number of
girls seeking work in the apparel trade rose dramatically."
to Holsinger, the campaign had a great response in the country,
especially from the people who own factories and the juki girls
are now treated better in the factories as well as by society in
a result, "the credibility and effectiveness of having a juki
girl as the villain in the tele-dramas is not effective
anymore," he said.
total of 44 awards were given in the Asian region and it is an
incredible feat that Sri Lanka could be recognised through Leo
Burnett to get one of the 44 awards. Ironically, the campaign did
not receive an award or any recognition at the local advertising
sad thing is the campaign was put up for the awards in the local
advertising industry but it just flew over their heads and won
nothing in Sri Lanka. With this commendation, it proves that some
things we Sri Lankans cannot see, others can see," asserted
commendation was given to us because they thought this strategy
was very innovative. They couldn't give us anything more because
we don't have a monitoring system in this country to measure
results. These awards are for effectiveness and effectiveness is
all about the results that you actually achieve but we didn't get
a higher award because we couldn't quantify the results,"
Holsinger further said.
phones boost small-scale businesses
use of mobile phones in conducting day to day business has given a
new lease of life to small scale businesspeople such as three
wheeler drivers, vegetable, meat and fruit sellers, fishermen and
farmers in Sri Lanka.
which were a luxury just a few years ago, are now commonplace due
to affordability, unlike land phones, and give an added advantage
to many, enabling them to operate their businesses more
affordability of mobile phones in the recent past is the major
factor contributing to the surge in use of mobile phones by many
sections of society, without it being limited to the more
privileged sections of society.
operators cover many remote areas and the short time period
involved in getting a mobile phone and connection, compared to
getting a land phone, has boosted sales.
portable handsets give farmers and traders better access to demand
and price information, so their stocks could be controlled
according to demand, instead of ordering too little or too much.
Rohan Udith Dharshana, a fruit seller in Borella, "Using a
mobile has made business much easier. I can now order what I need
on the phone."
when it comes to getting a three-wheeler, a popular mode of
transport in the country, one does not have to wait on the road
for a three-wheeler in most cases any longer. Now it's just a
matter of calling up a known three-wheeler driver who operates in
the area on his mobile, who will then turn up in a few minutes.
fishermen are called on their mobiles and asked to deliver fish to
houses or sales outlets according to the requirement, making sales
that much easier and faster.
we tell the fish man what to bring, he makes it a point to set
aside our order when making his rounds. By the time he comes to
our lane, I don't have to worry that the fish I want to buy will
be over since I have already told him what to keep," said
Sonali, a house-wife in Mount Lavinia.
number of people using mobile phones to conduct businesses is huge
and it has increased the income level of three-wheeler drivers who
no longer have to hang around waiting for hires as often as they
phones are constantly ringing, bringing in new business and the
rate they pay for the mobile service is more than compensated for,
due to the increase in hires.
Nimal, a three-wheeler driver who operates from Ratmalana,
"We park at the Galle Road and there are hires that go down
the lanes but many people have to walk up since there are no
three-wheelers at the bottom of the lanes. Now with my phone, I
get calls from those who want to come to the road and just go down
and pick them up. There are so many hires like this that come my
way everyday and it has increased the number of hires a day to
almost double the number I used to have."
operate with card connections, which do not have monthly rentals
while the few who have permanent connections say that since they
have the one-minute incoming free facility, they end up paying a
very small amount since the calls last less than a minute.
Ravi, a three-wheeler driver who operates from Bambalapitiya,
"When people call about a hire, they only have to tell us who
it is and where to pick them from, which does not take even a
minute. But it is easier to use the card connection since we can
recharge the card with small amounts now."
to an official from a mobile phone company, over 70% of the
company business is on pre-paid (card) connections and it is
small-scale businesspeople who use these connections to conduct
their business activities.
they can also update the amount of credit on their phones with a
small payment, many of them find that having a mobile phone helps
grow their business. It is only the more affluent who obtain
permanent connections," the official said.
dispute settled in favour of garment exporter
leading garment manufacturer, Amrita Apparels (Pvt) Ltd., which is
a member of the well-known export group Ranliya has since 1992
been deprived of the legitimate quota due to them which is 25,000
dozens of USA quota as stipulated in the agreement that the
company entered into with the BOI at the time.
the years Amrita was allocated only 10,000 dozens of quota per
year out of the 25,000 dozens stipulated in the agreement.
company recently sought relief from the Supreme Court for the
injustice that had been meted out. It is only then the authorities
agreed to allocate the balance quantity of 15,000 dozens and came
to an amicable settlement.
the company has had to forego 15,000 dozens per year of this quota
for 12 consecutive years since 1992 absorbing the immense
financial loss over the years. The country too has lost valuable
episode has also adversely affected the better welfare facilities
that the company could have extended to its almost 1000 strong
work force had the quota not been reduced drastically over these
flush valves for Asia Pacific Golf courses
a leading brand in manual and sensor flush valves, has been
selected for all the washrooms at the prestigious Asia Pacific
Golf Courses, Battaramulla. Rigel was selected from a range of
reputed brands, for its quality and durability - a trademark of
all Rigel products.
is manufactured in Singapore by Rigel Technology
(Pte) Ltd. to high quality standards recognised around the
world and is the leading brand in Asia. Rigel products are in use
in many prestigious buildings such as Ceylinco House, Access
Tower, IFS complex and the BIA to name a few.
Rigel product range is wide and also includes sensor hand driers,
soap dispensers and SS washroom accessories and special
application taps for selected industries. The brand is represented
in Sri Lanka by Perry Jumat.
is World Thrift Day
to avoid losing your
money in saving and investing
it that you are depositing money in a financial institution or
investing in a company stock or debt instrument, it makes sense to
verify the financial health of that institution. Financial
statements are an indispensable source of information about
institutions' financial health and its prospects for the future.
and investors should learn to make use of the information they
contain as a report card of that institution's management
performance and accountability and as an early indicator of the
institution's future success or potential failure. This is why
regulators such as the Central Bank of Sri Lanka and the
Securities and Exchange Commission require public deposit taking
institutions and listed companies respectively to make public
their financial statements.
if you have no clue about accounting, with a little bit of effort
you can learn to interpret financial statements. Understanding a
company is very much the same process as understanding your own
personal finances. As we analyse our own finances, we typically
start looking at how much cash we received and how much cash we
paid and ultimately our net worth (how much money we are left with
after we add all moneys owed to us and subtract our debt.
is usually 'the truth' of how we really spent our money and how
much money we have. How we look at corporate financial statements
is very much the same. These financial statements are called (1)
the statement of cash flows, (2) the statement of income (profit
and loss), and (3) the balance sheet.
should start with the cash flow statement, to get the truth, a
sense of where does cash come from (source of cash) and where does
it go (use of cash). The cash flow statement has three parts;
however, the components may vary depending on the type of business
and the company engages in:
Cash flow from operations (CFFO) - describes cash coming in and
out from a company's day-to-day business.
Cash flow from / used in investment activities - describes cash
coming in and out from longer-term purchases, asset sales or
Cash flow from / used in financing activities
- describes additional sources of cash coming in or going
out from interest paid, interest received, loans, bonds sold or
stock issued. Accounting choices affect whether cash flows are
classified under operating, financing or investing activities.
statement of income communicates the profitability of a company
over a specified period. A company's profit or net income is equal
to its revenues and gains minus its expenses and losses. The
measurement of accounting earnings involves two steps:
Identifying revenues for the period and
Matching the corresponding costs to revenues.
is important to recognise that revenue is not the same as cash
received. According to the accrual principal of accounting,
revenue is recognised as soon as "the effort required to
generate the sale is substantially complete and there is a
reasonable certainty that payment will be received."
to the matching principal of accounting, the capital expenditure,
need to be spread over the useful life to match with the revenue.
Companies are given great latitude in how they recognise their
revenue and identify their expenses and CFFO under the accounting
principals (which leads to all the cooking!).
balance sheet presents a snapshot of a company's resources (i.e.
its assets) and the claims against those resources (i.e. its
liabilities and owners' equity or capital) at a specific point in
time. The asset position of the balance sheet reports the effects
of all of a company's past investment decisions.
liabilities and owners' equity position reports the effects of all
of the company's past financing decisions. Capital is obtained
from both short and long-term creditors and from owners.
The critical equation to remember is: Assets = Liabilities
+ Owners' Equity. A balance sheet is very much like a bikini. What
it reveals is interesting, what it conceals is vital.
much has changed in today's business world, it pays you to be
aware of what dishonest company executives will resort, to stretch
or even hide the truth. Financial Shenanigans by Howard Schilit,
McGraw-Hill, second edition is an excellent resource that
describes seven fundamental tricks that companies use to fool
auditors and investors even for those with no background in
accounting or financial analysis.
his book, Schilit defines financial shenanigans as actions or
omissions designed to hide or distort the real financial
performance or financial condition of a company.
problems can easily be detected by a through examination of
financial statements. Here are four steps to interpret financial
of the statement of cash flows
and analyse the common-size income statements and balance sheets
read the footnotes and other qualitative information
a few ratios to ascertain productivity, liquidity, solvency and
warning signs of problems can be found in the CFFO. It answers
whether the company is generating enough cash from normal
operations or have to generate cash from sale of assets or from
additional borrowing to meet its cash needs. Remember to adjust
reported CFFO by removing the effects of nonrecurring items such
as extraordinary items or discontinued items.
watching the trends in CFFO and comparing CFFO with reported net
income you can more easily spot deterioration in a business often
long before the problem flow through earnings. Red flags are
warranted when a company's earnings growth surpasses the growth
rate of CFFO.
a common-size income statement and a balance sheet is easy.
Express all income statement items as a percentage of revenues and
all balance sheet items as a percentage of total assets. Vertical
analysis of income statements and balance sheets will help you to
spot structural changes year-over-year (YOY).
the percentages remain stable over time. Horizontal analysis
develops trends in balance sheet and income statement percentages
over time. Designate a particular year as the base year and
calculate percentage changes in subsequent years. For example,
Table 1 reveals several incredible and troubling changes, though
if one look at only column 1 and 2 see as an improvement YOY.
margins (line 3) jumped from 2% to 25% a tenfold increase. Admin
expenses (line 4) have declined from 17% to 13% possibly showing a
shifting of current expenses to future periods. Shrinkage in cash
(line 10) from 28% to 12%, although revenue (line 1) has increased
by 62% cash has declined by 30%. A jump in account receivable
(line 11) from 20% to 29%, is growing at 148% faster than the
revenue growth of 62%.
inventories (line 12) rises from 27% to 33% a 100% increase YOY
and more than the 24% growth in cost of sales (line2). Trade and
other payables (line 20) are growing at 204%, twice as faster than
inventory (line 12) growth rate of 100%.
carefully reading the footnotes, auditor's report and management
discussion one could find a wealth of information for assessing
the financial condition of a company and the quality of its
reported earnings. The footnotes detail such matters as pending or
imminent litigation, sudden departure from past accounting
practices, changes in auditors, or outside legal counsel.
or the fine print is where company's hide the bad stuff they do
not want to disclose but have to, where few people will find them.
Watch for qualified opinions in the auditor's report. Be wary when
no audit committee exists with outside members of the board, or
chairman's wife is also on the board! Read the management
discussion with a grain of salt.
ratios to compare a company's performance with its prior years'
performance and with the performance of similar companies in the
industry. Decreasing productivity of assets i.e. inventory,
receivables, falling margins gross profit or net profit margin and
declining return on assets or equity, earnings per share are sure
signs of deteriorating earnings quality.
ability to meet debt obligations found by looking at debt to
assets or equity and interest coverage (operating income /
interest expense) ratios. In
most cases, some adjustment to the reported numbers will reveal
the true health of a company.
Pramuka depositors took the trouble to look at the bank's year
2000 financial report as described above, they would not be in the
plight they are in today. Regrettably,
until financial reporting is in plain language and accounting
standards are developed for the benefit of investors, the primary
users of financial statements, instead of for the benefit of
issuers, enabling management to manipulate earnings and hide
liabilities and losses, investors will be disadvantaged.
it is always sensible to make use of independent analyst
recommendations such as credit ratings from recognised third party
advisory services to find out the financial health of a particular
institution before depositing money or investing.
writer is Managing Director, Amba Research Lanka (Pvt.) Ltd.)
to de-tariff fire insurance criticised
decision taken by the Insurance Board of Sri Lanka to de-tariff
fire insurance with effect from January 1, 2005 is one that will
ruin the industry, according to Insurance Consultant, S.I.
Fernando, a member of the committee that was appointed to review
and revise the existing tariff.
is not a wise step. It will only ruin the industry. If the
insurance market is a disciplined one, the IBSL may think of
deregulating, but it is an indisciplined market and as such there
should be a tariff to regulate the industry," Fernando told
The Sunday Leader.
said that monitoring a tariff ensures adequate solvency margins
and technical reserves, in addition to maintaining a good rapport
with re-insurers, thereby safeguarding the interest of the policy
holder and the long-term survival of the insurance companies.
President, Sri Lanka Insurance Brokers Association (SLIBA), Upali
Wickremaratne said the insurance companies are in favour of the
decision to de-tariff fire insurance since "there is no need
for a tariff in the open market."
on their strengths and weakness, each company must have its own
underwriting philosophy and fix rates within that framework,"
of the primary reasons for the SLIBA to object to the introduction
of a new fire tariff is the increase in premiums that is bound to
occur in several areas. The association is of the opinion that any
increase in premia is surely unwelcome, given the rising cost of
(Marketing), Janashakthi Insurance Co. Ltd., Tryphon Mirando told
The Sunday Leader the decision to de-tariff fire insurance is good
because different companies will compete with each other in order
to get business.
all depends on what reinsurance arrangements the insurance
companies have and if it is good, they can get better rates,"
he further said.
to Fernando, the committee appointed by the IBSL to review and
revise the present tariff which is over 50 years old drafted the
tariff and passed it on to the Insurance Association for their
comments, which he says took over six months to go through the
draft tariff and agree to accept with certain amendments.
of the 10 insurance companies only three companies objected to the
implementation. However, the IBSL decided to implement the tariff
with effect from June 1, this year and appointed an advisory
committee to monitor and regulate the industry and stop unethical
the Brokers Association objected to the implementation of the
revised tariff and with the assistance of the Chamber of Commerce,
made representations to the finance minister.
minister, without even consulting the IBSL, requested them to
defer the implementing of the tariff. The secretary to the
minister then requested the IBSL to obtain advice from an
independent expert to do a comparison of the fire tariff probably
with a country like India," Fernando said.
services of Secretary / CEO, Tariff Advisory Committee, India,
K.K. Srinivasan, were obtained to do this proposed exercise and
Srinivasan had discussions with the Fire Advisory Committee,
Insurance Association, Brokers Association and Chamber of Commerce
these meetings, he also had a round of discussions with the FAC
and rates were slashed down by 40% and limit of sum insured on
large risks not subject to tariff rates were reduced from Rs. 500
m to Rs. 300 m. If anyone now says that the reduced rates are
still high, the insurance companies will have no other alternative
other than to provide free cover to their clients. In fire
insurance, the rates charged should commensurate with the risk
involved, otherwise in the even of any loss or damage the
insurance companies will find it difficult to pay claims and
thereby the policyholder will suffer," asserted Fernando.
the event IBSL de-regulates fire insurance, Fernando queried on
what basis insurance companies would rate a risk in the absence of
a tariff as the rates vary from risk to risk, adding, "Or
will they continue the present practice of undercutting rates so
as to get business for their survival?"
how long can insurance companies under cut rates? I foresee not
for long, a time will come when insurance companies will call for
a tariff to save them from bankruptcy. It is a well known fact in
the insurance market that they find it difficult to place their
re-insurance abroad. Because of the low rates, there have been
instances where some companies even find it difficult to place
100% of a large risk."
to Fernando, it is the IBSL, as regulatory body, that could
question the insurers and take necessary action in terms of the
act "to save the industry."
my view the IBSL by de-regulating fire insurance is only trying to
palm off their responsibility to insurance companies, allowing
them to regulate themselves. Then why should there be a regulatory
board? In the event of IBSL de-tariffing fire insurance, at this
stage the insurers will not hesitate to change the terms and
condition of the fire policy, as they have done in motor
insurance," he charged.
further said that since motor insurance has already been de-tariffed,
insurers are introducing interesting covers to the motor policy to
please the customers.
is welcome, but they have gone to the extent of introducing the
'Condition of Average' to the Motor Policy, which is against the
principles of insurance. What next?" Fernando questioned,
adding, "this is the result of de-tarrifing - insurers can do
many things to the detriment of the customer.
and 4A's launch diploma course in advertising
Synergy School of Marketing in association with the 4A's
(Accredited Advertising Agencies Association of Sri Lanka)
announced the local launch of the first ever internationally
recognised diploma course for students interested in the
profession of advertising, last week.
CAM advanced certificates leading to the Advanced Diploma in
Communication Studies and the CAM higher certificates, leading to
higher diploma qualifications were launched last week. The
qualifications are the first of its kind to be launched in Sri
by the Communications Advertising and Marketing Education
Foundation Limited, UK (CAM), the awards are tailored to the
integrated marketing communications needs of modern business.
is an industry led and recognised educational body that acts as
the glue between the various disciplines of the communication
industry and it also bridges the gap between the academic and the
is kept up to date by leading communication experts and the
majority of tutors are practitioners in the industry. It is
flexible and relevant making the certificates suitable for
anyone's continuing professional development.
4A's Sri Lanka, Rohan Rajaratnam said the dire need for such
qualifications was keenly felt by the advertising industry in Sri
Lanka and the 4A's with the assistance of the Synergy School of
Marketing were glad to fill this void that would undoubtedly
benefit the industry as a whole.
2000 the CAM Foundation formed an alliance with the Chartered
Institute of Marketing UK (CIM) and since then, CAM qualifications
have been managed and awarded by CIM.
Synergy School of Marketing, Michael Ranasinghe said CIM's aim was
to provide marketers with the best practice marketing knowledge
and to help them deliver world class marketing.
qualifications are tailored to the integrated marketing
communications needs of modern business," he said.
studying for these qualifications, students become CIM studying
members and have access to all the benefits of membership as well
as resources to support their studies.
ability to integrate the many disciplines present in the marketing
communications industry is its main benefit, giving specialists
the breadth of knowledge to advise clients, internal and external,
on the best ways to communicate a product or service.
improves career prospects, adds 'roundness' to knowledge gained
and to that of the team and satisfies clients needs to look more
broadly at the way in which their products and services are
thousands of professionals, CAM has provided a solution to the
challenges of modern marketing communication, satisfying the
growing need to look broadly at the way products and services are
qualifications also help clients to receive better service,
delivered with greater professionalism by practioners who inspire
confidence and for organisations to retain and develop valued
also allows individuals to become more productive and helps them
move into demanding roles where versatility and responsibility are
vital. Practioners also gain confidence to devise, plan and
execute communication programmes that work.
helps the industry improve its reputation and ability to set
standards and continually improve them. It also helps the managers
and directors of tomorrow to launch and invigorate careers as CAM
provides a broad based platform from which to work. CAM gives
practical knowledge plus theoretical understanding - the winning
combination for professional success," Ranasinghe said.
helps students right across the spectrum agency, client and
supplier backgrounds. Students could either work in marketing,
advertising, public relations, the media, market research, sales
promotion and direct marketing in both private and public sectors.
They will gain indepth knowledge of all the key elements needed
for planning and executing integrated campaigns, far greater
breadth of knowledge and competence than work experience alone can
provide, flexibility to chose different ways in which to study up
to date, relevant knowledge of both the theory and the reality of
present and future marketing communication practice.
in its attempt to shape the future of local students has embarked
on this innovative attempt to offer those interested in building a
career in advertising and the opportunity to benefit from a
globally recognised diploma.
vision statement for the 4A's enshrines a desire to improve the
knowledge base of the industry thus achieving its objective of
cultivating a vibrant and world class advertising industry in this
is the first step taken in partnership to achieving this goal.
to Ranasinghe, registrations for these qualifications will
commence in the first week of December and the duration period for
this course is 18 months with examinations held in June and
MD addresses International Islamic Finance Forum
Director, Amana Investments Limited, Faizal Salieh, was invited to
speak at the International Islamic Finance Forum held in Istanbul,
Turkey recently. The International Islamic Finance Forum is the
premier forum for Islamic finance in the world today.
forum in Istanbul was attended by a large number of delegates and
included bankers, financiers, regulators, investment companies,
Shariah scholars, academics and government officials from all over
spoke on 'Islamic Finance Initiatives in Sri Lanka and Amana's
Success Story' in the technical session on 'New Markets, New
Opportunities, New Frontiers.'
his presentation, he illustrated how the Amana Group in Sri Lanka
has made vast strides in introducing, pioneering and growing
Islamic financial services since 1997 and the impact it has made
on the country's financial services sector and the community.
Amana Group consists of five companies engaged in Shariah-compliant
investment and financing activities, Takaful Insurance, corporate
advisory services, real estate management, bullion trading and
has strategic alliances with Bank Islam of Malaysia and Sariyakat
Takaful of Malaysia in its finance and insurance businesses. The
parent company's key shareholders include two large corporate
groups in the country, namely Expo Lanka and Akbar Brothers, Bank
Islam of Malaysia and a number of local and foreign individuals
told the forum that the Muslim community in Sri Lanka was a
dominant trading community and essentially consisted of small and
medium sized enterprises. He estimated the size of the Islamic
market segment at about US$ 500 million and growing at 15% p.a.
commended the Sri Lankan government on its plans to support,
assist and revitalise the small and medium scale enterprises in
the country as they formed the back-bone of the economy.
independent identity of Muslims, their increasing political and
ethical awareness, the growth of Islamic banking in the Middle
East and Malaysia and limited access to conventional banks were
the factors that influenced the thirst for Shariah-compliant
products and the ready migration of customers into Amana's
folds," Salieh explained.
customers are strongly Shariah-focused and will not compromise on
Shariah when it comes to banking transactions. Business ethics is
the major driver of our business," he said.
offers the market a wide range of Shariah-compliant investment and
financing products and insurance products. Its customers comprise
both Muslims and non-Muslims. Over its seven-year history, Amana
has recorded remarkable growth in investments and advances, and
returns to investors have compared well with some of the
conventional, Riba-based market instruments.
put down "changing the mindset of regulators to accept and
see value in an ethics-driven business model for banking and
insurance, accelerating the customer conversion rate in the
primary Islamic market segment, reaching the non-Islamic market
segments and diffusing the apprehensions of conventional
competitors and developing and developing co-existence" as
the main challenges faced by Amana in Sri Lanka.
to the media soon after his presentation, Salieh said that his
country's regulators are clearly moving forward in keeping with
global trends; that they have licensed Amana's insurance business
and were now looking positively at Islamic banking.
licencing of the Islamic Bank of Britain by the FSA in the UK in
August and the presence of four Islamic banks in Thailand were
landmark developments and indicate the acceptance and approval of
Islamic banking practices by global regulators.
said that Amana would open the doors for the flow of new
investments into Sri Lanka from global Islamic funds that were
looking for Shariah-compliant investment opportunities.
Award' for Prof. Balakumaran
Mahadeva Balakumaran received the 'Lifetime Award' in recognition
of his outstanding contribution to the banking field and
especially to the Chartered Institute of Bankers, Colombo Centre
from the Association of Chartered Bankers of Sri Lanka Trust
youngest recipient of this prestigious award, Prof. Mahadeva
Balakumaran is an outstanding banker, scholar and a much sought
after management consultant and trainer.
former assistant general manager of Seylan Bank Limited, he is
presently a faculty member in many academic, professional
institutions and universities and considered to be the most
professionally qualified banker in this country having obtained
his PhD from the University of Honolulu, USA.
citation was delivered by President, Association of Chartered
Bankers of Sri Lanka Trust, S. Sivanathan in honour of Professor
M. Balakumaran at the 'Lifetime Awards In Banking' ceremony held
recently, at Hotel Taj Samudra. "The 'Lifetime Award' of the
Association of Chartered Bankers of Sri Lanka Trust has been
presented to Prof. Mahadeva Balakumaran a well earned reward for
his considerable contribution, in general to the banking
profession in Sri Lanka, and in particular to being education and
the Colombo Local Centre," said Sivanathan.
Balakumaran was also the first recipient from Sri Lanka to be
awarded the Financial Studies Diploma (Dip FS) - the highest level
qualification of the Chartered Institute of Bankers, London, and
also one of the first four persons to obtain the Diploma in Bank
Management from the Institute of Bankers, Sri Lanka. Prof.
Balakumaran has also been awarded fellowships by both the
Chartered Institute of Bankers, London (FCIB) and the Institute of
Bankers, Sri Lanka (FIB).
his qualifications is a MBA from the Postgraduate Institute of
Management, University of Sri Jayewardenapura, as well as
postgraduate certificates in human resource management in banks
and asset and liability management from the same institution. He
is also an associate of the Institute of Credit Management in Sri
Lanka. Prof. Balakumaran's immense contribution to banking,
finance and management is testimony to his scholarly achievements.
He is also a distance-learning tutor of the Chartered Institute of
Bankers, London and has received letters of commendation for 100%
success rate of his students.
is a member of the Association of Banking Teacher (ABT), which is
affiliated to the Chartered Institute of Bankers (London) and a
being a regular contributor to several national and foreign
publications. Prof. Balakumaran had his primary education at Royal
College, Colombo 7. He later graduated in commerce from the
University of Madras.