Stock market manipulators need to be weeded out :Top company official
By Duruthu Edirimuni Chandrasekera View(s):Manipulation is so rampant in the Colombo stock market that it is very necessary to weed out the perpetrators, a top company official says. “The Securities and Exchange Commission (SEC) is aware of those who are manipulating the stock market, but so far no one has been taken to task. Unless something is being done to curb this, serious investors won’t come to Sri Lanka,” Suren Madanayake, Managing Director ACL Cables PLC told the Business Times.
Highlighting the importance in weeding the manipulators, he said that this way confidence will be built in the stock market. Commenting on the ACL share Mr. Madanayake said that it hasn’t (fortunately) been in the manipulators’ radar. “Our investors are long term and not fly-by night,” he added.
He said that ACL Cables, which is celebrating its 50th anniversary this year, is eyeing diversifying into non-related areas. “We’re looking at getting into more power-related areas,” Mr. Madanayake said, noting that tourism will ‘not’ be a potential area for them as many have already invested in it.
ACL Cables PLC recorded a turnover of Rs. 5.18 billion in 2010/11 as compared to Rs. 3.49 billion in 2009/10. The company’s profits before tax recorded Rs. 33.9 million in 2010/11 after registering a loss of Rs. 146.9 million in the previous year. Meanwhile, ACL Cables Group’s profits before tax moved significantly upwards from Rs. 196 million previously to Rs. 449.7 million in the period under review.
Mr. Madanayake said that one of the most favourable developments during the year to have directly contributed to ACL’s performance has been the expansion of rural electrification efforts by the Ceylon Electricity Board (CEB). “As one of our main clients, this increase constituted an upsurge in demand for our products, thereby contributing to our improved turnover.
Accelerated infrastructural and economic development in the north and east will boost the economy further and in turn benefit ACL,” he said, adding that most of these newly developed regions will witness enhanced CEB activity and have a trickle-down effect on ACL’s operations in the future.
He added that while ACL is optimistic about future prospects for the economy, there are certain macro economic challenges that could impact the industry adversely. “The future course of government policies, taxes, legislation, etc., could impact the business in the months and years ahead. The government policy regarding the granting of duty-free facilities to the CEB for import of cables for foreign contractors has the potential to become a serious threat to the local industry, as this deters our competitiveness as foreign contractors offer lower prices,” he said, noting that this policy is skewing the level playing field unfavourably. “We sincerely hope that authorities take note of this status quo.”
The government should instead support the local industry in terms of including local materials and labour on contract projects, he explained, adding that in this manner, even if contracts are awarded to foreign contractors, conditions should be such that a certain percentage of material and labour should be sourced from within the local industry.
ACL’s copper rod manufacturing plant becoming operational during the last financial year heightens the possibility of improved future operational margins. “This backward integration will ensure that quality is controlled along the supply chain at ACL,” M. Madanayake said.
Further, the reduction in corporate tax rates by 7% to 28%, he added is a positive move by the government and will serve to enhance ACL’s growth potential in the near future. “We have our sights trained on new export markets, with plans to penetrate markets in which we already have a presence, which are Australia, New Zealand and East Africa.”
The government’s renewed commitment to infrastructure development will have positive repercussions for ACL’s business, he said, explaining that the company possesses the capacity to supply large volumes of wiring for road lighting, etc.
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