The Sri Lanka Institute of Directors (SLID) together with EY organized a webinar titled “Rising from the Pandemic: Challenges, Responses and Learnings” recently to discuss and share insights on the experiences of leading companies and their successful response to the pandemic. Moderated by A. R. Rasiah – Chairman, SLID, the Keynote Speaker at the event was Jonathan Moreno – Chief Strategy Officer, Metro Retail Stores Group Inc., Philippines. Joining him on the panel were top Sri Lankan corporates Hanif Yusoof – Group CEO, Expolanka Holdings PLC, Suren Fernando – CEO, MAS Holdings (Pvt) Ltd and Nalin Karunaratne – Director/CEO, Ceylon Biscuits Ltd and CBL Exports (Pvt) Ltd.
In his keynote address Jonathan Moreno said that the severity of the pandemic can be seen by the ADB conducted survey in Philippines revealing that out of 74,000 firms surveyed, 40% were closed during the pandemic out of which 16% were permanently closed and 78% saying that they have either decreased or stopped staff payments. “In addition to the challenges faced due to quarantine measures, travel restrictions and inadequate tech infrastructure, executive myopia, attitudinal shifts in the workforce, analog mindsets, outdated business models, silo mentality, skills, leadership and capability gaps, transactional relationships with stakeholders, performance management and governance were some of the specific challenges that we faced” and added that Metro Retail responded with strategies to ensure team welfare and security, financial stability, business continuity, moving to scenario-based stress testing, creating new delivery channels, governance, and communication models.
Describing various events in the past which led to strategies being implemented to make the business agile, and lead and think on its feet had helped its successful response to the pandemic, Hanif Yusoof said “as a global organization with a large monthly overhead, our main challenges were the working capital required to keep the system going with potential losses for the next 6 months, health & safety of our employees, and possible delayed payments from customers aggravating the capital requirements” adding that adopting work from home policies and opening hotlines for employee support, involving the Main Board on a weekly basis with management, focusing on the short term when the future is unclear played a critical role in Expolanka’s successful response to the pandemic.
“Amidst many challenges including order cancellations and pushbacks, operational stability, and the large workforce, our approach at MAS in responding to the pandemic was very clear in that our first and foremost concern was to protecting lives and livelihoods of our people which has been our motto and principle. We have set up many top-of-the-line care centers to treat our impacted employees. This employee first strategy has enabled us to build trust and engagement at all levels including at the shopfloor. We also ensured open, honest, quick communication with our customers regarding the impact on their deliveries” said Suren Fernando. He also added that amongst others, the support of the Board including giving management the independence and autonomy to make calls and move on, and digitalization programmes as positive factors in responding successfully to the pandemic.
“With over 6,000 employees, 24-hour manufacturing, 12,000 farmers supplying produce for our manufacturing processes, distributors, and over 150,000 retail outlets who depend on our brands, CBL’s foremost concerns, in our response to the pandemic, lay in ensuring the health & safety of employees, and ensuring food safety & security in fulfilling a large-scale responsibility to the country. We went to the extent of upgrading facilities in hostels where our employees were residing to ensure their health & safety and made certain that we cared for even the families of our employees who were impacted by the virus which enabled us to gain great trust amongst our employees. Furthermore, any changes to the manufacturing facility were done only with the approval and concurrence of the health authorities. We also ensured that our facilities and processes were always in conformance with the SLS and other standards making us ready even for unannounced compliance audits” said Nalin Karunaratne. He added that sticking to the basics and doing the right things, not taking short-cuts even in the most challenging times, and relying on wisdom which overpowers business rationale helped them to successfully face the pandemic.
In his closing remarks, moderator A. R. Rasiah said that the employee first approach including focus on employee health & safety, wellbeing and caring, and livelihood protection which helped to obtain the trust, support, commitment, and cooperation of their people was highlighted by all panelists as the key and foremost strategy that helped them successfully navigate their companies amidst the challenges of the pandemic.
Sri Lanka’s Ceylon tea prices weak, output fall expected
ECONOMYNEXT – Sri Lanka tea prices remained weak in the third week of July amid with slightly lower volume being sold from a week earlier, and industry expecting crop intake to fall, as rains ease and fertilizer problem starting to be felt, industry officials said.
Preliminary information from estates indicated that crop volumes may fall in the coming weeks, market participants said. There had also been quality issue in recent auctions brokers said.
There are anecdotal evidence of tea farmers experiencing problems in getting fertilizer on time after Sri Lanka banned chemical fertilizer.
On the buying side, currency problems in Turkey has also hit purchasing power.
Sri Lanka sold 6.8 million kilograms of tea in the auction of July 19 and 20, down from 7.1 million kilograms a week earlier.
It was made up of 0.95million kilograms of Ex-Estate teas (mainly high grown teas sold while in the factory itself to retain quality) and 2.8 million kilograms in Low Grown (Leafy/Tippy) teas.
Last week the Low Grown tea sale average was 630.10 rupees up by 7.77 rupees from a week earlier. BOPF teas maintained prices from last week.
This week, a few select BOP bests gained while the rest maintained last week’s prices.
Select best FBOP/FBOP1were firm and then eased marginally as the sale progressed. Bests and cleaner below bests gained while the rest maintained prices.
Well-made varieties and cleaner below bests FBOPF/FBOP1’s in general maintained steady prices while others declined following lower quality.
Last week, the High Grown auction average was tea sale average of 545.47 rupees.
This week in BOP teas, select best and best westerns dropped 20-30 rupees a kilogram.
Brighter below bests declined by 10-20 rupees a kilogram while the balance along with the plainer varieties held firm prices from last week.
BOP Nuwara Eliya prices were irregular following lower quality.
Better Udapussellawa’s declined 20 rupees per kilogram whereas the balance were firm towards the end of the auction. Uva’s maintained last week prices.
In BOPF category, a few best westerns went up by 50 rupees a kilogram while the others gained to a lesser extent.
Brighter sorts in the below best category went up by 30-50 rupees a kilogram while the balance teas along with plainer varieties were irregular. BOPF Nuwara Eliya’s followed a similar trajectory to the BOP teas.
Better Udapussellawa’s were irregular while the rest together with the Uva’s maintained.
Last week, the Medium Grown auction average was 520.13 rupees up 2.37 rupees from a week before. This week well-made OP/OPA’s gained 10-20 rupees while the balance were firm and as the sale progressed, gained marginally.
BOPF better sorts were lower, brokers said, while well made BOP teas maintained and the rest declined by 20-30 rupees a kilogram.
Select Best FBOP’s eased in general.
FF1’s declined 10-20 rupees a kilogram,.
High grown BP1s were irregular while PF1 better teas gained 20 rupees a kilogram.
Mid grown BP1s declined 10-20 rupees a kilogram while PF1s followed a similar trend to their BP1 teas. Low grown BPIs better sorts gained 20 rupees a kilogram, while better PF1 teas gained 10 rupees while the rest were irregular.
Crop and weather
Westerns and Nuwara Eliyas recorded a slight decline in crop whilst the Uva/Udapussellawa and Low grown districts maintained, Ceylon Tea Brokers said.
A general decrease in crops were seen in the previous weeks, leading to low volumes at this week’s auction.
The Department of Meteorology forecasts heavy showers with strong winds in the Nuwara Eliya region, eavy showers are expected in the Ruhuna and Sabaragumwa, in the coming week.
The Western planting districts including Nuwara Eliyas reported bright mornings with scattered evening showers. The Low grown region had bright mornings with scattered evening showers.
Some Sri Lanka firms could be hit on import controls as reserves fall: Fitch
ECONOMYNEXT – Some Sri Lankan firms could be hit while firms in essential goods may be less affected and import substitution firms could benefit if import controls are tightened on weak external finances, Fitch, a rating agency said.
“Sri Lanka sovereign’s weak external finances will affect corporates importing non-essential finished goods such as consumer durables more than corporates importing essential finished goods such as pharmaceuticals, food or clothing,” Fitch said.
“At the same time, we believe restrictions are less likely in the near term on the importation of raw materials for the domestic manufacture of essential products such as personal care, or for those industries serving as import-substitutes such as tyre and footwear manufacturers.”
Inflated Reserve Money
Sri Lanka’s central bank has been injecting liquidity (inflating reserve money supply in excess of the external monetary anchor or peg) keeping interest rates and credit out of line with the balance of payments and triggering forex shortages.
The central bank has lost foreign reserves as the liquidity was used in state salaries and later in cascading bank credit, and the news money redeemed against foreign reserves for imports or debt payments at a non-credible peg (convertibility undertaking).
The convertibility undertaking has far shifted from around 185 to 203 to the US dollar since early 2020. After convertibility was restricted for trade transactions, as well as some capital transfers banks started to ration dollars.
Parallel exchange rates have also risen as a result.
Due to Mercantilist beliefs – which are also taught in Keynesian universities – monetary instability has been blamed on imports, and authorities tried to control imports.
In Sri Lanka oil often is blamed for currency falls, though liquidity injections in 2015 created a currency crisis as global oil prices collapsed.
However as credit driven by the new liquidity shifted to permitted areas, the trade deficit had exceeded the 2019 levels by May 2021.
In June some import restrictions were relaxed.
Among Fitch Rated firms, consumer durables sellers were likely to be most affected.
“Singer (Sri Lanka) PLC (AA(lka)/Stable) and Abans PLC (AA(lka)/Stable) are the most exposed among Fitch-rated corporates to tighter import controls, due to the discretionary nature of their products,” the rating agency said.
“A tightening in import controls may exert pressure on both entities’ ratings, owing to low headroom. However, the availability of buffer inventories, a degree of local manufacturing, and potential group synergies in the case of Singer, could help mitigate the impact in the near term.”
Meanwhile firms that critics call crony import substitution firms which have actively lobbied politicians for protection in the past to create a domestic ‘black market’ at high prices could benefit.
“We expect sales volumes for domestic manufacturers to rise in the near term as they attempt to fill shortages created by import restrictions,” Fitch said.
“Therefore, corporates such as the domestic tyre manufacturer Ceat Kelani Holdings (Private) Limited (CKH, AA+(lka)/Stable), footwear manufacture and retailer DSI Samson Group (Private) Limited (DSG, AA(lka)/Stable), as well as electric cable producer Sierra Cables PLC (AA-(lka)/Negative), may be long-term beneficiaries as their products serve as import substitutes.”
The impact on alcohol, beverage and phamarceuticals may be neutral.
“We believe pharmaceutical manufacturers and distributors such as Hemas Holdings PLC (AAA(lka)/Stable) and Sunshine Holdings PLC (AA+(lka)/Stable) are less likely to see tighter import restrictions despite significant import exposure,” Fitch said.
“This is because of the essential nature of their goods, and limited availability of their products in the local market.
“Hemas and Sunshine have limited domestic manufacturing capabilities for certain generic drugs, while around 90% of the pharmaceutical products they sell are imported.
“This is because domestic pharmaceutical manufacturing is at a nascent stage, with producers lacking the technological know-how and infrastructure near term as they attempt to fill shortages created by import restrictions.”
Sri Lanka Insurance holds Annual General Meeting via Zoom online platform
Sri Lanka Insurance holds its Annual General Meeting via Zoom online platform on 7th July 2021. The Chairman and Board of Directors were participated for the meeting from their respective locations adhering to the Covid 19 health and safety standards issued by Health authorities.
During the Annual General Meeting, it was declared that the company has closed year 2020 in a positive note recording phenomenal growth with exceptional service innovations.
Sri Lanka Insurance the premier insurer to the nation recorded stellar performance in 2020 to record a Profit before taxation of Rs. 7.9 billion for the year2020 , with a strong improvement in combined Gross Written Premium (GWP) of Rs. 39.4 billion denoting growth of 16.65%.
In the year of 2020 Sri Lanka Insurance reported 29.9 % growth in life insurance premium increasing to Rs.19.8 from 14.8 billion whilst Sri Lanka Insurance General reported 6.27% premium growth increasing to Rs.20.1 billion. General insurance contributed 51% towards the total GWP whilst Life Insurance contributed 49 %.
In continuing with its tradition of leadership, Sri Lanka insurance in 2020, surpassed its own record to declare a sum of Rs.8.6 billion as bonus to policyholders. The cumulative life insurance bonus paid out during the past 15 years tops a massive Rs.73.2 billion making the SLIC bonus payout unmatchable.
“Inclusive insurance or as I like to call it “Insurance for All” is something I have consistently reiterated, for it is without a doubt one of the best ways to safeguard the quality of life for every Sri Lankan. Insurance helps everyone, even those at the base of the economic pyramid . A majority of Sri Lankans are unaware that Insurance acts as a safety net in times of crisis and can provide people and businesses with lifeline to help them recover from unforeseen events to re-establish their livelihoods. What is more disconcerting is that the lack of awareness has given rise to the misconceptions that insurance is a product for a privileged few. The task of delivering “Insurance for All” is no easy feat. However, with over 59 years of expertise in serving the Sri Lankan market, I am convinced SLIC is best equipped to lead the movement to make insurance accessible to all.” noted Mr.Jagath Wellawatta, Chairman of SLIC.
Notwithstanding the challenging macroeconomic environment and large-scale disruptions due to the COVID-19 outbreak, SLIC delivered an excellent performance in 2020, even outperforming the industry on many fronts. With our perceptions and outlook coloured by the pandemic, we embarked on a new strategic planning exercise aimed at mapping out SLIC’s growth trajectory for the next 3 years. Eager to put our plan into action, we advanced the first phase of our agenda and undertook a broad based restructuring initiative to embed a greater degree of management oversight across the General business and the Life business, which we felt will pave the way for SLIC to systematically improve the scalability of each business, based on specific opportunities in the market.” noted Mr. Chandana L. Aluthgama, Chief Executive Officer of SLIC.
Established in 1962, Sri Lanka Insurance Corporation is the largest government-owned insurance company in Sri Lanka, with a managed asset base of over Rs.235 billion and a Life fund of Rs. 134 billion, the largest in the local insurance industry. Sri Lanka Insurance ranked as the ‘Most Loved Insurance Brand’ and the ‘Most Valuable General Insurance Brand’ in the country by Brand Finance for the fourth consecutive year. Further Sri Lanka Insurance recognized as a “Great Place to Work” in Sri Lanka by Great Place to Work. The company is on the mission of being a customer focused company which constantly innovates in providing insurance services to customers and is now serves customers through an extensive network of 158 branches.
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