Sri Lanka Newspapers - 08/01/2012

Carsons Management expect property values to rise

Equity One PLC, the Carsons controlled property developer, has expressed optimism of potential value enhancement of its properties in terms of increased rental yields and capital appreciation in the context of the country’s economic growth and rapid infrastructure development in Colombo.

The Equity group had a property portfolio worth Rs.2.3 billion based on valuations as at March 31, 2011 with nine acres of land situated in Colombo and its suburbs.

In an interim financial statement, Carsons Management Services (Pvt) Ltd, Managers of Equity One, said that the group’s properties continued to maintain strong occupancy with a substantial part of remaining vacant space at its Dharmapala Mawatha property rented during the September quarter to a multinational organization.

"Accordingly all the properties owned by the group now operate at full or near full capacity," the managers said.

The six months ended September 30, 2011 had seen group revenue of Rs.73.8 million, down 31% from Rs.106.9 million a year earlier with the managers explaining that the significant variance was due to the sales proceeds of residential plots totaling Rs.57.8 million being included in the figures for the previous period with such revenue accrued during the current financial period being only Rs.21.9 million.

The revenue from the mainstream business – renting of office and storage space – amounted to Rs.51.8 million compared to Rs.49 million recorded in the corresponding period, the managers said explaining that the increase was due mainly to rent reviews.

The group had recorded a pre-tax profit of Rs.12 million during the six months under review against a loss of Rs.8.3 million a year earlier with the after-tax profit for the period standing at Rs.8.1 million against a loss of Rs.16.4 million a year earlier.

This translated to an earning of Rs.0.19 per share against Rs.0.42 per share a year earlier.

Carsons Management said that reduction of finance cost with the settlement of bank loans and the reduction of expenses following the amalgamation of the group’s property development companies had impacted favourably on the bottom line.

Carson Cumberbatch is the dominant shareholder of Equity One with 96.27% of the company with all other shareholders owning less than one percent.

Equity One has a stated capital of Rs.1.09 billion, capital reserves of Rs.13.2 million and revenue reserves of Rs.363.5 million in its books. Total assets ran at Rs.2.46 billion and total liabilities at Rs.940.8 million.

Net assets per share for the group were up to Rs.36.28 from Rs.34.63 a year earlier and for the company to Rs.33.11 from Rs.30.31 during the comparative period the previous year.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42719

The offer of Harry Jayawardene related/controlled companies to take control of the Aitken Spence conglomerate has now been formally communicated by circular to shareholders of Aitken Spence PLC with the detailed mandatory offer document to be sent out on or before January 26.

Although the Aitken Spence share has been trading at above the Rs.110 offer price of Melstacorp and related parties – Distilleries Company, Milford Exports, Stassen Exports and Periceyl (Pvt) Ltd, analysts were uncertain on whether the offerors will or will not acquire enough shares to top 50% of Spence.

Since the mandatory offer was triggered, Spence has been trading around Rs. 115 per share.

"It is hard to say what the eventual result would be," one analyst said on condition of anonymity. "While Spence has been trading over the Rs.110 offer price, there are foreign shareholders who may or may not be interested in accepting the offer."

The offerors together own slightly over 30% of Spence with Distilleries owning the lion’s share of a little over 28%.

Melstacorp owns just 0.126% following its purchase of 61,000 Spence on December 22 at the Rs.110 price triggering the Company Takeovers and Mergers Code of 1995.

The offer is to purchase nearly 70% of Spence comprising approximately 284.16 million shares.

Melstacorp is a 100% owned subsidiary of Distilleries and its principal activity is investments and related activities. It functions as the holding company for subsidiaries, joint ventures, associates and other investments and according to the document now with shareholders, provides guidance, directions and/or management services to subsidiaries, joint ventures and associates.

Milford Exports directly and through Lanka Milk Foods holds majority shares of Distilleries while Periceyl is a 100% owned subsidiary of Melstacorp.

"The shareholders of Milford Exports (Ceylon) Limited are also the shareholders of Stassen Exports Limited and a majority of directors of both companies consist of common directors. Further two of the three common directors of Milford Exports (Ceylon) Limited and Stassen Exports Limited also serve as directors of DCSL, Periceyl (Pvt) Limited and also on the Board of offeror," a circular to shareholders said.

Even if more than 50% of the Spence shares do not come within the control of the offerors following the mandatory offer, Melstacorp has agreed to accept and pay for any valid acceptances received.

The circular from Melstacorp to Spence shareholders has been signed by Mr. D.H.S. Jayawardene, Chairman of the company and Capt. K.I. Kahanda, Director.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42724

By Ravi Ladduwahetty

LOLC’s just concluded Rs. 1 billion acquisition of the Dickwella Resort will see the merging of tourism synergies within the Group adding value to its top and bottom lines, the group’s CEO said .

``We will be merging synergies with the group’s other hotels such as the five star Eden beach resort which will enable us to generate more packages that will add value to our top and bottom lines,’’ LOLC Group Managing Director Kapila Jayawardena said yesterday.

He said that the Dickwella Resort which was once described by the late Sir Arthur C Clarke as the best beach property in Sri Lanka , in addition to its breathtaking beach and sea frontage, had some fine options for the adventurous tourists

Among these is access to ancient shipwrecks as well as scuba diving, snorkeling etc. Synergies with their other hotels such as Eden located along the `golden mile’ at Beruwela will also be exploited, he said. These would include specially designed excursions.

``We will be operating the Dickwella property as the best beach resort south of Galle and have plans to attract local tourists too in contrast with the previous focus which was exclusively on attracting foreign guests,’’ he said.

Jayawardena said that the hotel had been very profitably run by its previous owners but he was confident that both occupancy and profits can be boosted under LOLC’s thrust into tourism.

The acquisition was funded by internally generated funds which he said was not excessive for the second largest corporate in Sri Lanka. One of the other factors which augured well for the Group was the recent opening of the Southern expressway which made access to the hotel much quicker than hitherto.

Dickwella hotel is now operational but there will be running refurbishment of rooms, car park, kitchen and other operational areas, he said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42720

Bank union agitation compels return of free shares

Employees of People’s Leasing Company (PLC) have returned 54.6 million shares in the company issued to them last year by their parent, People’s Bank, for what the company said was a "nil cash consideration."

This transfer follows SEC approval granted by their letter of November 23, 2011, PLC said addling that the transfer of these shares to the People’s Bank will be completed by Jan. 31, 2012 as required by the SEC.

The return of these free shares have cost particularly senior employees of PLC shares worth million. Middle and lower level employees too were big losers.

On June 30, 2011, a sum of approximately Rs.4.09 billion standing to the credit of the reserves of the then unlisted People’s Leasing Company was capitalized by the issue of 28 million fully paid ordinary voting shares at a consideration of Rs.146 per share in its entirety to the People’s Bank, sole shareholder of PLC at the time of the issue.

The People’s Bank adopted a resolution on the same day renouncing 3.64 million of the new shares to employees of PLC "in recognition of their commitment, dedication and service rendered to the company, which over the years have enabled PLC to accelerate its growth and gain the market leadership in the leasing industry," the PLC prospectus issued last October said.

Noting that the renunciation by the People’s Bank was at zero consideration, allotments to employees were made taking into consideration their years of service and the position they occupied in the company.

Following the capitalization of PLC reserves and the allotment of free shares to employees, each existing share was sub-divided into 15, substantially increasing the number of employees’ shares which amounted to 4.67% of the issued capital of the company.

Senior managers of the company including its Managing Director, Mr. D.P. Kumarage, had substantial shareholdings of PLC at the time of listing with Mr. Kumarage being the second largest shareholder of the company with nearly 4.3 million shares. Several other senior managers too had holdings of over 1 million shares.

The PLC prospectus listed the names of over 600 employees of PLC who had been issued shares.

The decision to ‘voluntarily’ return these shares to the People’s Bank was taken following pressure exerted by employees of the People’s Bank who held a picketing campaign outside PLC, issued bulletins and conducted a poster campaign over the issue of free shares to PLC employees.

The Union took up the position that PLC was in fact the leasing arm of the People’s Bank which had no leasing department.

"Thus, when a customer came to any People’s Bank branch seeking leasing facilities, they were directed to PLC which did the business," a union official explained.

PLC reserved 10% of the shares on offer at its recent IPO for its employees who were free to buy shares at the Rs.18 price if they so chose.

The company paid a dividend of Rs.0.50 per share on December 16 last year prior to the transfer of the free shares granted to employees back to the People’s Bank. Thus employees would have benefited from this payment.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42742

Sri Lanka’s main opposition has called for the immediate publication an annual report of the island’s largest pension fund also questioned state plans for a 30-storey building using private citizens’ pension money.

Sri Lanka’s employee’s provident fund (EPF) where contributions from private citizens’ salaries are kept is managed by the state but its annual report for 2010 has not been published through it is now 2012, an opposition legislator said.

United National Party legislator Harsha de Silva asked the state to delay an amendment to the EPF governing law to be scheduled to be brought to parliament on January 18, until there have been broader consultations.

There was a provision to start a pension, and construct a 30-storey building using people’s pension money, he said.

"The deleted’s official position is do not bring this on the 18th, postpone it until there is a discussion with the national labour advisory council, political parties, a broader discussion with trade unions," de Silva said.

"They should at least respect what Roshen Chanaka died for."

An attempt to forcibly create a third state managed pension fund out of people’s salaries resulted in protests where Roshen Chanaka, an export zone worker was shot by police and died. Even his funeral was carried out under heavy armed guard.

Under the current EPF law, private sector citizens are able to get the money collected in the fund as a lump sum and invest it as they wish after that.

A pension (which involves a monthly annuity) will allow the state and rulers to control the private sector workers money for a longer period. The bill to create a pension has still not been taken off the order book of the parliament.

"Roshen Chanaka’s life was taken because he was fighting for the economic freedom not just for himself but for all seven million people who work in this country," de Silva said.

"Respect that and don’t bring it from the back door and rush it through, but instead have a discussion and have agreement."

Though nominally a democracy, Sri Lanka’s rulers have used parliamentary majorities to steal the economic freedoms of citizens and violate their rights for decades.

Last year the state pushed through a secretly hatched an expropriation law, violating property rights of the people, while throughout Asia, from China to Vietnam state are bringing laws to strengthen property rights previously violated under Marxist doctrines.

State management of private citizen’s forced savings pension money has increasingly become controversial.

The EPF in particular had been long accused of being a so-called ‘captive source’ which rulers used for financial repression (to keep interest rates artificially low) creating high inflation and currency depreciation.

In recent years the EPF, which now has a trillion rupees under management, started putting more money into stock markets in a welcome move.

But several investments ran into controversy following the purchase of some fundamentally weak stocks at high prices and the fund dabbling in bank shares.

The EPF is managed by the Central Bank which also regulates banks. Critics say EPF purchases of bank stock are tantamount to insider dealing and a conflict of interest.

De Silva said the EPF annual report has not been submitted parliament even for 2010.

"The 1958 Act of the EPF says, the balance sheet income statement, cashflow statement and investment statement, has to be generated by the 31st of March of the next year, for the previous year," he said.

"The annual report must then be presented to parliament with the observations of the auditor general."

As of January 2012, the parliament has been informed in writing that the 2010 annual report is not ready, de Silva said.

The annual report should contain details of stock purchases, their cost and market price, he said. (LBO)
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42747

Sri Lankan companies to be listed in foreign stock exchanges:
by Gamini WARUSHAMANA

The Central Bank (CB) will further relax foreign exchange control this year and grant local listed companies to be listed in foreign stock exchanges, issue redeemable preference shares to non residents with specific minimum redemption basis, Central Bank Governor Ajith Nivard Cabraal said.

He was presenting a Road Map; Monetary and Financial Sector Policies for 2012 and beyond, at the Central Bank last week.

He said that the Government will also permit broadbased money changing operations in the formal sector, including the issue of general money changing licences to hotels and restaurants registered with the Tourist Board.

Specialised banks and registered finance companies too will be permitted to open and maintain NRFC and RFC accounts from this year, he said.

Cabraal reiterated that there was no need to downgrade the growth forecast and that the country can achieve the eight percent growth target despite the slow recovery in the US and Europe.

He explained the basis of the Central Bank’s optimism under gloomy global conditions, while some economists warn of hard times some countries have already downgraded its growth forecasts for 2012.

According to Cabraal, Agriculture is expected to expand at 7.3 percent compared to 2.0 percent in 2011.

Favourable weather conditions and expansion in cultivation in the North and the East will result in a 14.2 percent growth in the paddy sector.

The fisheries sector will expand at 9.8 percent due to favourable weather and improved marketing and infrastructure facilities. Growth in the tea sector will be at 1.4 percent backed by productivity improvement among tea smallholders. The Government expects 5.5 percent growth in the coconut sector.

Expansion in the industrial sector, will be at 9.0 percent, which is lower compared to 10.1 percent in 2011. Industrial sector growth will be backed by the expected strong 12.2 percent growth in the construction sector, 11.8 percent in mining and quarrying, 8.0 percent in cottage industries and 7.9 percent growth in electricity.

Service sector expansion is estimated at 7.7 percent compared to 8.6 percent in 2011 and the growth in the sector will be backed by a strong 22.1 percent growth in the hotel and restaurant sector with expected growth in tourism. Domestic trade will grow at 8.2 percent, post and telecommunications will grow by 10.2 percent and financial services by 8.2 percent.

Cabraal said that macroeconomic conditions and policies would be fashioned to support high growth in 2012. Government policy support covers areas such as prudent macroeconomic management, strengthened investor confidence, promotion of agriculture and industrial products in traditional and non traditional export markets, continued support to increase agricultural productivity, increase in fish harvest and promotion of FDI for infrastructure and tourism sectors.

The Central Bank will be keen to accommodate the higher growth of economic activity, although priority would be to check inflationary pressure in the economy. The monetory policy will be formed to achieve mid-single digit inflation. Broad money growth would be designed to accommodate growth, while ensuring the achievement of an inflation target.

Fiscal deficit is expected to decline to 6.2 percent from 7.0 percent in 2011. Domestic financing will be Rs.16.5 billion higher compared to 2011 and will reach Rs. 271.6 billion. External sector performance is expected to undergo a major structural change in 2012. A $ 825 million BOP surplus is expected with continued trade deficit. However, the trade deficit will be cushioned by $ 1.2 billion earnings from tourism, $6.5 billion remittances and $2 billion FDI inflow.

Under these circumstances the multidimensional and broad monetory policy will be implemented keeping policy rates as a key instrument of the Central Bank, while continuing the policy interest rate corridor approach. The exchange rate will be reviewed as a key stabilisation factor of the economy and Cabraal defended his vision of maintaining rigid exchange rate policy.

He said that control of imports will reverse growth and there are a lot of investment and intermediary goods among imports that are essential to maintain the growth momentum.

The policies for financial system stability in 2012 and beyond have been formulated with the vision of a banking sector in a $ 100 billion economy by 2016. According to these projections by 2016, assets of the banking sector would reach Rs.8,000 billion from Rs.4,100 billion today. Lending is projected to reach Rs.5,000 billion against Rs.2,500 billion today while reaching a broader spectrum of corporate and households.

The net interest margin is projected to decline to 3.3 percent from the current 4.2 percent. Market capitalisation of the CSE is projected to reach 70 percent of GDP by 2016. The outstanding corporate bond market will increase from Rs.100 billion to Rs. 1 trillion by 2016.
http://www.sundayobserver.lk/2012/01/08/fin06.asp

Dec 07, 2012 (LBO) - Sri Lanka's Softlogic group may look for foreign private equity to further develop its retail business this year ahead of a public listing , chairman Ashok Pathirage said.

Softlogic Holdings, which has interests in information technology, retailing, healthcare and financial services raised money last year from a domestic private placement and initial public offer by subscription. But its stock flopped on debut.
"Most probably this year we might look at private equity but we will not think of Sri Lanka," Softlogic chairman Ashok Pathirage told the LBR-LBO CEO forum, a gathering of senior executive, in Colombo.

"We have burnt our fingers with having the Softlogic IPO, with the guys who bought in the private placement selling out on the first day, just to make money.

"We do not like to have those kind of investors with us. So most probably we will look at outside."

Pathirage said Softlogic's healthcare arm, through Asiri Hospitals was already largely listed and so was its financial services units.

Pathirage, who started out in information technology after leaving Sri Lanka's John Keells Holdings with eight others when he was 27 became well known for retailing popular brands such as Nokia. It later acquired franchises for Panasonic and Samsung.

Branded Products

He said branded products will have a big potential with the government targeting 4,000 dollars per capita income by 2016.


Sri Lanka's current administration committed to a strong exchange rate and lower inflation ending decades of currency depreciation and high inflation.
Currency depreciation which was institutionalized as a policy by so-called 'New Dealers' of the administration of President Franklin Roosevelt in the US, is the principle tool through which rulers and the state can impoverish citizens.

Under the post World War II Bretton Woods system, so-called 'soft dollar pegged' central banks were set up around the world which targeted the exchange rate and interest rate at the same time, generating 'foreign exchange shortages' and balance of payments crises.

When contradictory policy pushes Sri Lanka into a balance of payments crisis, rulers and bureaucrats slap taxes on what are everyday consumer goods in other countries, deviously claiming that they are 'luxury goods', which analysts say is a risk to business.

Policy has improved in recent years, though the dollar peg is again under pressure due to delay in raising interest rates in 2011.

"If we achieve this 4,000 dollar per capital income by 2016, we believe that there will be a lifestyle change," Pathirage said.

"People will aspire to own branded and quality products,"

He said people will move up from standard mobile phones to smart phones and from motor cycles to cars.

He said Softlogic had also got the franchises for Nike, Levi's and the Mango store.

In this year's budget the state cut taxes for branded shoes, though nationalist industrialists still have a tight protectionist grip on footware used by poorer people.

Shopping Mall

Pathirage said Softlogic also had also signed up the UK based department store Debenhams.

The first Debenhams store will be around 20,000 to 30,000 square feet and may open next year, he said.

"It will be the first international department store if it works out," he said. "We are at the moment looking for retail space because that is one of the constraints we are facing today."

He said large shopping mall developments that are now being planned will help the sector. Several integrated hotel, retail and apartment projects are being planned in Colombo with the onset of a tourism boom.

"With the brands and products we have, we can easily occupy 150,000 to 200,000 square feet space in any new mall that is coming up."

"Basically our growth is going to come from there. In ICT we do not expect much growth."

He said while ICT may grow at 15 percent, about 100 percent annual growth is expected in retail.

Pathirage said the group had 110 electronic stores and the chain will grow to 250 by the year end.

"With 250 stores basically we are going to match the top two guys. That is Singer and Abans. Singer could possibly end up this year with 20 billion rupees plus turnover.

""Our idea is after having 200 outlets in 2014 we will most probably look at 20 billion plus from the retail side, only from consumer electronics."
http://lbo.lk/fullstory.php?nid=915055039

A consortium of five investors including Lankem and Siddhalepa, has completed a deal to take control of MBSL Savings Bank Ltd (formerly Ceylinco Savings Bank), a subsidiary of Merchant Bank of Sri Lanka at an investment of Rs.562 million, its main promoter and investor said. The 5-member consortium led by Navara Capital Ltd with PCH Holdings - owning company of PC House-, and Ideal Motors (Pvt) Ltd as the other two investors,, will purchase 68% of voting shares (87.1 million voting shares) and 72% non-voting shares.

(100 million), Navara Capital Managing Director Harsha N De Silva said. A deposit of Rs 100 million will be made initially. In May 2009, MBSL acquired control of Ceylinco Savings Bank (CSB) which suffered a run after the Golden Key Credit Card Company, a member of the Ceylinco Group, collapsed. He revealed that they are waiting for Central Bank approval to go ahead with their business plan aimed at revitalising the MBCL Savings Bank.

This business plan and the names of the board of directors of the entity have been forwarded to the Central Bank for its endorsement. MBSL Savings Bank, a Licensed Specialised Bank (LSB), registered under the Central Bank will be listed in the stock exchange by the end of this year as the consortium needs some time to restore the entity, Mr de Silva said. Commenting on the deal, MBSL Savings Bank Chairman M.R. Shah said that they have been able to resurrect the Ceylinco Savings Bank resolving the liquidity crisis. "But the turnaround of the acquisition has not been as rapid as anticipated," he added. The bank has today emerged as a dynamic and fast growing bank with a solid financial stability and a leading market share creating value for all stakeholders, he revealed.
http://sundaytimes.lk/120108/BusinessTimes/bt06.html

Non-core investments by Sri Lanka Insurance (SLC) in healthcare, LPG and leisure is a source of concern to the group as they are outside the core operating business and have little synergies, Fitch Ratings said in a report.

The company in 2010 acquired the Sri Lankan operations of Shell Gas Terminal Lanka (Pvt) Ltd, and 51% of Shell Gas Lanka Ltd for a combined investment of Rs 7 billion. "Nevertheless, Fitch notes that Litro Gas Lanka Ltd. holds a majority market share in the LPG market, with further growth potential given current low levels of gas usage. As such, profitability is expected to be robust," the statement said.

SLIC set up a subsidiary, Sri Lanka Insurance Resorts and Spas (Pvt) Ltd- through which it plans to invest in a luxury hotel in Hambantota. The company also has a strategic stake in the health sector via a 58.2% holding in Lanka Hospitals Corporation PLC. "Although these investments have been carried out through shareholder funds, they are a concern to the agency as they are outside the company's core operating business - and have little synergistic benefits," it said.

It said while SLIC benefits from state support, its investments in non-core industries - driven in turn by government - are a concern. While pointing out that these are profitable ventures, these could impede profitability if operating performance weakens at these entities. Fitch said,

The rating agency said that despite large realised capital gains in 2010, SLIC is susceptible to market volatility due to its large equity portfolio - and that risk management would require further strengthening.
"SLIC's ratings could be further upgraded if the group is able to arrest the gradual decline of its market share while increasing recurring income and reducing profit volatility," it said, adding that, "the company would also have to maintain a non-life combined ratio below 100% and current capital adequacy ratios on a sustained basis for such an upgrade." Fitch said the company plans to list its shares on the Colombo Stock Exchange subsequent to splitting its life and general insurance business tentatively in 2012 in line with the regulatory deadline of 2015 for existing companies.
http://sundaytimes.lk/120108/BusinessTimes/bt15.html

By Kajanga Kulatunga
The editorial comment in the Business Times last week suggests that (some) readers feel the paper is too pessimistic about events in the country. There was (and always is) plenty to be pessimistic about. Not only Sri Lanka, but the entire world led by high income countries are currently engulfed in suspended animation reeling from the Great Recession. A healthy dose of pessimism should be part of any good investors DNA. How do you ask difficult questions if you are an out-an-out optimist? Sometimes, smiles just aren't what the situation demands.

Yet in recent years it feels like we've all been ordered to "think positive" by an army of experts in any number of fields. Doctors inform us that optimism improves our health and helps us live longer, reduces the risk of stroke, even. Corporate coaches advise us that optimistic employees earn more money and climb the career ladder more quickly. "Positive psychology" researchers broadcast studies showing that optimistic people are happier and have more friends. In every way, it seems, optimists bask in the sunshine of the world's approbation, while pessimists mope in the shadows.

We view optimism as an unqualified good, an all-purpose remedy for everything that ails us. But a more nuanced view is emerging from the lab. Researchers find that optimism and pessimism operate not only as fixed points of view but also as mind-sets we can adopt as needed, rose- or blue-tinted lenses that we can put on and take off depending on the situation. Such a targeted use of optimism may actually be more effective than a blanket policy of all optimism, all the time, particularly when it comes to investing.

Pessimism has a negative connotation which no one wishes to associate. Cautious optimism is a cute way for society to explain pessimism. Science is clearly showing that pessimism and optimism are a state of mind as opposed to a fixed personality type. Research also shows that pessimistic investors weigh and take a multidimensional approach to risk analysis than do optimists. In sideways and down markets pessimists will continue to triumph optimists, as long as their risk assessment is correct.
For those investors who do operate from a pessimistic frame of mind 2012 would not be that different to 2011. The problems of the high income countries are well documented and need no repeating here. Needless to say that Eurozone and the UK will be in deep recession for most of 2012 driven by ideological austerity measures. In the Eurozone, however, this shift to fiscal austerity is running alongside a still bigger experiment: the construction of a currency union around a structurally mercantilist core among countries with negligible fiscal solidarity, fragile banking systems, inflexible economies and divergent competitiveness.

The US will surprise most observers on the upside. As this columnist has always argued Schumpeterian growth in the long run wins over Ricardian growth. Translation: The US is still the world epicenter of scientific discovery and innovation. As long as crazy politicians don't interrupt, it will still be the pre-eminent economy in the world. Although small, the US recovery will be one strong silver lining in an otherwise difficult year. The economy will be mere sideshow as a presidential election which can unite or give us four more years of bickering beckons. With Republican self-destruction assured via yet another weird ticket, the incumbent President Obama (most undeservedly) is likely to be returned, unless Europe falters and US unemployment gets closer to 10% come October.

With near zero interest rates for the four most traded currencies, commodities, especially soft and oil should hold on to current artificially elevated levels. Most trends next year will put structural demand headwinds for both oil and metals. Oil will suffer as more Natural Gas is tapped and crude based systems are converted to gas in high income countries. Other commodities will cool as demand from China cools off the back of overall domestic adjustment.

What does all this mean for a pessimist's investment strategy? Short duration term deposits and fixed income investing in all currencies and especially Rupees. The Rupee has to either go down or interest rates need to come up; neither are attractive options for savers. This will be forced via a US dollar liquidity crisis enveloping much of Asia off the back of European banks shutting credit to markets outside Europe. With inflation running at 10% (provided oil remains stable) and an equity risk premium of 6% (being very conservative), prospective returns from stocks need to be at least 18% to give you an absolute return of zero.

This is clearly not achievable. For all the reasons outlined in these columns throughout 2011, domestic shares remain the weakest and least attractive of all asset classes.
Property would have been a fantastic inflation hedge. Unfortunately, since the state has taken away the guarantee of private property rights, its best investors put off any plans until the laws become clearer.
NRFC account holders may have a winner amidst the $US liquidity crunch. With local banks desperate for cash, investors will be able to negotiate attractive terms even if official US rates remain low. Commodity currencies ($A and $CD) will weaken as China slows and if the $US liquidity crisis continues to the second half of 2012. The brightest spark for those investors who can access them are in foreign developed market shares, especially those in the US.

This may all be in vain. After all this columnist is currently a quintessential pessimist, who got 8 of 10 calls right in 2011 to help investors. Even an optimist should find that a decent score.

(Kajanga is an Investment Specialist based in Sydney, Australia. You can write to him at kajangak@gmail.com)
http://sundaytimes.lk/120108/BusinessTimes/bt24.html

Government debt to fall below 80 percent - Verité Research

Recorded government debt has dropped over the last six years resulting in major improvement in the economic outlook of Sri Lanka.

Recent projections show debt falling below 80 percent of the GDP in the next few years.

However, there is a flaw in the calculation of debt and this remains unaddressed.

The Civil Service Pension Scheme applicable to public servants is an unfunded debt obligation that has remained unaccounted for in the presentation of debt in the National Accounts. Between 2009 and 2010, the recorded government debt fell from 86.2 percent of the GDP to 81.9 percent.

However, the calculation of government debt fails to account for the unfunded Civil Service pension payments which previous budgets have inaccurately categorised as welfare payments. Pension payments to civil servants constitute a legally binding debt obligation on the government and as all other debts, it is a claim on future taxes.

Omitting the present discounted value of the future pension payments from the assessment of government debt obligations is a serious technical failing in evaluating the true macroeconomic position.

The average annual pension payments per year between 2005 and 2010 are 1.8 percent of the GDP.

The demographic ageing in Sri Lanka results in the pension burden growing because of:

Regular inflation and growth-related upward adjustment to payment.

(b) Increase in number of pensioners
(c) Increase in the longevity of pensioners.

The number of pensioners are 485,000; and the total estimated pension payouts in 2011 is Rs. 99 b more than 10 times the total payout for the Samurdhi Welfare Scheme.

The recent trend shows the nominal pension payments alternatively growing faster and slower than the nominal GDP. Between 2010 and 2011 nominal pension payment grew at almost the same rate as nominal GDP growth.

The accumulated outstanding pension debt can be calculated as the future stream of payments that are due to current pensioners as well as those employed and qualifying for pensions in the future.

Verité Research has estimated the existing discounted value of the outstanding pension debt obligation. If pension obligations are limited only to current employees and all new employees are not pensionable, to be in the range of 90 percent of the GDP. This means that the substantively accurate reading of fiscal debt is 171.9 percent of the GDP as opposed to the recorded figure of 81.9 percent of GDP.

Future policy and estimates with regard to pensions and fiscal debt would benefit from taking into account, this otherwise hidden debt obligation created by longstanding unfunded civil service pension scheme in Sri Lanka.

http://www.sundayobserver.lk/2012/01/08/fin01.asp

Timex and Fergasam Group forays into North

by Lalin FERNANDOPULLE

The Timex and Fergasam Group laid the foundation stone for the first apparel factory in Mannar yesterday. This is the first BOI apparel factory of the Group in the North to be set in the Mannar Industrial Zone. Timex and Fergasam Group Director Anis Sattar said that the two factories will be set up at a cost of US five million providing employment to around 1,200.

“Each factory is estimated to cost US 2.5 million and work will begin next month with commercial operations to commence by October”, he said.

The two state-of the art factories will be set up on a 70,000 sqft plot of land in the zone. UK, USA and Europe are the main targeted markets of the Group. Officials of Timex and Fergasam said that the new additions will be the 17th and 18th plants to come under the Group.

According to them, the project will be in two phases the first factory will provide employment for 1,200 and the second, for 800. Timex and Fergasam currently have over 8,000 in the workforce in the 16 manufacturing facilities, with offices in UK and Hong Kong.

Among the clients aer Marks & Spencer, Victoria’s Secret, House of Frazer, Diesel, H&M and SUZI Chin.

http://www.sundayobserver.lk/2012/01/08/fin02.asp

A/P2 rating for Tokyo Cement

RAM Ratings Lanka has reaffirmed Tokyo Cement Company (Lanka) PLC’s long and short-term corporate credit ratings of A and P2. The long-term rating carries a stable outlook. Ratings are supported by its sizable market share, its healthy balance sheet, and healthy debt coverage levels. The positives are, however, moderated by the inability to immediately pass on cost increases to the customer, funding mismatch and the exposure to the cyclical nature of the construction industry.

The Group is primarily involved in the manufacture and sale of Portland and ready-mix cement, to retail customers and large projects. Tokyo is one of the only two cement suppliers in Sri Lanka that operate local manufacturing plants. Together they supply around half of the cement requirement. The rest of the market is flooded with imported cement. The Group performed well in the retail and project-based segments during FYE March 31, 2011 (“FY March 2011), securing approximately the largest share of the domestic cement market during the same period.

Tokyo has been utilising its strong cashflow generation to pare down its debts.

The Group’s debt burden reduced from Rs 4.27 b as at end-March 2010 to Rs 3.56 b as at end-March 2011. Its gearing ratio eased from 0.75 times to 0.62 times. This further reduced to 0.57 times in end- June 2011. As the proposed bio mass plant is anticipated to be funded largely via internally generated funds, with only the remainder via debt the gearing levels are expected to remain at current levels.

http://www.sundayobserver.lk/2012/01/08/fin03.asp

Expolanka interacts with stakeholders

Expolanka Holdings PLC launched its social media channel to maintain interaction with stakeholders. They launched a corporate blog. Expolanka also opened official channels on Facebook, Twitter and YouTube to maintain a 3600 social media interaction.

Group CEO, Expolanka Holdings Hanif Yusoof said, “We have many diverse business interests and stakeholders from different areas of business and society, which don’t overlap. The new social media initiative gives us the opportunity to bring all stakeholders together and to present Brand Expo to them in an interactive and accessible manner”. According to global research conducted by KPMG International (“Going Social”, 2011)[i] A majority of businesses use social media to enhance their relationship with customers.

More than half are expanding the use of social media to drive innovation in their products and services, and for recruitment. Companies are also finding a variety of business uses for social media the report said.

Emerging markets find that social networks offer opportunities to leapfrog competition in developed markets. In some cases, inefficient, unreliable or monitored systems are forsaken in preference to faster and more consistent social network channels.”

http://www.sundayobserver.lk/2012/01/08/fin04.asp

2012, a challenging year for tea exports
by Lalin FERNANDOPULLE

2012 could be a very challenging year for the tea exports industry due to the crisis in the Middle East and the European economy still not fully recovered said Heladiv Group Chairman and Immediate Past President National Chamber of Exporters, Rohan Fernando. It is also predicted that the Russian economy will be affected due to the European financial situation.

Therefore, the industry will have to look at new markets and not be limited only to the traditional markets for expanding.

Tea brokers said that tea exporters will face stiff competition this year from countries such as Vietnam which is offering tea at a cheaper price. Despite growing competition, Sri Lanka retains its reputations in the global market for exporting quality tea. Lanka Commodity Brokers Ltd. sources said many tea exporting countries in the region are offering cheaper prices due to the low cost of production.

Sri Lankan tea prices are up due to the high cost of production. The tea industry faced a tough time last year due to the turbulence in the Gulf, Middle East and North Africa, the depreciation of the Russian as well as other former Soviet Union currencies, the sanctions on Iran and the strong local Rupee contributed to this negative result.

Incidentally, other major tea producing countries such as Kenya with a 30 percent depreciation of their currency, India with 15 percent, Bangladesh with 10 percent, Malawi with 12 percent and Vietnam with 9 percent have supported exports.

Experts said that the depreciation of the rupee will help tea exports to be competitive and boost revenue.

Fernando said :The current crisis in the tea plantations arising out of the inordinate wages without being linked to productivity will also add pressure on the quality of teas that will be available in the Colombo tea auction.

The highly debated scheme for tea exports will come under the microscope as there are several views on this and the traditionalists insisting on zero tea imports for value addition and re-export.

Hence, 2012 is going to be a very challenging year but as in the past, there will be many options for the tea industry to think out of the box and make inroads into some of the sectors based on tea as a beverage, healthcare and pharmaceutical.

Fernando said the challenges we foresee are primarily on worldwide supply and demand and the prices related to supply and demand with the world tea export industry being liberalised and Sri Lanka perhaps being the only tea producing country with a totally controlled tea import / export industry, the exporters will be faced with supply difficulties due to consumers demanding quality and taste in relation to value. This I believe is going to be the single biggest challenge for the tea export industry in 2012.

Heladiv Tea first started experimenting into tea extraction in 2000, we realised the potential in this sector in terms of variety, multiple value addition, abundant availability of raw material and sectors other than hot beverages to grow into.

"Our ten year research and development programme finally materialised in setting up the first ever pilot tea extraction plant to produce multiple products out of BM Fanning's which is even now considered as a tea waste.

Our experiments reveled that BM Fanning's when hygienically and appropriately handled could produce a large volume of tea properties and much more than what the standard made tea generates", Fernando said.

"The pilot plant thus started at a cost of over $ 1.5 million is now being upgraded to a commercial scale factory, producing several tea based products.

We are already marketing ready to drink iced tea in a range of flavours blended with Ceylon Green Tea and Ceylon Black Tea in the local and foreign markets.

http://www.sundayobserver.lk/2012/01/08/fin05.asp

Inflation remains at single digit in 2011
As projected in the beginning of the year the rate of year-on-year inflation, as measured by the Colombo Consumers' Price Index (CCPI) (2006/07=100), computed by the Department of Census and Statistics, decreased to 4.9 percent in December 2011 from 6.2 percent in January 2011 and the annual average rate of inflation recorded 6.7 percent in December 2011 thus stabilising the inflation at the mid single digit level.

The year-on-year core inflation, which is computed by excluding the items of fresh food, energy, transport, rice and coconut from the CCPI basket, also declined reaching 4.7 percent in December 2011. The annual average core inflation reached 6.9 percent by the year end.

The contribution to the annual average increase of 6.7 percent in the Index came mainly from price increases in the sub category of Food and non alcoholic beverages (8.8 percent).

Meanwhile, average prices in the sub categories of Housing, water, electricity, gas and other fuels (4.3 percent); Transport (7.1 percent); Clothing and footwear (13.4 percent); Furnishing, household equipment and routine household maintenance (4.6 percent); Health (2.7 percent); Education (3.5 percent); Miscellaneous goods and services (3.9 percent); and Recreation and culture (5.5 percent) increased compared to the previous year. However, the prices in the sub category of Communication remained unchanged during the year.

Increases in prices of locally produced agricultural and other food commodities, especially of vegetables were significant in the first three months of the year, due to both crop destructions and transport disruptions that occurred owing to the flood situation which prevailed in major producing areas.

Although this situation was temporary, inflation on a year-on-year basis continued to increase until it peaked in April and then decreased with the improved supply conditions. The increase in prices of imported food commodities such as wheat flour and milk powder in the international market led to the increase in the food sub index and thereby the CCPI. The upward price revisions of diesel, petrol, kerosene, LP gas and bus fares effected during the reference period also contributed both directly and indirectly to inflation.

http://www.sundayobserver.lk/2012/01/08/fin10.asp

Oxford University - Business Alumni

Dr. Parakrama Dissanayake

Chairman, Aitken Spence Maritime and Logistics and Director of Aitken Spence PLC Dr. Parakrama Dissanayake, having recently graduated from the Oxford Strategic Leadership program conducted by the University of Oxford, said the Business School, has been admitted as a University of Oxford Business Alumni.

He said the Business School was ranked by the Financial Times, UK as the No. 1 Business School in the country.

Dr. Dissanayake who pioneered commercial maritime education in Sri Lanka in his capacity as Chairman/Secretary of the Institute of Chartered Shipbrokers was the first Sri Lankan to have obtained the highest qualification in Shipping (FICS UK) and Logistics and Transport (FCILT, UK).

Dr. Dissanayake who has served on the UN /UNCTAD Panel as an expert in Ports and Shipping has successfully completed Executive education on 'The Global Economy' at Harvard Business School in Boston.

Some of the positions he had held in the past include Chairman, Chartered Institute of Logistics and Transport, Chairman, Sri Lanka Ports Authority, Chairman, Jaya Container Terminals and Chairman, Sri Lanka Transport Board, Central Advisory Council.

He is a recipient of the best Shipping Personality Award conferred by the Institute of Chartered Shipbrokers, Contribution to Society Award by PIMAA of the University of Sri Jayawardenapura and an award for the services rendered to the Shipping Industry.

http://www.sundayobserver.lk/2012/01/08/fin11.asp

LOLC takes over Dickwella Resort
LOLC Leisure took over the Dickwella Resort in the deep south of Sri Lanka, expanding the hospitality industry. Dickwella Resort is at the Southern-most tip of Sri Lanka. LOLC Leisure purchased 100 percent for Rs. 1,014 million. LOLC Leisure is owned by LOLC and Browns Investments with a holding of 70 percent and 30 percent.

Deputy Chairman, LOLC Group Ishara Nanayakkara, the holding company of LOLC Leisure said: "We are proud to take over this beach side property situated at such a prized location.

This marks another milestone in our leisure holdings and propels us into the forefront of the hospitality industry.

Dickwella Resort will be another key offering in our group of hotel properties along the western coast of Sri Lanka.

The resort has already carved out a distinctive niche for itself on the global tourist map and we intend to upgrade the luxury facilities and enhance the room capacity in the months ahead to catapult it further into a multi-star category hotel.

http://www.sundayobserver.lk/2012/01/08/fin12.asp

Janaki Kuruppu to head SLTB

Janaki Kuruppu

Chairperson of the Mother Sri Lanka Trust and Advisor on Food Security Janaki Kuruppu at the President's office has been appointed Chairperson of the Sri Lanka Tea Board (SLTB). She succeeds Susantha Ratnayake, with experience from the private and public sectors in international marketing.

Ms. Kuruppu has had an illustrious career of over 20 years in a variety of industries which covers research and consultancy, agri-business, food manufacturing, retailing, banking, media and engineering and held Director positions at Commercial Bank Plc, Sathosa, Cargills Ceylon Plc and Managing Director of the Nielsen Company.

She is also a member of the global steering committee of AgriFin, an agricultural finance fund set up by the World Bank and the Bill and Melinda Gates Foundation to support the activities of financing for agriculture, particularly for smallholder farmers.

http://www.sundayobserver.lk/2012/01/08/fin13.asp

Public Bank Berhad COO on visit here
Chief Operating Officer of Public Bank Berhad Dato, Chang Kat Kiam was in Colombo on a two-day official visit.

During his stay he paid a courtesy call on Central Bank Governor Ajith Nivard Cabraal, High Commissioner to Malaysia Azmi Zainudeen, Colombo Stock Exchange CEO Krishan Balendra and Overseas Realty CEO Pravir Samarasinghe. He also visited several development projects currently undertway in the country.

His visit was a successful one for the Colombo branch.

Dato Chang was delighted to see the rapid development taking place in the country after the end of terrorism.

http://www.sundayobserver.lk/2012/01/08/fin14.asp

What should be the next move in rubber plantations?
by Dr. Lakshman RODRIGO

Wage hikes are inevitable. As we all know, wages in the plantation sector have recently increased by about 27 percent; from Rs. 405 to Rs. 515 per day.

Dr. Lakshman Rodrigo

With EPF and ETF contributions, the total is Rs. 572 a day. This has an effect on other terminal benefits such as gratuity. Continuous increase in cost of living associated with the inflation drives people to demand for high wages.

Due to the improvements in science and technology together with striking advertisements, people are attracted to new luxuries; another reason to demand high wages.

In the past, plantation workers were considered to be a underprivileged category in a society. It is no more and it should not have been so; being involved in key economic activities, their contribution to the nation building is second to none.

They are covered and protected by strong trade unions supported by parliamentarians. This has strengthened their bargaining power and so, no way to ignore their demands. Recognising the needs and importance of this sector, the present government has taken steps to provide them good educational and health facilities.

As a way of improving the social dignity, official designations given to plantation workers have recently been changed with a special gazette notification. Nonetheless, some have already taken their move to work in other sectors for greener pastures.

Whilst meeting the worker needs, plantations should maintain their financial viability under any circumstances. Undoubtedly, current prices for raw rubber can cope up with recent wage increase in rubber plantations.

Although there is no speculation on market collapse, we need to be proactive to sustain rubber plantations for the future. Competitiveness would be the best approach for the sustainability. Particularly in human resource management, worker use efficiency and worker satisfaction / motivation are key issues to be tackled.

Cost of Production
Cost of Production (COP) generally declines with increase in worker-use efficiency.

Nevertheless, it is not always the case in the competitive market since workers are to be motivated with improved wage structures. Unlike in the past, managerial staff in most of Regional Plantation Companies (RPCs) has been reduced to bear minimum with given added facilities.

Unfortunately, no such move for worker class. All activities are important, however the first priority should go to what requires most labour. In rubber plantations, latex harvesting is labour intensive utilising over 60 percent of the workforce. In COP, its share is well over 1/3. Therefore, it's time to revise our harvesting policies in rubber estates for improved worker-use efficiency. Latex is usually harvested from rubber trees by tapping the tree trunk with a half spiral cut (i.e. half of the circumference) once in two days.

This is called S/2 d2 harvesting (S/2 stands for half spiral cut and d2 for once in two days). Each harvester is given about 300 trees per day hence 600 trees in two day cycle.

This means an area having 600 trees require a harvester every day. Rubber is planted at a density of 515 per hectare, however it diminishes to some extent with time.

Expecting an average about 400 trees in tapping per hectare, worker requirement for harvesting of mature rubber is about 0.6 per hectare per day.

This is just second to tea and coconut needs only about 0.2 per hectare per day. What can we do about this? All attempts made so far to mechanise rubber harvesting had no success and there is no sign of being a reality even in near future. So, waiting for latex harvesting machines would not be a wise decision. What is next? Is it necessary to tap the rubber tree so often? Is there a way to get the latex out with less labour?

Alternative methods
Low Intensity Harvesting (LIH) systems are found to be the most appropriate means to increase the worker use efficiency in latex harvesting. What does it mean by LIH? When compared with the previously mentioned traditional S/2 d2, either harvesting frequency or tapping cut length or both are reduced in LIHs.

Reduction in the harvesting frequency is made by extending the time gap between two consecutive harvesting over two days and commonly named as Low Frequency Harvesting (LFH).

Instead of half spiral, attempts have been made to reduce the cut length to quarter spiral or even less.

As everyone would expect, reduction in harvesting frequency and cut length has a negative impact on latex yield.

To compensate the yield loss associated with this reduced intensity, yield stimulants are to be applied in a judicious manner. Ethylene is the ultimate stimulant which enhances latex production in the laticiferous system in the rubber tree bark. Obviously, outside application of ethylene gas is not simple and so, ethephon is generally used as a liquidised paste in different formulations to facilitate a slow release of ethylene inside the bark. It is available in the market under different trade names (e.g. Ethrel, Ethephon Plus).

In the past, latex yield stimulants were used to increase yields. This has been a wrong intention and today, it remains as a short-term approach perhaps suitable for the rubber fields at the verge of uprooting.

In the long-run, the potential yield of the rubber tree cannot be exceeded in harvesting. Perhaps, you may have planted a rubber clone having a high genetic potential for high yields. However, the way you have looked after the rubber field determines the ultimate yield potential. It is similar to bringing up a child. Though genetically sound, final outcome depends on the nutrition, guidance, education and diseases .

Studies have shown that overharvesting with stimulants results in yield decline in subsequent years and also, leads to physiological disorders such as Tapping Panel Dryness (TPD) where latex synthesis in the bark ceases.

Therefore, ethephon is used in LIH to obtain the potential yield in other words, only to compensate the yield loss due to reduction in harvesting frequency or cut length or both.

As a rule of thumb, we could consider the yield given by time-honoured S/2 d2 as the potential. To overcome the time related discrepancies associated with harvesting frequency, average yield per tree per year (YPT) or yield per hectare per year (YPH) could be taken for comparison.

How does LIH increase the worker-use efficiency and is it the only advantage? Apparently, we could expect a four-fold benefit from LIH; firstly worker-use efficiency. With the increased time gap between two harvestings, each harvester can be allocated to a greater number of tapping blocks resulting in reduced harvester requirement.

For instance, if trees are tapped once in three days instead of two-day intervals, worker requirement is reduced by 1/3; if four day intervals, four blocks to each harvester hence reduction is 50%. Even with the reduction of tapping cut length, there is a time saving; hence number of trees allocated to each tapping block could be increased. It is expected to increase the tapping block size from 300 to 400 trees with a reduction of tapping cut length from half to quarter spiral; 25 percent reduction in labour use.

http://www.sundayobserver.lk/2012/01/08/fin15.asp

Kia Rio hatchback launched
by Senani WASANA THENUWARA

Kia Motors (Lanka) Ltd, the sole agent for South Korea's KIA Motors Corporation, launched 2012 Rio; a coupe-like hatchback in Colombo, last week. Kia Rio is designed by Chief Designer Peter Schreyer of KIA Corporation.

The new Rio, a five-door edition is coupled with new revolutionary advancement in terms of design, performance and technology and safety and environment-friendly features to attract Sri Lankan youth.

It is equipped with a durable Gamma 1.4 Gasoline engine that delivers displacement of 1396cc, maximum power of 107ps at 6300rpm and maximum torque of 13.8kg-m at 4200pm which increases the fuel efficiency and power while reducing emissions and lessening the vibrations to ensure quiet and smooth functioning.

The Kia Group, the fifth largest auto maker hopes to manufacture seven million vehicles this year and reach the fourth largest auto-maker position.

http://www.sundayobserver.lk/2012/01/08/fin20.asp

New chairman for Touchwood
Rienzie T Wijetilleke was appointed Director of Touchwood Investments PLC at an extraordinary general meeting of shareholders on January 2 .


Rienzie T Wijetilleke

At a board meeting held subsequently chairman Roscoe Maloney stepped down from the chairmanship and the directors unanimously decided to appoint Rienzie T Wijetilleke as the new chairman.

Wijetilleke said that "he has during his long years of service in the financial sector focused on the need to utilise economic resourses available in the urban sector to meet the urgent economic needs of the rural sector". He said that medium and long-term objectives of Touchwood were identical to his medium and long-term goals for the nation.

He said that this factor was the main reason for his decision to accept the chairmanship of the company.

He said that while improving stakeholder value, he would make every endeavour to take the company to the next level of growth

http://www.sundayobserver.lk/2012/01/08/fin21.asp

Gateway marks 15th anniversary
by Gayan KANCHANA

Gateway, one of Sri Lanka's largest educational institutions will celebrate its 15th anniversary this year. The institution provides education to local and foreign students.

The organisation has set up four International schools during a short span. A graduate school, IT training centres, English language training centres, speech and drama centres, a software consulting firm and many educational establishments in Sri Lanka. Gateway also has a chain of Kindergartens in Oxford, UK. Gateway's school-based IT programs have been introduced to 12 countries in three continents.

Gateway Group chairman and founder R.I.T Alles said "our students should be down to earth and we don't want snobs passing out from Gateway. They should respect our culture and heritage."

While we charge a nominal fee, we also provide free education to talented students who can't afford to pay fees. Shihan Ambepitiya is one of our products.

When some students are admitted they are unable to speak even a word of English. But after some time they are very comfortable with the language", he said".

Gateway Group Director, Dr. Harsha Alles said, "Even though we are the most recent among the well-established educational institutions in the country, we provide quality education. Our teachers are upto the international standards.

Gateway has taken meaningful steps to inculcate the Sri Lankan Culture, a sense of belonging and love for the nation and respect for its values", he said.

Dr. Alles said "Students are encouraged to engage in a variety of charitable and social service activities. The organisation through its CSR arm - the gateway HANDS foundation has carried out many initiatives.

They include rebuilding of tsunami devastated C.W.W. Kannangara School in Galle. On December 17, 2005, Gateway handed over a newly re-built school to the government.

We were the first organization to complete a fully-fledged school within a year after the tsunami. Recently Gateway took over the Management of Achievers, which is a school for children with learning difficulties," he said.

http://www.sundayobserver.lk/2012/01/08/fin25.asp

First Capital appoints Independent Director
Minette Perera has been appointed as an independent director of First Capital Holdings PLC from December 2011.

Perera, a Chartered Accountant with over 30 years experience, serves as Finance Director of MJF Group and on the boards of a number of Group companies including MJF Holdings Ltd., MJF Exports (Pvt.) Ltd., Ceylon Tea Services PLC, Kahawatte Plantations PLC and Forbes & Walker (Pvt.) Ltd.

A Fellow member of The Institute of Chartered Accountants of Sri Lanka (ICASL), the Chartered Institute of Management Accountants of UK (CIMA) and Association of Chartered Certified Accountants of UK (ACCA), Ms. Perera has also held key positions in Finance at several leading local and multinational companies.

http://www.sundayobserver.lk/2012/01/08/fin26.asp