Corporate Sri Lanka needs a shake-up
Colombo's bourse has been behaving like a yo-yo in recent months particularly after the United National Front won power at last December's parliamentary polls.

The stockmarket has risen to amazingly high levels, faltered and then got into stride again - all of which have created some concern for confused small investors. Last week the market rose due to big players like US-based Sri Lankan investor Raj Rajaratnam raising his stake in Commercial Bank to become its third largest shareholder, amongst other deals.

Over the years, the market has attracted big names like foreign investors David Watts, George Robinson, Azmi Wan Hamza and Ted Buchanan, and among locals, Sohli Captain, M.M. Udeshi, Harry Jayawardene, F.A. Yaseem and in recent times, Nahil Wijesuriya and Dhammika Perera. Among Sri Lankans living abroad, Dr Sena Yaddehige (based in London) and Rajaratnam have figured prominently.

In the past few years when the chips were down at the bourse due to civil strife, Captain and Udeshi were the most prominent investors. The now topsy-turvy behaviour of the Colombo bourse has raised many questions with one of the issues of concern being -should well-run companies be subject to raids and how are the interests of minority shareholders looked after in the process?

Raids on Richard Peiris and Asia Capital are currently the subject of probes by the Securities and Exchange Commission (SEC) and a series of court battles between the two "warring" factions. Many similar raids have occurred in the past and many more are to come if the peace process takes off and local and foreign investors swarm the market.

Should there be safeguards or shouldn't the market be allowed to freely operate as it does in other markets like the US, Singapore or Hong Kong? While big investors are convinced that too much regulation will kill a market that can soar if absolute peace is achieved, small investors express concern that they would be gobbled up by the big players. It's somewhat similar to the dilemma of globalisation and small farmers.

On the other hand questions are being raised as to whether Sri Lanka's big corporates are well managed, transparent and don't hide under weird accounting lingo meant to confuse investors. This is particularly relevant in the context of the Enron and WorldCom scam that shocked the investor world and showed that well-managed companies had many things to hide.

As this newspaper has repeatedly pointed out, there are a few "Enron's" in Sri Lanka too who have resorted to dodgy accounting practices. There are cases of big corporate executives even claiming for fitting light bulbs at home - not shown in the accounts - while having access to huge entertainment budgets.

There was a case of how a local conglomerate lost millions in a fraud by an accountant but hid the losses from shareholders through dexterous accounting to avoid exposure. There are other ways of fudging accounts like directors renting their houses to company colleagues and collecting a fat fee or transferring profits to loss-making companies in large groups of companies. Another tactic is in the use of emoluments paid to directors.

Management fees which run into millions of rupees is also a bone of contention amongst shareholders. Why should a company charge a management fee to run its affairs? Good point indeed but rejected by the big corporates with lengthy explanations. Shareholders are constantly complaining that their queries are not answered at board meetings.

In a way, big players could rejuvenate the stockmarket and keep companies on their toes instead of often being the exclusive preserve of a few directors. But it is also essential to recognize minority shareholders and ensure a director on the board represents minority interests in addition to regular meetings being held between management and this segment of shareholders. This is one way of winning the hearts and minds of small investors.

Geo-tourism soon Lanka's latest attraction
The Geological Survey and Mines Bureau wants to promote geo-tourism and has prepared a map of 201 sites of geological value that it hopes will become a draw among local and foreign tourists.

"We want to popularise these sites mainly among specialised audiences such as students and foreign scientists to encourage them to visit the sites," said Janapriya de Silva, chairman of the bureau. The map, and an accompanying brochure, will help tourists get a better idea of the island's geological structure and how it was formed, he said.

The bureau hopes to get the support of the Tourist Board and the Archaeology Department to conserve the sites and ensure they are protected. Geo-tourism is a new concept in tourism much like eco-tourism, which is designed to draw visitors interested in the island's flora and fauna.

Among the sites of importance in this section of the map is Panirendawa, the biggest iron ore deposit found in the island and used in historical periods to produce iron ore. The deposit itself is below the surface but large heaps of iron slag and parts of a clay furnace used during this period can be seen scattered over the area.

Other sites of interest are Marawila, where silica sand deposits used by the glass industry are found, and the sandstone, siltstone and mudstone beds exposed on the left bank of the Tabbowa tank. Even preserved fossils of the remains of plants can be seen in the mudstone.

At Aruakalu there is limestone belonging to the Miocene period in a narrow belt extending from Puttalam to Jaffna. Exposed limestone can be seen at the quarry site operated by Puttalam Cement.

Map courtesy of the Geological Survey and Mines Bureau.
Reproduced by M.A. Pushpakumara.

Markets and marketing for entrepreneurs - VIII

How do I talk to customers?
By Nilooka Dissanayake
We began this series of articles discussing how one can select a business idea. Then, to aid the process and to help you get started in putting your ideas together into a workable business plan, we talked about marketing. We discussed the 4Ps - namely product, price, place and promotion. Today's subject is on promotion.

Promotion in the context of the 4Ps in marketing refers to the way we tell our customers and prospects about our product or service.

Think of how companies you know tell us about their products or services. It is most likely that you began with "advertising." But, are you correct in this answer? You are correct, but not complete. Advertising is just one element of our marketing communication process. The other elements are personal selling, sales promotion and publicity. All your answers on how companies communicate will fall into one of these four activities. Let us take them one by one.

Advertising being uppermost in your mind, dear reader is because living in this day and age you are drowning in it. A drowning man does not forget the water. Switch on your radio and you hear jingles and cleverly worded advertisements. Turn on the television and you are amused, bored, angered or exasperated by advertisements according to your temperament and the budget of the advertiser. Try reading the paper, in print form or on the Internet and you come across advertising. Same if you flip through a magazine. In the words of the world-renowned guru of marketing, Philip Kotler, advertising is "any paid form of non-personal presentation and promotion of ideas, goods or services by an identified sponsor".

Personal selling, on the other hand, is the presentation of a product or service in a one to one contact. The insurance salesman or the direct marketer carrying a bagful of products is personally selling you a service and product. You will find it interesting to know that some companies thrive fully on direct selling with no support from advertising.

Oriflame is one such company. Oriflame sales people who are referred to as associates, sell Oriflame's personal care products and cosmetics to known people, friends, family and colleagues. It is Oriflame policy never to sell through shops and outlets. According to Martin Lundvall, the Managing Director of Oriflame in Sri Lanka, millions of associates working this way in over 60 countries make Oriflame, a Swedish company, one of the fastest growing cosmetics companies in the world. So, why not think of direct selling as an option when planning your business?

Sales promotion, (not to be confused with promotion mentioned above), means offering short-term incentives to encourage purchase or sales decisions. The most familiar example is offering "sale" prices or discounts. Buy-one-get-one-free offers, eligibility for a raffle draw on purchase, seasonal or pre-budget prices and such offers are part of sales promotion campaigns. While advertising is an age-old industry, sales promotion techniques are still at a young and dynamic stage in their evolution. Everyday we see new kinds of promotions. Let us keep our minds alert to benefit from the creative brains of other marketers. You can then come up with ideas of your own how best to market your own business and products.

Publicity is also exposure of the product or service to prospects through the media. But, the difference is that publicity involves no payment for the airtime or print space. For example, imagine a bank opening a new branch. Firstly, a full page in a paper will announce this. That is advertising.

But, at the branch opening there is a ceremony. Prominent personages are invited as well as the press and media people. There is ""kiribath"," ribbon cutting and speeches. From that day for at least a month, newspapers, radio and television news, magazines will deliver as news the same occurrence. The bank, depending upon how imaginative their creative people and the advertising and PR agency will contrive to make the event news worthy. That is publicity.

We do grave injustice to 4Ps and especially promotion if we finish our discussion thus. My objective so far has been to prompt you, the would-be entrepreneur to put on your thinking cap on how to market your business idea. I wanted to remind you the many and wonderful alternatives which we often tend to forget.

Picking a business idea is a difficult task, especially for those without prior business experience. If you are still looking for an idea, my objective was to show you the possibilities as well as the limits of impossibility. If you are now better able to pick and fine-tune an idea for your dream business, my goal is achieved.

From next week, we revert to business planning. I look forward to hearing your progress on this front and the difficulties you encounter. You can reach us on btimes@wijeya.lk or 074-304100.

Tractor whiz kid aims for mini bus
An enterprising young Sri Lankan engineer who has produced a revolutionary tractor is now setting his sights on a mini-bus.

Sunil Withanachchi from Galle said an interest free loan of Rs. 500,000 has been given by the government to improve his tractor business. "If some institution helps me further I can go ahead with plans to build a 15-seater mini bus," he said.

Withanachchi has produced a high-tech, low cost tractor called Hardymec which is set to create a revolution in the agriculture and transport sector in the country. His company, SD Technofab, has produced tractors from local materials except the engine which is imported from China.

According to Withanachchi, the tractor costs Rs. 295,000 compared to the imported tractor which is marketed at around Rs. 375,000 while fuel consumption is at 35 kmph per gallon against the normal tractor consumption of 10 kmph per gallon.

The unique feature in this tractor apart from the usual 12 horsepower engine, gearbox, accelerator and signal lights is a car-like steering wheel.

Many institutes like the Ceylon Electricity Board, Sri Lanka Telecom, and Pradeshiya Sabhas in Galle district have shown interest in the tractor. Vanik Inc. has agreed to help the company and act as the marketing agent.

Thusitha Hewakurumburage, Vanik's Senior Manager, Merchant Banking, said the objective is to help inventors to create a viable market for products like this.

He said this product would be promoted as a commercial product in Sri Lanka.

Back to Top

Back to Business

Copyright © 2001 Wijeya Newspapers Ltd. All rights reserved.
Webmaster