Hirdaramani joins green garments fray

 New USD 6 million facility in Agalawatte to start soon                                                               

By Indika Sakalasooriya
The new green apparel factory at Agalawatte set up by Ceylon Knit Trend (CKT) Pvt. Ltd. a fully owned subsidiary of Hirdaramani Group will start operations within the next few months. The new USD 6 million facility named Mihila will be the third factory to be set up in Sri Lanka falling in line with the new trend in Europe to go for eco- friendly products.

“The investment for the new factory is a mix of internal funds and bank borrowings and the project enjoys BoI concessions” Hirdaramani’s Group Finance Director Ranil Pathirana said.

According to him the decision to construct a green factory was taken almost a year ago. “The factory has a land area of 6 to 7 acres and expects to employ 1000 to 1500 workers. It will mainly manufacture knit products such as t-shirts and pants entirely for foreign markets”

Explaining the rationale to move into a green factory, Pathirana said that presently the whole world is moving towards green products and being green will provide Hirdaramani a cutting edge in the present intensified competitive environment. The UK garments retail giant Marks & Spencer recently announced that after the next five years every piece of garment they will be selling should contain the green tag.

Commenting on the green features of the new factory he said that use of solar power, rain water harvesting, recycling of emissions and planting of trees at key locations play a major role in making the factory truly green.

“Being green is not very easy. It is a very expensive process. But within a year we were able to complete it and commence operations. In my view it is quite an achievement for Hirdaramani” Pathirana added.

During the last few months the Sri Lankan apparel industry witnessed another two giants in the industry going green, namely Brandix and MAS. Brandix recently announced that their 30 year old factory in Seeduwa will be converted to a green plant at a cost of USD 2.5 and MAS last week opened their new green factory located at MAS Fabric Park in Thulhiriya.

Consumers in the west are increasingly demanding environmentally friendly goods. This has pushed large retailers and big brand names in the west, to look for eco-friendly products. This trend has resulted in three of Sri Lanka’s biggest garment manufacturers putting money into setting up ‘green’ factories.


Birla’s arrival to revive KKS cement confirmed

Construction and Engineering Services Minister Rajitha Senaratne last week confirmed the much speculated arrival of the India’s Aditya Birla Group to revive now defunct Lanka Cement Ltd. PLC’s Kankasanthurai (KKS) cement factory in the near future.

He said that a team of representatives from the Birla Group visited Sri Lanka in February and a feasibility study has already been concluded..

“There are some technical requirements that need be fulfilled from our side before they could come here and recommence manufacturing. Now we are in the process of clearing all these barriers with the relevant institutions” Minister Senaratne said.

Lanka Cements’s KKS factory which has a capacity of 500 Metric Tons per annum and an area of 105 acres, ceased operations in 1990 due to the increased terrorist activities in the area. Presently the Sri Lankan Army is using the factory premises as a ware house

According to the minister, if the KKS cement factory is re-activated, 40 percent of the country’s cement requirement can be obtained from it. He also said that in 2007 the country’s construction sector registered a growth of 7.2 percent and with the activation of the KKS facility he expressed hope that the sector would reach a growth rate of about 15 per cent.
However, the nature of the deal is not yet clear as to whether the Birla Group will acquire the entire KKS factory or lease it out for a certain period for production.

The stock market analysts pointed out that if the KKS factory is to be sold to the Birla Group, the need for a mandatory offer will arise under the new Company’s Act. The government holds about 80 percent of Lanka Cement PLC through the Treasury, Bank of Ceylon, CPC and state pension fund EPF while the other 20 percent is held by private investors. IS


We are watching you- CB tells banks

By Samantha Whybrow
A stern warning has been sent out to banking executive and non-executive directors, telling them to toe the line when it comes to corporate governance or risk a firm encounter with the law.

Amidst worldwide turmoil in financial institutions, the Central Bank of Sri Lanka—which regulates the island’s banking sector—held a half day symposium on Tuesday (30) to inform banking directors of their responsibilities to the national regulator, and to remind them to steer clear of moral impropriety.

Corporate governance, risk management, and compliance were the main issues discussed.
The Deputy Governor of the Central Bank, Dr Rani Jayamaha, stressed the need for bank directors to take full responsibility for corporate governance and compliance with regulations, pointing out that better governance would mean less interference from the Central Bank.

“If moral virtues were upheld, Central Bank regulatory intervention would be unnecessary,” said Dr Jayamaha, explaining the need for what she said some might consider interference in the freedom to operate business in the way they see fit.
Recent global financial crises—notably the sub-prime mortgage collapse in the US and the Northern Rock bail-out in the UK—have brought regulatory concerns to the forefront of financial institutions around the world.

Lapses in corporate governance, and a failure to comply with basic banking principles, are seen to be at the root of many of the massive banking failures witnessed in the past year alone, including the notorious ‘rogue trader’ who lost 4.9 billion Euros at Paris-based Societe General early in 2008.

“We wish to avoid banking panics, bank runs, or bank failures that will lead to financial crisis,” explained Jayamaha of the Central Bank’s present concern with the way banks in the country are operating.

Sri Lanka’s new Banking Act and Companies Act place greater responsibility and accountability on directors to ensure competent management and operation of their companies, which includes the banks.

During the seminar, the participants—mostly senior level executives—were warned that the Board of Directors of financial institutions are legally compelled to ensure adequate corporate governance structures are in place and monitored in order to guarantee compliance with the relevant Acts.

“The responsibility is shared equally amongst the board, including executive and non-executive directors,” said legal expert Arittha Wikramanayake, sending out a caution to many of the under-paid executive directors who, he noted, commonly hold a lackadaisical approach to their accountability in the event of failure.
“Violations [of the Act] will put you on the dock with pickpockets and prostitutes.”


Colombo Dockyard invests to upgrade facilities

 (LBO) – Colombo Dockyard, Sri Lanka’s sole listed ship builder, said it plans to invest 473 million rupees this year to upgrade yard infrastructure to meet growing demand for ship building and repair work.

The yard, a subsidiary of Japan’s Onomichi Dockyard Co., which provides management. and technical expertise, anticipates it will be get more business with India’s trade boom and expansion of its fleet as well as the growth of offshore oil exploration and drilling.

The yard’s net profit for the 2007 financial year shot up 77 percent to 1.1 billion rupees owing to a steady supply of orders for new buildings and repair work. It has set itself a sales revenue target exceeding 10 billion rupees by 2010 with profit expected to b seven percent of revenue.

“To achieve this target, we will infuse a capital investment of 473 million rupees, which will in turn improve the steel work production capacity by end-2008,” Dockyard chairman Shinichi Tatebe said. “We also aim to make a considerable investment towards improving the facilities within our yard,” he told shareholders in the firm’s annual report.

The yard has a full order book and even repairs are now booked well in advance because the ship building boom means a backlog of orders in many yards. Colombo Dockyard delivered its first Anchor Handling Tug Supply Vessel for Greatship (India) Limited earlier this year.

The 80 tonne bollard pull tug named Greatship Anjali is the largest vessel built by the yard. The second tug was delivered in March 2008 and the yard is working on a repeat order as well as holding talks on building more advanced vessels for Greatship’s subsidiary in Singapore.

The yard is also building two passenger vessels for the Indian government to be used in the Lakshadweep islands.


Dutch aid to build fisheries harbour

(LBO) – Sri Lanka has signed a deal with the Netherlands government to get eight billion rupees (44.9 million euro) in aid to build a fisheries harbour to accommodate deep sea trawlers and develop the island’s fishing industry.

The port will be built in Dikowita on the western coast, fisheries minister Felix Perera said. The new port will be Sri Lanka’s largest fisheries harbour with the capacity to dock 340 multi-day 65-foot trawlers and 150 smaller fishing boats.

Spread over 6.5 hectares, the harbour will be equipped with cold storage units, ice manufacturing machines and equipment to process the deep sea catch. The Netherlands will provide 17.1 million euros as a grant, with the rest as a soft loan, Perera told reporters Wednesday.

The harbour will be built by Interbeton BV, a unit of the Netherland’s BAM group. After completion in two years, the port will directly help over 3,000 fishermen, Perera said.

A modern fisheries harbour will encourage the younger generation to take up commercial fishing with a better understanding of the industry and its market, which will help stabilize the industry, Perera also said. The harbour’s location close to international waters will enable bigger foreign trawlers to unload their catch in Sri Lanka.

Furthermore, its close proximity to the island sole international airport will help local exporters in the fishing industry, the fisheries ministry said in a statement. The objective of the project is to give bigger fishing trawlers easy access to ports.

The existing fisheries anchorage in Modera, just north of Colombo port, is considered inadequate to meet the island’s future requirements as it seeks to increase the contribution of fisheries to economic growth.

The Modera harbour is too shallow to dock bigger fishing vessels. Furthermore, the naval authorities have also imposed restrictions on vessel movements in Modera because of Colombo port security requirements. The ministry has also started work on a modern central fish market in Peliyagoda, in the outskirts of Colombo.


SEC probes stock broker

(LBO) – Sri Lanka’s capital markets watch dog has questioned two officials of a stock brokering firm at their office this week as part of a probe, industry sources said.

Securities and Exchange Commission (SEC) regulators also took away documents, they said.
The exercise was conducted under enhanced powers available to the SEC under the island’s securities law, sources said. The SEC has in recent weeks issuing a series of warnings against violations of the securities law.

Last month, the SEC warned brokers against manipulating share prices at the market’s pre-opening stage. The month before, it warned management companies of unit trusts (mutual funds) against manipulating share prices on the last trading day of the financial year.


Apollo to re-enter Sri Lanka

Medical care services provider Apollo Hospital’s group said it would invest about INR 1,000 crore in the next 18 months to set up about 15 hospitals in tier II and III cities in India.

The hospital chain, which is also looking for overseas expansions, is planning to re-enter Sri Lanka besides expanding its operations in African continents, Indian news reports said.

India’s Apollo Hospitals sold out of Lanka Hospital Corporation in September 2006 accepting an offer by Sri Lanka Insurance Corporation to buy them out, despite governments of both countries throwing their weight behind Apollo.

Apollo Hospital Enterprise and Indian Hospital Corporation, which owned slightly over 30 percent, sold 52 million shares, for 28 rupees, valuing the deal at 1,456 million rupees.