Apollo’s exit not due to monetary considerations
There are valid reasons other than monetary again that may have made Apollo Group Chairman Dr Prathap C. Reddy to exit from their operations in Colombo, Indian High Commission’s First Secretary Economic and Commerce Sunjay Sudhir told The Sunday Leader on Friday.
Apollo Group which is based in India runs a chain of hospitals in India and abroad. However, the fate of the Group’s future ownership was sealed on Thursday when Reddy accepted the mandatory offer made by one of Jayawardena’s companies, the Sri Lanka Insurance Corporation Ltd (SLI) that took over a 36.1% stake in the hospital recently, thereby triggering the Securities and Exchange
Commission’s take-over and mergers code.
Reddy’s acceptance was made on Thursday, the last day of the validity of this mandatory offer. Apollo Hospitals Enterprises Ltd which Reddy controls has a 32.61% stake in Apollo Colombo, while two of the latter’s local directors, Bob Kundanmal and Ratnaraja Nawaratnam who have 5.04% and 3.19% stakes respectively in Apollo Colombo, also decided to accept SLIC’s mandatory offer on
Thursday, thereby, effectively upping SLIC’s stake in Apollo to over 75%. The value of this accepted mandatory offer, made at Rs 28 a share is Rs two billion.
"Reddy had problems in getting visas and approvals from the Sri Lanka Medical Council (SLMC) for Indian doctors to practice here," alleged Sudhir.
There are between 150-200 Indian doctors and 3-400 Indian technicians attached to Apollo, Colombo. "If it was purely monetary, why did Reddy wait till the last day of the validity of the mandatory offer before deciding to accept it?" he asked. SLIC officially announced this offer to the public in an advertisement that appeared on a national daily nearly two months ago on July 29.
However, sources who are aware of Apollo Colombo’s operations, but who did not want to be named said that as Apollo was set-up under BoI law, except for one or two isolated cases where the charge was made that the Indian doctors in question were under-performing, there had been no other problems as alleged by Sudhir.
The question however remains whether the new management can use the "Apollo" brand name, unless they enter into a franchise contract with the Indians, they said. Another issue was as Apollo was set-up under BoI law, whether it could enjoy the same concessions, the sources said.
Investment Promotion Minister Rohitha Bogollagama on Friday asked The Sunday Leader to give him two days time to reply when asked for his comments whether the BoI concessions extended to Apollo Hospitals would continue, after its predatory take-over by SLIC. Bogollagama flew to Singapore on an investment mission on Friday, while BoI Chairman Professor Lakshman R. Watawala had flown on
Bogollagama speaking at a public function only the day before Reddy’s sudden acceptance of SLIC’s offer, indicated his disapproval of Jayawardena’s company’s attempt to take-over Apollo. He said that Apollo is a special investment, governed by BoI law, which is a special law. It is like "one country, two systems", the Minister added, hinting that either its take-over won’t
be permitted, or in the event of take-over, it would lose its BoI privileges.
Earlier, the BoI in a press release said that even the land on which the hospital had been built and which had been given on concessionary terms would be lost in the event of a change of ownership. This was at the time that SLIC made a corporate raid on Apollo. Meanwhile, Apollo’s Public Relations Manager Chammika de Silva said that business was as usual at Apollo, despite its management
change. The Hospital’s Vice President Dr Rana Mehta however refused to comment on the future of the Indian professionals employed by the Hospital.
Business magnate Jayawardena was not immediately available for comment. But sources close to Jayawardena said that the Hospital since its inception in 2002 has accumulated losses amounting to Rs 500 million. These losses have to be looked at in the context that while other hospitals were making profits, Apollo was making losses, they said.
The sources said that other Indian companies which are specialists in healthcare services, were knocking at the door, wanting to fill the vacuum created by Apollo’s exit.
The sources however said that Jayawardena wants the Indians to remain because of their management expertise in running hospitals. They also alleged that the Indians are bound by a 10 year management contract entered with the BoI in 1998, to remain till 2008. Meanwhile, the Apollo Group in a press release said that the decision to exit was taken after considerable deliberation, "keeping
in mind our clear objectives of increasing our own shareholder value and long term business goals. With only a minority share holding, it would have been difficult for Apollo Hospitals to operate effectively. And fortunately, Apollo has found that the offer made by SLIC is adequate and good enough to accept."
Additives to reduce energy
Dankotuwa Porcelain Ltd (DPL), a tableware manufacturer, in order to reduce its energy costs has commissioned a foreign research institute to develop chemical additives that may cut-down its energy bill by 10%.
DPL chairman Sunil G. Wijesinha told The Sunday Leader that the recent electricity hike will see their monthly electricity bill going up by Rs three million, from Rs seven to Rs 10 million and the Rs 3 hike on diesel would mean an additional Rs 500,000 expense on the monthly diesel bill.
The energy used to fire the kilns comprises a mix, with some fired by LPG and the others by electricity or diesel, he said. Energy constitutes 40% of the company’s cost of production, the rest being material (30%) and labour (20%), Wijesinha said.
"But it may be next year before these energy saving additives come on stream, till then we will have to take a loss," he said. DPL made a Rs 80 million loss in the first half of this year.
The additives that are being manufactured will ‘play’ on the body of the porcelain product that will be subjected to firing of the seven kilns that are used by DPL in its porcelain manufacture, causing a drop in the amount of energy consumed, Wijesinha said.
He said that DPL’s two main competitors are Bangladesh and Thailand, countries that have access to cheap natural gas. "Bangladesh will soon be opening two new factories," he said.
Ninety per cent of DPL’s revenue is made through exports, with the company mainly concentrating on the high end of the market. "We cannot meet the demand," said Wijesinha, adding that Dubai, one of their new markets was growing rapidly.
"But we cannot increase prices either, because of competition," he added. Wijesinha said that this year they had already increased their prices by 5-10%. The company supplies porcelain tableware products to upmarket departmental stores such as Maceys USA, and Selfridges, UK. Other markets include Ukraine, India and Japan, with the latter market seeing an increase because of an
upturn in its economy. "We export to a total of 20 countries," said Wijesinha.
Dubai has become a global shopping centre. "And a number of Pakistanis, instead of flying to Singapore, now fly to Dubai because of its closer proximity and buy our porcelain to be given as gifts for weddings," he said.
Extend same facilities
Give Sri Lanka similar investment facilities that have been provided to Mauritius and Singapore, asked the Chairman of the Indo-Lanka Chamber of Commerce (ILCC) Mano Selvanathan.
Selvanathan, speaking at the inauguration of the ILCC that took place on Wednesday said that Sri Lanka achieved an 8.1% growth in the first quarter of this year and has been averaging a 5% annual growth in recent years because of the resilience of the country’s private sector.He however said that because of the crisis in the North and East, 20% of Sri Lanka’s market was not functioning.
Otherwise, the country would have experienced annual growth rates of 10%, he said.
Selvanathan also said that multilateral agreements were giving way to bilateral agreements. In this connection, he said that the current talks on a Comprehensive Economic Partnership Agreement (CEPA) with India were not progressing well.
Selvanathan’s solution was to "open-up" those that were being discussed, while keeping the remainder on the negative list. Central Bank Governor Ajith Nivard Cabraal in his speech said that the country experienced a 7.9% growth in the first half of this year. He also said that the government plans to develop hedging instruments to stabilize oil and other energy prices.
Countering India’s NTBs
The Finance Ministry’s Trade and Tariff Cluster (TTC) is working on various measures to counter India’s non-tariff barriers (NTBs) and other measures taken by Sri Lanka’s giant neighbour, such as the canalization of Vanaspathi imports, that nullifies the spirit of the Indo-Lanka Free Trade Agreement (ILFTA).
According to one exporter, these NTBs amount to as much as 40%. Vanaspathi accounts for 21% of Sri Lanka’s exports to India and provides 3,000 direct jobs, according to Enterprise Development Minister Rohitha Bogollagama.
"We are contemplating taking various measures to counter these actions," TTC Co-Chairman Lal de Mel told The Sunday Leader, but refused to disclose any details."However, one such measure is the current imposition of a 10% cess on imports, but this is unfair, because this cess, which is non-discriminatory, even affects imports from the EU region that has given us duty
free entry under the GSP + scheme," he said.
Meanwhile, import duties levied on Indian products under ILFTA which should have come down by 70% by March 2006, has however come down by only 30%.
De Mel attributed one of the reasons for the slow progress in this direction to issues such as India’s NTBs.
He said that the TTC makes its decisions after consulting its members, who are people like Kulathunga Rajapakse, managing director of DSI and Mineka Wickramasingha, Chairman Ceylon Biscuits. Meanwhile, Indian Finance Minister P. Chidambaram who was the chief guest at the inauguration of the Indo-Lanka Chamber of Commerce and Industry (ILCCI) that took place on Wednesday,made a plea for the
downward revision of this duty as per the ILFTA.
Tariffs affect consumption
Due to high water tariffs, daily volumes consumed by households using pipe-borne water have come down from one cubic metre to 600 litres (0.6 cu. mtrs.).
The National Water Supply and Drainage Board’s (NWSDB’s) DGM North and East D.U. Sumanasekera told The Sunday Leader, that under 30% of the country’s population have access to pipe borne drinking water supplied by the NWSDB.
He said that if a domestic consumer uses under 10 cu. mtrs. of pipe borne water, he is charged at the rate of Rs 2.50 per cu. mtr. But if consumption is more than 10 cu. mtrs., then there is a steep increase in tariffs.
For instance, if between 20-25 cu. mtrs. are consumed, then the charges may range from between Rs 25-30 per cu. mtrs. NWSDB has supplied one million connections of which half are in Colombo. Colombo subsidises the rest of the supplies, said Sumanasekera. He further said that industries are charged a flat rate of Rs 40 a cu mtr., while the tourism and the ports authority sectors are charged
the highest, at the rate of Rs 50 a litre. Charges for the religious sector at Rs 8 per cu. mtr. is the lowest charged, he said.
Sumanasekera, who, until recently was in charge of community based water supply projects, said that some 2,000 community based water projects are in operation, benefiting some three million people.
NWSDB’s duties and responsibilities with regard to such projects, other than assisting the beneficiary communities to develop such systems, do not go beyond that, he said. Sumanasekera said that the maintenance of such projects will be the responsibility of the community benefiting from such schemes. Such projects may also be operated through local authorities, where the NWSDB sells water
in bulk to those authorities, he said.
HSBC hosts golf tourney
The popular HSBC 5-Club Stableford Golf Tournament took place at the Royal Colombo Golf Club (RCGC) recently, said a statement.
It included Women’s, Men and Senior categories. A total of 270 players participated in the tournament. The overall winner at this year’s tournament was Romesh Abhayaratne, who secured the highest Stableford score of 38. The women’s champion was Yvonne Abhayaratne, who scored 35 points. The winner of the A division was Savantha De Saram (37 points), the B division winner
was Chandana Weerasinghe (38 points) and the winner of the C division was C. P. Rayan (37 points).
"This is the eleventh consecutive year that HSBC organised the Stableford tournament with a shotgun start at the RCGC," said David J H Griffiths, chief executive officer, HSBC Sri Lanka and Maldives. "It is a tradition we hope to continue. In fact, it has become popular with the Sri Lankan golfing fraternity! This year – as with every year – we had an overwhelming
After the match, HSBC hosted the players to lunch at the clubhouse, during which the prize giving was also held amidst camaraderie and enjoyment. It was also announced that HSBC is sponsoring HSBC Champions’ Tournament in China from November 10-13, 2006. Eight fortunate HSBC Premier customers would be invited to witness this "exciting" event through a draw.
SLI gets new CEO
Sri Lanka Insurance Corporation Ltd (SLI) has appointed Nalaka Godahewa as its Chief Executive Officer from this month, said a statement.
Godahewa assumes the post with a vision to propel SLI to benchmark status as a " world class" financial services provider. Speaking soon after
assuming office, Godahewa said: "The time has come to set ambitious goals, develop right strategies to deliver these goals and execute these plans with professionalism. The challenge today is to take a quantum leap towards the future and work towards establishing ourselves as a
financial service powerhouse. As a Sri Lankan company, any success enjoyed by SLI is a direct endorsement of Sri Lanka’s potential and capacity."
Commenting on SLI, Godahewa said: "SLI is poised for a bright future – the positive changes made within the organization since privatization are beginning to bear fruit. The company today has in place world class human resource systems, efficient processes and a customer-oriented culture deeply ingrained across the entire team.
I am privileged to assume this position in a company built on such solid foundations." As CEO, Godahewa will oversee the company’s operations under the direction of the Board of Directors, headed by Harry Jayawardene as Chairman.
The new CEO believes there is scope in Sri Lanka for
insurers – "Sri Lanka holds potential for insurance service providers–only a fragment of the available market has so far been tapped by insurance players. There is much opportunity for a company that focuses on thinking differently to attract new market segments via groundbreaking
products, innovative channels and attractive communication", he said. Godahewa brings with him 14 years of high level management experience in the areas of Finance, HR, Manufacturing, Sales and Marketing and Operations, working for multinational giants in Sri Lanka’s corporate sector. Having started his career
at Unilever Ceylon, Godahewa then joined Suntel Ltd where he held the positions of Director Operations , Director Customer Care and Director Marketing. He was at MAS Holdings, where he spearheaded off shore expansion operations in Vietnam and Madagascar as CEO, before being appointed a Divisional Business Director, after which he joined SLI.
Godahewa is an honours graduate from Moratuwa University, having read for a degree in Electronics and Telecommunications Engineering. Healso holds an MBA from Sri Jayewardenepura University. He is aFellow of the Chartered Institute of Marketing (UK), Fellow of theChartered Institute of Management Accountants
(UK) and a CertifiedManagement Accountant (Australia). He is currently reading for his PhD inMarketing from the University of South Australia. He is an old boy of Ananda College, Colombo
Ferntea to close?
A petition to wind up Ferntea Ltd., a public quoted company was taken up in the Colombo District Court on September 8, said a statement. The petition was filed by Carmel Consolidated (Private) Ltd., on the basis that Ferntea is in grave financial predicament, is insolvent and unable to pay its debts, including a sum of over Rs 55.3 million owed to the petitioner company.
The lawyer representing Ferntea took notice of the application and a set of the winding up papers was handed over to Ferntea in court through their lawyer. This was after an application made on behalf of Carmel Consolidated that Ferntea should be given notice of the application. Counsel for Ferntea requested time to file an affidavit, which was allowed, subject to Carmel Consolidated being
granted the right to file a counter-affidavit in response. "These steps are required to be taken before September 22, on which date the case is due to be taken up next," the statement added.
Success takes time
Sri Lanka Spice Festival, an attempt by the Sri Lanka Tourist Board (SLTB) and SriLankan Airlines to promote tourism was inaugurated at the Colombo Hilton on Wednesday. The seeming success of this Festival as against the inaugural festival that was held last year was that the organisers have been able to increase the number of foreign chefs participating at this year’s event from 12 to
HSBC CEO David J.H. Griffiths told The Sunday Leader that an event of this nature (it ends on September 21) takes time to succeed. HSBC is the main sponsor of this event.
He said that when HSBC initially started sponsoring the Hong Kong Rugby Sevens in the 1970s, it attracted only a handful of people. "But it has now become a major tourist event," he said. SLTB Chairman Udaya Nanayakkara told this reporter that promoting this festival has so far been confined regionally, with a particular focus on India. "It will take some time to ‘sell’
this festival to tour operators," he said.
Nanayakkara told the audience that following the spice festival, the next like promotional event that is in the cards is the Sri Lanka Tea festival which will kick-off in March.
He criticised the local media for the negative impact that their reporting was having on the industry, while speaking to this reporter.
According to Nanayakkara, foreign news agencies, in their coverage of Sri Lanka, picks-up from what is publicized by the local media. "That’s what the BBC told me when I threatened to stop advertising with them because of the negative publicity they were giving to the country," he said. Nanayakkara further said that the reason why tourism was thriving in Israel, despite the fact
that that country was facing like problems and negative publicity similar to Sri Lanka was because of "religious tourism." "It is like the draw that Mecca has," he said. Nanayakkara said that though they are trying to promote religious tourism, the biggest drawback was that Buddhism was not founded here. He further said that he cancelled a promotional visit to Japan because of the country situation.
Nanayakkara discounted the claim made by Aitken Spence Managing Director Rajan Brito that the SLTB considers a person as a tourist if he is in Sri Lanka for a minimum of six hours. The cut-off point is 24 hours, the SLTB chairman said.
George Steuarts travel agent for World Cup
George Steuarts Travel International Ltd (GSTI), Official Travel Agent in Sri Lanka for ICC Cricket World Cup Tournaments in 1996 (India/Pakistan/Sri Lanka); 1999 (UK) and 2003 (South Africa), has also been appointed for the fourth consecutive time as official travel Agent for the ICC Cricket World Cup 2007, scheduled to be held in the West Indies, in March-April next year.
A statement said that a media briefing was held in this connection, where George Steuart Group of Companies Chairman S. Skandakumar, Group Business Development Director D.P. Kanagaratnam, Senior Director GSTI Ticketing C. Wijemanne, Snr. Director GSTI Tours L. Fernando and Executive Director Steuart Holidays Ruha Jasinghe were also present.
Unlike previous World Cup Tournaments, the 2007 packages are being offered in the form of "land and sea accommodation," to enable cricket fans to experience a novel and different concept, to follow Sri Lanka’s fortunes at the Tournament.
These include an eight day package starting in Grenada-from April 22-29, being offered on a Cruise Liner on a Full Board basis where cricket fans will be afforded the opportunity to experience life at sea, whilst being provided with facilities to also witness one semi final match and the Final.
The other includes a package for the "Super-Eight" stage of the Tournament with hotel accommodation, from April 11-22, covering three of Sri Lanka’s pre-qualifying matches-versus New Zealand, Australia and Pakistan. A combination of both packages are also available.
Associated with the Official Travel Agent are co-sponsors, HSBC and Janashakthi Insurance. Jasinghe will respond to inquiries and co-ordinate bookings at GSTI. Further information could also be obtained from the website www.gstravels.lk