CRTA Annual Report

The History of The Colombo Rubber Traders’ Association

he Rubber Committee of the Ceylon Chamber of Commerce, which had

addressed the interests of the Rubber Trade since 1891, identified the need

for a separate forum to promote the interests of the Rubber Industry. A

meeting was held on November 27, 1918, at which the Colombo Rubber Traders'

Association [CRTA] was formally inaugurated. Attending this meeting were

personalities well known in the business circles of Colombo, which included Messrs.

Hayley, Durrent, Mackwood, Oldfield, Henry De Mel and John Tarbat. Knighthoods

were conferred on the last two named gentlemen.

T

The first Chairman of the CRTA was Mr. J. Lochore of Carson & Co. Ltd. Initially, the

Committee comprised two nominees each of the sellers and buyers. A Brokers’

representative was invited to serve on the Committee at a later date.

Members of the CRTA Committee were exclusively European, till Mr. S.T.L. De Soysa

of C. W. Mackie & Co. Ltd. was elected as one of the buyers’ representatives in

1945.

The first rubber auction was held on November 4, 1910, which was prior to the

formation of the CRTA. During the war years, the rubber auction was suspended.

The first crepe auction to be conducted following the war was held on June 2, 1950.

The first sheet auction was held on April 30, 1981, on the termination of the

Rubber/Rice pact with the Peoples Republic of China. The first sale of latex by

Auction was held on January 24, 1997.

Mission

“To be the Premier Forum for Rubber in the Country”

Objectives • To advance efficient and transparent trade between Sellers, Producers, Buyers,

Exporters and Dealers. • To support the expansion and sustainability of the Rubber Industry in Sri

Lanka. • To facilitate the development of value addition in the Industry by promoting the

manufacture of Rubber based products and to support the Industry efforts in moving up the value chain to achieve greater harmony with the aspirations of consumers.

• To promote co-operation amongst all sectors of the Industry and, thereby, to

create a synergistic and dynamic Rubber industry. • To stimulate innovation, investment and enhanced productivity throughout the

Industry. • To project Sri Lanka Rubber and Rubber based products as leaders in the

global markets. • To objectively address major issues, which have a bearing on the Rubber

Industry. • To serve as the voice of the Rubber Industry in dialogue with the Public Sector. • To widen the influence of the Rubber Industry by creating and nurturing

appropriate links which would be beneficial to it. • To encourage the concept of Corporate Social Responsibility, by example, in

promoting sound environmental initiatives, desirable business ethics and rational social practices.

• To safeguard the common interest of members by initiating prompt, legitimate

and effective action to satisfy their business and professional needs.

The Colombo Rubber Traders’ Association Annual Report & Accounts 2009/2010

COMMITTEE – 2009/2010

CHAIRMAN

Mr. M. S. Rahim A. M. Rahim & Co (Pvt) Ltd.

VICE CHAIRMAN

Mr. S. S. Poholiyadde Kegalle Plantations PLC

BUYER REPRESENTATIVES

A.M. Rahim & Co. (Pvt) Ltd. C.W. Mackie PLC

Eastern Merchants PLC Rajapakse Trading (Pvt) Ltd.

Richard Pieris & Co. PLC Shums & Co. Ltd.

SELLER REPRESENTATIVES

Agalawatte Plantations Ltd. Balangoda Plantations PLC

Kegalle Plantations PLC Kelani Valley Plantations PLC

Kotagala Plantations PLC Pussellawa Plantations Ltd.

BROKER REPRESENTATIVE

John Keells PLC

BY INVITATION

The Planters’ Association of Ceylon The Colombo Rubber Buyers’ Association

Non - CBA Broker – J. D. and Sons (Pvt) Ltd.

SECRETARIAT

The Ceylon Chamber of Commerce

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SUB COMMITTEES - 2009/2010

MEMBERSHIP & DISCIPLINE

Mr. W. T. Ellawala (Convenor) Mr. A. Karunaratne

Mr. M. S. Rahim Mr. R. C. Peiris

Mr. A. Jayawickrema Mr. R. Jansz

WAREHOUSE

Mr. A. Edirisinghe (Convenor) Mr. S. A. Eriyagama Mr. A. Jayawickrema

Mr. R. Fernando Mr. S. H. Saheed

Mr. R. Jansz

BYE LAWS & COSTITUTION

Mr. S. Poholiyadde (Convenor)

Mr. S. Devendra Mr. S. H. Saheed Mr. M.F. Jiffry

Mr. M. S. Rahim Mr. S. Eriyagama Mr. R. Fernando

FREIGHT & SHIPPING

Mr. A. Karunaratne (Convenor) Mr. S. H. Saheed

Mr. R. Siriwardena Mr. M. F. Jiffry

REGULATORY REFORMS

Mr. W. T. Ellawala (Convenor) Mr. A. Jayawickrema

Mr. M. S. Rahim Mr. S. Wijesekara Mr. S. Poholiyadde

Mr. R. Jansz

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REPRESENTATION ON OTHER BODIES

THE CEYLON CHAMBER OF COMMERCE

Mr. M.S Rahim and Mr. S. Poholiyadde were nominated to serve on the Committee of the Ceylon Chamber of Commerce for the year 2009/2010, the CRTA representative and Alternate, respectively.

SRI LANKA SHIPPERS’ COUNCIL

Mr. M. F. Jiffry of Shums & Co. Ltd. represented the Association on the Committee the Sri Lanka Shippers’ Council.

EXPORTERS’ ASSOCIATION OF SRI LANKA

Mr. R. Siriwardena of Richard Pieris & Co. PLC represented the Association on the Committee the Exporters’ Association of Sri Lanka during the year.

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MEMBERS

Buyer Members ALMAR TRADING CO. (PTE) LTD 143/17, Sri Wickrama Mawatha, Colombo 15 Tel : 5340440 Fax : 5344100 ALI BROTHERS (PVT) LTD. 278, Layards Broadway, Colombo 14 Tel : 2330207 – 8 Fax : 2541104 ASSOCIATED MOTORWAYS LTD 185, Union Place, Colombo 2 Tel : 2309309 Fax : 2323781 ASSOCIATED SPECIALTY RUBBER (PVT) LTD Yatideriya Rubber Factory Undungoda. 71200 Tel : 035-2278812 Fax : 035-2278811 ASSOCIATED TRADERS RUBBER EXPORTS (PVT) LTD. 478/3B, K. Cyril C. Perera Mawatha., Colombo 13 Tel : 2432137 Fax : 2321213 A. L. M. MAHAROOF & CO. 636/ B, Malwatte Malwana. Tel : 2422961/2535221 A. M. RAHIM & CO. LIMITED 64, W. A. D. Ramanayake Mawatha., Colombo 2 Tel : 2320421/2333625/2445856 Fax : 2448345 BATA SHOE COMPANY OF CEYLON LTD 100, General Sir John Kotalawala Road, Ratmalana. Tel : 2633791-3/261247-8 Fax : 2637093

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CEAT- KELANI INTERNATIONAL TYRES Co (PVT) LTD P. O. BOX 53, Nungamugoda, Kelaniya. Tel : 2911305/2911241/2911269 Fax : 4817721/2911453 CEYLON TRADING CO. LTD 36, D. R. Wijewardena Mawatha, Colombo 10 Tel : 2327336/9 /2328904/2325665 Fax : 2449586 C. W. MACKIE PLC 36, D. R. Wijewardena Mawatha, Colombo 10 Tel : 2440229/2423554-63 Fax : 2440228 EASTERN MERCHANTS PLC 341, Union Place, Colombo 2 Tel : 2325736/2328406 Fax : 2448474 GLENROSS RUBBER COMPANY B/2, Elvitigala Flats, Elvitigala Mw., Colombo 8 Tel : 2699607 Fax : 2866765 HAMEED BROTHERS COLOMBO (PVT) LTD 377, Grandpass Road, Colombo 14 Tel : 2320832/2324447/2345934-5 Fax : 2335617 JAFFERJEE BROTHERS 150, St. Joseph’s Street, P O Box 1180, Grandpass Colombo 14 Tel : 2432051/ 2434041 Fax : 2446085 K. R. V. ENTERPRISES 4, Keththarama Mawatha, Grandpass Road, Colombo 14 Tel /Fax : 0722123124/4936826 LANKA PRODUCE TRADERS 308 & 310, Grand Pass Road, Colombo 14 Tel : 2440505

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LE-FERNE LABORATORIES (PVT) LTD. 255/3, Highlevel Road, Colombo 5 Tel : 4203328/4203329 Fax : 2813862 LOADSTAR (PVT) LTD Regents Court 218, Minuwangoda Road Ekala, Ja-Ela Tel : 4837659 Fax : 2232828 MALWATTE TRADERS 22, Babapulle Place, Off Grand Pass Road, Colombo 14 Tel : 2439451 MICROCELLS LTD Koskanatte Road, Mampe, Piliyandala Tel : 2708908 Fax : 2708917 OREX TRADING COMPANY No. 107, Biyagama Road, Kelaniya Tel : 2911566/2911236 Fax : 2911566 P. R. & SONS No. 17, Dawalasinghharama Mawatha Colombo 15 Tel : 2546168 POLYDEX (PVT) LTD 69, Jayalath Building, 3rd Floor New Kelani Bridge Road, Orugodawatte Wellampitiya Tel : 2437575/5222111 Fax : 2448223 RAJAPAKSE TRADING (PVT) LTD. 287, Grandpass Road, Colombo 14 Tel : 2433015/2343624 Fax : 2445023 RICHARD PEIRIS & COMPANY PLC 310, High Level Road Nawinna, Maharagama Tel : 4304028/2852644 Fax : 2856787 SHUMS & CO LTD 33A, Queens Road, Colombo 3 Tel : 2580027/2580170/2588470 Fax : 2503619/2503440

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Seller Members

AGALAWATTE PLANTATIONS PLC 10, Gnanartha Pradeepa Mawatha, Colombo 8 Tel : 2679598-9/2678390 Fax : 2694833 BALANGODA PLANTATIONS PLC P.O.Box No. 6, Palmgarden Ratnapura Tel: : 045 2231445/7 Fax : 045 2223598 ELPITIYA PLANTATIONS PLC 73/3, Ward Place, Colombo 07 Tel : 5335572-74 Fax : 5335573 HAPUGASTENNE PLANTATIONS PLC 186, Vauxhall Street Colombo 2 Tel : 045 2222717/ 2222319 Fax : 045 2222717 HORANA PLANTATIONS PLC 8, Sir Chittampalam A. Gardiner Mawatha, Colombo 02. Tel : 2437431-2 Fax : 2447140 KAHAWATTE PLANTATIONS PLC 52, Maligawatte Road, Colombo 10 Tel : 4723937 Fax : 5335556 KEGALLE PLANTATIONS PLC 310, High Level Road, Nawinna, Maharagama. Tel : 4310823 / 4310799 Fax : 4310799 KELANI VALLEY PLANTATIONS PLC 400, Deans Road, Colombo 10 Tel : 2686274-5/4627243-6 Fax : 2694216 KOTAGALA PLANTATIONS PLC 53 1/1, Sir Baron Jayathileke Mawatha Colombo 1 Tel : 2381508-10 Fax : 2381513

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MALWATTE VALLEY PLANTATIONS PLC 280, Dam Street, Colombo 12 Tel: 5388800 Fax: 2543937 NAMUNUKULA PLANTATIONS PLC 310, High Level Road Nawinna, Maharagama. Tel : 4310801, 4310500 Fax : 4306726 PUSSELLAWA PLANTATIONS LTD. No. 228, Havelock Road Colombo 5 Tel : 2589804/2585794/2587837 Fax : 2587867 WATAWALA PLANTATIONS PLC No. 60, Dharmapala Mawatha, Colombo 03 Tel :4702400 Fax :4716365

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Broker Members

COMMODITY CONSULARS (PVT) LTD 49/4, Sir Chiththampalam A Gardiner Mawatha, Colombo 2 Tel : 0777 700 999 Fax : 5665429 EAST WEST BROKERS (PVT) LIMITED 23-1/14, Mathew Building, Colombo 1 Tel : 2382795, 2382796 Fax : 2382796 FORBES & WALKER COMMODITY BROKERS (PVT) LTD 46/38, Navam Mawatha, Colombo 2 Tel : 2433720/43 Fax : 2437147 H. W. J. DIAS & BROS (PVT) LTD. 33A, Queens Road, Colombo 3 Tel : 5653261 Fax : 4335061 J. D. & SONS (PRIVATE) LTD. 37/3, Pedris Road, Colombo 3 Tel : 2370647 Fax : 5555258 JOHN KEELLS PLC 130, Glennie Street, Colombo 2. Tel : 2306551 Fax : 2326121 LANKA COMMODITY BROKERS LTD No. 97 Ananda Rajakaruna Mawatha Colombo 10 Tel : 5377080-3 Fax : 5377090 M. Z. M. MOHIDEEN & SONS 235-1/2, Olcott Mawatha, Colombo 11 Tel : 2326484 / 0777316415 Fax : 2421542 RANSRI ENTERPRISES (PVT) LTD. 199/96, Obeyesekere Cresent, Rajagiriya. Tel : 5653261 Fax : 4335061 SIYAKA PRODUCE BROKERS (PVT) LTD. 120/15, Vidya Mawatha, Colombo 07 Tel : 4939438 Fax : 2678145

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AN OVERVIEW OF THE INDUSTRY

NATURAL RUBBER PRODUCTION The progressive increase in production recorded over the past 6 years continued in 2009, by a further 6 per cent, to reach 137 million kgs. Marginal increases in the extent under cultivation and the area under tapping, combined with a 4 per cent improvement in yields, to 1,437 kgs per hectare, contributed to the growth. The Moneragala Rubber Development Project, which continues to expand its area of new rubber cultivation, of which, up to end 2008, 3,400 hectares had matured and were yielding latex, was a factor in this equation. However, the year 2009 commenced dismally, with lower global demand throughout the first half of the year and a decline in the price of synthetic rubber, due to the reduction in crude oil prices. The depressed prices led to the sparing application of fertilizer. This impacted on production. A complete reversal in these conditions was manifested in the second half of 2009, with the gradual global economic recovery, the rise in crude oil prices and a shortage in world natural rubber supplies, as a consequence of unfavourable weather conditions in the major producing countries, Thailand, Malaysia and Thailand. This provided sufficient motivation for enhancing production and these latter six month registered an almost 9 per cent growth over the same period of 2008, which made the year end positively. A category-wise classification of Sri Lanka Rubber production is given in Table 1.

TABLE 1

SRI LANKAN RUBBER PRODUCTION 2005 - 2009 (Mn. Kgs.)

CATEGORY

TOTAL 2005 2006 2007 2008

2009 % SHARE OF TOTAL 2009

Sheet Rubber 50.2 46.2 48.8 55.0 54.6 39.9% Crepe Rubber 18.7 25.8 27.5 27.7 40.6 29.6%

TSR 5.9 9 9.5 10.9 11.8 8.6% Others 29.7 28 31.5 35.6 29.9 21.8%

Total 104.3 109 117.5 129.2 136.9 100% Source: Rubber Development Department In contrast to 2008, it was crepe rubber that, in 2009, recorded an increase in volume and that, too, to a significant extent of 46.5 percent over the previous year, which accounted for over a 38 per cent increase in its share of the total production. Sheet rubber registered a marginal decline.

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TABLE 2

NATURAL RUBBER PRODUCTION 2003-2009 (Mn Kgs)

Year

Sheet

Rubber

Sole Crepe

Scrap Crepe

Latex Crepe TSR Latex &

Other Total

2003 50.0 2.2 3.1 17.1 1.2 18.4 92.0

2004 46.5 2.0 3.9 12.5 3.8 26.0 94.7

2005 50.2 2.7 2.9 12.9 5.9 29.7 104.3

2006 46.2 3.96 1.6 20.24 9.0 28.0 109

2007 48.8 4.1 1.8 21.8 9.5 31.5 117.5

2008 55.0 3.9 2.7 21.0 10.9 35.6 129.2

2009 54.6 5.4 3.5 31.7 11.8 29.9 136.9 Source: Rubber Development Department DOMESTIC CONSUMPTION Despite the negative impact of the global economic down turn on natural rubber manufactured products, domestic consumption recorded a 6 per cent increase, following the trend of the preceding three years. A 15 percent increase in export volumes could have been a contributory factor to this.

TABLE 3

DOMESTIC CONSUMPTION OF NATURAL RUBBER 2005-2009 (IN THOUSAND TONS)

Category Total 2005 2006 2007 2008

2009

Dry Rubber 41.83 36.91 42.37 46.15 48.04 Latex 30.91 26.15 31.49 33.97 36.90

Total 72.74 63.06 73.86 80.12 84.94 Source: Rubber Development Department

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CULTIVATION The observation made under this caption in the Annual Report of last year warrants repetition, on the grounds of the various comments made by Buyers on quality deficiencies. Although the average yield per hectare in 2009 still fell short of the projected potential yield per hectare of 1,500 kgs per annum, despite its continued progressive improvement, the priority of rubber industry should not only be focused on the need to improve productivity, but also quality, to maintain its competitiveness and to penetrate more effectively the international market for natural rubber. The Rubber Research Institute, notwithstanding the scarcity of funds for research and development initiatives, continues its pursuit of identifying agronomic practices and technological improvements to enhance productivity and quality. Its recommendations included a downward revision in planting density, to avoid productivity impairment through over-crowding, and a reduction in the tapping cycle. It introduced five new high yielding clones and developed low protein concentrated latex for use in the manufacture of surgical gloves. It also developed the adaptation of the single day smoke drying system for the large scale plantation sector. The Rubber Development Department, in conjunction with the Wellassa Project, continues to be active in providing planting material from nurseries to smallholders. With the facilitation of the International Fund for Agricultural Development, the RDD further invested in the Moneragala Rubber Development Programme to expand rubber cultivation. It also helped implement the Government’s relief schemes for smallholders, when prices were depressed.

EXPORTS Exports recorded a 15 per cent increase over the previous year. However, the average prices for all grades were lower than those achieved in 2007 and 2008. The recovery during the second half the year, with the gradual global economic resurgence, the rise in crude oil prices and a shortage in world natural rubber supplies, as a consequence of unfavourable weather conditions in the major producing countries, Thailand, Malaysia and Thailand, could not, on average, offset the depressed price levels that prevailed in the first six months.

TABLE 4

EXPORTS OF RUBBER (IN THOUSAND TONS)

Year

Sheet

Rubber

Sole

Crepe

Scrap Crepe

Latex Crepe

TSR

Latex & Other

Total

2005 12.24 2.72 3.05 12.37 2.18 1.85 34.41 2006 19.80 2.49 0.60 16.33 4.51 2.60 46.34 2007 18.08 3.22 0.66 17.50 5.98 5.98 51.42 2008 17.26 3.28 0.50 15.33 4.99 7.25 48.62 2009 24.40 2.11 0.23 13.68 6.54 9.03 55.99

Source: Rubber Development Department

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TABLE 5

EXPORTS OF NATURAL RUBBER FROM SRI LANKA FOR 2009 (Mn Kgs)

2009 CREPE RUBBER

Sole Crepe Vietnam 0.70 South Africa 0.41 Hong Kong 0.34 Saudi Arabia 0.13 Bangladesh 0.10 Other 0.43 Total 2.11

Latex Crepe Malaysia 4.83 Japan 1.23 Singapore 1.12 Italy 0.78 Other 5.72 Total 13.68

Scrap Crepe Malaysia 0.16 Other 0.07 Total 0.23

SHEET RUBBER RSS

India 11.23 Pakistan 6.12 China 1.75 U.S.A 1.37 Malaysia 1.25 Other 2.68 Total 24.40 LATEX & OTHER 9.03

TSR 6.54

Total 15.57 GRAND TOTAL

55.99

Source: Rubber Development Department

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NATURAL RUBBER PRICES The export price of Rubber in 2005 - 2009 is shown in Table 6.

TABLE 6

RUBBER EXPORT PRICES 2005-2009 (Rs. Kg)

RSS

LATEX CREPE YEAR NO. 1 NO.2 IX NO. 1

SCRAP CREPE

NO. 1 X BR

2005 140.99 138.80 152.65 151.53 124.72 2006 202.23 181.28 241.04 237.00 179.36 2007 234.22 212.71 237.15 232.10 206.59 2008 269.51 265.28 273.71 271.69 250.38

2009 (a) 211.65 206.74 217.15 212.51 186.31 Source: Central Bank of Sri Lanka

(a) Provisional The average yield per hectare registered an improvement of 4 per cent. Export prices declined by 27 per cent. Of concern was the sharp drop in re-planting, while the extent of new planted areas slowed down. The cost of production was well contained, mainly on account of an increase in productivity. The statistical overview of Sri Lanka’s Rubber Industry for 2007-2009 is shown in Table 7. [Overleaf]

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TABLE 7

STATISTICAL OVERVIEW OF THE RUBBER INDUSTRY 2007-2009

ITEM UNIT 2007 2008 (a) 2009(b)

Production Kg mn 117.6 129.2 136.9

Total extent (f) Hectares ‘000 120 122 124

Area under tapping (f) Hectares ‘000 94 94 95

Yield kg./ hectare 1,261 1,382 1,437

Cost of Production (g) Rs./kg. 112.69 114.00 115.50

Average price

Colombo Auction (RSS1) Rs./kg. 234.22 269.51 211.65

Export (fob) Rs./kg. 234.48 278.20 202.23

Replanting (h) Hectares 5,192 6,105 1,002

New planting (h) Hectares 2,034 2,436 1,156

Source : Central Bank of Sri Lanka (a) Revised (b) Provisional (f) Extent under rubber is based on the Census of Agriculture conducted by the Department of Census & Statistics in 2002 (g) Cost of production revised in 2002 based on a survey conducted by the Rubber Development Department in 2003. (h) Extents covered by cultivation assistance schemes of the Rubber Development Department.

RUBBER REPLANTING SUBSIDY SCHEME With funds collected through the export cess being absorbed directly by the Consolidated Fund of the Treasury, the Line Ministry, the State Rubber Institutions and the Industry have no mandate to determine the manner in which they may be disbursed. With no funds being released for any development work, such salutary initiatives as re-planting, upgrading of factory facilities and the wider introduction of rain guards were virtually suspended. This has had a serious negative effect on the Industry, particularly in the Plantation sector.

ANNUAL GENERAL MEETING – 2008/2009 The 90th Annual General Meeting of the Colombo Rubber Traders’ Association was held on July 10, 2009 at Hotel Galadari, Colombo. Mrs. Indrani Sugathadasa, Secretary, Ministry of Plantation Industries was the Chief Guest and delivered the Keynote Address.

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MARKET TRENDS & OUTLOOK MARKET TRENDS After the slump at the end of 2008, when rubber prices dropped to below the cost of production, creating a worldwide fear for most commodities and agricultural products, producers were in quandary as to the future. However, rubber prices started to recover slowly and steadily in the first and second quarters of 2009. This was made possible by the quick recovery by several of the Asian Countries who did not suffer from the recession. Strong recovery in both China and India whose rapid progress and development created demand and absorbed large quantities of rubber needed for industrial growth. This strong demand created prices to escalate to record heights. At the end of the year 2009 prices for Crepe No. 1X fetched Rs. 310/- and RSS1 Rs. 318.50. Prices at the end of the first quarter 2010 was Rs. 411/- for Crepe 1X and Rs. 425/- for RSS1. Due to the many holidays in the month of April and onset of monsoon with storms creating floods in most growing areas production dropped drastically creating problems for both manufacturers and exporters. At the time of writing prices for a small quantity of 1X Crepe had fetched an all time record of Rs. 502/- at the Auctions held on 24th June 2010. These prices prevailing are well above overseas buyers idea of price. If and when supply returns to the normal regular estimated quantities by Plantation Companies and small holders, there will be price revision and correction in line with world markets which has to take place. All in all producers have had another very profitable year and it is hoped that they will increase replanting on a regular basis with high yielding clones which would withstand the recent changes in climatic conditions effecting the country. Demand from local manufacturing industry will continue for RSS grades, as local demand for tyres are on the rise with the free movement of vehicles around the country. Demand for Liquid Latex will increase both locally and overseas as some small holders prefer to market their Latex to nearby factories or glove manufacturers rather than produce the traditional RSS rubber which costs are much higher to manufacture and transport for sale. OUTLOOK It will be futile to predict whether Natural Rubber prices will be sustained because the economies in USA and European Countries who are large consumers have still not shown sufficient interest for our Crepe Rubber in particular. There are clear indications that both China and India cannot continue to expand their consumption of rubber through out rest of this year.

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ACTIVITIES OF THE ASSOCIATION

CESS ON RUBBER EXPORTS There continued to be conflicting reports regarding the total value of Cess funds collected and their application. There was also confusion regarding the Import and Domestic Cess funds collected by the Rubber Development Department and the Export Cess appropriated by the Consolidated Fund of the Treasury. The reality, however, was that the Industry was not benefiting to the extent that it should through the disbursement of these funds for re-planting, factory development and upgrading, and productivity enhancing initiatives, such as the wider utilization of rain guards. Instead, large sums were being consumed by the State Rubber Institutions - the Rubber Research Institute and the Rubber Development Department - to meet purely administrative expenses. The relief pledged through various Government schemes, to assist the recovery of the Industry following the disastrous recession of the preceding year, never materialized with the exception of the suspension of the Economic Service Charge for a period of one year for all exporters, and it was fortunate that propitious market forces eventually provided the stimulus to the Industry to endure that traumatic period. SRI LANKA SOCIETY FOR RUBBER INDUSTRY Mr. A. Edirisinghe was appointed as the CRTA representative on the Board of the Sri Lanka Society for Rubber Industry [SLSRI]. On an invitation extended to Mr. W.T. Ellawala, Chairman, SLSRI, he kindly consented to address the CRTA Committee at its January 2010 meeting on the Moneragala Rubber Development Project [MRDP], which is being facilitated by the SLSRI, expanding on its progress made so far and its projections for the future. Under the MRDP, 7,200 Hectares of new rubber had been cultivated up to 2008. 3,400 hectares had now matured and were yielding latex. Figures for 2009 had still to be released. The planting target under this project is 12,000 hectares by the end of 2010. Private companies were purchasing latex from farmers at “farm-gate” prices negotiated by them. The Wellassa Project was initiated by private sector rubber based manufacturing companies. Their participation was to provide planting material from nurseries. From 2006-2009, 667,000 seedlings had been supplied. The initiative of the Rubber Development Department to supply planting material to small holdings was below targets. To small holdings, under the International Fund for Agricultural Development (IFAD) Project, Wellassa provided seedlings at a subsidized rate of Rs.60/- and to the JEDB at Rs.75/- and private sector at Rs.85/-.

The CRTA was urged to revive its efforts to market the product, “Lankaprene”, a superior grade of Crepe Rubber, which had been registered as a trade mark by the Plantation Companies. It had been developed under the Competitiveness Initiative of the Rubber Cluster.

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PLANTERS’ ASSOCIATION OF CEYLON The Planters’ Association of Ceylon [PA] reported that for Plantation Companies to claim exemption from the Nation Building Tax of 1 per cent on revenue, the Broker or Buyer had to furnish the Plantation Company with documentary evidence that the rubber purchased had been exported from Sri Lanka. This was not practical and the CRTA made representations to the Ministry of Plantation Industries, on behalf of the PA, in this regard.

The Regional Plantation Companies also highlighted various other issues on which they sought relief. These included the following:

• The provision to RPCs of one month’s working capital, with 6% subsidy on interest. • The allocation of cess funds to the plantation sector for replanting, factory

development and productivity measures, such as rain guards, etc., as done in the past.

• The allocation of funds to the RRI for development initiatives. • The exemption of the Rubber Industry from the Nation Building Levy of 1% on

revenue. A request was made by the PA to Buyers for an increase in the premium for Sole Crepe from Rs.1/- to Rs.10/-. In view of the approximately 2000 tonnes of Sole Crepe being manufactured per annum, an increase in the premium from Rs.1/- to Rs.2/- for the Pebbly Grade only was granted. EXPORTERS’ ASSOCIATION OF SRI LANKA Mr. R. Siriwardena continued to serve as the representative of the CRTA on the Committee of the Exporters’ Association of Sri Lanka [EASL] in the year 2009/2010. The Annual General Meeting of the EASL was held on July 30, 2009, at the Taj Samundra Hotel, Colombo. The inability of the Chief Guest, Hon. Dr. Sarath Amunugama, to attend the meeting, resulted in the Guest of Honor, Mr. Anil Koswatte, CEO of the EDB, being invited to take his place. Mrs. Nirmalee Samarathunga was re-elected as Chairperson for the year 2009/2010. Following successful representations made by the EASL to the Director General of Customs, a reduction in the charges for panel examinations of export cargo was granted to the Association’s members It was reported that the EASL had submitted proposals to the NCED on various issues relating to VAT and other fiscal levies. One such proposal was the removal of the Cess levy of Rs.15/- per kg on imported Synthetic Rubber. The CRTA disagreed with that particular proposal, as it would be inimical to the country’s Natural Rubber Industry and voiced its objections.

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THE CEYLON CHAMBER OF COMMERCE Mr. M.S Rahim and Mr. S. Poholiyadde were nominated to serve on the Committee of the Ceylon Chamber of Commerce for the year 2009/2010, the CRTA representative and Alternate, respectively. SRI LANKA SHIPPERS’ COUNCIL The CRTA re-nominated Mr. M.F. Jiffry as its representative on the Committee of the Sri Lanka Shippers’ Council for 2009/2010, with Mr. I. De Zoysa as his Alternate. Sri Lanka hosted the Annual Meeting and Conference of the Asian Shippers’ Council which was held at the Colombo Hilton from 13-15 August 2009. The Hon. Chamal Rajapakse, Minister of Ports and Aviation, was the Chief Guest. A decision was taken to move the Permanent Secretariat of the Council from Singapore to Sri Lanka. Mr. Rohan Masakorale was appointed as the Permanent Secretary, while Hon. Chamal Rajapakse will serve as Patron of the Council. THE COLOMBO RUBBER BUYERS’ ASSOCIATION On the subject of Quality Control Systems in Crepe Rubber Factories, the Colombo Rubber Buyers’ Association complained of the presence of extraneous matter embedded in the rubber sheets. Reports of the detection of black particles contaminating crepe rubber were also received. It was suggested that this could be Tea Dust. It was emphasized that Crepe Rubber was a premium product and particular care should be exercised to maintain a higher standard of quality in crepe rubber factories. It was also decided to dispense with the use of paper tags, as a means of identification, and to use stickers, instead, on the rubber bales. Following complaints that skim rubber packed in 50 kg bags retained moisture and became tacky, a decision was taken to pack all grades of rubber in 25 kg bags, with effect from August 2009. Instances of the provision of inadequate sample material being made available by the Brokers for evaluation by Buyers were brought to the notice of the Committee. It was decided that a minimum of 4 sample sheets of reasonable dimensions for one ton of rubber should be provided and more samples for viewing, in the event of larger quantities. The AGM of the CRBA was held on October 23, 2009, at the Capri Club. Mr. A. Edirisinghe was elected as the Honorary Secretary/Treasurer of the Association and nominated to serve as its representative on the CRTA Committee.

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THE COLOMBO BROKERS’ ASSOCIATION The Bye-Laws of the Ceylon Chamber of Commerce governing the Sale of Rubber by Auction stipulates that “Only Brokers who are members of the Colombo Rubber Traders’ Association shall be entitled to conduct sales as Auctioneers”. However, there is no such restriction in regard to the Private Sales of Rubber. Following the highlighting, in last year’s Annual Report, of the concerns regarding Brokers who were not members of either the CRTA or the CCC and concluded transactions by private sale, the Committee decided, based on Legal Opinion, to persuade buyers to purchase their requirements through the auction system. It was decided that, with effect from May 2009, the provision for the rent free period should include Saturdays, as it was a working day for Brokers’ warehouses. Attention was drawn to the difficulties in the collection of rubber from Brokers’ warehouses, due to dearth of manpower at loading points. As a consequence, Buyers’ vehicles leaving for collection in the mornings are invariably attended to in the late afternoon or evening, resulting in Buyers having to incur additional expenses by way of overtime and transport charges. Concerns were expressed regarding adequate protection of Sellers’ rubber against all risks, during the period for which they were liable, while the goods were in the possession of the Brokers, in terms of the following Condition of Sale for Rubber by Auction.

4. (a) (i) Delivery Ex-sellers Warehouse shall be deemed to include the Sellers own or

the Warehouse of his Agent or of his Brokers. Such Warehouse shall be an insured Warehouse registered by the Colombo Rubber Traders’ Association (hereinafter referred to as ‘The Association’) after due inspection so that it conforms to the minimum conditions required as stipulated by the Committee of the Association (hereinafter referred to as the ‘Committee’) from time to time. 4. (a) (vii) If the Buyer fails to take delivery within 24 working days from prompt date, the rubber shall be absolutely at his risk and the Seller shall charge storage rent at the rate fixed by the Committee from time to time from the 25th working day after prompt date until and including the date of delivery, provided always that any payment of rent by the Buyer shall not render the Seller liable for any loss or damage to the rubber from whatever cause arising other than the Seller’s own negligence or wilful act. The Brokers confirmed that the scope of the Insurance cover taken by them adequately protected the Sellers from liability. The Colombo Brokers’ Association sought the intervention of the CRTA for an increase in the storage rates charged for accommodating Sellers’ rubber in their warehouses, with effect from August 1, 2009. The proposal was for an increase from the current rate of Rs.0.75 per kg to Rs.1.30 per kg, with effect from August 1, 2009. Agreement was finally reached, through the facilitation of the Chairman, CRTA, on a revised rate of Rs.1/- per kg, with effect from October 1, 2009. The need for a formal legal agreement between the Brokers and the Sellers, to safeguard the Sellers in the event of the insolvency of a Broker, was acknowledged. The risk was underscored by the fact that the qualifying criterion for a Rubber Broker’s Licence was the payment of a nominal fee to the Colombo Municipal Council.

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It was proposed that a Sub-Committee be appointed to study the Bye-Laws and Conditions for the Sale of Rubber by Public Auctions in relation to the role and liabilities of Brokers, in the context of the risks of insolvency. The absence of a Regulatory Authority for the Rubber Industry, in contrast to the Sri Lanka Tea Board, a State Institution, vis-à-vis the Tea Industry, amplified the risk. The following were nominated to review the Bye-Laws, in consultation with the CCC – Legal Manager: Sellers’ Representatives: Mr. L. Obeyesekere

Mr. S. Poholiyadde

Buyers’ Representatives: Mr. M.S Rahim Mr. S. Shaheed

Brokers’ Representatives: Mr. A. Jayawickrema Mr. M. Dias

EXPORTS OF RUBBER TO PAKISTAN Concerns were expressed by the High Commission of the Islamic Republic of Pakistan – Colombo, to the CRTA regarding the Importation of Natural Rubber RSS 4/5 by Pakistani Buyers, under inaccurate declarations of grades to circumvent the payment of the valid customs duties. The CRTA extended its fullest co-operation by furnishing the relevant information requested, in order that this malpractice may be eliminated. WEBSITE DEVELOPMENT The Committee decided to develop/re-constitute an upgraded website for the Association, which project has now been completed. This will provide more comprehensive and updated information on the Association and the Industry. AMENDMENTS TO RULES OF THE CRTA The Bye Laws & Constitution Sub-Committee was delegated the responsibility of reviewing the Rules of the Association and proposing amendments relevant to the needs of the Association, warranted by the changing circumstances in the Industry. On receiving the approval of the Committee, a General Meeting of the membership will be convened to consider their adoption.

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EMERGENCY MEETING OF THE CRTA An Emergency Meeting of the Buyer and Broker Members of the CRTA was held on January 21, 2010, to address problems faced by Buyers with regard to matters pertinent to the correct procedures to be adopted by Brokers, in conformity with the Conditions of Sale of Rubber by Public Auction. Conclusions were reached on the following:

• Sampling of Rubber • Cataloguing of Re-prints • The Risk of Insolvency of Brokers • Insurance

BALLOT FOR THE ELECTION OF THE COMMITTEE – 2010/2011 On the results of the ballot, the following were elected to the Committee of the CRTA for the year 2010-2011:

Buyer Representatives

A. M. Rahim & Co. Ltd.

C. W. Mackie PLC

Eastern Merchants PLC.

Rajapakse Trading (Pvt) Ltd.

Richard Peiris PLC.

Shums & Co. Ltd.

Seller Representatives

Balangoda Plantations PLC

Elpitiya Plantations PLC

Kegalle Plantations PLC

Kotagala Plantations PLC

Namunukula Plantations PLC

Pussellawa Plantations Ltd.

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CURRENT NEWS Large Delegation from Sri Lanka attended the ASEAN Rubber Conference 2010 held in Kuala Lumpur, Malaysia from 17th – 19th June 2010. Mr. M. S. Rahim, Chairman, CRTA receives a souvenir from Hon. Tan Bernard Giluk Dampok, Minister of Plantation Industries & Commodities, Malaysia. Looking on is Mr. Stephen Lai, CEO Nextview, organizers of the conference.

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THE CHAMBER BOARD OF ARBITRATORS AND SURVEYORS 2010

The Following were approved as Arbitrators for the year 2009/2010 – Rubber Mr. M. S. Rahim A. M. Rahim & Company Mr. M. F. Jiffry Shums & Co. Ltd. Mr. J. B. L. De Silva Eastern Merchants PLC Mr. S. Poholiyadde Kegalle Plantations PLC Mr. R. Jansz J. D. & Sons (Pvt) Ltd. Mr. D. C. A. Wickramasinghe Mr. U. Bandaranayake Forbes & Walker Commodity Brokers (Pvt) Ltd. Mr. R. C. Peiris Kotagala Plantations PLC The Following were approved as Surveyors for the year 2010 – Rubber Mr. Anura Edirisinghe C. W. Mackie PLC Mr. F. X. Felix 105/10, Alwis Town, Hendala, Wattala Mr. S. L. Gurunada SGS Lanka (Pvt.) Ltd. Mr. P. Ravinath Intertek Testing Services Lanka (Pvt) Ltd. Mr. A. A. Shums Shums & Company Ltd. Mr. N. Silva C. W. Mackie PLC Mr. I. De Zoysa Eastern Merchants PLC Mr. C. Nanayakkara C. W. Mackie PLC Mr. L. D. Ramanayake John Keells PLC BY ORDER OF THE COMMITTEE SGD. DAVID JANSZE CONSULTANT – CCC FOR SECRETARY -/np

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Tel +94-11242 6426+94-11542 6426+94-112445872+94-112446058+94-11254 1249+94-112307345

www.lk.kpmg.com

KPMG Ford, Rhodes, Thornton & Co.(Chartered Accountants)32A, Sir Mohamed Macan Markar Mawatha,P. O. Box 186,Colombo 00300,Sri Lanka.

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Report of the Auditors on Statement of Receipts and Payments

To the Ceylon Chamber of Commerce and Members of the Colombo Rubber TradersAssociation

We have audited the accompanying Statement of Receipts and Payments of the Colombo RubberTraders Association with the Ceylon Chamber of Commerce for the year ended 31 March 2010("Statement"). This Statement is the responsibility of the Committee of the Colombo Rubber TradersAssociation and our responsibility is to express an opinion on the Statement based on our audit.

We conducted our audit in accordance with Sri Lanka Auditing Standards and Sri Lanka AuditingPractice Statements. Those Standards and Practice Statements require that we plan and perform theaudit to obtain reasonable assurance about whether the Statement is free of material misstatement. Ouraudit includes examining, on a test basis, evidence supporting the amounts in the Statement. An auditalso includes assessing the accounting principles used and significant estimates made by theCommittee, as well as evaluating the overall presentation of the Statement. We believe that our auditprovides a reasonable basis for our opinion.

In our opinion, the accompanying statement presents fairly in all material respects the receipts andpayments of the Colombo Rubber Traders Association with the Ceylon Chamber of Commerce for theyear ended 31 March 2010 in accordance with the Sri Lanka Accounting Standard for SmallerEnterprises laid down by the Institute of Chartered Accountants of Sri Lanka.

CHARTERED ACCOUNTANTSANF/SP/CI

Colombo06 May 2010

KPMG Ford, Rhodes, Thornton & Co, a Sri Lankan Partnershipand a mamber firm of the KPMG network of independentmember firms affiliatad with KPMG International, a Swisscooperative All rights reserved,

A.N. Fe,nendo FCAMs. M. P. Pore,e FCAT.J.S. Rojeke,ie, FCAMs. S.M.B. Jeyeseke,e ACA

S. Sirikananathan FCA M.R. Mihular FCAP.Y.S. Parara FCA C.P. Jayatilaka FCAW.W.J.C. Parara FCA Ms. S. Josaph ACAW.K.D.C Abayrathna ACA S.T.D.L. Parara ACA

Documents

CRTA Annual Report