SAL Case Analysis Dec 2017

Dear Sir,
Current decision taken by SAL to sell the controlling power to CIC falls under which strategy according to theory knowledge ?

Dear friends,

Please upload any formalities for the issuing private placement and right issue SEC etc

Nirosha Gayani wrote:

Hai friends,

Athula and his team of newly recruited graduates are  created mission statement stating that their target market is up market tourists without considering that Sri Lanka has positioned as chief destination and per capita tourist receipts per day is  only US$ 168.2. I think this is main reason for the SAL's low occupancy and low cash flow What do you think ?

I guess this is not a valid statement. Since per capita income represents the average spending of all tourists where upend and low end both markets are included. I guess Vision to target High end market is justifiable since Northern and eastern provinces are lack with top class hotels. I guess reasons for all downturn is management problems.

Hi all,
Can one of you with updated knowledge on corporate governance practices list out corporate governance issues found in SAL?
TIA

Does anyone have soft copy of KC5 study pack. If so please share with us.

Thanks in advance!

Mark_Ravin wrote:

Does anyone have soft copy of KC5 study pack. If so please share with us.

Thanks in advance!

Soft copy of study packs are not available for any subject

CFS analysis for SAL

https://i.servimg.com/u/f62/19/83/03/57/captur12.png

DEAR SIR,

IF YOU CAN GIVE US A MOCK EXAMINATION FOR CASE STUDY EXAM BASED ON INFORMATION GIVEN IN THE SUN ASIA LEISURE PLC, IT WOULD GIVE GREAT OPPORTUNITY TO CHECK WHETHER WE CAN HANDLE EXAM TYPE QUESTION BEFORE THE EXAM.

SINCE WE DO NOT HAVE AN OPPORTUNITY TO TEST OUR KNOWLEDGE BY ANSWERING TO AT LEAST ONE EXAM TYPE MOCK EXAM BEFORE THE EXAM.

HENCE, WE KINDLY REQUEST FROM YOU TO GIVE A MOCK EXAM ON 28TH DECEMBER 2017 AT INSPIRO INSTITUTE IT WILL BE GREAT FOR US.

THANK YOU.

REGARDS
KC5 STUDENTS:D

what it means by 22% night leakages KC5 SAL case study

In SAL's forecast SOFP for 31-March-2018, it reflects there was an accrued interest amounting to 100MN to which another 90 MN needs to be added as a result of reconciling item. My concern is whether such 190MN amount is a part of debt capital or not?? If not, then corrected debt capital as of 31-March-2018 would be 2060 MN (NCP=1000, CP= 650, Bank over draft 410)??

I think there will be a huge possibility for a "Due Diligence" with a share valuation as it specified in the preseen. Because CIC had already carried out a market research and it said that new acquisition would be followed by a  Due diligence and a share valuation. just a guess/ In such an event, may we need to refer related services standards??

Hello Sir,


Can you please be kind enough to assist us on the preparation of the "Introduction for SAL " for the report.

Thanks!!!

Janithavimukthi wrote:

In SAL's forecast SOFP for 31-March-2018, it reflects there was an accrued interest amounting to 100MN to which another 90 MN needs to be added as a result of reconciling item. My concern is whether such 190MN amount is a part of debt capital or not?? If not, then corrected debt capital as of 31-March-2018 would be 2060 MN (NCP=1000, CP= 650, Bank over draft 410)??

Hi,
Debt capital should be 1000+650 and O/D is not a part of debt capital if it is not a permanent O/D
interest is not considered as debt capital. O/D 410 is correct

Janithavimukthi wrote:

I think there will be a huge possibility for a "Due Diligence" with a share valuation as it specified in the preseen. Because CIC had already carried out a market research and it said that new acquisition would be followed by a  Due diligence and a share valuation. just a guess/ In such an event, may we need to refer related services standards??

I also feel the same but there is a chance unseen is due diligence report and they might ask to write a report based on due diligence report. Only GOD knows

Dear All,
Here I have extended what Mr. Sanjaya Bandara did today at the workshop. pls add or comment on this

SAL Issues/Weaknesses and Suggested strategies

• Not having a succession plan
The general manager Sudath Silva resigned from the company stating his frustration. The vacant general manager position then became a struggle between two managers; marketing manager Harsha Perera and accountant Roshan Bandara. Both Harsha and Roshan were hard workers and had shown their loyalty in the past with every effort for the company’s success. As a result, Herman was appointed as the acting general manager for a short period.

• Not having a proper marketing plan.
Harsha Perera for overall product and brand development. Harsha was a marketing graduate and this was his first employment.

• Not having appropriate risk management strategies.
• Not having proper organization structure, job description.
Disputes among directors/CEO/GM etc. no proper job description and succession plan in the event of resignation of staffs (GM position then became a struggle between Harsha and Rohan)

• Decisions were taken only by Chairman and one Director.                                                  
Recruitment, investment in lands investment shares, selecting contractors

• Financial viability of the projects appears to have not considered.
Poor project management, poor fund utilization on constrictions, no feasibility study on projects before undertaking.


• Appropriateness of new strategy introduced not considered.
Restructuring strategies proposed by Herman appear to be poor one without analyzing consequences of the decision
• Loosing competent capable staff.
Staffs are looking for new jobs due to demotivation, frustration, lack of job security etc. (Sudath, Richard, and Ashoka resigned)
• Audit committee chairmen resigned.
Ashoka resigned and there is no right succession plan

• Appropriateness of the composition of the board
Independence of Non-executive directors are questionable

• Excessive borrowings without considering the implications
Dues to the poor financing strategy and poor project management

• Board performance evaluation appears to have not done.
• Noncompliance with Accounting standards.
Revaluation of properties done by non-independent person and relevant accounting standard guideline was not followed


1. Debt or Equity.
 Restructuring of existing debts or issue new listed bond or debentures.
Depends on bank’s restructuring conditions and plan.
If SAL opts to issue listed bonds/debenture, it will have to obtain credit rating to raise fund and listed bond/debenture will take a longer period for execution due the regulatory process involved compared to the bank loan. Further listed bond/debenture are issued without physical security unlike bank loan and this will an advantage to SAL but requires higher disclosure and compliance requirements
 Equity, private placement or right issue.
Decision should be made in light of current scenario of the company

 Pros and Cons of debt and equity.

2. Come up with an appropriate marketing plan.
 Hire industry expert or get consultant to make comprehensive new marketing plan
 The marketing plan should support to increase occupancy level and the revenue ultimately profit.

3. Establish risk management practices.
 Concentrate of reputation, market, operations, credit and interest rate risk

4. Appoint an appropriate board, committees and determine the TOR of the committees.
 At least 1/3 of the total number of Directors should be Non-Executive Directors
 2 or 1/3 of Non-Executive Directors, which is higher should be independent Each Non-Executive Director should submit a declaration of Independence/ Non-Independence in the prescribed format.
 The Remuneration Committee shall comprise of Non-Executive Directors and majority of which can be independent
 Audit Committee and Shall Comprise of Non-Executive Directors a majority of whom shall be independent The Chairman of the Audit Committee or one member should be a member of a professional accounting body
 It is expected there to be a clear division of responsibilities at the head of the company which will ensure a balance of power and authority

5. Establish an appropriate organizational structure.
 Current Power culture should be changed to Role culture
 Org. structure should be made with clear description and it should support SAL’s operations

As discussed please find below general instructions on your report content.
This is not a comprehensive list, but a guide only.
https://drive.google.com/file/d/1WzjLtDLUrMF9Dv4xzxRcc13m6veVjdHQ/view?usp=sharing

Some of you requested for residual income based valuation. Please refer attach PPT for details.

https://drive.google.com/file/d/18KfPXXTmlwdPr4qDQCg1cO_BS_u4aLBh/view?usp=sharing

Shameela wrote:

Hello Sir,


Can you please be kind enough to assist us on the preparation of the "Introduction for SAL " for the report.

Thanks!!!

Please refer PPT below for report content

Sir,

Can you please send us yesterday presentation (which included change management)

Dear Sir,
Plz see my report sent via email..

Plz give feedback
Thanks
Student

Dear sir

please share yesterdays slided

Pls find attached yesterdays PPT

https://drive.google.com/file/d/1BBA5wNX6yQDA7sj9fK6wo4FgdPgPm2vY/view?usp=sharing

Investment Incentives (Enhanced capital allowance in addition to existing)

100% capital allowances will be granted on investment in depreciable assets (other than intangible assets) during the Y/A - USD 3mn- to USD 100mn. (Such assets are used in any part in Sri Lanka, other than in the Northern Province)

150% capital allowances will be granted on investment in depreciable assets (other than intangible assets) during the Y/A - exceeding USD 100mn. (Such assets are used in any part in Sri Lanka, other than in the Northern Province)

200% capital allowances will be granted on investment in depreciable assets (other than intangible assets) during the Y/A - exceeding USD 3mn. (Such assets are used in the Northern Province)

Dear Sir,
Appreciate very much if you can comment on below answer outline

As described in Ansoff’s growth mix, SAL has 4 options to pursue namely,
1. Market penetration
2. Market development
3. Product development
4. Diversification
It is obvious that product development and diversification needs more capital investment and resources with high risk. As per SWOT done, SAL is not in a good position to adopt above two strategies. However, we can suggest that SAL is better position to pursue market penetration or market development or both,
Market penetrations is possible if SAL adopt the followings
1. Attract more guests to SAL hotels through group packages (include all 4 hotels to the package)
2. Attractive discounts for repeat guests
3. Loyalty discount for tourist who visits 02 or more SAL hotels during single visit
4. Bundle offer for guests who visit first time to SAL hotels
5. Family packages with special discount for kids
Market development (existing product new market)
SAL should capitalize growing arrival of cultural tourists and experiential tourists by attracting them to Anuradhapura and Waikkal.
To attract high-spend tourists SAL should understand their unique preferences in accommodation such as cabana and boutique where SAL can charge a premium price.
Attracting local tourists with the offerings such as family packages with child care and child pay facilities is feasible for SAL.