Directors aren’t a rarity at Blue Diamonds

Recently the Daily FT reported that the Board of Blue Diamonds Jewellery Worldwide Plc was getting richer with Managing Directors and if that wasn’t enough, the company last week announced more additions – bringing the total number of Directors to a high 15.

The latest appointments to the Blue Board are from Sri Lanka Insurance Corporation (SLIC), which is the single largest shareholder with a 10.5% stake.

Analysts viewed the new appointments as warranted, though the move would have been best in good governance if some irrelevant occupiers of Board seats vacated. The company continues to struggle in addition to being saddled with Rs. 856 million in carried forward losses.

The two SLIC nominees are its Senior Accountant (Financial Reporting and Taxation) Chaminda Gunasinghe and Senior Manager (Investments) Upul Dhanuka Liyanagamage.

SLIC’s nomination of two was on top of the 7.6% owning British American Technologies (BAT) succeeding with the appointment of an unusually high number of four directors recently. BAT nominees on the Blue Board are W.A.D.V. Perera, K.L. Dias, W. Ravishankar and W.W.M.R.K.W. Dela.

Their appointments were approved by shareholders at the AGM, but resolutions reappointing retiring Directors Ananda Wehalle and Mairus Fernando weren’t carried along with those seeking to appoint M.B.K. Sataharasinghe, the CEO and Managing Director of People’s Realty Ltd., and international management, tax and legal consultant and ICASL Secretary M. Thiyaharaja.

Last month Blue upgraded three Executive Directors to the post of Joint Managing Directors. They were K.V.D.D.A. Dias as a joint Managing Director Production, M.M.N. Priyantha as joint Managing Director Research and Development and W.K. Galagoda as the joint Managing Director Finance. This is in addition to Bandula Ranaweera being the Chairman/Managing Director and Executive Director Godfrey de Kretser being promoted as Deputy Chairman. Additionally, Manager (Investments) at People’s Realty Ltd. and Director of Ceylinco Selna Ltd. and Selna Residencies K.N. Gunawansa was appointed recently as well.

Blue Board also has several directors originally appointed when it was under Ceylinco Consolidated, whilst Ceylinco Insurance has a 5% stake at present.

In the first half of the 2012 financial year, Blue Diamonds Jewellery Worldwide’s turnover increased by 65% to Rs. 43 million, whilst in the second quarter it grew 100% to Rs. 25 million.

Profits in the six months rose 561% to Rs. 46 million due to credit not payable of Rs. 43 million being written back. Gross profit grew 60% to Rs. 14 million in the six months ending September 2011 as the cost of sales increased 67% to Rs. 29 million. Other income declined 89% to Rs. 4 million, while selling and distribution expenses increased 86% to Rs. 3.6 million and administration expenses rose 6% to Rs. 13 million.

As of last week the Board of Directors of Blue Diamond comprised Bandula Ranaweera (Chairman/Managing Director), Godfrey de Kretser (Deputy Chairman), K.V.D.D.A. Dias (joint Managing Director/Production), M.M.N. Priyantha (joint Managing Director/Research & Development), W.K. Galagoda (joint Managing Director/Finance), A.R. Gunawardena, A.D. Jegasothy, S.R. Wijesinghe, W.A.D.V. Perera, K.L. Dias, W. Ravishankar, W.W.M.R.K.W.B. Della, K.N. Gunawansa, K.S.C.P.K. Gunasinghe and U.D. Liyanagamage.