Sri Lanka's NDB, DFCC hire Boston Consulting to advice on merger

June 17, 2014 (LBO) - Sri Lanka's National Development Bank and DFCC Bank has engaged Boston Consulting Group (India) Pvt Ltd, to advice on a planned merger.

The two banks are merging under a regulatory move to create a bigger entity.

The banks said in a joint stock exchange filing that no final decision has been made on the merger.

Sri Lanka shares close down 0.3-pct

July 17, 2014 (LBO) - Sri Lanka's shares closed 0.31 percent lower on Thursday despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 20.69 points lower at 6,721.87, down 0.31 percent. The S&P SL20 closed 13.58 points lower at 3,747.47, down 0.36 percent.

Turnover was 926.45 million rupees, down from 1.21 billion rupees a day earlier with 75 stocks closed positive against 124 negative.

John Keells Holdings closed 10 cents higher at 245.00 rupees with market transactions of 279.10 million rupees contributing 30 percent of the turnover.

JKH’s W0022 warrants closed 1.20 rupees higher at 65.90 rupees and its W0023 warrants closed 40 cents lower at 73.70 rupees.

HNB closed 1.30 rupees lower at 169.10 rupees with an off-market transaction of 21.93 million rupees changing hands at 173.00 rupees per share contributing 2 percent of the turnover.

E-Channelling closed 1.10 rupees higher at 16.80 rupees, attracting most number of trades during the day.

Foreign investors bought 189.13 million rupees worth shares while selling 26.49 million rupees worth shares.

Sri Lanka Telecom closed 1.20 rupees lower at 55.00 rupees, contributing most to the index drop.

Lion Brewery Ceylon closed 13.90 rupees lower at 659.90 rupees and Distilleries closed 1.10 rupees higher at 204.90 rupees.

Ceylon Tobacco Company closed 2.50 rupees higher at 1,102.50 rupees and Hemas Holdings closed 70 cents higher at 48.90 rupees and.

COMBank to buy Indra Finance for Rs. 870 m

* Less liabilities but a strong foothold in motor leasing biz a key reason for selection – industry analysts

* Indra Traders proprietor is single largest individual shareholder of COMBank with 5% stake

* Commercial first in top banking league to announce acquisition under CB’s consolidation policy drive

* Private sector industry giant exploring takeover of more finance companies

Commercial Bank disclosed yesterday that it intends to fully acquire the unlisted Indra Finance Ltd., for Rs. 870 million.

The deal is subject to relevant statutory and regulatory approvals and COMBank being satisfied of the financials submitted by Indra Finance, which is a subsidiary of motor trade fame Indra Traders.

Commercial Bank said in the meantime it is carrying out a due diligence of Indra Finance Ltd.

The acquisition complies with the consolidation road map of the Central Bank.

The announcement didn’t reflect well in COMB’s share price yesterday. On a day when market was on the up, voting shares of COMBank closed at Rs. 142.10, down by Rs. 2.90 though it touched an intra-day high of Rs. 145.

However the planned local acquisition by COMBank is first in many years.Analysts noted Indra Finance was a good fit for the largest private commercial bank. Some years ago it had a leasing entity (Commercial Leasing) but divested it. Whilst plans on Indra were disclosed, analysts speculated that COMBank could be exploring several more finance companies as part of expansion and in tandem with Central Bank policy towards industry consolidation.

Incidentally, Commercial Bank was the first among the banking league to announce an acquisition under CB’s new policy environment.

The asset base and business volume of Indra is unknown since the entity is not quoted on the Colombo Stock Exchange but industry analysts noted Indra is well managed and had lower liabilities since it wasn’t too focused on deposit mobilisation.

Indra Finance was registered as a finance company by the Central Bank in May 2013. It is part of Indra Group, which is strong on the motor trade and big vehicle financing and leasing portfolio. Its proprietor Indra Silva incidentally is the fourth largest shareholder and the biggest individual shareholder of Commercial Bank with a 5.53% stake as at end March 2014.

This facet may be one of the reasons why COMBank had disclosed the move though the deal does not constitute a major transaction as defined in Section 185 of the Companies Act for Commercial Bank.

Indra Group is also a customer of Commercial Bank. He is also a high net worth investor in the stock market with a select blue chip portfolio.

Indra also has interests in property development. In the motor business, Indra Traders has 13 main branches, fully-equipped workshops, spare part dealers and 40 exclusive dealers.
www.ft.lk

Low rates push Sri Lanka stocks to over 33-month high

(Reuters) - Sri Lankan stocks hit more than 33-month highs on Wednesday, as investors bought into the island nation's risky assets after yields in risk free treasury bills further fell after the central bank kept policy rates at multi-year lows.

Continued foreign buying also boosted sentiment.

The main stock index rose 0.22 percent, or 14.77 points, to 6,742.56, its highest close since Oct. 3, 2011.

Yields in treasury bills fell further at the Wednesday's weekly auction.

"Though we don't see a galloping market, it will be stable and positive," said Hussain Gani, deputy CEO at Softlogic Stockbrokers.

The central bank on Monday kept policy rates steady at multi-year lows for a sixth straight month, as expected, despite private sector credit growth slowing to a 4-1/2-year low.

The index is in the overbought region since July 3 as it has gained 5.71 percent so far this month, Thomson Reuters data showed.

Analysts said the profit-taking in the mid cap shares and penny stocks was overshadowed by the gains in large cap shares.

Turnover was 1.21 billion rupees ($16.82 million), more than this year's daily average of about 1.09 billion rupees. Foreign investors accounted for 37.4 percent of the day's turnover.

Foreign investors were net buyers of 326.3 million rupees worth of shares on Wednesday, extending net foreign inflows in stocks to 9.79 billion rupees so far this year.

Tuesday's gains were led by Carson Cumberbatch, which rose 2.27 percent to 460.20 rupees and Bukit Darah Plc , which gained 3.75 percent to 700 rupees.

Shares in the market heavyweight John Keells Holdings gained 1.03 percent to close at 244.90 rupees.

Lower interest rates have prompted local investors to buy shares and shift their savings from unattractive fixed assets, analysts said, as yields on treasury bills edged down further at a weekly auction on Wednesday.

Analysts said foreigners have been buying risky assets because they see value in them, while falling yields in fixed assets gradually prompt local investors to shift to equities.

The market has been on a rising trend since late February due to continued foreign buying and lower interest rates. 

($1 = 130.1800 Sri Lankan Rupees) 

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

Sri Lanka shares close up 0.2-pct

July 16, 2014 (LBO) - Sri Lanka's shares closed 0.22 percent higher on Wednesday with continued foreign inflows extending gains further, brokers said.

The Colombo benchmark All Share Price Index closed 14.77 points higher at 6,742.56, up 0.22 percent. The S&P SL20 closed 10.79 points higher at 3,761.05, up 0.29 percent.

Turnover was 1.21 billion rupees, down from 2.19 billion rupees a day earlier with 105 stocks closed positive against 98 negative.

Distilleries closed 1.20 rupees lower at 203.80 rupees with an off-market transaction of 81.60 million rupees changing hands at 204.00 rupees per share contributing 7 percent of the turnover.

John Keells Holdings closed 2.50 rupees higher at 244.90 rupees with market transactions of 374.35 million rupees contributing 31 percent of the turnover.

JKH’s W0022 warrants closed 50 cents higher at 64.70 rupees and its W0023 warrants closed 60 cents lower at 74.10 rupees.

The aggregate value of all off-the-floor deals represented 14 percent of the turnover.

PC Pharma closed 10 cents higher at 3.20 rupees and E-Channelling closed 2.10 rupees higher at 15.70 rupees, attracting most number of trades during the day.

Foreign investors bought 452.04 million rupees worth shares while selling 125.62 million rupees worth shares.

Bukit Darah closed 25.30 rupees higher at 700.00 rupees, contributing most to the index gain.

Carson Cumberbatch closed 10.20 rupees higher at 460.20 rupees and Lion Brewery Ceylon closed 21.70 rupees higher at 673.80 rupees.

Piramal Glass posts Rs. 86 m PAT in 1Q

Piramal Glass Ceylon PLC has announced its results for the first quarter of FY 2015 with Rs. 1,245 million of revenue and Rs. 86 million profit after tax (PAT) showing a growth of 13% at operating profit and 41% growth at PAT level when compared with the profitability of FY2013 (excluding profit from land sale).

The total revenue generated during the quarter under review stood at as Rs. 1,245 mn as against Rs.1,233 mn depicting a 2% overall growth.

"We were happy to note that the domestic sales in Q1 showed positive signs with a growth of 8% by achieving Rs.994 mn during the current quarter as against Rs. 916 mn of the previous year similar quarter.

The Export Market sale was Rs. 251 mn as against Rs. 307 million of the previous year saw a decline of 18%. The Exports to Indian market which was effected during the past few quarters due to the currency fluctuation in India has recovered to some extent and the company was able to achieve its expected sales in India.

The Gross Profit saw a marginal decrease from 22% in Q1 F2014 to 21% in Q1 F2015, while the operating profit increased from 10% in first quarter of F2014 to 11% during the quarter under review.

The company saw a substantial increase in the direct and indirect costs during the quarter.The main increases were seen in Raw Material and Packing Material costs which has directly impacted the production costand the gross profit margins.

The Finance Cost too showed a 41% reduction from Rs. 54 mn in the 1st quarter of F 2014 to Rs. 32 mn in the first Quarter of F 2015 due to decline of interest rates and as most of the long term loan debts are now settled.
www.dailynews.lk

LB Finance mulls Vallibel merger

H.D.H Senewiratne (hsenewiratne@gmail.com)

Sri Lanka's third largest finance company LB Finance is exploring options of merging with Vallibel Finance as part of the Central Bank directive to create strong financial sector in the country, market sources said.

LB Finance's major loan impairment came down last year in the gold loan business due to the gold price slash. This year with the rise in gold prices, low bank interest rates and high GDP growth, its position has improved and is expected to improve in the coming year, Research Manager First Capital Research Dimantha Mathew told the Daily News Business.

At present there are 58 financial companies in the country. Under the Central Bank of Sri Lanka ruling the number is to be reduced to 20 financial entities as part of the consolidation programme.

Mathew said that these two entities are looking at the option of merging with Vallibel Finance Plc. However, Vallibel Finance is owned by Vallibel investment. The entities high performance it has the largest deposit base out of all the finance companies with a deposit base of Rs 46 billion in financial year 2014 and to Rs 51 billion in next year, he said. Mathew also said that total asset base of the entity was Rs 60 billion in financial year 2014, while its asset base to reach Rs 69 billion next year with these new development in the company.

Further the company's current profitability has topped Rs 2 billion and it will increase 49 percent growth or Rs 2.3 billion for the financial year 2016.

LB Finance was incorporated in May 1971 as a private limited liability company and subsequently converted to a public limited liability company in 1982. The Company was listed on the Colombo Stock Exchange in 1998 and was re-registered in June 2008 under the new Companies Act No. 7 of 2007.

At the beginning, the majority shareholding was held by Lewis Brown and Company Limited. In 1994, Vanik Incorporation Limited acquired the controlling interest of the Company. Dhammika Perera,took over the company in 2003 and turned it around to be the vibrant and leading finance company that it is today.

LBF is a company in the Group of Vallibel One which is a diversified holding Company with strategic investments in financial services, tile and sanitary ware manufacturing and leisure. 

www.dailynews.lk