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Spike in global raw material prices hurt SL’s corrugated carton industry

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Sri Lanka’s corrugated carton industry is facing hard times with many manufacturers struggling to insulate themselves against global price escalations which an industry player warned posed the threat of business closure with significant challenges to their financial performance.

“The biggest challenge the industry has to grapple with is the constantly fluctuating raw material prices. There is an acute global shortage of paper due to the Covid-19 pandemic, with many manufacturers experiencing disruptions in business and supply chain”, he cautioned.

The pressure on freight has also contributed to the upsurge in paper prices by over 25%, with the upward trend expected to continue, he said.

Sri Lanka’s annual total carton production is approximately 150,000 metric tons. However, there was no adequate growth visible in the industry due to either slow or minus growth in the economy in the recent past, he noted.

A few local companies expanded production capacities by adding extra automatic box making plants anticipating economic growth in the country. This initiative saw a significant increase in manufacturing capacity, with the industry geared to accommodate new opportunities, he noted.

However, many paper manufacturers are now operating below the normal production capacity, and due to low consumption of commodities, waste paper availability has nose-dived in the backdrop of world pulp prices spiraling by around 45-50%, industry officials said.

The local corrugated carton industry predominantly caters to the B2B market. As a result, the industry has to work with very thin margins due to heavy competition among the manufacturing companies. Hence, the demand for cartons is comparatively low, they explained.

The history of the corrugated carton industry in Sri Lanka goes back to many decades. Initially, companies started manufacturing boxes with Double Facer machines and with the expansion of other industries and markets, corrugated machinery was converted into fully automated lines. At present, there are over 30 corrugated carton manufacturers, of which seven account for 70% plus market share.

Packaging is an integral part of a supply chain. The corrugated packaging industry is a vital component of the economy as it caters to the needs of many sectors in the economy, food and beverages, fast-moving consumer goods (FMCG), industrial and pharmaceuticals. E-commerce is also another key trend that has created a huge impact on corrugated carton demand. Hence, the growth of the corrugated packaging industry is not independent, but correlated with the growth of the other industries and GDP growth, they stressed.

“The appearance of the box, strength and short lead times are the key deliverables that customers want from the industry. The appearance and the strength are totally dependent on the quality of the paper used for manufacture and the printing facilities of the individual manufacturer”, the officials outlined.

A few decades ago, the machines were imported to Sri Lanka from Japan with some reconditioned units purchased. With the development of the Chinese machinery manufacturing industry, where they customized machine technology embedding robotic packaging automation, many local companies sourced their machinery from China, they further said.

Two decades ago, Chinese machinery was considered of inferior quality but today, the Chinese machines are comparable with those made in Europe, they added.

There were earlier many small-scale corrugated carton manufacturers and many of them used the Double Facer corrugating machines. In these companies, two layers were produced separately and thereafter the layers were pasted manually. As a result, the volume produced by these companies was low and the quality was also not up to the expected standards, the officials continued.

Consequently, the cost of production and the delivery lead time were also considered too high in these companies. Therefore, many of them had to quit the business, while a few others acquired automatic box manufacturing plants resulting in many Sri Lankan manufacturers opting for automatic plants, they noted.

Another key factor of the industry is that the cartons manufactured in Sri Lanka are of high-quality as quality materials are sourced from Europe, American Sub Continent, Australia and various other parts in the world, they said.

In developed economies, when customers purchase corrugated boxes, they more or less look for the bursting strength of the box, not the variety or the grammage of paper being used. However, unfortunately, in Sri Lanka most customers demand grammage and the variety of papers instead of box strength. Eventually, in most instances, the corrugated packaging produced in Sri Lanka is over specified. Sadly, this is also the case with many multinational companies operating locally.

The same companies in India use Test Liner on Outer Ply, while they demand Kraft Liner paper for this purpose in Sri Lanka, the industry officials said.

In keeping with the government’s commitment to develop local industries, there are positive expectations that the corrugator packaging industry would be reviewed and given a sustainable opportunity to grow, the officials added.

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HNB promotes cashless transactions; joins CBSL’s ‘Rata Purama LANKAQR’ campaign

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Chief Guest for the event Money and Capital Markets and State Enterprise Reforms State Minister Ajith Nivard Cabraal, CBSL Deputy Governor and National Payments Council chairperson Yvette Fernando, and CBSL Payments and Settlements Director D. Kumaratunge with HNB Executive Director and Chief Operating Officer Dilshan Rodrigo as he completes a transaction via HNB SOLO at a merchant stall

HNB PLC, partnered with the Central Bank of Sri Lanka to promote the Colombo-leg of ‘Rata Purama LANKA QR’ campaign at Diyatha Uyana, to raise awareness and encourage the public towards cashless payments.

Having already linked LANKA QR to its digital payment app HNB SOLO, the bank was among other financial institutions and telecommunication partners in joining efforts to make cashless QR-code based payments the standard for mobile phones and digital payments countrywide, in moving towards a cashless and digitally-savvy Sri Lanka.

“We are entering a new era of financial technology, where almost all of our daily transactions will require no physical banknotes, but just a smartphone and internet connection with our bank account integrated to a digital payment app.

The Central Bank’s national directive for banks and financial institutions to adopt and integrate LANKA QR into their existing digital payment solutions has prompted an aggressive onboarding of merchants to the new payment solution across the country. With our extensive customer base, SOLO is no doubt a significant contributor to this innovative initiative,” HNB Deputy General Manager – Retail and SME Banking, Sanjay Wijemanne said.

The Colombo-leg of the ‘Rata Purama LANKA QR’ campaign raised awareness regarding SOLO’s many facilities, including zero human interaction, efficiency, and eliminated risks that influenced many vendors to come on board.

 

(HNB)

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Bank of Ceylon empowering nation with Lanka Q

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The Bank of Ceylon in its mission to assist the government initiative to empower Sri Lanka through digital technology is joining the customer awareness campaign of Central Bank of Sri Lanka’s Lanka QR digital platform.

Bank of Ceylon had its most recent major awareness programs in Borella and Maharagama along with the other branches in Colombo District in line with the Central Bank’s main program held in “Diyatha Uyana” with the participation of all Lanka QR certified banks on the same day.

Central Bank of Sri Lanka (CBSL) has organized a series of awareness and promotion campaigns for popularizing Lanka QR with the participation of all Lanka QR certified financial institutions throughout the country with the aim of speeding up the customer adaptation process towards digital banking.

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Sri Lanka Insurance posts a staggering revenue of Rs. 55.2 billion during 2020

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Amidst the turbulent and challenging year Sri Lanka Insurance has closed year 2020 on a positive note recording phenomenal revenue growth with exceptional service innovations.

Sri Lanka Insurance the premier insurer to the nation recorded stellar performance in 2020 to record Rs. 55.2 billion revenue for the year, a marked improvement on the Rs.48.6 billion in the year 2019, a press release said.

It adds – In the year of 2020 Sri Lanka Insurance reported 30 % growth in life insurance premium increasing to Rs.19.2 billion whilst general insurance reported 7% growth in premium grew to Rs. 20.1 billion. The company achieved a combined Gross Written Premium (GWP) growth rate of 17 % during the year. 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.8.2 billion as bonus to policyholders. The cumulative life insurance bonus paid out during the past 10 years tops a massive Rs.54 billion making the SLIC bonus payout unmatchable.

‘As the national insurer we have witnessed yet another challenging year and the consequences brought out by pandemic outbreak urged us to conduct our business operations in a more empathetic manner. SLIC has always taken the lead to protect the nation and during this difficult time Sri Lanka Insurance launched many initiatives to sustain country’s health defenses while ensuring our customers receive uninterrupted insurance service.

‘As the pioneering insurance company in Sri Lanka we are in the forefront to inculcate the importance of insurance to the masses as a national responsibility on our shoulders. We will further strengthen internal capabilities to serve the nation through innovative and affordable insurance solutions which cater to all Sri Lankans under the ‘Insurance for All” concept. Even though the times are defining we will continue protecting our nation turning obstacles into opportunities.’ noted .Jagath Wellawatta, chairman of SLIC.

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