Jagdish Hathiramani's Portfolio


Rs. 9 bln impact from SL nanotech fertiliser, apparel, rubber patents

http://www.sundaytimes.lk/111030/BusinessTimes/bt25.html

Rs. 9 bln impact from SL nanotech fertiliser, apparel, rubber patents
By Jagdish Hathiramani

Three patents filed by the country’s nanotechnology public-private partnership, the Sri Lanka Institute of Nanotechnology (SLINTEC), in the areas of fertilisers, apparel and rubber, could potentially result in a Rs. 9.55 billion positive impact for the country, based on combined savings and earnings, according to Prof. Veranja Karunaratne, a University of Peradeniya Chemistry don and SLINTEC’s Science Team Leader.

One example given was the development of slow release fertilisers, which facilitates a controlled and sustained release of nutrients. This newly developed fertiliser significantly diminishes previously incurred, and expected, losses of 50% to 70% of urea which are a part of the fertilising process by making it more efficient. Additionally, the anticipated savings of as much as 10% of the urea, which would otherwise be lost, will result in Rs. 3 billion in estimated annual savings for the country. Aside from this, there are also benefits such as better crop yields, and quality, as well as less environmental repercussions.

He further revealed that SLINTEC was also working on private sector projects such as smart yarn, high end fabric, high performance tires and other rubber composites, smart agriculture and remote health monitoring. A 1% value addition in terms of exports in related industries would add billions of rupees in earnings to the potential Rs. 3 billion annual savings from slow release fertiliser and, as a consequence, lift nanotechnology’s total economic impact in Sri Lanka to Rs. 9.55 billion per year, he noted.

At the same time, Prof. Karunaratne indicated that nanotechnology could also be used to add value to existing public sector mineral exports, such as for Ilmenite extracted from Pulmoddai in the North East, a substance for which the country is ranked ninth in terms of reserves as it has 18 million metric tonnes, or 2.6% of the world’s reserves. He revealed that nanotechnology could be used to turn ilmenite, a commodity which was just at the first stage of value addition, into titanium dioxide, which is 40 times greater in price and widely demanded by the paint and printing ink industries which buy up 65% of worldwide supply annually.

Currently, Sri Lanka exports 80,000 metric tonnes of Ilmenite a year at US$ 8 million. However, the country could potentially earn US$ 100 million per year for just 40,000 metric tonnes of titanium dioxide. This is while the local paint industry spends US 12.5 million per year for 5,000 metric tonnes of titanium dioxide.

He also identified Graphite (from Bogala and Kahatagaha), Magnetite (from Matale), Montmorillonite clay (from Murukkan Bay in Mannar) and Vein Quartz (from Matale and Ratnapura) as other commodity-type minerals which were now being exported that could benefit from value addition, resulting in price increasing anywhere between a factor of 16, for nanosilica from vein quartz, to a factor of 25,000, for graphite-based carbon nanotubes and graphite oxide.

Prof. Karunaratne’s comments were part of his recent presentation,”Economic Impact of Nanotechnology: Opportunities for Sri Lanka,” held at the Central Bank’s Centre for Banking Studies in Rajagiriya last week, an event during which he also opined that currently there were only about 4,000 scientists working locally, while 50,000 Sri Lankan scientists were now abroad. He also added that, to truly become an innovation oriented culture, the country needed about 18,000 scientists working and publishing domestically. Also emerging, high technology product exports as a percentage of total manufactured exports was only 1.8% in 2008, equalling US$ 101.27 million.


Cisco to get into local social entrepreneurship ‘in a big way’

http://www.sundaytimes.lk/111030/BusinessTimes/bt28.html

IT networking giant Cisco Systems recently held a local career fair for vocational students in conjunction with Sri Lanka’s Vocational Training Authority in which several of the country’s top corporates participated, including Abans, Millennium IT, Airtel, Mobitel, IBM, CIC, etc. This event was part of the company’s Networking Academy programme whereby it offers certifications in the field of IT networking.

The academy, a worldwide company initiative currently undergoing an “evolution” to be rolled out in the SAARC region on November 14, comprises 70,000 students across this region, with 1,500 students currently enrolled locally and 2,900 students certified cumulatively to date, by way of six authorised domestic institutes.

Speaking exclusively to the Business Times on the sidelines of the event, the company’s newly appointed academy head and Regional Head for Corporate Affairs for India and SAARC, Bina Raj-Debur, outlined Cisco’s plans for Sri Lanka over the coming year, one of which is national level skills building which will necessitate Cisco going beyond its traditional local focus of academic interactions, and also partnering with the Sri Lankan government and industry associations. Another such area is catering to defence personnel and offering them, post-war, new career options. In addition, the company wants to further its capacity building efforts domestically and, as such, continue to grow its island-wide footprint in terms of students, institutions, etc.

At the same time, also suggested was the company’s entry into social entrepreneurship locally “in a big way.” In line with this, Ms. Raj-Debur also noted that the current, introductory IT enabled skills component of Cisco’s certificates had already incorporated a suite of tools named “Passport 21″ which included case studies on business management, money matters, enterprise, etc. as well as a simulated data packet tracing game called “Aspire” which would help inculcate social entrepreneurship skills in students.

Also signalled, Cisco expects to carry out more community engagement programmes in line with the ones it has already carried out with the University of Peradeniya. However, in the future, these will be more structured, rather than need based, which was formerly the case.

The firm also revealed plans to extend its teaching methods beyond the classroom and incorporate open distance learning methods using its proprietary unified collaboration/communication tools into academy coursework.

Concluding, Ms. Raj-Debur also opined that Sri Lanka and Bangladesh were Cisco’s two most important markets in the region, while also recommending IT networking as a career because “all industries need networking jobs.”


Govt. Info Centre received 1.3 mln calls in 2010

http://www.sundaytimes.lk/111023/BusinessTimes/bt018.html

Govt. Info Centre received 1.3 mln calls in 2010
By Jagdish Hathiramani

Sri Lanka’s Government Information Centre (GIC) call centre, a part of the e-Sri Lanka initiative, is being used as a “digital intermediary” by citizens that are usually categorised as being at the “bottom of the pyramid” in terms of their earnings.

These people are said to favour calling GIC’s 1919 telephone number for information on access train schedules, foreign employment opportunities, crop prices, etc. It has also resulted in GIC having received over 5 million calls so far, including 1.3 million calls in total in 2010 and 1.5 million calls expected by end-2011, according to Wasantha Deshapriya, the Programme Head for the Re-engineering Government unit at Sri Lanka’s Information and Communication Technology Agency (ICTA), the organisation overseeing GIC.

Mr. Deshapriya also noted that, with Sri Lanka’s Internet penetration being below 10%, there was a need to bypass this disparity and get information across to those who need it. And so GIC, a call centre that has handled as many as 6,000 calls during a day at its peak, had no choice but to take on the role of “digital intermediary.” Further, he also revealed that during a recent Sunday there were 290 calls received regarding train schedules and 99 calls about foreign jobs, with 4,500 calls received daily, on average.

Meanwhile, commenting on the findings of the most recent, United Nations e-Government Development Survey 2010, in which Sri Lanka dropped 10 places to 111th out of 192 countries, he opined that this fall was due to the lack of visibility of services offered via GIC. The survey, which assessed the main national information portal, http://www.gov.lk, and the websites of the five major line ministries, Finance, Education, Health, Labour and Social Services, were said to have not accounted for the content in GIC’s website, hence the drop in Sri Lanka’s global ranking when it should have been ranked higher.

However, this was suggested as being in the process of being rectified with Mr. Deshapriya being hopeful that this would be addressed soon. Further, he also revealed that GIC’s website currently offered over 100 services, including the ability to apply for vehicle revenue licences, pay water and electricity bills, etc., as well as 50 RSS feeds highlighting new developments, and all that was necessary on this front was to expose this content at the national portal. In addition, there were about 500 local websites which could be showcased, many with trilingual content.

A number of other measures were also outlined for the improvement of the relevant websites, including adding: an A to Z type index for government agencies, diplomatic mission details, web 2.0 functionality and integration with Facebook, Twitter and other networks, FAQs, links to local government bodies, circulars, gazettes, downloads, investment advice, mobile based service links (GIC), other interactive services, etc. Additionally, there are plans to increase e-participation through forums, blogs, etc. as well as promote an open data culture via the right to information act now pending.


SL’s national cyber security responsibility of Govt: ICTA Chief

http://www.sundaytimes.lk/111023/BusinessTimes/bt022.html

SL’s national cyber security responsibility of Govt: ICTA Chief
By Jagdish Hathiramani

Sri Lanka’s national cyber security is the responsibility of the country’s government and making sure national networks are secure and unpenetrated should be coordinated at all levels by a single body such as the Sri Lanka Computer Emergency Response Team (SL CERT), according to Reshan Dewapura, the Chief Executive of the country’s Information and Communication Technology Agency, SL CERT’s parent.

Speaking at the 4th annual National Conference on Cyber Security, a full-day event which was held last week as part of the SL CERT organised Cyber Security Week 2011, Mr. Dewapura also called for law enforcement authorities and the legislature to focus on areas such as protecting critical infrastructure and putting in place a legal structure for regulation.

Additionally, he also signalled the need for the country’s national security policy to be extended to include cyber security, with citizens made aware that cyber security measures taken will be in line with individual rights and freedom of speech, and further noted that this inclusion of cyber security into national defence should be used to actively protect military operations against cyber attacks, while also taking advantage of the capabilities of Sri Lanka’s powerful neighbours. He also suggested that establishment of public private partnerships whereby the government can cooperate with the private sector, especially since the majority of the country’s essential infrastructure belongs to the private sector.

Mr. Dewapura also opined that citizens and organisations needed to come forward and report cyber crimes as these incidents could not be appropriately addressed otherwise. And, as such, it was also important to create awareness about this with regards to government departments, private sector organisations and the general public.


“Don’t harass customers” CBSL tells banks

http://www.sundaytimes.lk/111023/BusinessTimes/bt025.html

Sri Lanka’s Central Bank recently put forward a “Customer Charter of Licenced Banks” in which it outlined a ‘code of conduct’ for licenced banks, as well as the customers of these financial institutions, with the aim of providing “key standards for fair banking practices.”

One set of guidelines in the charter, amongst the many indicated, pertained to a licenced bank’s “Terms and Conditions” and the understanding of such, stating that “an officer carrying out the duties of a relationship officer should clearly explain to the customer of the terms and conditions and features of the products/services, provide a comparison of alternative products/services available and give reasonable time for the customer to make a decision.” Additionally, this process also requires that customers revert back with a “written confirmation [that] the details of the products or services and their terms and conditions were received, explained and understood.”

Also these guidelines required that “all the documents pertaining to the product or service are duly completed and signed by the customer (Incomplete documents and obtaining signatures on blank papers/documents are avoided)” and that “any changes made by licenced banks to the agreed terms and conditions on products or services should be informed to the customers in writing or through paper notice or any other appropriate way before such changes are made.”

The charter also signalled that customers are entitled to know “details of the bank’s general charges such as interest rates, fees and commissions, if any, required to be paid by the customer including the method of computing interest charges.”

Additionally, the “course of recovery actions a bank may follow in the event of any default by the customer on his/her obligations and bank’s expenses that will be reimbursed from the customer.”

Also noted, customers should be informed of the “disclosure of customer information to a party legally authorised to obtain such information” as well as the rules pertaining to “(i) reporting of suspicious transactions and above-the-threshold transaction to the Financial Intelligence Unit, (ii) the reporting procedures that the customer should follow in the case of stolen cards /financial instruments and (iii) liability of the bank and the customer” and even the “procedures to be employed by the bank to foreclose on the property held as collateral for a loan and the consequences thereof to the customer and options available to him/her.”

These new rules also stipulated that a “periodic statement should be sent to customers either in printed form or electronic form opted by them regarding transactions and balances in their deposit or loan accounts or other services other than passbook savings accounts of non-dormant category.”
Also that “[statements] for credit cards should set out the minimum payment required and the total interest amount charged if only the required minimum payment is made and late payment fee if the minimum payment is not made.”

In addition, guidelines also indicated that “customers have the right to know the details of the agents appointed for customer services by licenced banks and the ‘Code of Conduct’ issued to them by banks to refrain from… a) Harassing customers, b) Using abusive debt collection practices, c) Disclosing customer information to others, d) Giving false or misleading information about products/services, e) Unduly influence customers or the general public to buy or get involved in the bank’s products/services, f) Engage in getting any security documents signed outside the bank.”

On the other hand, it is the responsibility of a bank’s customers to “not borrow beyond their affordable repayment capacity limit” as well as be timely and honest in updating the bank with their contact details and/or changes to status, financial or otherwise.

They are also required to contact the bank immediately should they be unable to pay any loan installments, etc. or should they become aware of any fraud in relation to their accounts, Personal Identification Number (PIN), etc.

Meanwhile, the charter makes it the responsibility of licenced banks to educate customers with regards to financial literacy as well as give them information about the Financial Ombudsman, the Credit Counselling Centre, etc.

It also states that banks must now receive complaints either verbally or in writing, and have to revert with written confirmation of the complaint being received as well as periodically updating customers about the status of the complaint.


‘Holistic decision making’ at the ST Business Club

http://www.sundaytimes.lk/video-gallery/viewvideo/342/news-a-politics/holistic-decision-making-at-the-st-business-club.html

Times Online features a presentation by Dr. Errol Wirasinghe on “A holistic perspective on decision making,” which was part of October’s Sunday Times Business Club monthly discussion series.


Steve Jobs’ legacy at Apple

http://www.sundaytimes.lk/111016/BusinessTimes/bt32.html

Steve Jobs’ legacy at Apple
By Jagdish Hathiramani

While in the past few days many across the world have been mourning the loss of Steve Jobs, each remembering his achievements in their own way; it may ultimately prove to be the products launched by Apple, under his stewardship, which will eventually go on to steal back the limelight, just as Steve Jobs himself has done so many times before.

Widely regarded as “beautiful,” one of a multitude of adjectives used which result in similar sentiments; Apple’s ‘iProducts’ are best described as aspirational. In fact, most products are beyond the available means of many in the world. So much so that Apple, initially a computer manufacturer, has now evolved into a marketing machine churning out the next cool high end gadget rather than its initial effort to make computers accessible to as many as possible. A calling which had grouped Jobs with the likes of Edison and Ford in that they all created revolutionary products which changed the environment of their day.

It is a glaring fact that today, because of Apple’s steep price points (a basic iPod Shuffle retails online for US$ 49, an iPad costs US$ 499 and the Mac Mini desktop computer, sold without monitor, keyboard, mouse, etc., is priced at US$ 599), it is more than likely that many who are presently honouring the life of Steve Jobs have had only very limited exposure to Apple products. At least this would be the case for many Sri Lankans, and others from emerging and/or less developed economies. A case in point, Apple only has four stores in China and none in India, mostly tending to ignore what could be considered the main population centres in the world in favour of high income-centric cities.

As such, we have taken it upon ourselves to chart, below, an overview of the iconic Apple products launched under Jobs’ tenure at Apple, so that those that today worship at this mantle of design, by shopping there, will know what Jobs has truly achieved…

The GUI-enabled Lisa and the more successful Macintosh
Founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1976, Apple initially sold computers requiring a lot of assembly to hobbyists via mail order. However, it was the launch of the Apple Lisa in 1983 and the Apple Macintosh in 1984 that proved most significant, not only for the company but also for society, as this marked the beginning of the personal computer industry. Thanks to Graphical User Interface (GUI) technology inspired by the Xerox Alto, which was included in both Apple products, users no longer had to be programmers but rather just used menus to execute functions. In turn, Apple’s GUIs also later inspired Microsoft’s Windows operating system, now the default operating system for almost all PCs.

While the Lisa proved to be a commercial flop, the Macintosh did much better, admittedly because of its exceptional marketing efforts. But, most importantly for Jobs, and unknown to all at the time, these products put him in the league of Edison and Ford. Also important to note, while not being demanded en masse, these products also paved the way for computers to be used in desktop publishing and graphics, the most common uses for personal computers today, whereas historically computers had been exclusively the domain of businesses.

Interestingly, the Macintosh also marked Jobs’ first, and only, early commercial success with Apple. Following a dispute with the board, he was sidelined and later resigned from the company. In 1985, he went on to found computer manufacturer NeXT. Also noteworthy, the Macintosh product line also spawned one of the first laptop computers in the form of the PowerBook in 1991.

The fall and rise of Apple
Following a long, and very visible, decline, Apple’s resurgence only really kicked off in 1998, again led by Jobs who had regained management of the company the year before. The next iconic product from the brand was the iMac.

Designed by a team led by Jonathan Ive, later responsible for the iPod and iPhone, the iMac was a colourful all-in-one personal computer reminiscent of the Macintosh that sold 800,000 units over its first five months. Sales were undoubtedly spurred by the fact that its unique design was unlike anything seen before, at that time. This later evolved into Apple’s winning combination of even more minimalistic designs coupled with a technologically advanced features, at higher prices, which were also the hallmarks of the new iMac and Mini Mac desktop computers, in 2005, and a continuing trend even witnessed in 2011’s MacBook Air.

Three years later, in 2001, Apple did it again with the iPod portable digital audio player, a product which sold over 100 million units in just six years. At the same time, Apple further leveraged this platform with its online iTunes Store in 2003.

At the time, this was a revolutionary idea which allowed people to easily install or download iTunes software on their computer, either Mac or PC, and buy music online and “sync” it with their iPods. Later also the basis of the landmark App Store for iPhones, iPads, etc., another over US$ 1 billion source of revenue for Apple, the iTunes Store sold music downloads for $0.99 a song and went on to soon also dominate overall music sales, with over 5 billion songs downloaded by 2008, a span of time during which it also signed download agreements with every major record label. An especially impressive feat considering this was the industry that had previously taken down file sharer Napster using aggressive patent litigation.

The next sea change for Apple was 2007’s launch of the iPhone, an impeccably designed, fast and easy-to-use smart phone with a touch screen, a cool GUI and the superior video/audio properties for which Apple was becoming renowned. Most telling of all was this product’s launch being famously introduced by Steve Jobs announcing to the world that Apple was no longer a computer company but rather a mobile electronics company. iPhone sales numbers soon supported Jobs’ new vision and a little more than a year later Apple became the world’s third largest mobile phone company and, eventually, the world leader in smart phone sales.

Just over a year later, in 2008, Apple’s breakthrough App Store went online, spawning a whole new generation of killer applications or “apps” for the iPhone, and later the iPad, the latter which shared the iPhone’s operating system and so was compatible. Within the short span of a month, the store started achieving average daily sales of US$ 1 million. The store sold 60 million applications in its first month.

In 2010, Apple again re-invented itself again by extending its product line into the fledgling tablet PC market. The iPad was a hybrid which heavily borrowed from the graphics, the operating system, the touch screen, etc., essentially the features users loved in the iPhone, while essentially just making the screen bigger, to about 10 inches.

This was pitched as a new category of product, something between your iPhone and your iMac Pro laptop, significantly more portable than a laptop and usable for reading electronic books, playing lightweight mobile games like Angry Birds, etc. and, with its built i Wi Fi, browsing the Internet, all without lugging around a bulky laptop.

But most important of all to its success, its access to the App Store’s treasure trove of content numbering thousands of books, games, etc., much of which is available free of charge or, at worst, a nominal fee. The iPad sold more than 300,000 units on the day of its launch and reached sales of 500,000 by the end of its launch week. The winning combination of easy-to-use, great graphics and virtually unlimited content proved to be unbeatable as, even more than a year after its launch, it has maintained its dominance of the tablet market, even despite a number of so-called iPad killers which have failed to impress.

Most recently, in 2011, an anticipated launch of the iPhone 5 (the iPhone 4 was launched in 2010) never came to fruition despite frenzied media speculation. However, launched in its stead, the iPhone 4S was packed with significantly superior technical specifications, including dual A5 core, Siri voice recognition, an iOS update, and better cameras, etc. And, despite initial disappointment at there not being a new iPhone version, the most recent pre-order numbers announced by Apple point to one million units being ordered online within the first 24 hours of its launch announcement, a number which shattered Apple’s previous record of 600,000 units pre-ordered which was for the iPhone 4 in 2010.

The end of an era
Many analysts are currently conjecturing that, with US$ 75 billion in cash in its balance sheet and virtual market dominance with the App Store, iPad and iTunes, and significant worldwide smart phone penetration with iPhones; Apple, even without Steve Jobs, remains the one to beat in the short and even medium term. A factor further underscored by recent media claims that a dying Steve Jobs spent some of the precious time he had left nailing down the next four years of Apple’s product launches.

However, the big picture question on everybody’s mind undoubtedly has to be: Can Apple maintain its momentum in the long run without Steve Jobs? After all, it didn’t do quite so well after firing him in 1985.

 

The new iPhone 5?

Not really. Apple disappointed technophiles recently when, instead of launching a much-anticipated iPhone 5, the company unveiled an updated version of the iPhone 4. This is a product initially launched way back in 2010, even though the newly-minted iPhone 4S is vastly superior to its predecessor, now featuring 800 MHz dual A5 cores, an updated iOS 5 and better specifications, including a 8MP camera, 1080p HD recording, superior connectivity, and a trendy voice recognition application called Siri.

However, at least according to one seasoned technology commentator, this is the right move for new Apple chief Tim Cook as the much improved upgrade is capable of offering all the benefits of a new iPhone release without out many of the production delays that these launches have faced in the past. This is a situation which seems to held true as Apple last week announced that it had received one million pre-orders with the first 24-hours of the iPhone 4S’s launch, a new record for pre-orders that greatly overshadowed the previous one for the iPhone 4 in 2010, where 600,000 pre-orders were received within 24-hours. The iPhone 4S debuted at Apple Retail Stores last Friday.


681 SL cyber security incidents so far in 2011

http://www.sundaytimes.lk/111016/BusinessTimes/bt31.html

Some 681 incidents of potential cyber threats were reported in Sri Lanka thus far this year, for the period from February to July, according to officials. This was a significant increase over 2010’s total of 151 incidents. However, the majority of 2011’s reports were due to the opening of fake accounts (accounts opened using another’s identity or pictures) and/or hijacked accounts (655) which occurred in the case of free e-mail providers like Gmail, Hotmail, etc. and/or social networking like Facebook. These incidents were usually resolved by the person in question making a request for that account to be closed, according to information provided by the Sri Lanka Computer Emergency Response Team (SL CERT), a subsidiary of the state-run Information and Communication Technology Agency, whose mandate is to protect the country from all cyber security threats. The organisation is a member of the 26-country Asia Pacific CERT as well as FIRST, a 400-member public private international organisation that also comprises most of the top software companies worldwide.

SL CERT’s data also showed that the threat of fake accounts is a growing one as there were only 80 such incidents in 2010, and none the year before. On the other hand, other types of incidents mostly remained below or close to 2010 levels. These included malware (viruses), phishing (automated targeted emails, SMSs, Skype, faxes and other channel abuse where users are directed to malicious sites), abuse of or infringing on the privacy of personal online accounts, defacement of websites, scams such as Green Card lottery emails, etc., threatening or hate mail, and unauthorised access at places of business.

One malware incident was reported in 2011, to date, compared to five such incidents during the whole of 2010, and SL CERT noted that these were resolved by recovering the damaged systems. There were three phishing incidents reported this year, as opposed to six in 2010, which SL CERT dealt with in conjunction with Internet Service Providers (ISPs), international CERTs, etc. Further, there were five scams reported, down from 10 in 2010, and eight website defacements in 2010 as well as in 2011 thus far. The latter was handled through recovery of the websites.

Incidents of threatening or hate mail are low in 2011 with two reported thus far. This is in comparison to 12 in 2010. SL CERT handled these by getting ISPs to issue warnings to the mail’s sender. Also, there were two incidents of abuse of personal accounts and five incidents of unauthorised access of company information, compared to 20 and 10, respectively, the year before, with some of these incidents being forwarded to the Criminal Investigation Department (CID) of the Sri Lanka Police for their criminal actions.

Meanwhile, according to SL CERT Chief Executive Lal Dias, while there have been increased incidents of cyber threats, these correspond to international trends and Sri Lankans should not too alarmed, but should take due precautions. He also pointed out that threat levels for the international financial community were more severe than locally as 90% of all transactions in the West happened online or electronically with this avenue tapped significantly less locally. However, he did reveal that the biggest area of electronic crime in Sri Lanka was bank card fraud.

Speaking of Sri Lanka’s national infrastructure protection cyber strategy, the strategy which protects the country’s automated infrastructure such as power, telecommunications, etc., he indicated that Sri Lanka was “defensive” rather than “offensive” as SL CERT’s mandate was protection, and, as such, an “offensive” approach was not needed.

Mr. Dias also suggested that, while the local financial sector was more than capable of handling cyber threats that cropped up, SL CERT was in the process of setting up a CERT for the financial sector in conjunction with the local Central Bank. This being done to share any vulnerabilities that come up with the entire industry. CERTs were also being set up for local telcos, education and armed forces.


DSI leads in Lankan footwear market-Fitch

http://www.sundaytimes.lk/111016/BusinessTimes/bt14.html

Ratings agency Fitch has upheld a national long term “A-(lk)” rating, with stable outlook, for dominant Sri Lankan footwear manufacturer/retailer DSI. It also maintained the company’s unsecured notes ratings as “A-(lka).”

According to Fitch’s Rating Action and Commentary (RAC), these ratings were said to be due to the company’s “leading market position in Sri Lanka’s footwear industry, and the resilience of its business to economic cycles, which has largely allowed the company to sustain its sales and profit margins.” Additionally highlighted, the “lack of strong competition in the footwear market, helped by high import duties since 2005.”

However, it was also noted that ratings had been “constrained by a lack of clarity on the credit profile of its 100% parent D. Samson Group (DSG), of which [DSI] accounted for 66% of revenue and 50% of profits at end-March 2010, due to delays in producing consolidated financial statements of the group.”
Meanwhile, the RAC also indicated that DSI’s “revenues and [Earnings Before Interest, Taxation, Depreciation, Amortisation and Rent, EBITDAR] grew 23% and 28% respectively in the financial year ended March 2011, largely on account of a sharp increase in average prices across its footwear business.

Footwear volumes grew 5% despite the sharp price increase, reflecting inelastic demand for [DSI’s] products. EBITDAR growth was also helped by cost curtailment measures implemented during the period.”

Also noted by Fitch, DSI’s “financial leverage (defined as net adjusted debt / EBITDAR) to increase in [2012 financial year] on higher expansionary capex and investments expected across most business lines.”

In addition, the RAC revealed that the company’s liquidity was “sound” and that it had access to “undrawn credit facilities of Rs. 680 million and cash balances of about Rs. 385 million, against Rs. 156 million of long-term debt due within a year and Rs.246 million due within one to two years. Some 79% of [DSI’s] Rs. 2.4 billion total borrowings as at FYE11 comprised short term loans and overdrafts that fund working capital. The company enjoys strong access to local banks.”

On the other hand, Fitch also pointed out that DSI’s ratings were tied to its parent’s, DSG’s, financial profile, as DSG exercises completely control of DSI’s finances and operations, and, as such, Fitch cautions that there is “no contractual ring-fencing of [DSI’s] cash flows from DSG, and there is a history of inter-company lending between companies of the group.

DSG’s earnings – other than that from [DSI] – are mainly derived from exports of bicycle tires, and are more volatile than [DSI’s] earnings. Furthermore, DSG’s market position in most of its export markets is low.”


Fitch upholds Dialog’s ‘AAA(lka)’ / Stable

http://www.sundaytimes.lk/111016/BusinessTimes/bt33.html

Sri Lanka’s Dialog Axiata recently retained its Fitch-assigned national long term rating at “AAA(lka)” with stable outlook. Additionally, its cumulative redeemable preference shares were also maintained at “AA+(lka).”

According to an accompanying Rating Action and Commentary (RAC) issued by Fitch, these ratings were a result of “support from its 83% shareholder Axiata Group Berhad (Axiata), underpinned by the latter’s board representation in Dialog, a common brand, and the integration of strategic and some operational functions between the two companies. Axiata has provided tangible support to Dialog throughout its history, most recently in the form of shareholder loan and a corporate guarantee on a long-term offshore bank credit line.”

Further suggested by the RAC, “Dialog’s ‘AAA(lka)’ rating may face downward pressure if Axiata’s perceived willingness to support diminishes, evidence of which would include a considerable dilution in its ownership stake or control, or a material reduction in other operational and strategic ties.” However, also opined was that the “removal of Axiata’s corporate guarantee on the offshore bank line or the repayment of the shareholder loan will not by themselves result in a downgrade.”

At the same time, the RAC also revealed that the mobile operator had a “standalone profile at ‘AA(lka)’, underpinned by its leading market share in the local mobile industry (38% share at end-June 2011), growing diversity in revenues, comfortable operating profit margins, and continuous investments to maintain its technological edge.”

The RAC also highlighted that “Dialog’s revenue and [Earnings Before Interest, Taxation. Depreciation and Amortisation, EBITDA] growth slowed in [the first half of 2011, H111] to 9% and 2% respectively, largely on account of tariff adjustments within the mobile segment in [the first quarter of 2011] (66% of group revenue).” However, it was further predicted that revenues would “rebound in H211, as increased demand should more than compensate for lower tariffs.”

It was also Fitch’s expectation that the mobile operator would “generate positive free cash flow (FCF, after deducting capex and dividends) over the medium term, helped by strong operating cash flow generation and selective capital expenditure.”

Also emerging, “Dialog’s liquidity was comfortable at end-H111, with cash reserves of Rs. 8.4 billion and committed unutilised credit lines of around Rs. 6 billion, compared with current maturities of Rs. 9.8 billion. At end-H111, the share of group debt denominated in US$ stood at 65%. However foreign currency risk was limited by a natural hedge in the form of approximately US$ 50 million of annual net operating income and US dollar cash reserves of US$ 10 million at end-H111.”


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