Livestock IPO's await approval

The sale of 90 per cent shares in Ambewela Livestock Company Limited (ALCL) and Pattipola Livestock Company Limited (PLCL) is awaiting parliamentary ratification.

PERC officials said that under the government's privatisation process, the sale was approved but had to be submitted to parliament for ratification.

They said that a decision could be expected this week, after which the results of the bids could be announced.

PERC documents state that DAP Management Consulting, Kotmale Holdings Limited, Malwatte Valley Plantations Limited, Newdale Dairies Limited and Lanka Milk Foods (CWE) Limited have been invited to submit bids before December 10, 1999 for both companies.

PERC documents also say that the two National Livestock Development Board's farms Ambewela and New Zealand will be converted to limited liability companies for privatisation.

The farms moveable assets will be transferred to the company along with a 50 year lease for the land.

Fact file

ALCL

Location : Nuwara Eliya

Land : 880 acres

Elevation : 1,830 meters

PROPOSED BALANCE SHEET (as at 31/12/98)

(Rs. million)

Moveable assets : 7.7 mn

Leasehold rights : 191

Goodwill on conversion : 19.1

Current assets : 7.3

Current liabilities : (33.8)

Long term & deferred liabilities : (161.3)

Share capital : 30

PLCL

Location : Nuwara Eliya

Land : 545 acres

Elevation : 2,100 metres

PROPOSED BALANCE SHEET (as at 31/12/98)

(Rs. million)

Moveable assets : 4.5

Leasehold rights : 171

Goodwill on conversion : 13.1

Current assets : 10.2

Current liabilities : (30.3)

Long term & deferred liabilities : (104.6)

Share capital : 10

Source PERC

Revenue protection unit to be set up

A Revenue Protection Unit (RPU) is due to be set up in an effort to increase revenue collection through better enforcement of tax laws and speedy collection of taxes. The budget proposal will be operational, as soon as the logistics are in place, Inland Revenue officials said.

The revenue protection unit will comprise representatives from the Board of Investment, Department of Customs and the Inland Revenue department. While strengthening revenue laws and preventing abuse, the RPU will ensure that revenue due to the government is collected on a systematic basis and disputes resolved fast.

The budget described the move to set up the RPU as being important as many industries which enjoy Board Of Investment (BOI) concessions do not come under the purview of the revenue authorities. This appears to be an attempt to limit revenue leakages resulting from concessions given to industries under the BOI. Among the concessions being withdrawn through this budget, from such industries is the withdrawal of the facilty to import project related duty free goods from non- exporting companies. Import duty concessions will not be granted for items on the negative list of the Indo-Lanka Free Trade Agreement. This seeks to protect local industries but exceptions will be made if quality standards cannot be met locally.

A tax holiday had previously been granted to large scale projects investing a minimum of Rs 500 mn. This too has been replaced with a 15 per cent tax rate for non- export oriented projects. This applies to investments within a Rs 500 mn to Rs 3499 mn range.

Opinions divided on FTA benefits

When the long over- due and much spoken about Indo-Lanka Free Trade Agreement (FTA) was finaly ratified recently it left many wondering if it was worth all that hype.

Trade officials say that the FTA is much ado about nothing as according to them it is only a stepping stone or the first step towards the South Asian Free Trade Agreement (SAFTA). They said that although thousands of products would qualify for duty concessions, only a few items really made a difference to our bottom line at present.

Local exports to India stand at Rs. 2.43 million or 0.8 per cent of total exports as at 1998. Officials said that most the FTA would do would be to increase exports to India from 0.8 per cent to a little over an average of 1 per cent with the FTA coming to effect within the next five years.

Economists said that the FTA agreement did not have many short term benefits, but feel that it would be an ideal opportunity for small and medium scale exporters to gain a new market. They also said that it would give Sri Lanka a head start in establishing itself in the SAARC regions largest trading body, prior to the SAFTA agreement. They said that the main expectation from the FTA would be to attract foreign investment to set up production facilities here for export.

The government of Sri Lanka on the other hand believes that the agreement will provide considerable benefits to the Sri Lankan economy. In last week's budget presentation, the president said that the inflow of Indian raw materials on a duty free basis would assist Sri Lankan industries to reduce cost and increase profitability. In addition, officials said that the actual potential in the agreement would come from the not so likely exports to India.

However, in terms of the agreement, India will remove its customs tariff over a period of three years subject to a negative list and will allow Sri Lanka duty free access to the Indian market. In return, Sri Lanka will remove tariffs on imports from India over a period of eight years subject to a negative list. Domestic value addition of 35 per cent is required for products that will qualify for concessions under this agreement. Government officials feel that this would protect local industries, which are not ready to compete with imports on a duty free basis.

Sri Lanka has included all agricultural products including fisheries and livestock products and selected industrial products in the negative list.

Cornel Perera case

Preliminary objections rejected

The Court of Appeal recently rejected the preliminary objections raised by Mitsui and Company Ltd, its nominee directors and secretary to the treasury and officials and ordered that contempt of court proceedings instituted by Cornel and Company Ltd (CCL) be allowed to proceed.

CCL instituted action in the District Court of Colombo against Mitsui and Company Ltd and Taisei Corporation preventing them from complying with the terms and conditions of an agreement entered into, behind the back of CCL, who were responsible for the erection and construction of the Hilton Hotel. The agreement contained provisions to pay Mitsui and Company and Taisei Corporation large sums of money. After an inquiry the District Judge issued an interim injunction preventing Mitsui and Company Ltd and Taisei Corporation from implementing the provisions of the agreement.

Subsequently Mitsui and Company Ltd and Taisei Corporation received an instalment under the agreement. Consequently, Cornel and Company instituted contempt proceedings in the Court of Appeal against Mitsui and Company Ltd, Taisei Corporation and their nominee directors. CCL also charged B C Perera, Secretary to the Treasury, Daya Liyanage, Deputy Secretary to the Treasury and Dr P B Jayasundara, Deputy Secretary to the Treasury for contempt for aiding and abetting the breach of an interim injunction. Daya Liyanage and Dr, P B Jayasundara were nominees of the government of Sri Lanka on the board of Hotel Developers (Lanka ) Ltd.

It was alleged by CCL that the treasury bosses had knowledge of the interim injunction when they authorised payments which were contrary to the terms of the interim injunctions.

The defence for Mitsui and Company Ltd and Taisei Corporation took up preliminary objections stating that the charge was defective and the injunction was very wide and the injunction was not capable of giving effect to and moved that the contempt proceedings be terminated.

However Appeal Court Judge C V Wigneswaran delivered judgment holding that the contempt proceedings were valid and the preliminary objections raised by the respondents appear to be dilatory tactics.

This case is linked to the Hilton Hotel case where it was alleged that two floors which were detailed in the construction agreement of Hilton Hotel had not been constructed. It was subsequently established by architects of a government commission that the floors had been constructed. Subsequently an agreement was entered in to which detailed settlements to be made to Mitsui and Company Ltd and Taisei Corporation but an injunction was obtained from CCL preventing its implementation.

S Sivarasa,PC, S L Gunasekera, S Mahen-thiran and Nihal Fer-nando appeared for the Plaintiff-Respondent-Petitioner.

K Kanag-Iswaran, PC, Harsha Cabraal and M A Sumanthiran appeared for Mitsui and Company Ltd, Taisei Corporation and its nominee directors.

K C Kamala-sabayson, P C, S G, with S Fernando SC appeared for the treasury officials.

Mind Your Business

By Business Bug

Did the good professor know ?

So, Madam surprised all with a sudden decision to read the budget herself, taking almost everyone except a trusted few unawares. No one in the Treasury knew and they were burning the midnight oil, explaining the intricacies of the economy to the good professor of law.

The question everyone was asking was whether the professor knew and indeed he did: it was apparently he who explained the finer points to the lady who charmed all and sundry- even the greens- with her solo performance.

Teller machines takes it toll

A private bank which pioneered the automatic teller concept in the country is earning the wrath of customers over the recent performance of these machines. Some of the machines are more out of order than functional and has led to numerous complaints and even some account closures.

The bank wants to overhaul the entire system but- having done so only recently — the cost of doing it again is said to be prohibitively high but until then customers will continue to become 'upset!'.

Big birds do cry

The airline which recently changed its name to sound more national is grumbling about the pricing of tickets. Some rivals are offering cut-price tickets to popular destinations and the bird of paradise is apparently feeling the pinch, though it is true that turnover and profits are on the rise. So the bird is lobbying the governing authorities to impose more stringent controls over pricing — or appoint a regulating authority.

Market Report

Financial reforms pep up market

By Dinali Goonewardene

The market reacted positively to further liberalisation of the financial services sector. The banks, financial and insurance sector gained 9.5 points this week to close at 1205.8. The budget unveiled proposals to make medical and life insurance premiums deductible against taxable income while permitting foreign investment in unit trusts, increasing the permissible stake of foreign holdings in banks to 60 per cent and 100 per cent in the case of stock broking firms.

However the generally sluggish economic conditions have curtailed broader market performance. Average turnover for the week was Rs. 55.5 mn. The All Share Price Index rose .001 per cent to close at 558.3 while the Milanka Price Index also gained marginally by 0.2 per cent to register 926.5. Foreign sales reached a fever pitch of Rs 110 mn on Thursday when large parcels of John Keells Holdings and DFCC Bank were sold. However net foreign outflows for the week were Rs 109.5 mn.

"Though the government presented a reasonably long term growth oriented budget we remain concerned of its ability to meet fairly ambitious revenue growth targets," Head of Research, Asia Securities, Dushyanth Wijaysingha said. "However we also feel that a likelihood of capital spending falling short of budgetary targets should still enable the government to keep its fiscal targets within reasonably acceptable limits," he said

"The financial sector, the most vibrant sector of the Colombo Stock Exchange is likely to be driven by the insurance sector." Head of Research, MMBL Phillip Securities, Nouzab Fareed said. This coupled with other incentives to foreign investors will push the market up, he predicted.

LB Finance branching out

LB Finance has opened a branch in Badulla. The Badulla branch will offer the full range of LB Finance's principal lines of business - from the acceptance of deposits, leasing, hire purchase, real estate, mortgages and pawn broking to letters of guarantee, a company release said.

The company which was incorporated in 1971 was quoted in the Colombo Stock Exchange in 1998. Its share capital which stood at Rs. 6 million in its first formative decades has increased to Rs. 135 million, while its deposit base has moved up, over the one billion rupee mark.

BoC extends its protective arms to cover children

The Bank of Ceylon will donate insurance benefits to one million children below 18 years of age within the course of this year. The Bank has joined hands with Sri Lanka Insurance Corporation in this trail-blazing endeavour, which exemplifies the Bank's care and commitment to the welfare of the children, who no doubt are an asset to a Nation.

The Bank intends to attain the targeted 1,000,000 mark by extending the "Ran Kekulu" Children's Savings Account Scheme, which has mobilized deposits amounting to Rs. 3.9 billion through 700,000 accounts.

The extension has produced two types of savings products - namely 'Ran Kekulu" Millennium Acccounts and "Ran Kekulu" Millennium Plus Accounts which were introduced to the market at the dawn of the New Millennium on 1st January 2000, the press release said.

"Ran Kekulu" Millennium Accounts have been specifically designed with the unique "Millennium" Babies who were born on January 1, 2000.

The initial deposit required to open the account will be provided by the Bank and the amount denominated is Rs. 500 per account.

A special feature of the account is that it offers a special 5% Millennium Bonus (subject to a maximum of Rs. 500 per annum) in addition to the usual annual interest on deposits if the annual deposits to the account exceeds Rs. 2,000 during the period January 2000 to December 2004.

Further, each account holder will be awarded with an attractive docket to hold the savings passbook and an infant information chart.

Tea Update

Colombo scores over Kenya

By Shafraz Farook

Tea prices in the Colombo auctions are likely to gain significantly, as a slow recovery is predicted for the Kenyan tea plantations. Dry weather conditions and severe frost has from the beginning of this year affected the Kenyan crop very badly.

According to Asia Siyaka, preliminary indications are that frost and the subsequent hailstorm may have damaged 20,000 – 40,000 hectares of tea or approximately 17 per cent to 30 per cent of the area under tea.

This shortage of tea has pushed up prices at the Mombassa Tea Auctions significantly.

In addition, slack markets like Jakarta are witnessing significant price improvements.

Due to these reasons brokers feel that the shortage would fetch better prices during this year.

In addition, Forbes and Walkers said they understood that improved demand was likely from Pakistan possibly following lower inventory levels and Egypt due to colder weather conditions.

However, in the local auctions, a mixed market saw better teas commanding a premium price for the second week running.

This condition has widened the price difference between the best and the other teas. Officials said that this was very encouraging, especially for those producing better quality teas.

International Trade Services on the fast track

ANZ Grindlays Bank has redesigned its International Trade Services unit. Clients will now have a Trade Relations Manager who will deal with all their trade finance business requirements ranging from import and export documentary credits, import and export collections, shipping guarantees etc.

Customers will also be offered a complete solution to their overall trade finance business needs. The service will revolve round limits, pricing and speed of delivery. ANZ Grindlays Electronic 'Desk Top' banking package, known as ANZLINK, which is also offered as part of the selected suite of trade products and services will allow customers to work from the comfort of their offices, as this package is linked directly to the Grindlays Trade Services system, the press release said.

Dialog GSM launches e-volution range of services

Dialog GSM, Sri Lanka's premier cellular service provider is set to revolutionalise mobile telephony in Sri Lanka with the launch of the e-volution range of interactive mobile services. e-volution brings a range of interactive e-commerce services to Dialog GSM cellular phones say a company news release.

Subscribers to the service will now be able to check their bank balance, transfer funds, obtain mini statements etc., as well as obtain latest (live) stock prices from the Colombo Stock Exchange (CSE), foreign exchange rates and other information from their Dialog GSM handsets.

The e-volution range of services from Dialog also enables subscribers to send short email messages or fax messages directly from any Dialog GSM handset to any part of the world.

Dialog has branded its latest ground breaking set of services as e-volution in line with the evolution of existing services to the era of moblie e-commerce.

Speaking on the vision behind e-volution, the Chief Executive of Dialog GSM pointed out that interactive e-commerce applications on the GSM handset was the first step in the direction of the next generation of GSM services and is being pioneered in Sri Lanka well ahead of other countries in the region.

He further stressed, that the scope of the e-volution range was unbounded and that Dialog would continuously improve and extend its portfolio of mobile e-commerce solutions in line with the latest generation of GSM equipment.

"e-volution has been designed and developed with the objective of empowering our customers to derive maximum value from their Dialog GSM handset - in fact to allow our customers to carry out most essential transactions whilst on the move.

It is important that we enhance the capability of the Dialog GSM handset to be a total communication tool - we are committed to this vision and we have spent time and effort in designing and implementing these state of the art services which are found only in a few countries across the world".

Mrs. Anoja Obeyesekere Head of the Company's Corporate Development and International Roaming Division, explained that the company had pioneered advanced text services during the latter part of 1998 - "We have been providing email notification and stock market as well as forex updates for some time now - the rapid growth in demand for these services encouraged us to take the next step - we realised customers required the convenience of sending short emails and fax messages while on the move directly from any GSM handset - also customers would much rather receive information when they really require it - on demand - rather than when it is transmitted by us.

New Aquafresh toothbrush

A toothbrush with an exclusive feature, the Aquafresh Toothbrush was introduced recently. The Aquafresh Toothbrush is an international brand of Smithkline & Beecham which is marketed in over sixty countries. In fact it has succeeded in becoming the market leader in Europe.

"The Aquafresh Toothbrush has round ended bristles, a rubberised handle and a unique flexible neck which exerts less pressure, so it gently massages your gums while giving your teeth a thorough cleaning," says a news relese.

Maliban Biscuits to tempt palate

Mailban Biscuits, is ready to give the Indian consumer a taste of the perfect biscuit. Starting January 2000, Maliban will export their range of biscuits throughout Chennai.

The Maliban Company is the market leader in Sri Lanka, with a commanding 70% market share. The success in exports to Canada, New Zealand, Russia the Middle East and Maldives has been good. And now thanks to massive investments in machinery, Maliban is ready to meet the quantity demanded by the Indian market, says a company news release.

The company's origins date back to Mr. A.G. Hinniappuhamy. Starting off with a modest tea kiosk, the founder, a youth then, soon experienced success and expanded to a small hotel he named Maliban Hotels Limited.

Picture future

Acme Foto took a leap into the future last week with an investment of Rs. 10 million when it took charge of Sri Lanka's first Digital Minilab from Hayleys Photoprint.

Company officials said that the Minilab, the first of its kind in Sri Lanka, offered unmatched quality prints in addition to a host of others.

Hayleys Photoprint's Director/GM, Ashan Aeyesundere said that Fuji's Frontier 350 Minilab represented the highest print quality standards in the photography industry worldwide. He said that one of the unique features of the Minilab was that in addition to processing regular film, it also accepted a wide range of digital sources, including digital files on CD-ROMs, floppy disks, PC cards and other removable data storage media.

He added that the Minilab could also print from slid film, Advanced Photo Systems (APS) film and even printed photographs. He also said that the Minilab could adjust the image to bring out the best in the picture.

However, he said that it would take some time before the process caught on since the Sri Lankan consumer was a little slow on embracing new technology at the present accelerated pace. But he also said that since the future was digital, Acme Foto would have an edge over its competititors.

Rational Software for software developers

Rational Software Corporation (Pvt) Ltd., is a provider of resources to develop the link between man and machine in the 21 century. Software is the interpreter of man's requirements to his machine. And hence, representatives from the Rational Software Corporation (India) were here recently promoting Rational's range of software for software development as part of their promotional campaign in the SAARC region.

Company officials claim that Rational was the only company to offer software that covered the entire life-cycle of software development.

The company's Country Manager for the SAARC region, M.K. Baratee said that Rational's range of software would help increase the success rate of software development from the estimated 26 percent in the world today. He said that most software developers fail in their pursuits due to over run cost estimates and time estimates. He said that since Rational's range of software was developed based on best practices in developing software, software developers would have a professional guide to their work. According to him Rational's range of software allows each level in a typical software development company to integrate and work simultaneously, whereas other software used for software development could not.

He said that that since we live in a world that is becoming more and more dependant on software, developing and deploying quality software efficiently, reliably and quickly was important to gain a crucial competitive edge.

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