Simon Arthur Wickramasinghe would have been a successful lawyer, had he continued to practice. Although this was not what he had in the back of his mind?
If he was the ordinary, the Ceylon Biscuits Limited (CBL) would not have flagged its way to become the Sri Lanka’s largest confectionary manufacturer, producing and marketing 11 categories of branded food products catering to the diverse palates.
In 1939, Simon W. dropped out from the law college and bought over William biscuit factory from the owner. The lawyer capitalized in it and renamed the factory which came to be known as Williams Confectionary Limited. After relocating the location from Kolonnawa to Dehiwalaand then to Akuressa during the war.
The biscuits were handmade and baked in a long-fired oven. The dough was mixed by hand,rolled out and cut into shape and placed on trays. These were then baked and cooled. They were packed into gallon tins with a round lid for sale. It was sold locally.
Simon and his wife Enid had four children, sons.
Paul was their firstborn. He was in the first batch of graduates from the University of Peradeniya. He went on to setup Ceylon Essences. Ranjith, their second son excelled in the field of Engineering. Mineka, the third, also known as Micky was the first to follow in his father’s footsteps. Ramya was the youngest. His interests lay in food Science and Technology.
Simon W. was keen to expand the production of this non-traditional snack called a biscuit. A snack introduced by the British. He wanted to find new ways to make better biscuits, a greater variability and make all this easily available. He did this by introducing high-tech manufacturing machinery to the country.
During this period Mr. S W R D Bandaranayake was the Prime Minister of the country. Due to the mishandling of the economy imports were becoming challenging. Imports of biscuits were banned. It was up to Williams and Maliban which was opened in 1954, to meet the demand and satisfy the market.
Realize this in 1957, the biscuit production line was mechanized with the introduction of Baker Parkins lines from the UK. The then Governor General of Ceylon Sir Oliver Goonethilake declared open the new building which housed the factory.
As the company grew the ‘Williams’ brand packed biscuits in branded tins called ‘Orchid Assorted’ and ‘Cheese Cuts’ with advertising taglines that said ‘Pick the Best’. Simon W. even had many British nationals working for him at his factory.
The products made were Cream Crackers, Marie, Arrowroot, Tea Ginger Nuts, Nice, Custard Cream, Bourbon and Assorted.
In 1960 Simon W. installed an automatic wafer ovenwith 12 plates for better production. It also came with cream spread attached to a cooling conveyor. After cooling, it went to a cutting machine. The packing was done manually into 4 oz. packs and bulk pack into tins.
To Simon W. and his family this was a momentous and a historical venture. It was the birth of “Munchee”. The wafer manufactured were branded as Munchee. The name Munchee was given by Mr. Edger Corray.
Simon W. and his sons Mineka and Ramya realized that new machinery with high capacity was the need of the day. To expand, the Ministry of Industries approval had to be obtained. But, the ministry was not keen as private sector industry was not encouraged. Finally the Ministry wanted Williams Confectionary Limited to show exports to grant approval
With much difficulty an export order was obtained from Saudi Arabia. With this in hand approval for expansion was gained by Simon W. At that time William Confectionary Limited did not have land for expansion. This was the next obstacle faced by Simon and his sons. Finally land was bought at Pannipitiya.
Ceylon Biscuits Limited was incorporated in 1968 as a new company under the leadership of Simon Wickramasinghe’s son Mineka Wickramasinghe.
Simon Arthur (Artie) Wickramasinghe renamed Chairman of Ceylon Biscuits Limited until August 1984 when he passed away leaving behind a legacy of fair play, both by the worker and the consumer.
Today CBL offers diversity of captivating tastes to International consumers, stormed export market gaining acceptance in 52 countries and counting.
Winning Export Awards since the year 2003, having won recognition by awarding bodies including National Chamber of Exports and Presidential Exports Awards.
When it came to Simon W. a self-made Entrepreneur, the sky was not the limit.
Entrepreneurs aren’t born, they are made. And they are made just like anything else, through hard work.
In this exclusive interview with BiZnomics Magazine, the Chairman of the Colombo Stock Exchange Mr.Dumith Fernando, discusses the digitalization of the Colombo Stock Market. He also touched on the future investment environment in Sri Lanka. Fernando is Chairman of the leading investment banking firm, Asia Securities Holdings Ltd, which he has led for the last six years. He also serves as a member of the Financial Stability Consultative Committee of the Central Bank of Sri Lanka. With 25 years of experience in international and Sri Lankan capital markets, Fernando spent much of his career in global financial centers in New York and Hong Kong with global banking giants JPMorgan Chase and Credit Suisse.
What role will the ‘hyper-leap to the future’ play in creating a vibrant equity market for Sri Lanka?
The “hyper leap” to the future, what it refers to is the digitalization of the stock market. The Chairman of the Securities and Exchange Commission (SEC) called for a joint committee of the Colombo Stock Exchange (CSE) and SEC with the intent of digitalizing some of the core activities of market and market participants. The goal was to digitalize as many of the stakeholder touchpoints, enabling end to end connectivity electronically with interactive user interfaces and interactive user experiences so that the stock market can be accessible to anyone with a smartphone. Early on we converted a lot of the statements to electronic form, for instance, CDS statement is sent via email, and companies listed on the CSE were allowed to pay dividends directly into their shareholders’ accounts, electronically. In the second phase of the initiative, we introduced a mobile application. A CSE mobile app that allows anyone from anywhere in the country to open a stockbroking and Central Depository System (CDS) account without visiting a branch of a stockbroker physically. It helps broad-base the market and brings a lot more individual investors onto the market, which is a fundamental part of creating a vibrant equity market.
How has the market performed in the past few weeks?
The activity levels and market valuations have gone up considerably. In the past few years, after 2015, every single year the average daily turnover in the market was under a billion rupees. It was Rs. 710 million a day in 2019. Today we are probably doing over Rs. 1.5 billion of turnover per day. On the 14th of October, there was a turnover of Rs. 5 billion, and the number of actual trades in the market was the highest since 2011. Before the lockdown, there was very heavy foreign selling in particular, and when the market reopened for one or two days you had markets falling about 13 or 14%. From that time what we have witnessed is local investors, seeing very good value in the market and taking advantage of this opportunity.
How will the market face a second scenario?
The market was closed for about 7 or 8 weeks in March through mid-May, a big part of that was the lack of full confidence that trades could be settled, due to the trade settlement process. So with the current digitalization move, we’ve asked brokers to get on board as many of their customers for online settlement and online payment to bank accounts. This allows us to be much more confident about operating the market even during the unfortunate eventualities of a lockdown or a curfew. In terms of COVID management we have performed much better, the markets and companies are better prepared now to deal with the COVID situation. So that’s why I think even if there is a second wave of any sort, companies are much better prepared for that and we would expect to see companies and the stock market also performing in a much more resilient manner than before.
What role has interest rates played in boosting the market?
This was a fundamental catalyst for the share market performance. Since the reopening after the lockdown, there was a precipitous drop in interest rates. Interest rates falling has always been good news for equity markets for three reasons.
First for individual investors in particular, if you’ve been sitting on high-interest rate deposits for the last few years they might sometimes be getting double-digit returns on fixed deposits. That has now fallen considerably. For a lot of people, the return they are getting on their money from bank deposits is just not enough.
That has made them shift to the equity asset class particularly because valuations were so low by the end of the lockdown. Dividend yields in the equity markets are probably about 3% so that combined with the price appreciation that have been expecting will give them a better return. Secondly, when interest rates drop, the finance cost of listed companies go down, and with that comes a boost in earnings. This resulted in some of these particular companies being highly geared and a boost in their earnings, leading to their stocks performing quite well. Third impact will be for those who trade stocks on margin. Their margin interest cost also goes down, then they are in a better position to get into the market. There’s a high degree of confidence that you can make more money in the market than you pay in margin interest costs. That is also one of the positive impacts of low interest rates.
Will we be seeing more IPOs in the coming years?
When people come to the market to list, generally we would look at two or three different things. High valuation, high price to earnings multiples, and high price to book value multiples in the market. These factors would assure much greater investor engagement. Sentiment and confidence also plays a big role, because it’s not just a matter of placing your shares in the market, you want the share price to perform well. Now we’ve obviously gone through a period where markets have been somewhat challenged. Even as of last month the valuations of our market were the lowest among peer countries. That’s one of the reasons why I think a lot of companies in the last three years have not gone out for listing.
We want to see more companies tapping into the public share market to raise money; raise capital for their growth. With the COVID-19 lockdown I think there may be a number of companies who have survived on bank financing, some challenges of the COVID impact may mean that raising equity is the way out of any sort of balance sheet challenges. So we would expect to see some of those companies as well, now considering equity markets. State minister for capital markets Hon. Nivard Cabraal has challenged the CSE to look at getting to 500 listed companies in five years. We’re at about 300 at the moment and that 300 hasn’t really changed over the last few years. We have been having promotional campaigns and doing various things to get them to come into the market but we are definitely going to have to redouble our efforts to push towards some of those targets now.
What is the outlook for the Sri Lankan economy in the medium to long-term?
I’m generally positive. We should expect to go back to 5 percent or 5% plus growth as an economy. Even though there is a lot of noise around the current sovereign rating downgrade and international debt repayments I’ve never had doubts about our October bonds being repaid. I don’t have doubts about our July repayment. Clearly there are concerns and fears! I’m not trying to say that the future or the next year or two is going to be easy but, there’s a lot of free space between it being easy and not being able to repay debt and I think we will definitely find the middle ground in that space to do what we have done for all these years, which is, never default on a sovereign issue.
Outside of that we are in a very good position. There’s a lot of infrastructure investment that still needs to happen, the road network and the country being better connected, the two ports being expanded, the Hambanthota Airport now potentially getting more utilized, I think the logistics infrastructure is a fundamental necessity for economic growth and it is all falling into place. We’re also seeing potentially quite positive wins from some of the government focus to move towards local manufacturing. If you look at local manufacturing stocks on the exchange, they performed extremely well in the last few months
One sector that is seeing a bit of slowdown and will do so in the next 12 to 18 months will be the financial and banking sector in particular. But with other parts of the economy growing and strengthening the banking sector will pull through.
We don’t have the answers to when the tourism sector will bounce back, it’s not a massive part of our economy but contributes about 4-5 % of the economy. It’s a big foreign exchange earner and there are quite a few jobs that depend on it. There’s a lot of dependencies, not just economic dependencies, primarily health-related dependencies including travel bans been lifted, a vaccine for COVID, and treatments for COVID advancing. So there are number of things that are very hard to predict at this stage.
However we’ve seen exports bouncing back with about a billion dollars of exports a month, that run rate would make it possible to put us ahead of last year’s full year export number.
On the production and manufacturing side, I think we’re much better organized to operate even if there were a COVID second wave.
With that in mind, there will need to be much stronger capital formation across industries and that’s where we see a big opportunity for the Stock Exchange. With more companies raising capital through the CSE. I am positive about our outlook! We have a game plan; we’ve been able to stabilize policy uncertainty which we had for the last few years, with a consistent government in place, good policy and solid public sector private sector engagement, I think we should get back to 5% plus growth.
The Econsult Asia research team visited Cubby Wijetunge at his residence at Charles Avenue where in retirement he enjoys a simple yet elegant life style in a pristine environment. We were anxious to learn about his journey toward a Corporate Leadership in his stellar career whilst speaks for itself and the wealth of knowledge and experience gleaned during this time.
It is important to mention that during a career spanning over 50 years where he interacted socially and intellectually with top corporates and foreigners alike, Mr. Wijetunge remained true to his Sri Lankan roots. His home and his life style boasts of a simple elegance with a local flavor, inclusive of traditional furniture. Cubby sat with our team and talked freely, imparting a deep reservoir of knowledge and experience whilst allowing us insights of his views on many subjects proving to us Sri Lankans as to why he remains a Giant in the Industry.
Cubby Wijetunge known by his friends as Cubby – is a proud product of one of the country’s leading school’s St. Thomas’s College, Mt. Lavinia. Growing up his only ambition was to join the Sri Lankan Army upon leaving school. However heading the advice given by his parents he abandoned the idea and pursued a career as a Tea cum Rubber Plantation Manager in the areas of Uva, Kandy and Sabaragamuwa. His plantation career began in the year 1958 and spanned over a period of 16 until 1974 when he retired from the plantation sector as a Visiting Agent of over 15,000 acres managed by George Steuart & Co. In 1973, Mr. Wijetunge was appointed Director of Whittalls Estates & Agencies Ltd. becoming the youngest director to be appointed to the Board. However, in late 1974, Ceylon Cold Stores Ltd. was in need of a dynamic Leadership and Cubby was appointed as Chief Executive Officer representing Whittall Boustead’s. He proudly speaks how ‘Elephant House’ manufactured the bulk of the food and beverages locally due to the then import restriction systems prevalent in the country, and of how Elephant House became the much sort after household brand ranging from fresh milk and ice creams to a vast range of frozen foods such as their famous sausages as well as the Elephant House Ginger Beer. Thereafter, in 1983 Cubby joined the world renowned multinational food and beverage company Nestle as food and beverage corporate affairs and recently retired with an honorific title Chairman emeritus of Nestle Lanka PLC.
‘’How do we get out of the box’’
In 1994, Cubby headed the Industrial Association of Sri Lanka i.e. the Industrial arm of the Ceylon Chamber of Commerce. His main task here was to ensure that the Government sought a degree of protectionism and support for local manufacturers with a view of ensuring that the local products retained their ability to complete in both the local and international markets.With a view of achieving this insisted the Government introduce and implement policies that would support the local entrepreneurs subject to them maximizing the use of local resources in national interest for economic and social progress. He spoke of few names such as his guru the late Mallory Wijesinghe and giants like Sohli Captain, Ken Balendra, the late D.S. Jayasundera, the late Michael Mack, the Akbar Brothers, the Gnanam family, Micky Wickremasinghe, Merrill J. Fernando and late Edgar Gunathunga who were corporate personalities, their achievements and their contribution towards the development of our island nation. How they were instrumental in scouting out those from rural schools and developing local talents and grooming the new generation Corporate Leaders to take over the private sector for the future. He went on to say that whilst working in the Private Sector and the Multi-National Sector he was also well exposed to the public sector. He voiced his belief in the role the public sector has to play as facilitator, promoter, regulator, financier and navigator in the development of Sri Lanka and its need for honest technocrats and support staff following best practices and maintains their integrity at all times. He emphasized on the need for ‘profit motive’ sustaining private enterprises and a balance sheet free of barnacles.
Whilst reminiscing, Cubby fondly remembers, how the late President J.R. Jayawardena suggested that he should give something back to his country by managing some State owned enterprises. This resulted in Cubby taking up the challenge as Managing Director of the Fisheries Corporation. He was involved in the Central Bank reform process with the IMF Resident Head, Dr. Nadeem Ul-Haque. He also spoke of having a few interesting arguments with former Governor, the late Mr. A.S. Jayawardena regarding dollarization. Cubby was also involved in the Tax and Financial Sector Reforms. He also spearheaded the famous De-regulation Committee. He has served as a Board Member of many State enterprises, including the Bank of Ceylon and Securities & Exchange Commission. He strongly feels the way forward is impeded as Sri Lanka is over regulated in all aspects and far too bureaucratic. He explained that we need much simpler and less cumbersome procedures and less Government involvement in order to install a highly efficient economy.
However, he stated that he believed that certain enterprises can play a lead role in the development of our country. “When I was highly involved in the private sector, I saw potential in some of these Organizations, and personally think, in my considered opinion, that the Bank of Ceylon, Peoples Bank, Ceylon Electricity Board and the Ceylon Petroleum Corporation should not be privatized”. The Water Board, in his view, should be a regulator, but the generation of water and its distribution has to be privatized to develop that industry which has a huge potential. He was strong in expressing his views on rail transport stating that “privatizing the management of railways was vital, whilst the Government retained ownership. Such a policy is worth pursuing”. “The Government requires, to a point, competent and responsible people to manage enterprises, accountable to the shareholders – a leaf they can borrow from the private sector corporate culture. This thought is applicable to all Boards of Directors and the managements that run those enterprises, and it is their responsibility not to burden shareholders.
He was quite radical in his view on taxation, which he argued that only the Western Province should be liable to modest taxes, and the rest of the country dependent on a low VAT regime, thus making Sri Lanka a new haven to attract worldwide investors with no strings attached. Quoting his own exposure to the Central Bank, he says the Central Bank must have confidence in the market. Our well known entrepreneur took this opportunity to send a message to political leaders and the public service. ‘THINK OUT OF THE BOX AND BE BOLD AND HAVE THE GUTS TO IMPLEMENT REFORMS’. There is no other way by which Sri Lanka can be made progressive – a country that is a better place to invest, a better place to live and a safe country for our tourists as well as our citizens. Let us make Sri Lanka a proud place in the world.
‘’Think local – Act global’’
I do not believe in ad hoc Public Sector Reforms – suggest to the Private Sector to re-evaluate their concept of Corporate Social Responsibility. The current Interest Rates are far too high. It should be and can be lowered by arresting waste. Cost of power/electricity should be lowered. We need to pursue obtaining power from garbage.
Such a policy will be a better one, and sustainable in the long term, rather than power generated from coal. We have so many other safe options, but despite issues, we may need to explore nuclear power as a last resort. With regard to foreign policy after 1948, Sri Lanka as a Nation has not been able to manage its affairs. History, unfortunately, proves to be so. For example – Do other countries trust us? Sri Lanka must be in a position to tell other countries that we are a trusted partner. We need to lead from the front, and we need to unite within the country as a priority. Thinking out of the box, why can’t we re-examine a way for Casinos to be established in Sri Lanka, and ways and means of giving other employment to our people.
‘’I am, you are, we are, SRI LANKAN’’
By: BiZnomics Special Economic Correspondent Photography by: Chameera Dasun