Sri Lanka bourse edges up on Keells; seen near 3-year high

Aug 28 (Reuters) - Sri Lankan stocks edged up on Thursday, hovering near a three-year high, led by conglomerate John Keells Holdings Plc in low volume trade with foreign investors buying into risky assets, brokers said.

The main stock index ended 0.1 percent, or 6.85 points up at 6,991.76, near its highest close since Aug. 18, 2011 hit on Tuesday.

Analysts said an increase in speculative trading in fundamentally weak shares could dent the healthy growth the index has seen this year.

The index has gained 18.25 percent so far this year.

"The market is slightly over heated that's why we are seeing it stagnate at these levels around 7000 points for a while till the next earnings season," said Dimantha Mathew, manager, research, at First Capital Equities (Pvt) Ltd.

"There is no major reason for the index to come down."

Analysts said the market is struggling to rise above a psychological barrier of 7,000 points which has turned it to a technical barrier now.

The bourse has been trading in an over bought region since July and on Thursday the Relative Strength Index was at 72.573 points, above its upper neutral region of 70, Thomson Reuters data showed.

Market heavyweight John Keells Holdings Plc, which led the overall gain in the index, rose 1.59 percent to 248.90 rupees, while Lanka IOC Plc rose 3.41 percent to 42.40 rupees.

Shares in Distillers Sri Lanka Plc rose 0.70 percent to 209 rupees.

Thursday's turnover stood at 887.2 million rupees ($6.82 million), well below this year's daily average of 1.2 billion rupees.

Foreign investors were net buyers of 102.7 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflow to 8.1 billion rupees.

The central bank rejected all 91-day treasury bill bids for the second straight week at an auction, while yields on the 182-day and 364-day treasury bills held steady at a weekly auction on Wednesday.

($1 = 130.1800 Sri Lankan rupee) 

(Reporting by Ranga Sirilal; Editing by Anupama Dwivedi)

Senkadagala Finance buys over Newest Capital

Senkadagala Finance PLC has entered into a share purchase agreement with Newest Capital Limited to acquire 100 percent of the fully paid issued share capital for Rs. 300 million.

Accordingly, from 25 August 2014, Newest Capital is a fully owned subsidiary of Senkadagala Finance PLC.

This is under the Master Plan for the Consolidation of the Financial Sector 2014 initiated by the Central Bank of Sri Lanka.
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Sri Lanka stocks close up 0.1-pct

Aug 28, 2014 (LBO) - Sri Lanka's stocks close 0.10 percent higher on Thursday with index heavy John Keells Holdings gaining despite low foreign participation, brokers said.

The Colombo benchmark All Share Price Index closed 6.85 points higher at 6,991.76, up 0.10 percent. The S&P SL20 closed 3.04 points higher at 3,845.87, up 0.08 percent.

Turnover was 888.75 million rupees, up from 742.11 million rupees a day earlier with 92 stocks closed positive against 109 negative.

Aitken Spence Hotel Holdings closed 1.40 rupees higher at 84.00 rupees with an off-market transaction of 37.10 million rupees changing hands at 85.00 rupees per share contributing 4 percent of the daily turnover.

Blue Diamonds Jewellery Worldwide closed 10 cents lower at 3.50 rupees, attracting most number of trades during the day.

Foreign investors bought 151.02 million rupees worth shares while selling 48.32 million rupees worth shares.

John Keells Holdings closed 3.90 rupees higher at 248.90 rupees, contributing most to the index gain.

JKH’s W0022 warrants closed 10 cents higher at 69.20 rupees and its W0023 warrants closed 10 cents lower at 79.00 rupees.

Ceylon Tobacco Company closed 18.00 rupees lower at 1,181.00 rupees.

DFCC Bank, NDB Bank merger before November budget

By Ravi Ladduwahetty

Ceylon Finance Today: The merger of the three major banks – DFCC Bank, DFCC Vardhana Bank and the NDB Bank will be completed prior to the 2015 national budget, billed to be presented in Parliament in November.

Top sources from the Central Bank, and the two development banks, while confirming this, said that the amalgamation will see the movable, immovable assets and the human resources being brought under one banner, though a common name for the bank has not been determined yet.

They also added that even the management structure of the three merged banks, has also not yet been decided.

Among the other mandatory requirements for the merger, will be the need for the refilling of the DFCC Bank Act, getting the approval of the government and presenting it to Parliament.

The need for the refilling of the DFCC Bank Act (successors to the Development Finance Corporation of Ceylon) has arisen as it was formed following an Act of Parliament. The NDB Bank (successors to the National Development Bank) was formed under the Companies Act.

These sources also said the leadership of the three banks is also seeking the advice of the famous Boston Consulting Group of the USA and also its Indian subsidiary – the Boston Consulting Group ( India) Pvt) Ltd.

The controlling shares of the DFCC Bank, in addition to the government, is being held by business magnate Harry Jayawardena led parties while the controlling shares of the DFCC Bank, in addition to the government, is being held by Deputy Chairman Ashok Pathirage, who is also the Chairman of the Softlogic Group.

The assets of the NDB Bank is higher than the DFCC Bank, albeit the DFCC Vardhana Bank acquisition.
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LRA assigns BBB+/P2 rating to HDFC Bank

Lanka Rating Agency has upgraded financial institution ratings of Housing Development Finance Corporation Bank (HDFC) to BBB+ and P2 from BBB and P3.

The long term ratings will continue to carry a stable outlook. Concurrently long-term issue ratings of Rs 2 billion secured senior listed debenture (2013/2018) has been upgraded to BBB+ from BBB. Meanwhile, the ratings are upheld by the state's majority ownership of the Bank and the on-going support of the government of Sri Lanka as well as a good capital cushioning level. The ratings are tempered by HDFC's below-average asset quality and its small stature.

HDFC is a licensed specialised bank (LSB) under the Housing Development Finance Corporation Act (No. 7 of 1997) and falls under the purview of the Finance and Planning Ministry.

The GOSL remains its largest shareholder with a 49.73% stake through the National Housing Development Authority (NHDA).
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Abans records 9% revenue increase

Abans PLC, market leader in electronics and home appliances and the leading retailer of consumer durables with 400 plus showrooms, has reported revenue of Rs. 25.8 billion and an increase of 9% over last year.

In spite of sluggish market conditions, the growth recorded is very encouraging, the company noted in a statement yesterday.

In a disclosure released to the Colombo Stock Exchange (CSE), the company has cited that the bottom line was impacted due to pre operational losses and finance costs owing to its planned Mega Mixed Development Project.

The company floated a Rs. 2 billion debenture in December 2013 which was oversubscribed, from which funds were utilised to replace short-term borrowing.

“The company is about to begin construction of its mixed development project consisting of a shopping mall, five-star hotel and residence complex in a 55-storey tower which will provide the residents with uninterrupted majestic views of the Beira Lake, the ocean, Colombo Harbour and Viharamahadevi Park,” the statement added.

The mega mall is expected to be one of Sri Lanka’s landmarks with shopping, entertainment, movie theatres, large food court and children’s play facilities in an integrated concept.

The spacious, stylish and modern shopping centre will house sections for branded fashion garments for men, women and children, accessories, toys, stationery, jewellery, perfumes, cosmetics, groceries, etc.

The large food court will serve clean and wholesome food offering a variety of Sri Lankan and international cuisine, fast foods, snacks, ice cream and beverages. The movie theatres will screen the latest movies and 3D films. There will also be a gym, a cyber café, bowling alley and indoor archery. 
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Court orders Liquidator to file comprehensive report on Touchwood assets

The case for the winding-up of Touchwood Investments PLC was called in the Commercial High Court of Colombo yesterday.

Heated arguments between the Counsel for the Petitioner, Company and Liquidator continued for nearly two hours when the case was taken up.

Court ordered the Company on the last occasion to hand over all the documents, books of account, and all other documents pertaining to the assets of the Company to the Liquidator by 25 August 2014 by 5 p.m.

Counsel for the Liquidator Hafeel Farisz submitted that certain documents were handed over by the Company but all pertaining to the assets have been conveyed to the investors.

Counsel further stated that no documents pertaining to the freehold property of the Company have been handed over to the Liquidator. It was also stated that the Company has not handed over possession of any other assets movable or immovable.

Counsel also filed a preliminary report by the Liquidator in Court and stated that the said report reflects prima facie the disparities of the documents handed over to the Liquidator. Counsel submitted that the Interim Financial Statements filed by the Company in June 2013 and the Affidavit filed by the present CEO in Court in October 2013 categorically stated that the assets of the Company are worth Rs. 8 billion and when compared with the Statement of Affairs submitted on 25 August 2014, a shortfall of Rs. 6.5 billion is reflected. Counsel also stated that no documents have been given pertaining to the shares worth Rs. 252,668,995 which have been issued by the Company being wound-up.

Counsel for the Company Nihal Fernando PC stated that all the documents in the possession of the Company have been handed over to the Liquidator. The President’s Counsel further stated that the books, documents and computers belonging to the Company have been stolen. It was also stated that the documents related to the Agarwood plantation in Thailand were not available in the Company and had been stolen by the former directors of the Company.

He further defended the present CEO of the Company by stating that the he has no knowledge about the assets of the Company or the documents pertaining to the assets of the Company as all such records had been stolen before he was appointed CEO. Counsel further stated that it is the duty of the Liquidator to find the assets and documents of the Company and take over the business of the Company.

Countering the submission made by the Counsel for the Company, Counsel for the Petitioner Avindra Rodrigo stated that the present CEO could not simply absolve himself of all liabilities stating that he has no knowledge of the goings-on or the records of the Company as he has assumed responsibility for and on behalf of the Company and has represented the Company in the winding-up action.

Counsel further stated that the Liquidator cannot be put on a quest of finding the assets or the records of the Company as it is the statutory obligation of the directors of a Company being wound-up to handover the assets and all other documents to the Liquidator. Upon a winding-up Order being made the onus automatically shifts to the officers of the Company to handover the properties and records to the Liquidator.

Reiterating the submissions of the Liquidator Counsel Rodrigo further stated that not a single asset of the Company has been handed over. Counsel also questioned as to how a public-quoted Company has carried on its business without a single computer or vehicle.

Counsel further reiterated that the Company had disclosed assets worth Rs. 8 billion in the Financial Statements of 2013 and in the Affidavit of the CEO filed in Court in 2013 and that the present Statement of Affairs has only disclosed assets worth approximately Rs. 659 million. Counsel further submitted that the directors of the Company are not acting bona fide and have committed fraud on the investors and reserved his right to make any further applications to Court if and when appropriate.

Court ordered the Liquidator to file a comprehensive report on the assets of the Company when the case is called on 19 September 2014. Court also ordered the liquidator to ascertain any documents pertaining to the assets of the Company such as title deeds from the respective land registry as no such documents have been handed over by the Company. 
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