World's most attractive employers

Google is the "world's most attractive employer" based on a survey of 130,000 career seekers with an education in business or engineering, according to Universum, a consulting firm that focuses on employer branding. Google retained its position for the second consecutive year, while rival Microsoft was rated the 7th most attractive employer.

In the overall business ranking, Google is seeing a challenge from the "Big Four" auditing firms -- KPMG, Ernst & Young, PricewaterhouseCoopers and Deloitte -- who rounded out the top five.

The sixth-most attractive business to work for is Procter & Gamble. After Microsoft in 7th place, Coca-Cola, J.P. Morgan and Goldman Sachs round out the top 10.

The rankings were compiled from a survey of "nearly 130,000 students at top academic institutions," who "chose their ideal companies to work for." The survey was first conducted in 2009.

Sky taxi

SriLankan Air Taxi takes to the skies again

SriLankan Airlines is set to re-launch its domestic floatplane service – SriLankan Air Taxi – starting this December in time for the winter tourist season, a statement by the airline said.

SriLankan’s Head of Worldwide Sales Mohamed Fazeel said: “We are delighted to announce that we will shortly be adding a new dimension to domestic travel, enabling all types of travelers to reach most parts of the island within 40 minutes. International visitors arriving in Sri Lanka can go straight on to their destinations with convenient connections.”

The National Carrier is planning to acquire two Twin Otter aircraft for the operation, each with a capacity of up to 15 passengers. These twin-engined aircraft are currently being sourced.

Bond Success

Sri Lanka extends yield curve with $1 billion issue

Sri Lanka comes to market with its largest and longest-dated sovereign ever, achieving the objective of extending its yield curve to 10 years.

The Democratic Socialist Republic of Sri Lanka has sold $1 billion of fixed-rate senior unsecured 10-year bonds -- the largest and longest-dated sovereign from the South Asian island nation ever. The notes pay a 6.25% coupon and were re-offered at par for the same amount of yield. 

On a spreads basis that translated into 373.1bp over 10-year Treasuries.


The market has seen credit spreads tighten and yields rally recently and as a result, demand for emerging market paper and longer-dated notes has picked up. Sri Lanka's new credit took advantage of both those trends.


A single-B credit doesn’t appeal to everybody, but it is included in the emerging market bond index, which helps and [hence it] appeals to emerging market-based funds globally," said a banker, noting that such funds were a key target as the country went on the road to meet up with key investors.


Sri Lanka was on the road throughout the course of last week, speaking with investors and selling a story not only of an emerging market sovereign credit, but of improved fundamentals surrounding the economy that led to a ratings upgrade by Standard and Poor’s earlier this month.


Following that upgrade, the new 2020 bonds received a B+ rating from both S&P and Fitch.


Based on the strong reception received from investors, the borrower went straight to the market with a yield guidance of 6.5%. The guidance was left unchanged throughout Hong Kong trading day on Monday, and by midday New York time, after US accounts had had a chance to look at the trade, the lead managers confirmed a final guidance of 6.25% to 6.375%. By then, they had already secured an order book of over $3 billion.


By the time the order books closed, the demand totalled $6.5 billion from 310 accounts. Incidentally, this equalled the size of the order book for Sri Lanka's $500 million 2015 sovereign issue last year, which was used as the most comparable benchmark for this deal.


During the Hong Kong trading session yesterday the bonds reached a high of 101.00 on a cash price basis. By the end of the day they had fallen slightly to 100.75 for a yield of 6.15%.


“At 10bp tighter (on a yield basis) this is a very solid performance without leaving too much value on the table for investors,” said one banker familiar with the deal.


The notes were issued under the 144A/Reg-S format and attracted strong interest from US-based accounts, which took 52.5% of the bonds.


“It was an asset that suited investor preferences in the US extremely well,” said one source. “Leading into the trade, there was a strong bid for 10-year assets in the US,” he added.


Europe bought a quarter of the notes offered and Asia took the remaining 22.5%. 

There were mixed reactions to the allocation with one source commenting that some accounts in Asia were asking why it was heavily skewed towards US accounts.


What it came down to, explained another source, was that the US was able to provide good quality orders, particularly through asset and fund managers.


Indeed, the bonds saw a strong bid from real money accounts, and fund managers and asset managers received 85% of the bonds, while the remainder was evenly distributed between pension and insurance funds, private banks and commercial banks.


Bank of America Merrill Lynch, HSBC and the Royal Bank of Scotland were joint lead managers for the offering.

(FinanceAsia)

Organic Growth

Bharti enters mobile handset market

Bharti Airtel India today announced that they will enter the lucrative mobile handset manufacturing business via its subsidiary Beetel Teletech Limited.

According to Indian media reports, Bharti is planning to serve the lower end with cheap mobile phones in the range of Indian rupees. 1,750-7,000.

Making an announcement, Beetel Teletech Limited (a Bharti Group firm) Executive Director and CEO Vinod Sawhny said, “The market is huge and there is a room for Indian players...Phones in the price range of Rs. 2,000-6,000 are witnessing 30 per cent growth and we plan to offer a good combination of feature-rich phones at affordable prices.”

On the market, which has a mix of leading global players like Nokia, Samsung, Sony Ericsson and Motorola and home-grown companies like Micromax, Karbonn and others, he said the company was a long-term player and has set an ambitious target of being among the top five players in the next three years.

Bharti Airtel through its subsidiary Bharti Airtel Sri Lanka started its operations in Sri Lanka in January 2009.

Indian Bank to open branch in Jaffna

Indian Bank to open branch in Jaffna

Public sector lender, Indian Bank wishes to expand its overseas reach. The Chennai based bank is all set to open a full fledged branch in Jaffna, which is the capital of the northern province of Sri Lanka.

This would be the second branch of the bank in the country. It already has a branch in Colombo.

After SriLanka, the bank is targeting Jakarta in Indonesia. The branch is Jakarta is expected to be the representative office.

“We have got all necessary clearances from different departments of the Indian government including the finance ministry’s go-ahead to RBI. We are expecting to get the licence within a fortnight’s time. In such an eventuality, we are hopeful of setting up a branch there by November,” TM Bhasin, chairman & managing director of Indian Bank, said.

While talking about the idea behind opening a branch in Jaffna, Bhasin said, “There are a lot of opportunities coming in Jaffna. About Rs 1,000 crore has been earmarked for housing development in Jaffna — mostly for rehabilitation of the Indians. Besides, there are a lot of opportunities for entrepreneurship development”.

ASEAN+3 Forum Discusses Harmonizing Asia's Bond Markets

MANILA, PHILIPPINES - The ASEAN+3 Bond Market Forum (ABMF) met for the first time today in Tokyo, Japan to discuss how best to harmonize regulations and market practices in Asia’s local currency bond transactions.

The ABMF is largely made up of financial experts from the 10 countries of the Association of Southeast Asian Nations (ASEAN), plus the People’s Republic of China, Japan and the Republic of Korea. It aims to establish regional market standards and common practices to make cross-border bond investment and settlement both smoother and cheaper.

The local currency bond markets in emerging East Asia have grown steadily in recent years, with $4.8 trillion in bonds outstanding at the end of June 2010. However, cross-border transaction costs in the region are high at an estimated three times more than in developed markets.

Common trading standards would make it faster and cheaper for investors from across the region to dip in and out of their neighboring markets. A wider variety and larger number of investors in Asia’s bonds would also make the markets more efficient and thus a better place for borrowers to raise funds.

“The forum is a big step towards institutionalizing regional cooperation and should help integrate Asia’s bond markets,” said Noritaka Akamatsu, Deputy Head of the Asian Development Bank’s (ADB) Office of Regional Economic Integration. “Ultimately, an integrated Asian bond market would benefit issuers and investors not only in Asia but also in the rest of the world.”

As a first step, the ABMF will create two sub-forums. One will collate and compare regulations and market practices in the region, while the second will look to harmonize transaction procedures and bond messaging formats with a view to cutting the cost of cross-border deals.

The forum was set up on the recommendation of a Group of Experts consisting of leading public and private sector institutions, including national central securities depositories from ASEAN+3 countries, international central securities depositories, global and regional custodians, and the ADB. It was endorsed by finance ministers of ASEAN+3 when they met in Tashkent, Uzbekistan in May.

The Group of Experts and the ABMF are part of ASEAN+3’s Asian Bond Markets Initiative (ABMI) aimed at fostering cross-border bond transactions. The ABMI was set up by the ASEAN+3 Finance Ministers in 2003 to develop local currency bond markets and to channel Asian savings into the region.

Update on Price band

As at yesterday, a 10% price band is presently applicable for two listed securities, Vallibel Finance (From Sep 23 to Oct 13) and Lake House Printers and Publishers PLC (from Sep 24 to Oct 14), a CSE filing made yesterday  stated.

Govt. aims to conclude Shell Gas takeover soon

By Santhush Fernando

Sri Lankan government is to conclude the re-acquisition deal of Shell Gas Lanka (Pvt) Ltd. (SGLL), the country’s largest Liquid Petroleum Gas (LPG) player in the very near future.
“The due diligence was earlier conducted and the Shell deal will be concluded in the very near future,” Sirisena Amarasekera, chairman of the Cabinet appointed Negotiating Committee overseeing the Shell deal and Prime Minister’s Secretary, told The Bottom Line.
Another senior official close to the deal confirmed that it was ‘unofficially finalised’ that the government will buy Shell’s 51 percent holding.
Last June, SGLL’s parent company- Royal Dutch Shell (RDS) offered to sell Shell Gas Lanka Ltd. and its wholly-owned subsidiary, Shell Lanka Terminal Ltd., as a part of its worldwide strategy to review its business units in Europe, Asia and Latin America. While the government already owns 49 percent stake of Shell Gas Lanka Ltd., Shell Lanka Terminal Ltd. is fully owned by the RDS. On June 17, the government expressed its willingness to take-over Shell Gas Lanka.
Earlier, W K H Wegapitiya, Chairman, Laugfs Holdings Ltd., Shell Gas Lanka’s rival and also a prospective bidder, announced that Laugfs too was interested in purchasing Shell Gas Lanka after his visit to London for negotiations with Royal Dutch Shell.
SGLL has been engaged in importing, storing, filling, marketing and selling LPG in Sri Lanka since 1995, after 51 percent of the then Colombo Gas Company was sold to Shell for US $ 37 million during the then Chandrika Bandaranaike Kumaratunga regime.
Shell virtually ran a monopoly till the second player, Laughs Gas, entered the local LP Gas market. Third players - Mundo Gas and Power Gas never succeeded to take off the ground due to undercutting by an existing player.

Sunway to make foray into Sri Lanka with RM250m project

Malaysian based Sunway Holdings Bhd. is making its foray into Sri Lanka to undertake a mixed development project with a gross development value of RM250 million, Malaysian news reports said.


Sunway said on Friday, Sept 24 it was teaming up with Dasa Tourist Complex Pte Ltd to build residential and commercial units in Colombo.

Its unit, SunwayMas Sdn Bhd will have a 65% stake in the JV company and Dasa Tourist 35%.
The mixed development will comprise of at least 318,000 sq ft of net saleable areas of residential units and 60,000 sq ft of net saleable areas of commercial units in Colombo city.

Sunway managing director Yau Kok Seng said the project would consist of a 34-storey building comprising 70 commercial units and 180 residential units on prime freehold land in the premium mixed-use zone of Bambalapitiya in District Colombo 4.

He said the project was expected to be launched in the second quarter of next year and to be completed by mid-2014. He added it would contribute “very positively” to the bottom line of the group.

“We are targeting Sri Lankans in the high-medium income and the high-end income groups. Even foreigners and those who are part of the Sri Lankan diaspora are expected to be interested,” he told a press conference.
On the pricing, Yau said the group was anticipated to launch the upmarket property with the residential units priced at about US$200 (RM618) per sq ft while that of commercial units at US$350 per sq ft.

"We are anticipating more than 20% net margin from this project," he said adding that the project enjoyed a five-year "tax holiday" from the Sri Lankan government from the time of completion.

Yau said the project would increase Sunway's landbank to more than 430 acres with potential GDV of RM2.6 billion which would be developed over the next three years.

Dasa Group chairman and founder S D Gunadasa said the JV marked an important milestone for the company's first venture in mixed development in Sri Lanka, stressing that it looked forward to more collaborations with Sunway Holdings in its future expansions.

"While the Sri Lankan property market gears itself for robust growth in the next five years, international collaborations with premier property players such as Sunway Holdings will contribute immensely to raise the standards in the industry as well as to create new benchmarks," he added.

Chinese investments in Lanka to rise - Economist

Authorities in Sri Lanka are currently mulling on providing additional space for Chinese investments to take place in Sri Lanka with areas like Godagama, Matara and the Eastern Province under the microscope, a top economist said.
According to him, the present existence of strong trading relationship between the two countries could now pave way for an increased flow of Foreign Direct Investment (FDI) from China, which is one of the fastest growing economies in the world.
“Entrepreneurs from China have been provided with an exclusive Export Processing Zone at Mirigama, and depending on the progress, additional space will be provided at Godagama, Matara and the Eastern Province,” Institute of Policy Studies executive director Dr Saman Kelegama said at a recent public lecture.
He said that of late, China has become a major investor in Sri Lanka with bilateral cooperation in tourism, mining, power generation, education, infrastructure, construction projects booming between the two countries.
“The telecommunications, power and energy industries attracted most of FDI inflows from China and presently 16 Chinese businesses have invested in garment, leather, telecom and electronics manufacturing facilities in the island,” Dr Kelegama said addressing on the topic ‘SL-China Economic Relations’ and held at the Bandaranaike Centre for International Studies in Colombo last week.
According to local immigration rules, all Chinese entrepreneurs who invest a minimum of US$ 25 million are provided with a Sri Lankan passport on the basis of a “second home” passport.

Most banks back CBSL rate-cut call

But negotiations likely on 30% range for credit cards

Sri Lanka’s private commercial banks are likely to respond positively to the recent call made by the Central Bank of Sri Lanka (CBSL) to lower interest rates on housing loans to 14 percent by the end of next month although they would appeal for a lower rate reduction on credit cards, a top industry official said.
CBSL on Thursday requested all private commercial banks to reduce interest rates on credit cards to 24 percent per annum, by the end of next month, following steep falls in policy rate cuts and lower economic risks.
“As far as housing loans are concerned, most of the banks have already reduced their rates in line with the Central Bank’s recent guideline even before the announcement came in. However, with regard to the recently requested rate reduction on credit cards, the association is mulling on negotiating the rate with the CBSL,” Sri Lanka Banks’ Association secretary-general Upali de Silva told The Bottom Line.
He said ‘most banks’ are keen on appealing to the Central Bank to make the rate on credit cards to hover around 30 percent given the high-risk factor prevalent in the business.
“We should understand that even the regional average rate on credit cards is also around the 30 percent range and for example in India it is about 32 percent,” De Silva added.
Meanwhile, when The Bottom Line spoke to Saliya Rajakaruna, the chief executive at Nations Trust Bank and one of the comparatively smaller banks operating in the island, he said the bank would respond positive by making efforts to comply with the request for rate-cuts on housing loans by the stipulated deadline.
“However, as far as reducing rates on credit cards is concerned, we will need some more time as the operating model for credit cards is fairly different,” he said.
In a statement made earlier in the week, CBSL had argued that since February 2009, its policy repurchase rate (at which money is injected to the market) has been cut by 300 basis points to 9 percent and the repurchase rate (at which money is drained from the market) has been cut by 300 basis points.
“Nevertheless, it has been noted that adjustments to lending rates of financial institutions generally tend to lag behind the adjustments to their cost of funds. Hence, it is expected that market lending rates would decline further in the period ahead, to fully reflect the recent relaxation of the monetary policy stance of the Central Bank,” the Central Bank said in its September monetary policy review.
The CBSL noted that the current macro economic performance and stability warrant a reduction in the risk premia added to lending rates, thus leading to the spread between lending rates and deposit rates of banks reducing further.
According to Central Bank statistics, loans from commercial banks to the private sector rose by 8.9 percent up to July 2010 from a year earlier while credit from all banks and finance companies had increased 9.9 percent in July from a year earlier.
In July alone, loans from commercial banks rose 23.4 billion rupees to 1,292 billion rupees compared to a 105 billion rupees increase for the preceding 12 months.

Bond rating

Fitch rates Sri Lanka's upcoming bond 'B+'

Fitch Ratings has assigned Sri Lanka's upcoming USD bond issue a rating of 'B+', a statement by the rating firm said.
 The rating is in line with Sri Lanka's Long-term foreign currency Issuer Default Rating (IDR) of 'B+', which has a Positive Outlook

Sri Lanka and Mexico 'best for long-haul value'

Sri Lanka and Mexico 'best for long-haul value'


Australia and Hong Kong were the least cost-effective destinations featured in the survey, which also revealed significant rises in the price of food, drinks and supermarket goods in Thailand and South Africa.
The Post Office's annual Long-Haul Holiday Report compares the cost of 10 essential holiday purchases – such as an evening meal, a cup of coffee and sun cream – in 22 destinations.

In Sri Lanka, the 10 items cost just £46.85, compared with £155.48 in the Australian capital, Sydney.
Research released this week by Hayes and Jarvis, a tour operator specialising in long-haul trips, also suggested that Sri Lanka is among the best-value destinations for a package holiday, with a one-week break in November costing £799 on average, bettered only by Egypt (£649) and the Dominican Republic (£729).
Sri Lanka has witnessed a sharp rise in visitors following the end to hostilities between government forces and Tamil separatists in the north and east of the island. 

Nearly 400,000 foreign tourists visited in the first eight months of 2010, an increase of 47 per cent on the previous year.
Thailand – the cheapest destination in the Post Office's 2009 report – fell to sixth in the survey, thanks in part to the strength against the pound of the Thai baht, which is worth 11.6 per cent more than last year. The 10 items cost £52.85 in Phuket, up by 16 per cent on last year.
Mexico and Kenya finished second and third in the survey. UK sales of the Mexican peso and the Kenyan shilling have risen by 5 and 11 per cent, respectively, while the Kenyan Tourism Board has reported a 7 per cent rise in British visitors.
Malaysia and Indonesia finished fourth and fifth in the survey, with the 10 items costing British visitors £51.89 and £52.39.

Sean Tipton from Abta , the travel association, emphasised the importance of prices on the ground, particularly with air travel becoming more expensive. The latest rises in APD, due in November, will add up to £240 to the cost of long-haul flights from the UK for a family of four.
"Long-haul travel can initially look unattractive, with air fares costing more than travelling to Europe," Mr Tipton said. "But many long-haul destinations are cheaper than the Mediterranean, with even a weak pound still going a very long way."
Elsewhere, prices in Australia, Canada and Brazil have all risen sharply, and sterling's recent weakness against the rand means that tourists visiting South Africa can expect to pay about 28 per cent more for food, drink and other holiday essentials this winter.

(Courtesy The Telegraph)

Britannia to wind up ‘unviable’ Lanka operation

Britannia to wind up ‘unviable’ Lanka operation

The Nusli Wadia-promoted biscuit maker, Britannia Industries, has decided to wind up its ‘unviable’ Sri Lankan operations, according to foreign media.

 Britannia entered the Sri Lankan market in 2008 by launching a range of biscuits under the brand name Britannia Lanka.
“The company had decided to withdraw from the operations in Sri Lanka as they were not found to be viable. The right thing for a management to do was realise and recognise something and act on it and it is precisely for this reason that the company decided to withdraw,” Wadia told shareholders of the company recently.

Britannia could not turn around its business in the island nation , thanks to stiff competition from the local and already established brands in that counrty, sources said. 

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GSP crisis prompts top apparel firms to look beyond Lanka

The loss of the Generalised System of Preferences Plus (GSP+) facility offered to Sri Lanka and the wages board’s recent decision to raise the minimum salary of garment workers by 20% have prompted some top industry players to look for alternatives in other countries.
Industry sources said some major apparel manufacturers in the country were considering the possibility of shutting down their factories here and open then elsewhere to cut costs.
“This is the case at present with factories that have a greater exposure to Europe since they are reluctant to lose the higher margins that could be made through buyers in these markets,” a top industry official told The Bottom Line.
The sources said some players were contemplating on relocation based on the fact that costs of labour and raw materials were much lower in those countries.
It is learnt that some major players are conducting feasibility studies to operate from regional countries such as Bangladesh and the Maldives.
Joint Apparel Association Forum (JAAF) secretary-general Rohan Masakorala said the industry was facing a ‘tough situation.’
“There’s a grave threat of GSP-related orders moving out of Sri Lanka and to countries like India or Bangladesh. Exporters will feel the pinch by late September or October. However, it’s too premature to comment on this.”
He said the turnover forecast for apparels would be around Rs 333bn or US$ 3bn.
According to Masakorala, the minimum wage has risen to Rs 7,900 for a garment employee, starting without any skills.
“I can’t tell what the exact impact would be but certain industrialists will definitely feel the pressure. Although industrialists wanted the Wages Board to have January 1, 2011, as the implementation date the government wanted it to be
October 1, 2010.”
“It will affect within the trade and across the trade although we still haven’t heard of retrenchment or layoffs so far.”
Another top official, meanwhile, said the industry was currently trying to mitigate the loss of the GSP plus by portraying Sri Lanka as a country that is serious about its ethics in manufacturing standards such as employing greener production methods and adhering to accepted labour standards.
Sri Lanka’s garment industry is a US$3.2 billion export business and accounts for around 46% of the country’s export revenue.
Sri Lanka has nearly 300 garment factories including major suppliers such as Brandix, Hirdaramani and MAS Holdings.
Until recently, Sri Lanka had been one of the two Asian countries which enjoyed the GSP Plus benefits for trade with EU countries.
Sri Lanka was awarded the GSP Plus to facilitate its recovery from the Tsunami disaster in 2004.

http://www.thebottomline.lk/2010/09/05/page1.html

Economic implications of the 18th Amendment

By Azhar Razak

Although certain sections of the government claim the implementation of the 18th Amendment last week could lay the foundation towards an accelerated economic growth derived from the political stability, a senior economist from the main opposition party says it could pave the way for a more politicised and autocratic economic culture.
“The Sri Lankan economy is certainly going to face dire consequences by the implementation of the amendment as it would make regulators such as the Central Bank of Sri Lanka to be completely managed by politicians and questions being asked over its independence,” economist and UNP MP Dr Harsha de Silva told The Bottom Line.
He charged that since the Constitutional Council, which earlier had a say in the appointment of the three non-executive board members to the Central Bank’s Monetary Board, is now replaced with the parliamentary council set up, the President would now get exclusive powers to appoint all five members to the board.
“Earlier although the non-executive board members are appointed by the President on the recommendation of the Minister of Finance, the approval of the Constitutional Council was also required for the appointment of these non-executive board members. However, since the Constitutional Council has now been repealed, additional approvals would no longer be needed in future with the President having powers to appoint anyone as he wishes,” de Silva explained.
He added that the 18th Amendment only required the President to seek observations from the Parliamentary Council, which does not necessarily mean he has to abide by the decisions taken by the council.
The Central Bank has a unique legal structure in which the Central Bank is not an incorporated body. In terms of the Monetary Law Act, the corporate status is conferred on the Monetary Board, which is vested with all powers, functions and duties and the Monetary Board is responsible for making all policy decisions related to the management, operation and administration of the Central Bank.
Meanwhile, heads of universities and academics who met at a recent discussion stated that the 18th Amendment to the Constitution could lay the strong foundation that is required to accelerate economic development in the country. Speaking to journalists, University Grants Commission chairman Professor Gamini Samaranayake said Sri Lanka suffered from both political and economic instability since independence due to the war.
“We believe that the 18th Amendment would give the long felt political stability to achieve the economic stability that is required to accelerate the country’s development process while ensuring the People’s right to appoint a president according to their wish,” Samaranayake pointed out.
He said Sri Lanka was able to record average growth rates of around six percent even during the war and with the political stability it derives from the implementation of the 18th Amendment, it could well mean that we could be heading towards ‘double digit growth rates’ in the future.
“In the past 40 years, although Sri Lanka tried to reduce inflation, unemployment, etc to single digits it had failed in the attempt due to the lack of political stability. Around 47,000 graduates were recruited to the Public Service in 2005. The 18th Amendment is a must for the country’s economic development and that is why even the entire private sector supports it,” Strategic Enterprise Management Agency (SEMA) Financial Service Cluster Director, who is also a senior economic advisor to the President said.
The 18th Amendment was also supported by the Vice Chancellor of the Open University Sri Lanka, Professor Upali Vidanapathirana and the Vice Chancellor at the University of Colombo, Professor Kshanika Himburegama, at the press briefing held at the Sri Lanka Foundation Institute.
One of the objectives of the 18th Amendment to the Constitution is to replace the Constitutional Council by a Parliamentary Council consisting of five members of which three are ex-officio (The Speaker, the Prime Minister and the Leader of the Opposition).
The other two members will be separately nominated by the Prime Minister and the Leader of Opposition to include ethnic groups not represented by the three ex-officio members.
President Mahinda Rajapaksa had earlier said that the Constitutional Council in the 18th Amendment to the Constitution will better assure the supremacy of the Parliament as there will not be a presidential representative in the proposed council and will only consist of parliamentary members.

http://www.thebottomline.lk/2010/09/12/biz_feature3.html

Turnaround at BOGA’s marketing subsidiary

The marketing subsidiary of Bogawantalawa Tea Estates (BTE) Plc, BPL Teas Private Ltd., which used to be a loss making entity over the years, has showed a positive turnaround during the year ended March 31, 2010, a senior official of the firm said.
According to the group’s chairman, tea manufacturer and green tea exporter, BPL Teas made a profit after tax of Rs. 6.9 million during the recent financial year.
“As a result of the continuous efforts made during the recent past, the marketing subsidiary has begun to give positive results as evidenced by declaring a profit after tax of Rs. 6.9 million for the year under review,” BTE Plc chairman D J Ambani highlighted in his message written to the shareholders at the release of BTE’s 2009 annual Report last week.
He said that the company had made a considerable progress during the year and was able to increase the market share especially in highly competitive markets such as Europe and the US.
“In addition to the positive financial results shown by the company, the firm continued to enhance the facilities at the processing centre to meet the high International Standards,” the chairman said.

BTE Plc reported a profit after tax of Rs. 120.4 million for the year ended March 31 2010, a complete turnaround from a loss of Rs. 126.4 million recorded during the corresponding period in the previous year. Gross profit shot up by 144 percent to Rs. 331.8 million helped by a sharp increase in revenues from Rs. 2.8 million a year ago to Rs. 3.56 million. However, the group has not allocated a management fee this year although it spent Rs. 4.4 million on it last year.
The chairman said that BTE Plc has embarked on Agroforestry, Dairy farming and Tea-based tourism projects this year.
“One of the impediments for effective implementation of the above is the lack of clear-cut policy guidelines. Policy consistency is an area in which the plantation sector has had a poor record,” Ambani pointed out.
He said union demand for wage hike also remains an issue considering the long-term viability of the industry as well as the competitiveness of Ceylon tea in international markets.
“There has been almost a 40% wage hike at the last round of wage negotiations which had around Rs. 402 Mn. impact (Incl. gratuity provision) on the cost of production of our company (Rs. 49 per kg of Made tea). It is therefore important that the companies and the trade unions agree to look at the industrial relations issues with a fresh and open mind in the best interest of the industry. This is because the sector cannot sustain any further ad hoc wage increases without linking such increases to productivity and product quality or in other words to “Value Addition”, he outlined.

Meanwhile, BTE Plc which is Sri Lanka’s largest supplier of iced tea to the United States entered into a Joint Venture (JV) agreement in June 2010 with US based, Walters Bay International by incorporating a new BOI company “Walters Bay Bogawantalawa Estates (Pvt) Ltd”.
This JV company has already set up a state of art processing centre at Welisara to manufacture iced tea in packaged form for export to US, in fulfillment of its contractual obligations with the global multiple brands.(AR)

http://www.thebottomline.lk/2010/09/12/biz_news.html

MphasiS Lanka sets ambitious growth targets

By Azhar Razak

The newly opened Sri Lankan unit of Indian IT firm, MphasiS is presently finalising a contract with a large multinational that could immediately require the company to hire about 500-1,000 employees, a top official of the firm revealed.
MphasiS, a leading IT services provider headquartered in India, kicked off its operations in Sri Lanka last week following the opening of its Global Delivery Centre in Orion City, Colombo 9, to provide Applications, Business Process Outsourcing (BPO) and IT infrastructure and Outsourcing (ITO) services to clients worldwide.

“We are presently negotiating with a large multinational firm to get outsourcing work for the new Sri Lanka unit. We will be doing a presentation today and if the contract materialises, we are talking about employing anywhere between 500 to 1,000 people,” MphasiS, Chief Executive Officer Ganesh Ayyar disclosed at the inauguration ceremony held at the company’s new office last week.
He said that over the longer-term the company plans to hire 3,000-5,000 people in the space of 36 months.
“As we are speaking, a contract is already being finalised with a large multinational to move its work to Sri Lanka. The work will be shifted in about four weeks,” Ayyar said.

The outsourcing unit presently has a 250-seat office space and has already hired 55 IT graduates to manage infrastructure and application services. Ayyar said that MphasiS has been working on hiring local talent as well as setting up infrastructure since it announced its intention to set up the delivery centre end last year.
“The three main reasons why MphasiS chose Sri Lanka compared to another country in the region – which I do not want to name – are because of the strength of the island’s IT talent pool, the government’s hunger for an accelerated post war growth drive and Sri Lanka’s Board of Investment,” Ayyar claimed.
The new centre was formally inaugurated on Monday by Minister of Economic Development Basil Rajapaksa along with the participation of a large number of other senior officials.

With over 38,000 employees and a global presence across America, Europe, Australia, Asia Pacific, Japan and India, MphasiS has been India’s fastest growing IT company in the year 2009, with a growth rate of 43 percent.
It is learnt that employees at the new Sri Lanka centre will be part of MphasiS Global Talent Pool and groomed as a part of MphasiS Talent Development Programme.

“Sri Lanka’s vibrant talent pool is of strategic interest to us and we hope to expand our footprint here. Our focus in Sri Lanka is holistic. Our aim is to develop the larger ecosystem and be a responsible corporate citizen. We want to build deeper roots into the talent supply chain in Sri Lanka, partnering with academia, industry bodies and the government,” MphasiS Chief Information Officer M G Raghuraman.

MphasiS is a leading provider of applications services, remote management services and BPO services. The company delivers real improvements in business performance for clients through a combination of technology know-how, domain and process expertise. MphasiS services clients are in financial services, healthcare, communications, transportation, consumer and retail industries and governments around the world

IFS to deploy ERP solution for 9 firms at Flinth Ind. Park

The Sri Lankan unit of global business solutions provider, IFS has recently been awarded with a major contract from owners of Flinth Industrial Park (FIP) to swiftly deploy Enterprise Resource Planning (ERP) systems for all nine companies operating within the park.
IFS has already deployed its fully-fledged solutions for two companies in the park, Cable Solutions Private Ltd and Flinth Industrial Park (the main company managing the firms in the park) while a third company, AeroSense Private Ltd is expected to go live on October 1, officials said.
“We decided from the outset that we needed a globally-reputed ERP provider for the park to ensure that all the functions process smoothly and that is why we selected IFS. We have also given them a target to complete the implementation of ERP to all the companies in the park by the end of this year, which promise we are confident the IFS team could live up to,” Flinth Industrial Park’s Managing Director Michael Thorburn told reporters at a recent press conference.
He said that while there were only a few global companies that could cover all the functions carried out by FIP with their ERP systems, only IFS from the outset had a strong exposure and expertise in manufacturing and supply chain sector and a fully fledged offering that satisfied the senior management.
“IFS had no competition in that aspect as their compliant ability with the most rigid quality requirements necessary in the airspace industry ideally suited our requirements,” Thornburn explained.
FIP is home to AeroSense Ltd, a company manufacturing sensors for aircrafts across the world, and which needs to adhere to the highest levels of quality. This in turn benefited all the other companies in the park, Thorburn pointed out, since the quality assurance system embedded in the ERP had to be of the highest standard.
Meanwhile, IFS South Asia Vice President Jayatha De Silva explained that Flinth’s requirements in an ERP were challenging from the start but IFS was bold and took it on.
“For the success of any ERP implementation there are four factors that need to fall in place. The first factor of success is that the business solution must match the requirements of the business”.
“In this situation, the ERP we offered covered all the functions required by Flinth Industrial Park, including HR, finance, and quality assurance”.
The second factor was the consultants and experienced personnel that went into the task.
“IFS had the potential and the capacity, with its hugely experienced team of consultants to take on this challenge, work long hours, and get the ERP going well within the prescribed time frame.”
The third factor for a successful implementation was the post-implementation, De Silva explained. “The hand-holding is vital for the entire process to run smoothly, and in a project of this scale and magnitude, this is even more important.
“With this in mind, IFS will have two of its own personnel working with FIP, on-the-ground and at-hand, after the ERP goes live in order to ensure the system functions smoothly and to train any new personnel entering FIP, on the ERP.”
The fourth factor was the customer’s readiness, and Jayantha pointed out that in this respect, FIP were extremely supportive.
“When you want the ERP implemented so fast, you need the customer to set his priorities and let us know what is most important first. We found FIP ready with their guidelines and recommendations and ready to compromise in order to focus on what was most vital”, Jayantha explained.
FIP, which brings a unique industrial park concept to Sri Lanka, is the brain child of Swedish entrepreneur and visionary Rune Flinth. The park is based upon the concept that companies should focus mainly on production, while supporting functions such as finance, IT, legal services, quality control and human resources, are handled by the park itself.
Located in a 10-acrea area in Kadawatha, FIP already has eight export-oriented companies in residence, creating products that are highly technical, state-of-the-art and demanding stringent levels of quality in both hardware and software.
FIP is a subsidiary of the Swedish holding company Swedcord Development AB owned by Rune Flinth, who has been an industrialist in Sri Lanka for over 20 years having founded two major companies, Flintec and Toroid. (AR)


http://www.thebottomline.lk/2010/09/19/it3.html

 

PABC confident of meeting minimum capital requirement organically – Official

By Azhar Razak

PABC Bank says it is confident of raising the additional capital requirement of around Rs. 500 million through organic growth and would not need to go for another Rights issue to fund the recently stipulated Rs. 3 billion capital requirement by end 2011. Presently, PABC Bank, which has a core capital (Tier 1 capital) of Rs. 2.54 billion as at 30.06.2010, is the only private commercial bank that is short of the increased minimum capital stipulated by the Central Bank of Sri Lanka (CBSL).
“Given the existing strength of PABC Bank’s core capital adequacy ratio and the total adequacy ratio, we are very much confident of easily reaching the Rs 3 billion Tier 1 required through significantly expanding our business in the near future,” Director-CEO, PABC Bank, Claude Peiris told The Bottom Line in a recent interview.
The amended regulations of CBSL requires existing private commercial banks to increase their minimum capital to Rs 3 billion by end 2011, and further raise it to Rs. 4 billion by end 2013 and Rs 5 billion by end 2015.
He stated that, according to recent interim financials as at June 30, 2010, PABC Bank’s core capital adequacy ratio, calculated as a percentage of Risk Weighted Assets, stood at a healthy 19.24%, which is well above the minimum requirement of 5%, while total capital adequacy ratio, also calculated as a percentage of Risk Weighted Assets, was 19.91%, as opposed to the minimum requirement of 10%.
“The fact that we have maintained a higher capital adequacy ratio means that we will have a greater capability to deal with risk going forward, and therefore, we are already planning for a rigorous expansion drive,” he said, pointing further that the Bank will have sufficient time until end 2011 to meet the new requirement.
Expansion plans
According to Peiris, PABC Bank plans to open at least five branches around the island before the end of this year, which could take the bank’s Branch network to 42 by December 2010.
“We have plans to open branches in Embilipitiya, Matale, Ambalangoda, Batticaloa and Kalmunai before the end of this year,” Peiris said.
It has to be noted that PABC Bank went for a Rights issue last year to infuse fresh capital amounting to Rs 563 million, which had been needed at the time to meet a CBSL minimum capital requirement of Rs 2.5 billion by December 2009. In 2006, the CBSL had increased a minimum capital requirement for licensed commercial banks from 0.5 billion to 2.5 billion, to be met by end 2009. However, the deadline was later extended until June 30, 2010.
PABC Bank’s net profit for the June 2010 quarter fell 60% to Rs 83 million from a year earlier, despite lower loan loss provisions, as fee income fell steeply.
Listing requirement
Meanwhile, new regulations set out by the CBSL a fortnight ago, also requires unlisted locally incorporated private banks to list on the Colombo Bourse by end 2011. Union Bank and DFCC Vardhana Bank, at present, are the only two ‘locally incorporated’ private commercial banks that are not listed on the Colombo Stock Exchange. Union Bank is however in line with the ‘minimum capital requirement’, following the receipt of an Rs 2 billion private placement in May 2010. Prior to the private placement being received, the Bank’s equity stood at Rs 1.5 billion.
According to recent media reports, Union Bank is planning to go public at the end of this year or early next year, to comply with the CBSL directive.
However, Sri Lanka’s three largest banks, State-run Bank of Ceylon, Peoples Bank and National Savings Bank are not listed, and the CBSL has not requited them to do so. (AR)

LIRNEasia urges implementation of mHealth programme

By Azhar Razak

Sri Lanka’s ICT policy think tank, LIRNEasia has urged Sri Lanka to implement a ‘real-time bio-surveillance programme’ (RTBP) which uses mobile phones for sharing information following its successful completion of a recent pilot research project.
The findings of the research survey shows that implementation of the project could enable early detection and notification of potential health outbreaks (more importantly some killer communicable diseases) while at the same time reducing costs by 30 percent as the system only uses mobile phones, software applications and a Web interface.
“I am proud to say that we are extremely pleased that the research and pilot project has led to the unprecedented milestone of a significant improvement in capturing and documenting health information. We now have solid proven evidence to support RTBP as an important tool in preventing the spread of devastating diseases. Had these monitoring systems been in place before, we would have prevented the deaths of many,” Nuwan Waidyanathan, Senior Research Manager, LlRNEasia, told a press conference recently.
Some of the findings from the project noted that respiratory infectious diseases are the most common in Sri Lanka, common cold is the most popular but gastrointestinal infectious are, relatively, the most visible, people over 45 years are most vulnerable to both hypertension (high blood pressure) and Diabetes-Mellitus.
RTBP is designed to collect timely relevant health surveillance data and to process this data in order to reliably and quickly detect possible outbreaks of diseases. The pilot project carried out with the aid of a grant of US $ 300,000 from the International Development Research Centre, Canada, was tested out in 12 hospitals and clinics in the Kurunegala District from July 2008 onwards accumulating an average of 7,200 records per week or 300,000 patient records in total.
“They detected 25 prioritised infectious diseases like dengue, malaria and dysentery. They were also the first to utilise other options of investigating other communicable like common colds and non-communicable diseases like diabetes or arthritis,” Waidyanathan said.
Cost reduction
The research which was also carried out simultaneously in South India also concluded that Sri Lanka could reduce its overall expenses by 30 percent with RTBP while India could reduce by 50 percent. It further noted that both India and Sri Lanka presently dedicate very little or no resources to event detection or alerting and that RTBP allows allocating more resources to the upkeep of situational awareness and to crisis response activity
“Bulk of the health departments expenses are spent on data collection and consolidation. They can be reduced by RTBP with the introduction of mHealth at the point of care,” the research findings pointed out.
The research paper urged authorities to invest more in alerting to empower health workers with information on the state of affairs of the health in their regions.
“Following a feasibility analysis, researchers have found that the project would require US $12,000 per month per district to be implemented island wide in Sri Lanka,” Waidyanathan noted.
Technical aspects
mHealthSurvey software works on any available standard java mobile phone. A typical record contains the patient visitation date, location, gender, age, disease, symptoms, and signs. Data is transmitted over GPRS cellular networks. T-Cube Web Interface (TCWI) is an Internet browser based tool to visualise and manipulate large spatio-temporal data sets. Epidemiologists can pin down a potential outbreak of, for instance, a gastrointestinal disease among children in the Wariyapola. Sahana Alerting Module (SAM) allows for the generic dissemination of localised and standardised interoperable messages. Selected groups of recipients would receive the single-entry of the message via SMS, Email, and Web.
“The key paradigm of the bio-surveillance programme is not just about computerising the present day processes but it is about complementing them with revolutionary techniques like “syndromic” surveillance. RTBP’s real time bio surveillance capabilities will enhance the present day passive or non-active passive surveillance to an active surveillance system,” Wayamba Provincial Director of Health Services, Dr. R. M. S. K. Ratnayake said.
He added that since the manner in which responses are sent back to health workers follow a global standard recognised by the International Telecommunications Union, RTBP makes it possible for information dissemination with other national organisations such as the boarder control health authorities as well as across borders with neighbouring countries or global organisations.

 http://www.thebottomline.lk/2010/09/19/it1.html

Colombo Bourse likely to buzz this week- Analysts

By Azhar Razak

Sri Lanka’s stock market is expected to bustle with more activity again from tomorrow as a highly-debated ten percent price band rule becomes ineffective and is replaced by a formula to curb fishy transactions, analysts opine.
According to them, the bourse will flurry again with activity, similar to the pre-price band period that was however driven by speculations rather than proper fundamentals.
“The market has been fairing pretty well even when the price band was in place. So there is no reason why it should not continue to do so,” a top market analyst, who however wished to remain anonymous, told The Bottom Line.
The analyst said the market will be further boosted by the more recent positive reports of the economy, political stability, strong financial performances reported by firms in the recent quarter and other macro economic factors.

“I feel the removal of the ten percent price band rule by the SEC will be taken in a positive light by the retailers although regulation is only one aspect of what investors will look into prior to investing and factors such as transparency also plays a part specially for long term investors,” Nikita Tissera, manager, research, at SC Securities said.
Alternatively, he said, SEC could have even kept the price band rule in place as investors had started getting used to the system but made other changes such as to ensure flexibility is given to genuine long term investors.

Capital Trust Securities director Sarath Rajapaksa, meanwhile, said the market was anyway expected to take a bull run irrespective of the price band rule being in place as the country is presently bustling with positive sentiments.
“What is further encouraging is to see that the banks have also lowered interest rates following directives given by the Central Bank as non-availability of cheap financing had always been a major detriment to investor activity,” Rajapaksa pointed out.
Critics of the price band rule had earlier argued that the rule had imposed a flat punishment to all listed securities in the market due to actions of a few ‘so called manipulators’ whom the SEC had even not named todate.
The new formula that replaces the price band takes into account ‘unusual activity’ in both volume and price movements based on the last five trading days of the share which will then be captured into a list and will remain there for 15 days.

During this time, SEC will place restrictions on these shares such as the applicability of the 10 percent price band and the 50 percent margin upfront for trading such shares. On a further development, the SEC has also asked all stock broking companies to refrain from extending credit to any investor beyond three days from January 1 next year.
“If credit is to be extended beyond this specified period it could be done only through a Margin Provider duly registered with the SEC, the regulator said in a statement made to the Colombo Stock Exchange recently.
However, according to Sarath Rajapaksa, the new changes to be introduced from January 1 will harm the small retailers who used margins to sell and would only provide more benefits for big corporates to do their ventures.

http://www.thebottomline.lk/2010/09/19/page2.html

Fitch assigns positive outlook to Sri Lanka

Fitch assigns positive outlook to Sri Lanka

Fitch Ratings a while ago affirmed Sri Lanka's Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'B+', and simultaneously revised the Outlook to Positive from Stable. Fitch also has affirmed Sri Lanka's Short-term IDR at 'B' and Country Ceiling at 'B+'.
The Outlook revision is in large part a reflection of Sri Lanka's economy benefitting from the end of a prolonged civil war in 2009, from a more disciplined policy framework put in place under the Stand-By Arrangement (SBA) with the IMF, and from an improved external liquidity position bolstered by the IMF programme. Fitch believes these developments support the prospects for Sri Lanka to achieve sustained medium-term growth, without a resurgence in inflation or another bout of external liquidity stress (as experienced over end-2008 to early-2009). Foreign exchange reserves stood at USD5.8bn at end- July 2010, well above the low of USD1.1bn in March 2009, bolstered by USD1.0bn of IMF funds.
Sri Lanka's authorities have made headway in rebuilding and integrating the two war-torn Northern and Eastern provinces into the rest of the local economy, which is helping to boost Sri Lanka's productive capacity, particularly in the agriculture and tourism sectors. This is highlighted by real GDP growing 8.5% yoy in Q210, from a 7.1% yoy rise in Q110. Fitch is forecasting real GDP growth to average 7.2% in 2010-2012, versus an average of 5.1% over the last 20 years.
The authorities look to be implementing a more prudent macroeconomic policy framework under the IMF SBA. The Central Bank of Sri Lanka (CBSL) appears to have shifted the focus of monetary policy towards fighting inflation and away from supporting growth. As evidence, the CBSL has maintained a positive real interest rate environment since February 2009 (versus an average of -12% in 2008). Fitch views the CBSL's management of monetary policy as broadly appropriate, which along with more benign global energy and food prices, is helping to keep the inflation rate in the single-digit range (up 5.6% yoy in January-to-August 2010).
Sri Lanka's authorities also appear more ready to tackle the sovereign's biggest ratings constraint - weak public finances. The budget deficit of 9.9% of GDP in 2009 and public debt of 86.2% of GDP were both well above the medians for the 'B' rating peer group of 4.9% and 37.3%, respectively. Similarly, the government revenue-to-GDP ratio stood at just 15% in 2009, which is well below the 'B' rating peer group median of 28.1%. The Presidential Commission on Taxation is set to release its final recommendations in November 2010. New tax measures will be crucial in determining if the authorities can get the public finances on a more sustainable path. Equally vital, the end of the civil war should provide the authorities much needed flexibility in cutting spending on defence and resettling refugees.
Maintained policy discipline would support the case for a ratings upgrade. If the Sri Lankan authorities can sustainably boost the tax revenue base and restrain spending to consolidate the budget deficit, this would help lower the country's overall public debt burden and directly address a key rating weakness. Similarly, a sustained period of stronger GDP growth that does not see a return to accelerating inflation or a sharp deterioration in the current account deficit would also support Sri Lanka's ratings. Fitch would also view a pick-up in foreign direct investment as a positive development as this could help bolster the country's external finances and also improve the overall competitiveness of the economy. More specifically, this could help stem concern over Sri Lanka's export sector following the loss of reduced tariff rates via the GSP Plus facility to the European Union in mid-August 2010.
On the other hand, the agency would negatively view an erosion of macroeconomic policy discipline as an acceleration of inflation would undermine Sri Lanka's export competitiveness and result in a sharp rise in domestic borrowing costs for the fiscal authorities and raise overall interest payments. These already stood at 43% of government revenues in 2009, which is well above the 'B' rating peer group median of 5.7%.