New fund takes over textile
debts
By Mel Gunasekera
A special fund to take over debts of ailing domestic
textile firms and an incentive package for new investment are some of the
measures the government has taken to rejuvenate the industry.
The Textile Debt Recovery Fund (TDFR) will assume all outstanding long
and medium term overdrafts, trust receipts, import loans and discounted
bills of textile firms as of October 31, 1997 together with accrued interest.
Companies investing to modernise will be given BOI concessions and stop
gap arrangements have also been made to off-take stocks until quality improves
to export standards.
In a circular to the textile manufacturers, Deputy Secretary Treasury
Dr. P B Jayasundara said, manufacturers will not liable to pay interest
on such loans, once they are transferred to the Fund.
However, manufacturers have to pay back the principal amounts to the
relevant commercial banks after a three-year grace period, reckoned from
the date of transfer of debt to the TDRF.
For this purpose, each manufacturer is required to enter into a new
agreement guaranteeing such a payment. Depending on the size of the debt,
a maximum period of seven years will be granted to repay such loans.
"This period will be decided on a case by case basis," Dr.
Jayasundera said.
Upon the transfer of debt to the Fund, the banks will be in a position
to extend further financial assistance to modernise and restructure the
industry taking into consideration the collateral and mortgages already
furnished as security for previous loans.
"This would relieve the manufacturers from the interest burden
and cash flow problems for three years, and will enable the banks to inject
much needed capital for modernisation programmes," a leading textile
manufacturer said.
Companies wanting to modernise have to submit a restructuring proposal
to their bank and the BOI.
"A collective effort will be made by the government agencies including
the Treasury, the BOI and banks to hasten the process of approval,"
Dr. Jayasundara told the textile firms.
With a minimum additional investment of Rs. 5 mn, BOI status would be
granted to such manufacturers without any liability for undertaking exports
either directly or indirectly.
An income tax of only 15 per cent would be levied on all profits.
However, if any manufacturer reaches a minimum of 50 per cent exports
direct or indirect, the BOI would grant additional incentives.
To ensure availability of a market until the products reach a quality
status for international marketing, commencing 1st January 1999, selected
manufacturers will be entrusted to cater to the domestic requirement of
school material, uniform material for service personnel and textile products
such as bandages and gauze for the health sector.
A Domestic Textile Allocation Committee (DTAC) is to be set up to assess
the fabric requirement of government institutions and identify the manufacturers
to whom the allocation would be made on a quota basis.
In addition to these provisions, statutory dues like EPF and ETF liabilities
are to be rescheduled with the approval of the Labour Commissioner.
The Commissioner General of Inland Revenue is also requested to release
turnover tax refunds due to the manufacturers with immediate effect.
Weavers will have to bear all other liabilities payable to government
agencies, except bills payable to Sri Lanka Telecom, which will be re-negotiated
by the Treasury.
Meanwhile the textile industry has also made additional requests which
were not within the approved package, The Sunday Times Business learns.
They are exploring the possibility of getting a refund of the duty and
turnover tax paid on the stock that were in the hands of manufacturers
as of October 31, 1997, and ways of assisting manufacturers who will not
be benefiting as a result of the debt transfer.
"We are thankful to the government and relevant officials for doing
an excellent job to restructures our industry," one textile maker
said.
MBSL faces overhaul
By Ruvini Jayasinghe and Asantha Sirimanne
TheMerchant Bank of Sri Lanka (MBSL) is to undergo
a major restructuring progra-mme in the near future.
"We are studying a proposal to restructure the bank," MBSL
Chairperson Dayani de Silva told The Sunday Times Business. "We are
mindful of the losses and are taking action to turn it around."
There was speculation that the troubled bank was heading for a financial
and management overhaul with three top managers being issued marching orders.
There were moves by foreign and local investors to buy a 35 per cent
stake in Merchant Bank, and some believed that the Public Enterprise Reform
Commission may be brought into assist in the exercise.
MBSL was at one time the development banking arm of Bank of Ceylon,
but MBSL underwent what it called a 'self privatization' process under
its then Chief Executive Justin Meegoda, becoming an associate company
of the BoC. MBSL shares soon became much-sought-after blue chip.
However in recent times the company had become a chronic loss maker,
believed to be saddled with still more unrealized losses. A few years ago
an under-subscribed Rs. 800 mn rights issue forced BoC to take up the slack,
once more making MBSL a subsidiary of it.
During the interest rates crises in 1994-95 the BoC had to step in with
a Rs 1,800 mn debentures and other long term funds to match its maturities
and reduce interest rate exposure.
MBSL shares have fallen from a high of Rs 168 in Feb. 1994 to Rs. 7
last Thursday. Trading was suspended at the bank's own request on Friday.
According to its third quarter unaudited results for 1997, the bank
lost of Rs 149 mn for the nine months and is carrying forward losses of
Rs 108 mn.
MIND YOUR BUSINESS
By Business Bug
T and strikes
Almost everybody is back at work and all's-well...that... ends-well
for the plantation strike, or so it seems.
But that may not be the case as wily Mr.T is all set to strike again.
The strategy, Mr.T told some of his advisors last week who asked him
why he settled for four rupees less, was to ''take what is given and then
ask for more''.
What does that mean, T-man was asked.
"That," said T-man with a twinkle in his eye, "means
we will strike again later this year!"
Going abroad
Tourist arrivals may be on the decline, falling even lower whenever
a bomb explodes in the city.
But it is a fact that it is the small and medium scale hotelier that
it hurt most.
The blue chips in the hospitality trade somehow break even, what with
special promotions, seminars and weddings all helping the turnover. So,
they were not unduly worried until now. But the moratorium on new hotel
projects has changed all that.
The only option, one blue chip has decided, is to go for resorts in
neighbouring tourist hot spots - Goa and the Maldives.......
Hi-tech rating as you watch TV
Sri Lanka's youngest market research firm is planning
to introduce electronic rating of TV programmes here.
"With the introduction of many private TV channels the accuracy
in which audience is measured is critical," says Joint Managing Director
of ORG-Marg Smart Harsha de Silva.
The company is a joint venture with ORG Marg of India, which is said
to be the largest market research agency in India.
"Companies want to make the most of advertising expenditure and
the agencies want companies to devise the most effective media plans."
ORG Marg estimates last year's adspend on TV to have neared Rs 1 bn.
At present TV ratings are provided by the diary method, where households
in the survey sample are asked to log the programmes they watch.
Sunil Maloo, Executive Director of Media Research at ORG-Marg India
says the diaries are filled by the audience out of memory, not always when
they are viewing the programme. People also tended to change channels when
commercials came on, especially in households with remote controlled TVs.
"Just because someone watched a programme from 8.30 to 9 it does
not mean he also watched the commercials," he says.
The rating meter used by ORG-Marg made by AGB- Taylor Nelson is now
used in 22 other countries. The meter has a probe which is connected to
the oscillator of the TV receiver. It will recognise the TV station being
viewed by the active frequency in the receiver.
The monitor, called a Peoplemeter is a development from an earlier instrument
called Setmeter, without most of the inherent drawbacks contained in it.
With the introduction of digital and cable TV it is now possible to
pipe several programmes on the same frequency, requiring sophisticated
tracking systems which match images to identify the channel.
But the Peoplemeter allows each family member to individually register
themselves before starting to view, using a remote key pad.
It will keep track of the channel being watched and any channel changes
to the accuracy to a few seconds
"The need for such a system is now being felt for media buyers
as well as those who own the media," says MTV channel Chief Executive
Gautam Radia.
"We need to know what kind of programmes people want to watch."
Mr. Maloo says programmes which had a high rating in a diary method
will tend to have lower ratings in the electronic ratings. Programmes with
marginal ratings would have higher ratings when measured electronically.
They could also keep tabs on time shifted viewing where people record
programmes and then view later.
Joint Managing Director Janaki de Silva says electronic rating would
be kicked off initially in the Colombo district.
More Business * 42 jobless after SDA shake-up
* A disappointing agriculture * Hotelier hits out at BA * CB's enhanced
seignorage
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