Shoe maker ups stake in textile maker

Ceylon FT: Ceylon Leather Products PLC yesterday said it increased its stake in South Asia Textile Industries Lanka (Pvt.) Ltd to over 80% with a Rs 306 million deal. In a stock exchange filing, the company said it purchased 3.06 billion shares in South Asia Textile for Rs 306.45 million through a rights issue.

Lanak Century Investments PLC, the controlling shareholder of Ceylon Leather, also bought 480.7 million shares of South Asia Textile for Rs 48.07 million, increasing its stake to 12.61%.

South Asia Textile produces weft knitted fabric and specializes in knitting, dyeing, finishing, printing, brushing, sueding and anti pill micro/polar fleece fabric.
Its factory is located in Pugoda with a 700,000Kg monthly capacity.

Its buyers include global heavy weights, Puma, PC Penney, Old Navy, Wal-Mart, Victoria's Secret, Next, Reebok, Mother Care, Gap, Marks and Spencer and Levi's.

Operating an industrial tannery, Ceylon Leather manufactures bags, accessories and shoes and operates several outlets branded DI Leather Boutique.

It reported an Rs 135.68 million net profit for the year ended 31 March 2014, up 40% from a year ago.
www.ceylontoday.lk

Rs 500M acquisition announced

Ceylon FT: In keeping with the financial sector consolidation programme of the Central Bank a Rs 500 million acquisition was announced yesterday (21).

Deshodaya Development Finance Limited has entered in to a memorandum of understanding for the purchase the majority shareholding of George Steuart Finance PLC.

"The Principal Shareholders of George Steuart Finance PLC, George Steuart & Company Limited and Capital Trust Holdings Limited will divest their shareholding for a company valuation of Rs 500 million for this transaction, which also has been endorsed by the Central Bank of Sri Lanka," George Steuart said in a statement.

Deshodaya Development Finance Limited, a micro finance provider, intends to expand its outreach and diversify its existing product portfolio by amalgamating the businesses whilst keeping in line with regulatory asset and capital enhancement requirements. www.ceylontoday.lk

Capital Alliance records increase in profits of 17%

Capital Alliance Ltd. (CALT), a primary dealer in Government securities recorded an impressive profit after tax of Rs. 331.9 million for the financial year of 2013/2014.

This year’s financial performance showed a 17% increase in profitability from the previous financial year which helped CALT maintain its position as a dynamic leader in the trading sphere. CALT’s ability to refocus business and management strategies and maximise on opportunities in an extremely active trading climate resulted in the company achieving higher capital gains and momentous growth.

The company’s total assets were valued at Rs. 5.13 billion, an 8% rise from the previous financial year. Earnings per share were recorded at Rs. 22.12 and increased by 17%. Total shareholder’s funds were recorded at Rs. 1 billion with an increase of 27% over the previous financial year. Due to a turbulent financial year and the challenges of QE tapering, markets were in shock and only recently recovered. Despite a tough economic climate and various ongoing challenges, CALT delivered a consistent financial performance that exceeded expectations.

CALT Chief Executive Officer Gehan Hemachandra completed his first tenure as CEO of the company this year. Some of the key changes he implemented included revising the company’s strategic focus and developing CALT’s dynamic marketing and dealing teams.

Commenting on the measures taken to strengthen CALT’s operational prowess, he stated: “People are at the core of CALT’s business operations and the company invested in recruiting high performing professionals to head our marketing and treasury divisions. We developed a new marketing team from scratch and recruited senior management to ensure the growth and development of the division. Thereafter, both our marketing and dealing teams performed exceptionally and their efforts contributed significantly to our high financial performance this year.”

Under new rules created by the Colombo Stock Exchange (CSE) the company became the first-ever primary dealer to obtain a debt-broker license from CSE, the new license has enabled CALT to significantly diversify income revenues.

CALT was initially focusing on the government securities market and is now applying the same model in the corporate debt space. Corporate debt trading is a market that is still in its infant stages and although it will face many challenges, it also has great potential for growth. Due to a burst of activity in corporate debt, aided by interest rate fluctuations, CALT is now developing corporate debt trading into a vibrant secondary market.

Capital Alliance commenced operations in 2000 and began dealing in fixed income securities and corporate finance advisory services. The company has become a dominant force in trading and developing financial services and has acquired an impressive client portfolio.

In 2003, CALT was issued with a primary dealer license from the Central Bank of Sri Lanka (CBSL). Thereafter in 2013, the company was appointed as Sri Lanka’s first registered debt dealer in the primary dealer category. With an innovative and assertive approach to trading, CALT continuously capitalises on market trends and developments to secure high returns for its diverse client base.

As one of the six non-bank licensed primary dealers in the country, CALT is authorised to distribute fixed income securities to all investor categories including individual, corporate and institutional investors in Sri Lanka.

CALT has gradually evolved into a multi-faced organisation offering a sophisticated selection of structured government debt-based instruments including Treasury bills, 

Treasury bonds, agreements and reverse purchase agreements, corporate debt, leveraging and interest rate swaps. As the company looks ahead to the future, it remains committed to delivering excellence and maintaining its position as the leading secondary market dealer in the country.

Capital Alliance Ltd. is part of the CAL Group which also includes Capital Alliance Partners (CALP, the company’s corporate finance arm which specialises in investment banking, fund management and securities broking).

The group also includes Capital Alliance Securities (an equity brokerage firm), Capital Alliance Investments (a fund management firm), Capital Alliance Finance PLC (a leasing company) and the Ceylon Tea Brokers PLC.

All CAL business units leverage the strength of the group to deliver integrated and customised solutions for diverse clientele. The CAL Group comprises a dynamic team of individuals with extensive local and international market experience. Since its inception in 2000, the CAL Group has built a reputation for itself as a market leader, capable of continuously meeting client expectations and delivering excellence in research, ethical dealing, confidentiality and product innovation.
www.ft.lk

Sri Lanka stocks edge up; correction seen

(Reuters) - Sri Lankan stocks hovered around 33-month highs on Monday, as local investors took advantage of low interest rates to shift funds from fixed income assets to risk assets despite foreign outflows, brokers said.

The main stock index ended up 0.51 percent, or 34.32 points, at 6,756.52, near its highest close since Oct. 3, 2011 hit on Wednesday.

"There would be miner corrections here and there, but we see continued buying," said a stockbroker asking not to be named.

"There is stability in the market. With the positive outlook, investors are holding on."

The share index has gained 5.92 percent so far this month.

Turnover was 904 million rupees ($6.94 million), slightly below this year's daily average of about 1.09 billion rupees.

Foreign investors were net sellers for the first time in the last eight sessions, selling 215.13 million rupees worth of shares on Monday. But they have been net buyers of shares worth 9.8 billion rupees so far this year.

Shares of Lion Brewery (Ceylon) Plc rose 4.05 percent to 667.60 rupees, while Commercial Bank of Ceylon Plc rose 1.99 percent to 143.30 rupees.

The market is on the rise because investors have little options in other instruments as yields of treasury bills and the central bank's key monetary policy rates have fallen to multi-year lows amid continued foreign buying.

Yields on treasury bills edged down further at a weekly auction on Wednesday.

The index is in the overbought region since July 3. It has risen 14.27 percent so far this year.

Lower interest rates have prompted local investors to buy shares and move away from unattractive fixed assets, analysts said.

Analysts said foreigners have been buying risky assets because they see value in them.

($1 = 130.2300 Sri Lankan Rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka stocks close up 0.5-pct

July 21, 2014 (LBO) - Sri Lanka's stocks closed 0.51 percent higher with diversified stocks gaining despite net foreign selling, brokers said.

The Colombo benchmark All Share Price Index closed 34.32 points higher at 6,756.52, up 0.51 percent. The S&P SL20 closed 29.17 points higher at 3,768.15, up 0.78 percent.

Turnover was 904.71 million rupees, down from 1.30 billion rupees last Friday with 132 stocks closed positive against 66 negative.

DFCC Bank closed 30 cents lower at 165.40 rupees with an off-market transaction of 162.00 million rupees changing hands at 162.00 rupees per share contributing 18 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 35 percent of the turnover.

George Steuart Finance closed 1.80 rupees lower at 45.90 rupees, attracting most number of trades during the day.

Foreign investors bought 210.69 million rupees worth shares while selling 363.41 million rupees worth shares.

Commercial Bank closed 2.80 rupees higher at 143.30 rupees and Lion Brewery Ceylon closed 26.00 rupees higher at 667.60 rupees, contributing most to the index gain.

Carson Cumberbatch closed 10.00 rupees higher at 468.00 rupees and John Keells Holdings closed 1.70 rupees higher at 246.70 rupees.

JKH’s W0022 warrants closed 2.90 rupees higher at 66.90 rupees and its W0023 warrants closed 1.50 rupees higher at 74.50 rupees.

Rs 14B fund to make NBFIs pretty

Financial consolidation
By Charumini de Silva

Ceylon FT: Sri Lanka's banking watchdog – the Central Bank – will provide funds to a few non-bank financial institutions (NBFIs) via Sri Lanka Deposit Insurance Scheme (SLDI) in order to make them attractive to investors for mergers and acquisitions.

Speaking to Ceylon FT Central Bank Deputy Governor, Ananda Silva said, "During the financial consolidation process we saw that there were a few NBFIs that needed further financial support to attract investors for mergers and acquisitions. Hence, the Monetary Board approved providing such financial support to those entities."

He said Sri Lanka Deposit Insurance Scheme had grown to Rs 14 billion to date. Refusing to reveal the amount the Central Bank would provide to these companies Silva said, "Depending on the requirement of the entities we will allocate funds to strengthen their financial condition."

Central Bank formulated the scheme on 2 October 2010, where the member institutions paid the premium on a monthly or quarterly basis. However the liability was allowed after 1 January 2012. The main reason for this gap was to allow the fund to grow substantially by 2012.

According to the Central Bank the deposits of the funds were re-invested on government papers.

The premium levied on eligible deposits ranges between 0.10% and 0.15% per annum. 

These premiums are credited to the Deposit Insurance Fund (DIF) operated and managed by the Monetary Board of the Central Bank.

The DIF is separate from the Central Bank and its liability is limited to the level of fund balance and the DIF will be audited by the Auditor General.

Silva said the setting up of the deposit insurance scheme had a positive impact on the industry. The scheme improved depositors' confidence and has a self-corrective mechanism where companies would not have to take it as a burden. Having this kind of scheme would also help to strengthen the financial system, he said.
www.ceylontoday.lk

Sinhaputhra profits up by 13.5% despite industry slump of 50%

Sinhaputhra recorded a growth in profitability in FYE 2014 vs. FYE 2013, despite the industry's profitability falling from Rs. 14 billion to Rs. 7 billion.

Managing Director Ravana Wijeyeratne said that Sinhaputhra's conservative expansion on credit growth allows it to steadily maintain its growth momentum without large variations that could be extremely damaging. Although, Sinhaputhra faces the same market conditions, the fact that they had not accelerated beyond their means and also thanks to its time tested product - loans, they have always been able to steady themselves during a lackluster performance in the vehicle market. Hence while the industry loan book growth shrunk from 21.6% to 12.1% in FYE 2013 vs FYE 2014, Sinhaputhra's loan book grew around the same space, at 16% and 15%, which explains a growth in profitability against the industry norms.

Sinhaputhra's growth in profits for the last three years have been from Rs. 52 million to Rs. 74 million and this year Rs. 84 million. www.island.lk