• MJF picks up Forbes 
• High on FDI in 1999 
• PERC to rescue Kandy Hotels 
• Golden handshake for Vanik top rung 
• Mind your Business 
• Renewed concerns about food security 
• Tea goes high tech at TSFL 
• Sri Lanka Growth Fund folds up 
• Redefinition for used motor vehicles 
• Less tinkering with tax in future 
• MTL gets M&S accreditation 
• Maersk Sea-Land pull out put SLPA in bad shape 
• 'NMC' to maintain quality service 
• 'NMC' to get ISO 9002 
• SCI tie-up with Sea Services 
• Mackwoods Infotech and APTECH India join hands 
• FCCISL Trade Mission to B'desh 
• "Infrastructure 2000" - Product Catalog Show 
• Ceylinco Life offers unique investment plan 
• ICASL Accounting Standards published 
• Consultancy House launched 
• LB Finance commences "Saturday Service
• Mackinnons win Gold Award 
• Another Branch for Hameedia's 
• Harcourts opens new branch 

MJF picks up Forbes

By Mel Gunasekera

The MJF Group signed an MOU with Vanik Inc. recently and a due diligence study is in progress, a senior company official said.

Under the deal, MJF is to purchase Forbes & Walker Tea broking and Forbes & Walker Produce broking. 

The deal would be structured in the form of a management buyout (MBO), with the senior managers of FWL buying 30 percent of the company and the MJF Group coming in as an investor, to inject Rs. 130 mn into the business.

The cash rich MJF Group is expected to fund the deal through internal resources.

Officials from all parties are in the process of hammering out the finer details of the deal, which is expected to be finalised this week.

The MJF Group has sought Tea Board approval to purchase the tea brokerage and the official was optimistic that they would get the green light by Monday.

"We were not looking at the deal very seriously, until it was brought to us. We feel it will add value to our core business," the official said.

Presently, the MJF Group is actively involved in the plantation business through MJF Plantations Ltd. The company formed a strategic alliances to acquire and manage Talawakelle Plantations with Hayleys Ltd and Elpitiya Plantations with Aitken Spence.

The Forbes tea broking business is heavily exposed to business from Kahawatte Plantations (which is also owned by Vanik Inc. through subsidiary Forbes Plantations) and analysts expect the company's revenues to be restricted, since the new owner of Kahawatte Plantations may not be interested in dealing with the broking house. In another related deal Vanik is also trying to sell Kahawatte Plantations to Central Highfield Pvt. Ltd. (See related story on this page).

There was also market speculation that business from Talawakelle and Elpitiya will be channelled to Forbes tea brokers.

However, MJF officials denied such rumours. "We want to develop Forbes tea broking business and bring it up to international standards."

The MJF Group is undergoing a re-structuring process which will see part of the group's companies listed on the stock exchange. The re-structuring process is being handled by Vanik Inc.

The MJF Group's core activities include: manufacture and export of tea in pre-packaged branded products; printing and packaging; real estate; agency representation of packaging machinery and material; tea and rubber plantation management; and investment and private portfolio management.

Forbes Tea Brokers opened in 1881 making it one of the oldest brokering houses in the country. The tea brokering arm is one of the three fully owned subsidies of Forbes and Walkers Ltd. Forbes Services and Forbes Commodity Brokers along with the tea broking arm engage in supplying packing material to the industry, selling tea, rubber, coconuts and spices among others.

High on FDI in 1999

While the graph is self explanatory and the accompanying table gives a summary of FDI flows in 1999, a more comprehensive inflow of FDI capital from the top 30 companies is given on page 2. 

During the past five years the implementation ratio of the approved

projects has improved by 556 or 83.7% the report added.

The number of projects in operation as a percentage of approvals in force has increased from 45% in 1994 to 62% in 1999. This has been achieved through a process of closely monitoring the implementation of projects and cancelling approvals / agreements whenever it is clearly established that a given project will not get off the ground, the report said.

The report added that 1220 enterprises operating under Section 17 of the BOI law were in commercial operation as at December 31, 1999.

However FDIs have been on average less than 1.46 per cent of gross domestic product (GDP) except in 1993 and 1994 where FDI flows were higher. 1999 is the only other exception. 

PERC to rescue Kandy Hotels

By Dinali Goonewardene

Inquiries are being made regarding the circumstances surrounding allegedly dubious financial transactions entered into by a senior executive. This was subsequent to a draft audit report released by the company's auditors.

The Sunday Times Business learns that these transactions were entered into in connection with the refurbishment of the Queens Hotel after the bomb blast in Kandy in 1998. The Management subsequently decided to refurbish the Hotel Suisse. US$ 12,300 had been allegedly spent on an overseas trip with an architect for which bills have yet to be produced, justifying a part of this expenditure. 

Inquiries have also been made about a short shipment of marble flooring which cost Rs. 689,112, purchased through local agents. Queries also included an advance of Rs. 150,000 paid for a lighting system. 

Sources said the lighting equipment had not been received by the company. Reasons had been sought for the non clearance of tableware costing the company Rs. 346,410 for which clearing charges had been incurred. The goods had not been received by the company. The senior executive has also been requested to take steps to recover funds which were with third parties, and part of the accounting and recovery has now taken place. Sources claim that a change made in the senior executive's designation has been regarded by many as dubious. 

When contacted by the Sunday Times Business,the Chairman of KHCL , Kithsiri Wanigasekera declined to comment on the issue pending the release of an audit report while company officials said the senior executive had chosen not to report to work since he was asked to explain the transactions he was involved in. However he continues to receive his salary and other emoluments.

The Securities and Exchange Commission (SEC) is not investigating KHCL. However the issue of whether disclosures regarding this should be made to shareholders of the company may arise. 

Disclosures would be necessary if pertinent to investors when investing or divesting shares. Issues of transparency may also warrant shareholders being informed. The majority stakeholder of KHCL is the Ceylon Hotels Corporation which controls 67.9 percent of the voting rights of the company. 

The board of directors of KHCL includes Kithsiri Wanigasekera (Chairman), Upali Senanayake, M Ariyanathan, Ariya Senanayake, Neranjan Wijeyaratne and M P Jayasinghe. Minority shareholders include the East West Group with 16.29 percent of voting rights and individual and corporate shareholders who control 15.8 percent of voting rights.

Kahawatte to go

Golden handshake for Vanik top rung 

Forbes Plantations which owns Kahawatte Plantations, will change hands with Central Highfield (Pvt) Ltd for Rs. 250 mn.

The deal is awaiting clearance from the Tea Plantation Investment Trust Plc UK, who own 33 percent of Forbes Plantations. The golden shareholder (the government) has already given the approval and the deal is expected to go through by Tuesday.

Central Highfield, a relatively new company, came into the limelight to bid for Elkaduwa Plantations a few years ago. The company's directors include Nimal Silva (Planter), Hema Kotagama (Planter), I V A Gunatillake (Accountant) and Pushya Gunawardene (Accountant). 

The company is expected to finance the deal from overseas funds (Rs. 105 mn) and the balance through a convertible debenture issued by Mr. Nahil Wijesuriya, East West chairman and majority stakeholder in Vanik. Incidentally, Wijesuriya was involved with the company when it bid for Elkaduwa, but sold out when they failed to secure the bid.

Vanik Incorporation will announce its long awaited re-structuring package next week. Vanik chief Justin Meegoda was unavailable for comment, but an official said the package would include a staff re-trenchment package.

The Sunday Times Business learns that the retrenchment package is mainly aimed at very senior company executives or the 'super stars'. Mr. Meegoda himself has said that Vanik is 'top heavy and unless they go, things won't move', sources said.

Meegoda had also said that Vanik will not close down any of their operations, which includes the Vanik Windows (branches) outstations. However, if a Vanik Window does not perform, it may likely be closed down, sources said.

The package is to be announced next week and the staff given a week to decide on their future. 

Mind your Business 

By Business Bug

Defaulters to be netted

Now the dragnet to detect them has been thrown far and wide, we hear.

Many offenders have been detected and they include some big names in the garment industry, they say. Of course, some have used the ruse of employing workers on a temporary basis and then renewing their contracts but even they would be charged.

Consumers gass up 

Now we hear of another consumer group preparing to do battle with the monopoly gas distributor- for allegedly selling underweight gas cylinders.

Consumers allege the amount of gas in the cylinder was reduced- overtly for safety reasons and to maintain standards- but not adequate publicity was given to this which in effect, was a price hike because a lesser amount of gas was sold for the same price.

Later the price was increased- this time, with publicity- and then the strategy came to light. The company may be having their explanation of course, but we might soon see the issue being dragged into court.

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