Colombo to get its first electric train

A master plan to modernize the intercity train service to bring it on par with the existing well-developed railway systems is soon to be introduced.

Under the master plan, serious modernization will take place and specific routes to identified destinations will be rehabilitated and news features will be introduced, making train travel a comfortable and safe one, Minister of Internal Transport Ranjith Madduma Bandara told the Sunday Observer. A Cabinet paper is to be submitted in the coming weeks, proposing specific improvements to the railway service, after which the master plan will be implemented.

The master plan includes details on modernizing the intercity train services, construction of new railway tracks, development of existing tracks and installation of double tracks to identified destination, he said.

The Government of India is likely to assist the development of track between Anuradhapura and Vavuniya. In addition, eight locomotive engines and 30 coaches too will be requested from India, Maddumabandara said.

The first electric train service will be from Colombo to Battaramulla, a fast developing township with many government ministries and departments located there. A feasibility study is currently in progress. Plans are underway to extend the double track on the coastal line up to Aluthgama railway station and another double track between Kurunegala and Polgahawela. The railway track from Maho to Trincomalee and up to Batticaloa too are identified priorities. A new railway track from Kurunegala to Habarana via Dambulla is also to be constructed, the Minister said. -PK

www.sundayobserver.lk

Galadari makes Rs. 157 mn. profit for 2014, optimistic about future

Galadari Hotel (Lanka) PLC has made a small dent in the accumulated losses of Rs. 9.28 Billion in its balance sheet with a profit after tax of Rs. 156.6 million earned in the year ended Dec 31, 2014, down from Rs. 285.8 million earned in the previous year, according to the company’s recently released annual report.

These earnings translated to 32 cents per share against 84 cents per share earned the previous year.

The company’s chairman, Mr. Khaled Aly Soliman has said in the report that last year’s profit "reflects a sustained performance" comparable to the previous year.

He noted that the performance was "noteworthy and headed in the direction towards realizing greater potential in the coming years" and made the point that this profit had been earned in the context of developments in the political environment and the advent of new and refurbished competition in the hotel sector during the year as well as the current position of the Galadari property.

Soliman said that with Sri Lanka emerging as one of the world’s key tourism destination and the Sri Lanka Tourism Development Authority targeting 2.6 million tourist arrivals by 2016, "we see enhanced potential in the hospitality sector over the coming years."

This was likely to present both opportunities and challenges to Galadari Hotels, he said.

Galadari Brothers Company ( LLC) with 63.57% of Galadari Hotels is the controlling shareholder of the company, with several members of the Galadari family having individual holdings of slightly below 2% and 1% each. The top local shareholder is the EPF with 4.73% ranked number three among the top twenty shareholders.

The directors of Galadari Hotels are Messrs. Khaled Soliman – Chairman, Sharif Hashim Ahmed Khoory, Mohamed Hisham Al Garf, Amit Chib, Hatim Abdelaziz Mohamed, Dr. John Anthony Shivaji Felix and Lalith Rukman De Silva. 
www.island.lk

Sri Lanka vehicle registrations soar to new historic high

COLOMBO (EconomyNext) - Sri Lanka vehicle registrations hit a historic new high of 66,664 up 147 percent from a year earlier, with 2 and 3 wheeler registrations doubling from a year earlier, analysis of vehicle registry data shows.

JB Securities, an equities brokerage in Colombo said in an analysis that motor cycle registration hit 42,221 in March, up from 163 percent from 15,997 and also sharply up from the 25,155 levels seen earlier.

Three wheelers which are mostly used as taxis were up 104 percent from a year earlier to 12,347. In February 2015 only 7,994 vehicles were registered.

JB Securities said motor cycle registration were probably driven up cut price bikes given to policemen but it was less clear why three wheeler taxi registrations were going up.

Motor car registrations were up rose 245 percent from a year earlier to 5,856 unit in March led by hybrids.

The financing share of cars were 56.7 percent, 2-wheelers 41 percent and three wheelers 92 percent, according to JB Securities data.

Sri Lanka's interest rates are now at three decade lows and analysts who are watching credit and liquidity trends have warned that higher government consumption was pushing domestic demand up and higher interest rates were needed to correct the imbalance.

Fuel prices are also low pushing down vehicle operating costs.

Motor car and other vehicle registration are now at levels higher than seen before February 2012, when a balance of payments crisis force interest rates to be pushed up.

Sri Lanka's central bank however loosened monetary policy on April 15, cutting policy rates by 50 basis points despite loose fiscal policy.

The Central Bank has also been engaging in type of 'quantity easing' by steadily releasing temporarily sterilized excess liquidity, which have disappearing through the balance of payments at alarming speed.

Sri Lanka shares gain for third session; lower rates help

(Reuters) - Sri Lanka's main stock index gained for a third straight session on Friday to a more-than-one-month closing high, on buying by local investors as lower interest rates dissuaded them from investing in risk-free government bonds.

Since the central bank cut the key policy rates by 50 basis points to record lows on Wednesday, yields on government securities have fallen 30-50 basis points, dealers said.

The main index gained 0.13 percent to 7,086.41, its highest close since March 16. It has gained 2.7 percent since the central bank's rate cut.

Stockbrokers said there was some profit-taking during the day with local investors mainly on the buying side.

The market saw a net foreign outflow 31.7 million rupees ($238,525), but it has seen a net foreign inflow of 3.4 billion rupees so far this year.

The day's turnover was 717.1 million rupees, well below this year's daily average of around 1.1 billion rupees.

Infrastructure firm Access Engineering jumped 6.7 percent, while Aitken Spence Hotel Holdings gained 5.1 percent, helping to boost the index.

The index had lost 6.6 percent last month, its biggest monthly drop since October 2012, as investors sold their holdings to settle margin trades amid concerns about political stability and a rise in interest rates.

Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party did not have a majority in parliament, stockbrokers said.

They said, however, efforts by both ruling and opposition parties for a stable government have helped to improve investor confidence, adding that investors were still largely on a wait-and-see mode ahead of parliamentary elections possibly in June.

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Sunil Nair)

Sri Lankan stocks jump to near 4-wk high after surprising rate cut

(Reuters) - Sri Lankan shares rose more than 1 percent to a near four-week high on Thursday, extending gains from the previous session after the central bank in a surprise move cut key monetary policy rates by 50 basis points.

The main stock index advanced as much as 1.01 percent to 7,051.43, its highest since March 23, in early trade.

The central bank early on Wednesday surprised markets by cutting key policy rates to record lows in a move aimed at boosting economic growth amid near zero inflation.

"Now the direction on the interest rate is very clear and the gains could be sustained after the rate cut," said Hussain Gani, deputy CEO at Softlogic Stockbrokers (Pvt) Ltd.

"We see more participation of local investors including retailers. Foreigners are also trading in high volume. Investors were uncertain about the interest rates, but now it is evident that the new government wants to lower interest rates further."

Turnover stood at 744.1 million rupees ($5.60 million) at 0655 GMT.

Investors have been cautious due to political uncertainty as Prime Minister Ranil Wickremesinghe's party did not have a majority in parliament, stockbrokers said.

However, efforts by both ruling and opposition parties for a stable government have helped to improve investor confidence, they said, adding they were still largely on a wait-and-see mode ahead of parliamentary elections possibly in June.

Sri Lankan rupee forwards traded weaker on Thursday on importer dollar demand in dull trade, dealers said.

Actively traded two-week forwards were at 133.90/95 per dollar at 0712 GMT, compared with Wednesday's close of 133.78/85. One-week forwards were steady at 133.60 per dollar amid moral suasion by central bank.

Dealers said one-month forwards were down at 134.15/25 per dollar, compared with the previous close of 134.05/15.

They said the rupee might be under downward pressure after the central bank cut interest rates.

The central bank through moral suasion prevented the spot rupee from dropping below 132.90/133.20, a limit it set in February.

Central bank officials were not available for comment. 

($1 = 132.9000 Sri Lankan rupees) 

(Reporting by Shihar Aneez; Editing by Subhranshu Sahu)

Monetary Policy Review – April 2015 - Policy Rate reduced by 50 Basis Points

The Monetary Board at its regular meeting held on 11 April 2015 reviewed the current monetary policy stance and underlying macroeconomic conditions. Accordingly, the Monetary Board made following observations: 

 Headline inflation, on a year-on-year (y-o-y) basis, declined to 0.1 per cent in March 2015 from 0.6 per cent in February 2015. Following the same trend, annual average inflation also declined to 2.5 per cent from 2.9 per cent recorded in the previous month. Significant decline in inflation in March 2015 reflects primarily the first round impact of downward price revisions of domestic energy prices as well as the administratively reduction in prices of a number of consumer items. Meanwhile, core inflation stood at 1.4 per cent on y-o-y basis and 3.0 per cent on annual average basis in March 2015. 

 As expected, a sustained increase in credit granted by commercial banks to the private sector was observed in the past few months. The growth of the private sector credit rose to 12.6 per cent (y-o-y) or Rs. 24.5 billion in absolute terms in February 2015. Reflecting the developments in domestic credit, broad money (M2b) increased by 12.3 per cent (y-o-y) in February 2015, remaining well within the underlying monetary projections. Economic Research Department 15-04-2015 12-12-2012 2 

 The external sector remained resilient with foreign currency inflows from export proceeds, workers’ remittances, and tourist earnings as well as inflows to the government securities and portfolio investments supporting maintenance of the exchange rate against US Dollar without an unhealthy volatility on the strength of official foreign reserves increasing from US dollars 6.8 billion as at end March 2015 to US dollars 7.0 billion at present. The official reserves are projected to strengthen further with the proceeds pending from the currency swap arrangement between Sri Lanka and India and other identified regular investment inflows to a level of official reserves comfortable for supporting the exchange rate stability in the immediate future. Overall, the outlook in the balance of payments in 2015 remains favourable with continued inflows expected from current account related transactions, significantly lower expenditure on petroleum imports and receipts to the government, the banking sector and other private corporates. 

 Current behaviour of market interest rates is viewed to be inconsistent with the continued low inflation and investments needed to address concerns on economic growth for the year. Inflation is projected to remain at low mid-single digit level in 2015. Therefore, there is a further leeway to continue relaxation of monetary policy, primarily through a reduction in policy interest rates of the Central Bank to encourage economic activities by enhanced credit flows and investments due to lower cost of funds and behaviour of market interest rates consistent with economic growth outlook. If any of subsequent interim effects of further monetary relaxation are found to be of concern over other economic variables, a mix of other monetary policy tools is available to fine-tune such effects towards achievement of current objectives of the monetary policy. 

Taking the above observations into consideration, the Monetary Board decided to reduce the policy interest rates by 50 basis points. 

Accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank are reduced to 6.00 per cent and 7.50 per cent, respectively, with effect from today (15 April 2015). 

The monetary policy tool primarily adopted by the Monetary Board will continue to be the policy interest rates announced to the market with the support of other monetary policy tools. The relaxed monetary policy stance will also be pursued in months 3 to come until concerns over inconsistent behaviour of market interest rates are addressed sufficiently to facilitate the economic growth further in a low single digit inflation environment. 

The date for the release of the next regular statement on monetary policy would be announced in due course.

Sri Lanka finds more 'pump and dump' stock losses at National Savings Bank: Finance Minister

COLOMBO (EconomyNext) - The losses to Sri Lanka's National Savings Bank from being used to dump pumped up stocks during a bubble that broke in 2011 and 2012 was greater than previously imagined Finance Minister Ravi Karunanayake said.

Karunanayake said NSB had so far lost 1,071 billion rupees from stock in 10 companies bought for 2,645 million rupees, mainly in 2011 and 2012, he said.

The National Savings Bank hit the headlines during the last regime when it bought stock of The Finance Company, a troubled finance company.

"The same people who were involved in selling The Finance Company to NSB appeared to be involved in these deals as well," Karunanayake told reporters.

The stock included Browns, Renuka Holdings and Access, Karunanayake said.

In the case of one stock a 500 million rupee loss had made it.

NSB Chairman Ashwin de Silva would complain the anti-corruption commission on the matter, he said.

"You cannot win on every share, that is for sure, but why do you want to buy stocks that are sure to fall?" Karunayake asked.

During the stock market bubble, fired by low interest rates, which broke in 2011 and 2012, many shares were dumped on state-managed funds.

The Employees Provident Fund came to be known in markets as the 'buyer of last resort' as it bought stocks at prices other investors in the market were not buying.