Crisis-ridden Ceylinco companies in revamp drive:

MBSL to the rescue

by Charmaine FERNANDO

Ceylinco companies have suffered a serious financial setback lately due to mismanagement. F & G, the fallen real estate giant of the Ceylinco group was given a new lease of life lately when MBSL took over the gigantic task of restoring it in to a viable venture.

Janaka Ratnayake

Ceylinco Sussex College network is no exception. The Merchant Bank of Sri Lanka (MBSL) announced the takeover of the management of crisis-ridden Sussex Colleges, recently.

MBSL has not rested since and one by one, Ceylinco Building Society, then CIR, the fallen decentralized Ceylinco companies are being taken over by MBSL, on an ambitious mission to do the impossible.

Janaka Ratnayake, sitting at the hot seat at MBSL is armed with power-packed effective ideas that work. He is a man of action so unlike the typical government servant.

With a team of experts to back him, the daunting task seem possible. He is confident of turning round these companies that have fallen from grace, in to viable profit centres.

Ratnayake said that regaining the confidence of over 5,000 parents of Sussex Schools wasn't easy. 'But then, I see opportunity in a crisis'. Being a task driven person with an appetite for taking calculated risks, supported by a strong team of qualified and experienced professionals, Ratnayake, decided to take the challenge head-on. The Merchant Bank of Sri Lanka (MBSL) a public quoted financial institution of repute has decided to intervene in the management of Ceylinco Sussex Schools Network, a multi-billion rupee enterprise, of the troubled Ceylinco Group. MBSL is working in the capacity of management agent of The Finance Company.

We are looking at a total asset base of Rs. 3.1 billion to resurrect the entire network. sixty percent assets of the Sussex colleges to the value of 2 billion is vested with The Finance (TFC) and 1 billion has come from Ceylinco Profit Sharing. The public have invested another Rs. 300 million and the balance were taken as loans to resurrect the Sussex network of colleges, formalizing TFC, as the majority 60% share holder, he pointed out.

We are looking at a 17 year cycle. Rs. 600 million is needed to meet annual expenses and Rs. 300 million an year income is generated at present. Our target after the rescue mission is a new student influx of 1500 in the next year. Five hundred government schools teaching in the English medium have been closed down. We are looking at those students to continue their education here with us he said with confidence.

Already eight schools at Sussex are breaking even. Rs. 25 million is enough to run all the 20 schools. Shareholders will be paid monthly in the second year. A debenture will support it. We are under pressure to pay Rs. 40 billion deposits. People are resilient. Peoples Merchant has bought over one school. Regulations will be in place to check fraud and prevent any in the future said Ratnayake.

A round 5,700 students are studying at Sussex Colleges for local national examinations in the English medium, were at risk of losing ground in 20 schools spread around the island which would place them in dire straits because there were no other optional institution which offered the English medium facility, to initiate a transfer.

Besides there were 900 employees, of which, over two thirds were teachers and principals, which gave a head count of approximately 700, who stood at 1:6 student ratio, who would go jobless in such a crisis situation. This situation would have had far-reaching political, social and financial implications on the country. This plight of student and the overall implications prompted MBSL to take on the role of rescue operations said Ratnayake.

MBSL holds the fundamental responsibility to assist market forces to manage financial risks and efficient fund movement. We turned around the ailing Ceylinco Finance & Guarantee company and are now showcasing yet another revolutionary transformation with 25 billion worth TFC.

Rehabilitating and restructuring these companies is MBSL's prime task at hand. With a track record of success, MBSL is ready to be the driving force to transform these companies in to viable profitmaking entities without delay. Timing is crucial' he said. We have taken on board Professor Gunapala Nanayakkara, Chief Executive of the Sussex College Network, to be a stronghold in the education and administration sphere. Looking at problems on a surface level, we found employees have not been paid for the past 2 months. We immediately settled salaries for September. The arrears, he said, will be paid at a later date.

We found responsibilities assigned to staff overlapping and complex. The best solution will be to streamline the operations.

The parents request stability. Teachers are not paid competitive salaries. Financially the colleges are not breaking even.

We will remedy the situation before long and see to a surplus he said.

We held a conference for the principals of all the Sussex Colleges, and will be giving guidelines to follow. Parent Associations will be formed and we will meet them for support.

There is a need to furnish facilities such as libraries, playgrounds, labs Staff issues prevail with regard to training. Three streams of Arts, Commerce and Science will be launched.