Friday, 5 September 2014 00:48
A highly-respected business leader in Sri Lanka who spearheaded CIC Holdings’ transformation from a chemicals-oriented company into a leading conglomerate, B.R.L. Fernando stepped down from his position as Non-Executive Chairman of CIC Holdings last month.Fernando served the company in various senior management positions for 36 years and helped it become one of the largest conglomerates in Sri Lanka during his time at the helm, as its Managing Director/CEO from 1988 to 1995 and Chairman from 1995 to 2009.Fernando, who leaves a substantial legacy at CIC, will continue to serve on the boards of some of CIC Holdings’ subsidiary companies, while turning his attention to a new challenge – changing the landscape of the horticulture sector in Sri Lanka.Following are excerpts of an interview with Fernando, in which he shares his journey to the top, tracing his life story from humble beginnings to heady heights:Q: Can you single out a major milestone in your 36-year career at CIC Holdings?
A: The major milestone was the change of CIC from a chemical-oriented company to an agri-based one. That was a major change, because earlier ICI – Imperial Chemical Industries – was the major shareholder in CIC and the company vision was to distribute the range of commodity chemicals ICI manufactured. ICI had a full range of chemicals it manufactured in the UK and brought here; we were the distributing arm. Before CIC was setup it was called ICI Export. It was subsequently Ceylonised in 1964 with the majority of the shares given to Sri Lankans. By the 1980s, the writing was on the wall with the major chemicals companies facing huge challenges from regional players.
Q: What was your role in this transition?
A: I joined CIC as a junior accountant, mainly to a chemical business. Immediately thereafter, with the liberalisation of the economy, we found the chemicals business was drying up and turnover was declining. By the 1990s, we were essentially becoming a paint company. Pentalite, Dulux and Duco were ICI brands; we were manufacturing paints through an associate company and marketing the paints in Sri Lanka.
Q: By this time you were MD/CEO of the company?
A: I was MD in 1987. In the early ’90s we bought into the fertiliser business from Ceylon Tobacco Company. People were quite sceptical, because they thought the fertiliser business was more synonymous with CTC and we should not impose the CIC name on this product, but I felt CIC was a much better known name in the agriculture sector because of the wide range of pesticides that we marketed. The change was thus effected. I do not think we looked back from that decision and within about 10 years, we were the market leader. The fertiliser business was not alien to CIC or ICI; ICI was the major supplier of fertiliser into this country before the fertiliser industry was nationalised and it was then that the other parties came in.
Q: What do you consider as the turning point in your career?
A: The turning point in my career was when I joined CIC; before that I was in a corporation for three years and at Browns for four years. When I joined I didn’t think I would stay this long, nor did I think I would become Chairman. It was a job that interested me and the people with whom I had to work were very good.
I was very fortunate right through my career in the type of people that I met. When I was in the Industrial Development Board at the beginning, my bosses were James Lanerolle, Eric Silva, Somapala Gunadheera and before that C. Mylvaganam. They were absolute top-level civil servants.
Afterwards, at Fishery Harbours Corporation, there I had contact with people like M.L.D. Caspersz and Dr. Sena Wickramasooriya, and Wilfred Wijekulasuriya was Chairman. Then there was the Port Engineer Alwis. They were all top-level people with whom I associated and they were very encouraging and supportive of the young accountant.
At Browns I joined a company called Engineering Services. There I learned how the foundry, machinery, boring machines, milling machines and lathes work. It was essentially a jobbing company and I was able to interact with the engineers and see how each one of these machines was used. From that experience I gathered a lot of engineering knowledge.
From there I moved to Associated Battery Manufacturers. As opposed to the low-tech industry which was jobbing, that was a high tech industry using very sophisticated equipment. I got to grips with the use of mechanised handling, which widened my horizons in the industrial sector. I remember with a lot of gratitude people like Edmund Cooray and M.V. Theagarajah, who were my bosses at Browns, and Leslie Sebastian who was the General Manager at ABM. At Browns they promoted me as Group Cost Accountant and I moved into ABM as Administration Manager, so when I came to CIC I had substantial experience. At CIC I was privileged to work with people like S.K. Wickremesinghe who was Chairman, Chris De Saram who subsequently became Managing Director and S. Srikanthan who was Finance Director.
CIC had a record of recruiting good quality graduates and was one of the larger employers of graduates. We had a good set of staff and the background information that I gathered in my previous jobs came to the fore.
Q: What legacy do you leave at CIC and for the agriculture sector in general?
A: I think the legacy that I leave at CIC is fairly substantial, even if I say it myself, because we shifted the company from a chemicals company which moved into paints at which time ICI acquired a direct interest in the paint business. CIC then had virtually no business other than a very small chemicals business. When we started the agri business, we took on the fertiliser business and then started the seeds business; we took on the 1,450-acre Hingurakgoda farm and then took on Pelwehera, another 650 acres, and changed the landscape of agriculture in this country. I think CCI’s science orientation helped largely to get value addition in these farms.
At Hingurakgoda, there were 850 acres of paddy lands and the average yield was 58 bushels per acre. At Maha they cultivated about 350 acres and at Yala they cultivated 200 acres, using 550 acres a year. The land utilisation ratio was less than 60%. We increased Maha cultivation to 850 acres and Yala cultivation to 500 acres and moved the yield from 58 bushels to 160 bushels per acre.
Because of CIC’s infusion, I firmly believe that providing better quality seeds to the farming community from that time onwards added at least Rs. 1 billion to rural farmers every year by way of improved yields due to better quality seeds. The net result is that Sri Lanka’s average yields, which was little under four tons, is now about 4.2 tons. I would say the impetus for that increase was driven largely by CIC. That was a very substantial change we made to rural communities.
The other area was the purchase of the Feed business from the American multinational Cargill Ltd., where we struck a huge bargain and acquired assets worth nearly Rs. 1 billion for a mere Rs. 130 million. Today, it is a vibrant business benchmarking quality feed and prices to the poultry farmer. This was because I put in a top quality manager who turned around the project from day one.
The other major change was to link our agricultural sector with the 2,500-year-old Ayurvedic tradition in the Sri Lankan civilisation. We secured majority shares in Link Natural Products and added a lot of value utilising the knowledge resources available within the company.
Q: Have you completely retired as of end August 2014?
A: I’ve relinquished office as the Chairman of the quoted companies. I still continue to remain as the Non-Executive Chairman of some of the subsidiary companies such as the Feeds company and the agri business company.
Q: Now that you’ve got a lot more time on your hands, what will you be doing?
A: I do a lot of gardening and a lot of experiments at my house. I have 21 fruiting trees up here. I think with the R&D that I have been doing here, I can change the landscape of the horticulture sector in this country. However, I do not have a real handle of a place so I am looking around to get some place to push these ideas across. Hopefully I will get something moving in a month or two.
Q: Going back to the early years, could you tell us about your childhood and your family?
A: I come from a lower middle income family. My father was a Government clerical servant working in the Railway. I was the eldest of 11 children. Anybody will say ‘we never had enough,’ but I can tell you, ‘we really never had enough’.
I was fortunate because my father had been to S. Thomas’ College before and in 1950 I got into STC. When they went private, it was hard because my parents certainly could not afford to pay the fees. I remember my last two years’ fees were not paid when I left college. I am grateful to STC for having kept me on, even though I was not a good student. One of the first things I did when I started working was pay the arrears of fees I owed S. Thomas’. My other siblings went to Visaka and St. Peter’s. The youngest two studied; the youngest is an accountant and the other a maths graduate. The others started working after their O/Ls.
Life was very difficult; very, very difficult. I am sure my mother went hungry on a lot of days. She used to have a few chickens in the back garden, just to supplement the family nutrition needs, and used to grow many plants. We were fortunate that we had a place to stay in Wellawatte, which belonged to my grandfather.
It was a life full of deprivation. It was tough and even now I feel for my mother. She was a real driving force. She died about three years ago. In the latter years she used to tell me I had worked for long enough and would ask me to retire and relax.
Q: How was school life?
A: School life was quite good because my father had a reputation at S. Thomas’. When I joined College, he had three records and I remember Canon De Saram telling me, “Sri Lanka produced two athletes; Duncan White and your father. Both were freaks.” But my father got married at 19 and that was the end of his athletics.
I still keep a very strong connection with S. Thomas’ and I have run five carnivals by myself and with Mrs. Siva Obeyesekera, whom most Thomians consider part of the Thomian family, to raise funds for STC. A lot of Thomians know me as the ‘Carnival Guy’. I try to contribute to College in whatever way that I can. I have put aside a little money into a trust to try and build it up so that we can give scholarships to needy children at STC. My daughter was at Holy Family Convent and I have setup a trust there too, to help with teachers’ salaries.
I think our education system needs to be completely overhauled. If you look at Sri Lanka, we were essentially a trading country and if you look at our civilisation, our culture and economy, I think we survived as a country and as a civilisation because Sri Lankans were clever. That open, liberal approach to everything needs to be resurrected. With the global village and the challenges that people are facing, the innate ability of our people will be stifled if the education system is not re-engineered. If we are to progress as a civilisation, culture, language and religion, I think we need to have greater liberality and encourage people to use their innate abilities and leverage the skills they have, which have helped to sustain this country over the last 2,500 years of recorded history. I believe this civilisation was much older than that. Once again I reiterate we have survived because we were clever.
Today, everybody is trying to steal competitive advantage and that is not good for the future. We need to start recognising merit, start recognising people first past the post, give people the necessary wherewithal to acquire skills and then leverage those skills to get benefits into the economy. We need to recognise different skills sets and reward them accordingly.
Q: How did your entry into the corporate world come about?
A: I sat for my A/Ls and left college in 1963. I didn’t do well. At that time it was very tough to get into the universities and I was not an extremely good student. Then I got a job planting. My father’s brother, B.L.W. Fernando, was the Auditor General and I went to tell him that I have got this job. He said: “What? What nonsense is that? What are you trying to do? Planting is reserved for the dud sons of the rich.” Perhaps an unfair comment, as I see it now. He then gave me such a shelling that I said I would sit for the A/Ls again.
When I got through the A/Ls, he found me a place to do articles – at A. I. Macan Markar & Co. I am really grateful to Alavi Macan Markar. At that time people used to take a premium when they took an article clerk. It was Rs. 1,000 then. My uncle wrote a letter to Alavi saying my parents could not afford to pay it. Alavi took me because of my uncle’s letter and I am grateful to him and the people I worked with there, like John Diandas and Tom Navaratne, who were then partners of Macan Markar & Co.
I still remember John telling me, “Lakshman, my aim is to make you a good accountant.” Later I did a function for John for his 50 years’ celebration and he said, “Lakshman, I remember telling you I wanted to make you a good accountant and I am certainly not disappointed!”
Q: Could you tell us about your family?
A: My wife Nelun is an only child and we met at a carnival. We’ve known each other for the last 52 years, since I was 17 and she was 14, and we’ve been married for 42 years. We have three children, Rushika, Rukshan and Reshane. My eldest is in the States. She did a degree in mathematics and physics in the US, and then a MSc and MPhil and followed a PhD programme, all at Columbia University, New York. She went into investment banking after that and was Vice President – Technology at Goldman Sachs. When she had her second child, she decided to chuck it; but now that the child is two, she has started working again – this time at JPMorgan.
My second was at S. Thomas’ and rowed for College. He did a degree in the UK and subsequently an MBA in Australia. He is an Australian citizen but he has dual citizenship and is back here, working at CIC. The third was also at S. Thomas’ and again rowed for College and obtained national recognition. I sent him to Houston and he did a degree there in Information Technology. He is now the Supply Chain Manager at Airtel. He was the Manager of the Sri Lankan Rowing Team in China this month.
My daughter was a very good and keen student but the boys took it in their stride. They were not pushed but I know my wife saw that they did their work.
Q: When you were growing up, what were your dreams?
A: I wouldn’t say that we had major goals and achievements. Like children of that era, we were fairly non-focused on what we had to achieve. Today the world is so competitive that children have to have some sort of goal orientation. I think parents drive them too hard to get that orientation and as a result, they are very narrow-focused. I do not think that is a good thing. Overall I don’t think the people of that era were very goal-oriented.
Q: Looking back, do you have any regrets?
A: Not really. I think I have achieved much more than what I ever anticipated. I’ve educated the three children and they’re all on their feet. They are very law-abiding, good citizens and I think that’s a huge achievement in itself.
Q: What are your dreams for Sri Lanka?
A: I would look at Sri Lanka as evolving into a very vibrant democracy and the aspirations of the people to be global players in various areas would be realised; that with the demographic changes that are taking place and the population growth being lower, we would have a good standard of living. Hopefully we will have much greater planning of our water and land resources and the utilisation of these resources, and better facilities for education. I don’t necessarily articulate that education should be controlled by the State. The parents know what the children really want in terms of education. I might want to push my children to achieve what I could not achieve.
Q: What is your advice to corporate leaders today?
A: I think that corporate leaders have to look at how they can help education, help uplift people’s living standards and help generate a better work ethic and productivity in this country. At Hingurakgoda, we helped to run a school. There we gave a library and a computer lab and paid a teacher to do English language classes. Language skills are a very vital cog in our system. The liberality that is needed for this country to progress is also important. I think the country will prosper – the Government is dreaming of a $ 7,000 economy in the short term. I am sure we will achieve this, but we need to strengthen recognition of merit, a level playing field for all our citizens and the application of the law without favour.