Loadstar maintains strong position in replacement tyre market -
Chairman
Ramani KANGARAARACHCHI
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Nihal Jinasena
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The classic responses that companies can make are cutting down on
inventories, reducing expenditure in areas such as power consumption,
waste capital expenditure and staff, slash bank borrowings and reducing
the workforce, said Chairman, Jinasena Ltd., Dr Nihal Jinasena.
He was addressing the CMA International Business Management Seminar
on ‘Global Financial Crises and Impact on Economy and Business” in
Colombo on Monday.
He said that a huge drop in confidence has made customers retain
money in their hands rather than spending and the effect of this
reaction on a global scale is devastating.
Dr. Jinasena said that it is very difficult to cut down on
inventories and it is impossible to get rid of workers in Sri Lanka
unlike in America or Europe with the archaic labour laws and therefore
it is impossible for Sri Lankan companies to respond to a global crisis
like this.
He said that when these workers are taken out of the spectrum of
spenders, the problem becomes worse, throwing the economy further into
crisis.
Referring to the situation in his export company Loadstar (Pvt) Ltd.,
Jinasena said that earlier the company had to reject 20-30 per cent of
the orders they received, as they could not meet the demand but today
the company has to accept anything it gets, because original equipment
manufacturers who are the largest customers have decided to close their
plants following small orders they receive for their heavy equipment
such as forklift, trucks overhead cranes and logging tractors and
trailers. However, Loadstar continues to maintain its strong position in
the replacement tyre market irrespective of how bad the economic
situation is - tyres get worn out and have to be replaced.
Elaborating on the difficulties that export companies face, he said
that expensive raw materials stocked up unaware of the tumbling prices
two months later have made it impossible to reduce the prices of the end
product. Smaller orders and devaluating currencies by competitor
countries are the other problems.
He called upon the government to depreciate the Sri Lankan rupee by
one to two per cent to face the competition.
He warned that many export companies will be unable to sustain
themselves for a long period and added that a large number of reputed
export companies may go bankrupt or face serious financial difficulties.
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