WITH EXPORT markets in over 23 countries worldwide, Sacha Cosmetics owner Kama Maharaj believes he can compete with any of the big names names out there. He  is leading the charge for the Caribbean in the cosmetics world . Sacha is also the only Caribbean product that is marketed on the shelves of Walmart, Puerto Rico, the world’s largest retailer. Sacha cosmetics was established in 1979 — 24 years ago — by Kama Maharaj, with a dream of becoming the leading cosmetic company for women of diverse and exotic skin tones. A dream that, according to Maharaj, is just a few leaps away. Maharaj, who is now the company’s managing director, and who was once  selected as a finalist in the Caribbean Entrepreneur of the year award in 1998, is busy plotting course for his company. Maharaj noted that for years no brand catered to the special needs and demands of the woman with the exotic skin, the Caribbean woman. While the exotic woman possessed a yellow undertone, all existing foundations and powders had pink and orange undertones. “Everywhere I turned women were looking pink, orange and two-toned,” said Maharaj. “I saw darker women looking ashy and artificial. I had to do something about this to ensure exotic women looked natural and flawless.”

The company finally made a breakthrough six years ago, when the Sacha chemists developed a line of yellow-based foundation, which matched the diverse skin tones more perfectly than other brands. The product was tested at the 1997 Miss Universe Pageant, where TT’s representative Margot Bourgeois placed second runner-up wearing the new brand of Sacha cosmetics. Inspired by this milestone, Sacha decided to work alongside Wendy Fitzwilliam for the 1998 Miss Universe Pageant, which she eventually won. Sacha went on to become the official make-up of the Miss Universe 1999 pageant, held in Trinidad and Tobago. The 2000 experience gave his company  the recognition it  needed and the brand began attracting international attention, said Maharaj. It was at this juncture that Sacha decided to approach Walmart, the largest retail chain in the world, to try to market the brand there. Walmart was so blown away by the quality, colours and the perfect match of the Sacha Foundation to Latin skin-tones, that they allocated four feet of wall space to Sacha. The product had now found a space amongst the major and leading American brands and amongst the Caribbean’s only product to achieve this landmark. It was after this coup  that Sacha realised they were ready to take on the world. In doing so, Sacha decided to sign on Miss Universe 1998 Wendy Fitzwilliam as their international spokesperson.

Fitzwilliam said her new job offers the opportunity of using her legal training, since she will assist the company in negotiating contracts with new and existing clients. In addition, Fitzwilliam will be responsible for export promotions, establishing new markets and making public appearances in all new and existing markets and advertising campaigns on behalf of the company. Fitzwilliam has already begun working with the company to establish markets in Angola, South Africa and Mexico. She explained that she is determined to make Sacha cosmetics the official and only product used in pageants in Angola. She stated that she had the opportunity to be in Angola for the country’s last pageant, and realised that no international cosmetic company has made an effort to market its products there. “The market in Sub-Sahara Africa has been neglected by cosmetic companies, and I aim to ensure that Sacha is the name that establishes a link there. Although, only about .5% of the population there can afford Sacha, I intend to make sure they know Sacha,” Fitzwilliam said. Although she has the confidence and ability to sell the world on Sacha, Fitzwilliam admitted that it would not be easy to break into the European market. “Those markets would be harder to get into, but once we do and people get a feel of Sacha, everything else will fall into place.” However Maharaj is a little more optimistic about their chances in the larger markets. “I am confident in the Sacha line and I believe that we are producing a superior product, so right now I am not afraid, I believe Sacha can compete with anyone.”Sacha has also gone in the direction of technology, and caters to the global market via the Internet:
http://www.sachacosmetics.com.    

In a release to analysts this week Trinidad Cement (TCL) has announced that its Jamaican subsidiary, Caribbean Cement Company Limited (CCCL) has implemented a 21% increase in cement prices effective May 20, 2003. This has become necessary because of the increasing costs of operations arising from the continued devaluation in the exchange rate of Jamaica.  CCCL also lamented the fact that the dumping of cement into Jamaica continues unabated, affecting the Company’s market share. As such CCCL has had to reduce production which resulted in the unit cost of production increasing.  CCCL is looking to the export market in order to get rid of its surplus production. The Company also reiterated its previously announced plans to embark upon a major plant upgrade costing US$100 million that would bring the company up to world-class levels and allow it to enter the export market.  We believe that TCL would be pressed to achieve its forecast for 2003 as CCCL battles to maintain profitability and market share. We would continue to monitor the situation in Jamaica as it affects many of the listed companies that we cover. The Jamaican dollar has strengthened in the last week because of the intervention of the Bank of Jamaica. However there are still underlying concerns which need to be addressed. 

Major Advances
Neal & Massy Holdings up 77 cents (+3.67 per cent)
Berger Paints up 9 cents (+2.94 per cent)
Prestige Holdings up 10 cents (+2.78 per cent)
PLIPDECO up 26 cents (+2.21 per cent)
National Enterprises up 10 cents (+2.13 per cent)
Trinidad Publishing up 5 cents (+1.19 per cent)
Major Declines
Grace Kennedy & Co. down 40 cents (-8.16 per cent)
Angostura Holdings down 40 cents (-7.41 per cent)
JMMB down 4 cents (-4.26 per cent)
Analysis by West Indies Stockbrokers Limited. Member of the Trinidad and Tobago Stock Exchange Ltd.   

The streamlining of financial regulations across the region will improve cross border activity and boost volumes on financial markets in the Caribbean, says Guardian Holdings Group CEO Peter Ganteaume. Ganteaume was chairing a high-powered business panel, discussing Caribbean Finance and Funding, at the third annual Euromoney Caribbean Investment Forum in the Dominican Republic last week. Ganteaume said regional investors were finding it difficult to plan their long-term investment strategies because of the uncertainty of moving funds around the region. “Regulations are different in each territory, and the lack of confidence has encouraged the development of investors with short term horizons who mainly focus on sovereign bonds and treasury bills. He said this was particularly true in Jamaica where the long to medium term market is practically non-existent. He said the market is not as diversified as it should and governments in the region must move to provide an economic and legal environment to encourage more domestic savings and wider options for investors. He said recent moves by Jamaica’s Government to restrict movement and trade in foreign currency should be reversed as soon as possible and regional governments should make it public policy to reduce its activity on the local financial market to allow the corporate bond market to develop.

He said governments around the region must take steps to facilitate business and the flow of capital by updating legislation and widen the options available to pension fund managers, insurers and other institutional investors. Ganteaume’s position was supported by another panel member, Mauro Leos, VP — Sovereign Risk at Moody’s, the international financial rating agency.  Leos said the world is poised for the turnaround of the global economy, however the Caribbean is at a serious disadvantage as its risk portfolio is much too concentrated into a few industrial sectors. “From our view, as a rating agency looking at Caribbean economies, we see very vulnerable and volatile economies that are heavily invested in tourism and a few other sectors.   If these global markets are affected by the economic cycle or a shock such as the terrorist attack in 2001, or a downturn in the global travel industry, the whole region will be seriously distressed.

“That lack of diversity provides a serious risk for international investors considering the Caribbean. Incentives must be provided for financiers and the regional corporate sector to explore options in sectors other than tourism.” A regional strategy must also be outlined to get low cost funding available to the corporate sector, while providing the stability for investors. Investors can still manage their risk by strengthening their portfolio through diversification and being conservative in their investment options. The region must also make an effort to better integrate with Latin America. He suggested that this move might provide the opportunity to widen the financial markets. However, it is important to review the economic fundamentals of these countries before considering investment projects. “The potential of these markets is tremendous and we want to realise that potential, however nothing takes place without the right environment for savings and investments.” He said from Moody’s perspective, the more successful economies in the region are those that maintain well-regulated financial markets. “The authorities in these markets also have real power and independence to enforce the regulations. This provides the credible leadership and stability necessary for growth.”   

Jamaica went up against telecommunications giant Cable&Wireless — and won. Phillip Paulwell, Jamaica Industry Minister, told delegates attending the Euromoney&Latin Finance Caribbean Investment Forum that Jamaica was able to set aside agreements that would have run to 2038. The panel discussion was on “Liberalisation and Competition.” Jamaica, he said, was always looking at the phased liberalisation of the telecommunications industry but could only do so, “if they negotiated C&W’s agreements away.” The liberalisation of the industry has led to tremendous investment, he said, noting that about JA$600 had already gone to the country’s coffers. Of that sum, about $100 million came from the sale of telephone licences. Liberalisation has also brought market growth, noting that it jumped from 70, 000 to 1.3 million out of a population of 2.5 million. Since liberalisation, Paulwell said, 200 licences have been issued.

“Competition ought to be fierce and even, he said. The major concern now was the access to data, especially boradband. To that end, Jamaica was looking to get a submarine cable into Jamaica and “unbundle” the existing structure. One Nortel representative made the point that  the Caribbean was on the list of international markets and the monopolistic telecom sector was one of the last bastions to come down. He said there was enough growth in this sector to encourage investments. He took the view that that telecompanies like C&W, AT&T and Digical will look at the Caribbean as individual islands and take advantage of economies of scale and hopefully reduce prices. Mike Singh, Telecom Caribe CEO described the Caribbean as having “digital constipation.” In TT, “That is where the action will be” he said, noting that things in the telecommunications sector will heat up when government moves to dismantle C&W’s grip.          

“Where are the international portfolio investors?” That was the question  asked by one international banker attending  a  workshop session, titled, “Funding Challenges facing the private sector in Central America and the Caribbean” at  the third Euromoney and Latin Finance Caribbean Investment forum held in the Dominican Republic recently. Jay Pierce, Head of Research, New York Secutities, Standard Bank Group, said the flow of funds was not coming to the Caribbean. As a result, it was missing out on the opportunity for cheaper financing and the chance to diversify their  risks. But as one attorney from the Dominican Republic  noted, becoming transparent was extremely expensive. Peirce, in his response, noted that that while costs were significant, the benefit of transparancy far outweighed other considerations. Transparency, he stressed, helped encourage foreign investment and capital inflows.  The lack of transparancy and disclosure, insufficient legal infrastructure to protect creditors from bankruptcy as well as the lack of diversity of instruments to invest in sectors across companies were some of the reasons cited by Maria Teresa Beyra, Stardard Bank Group, for the dearth of interttional portfolio investors.

Capital markets, Beyra said, needed support from international regulators to ensure their information is up to scratch Berga stressed that credit rating was a significant indicator for emerging markets, noting that the last thing a country wanted was to be percieved as corrupt and warned that this could prove damaging to investor confidence. Investors, she said, are interested on focusing on maximising their asset value, lower risk premium and transparency. Particia Calvo, Associate Director of Corportate Ratings, Standard and Poor’s, Mexico, noted that gradings and ratings impact on investment in developing countries. Such ratings, she said, not only fosters growth of the capital market but also gives credit worthiness to companies. In places where there were currency restrictions and transactions were shrouded in secrecy, there was little hope to develop capital markets. TT Deputy Central Bank Governor Amoy Chang Fong noted that the bank was moving to set up its own credit rating agency, noting that “ not everybody was going to go for international rating.” She noted that this local rating was going to be beneficial for small companies and could be used a benchmark for the local market.      

When the global economy goes through a stormy patch, as at present, people are desperate for forecasts on whether businesses they trade with or depend on for business or employment will make it to dry land. Here, we look at the signs which warn that a company or business is in trouble… Whether a business is set up as a company or otherwise, and regardless of prevailing economic conditions, it is the responsibility of those who control the business to ensure that they exercise proper controls over its finances. No one expects a sole trader or the directors of a small trading company to be experts on financial matters. But there is much that business people can and should do for themselves to ensure that they are prepared for financial turbulence and can take effective action to withstand it. Simply being able to recognise problems when they arise is an obvious but crucial first step in riding the storm.

Examples of the sort of warning signs that businesses should be aware of are as follows:

Inadequate credit control

Credit control is all about making sure that a business keeps a tight check on the credit facilities it allows to its customers and clients.
This should involve running credit checks either on all new customers or on those who request credit of a level which exceeds a certain amount which is considered material to the business. The business should also make sure that invoices are issued promptly, that payment terms are made clear to customers at the outset, and also that it keeps a careful check on whether individual bills are paid on time.  Some countries such as the UK go one step further to have legislation which guarantees sellers a statutory right to interest where the bills due to them are not paid on time.  This would serve many small firms well in the Caribbean as they are particularly leveraged by cash shortfalls, especially when their competitors with deeper pockets offer longer-term credit. 

Indications of impending material bad debts
A single bad debt can kill a business.  At particular risk are smaller businesses which are over-reliant for their turnover on a single client or customer. Often, such businesses go to great lengths to cultivate their relationship with the favoured client by affording special payment terms to them. Businesses should keep alert for any information that their ‘favoured’ customer may not be in the best of financial health; they should also consider the long-term sense of remaining dependent on a single client.

Evidence that the business is ‘overtrading’
This can happen when a business grows too fast for its own good. If a product line takes off quicker than expected, then the firm might end up with contractual commitments that are beyond its capital base to honour. A business should ensure that its capital base is sufficient to allow it to produce and deliver the products that it seeks to sell to its customers.  

The presence of a high level of contingent liabilities
A contingent liability is a financial obligation which a business might have to meet should specified circumstances apply and trigger the obligation. If a business has a number of potential liabilities of this kind hanging over it, then should the worst happen and all of them fail to be met, its finances could be overwhelmed. Some firms, because of the line of business they are in, may not be able to avoid accumulating contingent liabilities. If they are inevitable, then they should not be ignored: prudence dictates that the business should make reasonable provision for meeting the consequent debts. 

A history of ‘qualified’ audit reports
Where a business has its accounts audited, the ideal is for the auditor to give the accounts a ‘clean’ report, which indicates that the accounts are ‘true and fair’ and comply with legal rules and professional standards. If the auditor is not satisfied that the accounts meet this test, then he will ‘qualify’ his audit report. This gives a clear signal that the financial statements cannot be relied upon for the purposes of assessing the business’ current or future financial health. This poses a problem in the Caribbean as most small businesses or even large family businesses do not and will not share these true and fair accounts with the public, including those with whom it does business.  

Evidence that assumptions and forecasts used in the past have proved unreliable
Financial management is not an exact     science. Subjective judgments will always fail to be made in relation to, e.g., the profitability of individual investment projects and the likelihood of bad debts arising. All business people hope that the assumptions and forecasts that they make will prove correct. In the real world, of course, this cannot always be the case, but regular checks should be made in this area to ensure that assumptions and forecasts which have proved incorrect are reviewed with a view to making necessary changes.