CPC-banks in talks to reduce hedge floor price

Ceylon Petroleum Corporation (CPC) is talking to three banks to reduce its hedge floor price in the backdrop of falling oil prices, it is learnt.

Those banks are Standard Chartered Bank, Citi Bank and Commercial Bank.

 If the oil price falls below the hedge floor price, then the CPC has to pay the hedge banks the difference. However, if oil prices rise above the hedge price, then the hedge banks will have to take that hit.

Industry sources however did not say what the new hedge floor price is going to be on the grounds that it would be a breach of confidentiality, but said that the new formula would be ready by the end of this  week and would at least cover part of CPC's oil imports from next month.

 CPC which currently has fixed its hedge floor price at US$ 100 a barrel is taking a hit due to falling oil prices, with the loss last month estimated at US$ 27 million according to CPC Chairman Ashantha de Mel.

Oil prices have fallen below US$ 60 currently, after peaking at US$ 147 in July due to the USA and the EU going into recession.

In a statement circulated by the CPC at a press conference on Monday, it was said that CPC has hedged 35% of its oil imports against a possible upside in oil prices, with hedging operations beginning in February 2007,when oil prices were in the ascent.

Prior to the descent in oil prices which started to take place from September, CPC had been making a saving on its oil bill due to its hedge against any upward price risk, with the saving upto August being US$ 23million, according to de Mel, when he addressed reporters on Monday.

Meanwhile CPC's hedge contract with at least one bank expires in May.

However, sources said that because of the sound relationship that the industry has with CPC and in particular with its chairman, they didn't want to apply the letter of the law and continue with the present hedge contract until it expires in May, where the hedge floor price has been fixed at US$ 100 a barrel.

When oil prices were on the ascent, one particular hedge bank had paid CPC a cumulative amount totalling US$ eight million upto August, though gaining an amount of US$ six million in September and October, when oil prices started to descend.

They said that hedging against downside oil price risk, as is currently happening, is done by producers to minimize losses arising from a falling market, and not by importers such as the CPC.

Oil importers generally hedge against an upside risk (i.e against rising oil prices), like what the CPC has done, and not against downside risks, they said.

Hedging banks in turn re-hedge those hedge instruments with other banks like J.P.Morgan U.S.A. and Barclays of London as has been currently done by some of the banks vis-…-vis their hedge contracts with the CPC, they said.

Re-hedging is not done within the same banking group, say with another bank branch in the group, the sources said.

When there is a gain in hedging, it's shared among the other banks where those instruments have been re-hedged, they said.  As such the hedge gains are shared, the sources said. They further said that hedging is an off balance sheet item, though it impacts on the hedge banks' profit and loss accounts.

Pressure on rupee to dip

Pressure on the rupee to depreciate further was building-up on Friday as the market and the State controlled People's Bank (PB) were fishing for U.S. dollars with Bank of Ceylon (BoC), the other State controlled commercial bank continuing to defend the rupee by selling dollars at Rs. 110 a unit.

Central Bank (CB)/Government intervention in the money markets is generally through the PB and BoC, with those two banks, together with the CB also acting as the Government's/Treasury's agents in the local money market.

"My gut feeling is that the CB would have expended at least US$ 100million to defend the rupee at the parity rate of Rs. 110 to one US$ in the first two weeks of this month," a market source speaking on the grounds of anonymity told The Sunday Leader.

This follows CB's own admission that they expended a sum of US$ 790 million in the last two months in order to defend the rupee at the expense of depleting the country's sparse foreign reserves.

"Tea exports are affected because importers are shying away from the market, the story is also true in the case of garments due to the impact of the recession hitting Sri Lanka's major export markets, that is drying up dollar inflows," they said.

That is placing pressure on the rupee to dip further, the sources said.  Garments and tea are Sri Lanka's two largest commodity exports.

The rupee-dollar parity rate which was Rs. 108.80 to the dollar at the beginning of the year has since been allowed to dip by only 1.1% to Rs. 110  due to doctored depreciation allowed for by the CB, they said.

However, India, during this period, has allowed their currency to depreciate by as much as 25%, they said.

The sources further said that though CB's new import restrictions initially lowered the pressure on the rupee, the tide was now turning, with demand for dollars once again picking up in the market.

Those restrictions included imposing overnight limits on the amount of foreign currency that commercial banks could carry in inter-bank trading, 100% letters of credit (LC) margins on certain imports, 200% LC margins on vehicle imports and the imposition of new import taxes on certain imports in Budget 2009.

Rubber, cinnamon too impacted

Rubber prices have come down by more than 50%, from a peak Rs. 400 a kilo in July to Rs. 190 currently, while prices of Cinnamon, Sri Lanka's biggest spice export, during this period had come down by 13%, from Rs. 750 a kg., to Rs. 650 after the burst of the global commodities bubble, the trade said.

Upali Bandaranayake, Director Forbes & Walker Ltd. (F&W), a commodity broking firm told The Sunday Leader on Thursday that despite the steep decline in rubber prices, producers were still making a profit of Rs. 50 on a kg., on rubber.

He however said that during this period last year, rubber was fetching prices ranging from Rs. 200-220 a kg., a decline of  between Rs. 10-30 since. But Bandaranayake said that the October-November period was generally a lean period for rubber and hoped that prices would pick-up next month.

Meanwhile, Damitha Perera, another F&W director said that currently this was the lean period for cinnamon, with the harvest expected next month. That would be the crucial time to watch how cinnamon prices would move, he said.

He said that they could not reduce the wage paid to peelers because there was a shortage of the same.

The industry wanted to set-up a training institute for cinnamon peelers with GTZ-German funding. A land in Galle was identified for this purpose. But GTZ was not happy with this land and instead opted for another piece of land, which the industry was not happy. As a result this project fell through, Perera said.

Meanwhile, Sarada de Silva, immediate past chairman of The Spice Council (TSC) and one of the country's bigger cinnamon exporters said that because of the global melt down in commodity prices, buyers were currently adopting a "wait and see" attitude.

Markets act on sentiment and currently the sentiment is negative due to the global meltdown,  he said.

He said that the principal markets for Ceylon Cinnamon were Mexico and other Latin American countries. De Silva said that of Sri Lanka's Rs. 14 billion spice export market, cinnamon alone contributed Rs. nine billion.

Meanwhile, TSC Chairman D.A. Perera addressing TSC's AGM on Thursday said that the industry needs 10,000 trained cinnamon peelers and fertilizer subsidy to increase exports by 30-50%. He said that the Indian government gives a 33% grant for value addition. Perera further said that in two years time Sri Lanka will be self-sufficient in turmeric, partly due to GTZ assistance in bringing 100 acres in Ampara to grow turmeric. In total some 2,000 acres in Ampara and Gampola will come under turmeric cultivation with  seed provided by the Export Agriculture Department.

$ 17.9 mn., USAID project to uplift agriculture

USAID has embarked on a new US$ 17.9 million grant aid project to uplift the farmer community in the North Central and Eastern Provinces, a USAID source speaking on the grounds of anonymity told The Sunday Leader on Thursday.

Ms. Melani Schultz, Acting Chief of Party USAID CORE Aid programme told members of The Spice Council (TSC) on Thursday that the project covers three areas, namely Spices, Fruit & Vegetables and Livestock, with provision to cover other areas.

She said a component of this aid programme is the provision of technical services and the necessary machinery and equipment in this essentially private sector driven programme.

The project which has a five year span beginning immediately would help in creating livelihood development through value addition by targeting women headed households, households affected by the conflict and displaced persons.

Improving the cooperation of producers and linking producers with companies dealing with such products and thereby enhancing the value addition chain, strengthening the services and workforce and improving the enabling environment, namely by helping to create the right policies are some of the other components of this project.

She further said that the project would link lending agencies with borrowers and help in the use of ICT services for delivery.

Immediate Past Chairman TSC Sarada de Silva told The Sunday Leader that a key thrust of this project was to build farmer organizations and link them with companies dealing with such products.

He said that his company together with another were working on the spice component of this project with USAID, while Hayleys and Sarath De Silva of the Fruits & Vegetables Association were working on the Fruits & Vegetables component.

The USAID source said that they had been working on this project for the past two years and the companies involved would be both exporters and those catering to the local market. Government involvement would be in creating the right policies in this essentially private sector driven programme, he said. Meanwhile, in relation to another USAID funded project, a recent posting in the USAID website said that the Hayleys Group and USAID launched a pilot project to link farmers in Ampara and Moneragala Districts to commercial agriculture.

This project, which got underway in April has already benefited 160 farmer families in Ampara and Moneragala through the introduction of the latest agricultural practices and high-quality inputs for the cultivation of cash crops with high revenue potential.

Farmers are now growing gherkins, pineapples and jalapeno peppers on 60 acres of land that have either lain fallow or used previously for subsistence farming.

The objective of the project is to motivate farmers in these areas, some of whom have been affected by Sri Lanka's 25-year conflict, to embrace modern agricultural practices and to empower them to substantially improve their incomes from agriculture by switching to cash crops that are high in demand. The farmers selected to participate in the pilot project represent the three ethnic communities predominant in the two districts: Sinhalese, Tamils, and Muslims.

USAID selected the Hayleys Group as a partner for the project on the basis of the company's expertise in the cultivation, harvesting, packaging and marketing of such crops; its existing successful out grower programmes and the company's long-standing involvement in agriculture.

At the launch of the partnership, USAID's Mission Director Rebecca Cohn said that USAID' partnership with Hayleys would establish a value chain that will bring sustainable economic growth to those in need in the Eastern and Uva Provinces. This is one way in which people can move up the path from poverty to prosperity.

Hayleys agribusiness subsidiaries, HJS Condiments Ltd and Sunfrost Ltd., account for 34% of Sri Lanka's exports of fruits and vegetables. The Hayleys Group is the sole exporter of gherkins from Sri Lanka and the second largest in Asia, processing more than 8,000 tons a year. It accounts for 50% of the market for bottled pickles in Japan and is a major supplier to well-known international brands such as McDonalds, Burger King, Unilever and Heinz.

Under this pilot project, Hayleys and Sunfrost are providing inputs ranging from farmer training on improved agricultural practices and business management to seeds, fertilizers and pesticides. Sunfrost and Hayleys are also sharing their expertise in modern cultivation, harvesting, packaging and transportation methods and by purchasing the whole crop of project beneficiaries, they are linking outgrowers to national and export markets. The inputs are provided on credit to farmers participating in the pilot and USAID has donated soil testing kits, digital microscopes for disease identification and crates to reduce post-harvest losses.

Hayleys Group Director and Agriculture & Agri-Business cluster Head  Rizvi Zaheed said this project is one of the most exciting projects in the agriculture sector because it is introducing modern agricultural practices such as soil testing, scientific plot selection, and post-harvest processing to minimize losses to a long-neglected area of Sri Lanka and creating new business opportunities that will raise farmers' incomes.

He also said he hopes the project will lead to an agricultural renaissance in the Eastern and Uva provinces through a conversion to modern practices.

Higher returns from new policy

Allianz Life Insurance Lanka is set to revolutionise Life insurance with a unique Life Plan that brings a new concept into Life insurance, providing Life protection as well as returns on investment.

For the first time ever Sri Lankans now have the protection of a Life insurance policy that is designed to develop into a sound investment portfolio for the entire family, from children to senior citizens.

In step with contemporary global trends, the Allianz Universal Life Plan (ULP) offers higher returns on investment and is equipped with a unique top- up option that gives the flexibility to increase investment whenever the policyholder has more funds at his disposal to invest.

Allianz ULP also has a risk cover plan to meet adverse circumstances in life, and provides financial support in times of critical illness and/or hospitalisation, also offering cash in hand in times of need.

Allianz Lanka is backed by the global strength of Allianz SE, one of the world' s largest financial services providers with experience since 1890 in providing innovative insurance, asset management and banking services to over 80 million customers in more than 70 countries. The Allianz Group has over _ One Trillion in assets under management and was ranked 19th among Fortune 500's listing of top global corporates in 2007, over half of whom insure with Allianz.

The local subsidiary successfully set up general insurance operations in Sri Lanka in 2005, and already has an impressive track record of achievements, with many 'firsts' in performance in just three years. The success of its General insurance business in Sri Lanka prompted parent company Allianz SE to explore the viability of setting up Life operations in the country. 

Allianz SE's application to startLife insurance business in Sri Lanka was approved by Insurance Regulator IBSL (Insurance Board of Sri Lanka) on July 1 of this year. The application conforms to proposed IBSL regulations that support the setting up of separate corporate entities to manage Life and General Business. At present, all insurance companies in Sri Lanka carrying out Life and General business operations do business under a single entity.

Allianz Life Insurance is serviced by a direct sales team of over 300 professionals, trained to international standards of customer service. Allianz SE's lapsation rate is one of the lowest in the world and the local subsidiary plans to draw on the customer centric approach of its parent Company which assures customers that they will be taken care of, every step of their journey through life.

Located at the corporate offices in Glennie Street, the Allianz Life business division is equipped with facilities for Life operations and plans to introduce many more new, innovative and personalised Life insurance products to reach more Sri Lankans than ever before.

Life insurance is important for the security of a Government as well as for the economic health of a country. The monies collected in insurance are usually reinvested in Government bonds and other financial instruments.

Proactive vs., reactive

George Steuart Chairman on Benchmark says we need to be proactive, not reactive.

On last week's edition of Benchmark, George Steuart & Co., Chairman Jayantha Wimalagooneratne discussed trends in tea, medicine and tourism, with an emphasis on the pharmaceutical industry.

Doing a SWOT analysis of the industry, Wimalagooneratne said, "If you look at strengths, ours is an ageing population. We fall sick and need medicine; that's our opportunity. If you look at weaknesses, there are 297 importers; and if you come in now, you will be the 298th-it won't be easy.

Opportunities are there, if you can tie-up with the right partner. As far as threats are concerned, there's the threat of curtailing the number of products that can be brought in and an emphasis on the generics. If that happens, I would say it will be fatal."

As for how the global economic downturn has affected the plans of diversified groups looking to expand, Wimalagooneratne said that as far as Sri Lanka was concerned, we had been beset by one problem after another, due to which the global economic downturn was not something new, nor a cause for major concern.

"We should have strategic planning; we should constantly evaluate performance. And if changes need to be brought in, then that must be done," he told Benchmark's audience of over a million viewers.

Discussing the impact of the global slump on travel and prospects for inbound and outbound tourism, Wimalagooneratne was of the opinion that there has been no change in outbound traffic.

"There is no reduction in the numbers of Sri Lankans going out. But inbound is definitely affected. Even confirmed bookings of large groups are cancelled overnight. We prepare things here and then a bomb goes off and it is finished. And as to when we could put it right is anybody's guess," he told viewers of the widely watched weekly business programme.

Commenting on the plantations sector, he pointed out that the future lay in value-added tea. "It can't be confined to tea bags. It is far wider. What about instant tea, bottled tea? Then you have the powder and flavoured tea. Regrettably, I don't think we have done much about this," he claimed.

As for competing in the 'ethical teas' segment, Wimalagooneratne said it was a blessing in disguise since it would result in the resolution of issues facing a segment of the population that should not be neglected.

"In my opinion, we should not wait until the laws are brought in forcing us to do it. We are a reactive nation, but we need to be proactive and have set plans in place," he added.

Benchmark is presented by LMD and airs on TNL on Sundays at noon, with a repeat at 9.05 p.m. The programme is also carried over Dialog TV as well as on LBN and on Bloomberg Channel on Mondays at 10 p.m. The weekly biz show is produced by The Wrap Factory.

Leader in ICT education

Vienna, October 2008

ICDL Sri Lanka has established itself as the most recognized ICT skills qualification in Sri Lanka.

Several Government and Private Institutions including District and divisional secretariats of Colombo, Gampaha, Kalutara, Kandy, Hambantota and Matara, Pensions Department, Foreign Employment Bureau, Sri Lanka Navy, Laksala, Registrar General's Department, Education Ministry, UNDP and Worldvision have trained their staff in e-Citizen at ICDL.

ICDL Sri Lanka, the most successful Licensee in the Asia Pacific was represented by Dr. Harsha Alles at the ECDL Foundation's Annual Forum brought together delegates from 52 international organisations and informatics societies representing 148 countries to plan future activities in support of the i2010 strategy and launch the new syllabus for the ECDL / ICDL Advanced programme.

This international event focused on three themes underlying  the programmes which support the i2010 strategy: building the Information Society, enabling growth and employment through helping society and the economy reap the benefits of digital literacy, and empowering individuals with the skills necessary to participate in the Information Society.

Austrian Education Ministry's Dr. Christian Dorninger and Egypt's Communications and Information Technology Ministry's Dr. Ekram Fathi stressed the importance of digital competences and the need for ministries to work together to make Information Society a reality.

Dublin City University's Dr. Theo Lynn and Arizona State University's Dr. Sam DiGangi addressed the future of education and informatics in a changing world and the need for lifelong learning.

Speaking at the Awards ceremony, Damien O' Sullivan, CEO of the ECDL Foundation noted that "At the ECDL Foundation, we believe that providing digital literacy skills for all is a social, economic and political imperative as well as an important catalyst for growth, we are proud to announce our continued commitment to supporting the i2010 strategy for growth and jobs through our internationally-recognised certification programmes, which harness the benefits of ICT for social and economic life for all."

ECDL Foundation is the global body of the world's leading end-user computer skills certification programme. It's a not-for-profit organisation dedicated to raising the level of computer skills in society and providing access for all to the Information Society.  Known as ICDL outside of Europe with over eight million candidates participating in a range of programmes, ECDL Foundation has set the global benchmark in end-user skills certification.

Brief for water

Sri Lanka's Brandix Group was recently invited by IBM to the company's Global Innovation Outlook (GIO) Deep Dive discussion on "Water and the Ocean" in acknowledgement of the Group's commitment to the environment at Singapore last month (October).

It was attended by more than 40 delegates and visionaries from dozens of countries. The delegates represented all segments of society-business, government, civil society, labour and academia.

The 40 participants were divided into two groups of 20 each-one to discuss the issue of 'Water' and the other the issue of 'Ocean.' The group that Brandix was included in discussed Water.

Brandix Lanka Ltd.'s Corporate Social Responsibility Head Ms. Anusha Alles who represented Brandix, shared ideas on how to transfer universal principles into specific, strategically-aligned meaningful medium and long term action and briefly outlined her company's experiences at these sessions.

GIO created in 2004 by IBM is based on the notion that in the era of borderless business, rapid technological development and constant communications, where potential exists for new innovations that could benefit global society.

Sri Lanka's largest apparel exporter and the pioneer of the concept of inspired end-to-end solutions to the apparel industry, Brandix has corporate social responsibility involvements driven by the theme 'Water is Life' and constitute a commitment to increasing the availability of water and the provision of safe drinking water to those in need.

Expat. insurance

BUPA International based in the UK is delighted to have won the Best International Private Medical Insurance awardat the prestigious Health Insurance Awards recently.

It was recognised by intermediaries as the best provider of international private medical insurance for the third year running and the eighth time since 1999. This accolade is testament to the hard work and dedication of everyone who works for Bupa International and recognizes the company's desire to lead the industry with innovative products and an unrivalled dedication to customer service.

Bupa International continues to grow from strength to strength and today is one of the leading health insurers in the world. Having pioneered international health insurance, the company has over 35 years' expertise in caring for the healthcare needs of expats and their families around the globe. Covering almost 800,000 people in 190 countries, Bupa International is the world's largestinternational expatriatehealth insurer offering a range of quality and flexible plans designed for groups and individuals.

Bupa International has also received a Royal seal of approval twice, having won a prestigious Queen's Award in 1999 for continuous achievement in international trade and again in 2005 for export.

This year, BUPA International has introduced a range of new benefits and services for intermediaries and customers including cover for chronic conditions and improved outpatient benefits. Service enhancements make it easier for customers to talk to us, access their documentation and make payments.

The company has also made its products more affordable with more group size discounts and a new Lifeline deductible. Service improvements including the introduction of online tools through MembersWorld where customers can find answers to their questions, view membership documentation and pay online.

Another innovation this year is the launch of Webchat on both MembersWorld and IntermediaryWorld which provides instant 24-hour access to the company's team of experienced advisers who can talk in real time, online, at any time from anywhere. And a new alert system means that when a member's policy is updated, they are sent an automatic email alert so they can log on to MembersWorld and check their accounts. And a new payment facility allows members to make a change to their payment details online securely, making it easier for them to manage their policy.

BUPA International plans to build on its success to help even more people living and working abroad live longer, healthier and happier lives and have peace of mind about their healthcare.

Diesel power

On the occasion of the 8th Advanced Diesel Engine Technology Symposium held at Hyundai's Namyang R&D Centre, Hyundai Motor Co., recently unveiled details of its newest passenger diesel powerplant, the R-Engine, with an output of 184ps and 40kg of torque, the R-Engine is allegedly ahead of the rest of the class, surpassing German and French competitors (200ps and 44.5kg-m for the 2.2 litre).

Corporate Research and Development Division president Dr. Hyun-Soon Lee said: "R proves Hyundai's diesel development capabilities are world-class. With diesels becoming cleaner and more fuel efficient all the time, there's a growing demand for diesel power plants worldwide and Hyundai is positioned to supply the market with the best diesel technology."

Developed by a 150-man team at an investment cost of 250 billion won, the R-Engine harnesses Hyundai's newest and most advanced development tools. Computional flow dynamics, structural and thermal analysis were used to optimize its design while computerized simulation of the die casting process was employed to achieve the optimal balance of strength and low weight.

Over 500 prototype engines were built during the 42 month-long development period which encompassed a variety of performance and emissions tests, endurance as well as "NVH," cooling and lubrication studies. Finally, the engine was installed in vehicles and subjected to exhaustive testing under all imaginable environmental conditions.

Available in 2- and 2.2-litre displacements, the aluminum R-Engine is fitted with a 16-valve dual overhead camshaft which is driven by an internal steel silent timing chain. For reduced vibration and lower booming noise, the R gets a lower balance shaft which has been encased in a stiffened ladder frame housing for increased rigidity. Weight saving features include serpentine belt with isolation pulley, a plastic head cover, plastic intake manifold and plastic oil filter housing.

To achieve Euro-5 emission compliancy, the R is fitted with a close-coupled diesel particulate filter plus  efficient exhaust gas recirculation with by-pass valve

The R-Engine will enter production next year and will see its first application on the 2010 Tuscon and Sonata models which are due to be launched in the coming year.

Real time exchange for commodities

Sri Lanka's first indigenous commodity exchange has been established by Ceylinco Consolidated, one of Sri Lanka's large conglomerates which has substantial stakes in all major  fields of business activities such as property development, insurance, banking, financial services, health, leisure, information technology and diamond cutting & jewellery.

Ceylinco Commodity Exchange Ltd., (CCE) is expected to bring in substantial gains to the country through foreign exchange savings. This will be as a result of imports and exports being made at competitive prices and value addition to exports. The exchange will also enable local farmers to obtain the best prices for their commodities and help local producers and supermarkets to obtain their local supplies of food items at competitive prices.

The move will overcome the biggest drawback faced by local traders including importers and exporters. Currently they rely on a couple of bids and offers that come their way. Such an archaic mechanism has limited scope for getting a competitive price. With the result that a buyer or a seller who depends on a single or a fewer number of sources would transact at prices which are likely to be way off. The best way to mitigate such price risks would be by getting a larger number of quotes from buyers and sellers around the world rather than rely on a few sources.

Among Asian countries, Sri Lanka has been one of the few countries that did not have a commodity exchange until CCE was formed this year. The formation of the exchange is in keeping in line with the vision of its Chairman Deshamanya Dr.Lalith Kotelawala, whose intention is to provide the nation with an invaluable gift to improve its economic well being.

CCE will continue to enrol members who will comprise brokers, agents and representatives, who in turn would put through deals on behalf of their customers. CCE intends delivering a package of services, including exchange traded contracts (ETC) for commodities such as spots and forwards, over-the-counter transactions (OTC), and also related financial services such as factoring. 

CCE is currentlydeveloping a trading platform to facilitate trading in importitems such as foods, fertilizer, petroleum products, paper and building materials.

These items are sourced abroad in order to meet local demand and as well as the requirements for other overseas markets at highly competitive rates. Likewise for local exports of commodities such as food items, precious stones and aquarium fish, CCE through its network of brokers, agents, overseas representatives, foreign missions, youth organizations such as Tharunayata Hetak and other organizations like companies within the Ceylinco Consolidated Group with offices abroad is continuously sourcing foreign buyers. In addition to facilitating import & export trading, the exchange will also facilitate cross border transactions between two other countries. Once the web based trading portal for accepting buying and selling orders on behalf of customers, brokers and customers will be in a position to access and also upload information on buy/sell opportunities from any part of the world. Besides queuing orders they could also watch listings of latest transactions and witness transactions reported on a ticker tape as and when they occur. This will undoubtedly reduce price asymmetries and market anomalies that may have existed before. CCE is also in the process of formulating strategies to structure deals for the supply of yellow corn for large scale buyers such as food processing companies and feed mills from local farmers.

Once the trading portal is ready to be implemented, buyers and sellers will be able to access information on buy/sell opportunities on their laptops, PCs, mobiles and PDAs.

The increased networking of customers will cultivate a climate of competitive bidding, and thereby create a healthy and vibrant market for essential commodities and pave the way for increased international trading. Foreign exchange earnings to the country will accrue through this mechanism and is likely to benefit commodities such as tea where more than 50% of exports are in bulk form. A commodity such as tea is finally sold to the retail market after much value addition. But Sri Lanka despite being a major exporter, benefits are insignificant despite being one of the largest producers of tea in the world.

 CCE is currently in the process of drawing up the agreements for brokers, agents and customers. The company is in its infancy, and has moved into its own premises at Baudhaloka Mawatha, Colombo.

 At this point it hopes to introduce a web based trading portal catering to buyers and sellers both in the domestic market and as well as overseas markets. Currently CCE is engaged in transacting in the spot market on a cash basis, and eventually hopes to have more exchange traded products.

CCE directors are Deshamanya Dr.Lalith Kotelawala (Chairman), Khavan Perera (Deputy Chairman/Chief Executive), Lady Dr. Sicille Kotelawala, Suramya Karunaratne (Deputy Chief Executive), .Kosala Pathirana (Executive Director), Hisham Shariff (Technical Director), Shanaz Sheriff and Ravi Perera.

Strategies from Serengeti

CIMA Sri Lanka announced the visit of Stephen Berry, author of the book  "Strategies of the Serengeti" to Sri Lanka.

Berry, a highly qualified speaker, consultant, trainer and international MBA lecturer in business strategy, previously a finance director and banker, has worked in the harsh climates of "corporate Serengeti,"  our business world and brings skills and processes for real life rather than academia. He takes some complicated strategic ideas and brings them to life with the analogy of the Serengeti animals. This makes learning memorable, colourful and unique. The vast range of available strategies become apparent and the "words of the animals" give us strong intellectual reasons for considering them.

In the half day programme designed for CEOs, directors, senior managers and those who will soon have such responsibilities, international trainer and conference speaker Berry will unpack business secrets of some of the worlds strategy experts. 

These experts have not just practiced success for decades-but for centuries and possibly millennia. They are the animals of the Serengeti-the lion, cheetah, rhinoceros, hippopotamus and others. Each is successful with a record unparalleled by any of our human organisations.

Berry's  book has been read by a number of influential business people on both sides of the Atlantic and his speeches have been heard in the USA, UK and many European countries.  The analogy of the animals enables us to see strategic options in a "more accessible and comprehensive way." There is no one strategy for success-the subtle blending of strategies to fit your own organisational strengths is vital.

If the lion tries to copy the giraffe he would be extinct and if the hippopotamus tried to be a cheetah he would not last.  The key to success is the right strategy in the right place. Strategies of the Serengeti approach shows us the options available and gives strong suggestions for success.

Addressing "real" needs

The ongoing conflict has been a major obstacle to the longer-term development, but we cannot wait for the conflict to be over; rather we need to address conflict driven needs in a more systematic manner, a World Bank (WB) press release of Thursday quoting its Country Director Ms. Naoko Ishii said.

She further said: "We believe it is important to work with and strengthen local government authorities. At the same time, efforts for security and development effort need to go hand in hand. The international community, development partners, civil society groups, and stakeholders need to work together to help bring the conducive environment."

Following are excerpts of this release: "The conflict sensitive filter helps us consider whether we have asked enough people what they think. And have we asked a good mix of people considering ethnicity, gender, religion, civil society organizations, political parties, government officials and those who should be in line to benefit from a project?

Is there an adequate, impartial and accessible grievance mechanism to listen to people's complaints about a project?

Are the managers and administrators of the project sensitive to inter-ethnic issues like communicating in local languages of an appropriate mix themselves and making decisions transparently based on the determined development needs of the community rather than, dare we say, political and other considerations?

Have we been keen to special needs generated by the conflict and violence itself like psycho-social impacts on communities, human resource shortages in education andhealth?

And, lastly have we made sufficient effort to capture opportunities to strengthen reconciliation and inter-ethnic trust through projects? For example, can we choose multi-ethnic communities, all other things being equal, under community development projects and can we encourage Tamil and Sinhala speaking students to learn each others language by working towards mixed Tamil-Sinhala schooling under education projects?"

The conflict filter has been formulated in consultation with donors and "CSOs" in this country, as well as with experts at the WB, based on the experiences on the ground. In others words, this is not something created at a desk, but efforts already made and tested, if not completed, in response to challenges on the ground.

"We had the Bank-supported operation in the North and East (NE) as early as in 2000. Under the previous CAS, several NE related projects were parked under Equity and Tsunami Pillars.  Currently, we have 14 projects ongoing, among which about 30% are estimated to be for the NE or conflict driven needs.  Those operations range from housing, to livelihood, rural infrastructure, irrigation,agricultural production, health and education.

Among newly proposed projects under the new CAS, we expect about 30% of resources to be allocated to the NE or conflict driven needs, though the final decision is made by the government.

For now as we move ahead with the new conflict sensitive CAS, it is critical for us to stay alert to ensure our supported operations do not create further tensions on the ground, while we address more systematically causes and consequences of the conflict. The conflict filter will need to be updated in parallel with the constantly changing ground situation. Our team has been and will be there in person as frequently as possible to keep our consultation up and running to hear the voices of citizens across party, ethnic, religious and geographical lines, both in private and public sectors, so that we can read the ground situation from multiple angles and best address challenges. Certainly the situation in the east is far from optimal and we have encountered many challenges.

However we believe that by supporting development, livelihoods and public services, that we will give hope for a better future of the people in the conflict affected areas."

Expands despite downturn

Dubai, Monday

Emirates Airline produced a Dhs 284 million (US $77 million) net profit for the first six months of its current financial year ending September 30, 2008; down 88% year on year (YoY), due to the impact of record fuel prices earlier this year.

However in the first-half of financial year 2008/09 Emirates continued to post strong business growth with operating revenues increasing by 31% to Dhs 22.1 billion ($6 billion). Passenger traffic ("RPKM") was up 11%, cargo tonnes up 13% and passenger yield-up 20%.

Seat factor averaged 78.3%, down slightly on 79.7% for last year, on top of a 13% increase in capacity ("ASKMs").

Emirates Airline and Group, Chairman and Chief Executive Sheikh Ahmed bin Saeed Al-Maktoum said: "The first half of the year has been tough for the airline industry with record fuel prices forcing many carriers to shut shop or consolidate. Emirates has worked hard to manage the impact of high fuel prices on our unit costs, while continuing to grow our business and provide our customers with a quality product and service. "

"We've made massive investments in our eco-efficient aircraft fleet, in our newly-opened world class airport terminal dedicated to Emirates operations, in strengthening our global route network and also in supporting infrastructure for our growing business."

SL is cash cow

Aeturnum Lanka celebrated its second anniversary recently, having made significant inroads into the ICT sector.

Aeturnum Lanka is a global expansion initiative of Aeturnum Inc, headquartered in Westford, MA and functions as a subsidiary engaged in providing a variety of software services.

While the company does not offer software solutions to the Sri Lankan market, it is fast becoming a preferred employer in the Sri Lankan ICT sector. Offering above industry average salaries and exposure to cutting edge technologies, Aeturnum Lanka recruits an average of 15 engineers a quarter.

 "Since its inception in 2006, Aeturnum Lanka has been the corner stone of Aeturnum's global success. The innovation, professionalism and tenacity of our Sri Lankan team has helped Aeturnum grow globally, increasing its operational revenue by 135% in the last financial year. We have ventured into new geographical markets and new business domains expanding our service offerings and areas of expertise," said Aeturnum, Inc., CEO Rajat Bhakhri. "I'm pleased to say that the state of the company is strong," he added.

Further indicating growth, Aeturnum Inc ., recently exceeded Rs. 100 million in their investments in Aeturnum Lanka. While the offshore development centre was assigned only two development projects initially, Aeturnum Lanka now handles 16 major projects and a host of smaller assignments.

In their bid to increase the 'bandwidth' of the Sri Lankan ICT sector, the company recently awarded six scholarships to Colombo University and Informatics Institute of Technology students as part of their CSR efforts. "While we celebrate our second anniversary, we wanted to give something back to community that has enabled us to reach new heights," Bhakhri said.

Aeturnum Inc, headquartered in Westford, MA has been providing software development and IT consulting services to North America since 2001 and initiated operations in Sri Lanka in November 2006. To-date, Aeturnum has established two development centres in Sri Lanka.

Sexy look

The New Beetle Convertible 2006 model is equipped with new lights, TDI motor with 77 kW/105 PS and a slightly altered, tighter contour. Also new: some of the paint colours as well as new rims.

Some of the basic shapes of the body were revised by Volkswagen designers: among them the synthetic fenders and the front bumpers that received a sportier look through a radiator grille. The designers also slightly changed the lights and beams. The blinkers are narrower and the clear glass headlights have a more oval shape which makes them even more defined.

 The basic engine in the New Beetle Convertible is a modern four-vent motor with 59 kW/80 PS. In 14.6 seconds the new Beetle accelerates to 100 km/h; the maximum speed is around 160 km/h, consumption is low at 7.1 litres.

Senok workshop for the Volkswagen and Audi range of vehicles located at Negombo Road, Wattala is handled by German factory trained engineers. It also has equipment that meet manufacturers' standards. Senok offers customers spare parts for the vehicles sold which include importing spare parts for those who are still using the very old Volkswagen models.

Migration

Ashmore Brown and Associates, Sydney, consultant Ray Brown recently held seminar on immigration to Australia at the Ceylon Hotel School.

The organization is represented here by WIDAC Holdings (WH).

WH chairman Primal Wijayanayake made an introduction of Australian immigration procedures to the audience.

Capex lags behind

Government's capital and lending minus repayments in the first nine months of the year stood at Rs. 190.8 billion, equivalent to 57.6% of the original budgeted target of Rs. 331.3 billion.

Revenue off target

Government revenue in the first nine months of the year stood at Rs. 478.5 billion, 63.7% of the original budgeted revenue target of Rs. 750.7 billion.

Expenditure on target

Government's current expenditure of Rs. 537 billion in the first nine months of the year is equivalent to 75.3% of the budgeted current expenditure target of Rs. 712.9 billion. (Source: Central Bank)

Dialog makes Rs. 192mn., loss

Dialog plc in the third quarter (3Q) ended September 30, 2008 made a Rs. 192.46 million loss compared to a Rs. 377million net profit in the corresponding Q of the previous year. The company in the nine months ended September 30, 2008 saw net profits decline by 59% year on year (YoY) to Rs.  1,031 million.

Nestle's PAT up 49%

Nestle Lanka in the 3Q ended September 30, 2008 saw net profits grow by 49% YoY to Rs. 417.34 million. The company in the nine months ended September 30, 2008 saw net profits grow by 44% YoY to Rs. 1,328.11 million. (Source: John Keells Stock Brokers)

Baker Tilly Lanka (Pvt) Ltd directors are Mahmud P.K. Merali, Nalin  Welgama, Dhammika Lokuge  and  Tharanga Amarasena.