Strict forex regulations to go

Ranil

COLOMBO, (AFP) -Sri Lanka has announced plans to lift six-decade-old restrictions on foreign exchange flows and allow free transfer of money in and out of the island to encourage investment in the struggling economy.

The island tightly controls foreign currency transactions under a 1953 law that does not allow the free repatriation of capital, in an effort to protect its modest foreign reserves.

Under the present strict rules, exporters must bring back their foreign earnings within a short period of time or face penalties. Analysts say the policy deters investors.

"We can remove exchange controls before the next budget (in November)," Prime Minister Ranil Wickremesinghe said in parliament. "We are strong enough to do that. We have that confidence."

Last week, Sri Lanka received the first tranche of a $1.5 billion bailout from the International Monetary Fund (IMF) to shore up the island’s economy, left reeling after a spending spree by the new government.

The premier said Sri Lanka’s foreign reserves were expected to double to $12 billion by the end of this year thanks to loans and grants from China, India and Japan.

The island also plans to raise about $4.2 billion with two bond issues, Wickremesinghe said.

The announcements came during a parliamentary session in which the opposition moved a no-trust resolution against Finance Minister Ravi Karunanayake accusing him of arbitrarily raising taxes.

Earlier this month, Karunanayake sharply raised taxes on cars shortly after announcing an increase in the island’s value added tax from 11 to 15 percent.

But the no-confidence move was defeated by 94 votes in the 225-member assembly, where the ruling party commands a two-thirds majority.

Soon after President Maithripala Sirisena’s government came to power in January last year, the finance minister led a spending spree to implement election pledges of higher public sector salaries and reduced taxes.

However, the country soon found itself in a balance of payments crisis.

The IMF noted last week that Sri Lanka’s economy was under strain from an increasingly difficult external environment and has warned Colombo that it should increase tax collection.

Sri Lanka enjoyed blistering economic growth rates averaging more than 8.0 percent for two years after a prolonged civil war ended in 2009.

But the pace of expansion has since slowed, falling to 4.8 percent in 2015, down from 4.9 percent in the previous year, according to official data.

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Anilana admits Rs. 17 mn. loan, says no winding-up notice received

Mr. Asanga Seneviratne, Managing Director of Anilana Hotels and Properties PLC, has in a letter to the Colombo Stock Exchange on Friday has said the company has not been served with any papers with regard to a winding up application purportedly filed by Millenium Housing Developers PLC in the High Court on June 9.

Seneviratne said in his letter responding to a request for disclosure by the CSE that Anilana had taken a loan for a sum of Rs. 17 million from Millenium which is outstanding. They were presently in discussion with Millenium with regard to the settlement on the loan.

He waid they have not been "at this point" served with any notice with regard to a winding up application.
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Diesel leak cost Coke Rs. 137 million

2015 worst year in a decade, accumulated losses topping Rs. 1.9 billion

June 11, 2016, 7:35 pm 

The diesel leak from the plant of the Coca-Cola bottler here into the Kelani river had cost approximately Rs. 137 million in claims and expenses relating to the accident that had contributed to a loss of Rs. 640.9 million, up from Rs. 240.4 million a year earlier, of Coca Cola Beverages Sri Lanka Ltd., in the year ended Dec. 31, 2015.

The company’s chairman, Mr. Asoka Wickremesinghe, has said it had to face "an unprecedented and unfortunate situation" from the accidental diesel leakage from the plant in premises adjoining the river.

"However, in expending this amount (Rs. 137 million) your company worked closely with all the authorities and ensured compliance to all the recommendations of all the relevant authorities and demonstrated continued commitment towards environmental management," he has told shareholders.

Excluding the impact of that cost, the company had posted an operating profit of approx. Rs. 50 million against the previous year’s operating loss of approx. Rs. 35 million.

Over and above the diesel leak expense, the company had decided last year to discontinue an under-utilized production line that was operating sub-optimally and use that space for a new sparkling PET (plastic bottles) line.

"Subsequently, your company impaired and scrapped the sparkling and juice RGB line. The financial impact of this decision was approx. Rs. 349 million," Wickremasinghe said.

The end result was the loss which drove the company’s accumulated losses to Rs. 1.93 billion with a loss per share of Rs. 8.47, up from a loss per share of Rs. 1.41 the previous year, with net assets per share down to Rs. 4.55 from Rs. 4.88 the previous year.

Coca Cola continued to lead the country’s sparkling soft drink market gaining 0.3% market share during the year under review. Industry volume too had grown by 14.3% the report revealed.

Coca Cola Beverages is the business preparing, packaging, distributing and selling carbonated and non-carbonated soft drinks, fruit based drinks and fruit juices under various trade marks – Coca-Cola, Coke light, Fanta, Sprite, Minute Maid range of fruit juices and Schweppes owned by the Coca-Cola Company, Atlanta, USA.

The parent undertaking of the Sri Lanka operation is Coca-Cola Sabco (Asia) Ltd. incorporated in the UAE with ultimate control with the U.S. entity.

Despite the 2015 performance being the worst in a decade with losses posted for the last four consecutive years, the parent company had invested approx. Rs. 1.74 billion in the business during the year under review by way of a preference share issue paving the way for repayment of bank borrowings and funding new capital investment.

"Consequently, we laid an important foundation for the future by investing in a new production line," Wickremesinghe said. "Accordingly, your company is looking forward to strategic investments in the business for growing opportunities in the years ahead."

Coca Cola Beverages had total assets of Rs. 6.64 billion in its books on Dec. 31, 2015, with liabilities running at Rs. 2.35 billion.

The directors of the company are Messrs. Asoka Wickremesinghe, Sohli Captain, D.K. Welmillage (resigned Dec. 1, 2015), Mrs. Shukla Watson, J.S. Kuppuswamy, S. Ray, K. Thirumalai and H.K. Bhutani.

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