Individual action plan for companies vital

To survive in crisis situation:

Hiran H. Senewiratne

Sri Lankan companies should adopt individual action plans to review the possible impact arising from the global economic crisis, said President/Chief Executive Officer Finco Group of Companies Sarath Weerasooria.

He said their action plan should include restructuring where necessary - innovative changes to meet the current market needs and stay ahead of competitors in the business.Weerasooria said that most Sri Lankan private sector institutions are either facing or would have to face directly or indirectly the impact of the economic crisis, especially companies involved in the export sector.

Therefore, having an action plan for an each and every company would give some breathing space to companies to survive in this crisis situation. Industries catering to the domestic market including companies in the service sector are also affected due to the present cut back of capital expenditure made by most companies and banking institutions as well as the fall in consumer demand arising from the present economic trends and increase in unemployment. Having a proper action plan will pave the way for companies to survive in the crisis to a great extent.

Q: Sri Lanka's private sector especially the export sector is now facing a major crisis due to the global recession. What is your advice for decision makers in the country to restore the industrial sector?

A: The Government should assist private sector companies for a short period until the global crisis abates or subsides. Most governments have assisted the private sector such as China where a 12 percent 15 percent subsidy/grant has been given to the export sector, India has granted a similar five to seven percent subsidy.

The five percent grant from the Sri Lankan government to the export sector despite the high defence expenditure is a welcome move. Arising from buyer failure, most exporters will not be in a position to achieve the same level of growth like in previous years.

Q: How does high bank interest rates and inflation impact local industries?

A: The industrialists have to obtain banks loans at a very high interest rate, which is more than 25 percent and also the penal interest overdraft is more than 30 percent.

Under these circumstances local industrialists find it difficult to survive in the competitive and challenging environment due to high bank interest rates. To page vii

The biggest drawback is that industrialists would not invest in new technology due to the global crisis. Sri Lanka is a small market with mostly high labour intensive industries. After the recession our industries might be left with obsolete equipment. High inflation is also adversely affecting our companies as we see that the cost of production tends to go up dramatically.

Q: How would currency depreciation impact on local industries?

A: The devaluation of the rupee helps the export sector but local industries will suffer. The currency devaluation is workable if the government imposes the Cess on essential goods rather than on imported red raw materials.

Q: What are the advantages we could gain from the global recession?

A: When there is a global recession every country reduces the volume of imports. We see that our apparel and tea exports have dropped due to this crisis. Fortunately, Sri Lanka is not adversely affected by the global crisis due the strong agro based economy.

We will now explore new exports' avenues by investing in new technology to manufacture innovative products. Business entities should adopt cost cutting measures to face these challenges.

Q: As President/Chief Executive Officer (CEO) of the Finco Group of Companies what are the future plans of the company?

A: Our group is a family owned company engaged in diverse fields of activity, where the companies within the Group have been clustered under Trading and Representation, Construction, Manufacturing, Servicing and Office Automation and IT. The individual companies in each cluster are managed by a Managing Director/CEO with a Group Director responsible for the overall coordination of the cluster.

In 2008 we went to Dubai and Qatar to get involved in the construction business and we are now in the Maldives as well.

We also have an Alfa office furniture branch in Bangalore India. However, this year is going to be a survival year and if the global situation improves we will go for major investments not only in Sri Lanka but also overseas.

Q: Why hasn't even a single company in the group been listed in the Colombo Stock Exchange?

A: We initially looked at listing our construction company, the ICC International Construction Company and later did not pursue it. The purpose of listing is to raise capital but we did not have a funding requirement at that time.

Q: Finco started a Finco Finance company in 1980. What prompted you to close the entity a few years after operations commenced?

A: Finco Finance performed well but was closed after the HPT issue in the 1980's. After the HPT issue, the Central Bank offered low cost loans to banks and financial institutions through the Bank of Ceylon. We raised a loan and paid all depositors and closed that department. In view of the current situation we are quite happy that we are out of the banking and financial business.

Q: What is your advice to national leaders to develop Sri Lanka's economy?

A: Today, the most important thing at this juncture is the cessation of hostilities and to establish law and order in the country.

This will give some breathing space for local companies. The government should also assist export companies to grow in the competitive environment.

Q: As a professional accountant what is your view on the quality of Sri Lankan professionals in any field?

A: Unfortunately in our education system we find that professionals are not being taught or trained how to take on the full responsibility whatever work is allotted to them in their respective profession/job.

Today young professionals take on responsibility but they don't perform the same amount of work what we did during our time. It is also difficult to find proper professionals for any job.

Q: What is your philosophy in life?

A: My philosophy is centered on business activities for more than 45 years. Therefore, when we face complicated problems/issues, which cannot be resolved easily, we resort to time to resolve them.

Q: What is your retirement plan?

A: I am a very senior citizen and my retirement plan is to get involved in the company as the non Executive Chairman. The present Deputy Chairman will be given full executive powers to run the business.

I want to be in the business as an occupational therapy. I will remain in the company until I am mentally agile and physically fit. I want to study Buddhist philosophy indepth.