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27th February,  2005 Volume 11, Issue 33

First with the news and free with its views                                     First with the news and free with its views                             First with the news and free with its views                                    

Business

Sitting on Transmec proposal

By Marianne David 

The National Procurement Agency (NPA) is currently evaluating a proposal by Transmec Holdings Pte. Ltd. to build the Econo Rail in Sri Lanka utilising the undercarriages that are not being used by the Railways Department.

"The proposal has been submitted to the NPA and engineers from the Railways Department are also part of the committee that is considering this proposal," General Manager, Railways Department, Priyal De Silva told The Sunday Leader.

Transmec Holdings submitted the proposal to the government nine months ago in order to develop the transport industry and says it is able to offer the Econo Rail to the Railways Department at a much lower price than that of the imported train.

"The imported train costs Rs. 300 million but we are able to offer it at Rs. 45 million. There is a huge disparity in prices. We started the Econo Rail in order to serve the public due to the sorry state of the public transport. We have the engineering background, technology and know-how to manufacture this train and we want to work with the Railways Department in order to do this," Director, Transmec Holdings, C.P. Guhashanka told The Sunday Leader.

Guhashanka said the company has requested the Railways Department to give them the undercarriages that are not being utilised and go as scrap which are much more valuable in order to reconstruct and refurbish them, after which the company would build, test and hand over the Econo Rail to the Railways Department.

According to Guhashanka, in Sri Lanka, any component of a train that is needed has to be imported.

"The local agent supplies all the parts and gets a percentage. If all these items are being bought from private companies, why doesn't the Railways Department join with a private company and manufacture its own train?" he questioned.

Guhashanka also asserted the Econo Rail is not a profit-oriented operation.

"We are looking at the development of the country, but we are disgusted with the response. Elsewhere government subsidies and support would be forthcoming but in Sri Lanka this is not happening," he charged.

The Railways Department also plans to implement a project for which the government has provided funds where 50 undercarriages that are not being used will be rehabilitated.

"To rehabilitate one carriage, it will cost Rs. 2.5 million. Buying one would cost Rs. 22 million. Rehabilitating these carriages would cost only 10% of buying new ones. Through this project the undercarriages would be used instead of being discarded," said De Silva.


JKH posts impressive results for 3Q, 2004

The interim results of John Keells Holdings Limited (JKH) for the nine months ended December 31, 2004 were released on Friday (28).

The group recorded a 18 percent increase in group revenues from Rs. 14.92 billion to Rs. 17.67 billion, a 33 percent increase in profit before exceptional items from Rs. 1.99 billion to Rs. 2.64 billion and a 74 percent increase in profit attributable to shareholders from Rs 1.03 billion to Rs 1.79 billion.

This was despite tax rates increasing from 13.67 percent 18.35 percent mainly as a result of inflation in tax set offs and imposition of the Economic Service Charge.

While the tsunami affected the group's leisure, financial services and food and beverage sectors, the properties were well covered by insurance and all hotels under repair are to be fully operational by end July this year, with the exception of Beach Hotel Bayroo.

The SAP based enterprise resource planning was fully implemented and the HR initiatives aimed at making JKH "more than just a workplace" are nearing completion. The group continues to pursue internal efficiency with renewed vigor in its effort to be a world-class organisation. The construction of 'The Monarch' commenced on schedule and JKH also established a Tsunami Relief Initiative (TRI).

"Events of December 26 marred what otherwise would have been an excellent year for the group. Amidst the setbacks to the national economy and significant impacts to our own operations, we are confident that the Sri Lankan spirit will ultimately prevail and that the foundations that we have created internally will stand in good stead when meeting challenges posed by the external environment," said Chairman, JKH, Vivendra Lintotawela.


Prima in the dark over withdrawal of flour subsidy

By Jamila Najmuddin 

Following the announcement by the government last week of plans to withdraw the flour subsidy by March 1, Prima Ceylon Ltd. has voiced its disapproval of the government's failure to inform the company in this regard.

Officials from Prima Ceylon Ltd. told The Sunday Leader they were unaware of such a decision and claimed if the decision were to be implemented, flour prices were likely to increase.

"We knew about the withdrawal through the media as the government has not informed the company to date. If this decision is implemented, in order to cover up the subsidy, flour prices are likely to increase by Rs. 7.50," a company official said.

However, Trade and Consumer Affairs Minister, Jeyaraj Fernadopulle told The Sunday Leader the government had informed the company soon after the decision. "Everyone has been informed and Prima has in fact made a request to the Consumer Affairs Authority to fix the prices on flour after the withdrawal," Minister Fernandopulle said.

When questioned if bread prices would increase after the subsidy withdrawal, Minister Fernandopulle said he was not aware of whether prices would increase but added the government would continue to supply flour at Rs. 24 and Rs. 25 and that retail prices would continue at Rs. 27.

Meanwhile, President, Bakers Association, Parakrama Dassanayaka told The Sunday Leader bread prices were likely to increase by Rs. 1.50 or Rs. 2. However, he said this was due to the increase in the cumulative cost of flour last year and not the withdrawal of the flour subsidy.

"Many bakers purchase the imported flour which is sold from Rs. 24 to Rs. 26. This flour is freely available in the market. Therefore bread prices will not increase by a large margin," he said.


A boost for tourism

In a bid to boost the tourism industry following the devastating tsunami, the government has invited 200 international journalists to visit the country by March.

The tourism industry, which was one of the worst hit industries by the tsunami, faced severe setbacks due to international media reports claiming the country was unsafe for travel and leisure purposes due to the spread of diseases. Fifty journalists have already arrived in the country following the December 26 devastation and the government is expecting 150 journalists in the country by March.

"The tourism industry is expected to improve in the next three to four months and in order to inform the international community that the country is safe, the government has implemented a programme to invite foreign journalists," Director General, Sri Lanka Tourist Board (SLTB), S. Kalaiselvam told The Sunday Leader.

The industry recorded a drop of 23.5% in the number of tourist arrivals in the country in January this year compared to January 2004. The overall number of tourist arrivals in January this year is 38,187 to last year's 49,950.

According to the SLTB, the total number of tourist arrivals in the country last year was 566,202. However, due to the tsunami, tourist arrivals are targeted at 450,000 this year.

Following the tsunami, air traffic had also faced a severe setback due to the low number of tourist arrivals in the country.

According to an official from Sri Lankan Airlines, cabin factor was recorded in the average high 80s before the tsunami but it had dropped by 10% soon after the devastation. However, the official added that cabin factor had increased by 5% this month.

- Jamila Najmuddin


Hayleys post-tax profit tops Rs. 1 bn 

The Hayleys Group has achieved a milestone Rs. 1.3 bn in profit after tax for the nine months ending December 31, 2004, with improved contributions from several key sectors of business.

In results released to the Colombo Stock Exchange last week, the blue chip conglomerate reported strong growth in turnover and pre and post tax profits at the end of the third quarter. In a statement issued simultaneously to media, Hayleys said it expects strong performance for the year, despite the appreciation of the rupee against the US dollar in the final quarter.

Highlights of the period under review include: a turnover growth of 25 per cent to Rs. 13.9 bn; pre-tax profit up 57 per cent to Rs. 1.3bn; profit after tax up Rs. 472 mn,  a growth of 70 per cent and profit attributable to shareholders up 56 per cent to Rs. 573 mn.

Hayleys Chairman, Rajan Yatawara said these figures are consistent with the group's  anticipated performance for the first three quarters of the year and reflect particularly significant growth in the rubber, transportation, inland marketing and plantations sectors.


Snippets 

World Bank support for Sri Lanka

Sri Lanka received a boost last week when the World Bank announced a total US$ 150 million in financial support for the country's reconstruction and recovery programme. The US$ 75 million emergency credit / grant approved is in addition to the US$75 million made available earlier this month as an immediate response to the tragedy. Total financing needs for Sri Lanka's recovery and reconstruction are estimated to be approximately US$1.5 to 1.6 billion, according to a damage and needs assessment released earlier this month by the World Bank in partnership with the Asian Development Bank and the Japan Bank for International Cooperation.

ESRI provides support services

ESRI and its international distributors are providing support in response to the recent Indian Ocean earthquake and tsunami disaster. ESRI is working with government agencies and disaster relief organisations to provide geographic information system resources including software, spatial data warehousing and management, Web hosting, emergency response GIS applications, and more. "We are humbled by the amazing contributions our users are making to the immediate global response to the tsunami disaster," says President, ESRI, Jack Dangermond.

Asian Alliance records highest premium

Asian Alliance has produced Rs. 58.32 million in annualised premium in 1,541 policies at an average premium per policy of Rs. 37,000 in January this year - the highest in the industry. The Negombo regional office has performed best with Kurunegala and Colombo earning the second and third place respectively. The company has a network of only eight regional branch offices with a total sales force of 500 sales advisors.

'Imagine Cup' open for registration

Microsoft is calling all students with a passion for creativity and technology to join its third annual 'Imagine Cup' which is now open for registration until March 15, 2005. 'Imagine Cup' is a global student technology competition conducted by Microsoft Corp. 'Imagine Cup' 2005 has a prize fund of US$ 215,000 and five additional competition categories to reflect a broader range of professional applications.

AMCHAM takes business delegation to China

The American Chamber of Commerce (AMCHAM) in Sri Lanka will be participating in the spring meeting of the Asia Pacific Council of American Chambers of Commerce (APCAC) next month. The AMCHAM delegation will be led by the Chamber's Executive Director, Maria Rajanayagam who says, "The delegates who will be joining would never get this type of opportunity in that the programme is a perfect blend of meetings, networking and experiences of the province's development and growth." The visit will offer an excellent opportunity for business leaders in Sri Lanka to further establish relations with American business in the region as well as create trade relationships with key business and government officials in China.

New head at HP

The board of directors of Hewlett-Packard Company announced that Carleton S. Fiorina has stepped down as chairman and chief executive officer and Robert P. Wayman, HP's chief financial officer, has been named chief executive officer on an interim basis and appointed to the board of directors. Patricia C. Dunn, an HP director since 1998, has been named non executive chairman of the board, also effective immediately. The board will begin a search for a new CEO immediately.

DRH ties up with DTDC

DRH Logistics Lanka (Pvt) Ltd. through its fully owned subsidiary DRH Courier Express Lanka (Pvt) Ltd. is venturing in to a partnership with India's largest locally owned courier company DTDC (Desk-to-Desk Courier). Currently, DTDC boast of 4,200 officers spread throughout India manned by 18,700 franchise employees, and handles over 300,000 packages per day throughout India. Due to this new partnership customers in Sri Lanka will be offered the best yet cost effective and value added service.


Avertorial 

Ceylinco Insurance now the leader in insurance

By Pelham Juriansz 

"Big or small Ceylinco protects them all." Hitherto, this was the slogan that Ceylinco Insurance was known by. Now, Ceylinco is the leader in the industry.

Last week, Ceylinco Insurance Co. Ltd formally claimed market leadership in Sri Lanka's competitive insurance business, ending four years of dominance by the once state-owned Sri Lanka Insurance Corporation Ltd. (SLICL).

Speaking at press conference to announce the change, Ceylinco Consolidated Chairman, Deshamanya Dr.Lalith Kotelawala said that both Life and General Insurance Divisions of the company had emerged as market leaders in their respective segments in terms of total premium income in 2004, making Ceylinco Insurance the undisputed No: 1 insurer in the country.

"While my uncle was involved in politics, my father, Senator Justin Kotelawala was involved in economic freedom. Ceylon Insurance was the first insurance company formed in 1938. Ceylinco Insurance Co.Ltd, was the successor to Ceylon Insurance Co: Ltd, and Ceylinco House, the first high-rise was completed in 1961. Ceylinco Consolidated now has 20 companies," mentioned Kotelawala.

"What is most significant about this achievement is that Ceylinco Insurance's portfolio has been built up over 17 years and has surpassed the cumulative business built up over 40 years, with state patronage during most of that time, by Sri Lanka Insurance,"  said Kotelawala.

Ceylinco Life Chief Executive Director, R.Renganathan said that the company had emerged as the industry-wide leader in new life business two years ago after maintaining leadership among the private sector life insurers for a decade.

Chief Executive Director (General) Ajith Gunawardena said that Ceylinco Insurance had made huge strides in the field of motor insurance in particular in 2004. "Ceylinco VIP has become the most sought after brand of motor insurance in Sri Lanka today, because of the convenience it offers motorists."


SLIM Awards 2005 focusing on the future

The SLIM Awards is by far the most glamorous event held in a calendar year which is organised by the Sri Lanka Institute of Marketing.  The big event for 2005 is scheduled to be held on March 5 at the Sri Lanka Exhibition & Convention Centre for the 16th consecutive year with the theme 'Focusing on the future.' Approximately 75% of this year's net proceeds would be channeled to build a better Sri Lanka. 

"We have completed the official judging for both the Main Advertising and Integrated Marketing Communication categories which are the two main areas"  said Chairman, SLIM Awards 2005, Jagath Gamanayake.

Past President, Sri Lanka Institute of Marketing and Head of Marketing, Lanka Orix Leasing Co., Rienzie Martinesz headed the panel of judges this year.    

The main advertising category panel 2005 comprised of Varuni Amunugama (joint MD, Triad Advertising), Ranil de Silva (MD, Leo Burnett), Chandani Rajaratnam (ECD, JWT),  Nilantha Bastian (Head of Sales, HSBC), and Imal Fonseka (DGM- MAS Branding). 

For the Integrated Marketing Communication category, Sandya Salgado (CEO, Ogilvy Outreach),  Paddy Weerasekara (GM, 141 Bates Asia), Ameer Ahamed (MD, Art Box Advertising), Wisal Wickramaratne (Director/GM, Watawala Plantations), Rathika de Silva (CSR and Communication Manager, Holcim) and  Fazla Rusli of Indonesia served as an international judge for both panels.

They have judged entries from 23 agencies under 14 categories, namely food, beverages, personal care, household care, automotive, entertainment and leisure, information communication technology, office automation/business education and support services, agricultural/building/constructional/industrial equipments, banking and financial services, investments/insurance and real estate, corporate social responsibility/public services, retail and corporate image under main advertising and nine categories namely, packaging and designing, consumer trade promotions, interactive media, transnational advertising, outdoor, public relations (external/internal), point of sales material,  event marketing and sponsorship under Integrated Marketing Communications.

The culmination of the evening will be the awards for the Print Advertisement of the Year, Radio Commercial of the Year, TV Commercial of the Year and the highest of all accolades, for the Best  Campaign of the Year for creations during 2004.

Like last year, SLIM Awards 2005, in addition to advertising professionals, will also award marketers in  recognition of the role they play today in marketing and communications. Therefore, SLIM Awards is not only for the advertising fraternity but also for marketers. 


Havelock City rises

Havelock City, the largest single mixed development project to soar in the Colombo skyline, begins piling work today (27) . Singapore Piling & Civil Engineering (Pvt) Ltd, a Singapore based company with construction works for many prestigious projects internationally and in Sri Lanka under its belt, was appointed as piling contractors following a competitive tender by six local and international contractors. The project promises to transform the landscape in the area, which was earlier the Wellawatte Spinning & Weaving Mills site.

The project will showcase its world-class features as an internationally acclaimed team of designers and consultants come together to provide their expertise on the development of the project. East China Architectural Design & Research Institute Co. Ltd. (ECADI) is the design consultant while Design Group Five International (Pvt) Ltd of Sri Lanka is the local architect and consultant. The project's unique eco-friendly landscaping will be designed by Design Group Five with Laki Senanayake and Shiranee Balasuriya.

Havelock City, the largest real estate development project in the country, is designed to have 1,080 apartments, a 300 room hotel, 200 serviced apartments and a shopping mall with a variety of shops, a department store, cineplex, super market, international food court, cafes etc. The project will add 3.2 million square feet of commercial  and residential space to Colombo.

Havelock City is being developed by Mireka Capital Land (Pvt) Ltd as a joint venture between the Shing  Kwan Group, real estate specialists based in Singapore and Sri Lanka's premier bank, the Bank of Ceylon. Shing Kwan Management Ltd, a member of the Shing Kwan Group, has been appointed the development manager for the project. The Shing Kwan Group is the major shareholder of Overseas Realty (Ceylon) Limited, the manager and substantial owner of the World Trade Center, Colombo.

The tender for the superstructure of the first two residential blocks will be awarded by April 2005 and completion of these blocks is expected in 2007.


"Access For All" to help disabled tsunami victims

The tsunami has left a wake of devastation hard to comprehend even almost two months after its arrival. Relief and rehabilitation operations have taken an immense effort to cater to the diverse needs of the people affected but there are still community groups vastly unseen in the relief efforts and unaccounted for in the rebuilding and reconstruction process. Persons with disabilities are one such group.

The "Access For All" campaign to help people with disabilities affected by the tsunami, is spearheaded by a consortium of disability organisations comprising of the Disability Organisations Joint Front, Motivation, The Spinal Injuries Association, Intermediate Technology Development Group (ITDG) Handicap International, Christoffel Blindenmission (CBM) and John Grooms. The campaign is promoting the inclusion of disabled people in all relief, reconstruction and development programmes taking place in the wake of the tsunami.

 The tsunami has affected people with disabilities in a number of ways. The loss of loved ones on whom they depended on for support, the loss of assistive devices etc., have left them traumatised. Though a lot of aid has flown in, the rebuilding plans have not reached the PWD's (People affected with disabilities). Some of the problems faced by Access For All is the lack of proper information, lack of awareness-results in treating affected people as a homogenous group and of course the lack of accessibility.

What needs to be done is that PWD's should be included in society.

It was decided at a special press conference held at the Galle Face Hotel that the following needs be made available to the disabled. Transportation services, office complexes, schools, hospitals, housing services, housing schemes and places of worship.

Other methods suggested were "increased employment and livelihood opportunities through economic recovery packages and ensure education for children with disabilities."

In any crisis, disabled people tend to feel the negative impacts of the crisis more than any other. It is reported that there are more than 16,000 survivors with injuries. Persons with disabilities are a resource which has not been harnessed due to stereotype thinking. It is time to break away from the shackles and start thinking and acting anew.

- Pelham Juriansz


Dahas Diriya  Open to "all exporters" - EDB Chief

The Sri Lanka government budget proposal of developing the export sector got another boost with Dahas Diriya, the Rs. 1000 million export incentive scheme which will now be opened to all exporters except:

a)         Black tea in bulk, natural rubber, coconut oil, copra, fresh coconuts and quartz;

B)         Free size gemstones, diamonds, petroleum products, mineral sands, graphite and all types of scrap materials;

C)         Apparel;

D)         Any other product/service as decided by the SLEDB.

This decision was taken by the CORE decision makers of the EDB, National Council for Economic Development  and Ministry of Finance given that in 2004 there was a 18% increase in exports to Rs. 564 billion and the representations made by key exporters.

"The new scheme whilst assisting the small and medium scale enterprises will drive exports by 3.5 billion.  With the step up initiative to cover all exporters, we are aiming for a 20% growth in 2005 which will cross the Rs. 600 billion mark.

Please assist us by duly perfecting the application form so that we can release the funds within three weeks," said Chairman, EDB, Rohantha Athukorala.

Sri Lanka is rated 72 in 104 countries in the 'Global Ratings for Competitiveness.' The EDB and National Council for Economic Development (NCED) is working hard to improve the Sri Lanka rating in the next few years with targeted investment being done by each exporter with the Dahas Diriya Scheme.

The EDB will process applications and computerise same so that within three weeks an applicant can receive the funds as per scheme. All funds will be channeled through  commercial banks. Applications could be collected from the Dahas Diriya Counter at the EDB head office on any working day.


Star TV launches new network

By Easwaran Rutnam 

Star Television Lanka (Pvt) Ltd, the only pay television operator in the island that offers Direct-To-Home (DTH) entertainment, has launched a new network that operates via a mini dish antenna.

Dish TV, a venture of ZEE group of companies in India, offers 80 channels that cover entertainment, news and infotainment, music and lifestyle, sports and children's programming and religion.

The network, which includes English, Tamil, Hindi and French channels, can be accessed using the mini dish antenna even in the most remotest areas islandwide including Jaffna, Trincomalee, Batticaloa and Hambantota.

Managing Director, Star TV Lanka, Lakshman Hulugalle, speaking three months after the launch of Dish TV told The Sunday Leader that the new service offers quality digital entertainment at a very affordable rate. The mini dish antenna used to receive Dish TV is one and a half feet wide and can be fitted using brackets on the wall or just placed by the window.

Star TV Lanka already offers 15 digital channels from Star Hong Kong, part of media magnate Rupert Murdock's TV network, also using the DTH facility but with a larger six foot dish antenna.

"Star was targeted mainly to the upper market clients so the cost is fairly high whereas dish TV is nearly half that rate and also operates in digital stereo," says Hulugalle.

Hulugalle says while Dish TV offers channels including Zee TV, Zee Cinema , Zee Music, DD package, ETV package, Sun TV, ARY, Trace, Reality TV, BBC, NDTV, Fashion TV and ABC Asia Pacific his company has decided to offer Star Sports and ESPN to the customers as an added benefit.

"Clients who can't afford to get Star TV which offers among others Star Sports and ESPN for around Rs. 38,500 can now get the two premier sports channels for less than half that rate via Dish TV for Rs.17,500" he said.

Hulugalle noted that Dish TV hopes to increase its channels to around 100 in a few months time.

It also offers inbuilt video games to keep the children occupied at any time while there is a parental locking system on both Star TV and Dish TV to ensure the kids cannot access channels deemed unsuitable by the parents.

Hullugalle also noted that the content on both networks are Indian oriented and as such it matches our society and culture and not the West, erasing the fear of visually unsuitable images being screened.

Star Lanka has an islandwide agent base offering both Star and Dish TV including in Jaffna while it is virtually maintenance free, as it operates direct via satellite.

Meanwhile Sri Lankan companies will soon have the opportunity to advertise over Star Sports and ESPN at an affordable rate.

"As these channels cover more the 50 countries the advertising cost is naturally high and cannot be met by local companies. But I have had consultations with ESPN Star Sports and have reached an agreement where local companies can advertise via Star TV Lanka giving them global recognition at a reasonable cost" said a very happy Hulugalle.

Lakshman Hulugalle urged the government to offer concessions on the taxes imposed on pay TV companies when importing equipment, including dish antennas to help reduce the market cost and make it more affordable to every household.

He noted that pay TV is not just entertainment but offers quality education as well which should be encouraged by the government.

He also cautioned customers who may be coaxed into purchasing illegal Dish TV connections saying the local company keeps track of the customer base and can disconnect illegal users with a click of a button.


Budget airlines making air travel affordable

Across the Asia Pacific region from mighty India through Malaysia, Singapore and even tiny Sri Lanka, budget, low-cost "no-frills" airlines are changing the face of tourism in the region. Both, corporate and leisure travellers eagerly await the growth and success of airlines such as Value Air, Freedom Air, One-Two-Go, Virgin Blue, Tiger Airlines and Sri Lanka's own upstart, HolidayAir Airways - not to mention India's Air Deccan.

For as many years as anyone in Hong Kong can remember, the return fare between Hong Kong and Bangkok was around USD 250. Low-costs carriers are now offering that route for as little as a tenth of the price. With the journey taking just about two hours, passengers don't worry about the food, drink and movie on board. All they are paying for is a seat on a plane from  A to B. In exchange for a no-frills service on board as well as on the ground, low-cost airlines provide substantial savings on the prices of regular airlines.

A case in point is the newly opened up route of Colombo to South Indian hub, Chennai. At the launch of that route, the fare being charged by SriLankan Airlines was in the region of USD 210 for a journey of approximately one hour's duration. With the arrival of competition on the route, from JetAir and Air Sahara (not in themselves low-cost carriers) the fare has more than halved.

Says Arjun Ruzaik, the founder of Sri Lanka's HolidayAir Airways, "Competition never hurt anybody - it really empowers customers with more choice". With a price differential of some 50 per cent cheaper, the traveller soon realises that a saving of USD 100 on the route can more than pay for any drinks and food he buys on board.

The low-cost concept does not mean that you have to load your own bags on board though; there are a number of cost saving exercises employed by low-cost carriers. For example, re-usable boarding passes, in-flight sales of everything from water to a meal to beers and spirits and newspapers too, fast turnaround times and the convenience of booking and paying on-line.

Much depends on the support given such carriers by airport authorities throughout the Asia Pacific region. High landing, navigation and handling charges stifle the ability of budget airlines to stick to their premise of low prices.

Traditionally and naturally enough the established or 'traditional' carriers tend to be vociferous in their opposition of the low-cost operation. Major traditional carriers claim that a low-cost airline takes away business from their high-cost, pricey operation.

Budget airlines are equally adamant that is simply not true: claiming that they only attract a very small number of passengers away from the traditionals over a period. Budget airlines champion the cause of the traveller and justifiably claim that they create a new brand of traveller; one who has been put off travelling by air due to the high cost.

The industry has also attracted plenty of investment: the flamboyant Indian entrepreneur, Vijay Malia, known as India's liquor baron (he owns the successful Kingfisher beer operation) has set up a budget airline called Kingfisher which is set to make its inaugural flight in May this year. The founder of AirAsia, Tony Fernandez had a most successful IPO, raising some USD 300 Million on the Malaysian stock exchange to fund an 80-aircraft acquisition programme.

The impact on tourism is enormous. Investors in the fledgling aviation industry in Sri Lanka, have watched as the number of arrivals from its mighty neighbour, India, jump nearly 4-fold in 2 years; the possibilities of tapping that market out of Colombo and capitalizing on the potential has seen a keen interest in establishing a low-cost operation out of Sri Lanka - precisely what Arjun Ruzaik and HolidayAir Airways have envisaged.

Governments across the Asia Pacific region are actively encouraging the industry: the Indian government recently announced an end to the protectionist policies that helped the national carriers, Indian Airlines and Air India. Shortly, private airlines in India, like JetAir and Air Sahara, will be able to fly to the British hubs of Gatwick and Heathrow. In Sri Lanka, similar protection previously afforded SriLankan Airlines has not been extended, with the present administration committed to encouraging lateral growth of the industry.

The likes of Tony Fernandes are eloquent supporters of their cause: to fly more and more and carry millions of passengers from point to point - as cheaply as possible. Never one to miss the opportunity of gathering column inches, Tony Fernandes is fast becoming the Asia Pacific answer to Richard Branson. Not afraid to speak his mind, he recently launched a scathing attack on what he perceives is the Singapore Airport Authority's protectionist attitude when it failed to licence on time a Fernandes-related carrier called, Awair.

Like it or not, national and traditional carriers are having to face up to this inalienable fact: budget airlines are here to stay - strictly for better. They may well be, as a source at SriLankan Airlines recently put it, "unwilling partners" but if growth within the aviation industry in particular and national economies in general is to be sustained, they'll simply have to endure or join in the world's fastest growing band wagon: budget airlines.

- Faraz Shauketaly


California Grill unveils new menu

The Galadari Hotel  unveiled its new menu at its fine dining restaurant the California Grill Rooftop Restaurant on February 23.

Having a reputation that cannot be matched for its super steaks and sea food, The California Grill which caters to a cross section of patrons from Sri Lanka to foreign business travellers to airline crews, for which the Galadari Hotel is the resident hotel in Colombo for five major airlines, will further meet their clienteles' needs as creative dancing Chef Anushan Perera has created a menu for every gastronomic fantasy.

The new menu features hot and cold appetizers, salads, soups and vast range of main courses from seafood, poultry, meat dishes including the firm favourites, seafood grill and prim rib and of course a fabulous selection of hot and cold desserts from flambe's to crepes.

The new menu also focuses on the vegetarians as each section of the menu offers vegetarian and non vegetarian dishes.

The private beverage lounge, or the cozy bar will be the ideal venue for pre-dinner cocktails and mocktails created by the barman. With a wide range of exclusive wines selected to complement each meal, the extensive menu most importantly adds value for money.

The music at the California Grill is one of the best in town which offers dance music on Friday and Saturday.

Ernest Francis will keep you entertained on violin on Mondays and Tuesdays, while melodious piano music by Paul Pereira on Sunday, Wednesday and Thursday and Ernest Francis Combo on Fridays and Saturdays.

This restaurant which opens for dinner also offers the most elegant ambience. It overlooks the Galle Face Green with a magnificent view of the ocean and uses colour creative in its linen. The friendly staff ensures diners the best in service.


Another first by Mount Lavinia Hotel

Mount Lavinia Hotel which was the first hotel to have an air conditioned bar in Sri Lanka, the first with a night club, the first with an airline crew, etc. was also the first hotel in Sri Lanka to receive HACCP certification  in December 2004. Chairman, Sri Lanka Standards Institution, Armyne Wirasinha  handed over the HACCP certificate to Director/General Manager, Mount Lavinia Hotel, Bazeer Cassim.

At the presentation ceremony Wirasinha said: "Mount Lavinia Hotel being a historically famous hotel in Sri Lanka with international recognition as an outstanding institution has set an example to other organisations in the country by achieving this certificate which guarantees the highest standard of quality and the safety of food served to customers."

The Hazard Analysis Critical Control Point (HACCP) is a logical scientific system that assures safety in food processing and preparations. The introduction of HACCP has signalled a shift in emphasis from resource intensive product inspection and testing to preventive control of hazards at all stages of the food chain.

The award of this certificate by the Sri Lanka Standards Institution (SLS) to Mount Lavinia Hotel is a commendable achievement realised through the cooperation and commitment of two leading organisations in the country working together towards the promotion of quality and efficiency in every sphere of service.


Eden Resort & Spa "Highly Commended" by SAGA Holidays

Eden Resort & Spa, located on the south west coast of Sri Lanka, has certainly done the industry and Sri Lanka proud by being recently awarded a "High Commendation" award by SAGA Holiday, UK.

As the award states, this is a true reflection of the Saga customers' satisfaction with the quality of accommodation and consistently high standards of service.

It is yet another feather in the cap for Confifi Group Hotels

General Manager and Project Director for the Resort, Tilak Selviah stated, "to receive this award is an honour, but to receive it when we've been re-opened less than a year is outstanding. This is a testament to the quality of our workforce, the efforts of our team, the foresight of our owners and the hospitality philosophy of our management company, Confifi Management Services."

Amongst its many achievements, the Eden Resort & Spa has over the years has been awarded by Saga Holidays with the "Top 10 Hotels" Award in 2000 and 2003, and "Good Food" Award in 2000.

Popularity for the property continues to soar as it proudly shows off its startling refurbishment and redesign, leaving local visitors and travellers from afar equally astounded by the metamorphosis and ingenuity of the redesign that has taken place.

The $ 2.0 million refurbishment budget included the introduction of a new deluxe room category - Paradise Rooms and Suites that incorporates a four poster bed, timber flooring, espresso machine, tea and coffee making facilities, butler service, choice of pillows from an extensive pillow menu, choice of room fragrances and many more facilities and amenities to leave one feeling completely pampered.

For more details visit the website on www.edenresortandspa.com


Hotel Renuka says namaste to traditional Indian cuisine

The city of Colombo said 'namaste' to a brand new restaurant last week, when Hotel Renuka opened the doors to its authentic north Indian cuisine dining facility. Named for the traditional Indian greeting 'Namaste' meaning 'welcome' the new restaurant brings a whole new flavour to Indian cuisine in Sri Lanka, with the promise of quality from the same hoteliers that have so successfully operated the popular Sri Lankan restaurant Palmyriah for more than 20 years already.

On Wednesday (23) Namaste opened for business, serving up exclusively north Indian fare prepared by Chef Ijaz Azwer, who hails from Jharkhand, India. Azwer's dishes promise to tantalise and tease even the most discerning palate, having worked previously at a five star hotel in Chennai for many years before taking up his position at Hotel Renuka in Colombo.

"We decided to open Namaste because of the demand we were having from Indian in-house guests for an authentic Indian restaurant right inside the hotel," says General Manager, Renuka Hotels Ltd, Shibani Thambiayah, who took up her position only in August last year. According to Thambiayah, they expect their loyal Palmyrah customers to be equally enthused by this latest dining option available at Hotel Renuka and venture in to get a taste of Azwer's truly Indian fare.

The cuisine on offer at Namaste has already been put to the test and come up for rave reviews, Thambiayah told The Sunday Leader. "We have been holding sporadic tastings for staff, management and friends to sample the dishes prepared by our chef and give us their feedback. I'm happy to say that many of them really seemed to enjoy the food and of course they gave us some constructive criticism to work on," the GM said.

Dishes to be turned out by the Indian Chef include traditional Moghul and north Indian fare - Tandoori Chicken and Fish, biriyani and Naan and paratha - along with several unusual delicacies that include prawn entrees and staple curries from Goa. Also available are a variety of 'sweet indulgences' a la India - and of course a series of traditional Indian beverages on the Namaste drinks menu.

"There is much more we want to do in terms of decor, but we wanted to open the restaurant as soon as possible and fill in the gaps as we go along. As it is, we think the food will really get people hooked, because we have been working on getting down the equipment and trying out different dishes with Chef Azwer for almost two months now," said an enthusiastic Thambiayah.

The 80-seater restaurant is well lit and the interior decor selected carefully to reflect Moghul and North Indian culture, to give diners an experience that is truly Indian. Colourful pictures depicting scenes from India's ancient Moghul empire adorn the walls and traditional Indian arches and ornaments add suitable ambience to the restaurant. Namaste bids all city dwellers and visitors to Colombo alike a warm welcome.


Nagendra re-elected president, Skal International Colombo

At the Annual General Meeting of Skal International Colombo (Association de Professionels de Tourisme) held at the Golden Pond, Taj Samudra on February 22, Sega Nagendra was re-elected uncontested as president for the current year.

At the luncheon meeting held after the Annual General Meeting the Guest Speaker, President, Sri Lanka Medical Association, Prof. A.H. Sheriffdeen, spoke on his views on "Aftermath of Tsunami."

There was a large gathering of representatives from the tourism industry present.

The other office bearers elected were. Vice President: Praveen Nair (General Manager, Taj Samudra Hotel), Secretary: Zahara Mufti (Managing Director, Tallman Tours Ltd.), Asst. Secretary: Chryshantha de Alwis (Director of Sales, Colombo Hilton), Treasurer: Berty Wickremapala (Managing Director, Araliya Hotels), Public Relations Officer: Shamali de Vaz (Managing Director, Silverline Tours (Pvt) Ltd.), Immediate Past President: Jayantha Panabokke (Managing Director Mahaweli Reach Hotels, Kandy).


Coffee - cake combo promo at the Colombo Plaza

Making a stop at the Colombo Plaza's Coffee Stop will be a refreshing experience with two special promotions lined up during the month of March to make those 'breaks' even more enticing.

For the health savvy there's a 'Smoothie's Promo' with a range of smoothies in three flavours; passion fruit, guava and mandarin in a delightful yogurt and fresh fruit blend. Take your pick for a healthy start of for a refreshing encounter during the day.

For the caffeine addicts, there's a delightful coffee, cake combo deal that's hard to beat. All you have to do is to buy one of the delicious caffeine brews and be rewarded with a sumptuous slice of the featured cake of the day, absolutely free.

The two promotions will be on from March 1st to the 31st, so try the coffee-cake combo or the range of smoothies any time between 7 am to 2 a.m.


Show Time in Malaysia

Ushering in the Year of Rooster and showcasing Malaysia as a model multi-racial nation with appreciation and tolerance for diverse religious beliefs, Malaysia Airlines together with Express Rail Link organised ShowTime at the Kuala Lumpur City Air Terminal (KL CAT) and subsequently at the Kuala Lumpur International Airport, Sepang, recently.

ShowTime commenced at the Malaysia Airlines check-in counters in KL CAT, when its own multi-racial Lion Dance troupe thrilled members of the public and outbound passengers with daring stunts accompanied to the loud beat of traditional Chinese drums.

Whilst the MAS Lion Dance troupe held its audience captivated with a brilliant performance,  MAS staff of Indian descent, attired as Chai Shen Yeh (The Money God) went around distributing 'gold coins' and oranges to spectators signifying the showering of good fortune and good omens for the coming year.


Trans Asia spices up

Valentine's Day is over but now the Trans Asia is calling all chilli lovers to sample their authentic Thai Cuisine At the Royal Thai for busy executives from Monday to Friday with special lunch set menus at Rs. 800 net.

You could also try out their sauteed whole prawns done with chilli paste, spicy green mango salad with cashew nuts or you could try chicken wrapped in Pandanas (Rampe) leaves and green curry chicken. The Trans Asia is calling all meat eaters and vegetarians to sample the Thai style fried rice.

At the Long Feng the authentic Cantonese and Szechuan cuisine for the busy executive from Monday to Friday features special lunch set menus.

If you are another type of lover i.e. chicken lover there is deep-fried chicken wings with crispy garlic, wok fried beef fillet with black pepper and broccolli or deep fried crab with slated eggs and fried rice shang-dong style with shrimps to name a few.

If you are a sweet lover try out their very own ginger ice cream with lychees.

This offer is not available anywhere else. The d‚cor and the atmosphere is something to behold and the Long Feng faces the picturesque Beira Lake with a very peaceful atmosphere and is open from 12 noon to 2 p.m. There is also a buffet dinner on Sundays at the Long Feng.


CASA offers diploma in professional shipping

The Ceylon Association of Ships' Agents (CASA) together with its training partner CINEC Maritime Campus has launched the country's first professional shipping course to enhance shipping knowledge and expertise of those who are actively involved in the shipping, transport and logistics industry in Sri Lanka. The diploma in professional shipping course also allows new aspirants to enter in to the global shipping industry right here at home.

A few shipping professionals have had the good fortune of following similar diplomas and other programmes abroad through state scholarships. Some have had to resort to scarcely available shipping or transport related courses, which are mostly irrelevant to applicable job functions in shipping and transport industry in Sri Lanka.

The course therefore opens a window of opportunity to those who are keen to develop necessary knowledge and skills through a competent faculty with industry experience in the shortest possible time. The programme is fixed during weekends to accommodate those who are employed with the flexibility to change dates, which are commonly considered more appropriate than others.

The diploma is approved by CASA and therefore opens an opportunity for participants seeking employment to find ready employment and further career development for those already in the industry.

Participants are exposed to current topics such as marine economics, shipping law and marine insurance, logistics, chartering, port agency, terminal operations and cargo handling, fleet management and vessel operations and general management including financial and management accounting.

Participants are expected to submit a project report on a selected subject related to local shipping and transport industry to qualify for the award of a diploma. It is expected that the programme will accrue credits for other professional courses leading to a professional degree in transport and logistics in the future.

The course is expected to commence on Saturday, March 19 and complete towards the end of the year.


LOLC - Amongst the most powerful brands in Sri Lanka

BRAND FINANCE, the world's leading independent brand valuation company together with STING Consultants and LMD ranked LOLC as the 10th among the most powerful brands in Sri Lanka. This ranking put LOLC as the most powerful brand in the non banking financial sector, excluding insurance.

Adding to the numerous recognitions and awards received by LOLC recently, LOLC were the proud recipients of two awards at the annual ceremony to acknowledge corporate reporting at its best.

The first was LOLC won the award for the Best Annual Report in the Leasing Category and another for Good Corporate Governance. The award for the Best Report from among leasing companies was a repeat performance of the previous financial year 2002/03. It bears mentioning these awards were preceded by Merit Certificates in successive years since 1998.

The second was LOLC was also the winner of the prestigious South Asia Federation of Accountants (SAFA) Award - First Place in the non-banking financial sector for the financial year 2003/04.

A momentous and rewarding year it has been the direct result of LOLC's adherence to a formula that was a winning mix of accountability, completeness, credibility and the audit expectations gap. This gave to rise to what LOLC regards as a five-dimensional 'P-Plan' convolution: People, Planet, Product, Process and Profit.

In detailed definition, 'People' would centre on LOLC's efforts towards maximising stakeholder value, increasing shareholder wealth, increased output by employees, an enhanced supply chain management, social responsibility and community development and the creating of lasting value to customers through products and services. LOLC also provides professional development education to over 1000 SMEs through the LOLC Viyapara Shilpa programme and is a votary of CIMA and Rotary for vocational and community development.

The promoting of renewable energy - a part of a World Bank project in association with Shell for rural economic development and an advertising campaign that heralded on-going support for the eradication of dengue is a demonstration of caring for the 'planet.'

'Product' focuses on the marketing of the company's products - the result of innovation and expertise - totally in line with the LOLC mission:  ' to enhance the quality of life of society by providing value-added financial solutions' which in a phrase, means meeting the demands of entrepreneurs of any stature.

There is a set 'process' that concentrates on exemplary corporate governance, transparency and most importantly delivering value to stakeholders.

'Profit' being the reason to be for any business organisation, goes a little further with LOLC with their regard for shareholder funds. Naturally profits also encompass return on assets on capital employed and market capitalisation. 

 LOLC began as a single company some 25 years ago -  the result of a response by ORIX Corporation of Japan, to the International Monetary Fund's request and introduced leasing to the nation. The concept did more than change the business culture and entrepreneurial approach.

"As importantly, it provided the fillip industrial growth needed. Over the years, the lasting value LOLC brought to our country is not merely the numerous projects inaugurated with the nation's welfare at heart, but in being a driving force behind the creation of many socially responsible organisations that contribute meaningfully towards improving the quality of life of our people," said Head of Marketing, LOLC, Rienzie Martinesz.


Nations Trust Bank to build leasing portfolio 

Nations Trust Bank (NTB) has launched leasing operations with its new and innovative product 'Nations Leasing.' The  product is intended to provide a 'most satisfying experience' with fast and hassle-free processing ensuring a minimum turnaround time.

Flexible down payment options are on offer with financing extended up to 100 per cent  on the purchase value of new passenger vehicles and repayment installments conveniently spread over 36 to 60 months at very competitive and affordable interest rates. Attractive schemes are also available for used vehicles and leasing of items such as machinery etc. will be assessed on a 'case by case' basis.

Nations Leasing would be mainly targeted at three segments; namely, the salaried and self employed individuals, SMEs, and corporate customers . Individual applicants should have been permanent employees at their present jobs for at least six months, drawing a minimum monthly remuneration of Rs. 40,000.

They should be aged between 18 and  55 years. A maximum of 60 per cent  of the monthly income would be considered for the lease rental. Those self employed, should have been in business for at least three years, with a minimum income of Rs.40,000 per month, and be capable of forwarding documentary evidence such as bank statements etc., on the same.

The electronic delivery channels that the bank possesses in terms of ATMs, Phonebanking, Internet Banking and SMS Banking will further facilitate this product as payment of rentals and other information will be enabled through these channels. This will mean that customers need not call over at the branch office at which the leasing agreement was initiated, but could also transact at any other branch location or through electronic channels instead

An innovative structure has been set up where the processing activity associated with the leases has been outsourced to Mercantile Leasing Ltd (MLL) whilst the bank will retain ownership of the leased assets. The valuable industry insights that MLL possesses will combine with the funding and financial hedging expertise and resources of NTB to provide customers with a leasing proposition that is hard to beat.

With leasing now included in an impressive suite of financial products and services delivered 365 days a year, through a conveniently located network of branches, the reality of 'one-stop' banking has taken a further step forward.

"Our mission is to persistently and consistently be innovative in strategy whilst benchmarking excellent customer service standards to reach the pinnacle in our industry. Nations Leasing is a further step in that direction," says CEO, Nations Trust Bank, Zulfiqar Zavahir. "MLL is truly glad to be associated in this venture thereby generating group synergies which would ultimately yield a win- win situation for all stakeholders" said MD/CEO, MLL, Asoka Sirimanne.

Finance leasing forges ahead at Sinhaputhra Finance

Finance leasing has become, in this day and age, a vital part of business structure. It is no small wonder to see the famous "Larry" advertisements on TV. "This Larry," he says, "knows what he is doing." His transport lorries are leased.

Leasing has become today an operation of customer convenience in many ways and especially as a vital component of the transport - public and goods conveyance - sector.

At Sinhaputhra Finance Ltd., Assistant General Manager, IT and Risk, Pandula Aluwihare also oversees the all-important leasing operations.

As far as Sinhaputhra's lease portfolio shows (as at January 31 this year) the figure amounts to more than Rs 750 million in addition to a loan portfolio in excess of Rs 500 million and a deposit base exceeding Rs 1.1 billion - a dramatic rise over an approximate Rs 500 million in year 2004.

This demonstrates the ever-increasing demand in leasing facilities. Aluwihare explains this in the simplest of terms: huge capital expenditure in the purchase of vehicles, machinery and plant can be a huge burden; cause a drain on financial resources and actually subverts the ambitions and plans of a business. With leasing, this is avoided and only necessitates a more comfortable, staggered payment of capital and interest. At the same time, the business capitalises on the items so leased in order to enhance profitability.

Sinhaputhra has mainly concentrated its leasing activities within the rural sector because it is strongly felt that there is an acute native intelligence and business acumen among the rural population that impels them to launch into business activities that enhance their own social standards. In other words, Sinhaputhra believes in a rural empathy and in uplifting rural status.

Sinhaputhra's main finance leasing instrument is Sinha Shakthi (strength and empowerment) and, as Aluwihare says, such leasing transactions have registered tremendous growth.

Nonetheless, the company has in place a stringent provision for loan default and particularly when lease rentals are not repaid for a period of six months or over. In this event, the company makes provision to cover any such loss by a Central Bank requirement that calls for a 50% provision. However Sinhaputhra makes a 100% provision that ensures that the company maintains its status quo. In doing so, the company's profit level could decrease but it still keeps the company risk-free.

In dealing  with the rural sector, Aluwihare spelt out the innate difficulties as well as the more positive aspects of such dealings. "Normally, prospective lessees who come to us are unable to deal with the banks because 1) they may not have bank accounts or income tax files; 2) have had no previous bank dealings; 3) do not possess the knowledge or expertise to deal with the many bank procedures and are thus reluctant to place their signatures on papers or forms they are not fully conversant with or in other words cannot satisfy any further requirements laid down by banks."

At Sinhaputhra special investigative officers are detailed to make full inquiries, inspections, conduct interviews and also take into account what village leaders and officials have to say. They are also trained to carry out independent assessments. In this way, it is possible to ascertain the financial standing of the applicant and his ability to meet his dues. It is when the company has reached a large degree of reliance that the lessee is both entertained and his requirements met.

For the period April 1, 2005 to March 31, 2006, Aluwihare is confident that, especially with the "Recover Sri Lanka" programme now in place, leasing will be a lynchpin and increase in leasing should be well over Rs. 1 billion, in the company's leasing portfolio.

In time, with a growth spiral that is still in trajectory, a large, fully-contained Finance Leasing Division will function in the new Sinhaputhra Headquarters Complex to be built. Finance leasing, as a core-business component of the company, will then operate with the true professionalism Aluwihare has already set in motion.


People's Merchant Bank raises Rs. 150 mn for Ceylease

People's Merchant Bank Limited (PMBL) recently structured and placed asset backed trust certificates to the value of Rs. 150 mn, on behalf of Ceylease Financial Services Limited (CFSL). The entire issue was taken up by Hatton National Bank (HNB), whilst Deutsche Bank AG acted as the trustee to the issue.

These trust certificates are secured by a quality portfolio of leases and the tenure of these trust certificates range from three months to four years. The interest rate attached to the trust certificates was variable and pegged to the AWPLR. Monies raised through this placement of trust certificates will be utilised to further augment CFSL's fund base and to pursue its aggressive growth strategy.

This is the third asset backed debt issue placed by PMBL for CSSL, having successfully completed two similar issues to the value of Rs. 100 mn and 60 mn previously.

CFSL has achieved consistent profit growth during the last few years and they recently obtained a BBB-(sri) national rating, from Fitch Ratings Lanka Ltd, in respect of its long term, unsecured senior debt.

A 50% subsidiary of Bank of Ceylon, CFSL's other shareholders include the Brandix Group and Union Assurance Ltd. A spokesman from PMBL stated that CFSL's credentials, its recent performance and certain credit enhancements embedded in the structure of these debentures, made the risk profile of the trust certificates to be very low.

PMBL has featured prominently in debt market transactions, having structured and placed several securitisations, debenture issues and loan syndications for its clients. Key shareholders of PMB are People's Bank, DPMC Financial Services Ltd. and South Bridge Capital Investments (Sri Lanka) Ltd.


DFCC posts mixed results

DFCC Bank's non-audited group profit after tax for the nine months of 2004/2005 (current period) was Rs. 863 million, a decrease of 4.6% from Rs. 905 million in the previous comparable period (April to December 2003).

The current period saw a slight reduction in interest spread compared with the previous period but the 21% year on year increase in the credit portfolio resulted in an increase in Net Interest Income.

Other income grew by 31% in the current period helped by higher divided income, capital gains on sale of equities and by the recoveries of advances previously written off for accounting purposes.

Despite a specific provision of Rs. 62 million for tsunami affected loan and lease exposures, the increase in specific and general provision in the current period was only Rs. 17 million over the previous comparable period.

The bank posted a 12.4% growth in profit after tax in the current period from its operations. This was however offset by lower contribution to profit after tax by Commercial Bank of Ceylon Limited, an associate company, and the loss incurred by DVB resulting in a decrease of 4.6% in the profit after tax for the current period for the group compared to the previous comparable period.

Although the published profit after tax for nine months to 30 September 2004 of CBC was Rs.1269 million being a 12% increase over the previous comparable period, under the equity method of accounting adjustments were made for deferred taxation not fully accounted by CBC (as permitted for CBC) and the dividends payable by CBC on its preference shares. These adjustments caused a 8% reduction in the contribution from CBC for the current period compared to the previous comparable period.

The operating results of DFCC Vardhana Bank (DVB) which was acquired by DFCC in July 2003, continue to improve but it incurred a loss for the financial year to 31 December 2004, albeit on a much reduced scale compared to the financial year ended 31 December 2003. A key strategy for improving the profitability of DVB is to increase its customer advances and business volume.

A project is in progress to migrate DVB to the same information technology platform as DFCC by mid 2005 for more effective and efficient utilisation of resources.  The relocation of the Head Office of DVB to a DFCC owned property in 2005 is also in progress and this will also contribute to greater efficiency and cost savings at the group level.

Total loans and leases approved but not disbursed was Rs 4,693 million on 31 December 2004. The portfolio of customer advances net of provision was Rs.2,664 million in DVB as at 31 December 2004 compared to Rs.624 million one year ago. This growth in DVB together with the undisbursed approvals of DFCC portends good prospects for portfolio growth in the foreseeable future.

The cumulative provisions for bad and doubtful debts represented 5% of the total advances and lease portfolio.

The tsunami did not have any direct impact on the infrastructure of DFCC Bank or its subsidiaries and therefore all business units operated without interruption. However, some  customers to whom the bank has provided loans, financial leases from the Matara Branch and Colombo Office were directly affected by the tsunami.  The total affected exposure, as at 31 December 2004 was Rs.279 million for small and medium scale enterprises in the non-tourism sector. 

In the tourism sector (total affected exposure Rs.418 million) the larger affected enterprises had adequate insurance cover.  Based on a preliminary assessment, the bank has made a specific provision of Rs.62 million in the income statement as at 31 December 2004, covering the small and medium scale enterprises in the non-tourism sector and the smaller tourism exposures. The bank is actively involved in efforts to rehabilitate business activities of its customers who suffered damage but the financial impact of these efforts on the income statement is not likely to be significant.


Hitachi and Abans team up to bring power tools 

By Pelham Juriansz 

Abans Ltd., is offering a promotion that is unique and has never been offered in Sri Lanka before. In order to get the details of the promotion we met up with Brand Manager of Abans, Chintaka Wickramatillaka who offered us a comprehensive explanation of what Abans in collaboration with Hitachi are offering the customer.

Q: Is it true that Abans has teamed up with Hitachi to bring Hitachi Power Tools to the Sri Lankan market?

A: Yes, that's true. Abans, which is responsible for bringing to Sri Lanka some of the world's best brands of electronics and home appliances will now be marketing Hitachi Power Tools.

Q: Why Hitachi?

A: Hitachi is one of the most respected multi-nationals with a portfolio of numerous products. Hitachi Power Tools have been sold in lots of countries around the world for decades. They are trusted for their superior technology and dependable quality. The product range covers all three key users in the industry - wood works, steel and construction.

Q: Do you have any special promotions to popularise this range?

A: Abans is having a promotion that has never been offered in Sri Lanka.

For the first time in the country, small and medium industrial entrepreneurs can purchase Hitachi branded power tools on special six monthly interest free installment terms. We are sure this will help lots of people, especially carpenters, masons and steel fabricators, the opportunity to buy their tools, earn their living and pay later.

We are also offering a one year warranty with every product.  

Q: This is the first time a company in Sri Lanka has given encouragement to the industrial and individual sector to boost their productivity?

A: As we all know, Sri Lanka is a developing country and most of our industries are on the verge of transformation from traditional methods to modern, more mechanised ways of functioning. 

At Abans, our main objective is to develop our medium and small industries. In the near future, we hope this will provide them with the impetus needed to enter the international market. To ensure they get whatever support they need, Abans has also arranged hot lines that will provide full technical support over the phone.

Q: Will the Hitachi range of Power Tools be available only at a select few showrooms?

A: No, the entire range will be available at over 70 Abans showrooms spread across the island. What's more, we also have service centres with technicians who have been trained abroad to attend to any sort of technical problems that may arise.

Q: Anything else you would like to add?

A: Yes, we are also pleased to introduce a multi language technical specification catalogue. This will help users get the required specifications in the language they are most comfortable with and guide them to source the right product for the right usage - technically healthy.

I would like to take this opportunity to invite all those involved in this business to take maximum opportunity of this special promotion and develop their businesses.


HNB - dominant player in leasing sector

Hatton National Bank (HNB), the number one bank in the leasing arena, has grown steadily over the years. The bank is now at the forefront of the overall leasing market, occupying the No. 2 position in the overall leasing market and No. 1 position as a leasing provider in the banking sector.

"We were No. 4 in the overall market and we are now No. 2. This is a remarkable achievement. Among banks, we are No. 1 when it comes to leasing," asserted Chief Manager (Leasing), HNB, Keerthi Wijeratne.

HNB has been in the leasing business since 1991. It was the first bank to start leasing among the private commercial banks and has grown steadily over the years.

At HNB, once a lease contract is entered into with a customer, the lessees are offered a host of facilities such as housing loans, credit card usage in the case of individuals and approval of drafts, arranging opening of LCs and commercial loan facilities for businessmen.

"We try to give the best possible rate in the market and offer a very affordable rental. Our intention is to build up our customers - living up to our motto, 'A Partner In Progress,'" Wijeratne said.

When a client enters into a lease agreement with HNB he immediately becomes eligible to receive a host of other benefits that will enable him to wing his way to further development and success, making HNB leasing a unique experience in the leasing sector.

"Our services are not limited to leasing. Customers start a relationship with the bank through a leasing transaction and end up with a host of facilities," said Wijeratne.

One of the most attractive features of HNB leasing is the bank's strategy of giving clients a comfortable rental, to ensure that they are not overburdened and will have sufficient means to maintain their living standards within the limitations of cash flow.

"We also go the extra mile to arrange finance to any project proposal.  In this manner a client, no matter whether he is a HNB account holder or not, becomes our partner in progress with bank. The only difference is that when we deal with our own existing customers we are able to speed up the documentation as his credit worthiness is already known to us," he explained.

In addition, having customer service centres around the island is a major advantage for the bank. "Our biggest strength is our branch network - we have 140 branches around the country. Customers who want to take a lease can do it from right where they are. We can facilitate leases from any part of the country," he said.

Leasing at HNB is not confined only to vehicles. HNB's leasing products cover a wide range of machinery and equipment and the bank has contributed around Rs. 800 to 900 million for machinery leasing in the last year.

"This mostly covers the tea industry, production lines, confectionery industry, etc. This kind of quantum release of funds for machinery leasing is possible because HNB is a bank with immense financial resources," added Wijeratne.

HNB has the highest number of experienced professionals in the leasing trade in its team and as a result, the bank is capable of handling any type of structural leasing facilities.

HNB also offers foreign currency leases to BOI companies and with 'Wasi Leasing,' a customer looking forward to make a cash purchase is given the opportunity to 'keep the cash' and opt for a lease.

HNB also gives its 'Wasi Leasing' customers an-all expenses paid overseas holiday package including an air ticket absolutely free.

The bank also offers tailor-made schemes such as 'Leasemaster' for professionals and businessmen and handles consumer leasing for groups of employees of reputed companies to enable them to acquire household electronic appliances at a low rate of interest.

"We also have a range of unique promotions. By tying up with leading motor vehicle importers, we are offering unique leasing packages. HNB was the first to launch this concept.  Right now we are having a special promotion with DIMO. The intention of the promotion is to give our customers a better advantage and wider choice of vehicles," Wijeratne said.

The number one lease provider in the banking sector, HNB is committed to giving its customers the best deals possible. The bank also intends to launch a host of exciting products in the near future.


Orient Leasing goes from strength to strength 

With the theme of being "uniquely different," Orient Financial Services Corporation Limited, within a short span of two years has managed to record impressive growth.

The company will be engaged in finance leasing as its core activities initially and is expected to add debt factoring among other products to its portfolio in the near future.

Products currently offered by the company include standard leases, structured leases, variable interest rate leases and residual leasing.

The pillars of strength of the company include the incomparable flexibility, unmatched speed, high IT skills and the personalised service offered. Speaking to The Sunday Leader, Assistant General Manager (Marketing), Sumedha Fernando observed that customer care and customer satisfaction has been the driving force in the company's success.

"We make it a point to deliver and it has been the satisfied customers who have increased the company's business," he said, adding that quality service always retains customers.

Speaking of a feature unique only to Orient Financial Services, Fernando said that it is the only company which allows the customers to sell their assets or even upgrade them.

With Orient Leasing a customer has the liberty to upgrade his/her vehicle as and when they want without terminating the lease contract. And what's more, if the customer needs more financial assistance in purchasing the new vehicle, the company would even do that without increasing the prevailing monthly premium. That, Fernando feels is the height of flexibility.

Orient Financial Services has also reached a collaboration with Ashok Leyland for Leyland Tusker Super.

Speaking of the leasing sector in the country, Fernando said the country has come a long way.

Leasing became a popular method of acquiring capital goods at a convenient and low cost method of finance for small and medium businesses since the 1980s.

The popularity of leasing made finance companies and even some leading banks to adopt leasing as a facility offered to its clientele. Leasing is thus far the only financial product that small and medium businessmen could get without collateral and at rates that were only 2% or 3% more than what they would have paid for a bank loan.

The growth in the leasing sector could be identified by the 15% of the country's annual investment in capital goods coming from leasing. The members of the Leasing Association accounts for over 90% of the annual leasing volumes which stood at Rs. 40 billion in the financial year 2003/2004. Post tsunami development programmes are also expected to help the leasing sector, which began to pick up from February.

Fernando pointed out that machinery, especially for the small and medium scale industries could pave the way for a range of new leases.

However, the only obstacle in the path is the reduction of capital allowance for plant and machinery and equipment which was 50% during the PA government to 12.5% by the previous government.

With an annual growth rate of approximately 20% and the new infrastructure coming in, Fernando feels that leasing would play a key role in the country's economy.

With a growing portfolio, Orient Financial Services Corporation Limited has become the nation's newest and most dynamic financial services company.

Orient Financial Services Corporation is a public limited liability company registered under the Finance Leasing Act with an authorised capital of Rs. 500 million and an issued and paid up capital of Rs. 125 million.  Orient Financial Services Corporation Ltd. is a fully owned subsidiary of United Motors Lanka Ltd.

United Motors Lanka Ltd. is a public quoted company and sole distributor for Mitsubishi motor vehicles and TVS motorcycles in Sri Lanka.

As for future plans, Fernando said that they would look at increasing its portfolio by venturing into factoring as well.

Orient Financial Services also plans to open a branch in Kochchikade, Negombo next month.

Orient Financial Services although a small company is definitely a strong player in the leasing market.


Leasing: A microscopic view 

The present value of a future transaction is the nominal amount of money to change hands, adjusted to account for the time value of money. A given amount of money is almost always more valuable sooner than later, so present values are generally smaller than corresponding future values.

The simplest model of the time value of money is compound interest, which is in fact much simpler than simple interest. To someone who has the opportunity to invest an amount of money C for t years at a rate of interest of i compounded annually, the present value of the receipt of C, t years in the future, is C(1 + i)Ht. The expression (1 + i)Ht enters almost all calculations of present value. It represents the present value of 1. Many equations are expressed more concisely by making the substitution v = (1 + i)H1. Something worth 1 at time = t (years in the future) is worth vt at time = 0 (the present).

Present value is additive. The present value of a bundle of cash flows is the sum of each one's present value.

Many financial arrangements (including bonds, other loans, leases, salaries, membership dues, annuities, straight-line depreciation charges) stipulate structured payment schedules, which is to say payment of the same amount at regular time intervals. The term annuity is often used in to refer to any such arrangement when discussing calculation of present value, whether or not the arrangement is a retirement plan. The expressions for the present value of such payments amount to summations of geometric series.

A periodic amount receivable indefinitely is called a perpetuity and is of mostly theoretical interest. A perpetuity receivable starting at the present time is called a perpetuity due. If the frequency of payments equals the frequency of interest compounding, the present value of a perpetuity due with payments of 1, is given by dH1, where d = 1 H (1 + i)H1, and is called the rate of discount. In this case, i is the interest rate per period, not necessarily per year. If the first payment is 1 period in the future, the annuity is a perpetuity immediate, and the present value is iH1.

A finite number (n) of periodic payments, receivable at times 1 through n, is an annuity immediate.

This entire discussion thus far makes some enormous assumptions:

          That it is not necessary to account for price inflation.

          That it is not necessary to account for variable interest rates.

          That receipt of payments when due is certain.

          That we will live long enough to receive payments receivable by us in the future.

For these and many other reasons, we consider prediction of the future to be an inexact science.

Residual value is one of the constituents of a leasing calculus or operation. It describes the future value of a good in terms of percentage of depreciation of its initial value.

Example: A car is sold at a list price of EUR 20000 today. After a usage of 36 months and 90000 kilometers its value is contractually defined as 50% or EUR 10000. The credited amount, on which the interest is applied, thus is EUR 20000 present value minus EUR 10000 future value.

Residual values are contractually dealt with either in terms of  closed contracts or open contracts.

In finance, interest is a surcharge on the repayment of debt (borrowed money). The fact that lenders demand interest for loans can be explained by one or more of the following:

          time preference  the time value of money the opportunity cost of money macroeconomic price changes (inflation)  the risk of default on the loan (bankruptcy)

Mathematically, interest generally falls in one of the following two categories:

          simple interest, in which outstanding balances grow linearly with time. In each period, the total balance grows by some fraction of the principal (that is, of the original investment).

            compound interest, in which outstanding balances grow exponentially with time. In each period, the total balance grows by some fraction of the sum of the principal and the interest paid on all previous periods.

In either case, the fraction by which the balances grow is called the interest rate.

Economists sometimes refer to interest as rent on money. As with any rental, the market price (or rate) is subject to change to reflect market conditions. Interest rates are very closely watched market indicators, and have a dramatic effect on finance and economics.

Interest involves the future, which is uncertain. Some interest bearing investments are riskier than others. The greater the risk of the security, the more interest investors expect to receive.

Different parties will be offered different rates on debt obligations (such as loans). The measure of credit worthiness of an individual is called a credit rating or credit score. Other entities (such as governments and companies) will acquire a bond rating if they are active in bond markets.

Simple interest is seldom used in practice. In most cases this is because the interest earned in previous periods is assumed to remain in the account. Only when the interest earned is immediately withdrawn from the account should simple interest be used.

When interest is not collected as it is accrued (as with a certificate of deposit, where the payment is in a lump sum), the interest increases the amount of money subject to interest. In this case simple interest would not reflect the opportunity cost that the lender experiences.

With compound interest, the frequency of compounding influences the total amount of interest paid over the life of the loan.  


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