By Hiran H.Senewiratne

Sri Lanka needs a national solution to the issue of corruption in the collection of tax revenue. This is a white collar crime that affects the whole of society. Accordingly, the local tax collection process should be streamlined to minimize corruption and increase revenue, Commissioner General, Department of Inland Revenue (D.I.R) D.R.M. Hapuarachchi said.

‘The tax system and administration in developed countries, especially in the Northern European region, normally define their revenue targets on a yearly basis, Hapuarachchi added.

‘This enables developed countries to understand where they stand in relation to tax revenue. Without a target you don’t know where the revenue goes. Therefore developing countries always define tax targets and the tax collection authorities know what the position is with regard to tax revenue at the end of the year, Hapuarachchi said recently at a function where the Institute of Chartered Accountants (CA-Sri Lanka) unveiled freshly revamped Chartered Tax Advisor courses. The event was held at CA-Sri Lanka auditorium.

Hapuarachchi said that in some countries tax authorities try to make risk assessments, while in countries like Australia there is a system called the Compliance Model. The Model is a structured way of understanding and improving client compliance. It helps to understand the factors that influence client behavior, such as that of taxpayers, consultants and all other stakeholders and to enables the authorities to apply the most appropriate compliance strategy.

‘Tax policy should be appropriately forward looking and equitable. But where the tax administration is concerned officers with personal experience, honesty and dedication are necessary to create an efficient and effective tax collection system, the DIR head explained.

President, CA Sri Lanka Sanjaya Bandara said that as a pioneer in tax education, the CA’s School of Taxation has been in the forefront of producing resourceful and skilled tax professionals since the launch of the CTA programme in 2011.

‘Employers often seek individuals who specialize in tax knowledge along with the ability to handle complex tax issues. The CTA qualification can significantly enhance one’s career prospects, he said.

* Riding the wave ever since E. B. Creasy acquired TATA Steel

* Penetrating the lucrative South Indian market

* New manufacturing facility worth Rs. 1.3 bn to deal with production capacity challenges

* Company working on direct exports to Canada, South Africa and the Middle East

By Sanath Nanayakkare

Lanka Special Steels Limited (LSSL), the leading GI wire manufacturer in Sri Lanka has been strengthening its position in the export market since it was acquired by E. B. Creasy & Co. PLC from TATA Steel in 2015. Today the company is leveraging its success on five pillars. They are namely; its strategic capacity add-ons, its knowhow gained from India’s TATA Steel, sourcing of best raw materials, use of world-class European machinery and feeling the pulse of the South Indian market which creates significant effects of transactions on the company’s balance sheet.

These facts were revealed to the media by Pravin De Silva, Director – Chief Executive Officer- LSSL after the Company which was earlier known as TATA Steel, unveiled its new state-of-the-art manufacturing facility at Lanka Industrial Estate (LINDEL), in Sapugaskanda on Monday.

“We have established relationships with Hindustan Zinc, TATA Steel, JSW Steel, and other internationally reputed suppliers for raw materials. So LSSL guarantees the use of high-quality inputs resulting in superior finished products of unparalleled quality. For example, our hot dipped Gi wire is the only one with SLS 139:2003, and our barbed wire possesses the SLS 31:1988 certification as the only barbed wire in the market with SLS certification. So we are successfully exporting to the U.S.A. Canada, India and many other countries. Lanka SSL has obtained Bureau of Indian standard certificate of IS 280 for galvanized steel wire in order to supply to Indian market. South India is a good market for us. There are two reasons for this. One thing is South India is freight-friendly. And the other thing is most of the GI wire producers in India are located in North India – about 1000 kms from South India. But the distance between Sri Lanka and South India is less than 100 kms. This is a great advantage for us to penetrate into South Indian market. As a former TATA company we have all the knowhow and we understand the requirements of South Indian customers and already a sizable business comes from South India” Pravin De Silva said.

“As the domestic market is going through a tough time, we are planning to export 70% of our products and sell the balance 30% in the domestic market. Earlier we were selling about 90% of our products in the domestic market. Now we see that there is enough scope for exporting our products. However, in catering to the export market, we saw that our production capacity was a bottleneck. So we had to address that issue and that’s why we set up a new plant in Sapugaskanda with an investment of Rs. 1.3 billion,” he said.

“Currently we are exporting to the U.S.A. indirectly. I mean, we export to the U.S.A through Trinity Steel. Trinity is exporting hard wire nails and we supply them with 75% of their GI wire requirement. They produce about 1,000-1,500 metric tons a month. We supply GI wire to them and they export the end-product. Earlier they were importing 100% of their GI wire requirement and we were able to stop that foreign currency outflow. increase its production capacity from 15,000 MT to 30,000 MT per annum

“If we produce at the full capacity of 30,000 per annum – that will come to about USD 50 million foreign currency savings per year. With the capacity add-on, we are planning direct exports to Canada, South Africa and the Middle East. We are now working on to capture these markets. There’s a good demand for the end-product in countries such as Canada. That’s not for GI wire but for the end-product such as wire nails, hangers etc. Currently we are manufacturing an L-shaped article for Canada now which we export one or two containers every month. Our domestic value addition to the products is about 30%-35%,” he said.

He said that with the appreciation of the rupee, the company’s profit margin has reduced but at the end of the day what is important for the company is volume and that’s why they are trying to increase production volume to ensure a healthy balance sheet.

He noted that the Free Trade Agreement with India helps LSSL to enter the Indian market with a 5% duty benefit.

Further speaking he said: “In 2020, the domestic demand was about 13,000-16,000 tons out of which we supplied 75%-80%. Now the demand has gone down. We realized that with our capabilities, knowledge and experience we could easily reach the export market. When exporting we can’t be an on and off supplier. We had to be a serious player. Now we have everything in place to be a serious player in the export market.”

He concluded by saying that investing in a down market makes sense when you can reap its benefits in a turnaround.”

Arudpragasam, Chairman of E.B. Creasy Group said that the new plant can break even at 15-20% of its production capacity.

By Hiran H.Senewiratne

The CSE has witnessed Rs. 700 million worth net foreign selling in the first eight days of June. In the past four consecutive market days, the net outflow was Rs. 678 million, while so far for June the figure is Rs. 682 million, stock market analysts said.

Despite the heightened foreign selling, the CSE still reports Rs. 678 million in net foreign buying year- to- date, down from Rs. 1.4 billion as at end May and Rs. 4.4 billion in mid-February. Last year, net foreign inflow to CSE hit a 10 year high of Rs. 30.6 billion, market analysts added.

Amid those developments the stock market was positive yesterday, due to positive attitudes to Sri Lanka from foreign creditors, including the Paris Club and Non Paris Club. Consequently, both indices moved upwards. The All- Share Price Index went up by 54.8 points and S and P SL20 rose by 35.6 points. Turnover stood at Rs 1.5 billion with four crossings. Those crossings were reported in HNB, where one million shares crossed for Rs 130 million, its shares traded at Rs 130, Sampath Bank 1.8 million shares crossed to the tune of Rs 91.8 million, its shares traded at Rs 51, JKH 250,000 shares crossed to the tune of Rs 35.4 million, its shares traded at Rs 141.50 and Access Engineering 2.1 million shares crossed for Rs 31.9 million and its shares fetched Rs 15.20.

In the retail market top seven companies that mainly contributed to the turnover were; LOLC Finance Rs 151 million (25.9 million shares traded), CIC Holdings Rs 144.2 million (2.3 million shares traded), HNB Rs 84.9 million (632,000 shares traded), Sampath Bank Rs 78.8 million (1.5 million shares traded), Softlogic Rs 58.6 million (6.4 million shares traded), Browns Investments Rs 57.2 million (10 million shares traded) and Agstar PLC Rs 44.2 million (4.1 million shares traded). During the day 116.7 million share volumes changed hands in 16000 transactions.

It is said that high net worth and institutional investor participation was noted in Vallibel Finance, Union Bank, and JKH. Mixed interest was observed in LOLC Finance, CIC Holdings and Hayleys, while retail interest was noted in Browns Investments, Softlogic Capital and Nation Lanka Finance.

Diversified Financials sector was the top contributor to the market turnover (due to LOLC Finance and Vallibel Finance) while the sector index gained 4.14 percent. The share price of LOLC Finance increased by 40 cents to Rs. 5.50. The share price of Vallibel Finance moved up by Rs. 1.60 to Rs. 32.

The Food, Beverage & Tobacco sector was the second highest contributor to the market turnover (due to Browns Investments) while the sector index increased by 1.52 percent. Yesterday, the Central Bank’s US dollar buying rate was Rs 294.91 and selling rate Rs 309.22.