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The Ministry of Commerce and Consumer Affairs is planning to make STC General Trading Company Ltd, the successor to the Sri Lanka State Trading (General) Corporation a profitable venture within two years.

According to the Chairman of the Company Yasendra de Silva some of the proposals in the Corporate Plan introduced last August are being successfully implemented and with the appointment of a new management in April this year the Company has begun to perform well.

"The STC made profits since its inception in 1971. However during the last two years owing to bad management the Company had been incurring net losses. There was a marked decline in profits during the period from 1995 .

From early this year the new management had to move into various activities which required serious correction including the regrouping of strategic business units," de Silva said.

STC for the last 30 years has been engaged in the import and distribution of a wide range of products including agricultural supplies and construction hardware products, motor supplies, tyres and tubes, chemicals and allied products, engineering and machinery supplies, household, electronic and duty free shop supplies and office equipment.

The new management has focused on product portfolio diversification and they have introduced to the product range new items such as three-wheelers, motorcycles and other household appliances.

The Chairman said towards achieving success in the proposed Corporate Plan the management has formulated a strategic business plan, which includes a Voluntary Retirement Scheme (VRS).

"Overhead expenditure was generally on the increase and that was one of the reasons for the decline in profits of the STC during the last couple of years.

"Financing of the proposed VRS would be achieved by hypothecation of some of the fixed assets owned by the Company and we are awaiting the approval from the line Ministries. Human resource development and training is also in progress. We make sure that the employees are retired at age 55 in keeping with the present retirement rule. We envisaged a significant reduction of staff in the future which would contribute towards reducing overheads," de Silva said.

He said that apart from product rationalisation, the stock holding of Rs.285 million, well in excess of five months sales has now been brought under control.

"Under the business plan the main areas we monitor are cost reduction, accelerated collection of debts, product expansion and venturing into mobile sales. We envisage a marked improvement in financial management with the appointment of a new head of finance. We have introduced a new credit policy. The ordering pattern, maintaining maximum and minimum stock levels and negotiating with banks for competitive interest rates are new developments," de Silva said.

He said among the new developments in the IT area was to introduce a networking system to accommodate all sales points and cost centres to the central IT financial system.

"The funds available for STC are solely from those generated by the Company and all expenditure incurred are utilised from such funds. STC has not resorted to borrowing from the Treasury since its inception in 1971. However, it operates on overdraft facilities with various banks, which include People's Bank and Sampath Bank and makes use of other financial facilities such as import loans.

Since the new management appointed STC it opened new showrooms in Colombo and the outstations.

The Franchise Outlets called `Supiri Welandasela' are operating in the outstations. A special `dotha pura' sale conducted during April this year generated more that Rs.10 million for the company," de Silva said. (C.K)

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Copyright 2001 The Associated Newspapers of Ceylon Ltd.
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