Corporate Torchbearers

The 12th annual edition of the Most Respected showcases the leading lights in Sri Lanka Inc.

2016 01 MR 01-51_2015 SDSSri Lanka has been left battered and bruised by the forces of nature in the first half of 2016, with several parts of the island still coming to terms with the disaster, in the aftermath of Cyclonic Storm Roanu. The stormy weather caused severe flooding and widespread damage to life and property, in May.

This was not long after the lengthy power outages that left the nation literally in the dark, and brought all activity to an abrupt halt.

The citizenry is left financially bruised, too. The people are feeling the pinch, given the state of the economy, a year into the incumbent Administration’s term in office. Having gained power on a wave of optimism about a ‘change’ in how the country would be run, the Government finds itself facing several questions on the follow-through on promises that were made before, during and even after the twin elections of 2015.

So much so that, by June 2016, business confidence had plummeted to marginally below what it was before the parliamentary elections in August 2015, mainly due to recent tax hikes, with businesses also expressing concern about future revenue streams and sales volumes.

Corporates also appear to have little hope for the country’s investment prospects, while the all-important Foreign Direct Investments (FDIs) have been hard to come by, of late.

While projecting that South Asia, as a whole, is expected to grow by over seven percent this year, the World Bank has noted that Sri Lanka is falling behind, in terms of debt and growth. It explains that an expansionary fiscal policy has contributed to a widening deficit and increased debt.

However, Sri Lanka improved its standing in the 2016 Ease of Doing Business rankings. The country climbed six spots, to reach No. 107 – among the 189 economies ranked by the World Bank Group – demonstrating progress in the ease of commencing a business, managing construction permits and obtaining electricity.

Cumulative corporate earnings of entities listed on the Colombo bourse improved in the quarter ended 31 March 2016, with the financial services industry taking the lead. However, analysts have cautioned that rising interest rates and higher indirect taxes could dent earnings in subsequent quarters, in addition to which the spectre of Capital Gains Tax looms on the horizon.

As was the case in 2015, this year’s edition of Most Respected adopts the Olympic Ranking System to record peer perceptions of corporate admiration.

Accordingly, Sri Lanka’s most respected organisations are the recipients of gold, silver and bronze medals, reflecting their admiration among peers. Headlining the admiration list is John Keells Holdings (JKH), which occupies the No. 1 spot of the Most Respected rankings for a record 11th time. It registered an aggregate medals tally of 424, compared to 404 in 2015.

Commercial Bank of Ceylon (ComBank) retains its second-place from last year, with 79 gold, 70 silver and 49 bronze medals to its name. MAS Holdings and Unilever Sri Lanka are the only other entities with over 50 gold medals in the bag, claiming 73 and 52 respectively.

Notably, the four Most Respected entities on the list have remained the same from the previous year, and the top 10 includes four of the largest diversified companies, two private sector commercial banks and two of the leading apparel manufacturers in Sri Lanka.

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The key movers and shakers in this year’s special edition include Bank of Ceylon (BOC climbs four places, to No. 12), Brandix Lanka (three spots higher, at No. 10), Hemas Holdings (gaining two spots, to No. 9) and Hayleys (up a single notch, to fifth place).

As many as five new entrants grace the Most Respected top 20 (aka the Hall of Fame) this year – viz. Nestlé Lanka (at No. 11), Fonterra Brands Lanka (15), Softlogic Holdings (16), Diesel & Motor Engineering (17) and Maliban Biscuit Manufactories (18).

The 2016 edition of the Most Respected features 66 listed companies, along with 56 private entities, 26 multinationals and seven state enterprises – with JKH, MAS, Unilever Sri Lanka and BOC leading these categories, respectively, as was the case last year.

In terms of sector preferences, diversified businesses, banks, food and beverage entities and manufacturing organisations are the most favoured, with at least a third of the island’s Most Respected organisations coming from the ranks of conglomerates.

Meanwhile, Sri Lanka’s standing in Transparency International’s (TI’s) Corruption Perceptions Index 2015 – which measures perceived levels of public sector corruption, in 168 countries across the globe – recorded an ever so slight improvement from the preceding year, moving up to joint 83rd place (alongside Benin, China, Colombia and Liberia), from No. 85 in 2014.

However, the nation’s index score is a modest 37, out of a maximum 100, with TI noting that the country’s leaders “are falling short of their bold promises.”

Going by the state of affairs in the political sphere, the corporate sector – especially the establishments recognised as being among the Most Respected in the island – could well be the only hope, if Sri Lanka is to step out of an utterly corrupt Third World, and into the level playing field that is home to more advanced nations.

A call to arms to fight corruption must come from Sri Lanka Inc., perhaps with the backing of the chambers of commerce and industry.

– LMD/Media Services

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