Japanese investors boost Asia Capital with Rs. 400 m infusion

Asia Capital PLC has announced the infusion of Rs. 400 million into the group by two Japanese investors, brothers Yoshimichi Watanabe and Eiji Watanabe, through a private placement.

The Group has issued 21.33 million fresh shares to both individuals giving them a 16.3% stake in the company. This makes the Watanabe brothers the second and third largest  shareholders of Asia Capital PLC.

This fresh capital infusion strengthens the Group’s balance sheet as it is now able to clear out a significant portion of its debt. The move also changes the shareholding of the group to be in line with Colombo Stock Exchange (CSE) regulations.

Speaking on behalf of both brothers about the investment into Asia Capital, Y. Watanabe said: “Sri Lanka is a beautiful country with a large pool of natural resources and furthermore the people are friendly and trustworthy. These are very important traits for us and we have worked closely with Asia Capital for the past two years so we are convinced we have found the right partner for our investment plans. Sri Lanka is one of the few countries in Asia which still has a huge growth potential and we look forward to bring in more Japanese investors to Sri Lanka.”

Expressing his enthusiasm at the new investment Asia Capital Plc Group CEO/Director Stefan Abeyesinhe said: “We are very excited to have the Watanabe brothers joining us to become shareholders in our company. This is a testament to the faith foreign investors have in Sri Lanka and Asia Capital and the obvious potential for growth that they see. Sri Lanka has shown exceptional growth figures during the past four years and the CSE has seen strong growth in net foreign inflow over the past two years. This capital infusion will enhance our ability to capitalise on that growth.”

Over the past two years, Asia Capital has seen several Japanese investors making capital infusions into the company through private equity. The company currently has several Japanese individuals and companies investing in its subsidiaries, especially in the leisure sector. The fact that the Watanabe brothers will be significant shareholders of the parent company will further strengthen the confidence in the Group among other Japanese investors. This is expected to greatly assist Asia Capital PLC in securing more capital for multiple projects in Sri Lanka.

Asia Capital PLC is the largest investment bank in Sri Lanka to be listed on the Colombo Stock Exchange. As a group, Asia Capital has identified strong potential in the property, leisure and real estate sectors and is changing direction to focus on these avenues of growth. ACAP plans to expand its leisure and property sectors over the next few years and to increase its leisure portfolio significantly.
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Casino laws coming again with word game

By Chandani KirindeView(s):

The Government will make a second attempt to gain parliamentary approval to grant tax concessions to two major projects that have run into controversy over allegations that the move would lead to legalising of the casino business. The amended regulations in which the words “entertainment and gaming facilities” have been replaced with the words “associated facilities”, are to be presented under the Strategic Development Projects Act. The regulations will be taken up for debate in Parliament on Thursday and Friday.

One of the projects is to be run by the Australia-based Crown Group headed by casino tycoon James Packer and the other by John Keells Holdings.
Both will “set up and operate Integrated Super Luxury Tourist Resorts”, one along D. R. Wijewardena Mawatha in Colombo 10 and the other in two phases along Glennie Street and Justice Akbar Mawatha in Colombo 2.

The main opposition UNP and the JVP have said they will oppose these regulations. Chief Opposition Whip John Amaratunga said yesterday they would strongly oppose the attempts to grant tax concessions for a casino-related project. The regulations grant a host of tax concessions to the investors in the two projects. They include tax holidays of up to ten years and duty concessions on the import of project-related goods.

The previous regulations which were presented to Parliament in October last year were subsequently withdrawn after an outcry by opposition political parties and religious groups who expressed fears that the legalising of casinos would ruin the culture of the country. www.dailymirror.lk

Tata Motors and DIMO seek greater share of SL’s new car market

Tata Motors together with Diesel and Motor Engineering PLC (DIMO) is aiming for a significant share of the new car market in Sri Lanka through the stylish e-XETA, a top official of the company revealed..

Unveiling the new e-XETA in Colombo recently Pranaw Kumar, Area Manager, Sri Lanka, Tata Motors, said, “Sri Lanka has traditionally been an important market for Tata Motors and the company hopes the new car will help them to achieve a significant share of the new car market in the island”. He noted that they are confident that the passenger vehicle range will continue to be seen as a range that offers superior value to customers in Sri Lanka

The e-XETA will further consolidate the Tata offerings in Sri Lanka, he said, adding it is a new way to look at style, comfort, larger space and performance.

The e-XETA is equipped with a 1.2 litre MPFI engine, and it delivers high fuel efficiency. The GLX variant offers a host of convenient and style features such as heating, ventilation and air conditioning, power steering, all four power windows, body coloured bumpers and ORVMs, front and rear fog lamps and 2 tone alloy wheels.

Tata Motors is already the market leader in commercial vehicles in Sri Lanka, industry observers say. It has thus far exported over 70,000 commercial and passenger vehicles to the country. Part of this success has been due to the DIMO’s sales and after-sales facilities available Island-wide, 24-Hour Road Side assistance for TATA vehicles and superior product performance.

The company’s portfolio of commercial vehicles in the country comprises of an entire range from sub 1-tonne small trucks to 49-tonne prime movers and from 14-seater buses to luxury coaches, while the passenger vehicle portfolio—initiated in 2004—already includes Nano, Tata Vista, Tata Indigo CS, Tata Manza and the Tata Safari. Further, Tata Motors has already established a Technical Training Institute in Jaffna, in association with DIMO, and has begun work on a Driver Training School in Hambantota as part of their community development initiatives, a media release said.

As DIMO is celebrating its 75 years of existence in the Sri Lankan market, this specially designed car will be manufactured and launched as a 75th Anniversary Edition.
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Touchwood’s bogus address cons CSE, investors

By Sunimalee Dias

Thai investors ('touch wood') seek justice in Sri Lanka
The Touchwood company crisis has spread outside the shores of Sri Lanka with investors in Thailand suing the company there while in Colombo an attempt to deceive investors has been bared in a Business Times (BT) investigation.

The ‘new’ address of the Touchwood Lanka office as intimated to the Colombo Stock Exchange on February 28 is a bogus one, a BT investigation revealed.

The address given as No. 220, Nawala Road, Nawala belongs to the wife of Kapila Ariyananda who when contacted informed the newspaper that there is no Touchwood office at this location.

According to the BT investigation, Touchwood organisation’s Thai investors plan to file action in Sri Lankan courts in late April. Mr. Ariyananda said the CEO of Touchwood Lanka Kiwlegedara had approached him regarding the premises but “he was never a tenant or operating” from this location. “He came to see the house but he did not pay the rent and we didn’t sign an agreement,” Mr. Ariyananda said. The BT photographer visiting the site of the new address only found an old caretaker who informed him there was no office there.

Mr. Ariyananda said he had already informed the post office not to deliver letters addressed to the Touchwood Group to his address as it was becoming a “nuisance.” In fact, he would be writing to the Colombo Stock Exchange (CSE) through his lawyer to inform of this incorrect address given.

He also revealed that when Mr. Kiwlegedara was contacted on Thursday he was told by him that the latter had already informed the CSE that Touchwood was not at this location but that he was operating from a private address in Horton Place. No such notice has been posted on the CSE website.

Touchwood depositors have gone to the old office premises at Bambalapitiya which was empty and then based on the CSE announcement gone to the Nawala address which also drew a blank. Touchwood details on the CSE website as at Friday still gave the office address as – No. 220, Nawala Road, Nawala and the telephone no. as 4721448. When investors called the no. 0777-077324, which was listed in the February 28 CSE announcement, the response was rude and unpleasant. “One man who picked the phone… I don’t know whether it was Kiwlegedera because they didn’t identify themselves … said I should not bother calling anymore,” one depositor said. The company was owned by Roscoe Maloney and his wife, Swarna who then sold out to a group of investors led by Mr. Kiwlegedera who promised to reignite the crisis-hit firms.

The Maloneys arebelieved to be in Cambodia but wanted for questioning in Colombo.

Thai investors in the Touchwood Forestry Company in Thailand say they were duped by Roscoe Maloney to invest in plantations. They have formed a group and were looking at the possibility of filing action in the Sri Lankan courts against the Touchwood organisation, lawyer and Co-ordinator of the Sri Lanka Touchwood Stakeholders Association, G.S. Lakshan Dias said in an interview with the Business Times.

He noted that most of the Thai investors represented by their organizer Tim Randall would be looking at filing action against the Maloneys in late April. Through the website created for the Thai investors Mr. Randall had highlighted that about 60 per cent comprises Thai nationals who had invested in the properties owned by the Touchwood Forestry Company and about 40 per cent were overseas investors. Currently, there is already a case being heard in the Thai courts against Roscoe Maloney, the website stated. In the meantime, on the winding up case CHC/31/2013/CO against Touchwood in the Commercial High Court, judgment is due on May 5. During the March hearing of the case the Central Bank had joined the case as an intervening party.

Mr. Dias also said that, according to their information. Touchwood’s Hong Kong office would also be closing down in addition to the Dubai office.

The company has offices in Sri Lanka, Australia, Thailand and Dubai according to its website.
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Sri Lanka stocks close at 2-1/2-month high; banks in focus

(Reuters) - The Sri Lankan share index rose to a near 2-1/2-month peak on Thursday and posted its biggest gain in almost seven weeks with high net worth investors buying banking shares on hopes of high profits due to an expected rise in private sector credit in the second half of the year.

The main stock index ended up 1.01 percent at 6,180.76, its highest close since Feb. 5 and the biggest daily gain since Feb. 28.

"There was a lot of interest in banks," a stockbroker said on condition of anonymity. "We expect the market to gain in the coming week as well after the holidays."

Both currency and stock markets will be closed on Friday for Good Friday after they were shut on Monday and Tuesday for the Sinhala-Tamil new year and a special bank holiday.

The day's turnover was 664.1 million rupees ($5.09 million), less than this year's daily average of 976.1 million rupees. Shares in banks and financials accounted for 62 percent of the day's turnover, bourse data showed.

With a lower interest rate regime, both Sri Lanka's central bank and finance ministry have said private sector credit growth will rise in the second half of this year. Analysts expect rising credit demand to help boost banks' profits.

The bourse saw net foreign inflows for a seventh straight session. Offshore investors bought 3.3 million rupees worth of stocks, though they have sold a net 8.04 billion rupees of shares so far this year.

Top lender Commercial Bank of Ceylon and second largest lender Hatton National Bank ended 0.1 percent and 1.7 percent firmer respectively. Large cap Ceylon Tobacco Company PLC gained 3.8 percent.

Analysts said foreign investors could shift from the island nation's risky assets if Sri Lanka does not cooperate in an international probe by the Office of the United Nations' High Commissioner for Human Rights into the country's alleged war crimes and human rights abuses.

Sri Lanka's foreign minister said last week that the country would not cooperate with the inquiry. 

($1 = 130.5750 Sri Lanka Rupees)

(Reporting by Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka rubber growers hit by plunging prices

Apr 17, 2014 (LBO) - Sri Lanka's rubber growers are being hit by falling world prices with production volumes also dropping due to a drought within the country, an industry association said.

Deputy Chairman Planters’ Association of Ceylon (PA) and CRTA Vice Chairman S. S. Poholiyadde said in a statement that rubber prices have halved over the past three years.

Colombo Rubber Traders’ Association (CRTA) Chairman, M S Rahim said that latex crepe reached record highs of 600 rupees a kilo in 2011 but ended 2012 at 385 rupees and remained around 400 rupees in 2013.

From January 2014 rubber prices have fallen again with latex crepe down around 305 rupees, he said.

In April the average price for latex crepe at Colombo auction was 300 to 230 and ribbed smoked sheets were unquoted, the statement said.

Global commodity prices including oil plunged after a credit and economic bubble broke in the US and EU in 2009 ending a so-called 'food crisis'.

But in 2010 and 2011 prices picked up again and have been very volatile following excessive money printing programs by the US Federal Reserve know known as 'quantity easing', despite slow economic activity around the world.

But with the Fed set to 'taper' or gradually end its excessive money printing, commodity prices, precious metals and oil prices have moved down , as the inherent strength of the paper US dollars increases against real assets, economic analysts have said.

Gold prices have fallen sharply over 2012. In the past few months as 'tapering' took hold, volatility in commodity prices increased.

World coffee prices have also fallen in terms of the US dollar. But tea prices have held so far.

This month New Zealand milk powder prices plunged after a recent spike.

Commodity and precious metals are falling as the US economy recovers and many European economies also beginning to show strong growth and unemployment is starting to fall, though China's economy is slowing.

Economic analysts say a similar situation was also seen in the 1980s with a strong dollar pushing down commodity and food prices benefitting the poor.

At the time, European governments came up with price support schemes leading to the so-called 'butter mountains and wine lakes.'

With 2014 expected to be an El Nino year, agricultural output may fall, giving some price support.

Meanwhile the in the Planters Association statement, Damitha Perera, Director Rubber, Forbes and Walkers Commodity Brokers said China was not aggressive in markets, which was not good for Sri Lanka.

"Crepe and RSS is stagnant as this is the lean period and off season. A boom in prices is not expected for a few months," Perera said.

April 09, TRS20 which covers Thai, Indonesian and Malaysian rubber grades

Reuters, a new agency said on April 09, TRS20 which covers Thai, Indonesian and Malaysian rubber grades was near the lowest since 2009 on Singapore's SICOM exchange. Tokyo rubber futures have fallen more than 18 percent this year.

Thailand's STR20 grade was said to have been traded around 1.90 US dollars, with producers claiming that at below 2 dollars they were in losses.

Reports that the Thai government was planning to sell down a rubber stock pile were later denied.

Sri Lanka's rubber industry says cost of production continues to escalate.

Planters’ Association of Ceylon's S Poholiyadde says recent collective agreement with trade unions which raised salaries had increase cost of production by 20 to 25 rupees a kilogram.

Asoka Nugawela, Professor of Plantation Management at Sri Lanka's Wayamba University was quoted as saying that wages will increase further in the future, requiring more productivity gains.

In 2012 however Sri Lanka's rupee fell to 130 to the US dollar from 110 reducing real wages.

The Rubber Traders Association fears that small holder farmers may convert rubber lands to other crops due to weak rubber prices.

Large plantations firms were also feeling the pinch, the statement said.

Other analysts have noted that protectionist import taxes on vegetable oil were also making palm oil artificially profitable in Sri Lanka at the expense of export crops like rubber.

Poholiyadde said land acquisitions were shrinking the areas available for cultivation. There was a shortage of tappers, with young people not wanting such work.

Poholiyadde claimed that a "protectionist strategy was crucial", without elaborating.

In 2011 Sri Lanka slapped hiked export taxes on rubber, with farmers big and small denied the world price, penalizing them for honest work, while manufacturing businesses profited at their expense.

But analysts warn that any state intervention to push up domestic rubber prices higher than elsewhere in the world would discourage new investments in rubber based factories and may even cause a shift of production outside the country.

Rs 3.5B Richard Pieris debt issue gets CSE nod

Ceylon FT: The Colombo Stock Exchange yesterday (16) approved in principle the Rs 3.5 billion debt issue of Richard Pieris and Company PLC. 

The company will issue 30 million rated, unsecured, redeemable debentures at Rs 100 each and will exercise an option to raise another Rs 500 million upon over subscription by offering five million more debentures.The debenture issue opens on 7 May 2014, the Stock Exchange said.
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