October 2003


Business Today
The heads of the winning companies of the year (2003-2004) alongside then Presidential nominee Mahinda Rajapaksa L-R: The Business Today TOP 10 analysis team - Shiron Gooneratne, Keith Bernard and Dinesh Weerakkody; Shuhei Anan, CEO,Sri Lanka Telecom; Dr T N Jinasena, Chairman, DFCC Bank; Andrew O’Regan, CEO, Ceylon Tobacco Company; Mathi K Parthipan, Managing Director / CEO, BT Options; D H S Jayawardena, Chairman, Distilleries Company of Sri Lanka and Aitken Spence & Company; Thilak de Soyza, Chairman, Carson Cumberbatch & Company; Rienzie Wijetilleke, Chairman, Hatton National Bank; Harris Premaratne, Senior Deputy GM-Corporate Banking,Commercial Bank of Ceylon; Susantha Ratnayake, Deputy Chairman, John Keells Holdings; and Richard Ebell, Finance Director, Hayleys

Business Today takes pleasure in presenting the ten outstanding performers of corporate Sri Lanka for the seventh time. This scorecard is primarily based on the financial performance of Sri Lanka’s private sector for the year 2002/2003. The ranking is a reflection of the qualities and attributes that have come to be accepted by people advocating good management in today’s business world, even in the worst of times. Therefore, the companies that lead our list have the sharpest managers, the best-run operations, the coolest products, and the happiest shareholders. Business Today feels privileged to foster a process to amplify precisely the qualities people have come to admire in business and also to promote good corporate governance within Sri Lanka’s corporate sector.

The overall performance of the corporate sector in 2002 and 2003 clearly displays the re-emergence of a growth oriented business climate. This positive sentiment was visible towards the latter part of the period. This was evident by the phenomenal growth rates recorded by some of the blue chips. This year too, like in the past, many companies came close to being in the list of bluest among blue chips, but unfortunately only the TOP 10 companies are reported. The vigor of the private sector was clearly demonstrated during our survey. But a closer look at some of the companies that could not make it to our list reveals many similarities, when compared with the winning companies; which means that there are many players in the private sector who have the capacity to get ranked in our list in the future. The top performers this year would certainly be proud of their performance while those aspiring to make it to the list should be inspired and encouraged by the new names in the list. Companies that could not sustain their position in our TOP 10 already know what it takes to excel and would certainly be determined to re-join the all-star list.

The criteria established during the last seven years in consultation with business analysts were used to measure the performance of the private sector. The criteria used for the ranking are: Turnover, Growth in Turnover, Profitability, Growth in Profitability, Return on Equity, Earnings per Share, Value Added Per Employee, Market Capitalization, Value of Shares Transacted, Value Addition, Social Responsibility, Quality of Products and Services, and Employer of Choice. Social Responsibility, Quality of Products or Services, and Employer of Choice were surveyed through focus groups representing a cross section of interest groups. The weights applied to the three qualitative factors in the list of criteria are marginal, so that the credibility of the ranking, primarily based on published information is protected.

As in the past, weights used are not disclosed for proprietary reasons. Business Today however, wishes to report that weights were assigned to the criteria mentioned above after due consideration to significance of the criteria and ensuring all the business sectors are fairly represented. Weights were applied uniformly with no prejudice.

This year’s all-star list had two new companies – Seylan Bank re-entering the TOP 10 after a long lapse and Aitken Spence entering the TOP 10 for the first time. Many of the surveys perennial favorities seem to dig in as they and the TOP 10 age. Seylan Bank had an exceptional year, which propelled it to number three. Aitken Spence under new management has achieved impressive growth and killer shareholder returns, which may have contributed to their stellar performance and a place in the all-star list for the first time ever.

On the scale of one to ten used for the evaluation, John Keells Holdings (JKH) emerged at the top of the list. The main reason for heading the TOP 10 list is its relative size, profitability and phenomenal growth rates recorded for the year. This in turn has been made possible largely due to JKH’s ability to grow market share in the Group’s existing business sectors, coupled with its known wisdom in identifying opportunities and the agility in moving into potential growth sectors.

Commercial Bank achieved the second position, trailing behind John Keells Holdings. Commercial Bank is well known for its ability to use technology to deliver innovative services and for its unassuming but highly effective leadership team. It also has a well-balanced loan portfolio, a sound client base and the flexibility to adapt to any change. This has contributed to the Bank’s strong financial performance over the last few years.

Seylan, the bank with a heart, re-entered the TOP 10 at number three demonstrating its vigor and the will to be a shining star among the top corporates in Sri Lanka. Seylan’s performance is way above the industry performance. Its success could be mainly attributed to its laser-like focus, the willingness to do things differently and to add value for customers unlike any other financial institution.

Ceylon Tobacco Company (CTC) is a long distance runner. The only manufacturing company that has consistently found a place in our TOP 10 ranking since 1995, CTC came in fourth. CTC has demonstrated over the years that it has the ability to dig in and be consistent. CTC, unlike most companies in Sri Lanka, has world-class Human Resource and Management Practices, and the ability to attract and develop top talent. The company also believes in investing in the communities where they operate.

Hayleys finished up at number five, maintaining its status in Sri Lanka’s corporate world. Hayleys’ success has been attributed to its ability to maintain a sharp focus in its selected business sectors, and its strength to hold and grow market position in a changing business environment.

National Development Bank (NDB), a DFI that has diversified over the years, achieved sixth position. NDB’s ability to maintain focus in its selected business sectors, together with its ability to hold and grow market position in a highly competitive environment, has been the key to its success over the years. A notable observation from the published information of the company is its prudent approach to lending and business expansion.

DFCC Bank, the blue-chip DFI that has over the years played a pivotal role in developing the financial sector beyond the traditional banking services in Sri Lanka, once again ensured a place in our TOP 10 ranking at number seven. DFCC continues to build on its strengths and strategies to provide a broad range of financial services, while providing leadership to the country’s development-banking sector. Our survey revealed that DFCC believes that giving back to the communities it serves would ensure its own survival in the long term.

HNB came in at number eight. In terms of market position in the banking sector, HNB remains a dominant and aggressive player in the financial sector. An outstanding achievement that warrants commendation is the reputation it has gained for its commitment to uplift the rural sector and develop the rural banking infrastructure.

Distilleries, the only other manufacturing, company came in at number nine demonstrating its ability to sustain its position among the top performers. Distilleries’ prominent position in the market is not one bestowed upon it, but a position earned through continuous improvement in quality and also by benchmarking against world-class products.
Aitken Spence entered our ranking for the first time ever. It was an excellent year for Aitken Spence. The company today is winning praise for its value as a long-term investment and, naturally, for the quality of its management under Harry Jayawardena.

As in previous years, the pattern of half of the Business Today TOP 10 performers representing the financial sector repeated itself this year as well, manifesting the attractiveness of this sector in the country. This was further evident by another bank re-entering the TOP 10 from this sector. Business conglomerates representing a minority faction of the group of ten were joined by another conglomerate. Size and scale mainly ensured their presence.

Selecting ten winners out of a large population of a vibrant and competitive private sector is no easy task. Many competed intensively, and with the slightest shift in focus the result could have been dramatic. The single-minded purpose of the robust evaluation process adopted by Business Today is to select the best of the best.

In conclusion, in today’s tough business environment, admirable qualities like ingenuity, profitability, employee development and social responsibility are more important than ever. The companies in our all-star list have proved themselves in those areas and more.

The Business Today TOP 10 companies have been selected on the basis of their financial performance by Dinesh Weerakkody MBA (UK), ACMA, Adv. Dip. BA (UK), MSIHRM, MSIPS, Keith Bernard MBA (UK), MA-Economics (Colombo), FCMA, Dip.M., MCIM., and Shiron Gooneratne ACA, CMA (Australia) as per analysis made by KPMG Corporate Finance.
Business Today thanks Dinesh Weerakkody, Keith Bernard and Shiron Gooneratne for their voluntary contribution to make ‘Business Today TOP 10’ a reality.

Business Today TOP 10 Analysis

Turnover Growth

Lanka Cement has replaced Commercial Bank and has secured top slot for the Growth in Sales Turnover. At second place is Aitken Spence, replacing Asian Hotels. John Keells holds the third position this year.

Lanka Cement, though operating at a considerable loss, has had a 128% growth in turnover in the past year, the highest growth rates in the charts. However, due to the rising cost of sales and administrative expenses Lanka Cement has been unable to reap the benefits of such high turnover.

Another new entrant to the top ten growth of turnover is Aitken Spence. Its performance is in part due to the improving tourism environment in Maldives and Sri Lanka, and through strategic investments.



Several new players can be seen on this list. John Keells has managed to grab the top spot and National Development Bank has made a considerable climb up the ladder from the seventh spot last year to fourth this year. It is of notable importance that three of the four companies who achieved Rs1 billion as profits are banks, the other company being John Keells Holdings.

Profitability Growth

HNB’s profits after tax rose by a phenomenal 2845%, from Rs17Mn to Rs516 Mn, making its profit growth the highest in this category; this has been attributed largely to the low interest rates of the economy and increased net interest income.

Other players competing in this segment are Seylan Bank and Ceylon Brewery. Both have shown considerable increases in profitability from the previous year. Seylan Bank increased its profitability by 365% while Ceylon Brewery increased the same by 217%.

In Seylan Bank’s case it was due to declining interest rates and an increase in loans and advances by 14%. Ceylon Brewery’s performance can be attributed to the removal of the 10% provision tax on soft alcohol, the improved economy, the increasing sales of the “regular” beers and a clever pricing policy adopted by the Company.


Value Addition

Many of the top performers in this category remain the same, with Aitken Spence making the highest jump in the ranking, within those companies who were part of the rankings last year. Total value added for the top 10 companies compared with last year has increased by more than Rs5,000 Mn, highlighting the importance of value addition in corporate performance.

Value Added per Employee

As before, CTC tops the charts with value addition per employee, being just over Rs60 Mn. Second in the rank is Lion Brewery, while DFCC follows behind in the third place.


Earnings per Share

Carsons maintains its lead in this category with an EPS of Rs195, a sharp increase from an EPS of Rs94 last year, due to the over 110% increase in net profit attributable to ordinary shareholder and the low equity base compared to the other companies.

Commercial Bank remains in the second position. However the third position has been taken over by Caltex which was at number five last year.


Market Capitalization

The top three positions in this category are maintained by John Keells, CTC and Commercial Bank for the second consecutive year. The market capitalization values of the above three companies have increased in comparison to last year.


JOHN KEELLS HOLDINGS 14,730,409,283 11,116,447,083
CEYLON TOBACCO COMPANY 8,242,245,044 5,807,036,281
COMMERCIAL BANK 7,800,000,000 4,953,000,000


Responsibility to the Community and Environment (Social Responsibility)

Once again the social responsibility category was based on data obtained from annual reports and subsequent cross-referencing through a survey to identify those companies that are responsive to the community, pay attention to environmental protection, and demonstrate to the public that social responsibility is part and parcel of their management philosophy. Business Today salutes the ten companies ranked below for their exemplary corporate citizenship, and also believes that companies that respond positively and with commitment to address environmental and community issues by changing their business practices to address such challenges will be the leaders of the future.


Quality of Products or Services

As in previous years, this year too, we surveyed people to compile Business Today’s list of companies that are obsessed with quick product delivery, keenly focused on their customers and always looking to see what they can do to make customers’ lives easier or save them money. In our survey, respondents also focused on companies that promote a culture that impels employees to deliver top-notch service to customers and also companies that care passionately about what their customers think of their products and services and are willing to adapt to customer preferences.


Employer of Choice

(The Best Companies to Work For)

This year too we decided to survey people to identify companies that excel in attracting, developing and retaining top talent and also companies that have leaders who nurture the development of other leaders at all levels of the organization. The world of work is changing with flattening structures, less obvious career progression, even tougher targets to achieve with the new ways of working. Never has it been more important to focus on attracting and retaining the top talent the company has. Today, we all know that the leading organizations of the future will be Employers of Choice, attracting and retaining the very best people around. The companies selected demonstrated that most often they tried to do right by their employees, even during difficult times.



1. The ranking is based on Group figures.
2. The Turnover represents Net Turnover, which is calculated by deducting Goods & Services / Turnover Tax, National Security Levy and Inter Group Sales from Gross Turnover.
3. Profitability is represented by Net Profit After Tax, before Exceptional Items and Minority Interest.
4. Return on Equity is arrived at by dividing Net Profit After Tax and Minority Interest, by the opening Share Capital and Reserves.
5. Earnings Per Share has been calculated by dividing Profit attributable to ordinary shareholders by the weighted average number of ordinary shares in issue.
6. Value of Transactions represents the turnover from the number of shares traded at the Colombo Stock Exchange, for the year ended December 31, 2002.
7. The Market Capitalization represents the market value of the total Share Capital of the Company as at December 31, 2002.
8. The Profit Per Employee has been arrived at by dividing Net Profit After Tax, by the number of permanent employees for the financial year-end 2002.
10. Value Added Per Employee has been arrived at by dividing the Value Added by the number of permanent employees for the financial year-end 2002.
11. The amounts taken for Value Added represent published figures for the Group, for the year 2002. Wherever information was not available, requests for same were made.
12. In our analysis, we have excluded companies that incurred a loss in the previous financial year (2001) for purposes of calculating the “Growth in Profitability”.