Business

Working together, the two State sector entities strived relentlessly to promote home grown brand Highland’s locally manufactured full cream milk powder to consumers across 420 Sathosa outlets around the island.

Due to the combined efforts of the two organisations, Highland now accounts for one in every three packets of full cream milk powder sold on average at Sathosa outlets, rising from a basket share of less than 15% about a year ago.

Going beyond building the brand and driving sales and revenue, this achievement augurs well for the nation’s goal of achieving self-sufficiency in the dairy industry.

The sector is currently dependent largely on imported milk powder, thereby resulting in significant drain in valuable foreign exchange.

This is a significant milestone for the brand as well as for the local dairy industry,” said MILCO Ltd. Chairman Lasantha Wickramasinghe. “Encouraged by these results, we recommit ourselves to serving the nation and its dairy sector in particular.”

Lanka Sathosa is a State-owned largest retail network business in Sri Lanka with over 420 outlets island wide and over 4,500 employees.

Established in 2005 under the name Lanka Sathosa with the aim of food security to the mass consumer, the retail chain’s new vision reflects its perceptions of its current target consumers with lower and lower middle-income households which is a price setter for the nation.

Guided by its trusted leadership team, Lanka Sathosa spearheads the sustainable development of the food industry in Sri Lanka.

Sri Lanka’s Regional Plantation Companies (RPCs) have presented to state authorities with aim radically expanding worker earnings during a recently concluded meeting with the Minister of Labour and Trade Unions leaders. Workers may receive a total of LKR1,025 for a day’s work under this new proposal. The newly introduced proposal provides for a hybrid between the daily wage model and the productivity-linked earning systems implemented with great success in the smallholder sector.

Adding a productivity based component will ensure that worker earnings are expanded, and workers have more flexibility and control over their monthly earnings.

Under the new proposals, RPCs will continue to offer a fixed daily wage with the re-introduction of attendance and productivity incentives in a notable departure from previous years. The RPCs have proposed a mix of 3 days of daily wage and 3 days of productivity-based earnings, where workers will have the capacity to expand their earnings based on their output.

The first alternative under the productivity-linked proposal is a system where workers are paid LKR 50 for every kilogram of green tea leaf plucked (inclusive of EPF/ETF) where a high plucking average of between 30 - 40 kilograms a day is attained. RPCs pointed out that workers have the potential of expanding their earnings exponentially. In the case of the Rs. 50 rate, a worker who plucks 20 kg will receive Rs. 1,000 per day, and monthly pay of LKR 25,000.

Current annual plucking averages among RPC companies are between 20 - 22 kilograms a day. However, a majority of the best harvesters have plucking averages between 30 - 40 kilograms, which means that earnings can now be expanded to over LKR 37,500 - 62,000 per month.

The next alternative is that workers are remunerated based on a share of the National Sales Average (NSA) ratio of 35%.

Workers may receive a total of LKR1,025 for a day’s work under this new proposal.

Spectrify AI, a part of VeracityAI Sri Lanka’s fastest going AI company, has announced the launch of a new suite of solutions specifically designed to radically optimize production, agri-inputs, and quality control across the entire value chain for tea, spices and herbs – a first in Sri Lanka.

Leveraging the very latest advancements in spectral scanning, artificial intelligence and machine learning, Spectrify AI delivers end-to-end consistency on quality standards directly into the hands of producers and value chain partners.

This is accomplished by deploying extremely low-cost patented spectral scanners paired with AI to conduct real-time spectral analysis of everything from soil composition to the chemical make-up of tea, spices and herbs at every point from field to factory to the final buyer, the company said in a media release.

“Despite a rich history and unmatched legacy of quality, Sri Lanka’s agri and plantation industries are yet to even approach their full potential. Ultimately this is due to a lack of good data," the statement said.

"While most view this as a challenge, we see a massive opportunity in deploying new tech to overcome traditional bottlenecks, drastically optimize on cost of production, and ultimately recapture our nation’s reputation for the very highest quality tea, spices and herbs in the world,” serial entrepreneur and Spectrify AI co-founder, Jeevan Gnanam said.

Spectrify AI’s capabilities can also be merged with Veracity AI to analyse satellite imaging of land to track harvest development and study historical data to predict yields and risks.

Additionally, Spectrify AI also offers integration with GoMicro, another groundbreaking AI detection tool that converts any smart device with a camera into a powerful handheld microscope for instant analysis and identification of plant pests and diseases.

“The future of agriculture is technology, and it is already here today. The reductions in cost and growth in capabilities of spectral imaging analysis have the potential to be more impactful to global economies and societies than the agricultural and electronic revolutions combined," he said.

"Using AI and spectral imaging, we are gaining the ability to standardize, systematize and optimize agricultural production on an unprecedented scale. Our goal with Spectrify AI is to showcase this potential, and in the process, make Sri Lanka a hub for agri-tech innovation,” Deep Technology Entrepreneur and Spectrify co-founder Mike Richardson said.

A subsidiary of SAKS, Veracity AI specializes in data and machine learning technologies to drive AI applications. Ever since its establishment in 2018, Veracity AI has been transforming companies by providing personalized, intelligent business models and product development strategy and prototyping in the areas of Data Science, Machine Learning and Artificial Intelligence.

This project is with a capacity of 515kWp and has utilized the roof area of Diamond Cutters Ltd’s factory premises located in the Panadura Industrial Zone.

The commissioned project will contribute 0.7GWh of energy to the local grid. PV modules used were manufactured by JA Solar Holdings, while the inverters were sourced from Huawei Technology.

This solar power project is aimed at annually saving 495 metric tonnes of carbon through clean energy power generation, Vidullanka said in a media release.

Vidullanka PLC, a pioneering entity in the renewable energy sector in Sri Lanka for over two decades has been growing from strength to strength each year.

 The company has a total portfolio of more than 36MW, with a cumulative annual energy exceeding 125GWh annually to the national grids of Sri Lanka and Uganda.

 It is noteworthy that Vidullanka’s energy portfolio now comprises Hydro, Dendro and Solar power plants. Vidullanka PLC was also able to reduce 66,700 tonnes of carbon emissions through its strong renewable energy project portfolio.

Despite the operational challenges posted by the COVID-19, Vidullanka PLC was successful in ensuring the safety and wellbeing of its employees while ensuring smooth operations at the power plants.

The group reported a Profit After Tax of Rs. 196 million for the first six months of the financial year compared to Rs. 52 million for the corresponding period and Rs. 362 million for the financial year 2019/20

“Cash is king amidst prolonged uncertainty and our strategy is to manage EBITDA in the short term,” Pathirage told shareholders in the annual report 2019/20.

Pathirage stated that they have undertaken a Group-wide initiative to streamline costs which continues to be monitored and reinforced to support cash flow management.

“We have also renegotiated our interest rates with banks to reflect market rates which have declined sharply, supporting the bottom line and cash flow,” he said.

Pathirage further announced that the company signed contracts with third parties to expand and build their retail operations and added that work has commenced on many projects which will be completed in the near future.

The landmark hypermarket in Mount Lavinia opened in November 2020, realising part of our long-term retail strategy to build destinations offering unique retail experiences to consumers on par with developed markets.

Sri Lankan businessmen are now experiencing difficulties in importing essential items and other items needed for their value added products on credit terms as foreign banks begin reusing their Letters of Credit(LCs) opened in local banks, several business leaders said.

Three LCs opened in Bank of Ceylon (BOC) have been rejected by banks in the UK, Switzerland and New Zealand last week showing signs of the island nation’s bankruptcy and the country’s weakened credit profile, one of the top business leaders disclosed.

Apart from the prohibition of opening new LCs, banks have been directed to suspend the payment for already opened LCs before the enforcement of the import ban, they said, pointing out that it breaches Uniform Customs and Practice (UCP 600) regulations that govern international trade of banking.

Under this set up, the local bank which has opened the LC would be black listed in international trade for defaulting.      

Sovereign’s weakened credit profile will affect Sri Lankan Banks sluggish economic activity, external and domestic vulnerabilities.

According to Fitch Ratings, the operating environment continues to have a high influence on bank ratings in Sri Lanka, as it affects the level of risk of doing business and banks’ financial and non-financials rating factors.

Muted private credit growth and the sovereign’s weakened credit profile are significant downside risks to the operating environment for Sri Lankan banks, Fitch Ratings added.

Fitch lowered its assessment of the operating environment score for Sri Lankan banks to ‘ccc’ with negative outlook from ‘b-‘ with a negative outlook, after the Sri Lanka sovereign rating was downgraded to ‘CCC’ from ‘B-‘ in November 2020.

The weaker sovereign credit profile could affect the banks’ operating environment, which is already weak due to the COVID-19 pandemic.

Sri Lanka’s Dialog Axiata PLC (“Dialog”), Sri Lanka’s premier converged connectivity provider, announced yesterday (23) that it had entered into an agreement to acquire 100% shareholding in H One (Private) Limited. This acquisition has been completed through Dialog Broadband Network (Private) Limited (“DBN”), a fully owned subsidiary of Dialog.

H One founded in 2008 as a subsidiary of Hirdaramani Group, is the largest reseller of Microsoft (MSFT) enterprise solutions in Sri Lanka with an annual turnover of circa LKR 1.6 Billion.

The transaction is expected to be completed before end of January 2021, at a Purchase Consideration of between LKR 300 million to LKR 350 million on a cash free debt free basis.

“The acquisition of H One by Dialog would supplement Dialog’s expansive suite of enterprise solutions and would facilitate acceleration of the digital transformation of Sri Lanka’s Enterprise Sector.

The combination of Dialog’s expertise in advanced digital technologies and the leading edge capabilities of H-One will create a Centre of Excellence for the scaling of Microsoft Platforms and Enterprise Solutions” stated Supun Weerasinghe, Group Chief Executive of Dialog Axiata said.

“H One is the leading Microsoft services provider in Sri Lanka delivering innovative solutions to many top corporates in the country. We are confident that Dialog will continue to drive the consistent growth and innovation that has been a huge part of the company’s success to date," he added.

The Colombo Stock Exchange (CSE) announced several changes in the S&P Sri Lanka 20 index constituents made by S&P Dow Jones Indices at the 2020 year-end index rebalance.

The exclusions and inclusions announced by S&P Dow Jones Indices  are effective from 21st December 2020.

The new inclusions included Dipped Products PLC, Distilleries Company of Sri Lanka PLC, Expolanka Holdings PLC, Hayleys PLC, Hemas Holdings PLC, Royal Ceramics Lanka PLC, andTokyo Cement Co. (Lanka) PLC.

The S&P SL 20 index includes the 20 largest companies, by total market capitalization, listed on the CSE that meet minimum size, liquidity and financial viability thresholds. The constituents are weighted by float-adjusted market capitalization, subject to a single stock cap of 15%, which is employed to reduce single stock concentration.

The S&P SL 20 index has been designed in accordance with international practices and standards. All stocks are classified according to the Global Industry Classification Standard (GICS®), which was co-developed by S&P Dow Jones Indices and MCSI and is widely used by market participants throughout the world.

To be eligible for inclusion, a stock must have a minimum float-adjusted market capitalization of 500 million Sri Lankan rupees (Rs), a six-month median daily value traded of Rs 0.25 million, and have positive net income over the 12 months prior to the rebalancing reference date. For information, including the complete methodology.

South Africa has expressed willingness to bring down tea tariffs for a period of time not extending three years, the outgoing High Commissioner in Colombo, Robina P. Marks said.

She made this disclosure when she was delivering the inaugural address at the 'Sri Lanka – South Africa Business Promotion Meeting' held in Colombo recently.

She further underscored the need to recalibrate its trade strategy in Sri Lanka and the desire for a more balanced trade relationship between the two countries.

“Even though national interest is important to all countries, South Africa also wants a more balanced trade between the two countries. Sri Lanka and South Africa consider that it's important because they both need to work on the basis that each has something to offer in this bilateral relationship,” she added, commenting on bilateral trade ties in the COVID-19 era.

The Foreign Ministry said South Africa has been able to expand its trade footprint in Sri Lanka and that overall trade stood hugely in favour of her country.

South Africa is Sri Lanka’s largest source of imports and the second largest export destination in the African region.

Imports from South Africa largely consist of coal while Sri Lankan exports consist of tea, apparels and rubber products.

In terms of investment, High Commissioner Marks said that international retail brand, SPAR, through a joint venture between SPAR Group Ltd South Africa and Ceylon Biscuits Limited has opened four outlets in Sri Lanka with plans to expand up to 20 retail stores.

High Commissioner Marks also exchanged views with representatives of the Sri Lankan businesses community on the possibility of boosting fish exports to South Africa, value addition and knowledge sharing in the gem and jewelry industry, opportunities in the renewable energy sector and sharing expertise in food preservation in the canning industry.

It is now in the process of expanding its branch network country wide with more than 4,000 service points, including branches, post offices and ATMs.

NSB Katuwana branch declared open recently at No: 43/1, New Kandy Road, Weliweriya under the patronage of Minister of Tourism, Prasanna Ranatunga as the chief guest.  

The Chairperson of National Savings Bank, Keasila Jayawardena, and General Manager/CEO, Ajith Peiris, were amongst the distinguished guests present on  the occasion.    

The new branch, which consists of a spacious premise and modern banking amenities including an ATM will ensure a quality customer service by catering to all financial needs of the people of the area.    

National Savings Bank, the only bank in the country that offers 100% government guarantee, has commenced expanding its branch network substantially and accordingly, the Weliweriya branch marks the 259th Branch of the NSB Branch network.

The bank sought to implement a comprehensive intelligence and financial crime detection management solution, aimed at protecting its customers in real time.

In addition to card-based transactions, ACI’s fraud management capabilities allow the bank to address emerging digital payment channels, including internet and mobile banking, mobile wallets and real-time payments, solidifying its position as one of the country’s leading financial innovators.

 NSB reported a deposit base of LKR 1,113 Bn as of Jun-20 as compared to LKR 1,017 Bn reported as of Dec-19 (LKR  953 Bn as of Dec-18). The NSB Act provides explicit government guarantee for the deposits and interest payable thereon.

The Bank processed the 100% Government ownership, which provides a strong likelihood of sovereign support and, the 100% explicit guarantee provided by the Government for the money deposited with the Bank and the interest thereof through the National Savings Bank Act (NSB Act).

Sri Lanka’s ambitious initiative of merging finance and leasing companies with their larger profit making counterparts or commercial banks proposed in budget 2021 begins to bear fruits with two such companies announcing its amalgamation on Friday (24).

The merger proposal between Arpico Finance Company PLC (AFC) and Associated Motor Finance Company PLC (AMF) has been approved by the Central Bank of Sri Lanka (CBSL) on Tuesday (22), the two companies said in separate stock exchange filings.

The surviving company would be AMF and in terms of the said approval, AMF is required to complete the merger by 31 March 2021.

The merger of aforesaid, will commence, subject to the in principle approval being given by the Colombo Stock Exchange (CSE) to AMF, for the listing of shares of AMF arising from the amalgamation of AFC with AMF,  CSE filings revealed.

State Minister of Finance Ajith Nivard Cabraal that the government would be providing with the tax incentives as well for such mergers and is a wonderful way forward because that would mean that the finance system stability would be ensured.

Cabraal expressed the belief that the Central Bank also will take the steps to move that forward.

The mergers of Sri Lankan finance and leasing company (FLC) subsidiaries with their counterparts or parent banks will not have an immediate impact on the banks' ratings, Fitch Ratings said.

However, the extent of the impact of absorbed FLCs on banks' business models and their consolidated risk and financial metrics, particularly asset quality and profitability, will be important for the banks' ratings, the international rating agency said.  

The merger finance and leasing companies with their counterparts will result in customers with a higher risk profile being denied credit.

“FLCs typically cater to sub-prime customers, which banks have very little appetite for,” the rating agency said.

Rogue finance companies operating in the country are now being brought under intensified surveillance of the Central Bank and it’s taking necessary legal action as these firms have become a severe threat to the current financial system affected by the second wave of COVID-19. The Central Bank will be taking measures to broaden public awareness on the consequences of engaging in unauthorised financial activities by errant finance companies.

It has intensified surveillance in detecting unauthorised finance businesses and deposit taking while seeking public support to take appropriate action against such errant financial institutions.

All operations of Eyon Lanka Investment and Film Production International Company (Pvt) Limited have been stopped by the monetary regulator as this unauthorised finance company has carried out an illicit finance business.

The Central Bank has already issued freezing orders prohibiting the company soliciting and mobilising deposits or any funds in any other forms, disposing / alienating assets, entering into any transaction in relation to any account, property or investment.

The Colombo High Court has extended the freezing orders until 15.01.2021. Further, a report was sent to the Attorney General’s Department on 02.11.2020 requesting to institute criminal proceedings against the rogue finance company.

The Central Bank reiterates the requirement for enactment of a legal framework to regulate unregulated money lending activities so that a better and more effective regulatory environment is created for money lending institutions in the future.

Registration under the Finance Leasing Act, No 56 of 2000 (as amended) (the FLA) is mandatory to carry out finance leasing business and any person carrying out finance leasing business without such registration commits an offence under the FLA.

The said institution has not been registered by CBSL to carry out finance leasing business and therefore, any finance leasing business carried out by such institution constitutes an offence.

Over 9000 depositors including retired members of security forces have become destitute due to  the sudden collapse of the company and the freezing of its operations by the monetary authority, several disgruntled depositors said.

A meeting between the representatives of depositors, management of the company and CBSL officials was held on Tuesday (8) and the implementation of a payment plan was taken up for discussion. But the Monetary Board at its meeting held recently has already decided that the submitted repayment plan was not acceptable, a CBSL public notice revealed.