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Business Today Top 10
Awards 1996 - 1997

Awards for Corporate Excellence

The ‘Business Today’ Top Ten Awards ceremony was held on 15th June at the BMICH and was well attended by the cream of Sri Lanka’s corporate sector. Prof. G.L. Pieris, minister of Justice, Constitutional Affairs, Ethnic Affairs and National Integration and deputy minister of Finance was the chief guest. The minister called the event ‘an attractive forum for the recognition of excellence in the corporate sector.

Chairman of the Board of Investment, Tilan Wijesinghe speaking at the event highlighted the role of ‘Business Today’ in ‘formulating and publishing a maga­zine designed to disseminate information about the ac­tivities of the private sector and the role it has played in developing our economy’.

Mano Selvanathan, chairman Ceylon Chamber of Commerce also speaking at the event congratulated the winners on managing companies that are of international standards and emphasised the importance of the private sector becoming fully fledged adults, displaying maturity and not depending too much on government handouts.

CEO’s of the Top Ten companies receiving awards made bold statements acclaiming the Awards scheme which they felt was a timely initiative, many of them offering suggestions for its improvement and enhancement. They also made reference in their speeches to the prevailing business climate in the country, the achievements of their individual institutions, and the high emphasis placed on human resources and management.

The evening was a rare occasion for top management of the country to come together on one platform and to express their views and voice their industry problems and concerns. Here we reproduce the speeches made at the awards ceremony.

Speech by Dinesh Weerakkody

‘ Sri Lanka’s corporate sector deserves recognition. Especially because our private sector accounts for 75% of our total investment in this country and also is in the lead when it comes to job creation and providing employment.’

Firstly, I wish to thank “Business Today” for having given me this opportunity to speak a few words at this ceremony which is being held to recognize our national leaders in the corporate sector.

This ceremony which has been organized for the second time by Business Today is a tribute to excellence in the private sector. Business Today should be congratulated for creating a mechanism to recognize and reward ten outstanding companies based on their financial performance.

Sri Lanka’s corporate sector deserves recognition. Especially because our private sector accounts for 75% of our total investment in this. country and also is in the lead when it comes to job crea­tion and providing employment. Furthermore, the private sector of this country has done Sri Lanka proud. Their excellence manifolds itself not only in Sri Lanka but even in Europe and North America.

The Top 10 as you know is now in its second year. The Top 10 concept was conceived by my good friend, the managing director of Business Today who was of the view that an open com­petition like this would add to the credibility of our private sector, help a company to improve its transparency and act as a yardstick for potential employees, investors and the general public in their dealings with these companies.

On my part I was keen to find out how our corporate giants would fare against each other once evaluated on a standard set of criteria, because we have heard many times companies saying they are the No. 1 company in Sri Lanka. So when Business Today entrusted me with this job, I got together a team of people consisting of accountants, lawyers, stockbrokers, businessmen, university academics, university students, journalists and a few MBA’s and re­quested them to come up with a set of criteria, that in their view would be the best possible yardstick to measure excellence in our corporate sector.

So once this was done, we found that we had identified eleven criteria which had the support of almost the entire team. Then we decided on the weights by taking a mean score, arrived at again after asking a few people who are closest to the action – senior executives, directors and financial analysts – who are in a position to read the minds of employees, investors and customers.

As for the selection itself, it was done by identifying the 100 most traded shares. Then we used turnover and profit to zero in. Then we calculated the total score for each of these companies that got through our selection process and ranked them according to their overall score. The ratings were used uniformly and there was no variation whatsoever in the overall application of the weights.

I am happy that the Business Today selection process has generated great enthusiasm to the extent that many people contacted me and Business Today wishing to know why their company was not on the list. Of course, we have had our share of criticism also, with people saying we should have more qualitative factors inbuilt into the selection process and give more weightage to productivity and investor criteria. We are looking at including some points for quality of product, of service, innovativeness and quality of management, next year.

Perhaps another category that should be incorporated could be social responsibility demonstrated by the business sector. We must not forget that Sri Lanka has gone through two class-based insurgencies for which we all must take responsibility and today we are saddled with a costly ethnic war which is slowly but surely bleeding our economy by the day. At this juncture, I would also like to issue a call to the business community, to follow the great precedents of social philanthropy set elsewhere in the world, most notably in the United States, but more recently in India.

The social sector is the third sector along with government and the business sector. It is needed because of the limitation of party politics, which looks to what would win elections and the limitation of business which gives pride of place to the profit motive.

In the United States non-profit organizations, which comprise the social sector, operate in a wide range of public service fields and represent half of the country’s universities, hospitals and most of the country’s civil organizations. They play a vital role in mobilizing public attention to social problems and needs. In fact most of the social movements that have animated American society over the past century and made it a better place, took shape within the non-profit sector.

Some examples would be the Civil Rights Movement, the Anti- war Movement, Environment Movement and the Women’s Equality Movement. These-organizations helped to give voice to under­represented groups and points of view by helping to integrate these perspectives into social and political life. These-organizations function as a kind of social safety valve. It is no exaggeration to say that they play a key role in preserving social peace in that country.

In the early 1900s, Andrew Carnagie and John D. Rockerfeller led the way for the establishment of benevolent foundations. The foundations they established distributed private wealth for public benefit. This money may have been relatively small in comparison to the resources of the US government and corporations but when it was targeted creatively, the leadership value was tremendous. The need for similar initiatives in Sri Lanka cannot be more urgent than today, at a time what the country is locked in an unending conflict. Sri Lanka awaits the counterparts to the Carnagies and the Rockerfellers and the Tatas and Birlas of India who created great foundations to support ‘ the social sectors in their respective countries.

Before I conclude, I wish to pay a special tribute to the CEO’s and employees of the Top 10 companies and wish them even greater success in their drive towards excellence and also a special word of thanks to my good friend Keith Bernard for assisting me in putting this Top 10 selection together.

Finally, I would like to end my speech with the words of the famous Japanese entrepreneur Motsushita, who once said, profit should not be a reflection of corporate greed but profits are the rewards of the firm, if it continues to provide true value to its consumers to help its employees to grow, and to behave responsibly as a corporate citizen. What is important here is that this outlook is based on an acceptance that a firm does not function in a vacuum, that its success is dependent on the fulfillment of certain obligations to society.

Speech by Thilan Wijesinghe, Chairman, Board of Investment

‘Primarily, I foresee that unless major reforms are implemented in our educational system, we will leave an entire generation of intellectually and of physically capable youth from benefiting from the fruits of wealth created through private enterprise.’

Today we are gathered here to recognize the achievements of the private sector and at the outset I must congratulate the “Business Today” magazine for not only recognizing the achievements of the private sector, but also formulating and publishing a public magazine designed to disseminate information about the activities of the private sector and the role the private sector has played in developing our economy.

It is important to note that today, more than 90% of industrial output in Sri Lanka is generated by the private sector, compared to less than 50% in 1980. Furthermore 70% of employment also today is generated by the private sector. It is due to this importance that the government has today, in my opinion, put in place some of the most pro-investment, pro-private sector policies at any time during the post independent history of Sri Lanka. And this is not simply lim­ited to physical incentives, which I consider are merely sufficient con­ditions for private sector growth but we are focusing on what I call the necessary conditions. These include strict adherence to stabiliz­ing the macro economic fundamentals of Sri Lanka, including the re­duction of the budget deficit and inflation commitment to enhanc­ing the infrastructure of our country, in areas such as telecommuni­cation, power, ports and roads.

In particular, I would like to single out the achievements of the telecommunication sector. Last year there was a 33% growth in fixed line telephones installed. Roughly 90,000 new telephone lines were installed by the Sri Lanka Telecom and the private sector, which was three times the average of the previous three years and cellu­lar lines connected grew by 60%.

The plan for the next few years is to focus on a few large scale highway development projects connecting the airport, the central hills of Kandy and the southern highway. The third initiative under­taken by the government is public enterprises reform, where today virtually the entirety of the plantation sector is in the hands of the private sector.

I cannot think of any single major manufacturing enterprise which is not run by the private sector and in the future, increased proportion of services would also be in the hands of the private sector.

I believe that further structural reforms are necessary in order for the private sector to thrive and these include educational re­forms particulary to bridge the gap between the opportunities that are created by the private sector and the universities. We need to implement labor market reforms and more importantly we need to implement administrative reforms in order to ensure that we have an efficient private sector and to accelerate the process of economic growth.

I believe that the private sector cannot today sit on its lau­rels. The time has come for you to be more actively involved together with the government in implementing much needed structural reforms, in creating further opportunities for our youth to benefit from the opportunities inherently available within a free market economy.

Primarily, I foresee that unless major reforms are implemented in our educational system, we will leave an entire generation of intellectually and of physically capable youth from benefiting from the fruits of wealth created through private enterprise.

It is distressing sometimes to know that the pursuance of wealth through entrepreneurship, sometimes at the grass roots level and even academic circles, in universities in particular, is still perceived to fall within the domain of a privileged few, either by virtue of being born into wealth or having attended the right school or having proficiency in English. Going into business is not perceived as an occupation quite in the same league as becoming an engineer, a doctor or a lawyer.

I believe that the rise and fall of the East Asian economic miracle offers good lessons to Sri Lanka. The rise of East Asia was primarily due to religious adherence to the concept of entrepreneurship and creation of an environment by the governments for entrepreneurship to thrive. In fact the late Chinese leader, Deng Ziao Ping glorified the process of accumulating wealth.

However the fall came about due to one fundamental fact and that is that the process of wealth creation lacked transparency and fairness due to cruelism, nepotism and corruption.

In Sri Lanka, our latent entrepreneurial talents have to be harnessed fully and I believe that these can be harnessed through the process of improving infrastructure, availability of bank financing and seed capital.

However there are certain other aspects that we need to look into and these include eradicating the cultural bias against entre­preneurship where the businessman is seen as an evil “Mudalali” if I were to use a much-hackneyed phrase. All you have to do is to look at the cartoons of Wijesoma where the mudalali is portrayed as one who in fact takes unfair advantage. In fact even newspaper articles very often talk about unscrupulous traders making ungainful profits.

I think the concept that virtually 80% of investment in this country is created by retained profits of the private sector, has not yet been insulated within our educational system.

I also believe that while English may be the essential medium of business communication, the lack of ability to speak it should not override the inherent capabilities of an individual. English should be the means to an end and not the end itself. I think action must be taken to eradicate the concept of cultural imperialism perceived to be practiced by the private sector and particularly more so in the period of the 1960’s and prior to independence.

By way of an anecdote;’ I should point out that Sri Lanka became world champions of cricket without a single cricketer being from one of the two so called elite schools. Therefore today, in addition to patting ourselves on our backs, we must reflect on the obligations of the corporate sector.

Firstly, self-regulation, whereby we become good corporate citizens and do not use our privileged status to gain unfair advantage and where we provide equal opportunities for all cross sections of society to access jobs based on sheer ability.

Secondly, you must all work with the government in advising the government on much needed structural reforms in the education sector.

I believe the teaching of economics and subjects related to business must be made mandatory. You must also work with the universities to ensure that graduates that are churned out by these universities are employable. By way of just one example – about one year ago, the vice chancellor of the University of Moratuwa in his explanation as to why less than a hundred graduates in Computer Science are churned out, explained to me that he was fear­ful that these graduates would either go abroad or would remain unemployed.

However the state today is that in the BOI sector alone, we have more than 600 vacancies for trained software professionals. Furthermore, there is a necessity for us to train the trainers. I find that professors of universities are embracing outmoded economic policies.

Just recently a particular professor espoused the export of rock Phosphate in the Eppawela project as opposed to the export of value added fertilizer. Now I must point out that a very basic eco­nomic analysis would show that the net foreign exchange earnings from the export of value added fertilizer generates over Rs 5,000 million over a 30 year period compared to only Rs 400 million if it was exported in simply rock form.

Therefore, in conclusion I would like to suggest that there is a great deal of perception change that we have to engineer in order to disseminate information to all cross sections of society, of the fruits and the wealth that the private sector can create.

In this context, I would go as far as to propose that 1% of corporate profits should be contributed to a special fund to implement structural changes in our education system. Only then will we achieve true economic emancipation.

Speech by Mano Selvanathan, Chairman, Ceylon Chamber of Commerce

‘I must emphasize the importance of the private sector becoming fully fledged adults and displaying maturity and not depending on too many government handouts.’

I consider it both a privilege and a honor to have been invited to address you at this ceremony to felicitate the giants, the Top 10 companies in Sri Lanka. At the outset I must congratulate Business Today for having organized such a beautiful event. I hope that this will be an annual feature developing in the years to come as the leading event recognizing excellence in corporate Sri Lanka.

The resilience of Sri Lanka’s business community has been amply demonstrated many times over. It withstood the traumas of the southern insurrection of the 80’s, forged ahead despite the shocks of the ongoing conflict and has shown the world that we are second to none when it comes to business management.

In fact the Top 10 companies which are being honored with these awards today, definitely manage companies that are of inter­national standards. I would like to extend my heartfelt congratulations not only to the management but also to their staff.

 Having said that, I must emphasize the importance of the private sector becoming fully fledged adults and displaying maturity and not depending on too many government handouts.

I don’t need to emphasize on the opening of global markets. This is inevitable and just a matter of time, when only the fittest would survive the onslaught of the multinationals. The private sector needs to think ahead and plan meticulously to meet competition. Efficiency, through productivity, human resources development, marketing and cost reduction would be of paramount importance in to such survive a case, in this what tough business environment.

In such a case, what business should demand from any government is an environment of peace, and one with proper facilities where we as the business sector could concentrate on becoming more efficient without having to contend with this distraction of an unsettled political climate.

Let me emphasize by saying that we as the business sector require a climate of peace, a climate of mutual benefit for both employers and employees through better productivity and quality, realistic infrastructure cost caused through the efficient management of utilities, such as power, ports etc., effective and quick decision making. If such ground rules are in place and are effective, the business sector of our country could and would without a doubt, be the finest in the region.

We have to accept that our domestic market is small and for, this reason and for deficiencies of size and economy, companies may have to consider merging with one another and look at the possibilities of relocating or expanding their businesses elsewhere in the region.

I have seen many companies, in order to seize these opportu­nities are already expanding their activities outside Sri Lanka and are consolidating their local operations with profile from such, overseas ventures. This should be encouraged because it would expand the business outlook of the companies to benchmark themselves against the multinationals, thereby raising their own efficiencies. More importantly overseas expansion would be an easier access to international markets.

Mergers and acquisition may be a way of increasing the strength of companies with similar competencies. This has become a world phenomenon where we have seen large banks and other businesses merging, acquiring to evolve, into more efficient entities through their combined strengths.

I have noted with satisfaction a similar trend over the last few months in Sri Lanka where some mergers and acquisitions have taken place. This is very healthy. Many senior managers however, seem to fear the word acquisition. Today it’s a way of business and should be encouraged as long as the rules for such acquisitions are strictly followed. Even national assets like Rolls Royce has now been acquired by Volks Wagon.

Before I conclude, I would like to pose one question to you. The question is, ‘how competitive are we’? Are we geared to take ‘ advantage of the Asian currency crisis? Are we geared to take advantage of SAFTA or have we thought of the outcome in case China adjusts its currency? I feel it’s time for both that private sector anti the government to work closely to research these’ problems and to achieve economic competence and growth.

The Ceylon Chamber of Commerce has finalized a document called ‘The Challenges for Economic Development 1999 – 2001 and strategies to Incentivize Private Sector Commitment for Accelerated Investment and Growth’.

Honorable Minister, this document would be sent to you with an idea of partnership to progress between the private sector and one government.

In conclusion, let me thank once again Business Today for this event and wish them all the best in their endeavors towards publishing an excellent business journal.

Speech by Lalith Kotalawela, Chairman, Seylan Bank

Lalith Kotalawela, Chairman, Seylan Bank

Lalith Kotalawala receiving the award

‘When we contribute towards the success of Sri Lankan entrepreneurs and help them to make their dreams come true, we are convinced that we would be achieving the long sought-after economic freedom for Sri Lanka and her people.’

I am indeed delighted that that the Seylan Bank has been selected by the prestigious ‘Business Today’ to rank among the Top 10 companies in Sri Lanka for the second time in succession. This is a great achievement for us all at Ceylinco Consolidated, particularly as Seylan Bank is only one of our 68 companies and represents 90 of our 200 branches and 13% of our group turnover. We have a cellular organization without a centralized holding company with consolidated accounts.

This year we are celebrating the 10th anniversary of the Seylan Bank. We intend to celebrate this event by opening our headquarters and a millennium branch at Ceylinco – Seylan Towers. We hope that you will join us on this happy occasion.

The mission statement of our bank and Ceylinco Consolidated is to be stable in an unstable world, to be successful and cause success in others. When we contribute towards the success of Sri Lankan entrepreneurs and help them to make their dreams come true, we are convinced that we would be achieving the long sought-after economic freedom for Sri Lanka and her people.

Towards this end, Seylan Bank has been involved in ‘The Young Entrepreneur Project’ in schools, where children as young as 13 are gaining experience in business entrepreneurship. Thus we have invested in the future. The ‘Piyasa Velenda Nivasa’ the unique shop-house concept will make credit available to talented entrepreneurs of all ages who have hitherto, owing to lack of security, have had no access to credit. Many more such products will come in future from our bank, fulfilling the purpose of its existence.

50 years ago, our forefathers celebrated our hard fought politi­cal freedom. We have 50 years later, yet to win our economic freedom and maturity. Poverty is not abolished, in a land so rich in natural resources. Homes are out of reach for the majority of the homeless and despite revolution after revolution by the flower of our youth, unemployment and lack of capital to start one’s own business are still horribly present. We can still deliver. We only need a little help. We need help from visionary authorities to look not into the letter of the law but instead to look for its spirit. We need encouragement and guidance and we need gentleness and understanding when we try and sometimes fail. The entrepreneurs together with the people of Sri Lanka can then be truly free to build a nation of our dreams.

Thank you to all Seylan Bank clients and its directors, senior management and all employees for their loyalty and dedication which made Seylan Bank one of the Top 10, in under ten years of its existence. Thank you ‘Business Today’ for granting us this honor. Thank you honorable minister and all of you distinguished guests for your kind attention.

Speech by Royle Jansz, Director, Distilleries Company of Sri Lanka

Royal Jansz, Director, DCSL

Royal Jansz receiving the award

‘Our people are the most vital asset of our company and their services at all levels have enabled us to improve quality and profitability.’

The Distilleries Company of Sri Lanka, DCSL as it is popularly known has the unique distinction of being the oldest distillery in the country with a history dating back to 1913. DCSL was incorporated in 1989 and the majority stake was sold at the Colombo Stock Exchange in February 1992. The Stassens Group was the successful bidder. We have enjoyed a prominent position at the stock exchange since DCSL shares were quoted in July 1993.

In 1997, based on market capitalization, we were ranked 8th, compared to 10th in 1996. Our shares are one of the most popular shares traded in terms of volume. In 1997, in terms of share price gained, we were ranked 8th, compared to 13th in 1996. In terms of return on equity, we are ranked 6th, compared to 5th in the previous year. In 1997, profit wise we were ranked 8th, compared to 9th in 1996. Your esteemed journal ‘Business Today’ has ranked us the 9th best company, whereas last year, we were ranked 10th.

The dividend percentage paid per share in 1997, was 34%. This was after issuing bonus shares on a one for one basis in 1993. As at the end of March 1998, the market capitalization exceeded US $ 31 million. Our annual contribution to the State exceeds US $ 116 million. We are the 2nd largest contributor to State revenue.

Since 1913, we and our predecessors have been market lead­ers. This is primarily the result of very strong brand loyalty together with our commitment to maintain stringent quality control over the product range and provide the consumer with the very best money could buy.

The main competition to our products, comes from the illicit liquor segment. Successful inroads into this segment have resulted in steady volume growth since privatization. We have recorded an impressive 45% increase in volume of liquor produced and sold • since privatization. This increase in volume would have been far greater if not for the increases in taxes levied by the State which resulted in a 25% increase in the price of all our products in the year 1996.

We have entered into a joint venture with the Pernod Ricard Group of France, which is the 6th largest wine and spirit company in the world, to manufacture up market products. We hold the sole distributorship for all Pernod Ricard brands in Sri Lanka. The prod­ucts are now available in the market and are becoming increasingly popular. Our flagship products as you all would know, use coconut spirits distilled from toddy, which are then matured in hullmilla and teak wax. The entire process is time tested and packed with years of experience and research. We have our own facility to distill toddy.

With the collaboration of Pernod Ricard of France, we are planning to introduce new product and also upgrade the existing product range to international levels. Substantial investments have been made in new, and for upgrading existing facilities, with a view to achieving this objective.

The company presently employs over 1600 people in our factories, offices and outlets. Attractive incentives are offered to staff in order to link a significant portion of employee remuneration to their contribution towards the growth of the company.

Our people are the most vital asset of our company and their services at all levels have enabled us to improve quality and profitability. We operate a fleet of over 150 vehicles and are now striving to achieve 100% in direct delivery systems to our customers.

We acquired the controlling interest of Balangoda Plantations Ltd., on September 27th !996. The total investment of Rs 430 million was financed entirely by the use of our surplus funds. The total land area of all the estates under this company exceeds 12,100 hectares.

During the year 1997, after only a year, of privatization, Balangoda Plantations has earned substantial profits and has made a complete turn around. We, envisage that this investment will contribute substantially to the company’s profits, in the years ahead.

We also hold 6% convertible debentures in Madulsima Planta­tions Ltd., which upon conversion would give us a 31% stake in this company. The total land area under this company exceeds 7,300 hectares. This then is a brief summary of DCSL’s progress since privatization in 1992.

These vast strides made have been possible primarily due to the untiring efforts of our people, who are now firmly committed to making DCSL a world class company.

Finally we wish to thank ‘Business Today’ for carrying out this survey and using various criteria to rank public quoted companies. Our position in the ranking would undoubtedly portray a positive image to all our stake holders.

Speech by Eranjith Wijenaike, Managing Director, Central Finance

Eranjith Wijenaike, MD Central Finance

Eranjith Wijenaike receiving the award

‘Over the years we have been fortunate in that we have attracted some of the best in the country to work with us. Tonight I extend my thanks to them’

I would like to thank Business Today for selecting Central Finance as one of the Top 10 companies in Sri Lanka, based on the performance of the year ended 96/97. In fact ’97 was a very good year for Central Finance. We exceeded all our financial targets and achieved significant growth across our main business lines, amidst intense competition sweeping the financial services industry. More importantly we did this without compromising the high standards of service that Central Finance clients and stake holders expect of us.

Central Finance was launched in 1957, offering an entirely new dimension in financial services, not only to Kandy residents but to the country at large. For the first time, the public had access to an alternate, more attractive way of investing their savings at substantially higher, more flexible, yet safe rates of return.

Today the company services over 60,000 clients and is the largest provider of credit to the road transport industry. It has public deposits of Rs 5.5 billion and gross assets totaling Rs 7.5 billion.

Truly a humbling experience when one looks back, at the modest beginnings of the company with a staff of just four and a capital of Rs 120,000.

Ours is a business that was built entirely upon absolute trust, confidence and prudence. Therefore dedication to our stake holders and to perform exceptionally well on their behalf are deeply engraved Central Finance values.

The temptation to become a sprinter in pursuit of rapid growth, sometimes is compulsive but over the years we have prudently faced our growth which has helped the company withstand whatever economic and political setbacks we have encountered. An organization is only as good as its people.

Over the years we have been fortunate in that we have attracted some of the best ire the country to work with us. Tonight ” I extend my thanks to them. This award is’ a special recognition of the professionalism they constantly demonstrate at Central Finance.

Moksevi Prelis, GM, CE, DFCC bank

Moksevi Prelis, GM, CE, DFCC bank

Moksevi Prelis, receiving the award