Sri Lanka’s government preparing to bring back 2 billion US dollars stashed in Dubai bank

It has been revealed that there are three accounts at the Dubai National Bank with over USD 20 billion worth of assets belonging to Sri Lankans and the government has handed over the task of getting them back to Sri Lanka to the relevant US and Indian authorities, said Cabinet spokesman and Health & Indigenous Medicine Minister Dr. Rajitha Senaratne.

During the media briefing today (19 March) to convey Cabinet decisions, Minister Senaratne said that it has been revealed that certain Sri Lankans have thus taken assets worth over USD 10 billion away from the country and that this amount was more than the country’s foreign reserves.

A part of the money deposited at the Dubai National Bank has been withdrawn after the recent Presidential election and may have been taken away to some other country, added Minister Senaratne.

Meanwhile, the government has set up a special Presidential task force to bring back to Sri Lanka such assets taken overseas from the country.
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Sri Lanka’s government cancels USD 85 million BIA runway extension contract to Access Engineering

A decision has been taken to cancel the USD 85 million contract to Access Engineering Limited for the extension of the Katunayake International Airport runway, said Cabinet spokesman Health & Indigenous Medicine Minister Dr. Rajitha Senaratne.

Minister Senaratne said during the media briefing to announce Cabinet decisions that Access Engineering did not have the required experience to handle this project.

He added that it has been confirmed that this contract had been offered without the necessary tender procedures being adhered to and without transparency.

Hence, the Cabinet has approved the proposal submitted by Ports and Aviation Services Minister Arjuna Ranatunga to cancel this contract.
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Sri Lankan shares end steady; investors await cues on interest rates

(Reuters) - Sri Lankan shares ended steady on Thursday, near six-week lows hit on Wednesday, in dull trade as investors awaited cues on interest rates, stockbrokers said, a day after t-bill yields fell indicating a reversal in rising trend in interest rates.

The main stock index ended little changed, edging up 0.04 percent, or 2.80 points, at 7,046.70, from its lowest close since Feb. 2 hit on Wednesday. It had lost 3.74 percent in the last 13 sessions through Wednesday.

Analysts expect the index to gain on hope that interest rates might gradually come down after yields in t-bills fell between 31 basis points and 44 at a weekly auction on Wednesday after they spiked between 112 basis points and 124 in the two previous weekly auctions.

"We don't expect much to happen in the coming week as everybody is on a wait and see mood and not much of activity is taking place," said Dimantha Mathew, manager of research at First Capital Equities (Pvt) Ltd.

The day's turnover stood at 330.3 million rupees ($2.5 million), around a quarter of this year's daily average of 1.26 billion rupees.

Foreign investors were net buyers of 67.9 million rupees worth of shares, extending the year-to-date foreign inflow to 3.29 billion rupees.

The central bank on Wednesday said the low interest rate environment is expected to continue benefiting from lower inflation while keeping the policy rates steady.

Shares in biggest listed lender Commercial Bank of Ceylon Plc rose 1.71 percent, while conglomerate John Keells Holdings Plc gained 1.32 percent.

Infrastructure firm Access Engineering fell 3.23 percent after Sri Lanka's new government cancelled an $85 million runway project awarded by the previous government.

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

OGL winding up case: Petitioner submits CEO’s report on lack of cash

The petitioner of Orients Garments Plc, Dr. Senthilverl, while winding up action, has produced, along with his petition, a report on the OGL’s financial status by the Chief Executive Officer thereof, submitted by the CEO to the Board of Directors as recently as 13 February 2015.

According to the petition, this report shows the terminal situation of OGL. Salient observations made in the said report by the CEO are as follows:

* Backlog of the statutory dues of OGL are Rs. 177,300,865 (EPF + ETF + Gratuity).

* $ 1 million is required to finance the orders placed for the months of February and March 2015.

* The bank facilities of Bank of Ceylon, Seylan Bank and NDB were already saturated and non-performing and all collateral has been fully utilised.

* Money that is received through export revenue is absorbed as penal interest and insufficient money is available as working capital.

* As the expected profitability was not achieved, OGL is unable to settle the payments due to backlogs of all creditors therefore causing supply chain issues.

* Past seven months due to the lack of funds regular maintenance has not been carried out and the factories have fallen below the required standard.

* As OGL is forced to subcontract due to lack of working capital the link between the end customer and OGL is cut and the company runs the risk of losing customers.

* OGL is planning to seek financial recourse from President Maithripala’s 100-day program.

* Due to the current creditor backlog, it has been difficult to convince the existing suppliers unless a large component of their arrears is settled in full.

* Attempts made to obtain a long-term bank loan of Rs. 400 million to revive OGL were unsuccessful and avenues of receiving loans from banks have been exhausted.

* The management is left with no choice but to dismiss innocent employees in order to reduce operational cost.

Therefore the petition says that when a company that is unable to pay its debts continues to operate incurring losses as is the case herein, the company’s capital continues to erode and it accumulates liabilities, which in turn further deteriorates the ability of the company to settle its debts.

As per the petition nominee, the Directors of Adam Investments Plc have sought to ratify Adam Investments Plc or its affiliate/subsidiary, Adam Apparel Ltd. lending approximately Rs. 180 million.

Adam Apparel Ltd. has failed to pay its statutory payments due to the Employees’ Provident Fund from March 2014 to September 2014 amounting to approximately Rs. 6.5 million and has sought a 24-month time period from the Employees’ Provident Fund to settle such an amount.

Therefore the petitioner questions these landings to OGL by Adam Apparel Ltd. as suspicious on the grounds that a company which cannot even pay its statutory dues on time could not have had the ability to lend Rs. 124 million to OGL.

Adam Apparel Ltd. and Giorgio Morandi Ltd., another subsidiary/affiliate company of the Adam Group of companies, have allegedly rented their respective factories to OGL. Hence both companies are now receiving $ 37,500 each from OGL as monthly rent payable for their respective factories.

Like Adam Apparel Ltd., GiorgioMorandi Ltd. has also failed to pay its statutory dues amounting to approximately Rs. 15.8 million due to the Employees’ Provident Fund from July 2013 to September 2014.

Therefore, the petitioner claims that the “nominee directors of Adam Investments Plc are now financing their ‘debt-ridden’ related companies at the cost of OGL and the third parties who have claims over the assets of OGL”

In the affidavit in reply filed by the petitioner, in response to OGL’s allegation that the petitioner has ulterior motives in bring the winding up petition, he states:”I have not sought any relief with financial benefit to me from Your Honour’s court by filing the 

Winding Up Petition and I have in good faith, being the major shareholder of the company and a director thereof who therefore owes a sacred duty of care to all the parties who have claims against the company, presented the Winding Up Petition to safeguard the rights of all the those parties concerned and I state that I have no other ulterior motive as alleged by the company controlled by the Chairman and other nominee directors of Adam Investments Plc.”

The matter was fixed for hearing on 4 June 2015 and Avindra Rodrigo with Shanaka Gunasekara, instructed by F J & G de Saram, will appear for the petitioner and Paul Rathnayake Associates will act as the instructing attorney of the OGL.
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NDB buys 8.5% stake in Seylan Bank for Rs. 1.6 b

National Development Bank has purchased 8.5% stake in Seylan Bank for Rs. 1.6 billion which many believe was strategic.

NDB said it acquired 14.9 million voting shares on Tuesday. With the purchase NDB stake in Seylan has increased to 9.53%. On Tuesday around 15 million Seylan Bank shares changed hands including 11.7 million shares via crossing at Rs. 106 each.

NDB…
Sellers included a range of individuals and institutions who had been wanting to exit for sometime but couldn’t due to the absence of a serious buyer.
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CB confident low interest rate regime will persist

The Central Bank yesterday expressed confidence that the low interest rate regime will continue despite some upward movements in certain market segments.

This view as well as other recent developments and the overall outlook for the economy has made the Central Bank keep policy rates unchanged for the 14th consecutive month following the March monetary policy review.

“Despite some upward movements in interest rates in certain market segments, the low interest rate environment is expected to continue, benefiting from the prevailing low inflation levels in the economy, thus providing an impetus to economic activity,” the Central Bank said.

CB…
Following is the full text of Central Bank statement following the March monetary policy review:

According to recently-released data by the Department of Census and Statistics, the Sri Lankan economy is estimated to have grown by 7.4% in 2014 compared to 7.2% in 2013. 

This growth was mainly supported by the expansion in the Industry sector, which grew by 11.4% and the Services sector, which grew by 6.5%.

Meanwhile, the Agriculture sector that was affected by adverse weather conditions, recorded a marginal growth of 0.3%.

Going forward, the economy is expected to maintain its growth momentum in 2015 amidst sustained low and stable inflation and expected improvements in business confidence.

Headline inflation, on a year-on-year (y-o-y) basis, decreased significantly to 0.6% in February 2015 from 3.2% in the previous month reflecting the downward revision of domestic fuel prices and the reduction in the prices of certain essential items announced in the Interim Budget 2015. Given the impact of such measures and supported by improved supply conditions, headline inflation is likely to remain at low levels, particularly in the first half of 2015.

Meanwhile, core inflation, which reflects underlying demand pressures in the economy, declined to 0.8%, y-o-y, in February 2015 compared to 2.1% in January 2015.

The external sector remains resilient with continued foreign currency inflows to the current account as well as to the financial account of the Balance of Payments (BOP). 

During the remainder of 2015, the external sector is projected to strengthen further with the expected reduction in expenditure on imports together with higher inflows on account of tourism and workers’ remittances as well as receipts to the government, the banking sector and other private corporates.

Credit obtained by the private sector from commercial banks increased by 11.5%, y-o-y, in January 2015, while in absolute terms, credit disbursements during the month amounted to Rs. 21 billion.

Credit to the private sector from commercial banks is expected to sustain its growth momentum in the period ahead benefiting from low market interest rates and increased business confidence. Supported by higher domestic credit expansion including credit granted to the government and public corporations, broad money growth was 12.6% on a y-o-y basis in January 2015.

Given signs of sustained increase in credit flows to the private sector, the Central Bank removed the restriction placed on the access to its Standing Deposit Facility (SDF) by OMO participants with effect from 02 March 2015. Following this, the overnight interest rates moved upwards and settled within the policy rate corridor closer to the lower bound.
Despite some upward movements in interest rates in certain market segments, the low interest rate environment is expected to continue, benefiting from the prevailing low inflation levels in the economy, thus providing an impetus to economic activity.

Taking the above developments in the economy into consideration, the Monetary Board at its meeting held on 17 March, was of the view that the current monetary policy stance is appropriate, and accordingly, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank of Sri Lanka unchanged at 6.50% and 8.00%, respectively.

The date for the release of the next regular statement on monetary policy will be announced in due course.
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Inflation to remain low in first half

The Sri Lankan economy is estimated to have grown by 7.4 per cent in 2014 compared to 7.2 per cent in 2013, according to recently released data by the Census and Statistics Department.

This growth was mainly supported by the expansion in the Industry sector, which grew by 11.4 per cent and the Services sector, which grew by 6.5 per cent. Meanwhile, the Agriculture sector that was affected by adverse weather conditions, recorded a marginal growth of 0.3 per cent. Going forward, the economy is expected to maintain its growth momentum in 2015 amidst sustained low and stable inflation and expected improvements in business confidence,the Central Bank yesterday.

Headline inflation, on a year-on-year (y-o-y) basis, decreased significantly to 0.6 per cent in February 2015 from 3.2 per cent in the previous month reflecting the downward revision of domestic fuel prices and the reduction in the prices of certain essential items announced in the Interim Budget 2015. Given the impact of such measures and supported by improved supply conditions, headline inflation is likely to remain at low levels, particularly in the first half of 2015.

The external sector remains resilient with continued foreign currency inflows to the current account as well as to the financial account of the Balance of Payments (BOP). During the remainder of 2015, the external sector is projected to strengthen further with the expected reduction in expenditure on imports together with higher inflows on account of tourism and workers' remittances as well as receipts to the government, the banking sector and other private corporates.

- See more at: http://www.dailynews.lk/?q=business/inflation-remain-low-first-half#sthash.u5GCip3O.dpuf