Sri Lanka 3 and 6 months Treasury bill yields up, 12 months flat: Central Bank

(LBO) – Sri Lanka’s Treasury bill yields were up at Tuesday’s auction with 3-months yield up 03 basis points to 6.11 percent and 6-month yields also were also up 03 basis points, to 6.21 percent, data from the state debt office showed.

It was decided to accept 12,175 million rupees from the auction of 03 month yields from received 17,750 million rupees worth bills.

Treasury bills of 20,000 million were issued through the auction held today.

6-month bills closed at 6.21 percent and it was decided to accept 6,055 million rupees.

12-month closed at 6.28 percent and 845 million rupees were accepted from the auction.

The auction was oversubscribed with bids amounting to 47,870 million rupees being received.

It was decided to accept 19,075 million rupees from the auction.

Sri Lanka inflation 0.1-pct in June 2015

COLOMBO (EconomyNext) - Sri Lanka's consumer prices rose 0.1 percent in the 12-months to June 2015, falling back to the rate in March and April, the central bank said.

Prices rose 1.0 percent during the month of June, the highest rate since January, it said in a statement.

Sri Lanka's consumer prices are now at their lowest since the 0.5 percent reported in January 2004 with the government having cut taxes on some consumer goods and dropped fuel prices earlier this year.

The annual inflation rate had edged up to 0.2 percent in May.

The 12-month moving average fell to a record low of 1.7 percent in June 2015 from the earlier low of 1.9 percent in May.

The monthly increase in Colombo Consumers’ Price Index was mainly caused by the increase in food prices, the central bank said.

“Prices of some varieties of vegetables, fresh fish, green chilies, red onions, limes, dhal, potatoes and sprats increased during June 2015,” it said.

“However, prices of many varieties of fruits, coconuts, coconut oil, big onions and green gram decreased during the month.”

Criminal probe for Sri Lanka Insurance Corporation, Litro Gas hotel deal

ECONOMYNEXT - A criminal probe will be initiated into alleged procurement fraud and mis-appropriation of hundreds of millions of rupees at a unit of state-run Sri Lanka Insurance Corporation group which is building a 27 billion rupee hotel in Colombo, officials said.

"They have not followed government procurement processes," Chairman Hemaka Amarasuriya told reporters in Colombo.

"In procurement activities they have totally dis-regarded processes. There is no corporate governance, no respect for rules and regulations. No audit committee. No risk committee."

SLIC had invested 8.5 billion rupees in Canwill Holdings (Pvt) Ltd, an investment vehicle which in turn controlled SinoLanka Hotels and Spa, a firm with land and building expropriated from the Ceylinco group, which is expected to house a Grand Hyatt hotel in 2017.

SLIC unit Litro Gas held another 23 percent in Canwill with a 5 billion rupee investment and the Employees Provident Fund another 23 percent with a 5.0 billion rupee equity investment.

A forensic audit has uncovered evidence of padded contracts, mis-appropriation of hundreds of millions of rupees without board approval and awarding deals without competitive tender involving a hotel project, where the SLIC group had invested, officials told reporters.

The group had also initiated another hotel project in Hambantota, where 300 million rupees had been.

Evidence uncovered so far will be handed over to the police criminal investigation department, Chairman Hemaka Amarasuriya said.

Amarasuriya said the new board had cancelled a series of contracts awarded without competitive tender.

About 100 million rupees had been reduced from existing contracts by negotiation and the new board was hoping to slash another 150 million rupees.

Contracts apparently awarded by personal negotiation appeared to be padded Amarasuriya said.

Former SLIC Chairman Gamini Senarath and Managing Director Piyadasa Kudabalage had spent money without board approval apparently by email communication, during the ousted Rajapaksa administration officials alleged.

Both Sri Lanka Insurance and Litro Gas were privatized entities which was taken back to the state providing opportunities for corruption.

SinoLanka Hotels had also bought three blocks of land bordering the hotel from private parties at prices higher than the government valuation. The government valuation had also been increased three times in succession.

In one case a land had been valued at 191 million rupees in January 09, 2013, 253 million rupees on October 27 and 260 million rupees on November 22 for which eventually 270 million rupees had been paid.

"How the prices went up is a mystery," Amarasuriya said.

Managing Director Piyadasa Kudabalage had drawn multiple salaries from SLIC and its subsidiaries totalling 3.4 million rupees, an official said.

Litro Gas Executive Chairman Shalila Moonasinghe said Kudabalage had drawn 1.19 million rupees a month for Sri Lanka Insurance, 1.3 million rupees from Litro Gas, 450,000 rupees from Litro Gas Terminals and 500,000 rupees from Canwill Holdings.

His son who had been employed at the group had been given a 10,000 rupee phone allowance, while senior engineers were given only 1,500 rupees, they were told.

Sri Lanka’s Access Engineering buys property firms for Rs523.6mn

COLOMBO (EconomyNext) – Access Engineering Ltd. said it has invested 523.6 million rupees to buy into two property companies developing land in a suburb of the Sri Lankan capital Colombo.

The construction firm invested 273.6 million for 100 percent control of Horizon Holdings Ventures (Pvt) Ltd., a company incorporated in June 2015, a stock exchange filing said.

Access Engineering also invested 250 million rupees for a 50 percent share in Horizon Holdings (Pvt.) Ltd., a firm incorporated in March 2014.

Both firms are in the business of developing their 12.5 acre property located in Malabe, a fast-growing suburb of Colombo.

“Whilst this investment has synergies with the core business, it will enable AEL to enter the promising property development sector adding a complimentary segment to its operations,” the statement said.

Sri Lanka shares end weaker; pre-poll uncertainty weighs on sentiment

Sri Lankan shares fell on Tuesday, hovering near 2-1/2 month lows, led by large caps such as Nestle Lanka Plc as political uncertainty before parliamentary elections weighed on sentiment.

President Maithripala Sirisena dissolved parliament on Friday and scheduled elections for Aug. 17, in an effort to consolidate power and push through political reforms.

The main stock index ended 0.16 percent, or 11.35 points, weaker at 7,020.80, hovering near its lowest close since April 15 hit on Friday.

The day's turnover was 651.5 million rupees ($4.87 million), well below this year's daily average of 1.07 billion rupees.

"Still the political situation is not clear. We expect the market to continue on sideways due to political uncertainty," said Reshan Wediwardana, a research analyst at First Capital Equities (Pvt) Ltd.

The market saw net foreign outflow of 82.1 million rupees on Tuesday, after suffering net outflows of 4.15 billion rupees over the past 25 sessions.

But foreign investors were net buyers of 1.79 billion rupees worth of shares so far this year.

Shares in Nestle Lanka fell 0.03 percent, while Ceylon Theatres Plc declined 2.84 percent. 

($1 = 133.7000 Sri Lankan rupees) 

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

Sri Lanka revives tea auction automation plan

COLOMBO (EconomyNext) – Sri Lanka’s tea trade has revived the idea of automating the more-than-century-old Colombo tea auctions, a senior official said.

“It has been decided to revisit the prospect of the automation of the Colombo tea auction,” Anselm Perera, chairman of the Colombo Tea Traders Association (CTTA), said.

A committee of stakeholders has been set up to study the development of an integrated computer system for the automation of the pre- and post-auction procedures of the Colombo tea auction, he told the CTTA’s annual general meeting.

A Colombo University information technology consultant has been hired for the work.

The CTTA has been running the Colombo tea auction since 1894 although the first public sale of tea in the island took place in 1883 in the offices of a broking company.

The tea trade has previously considered automating the auctions and commissioned studies on the issues but the idea was abandoned almost 10 years ago.

Textured Jersey Lanka to buy Indian fabric maker for US$15mn

COLOMBO (EconomyNext) – Sri Lanka's Textured Jersey Lanka (TJL) said it will acquire an Indian knit fabric manufacturer, owned by one of its main shareholders, Brandix Lanka, for 15 million US dollars.

TJL will pay half the price in cash and the balance through a share swap by issuing new Textured Jersey Lanka shares valued at 28.50 rupees each.

Textured Jersey Lanka, whose shares were last traded at 28.60 rupees on the Colombo bourse Monday, said the acquisition was part of its regional expansion and capacity enhancement strategy.

The company will buy all 36.6 million shares of Ocean Mauritius Ltd., the parent firm of Ocean India, which operates a knit fabric manufacturing plant in Visakhapatnam, India.

In May this year, TJL said it will acquire Quenby Lanka Prints (Pvt) Ltd, a fabric printer, for 3.5 million US dollars.

“The acquisition of Quenby Lanka and Ocean India should potentially launch TJL to the next level of solution provision and innovation while also catering to growing customer demand,” TJL said in a stock exchange filing.

It said the acquisitions should make TJL, whose major shareholders are Pacific Textured Jersey Holdings and Sri Lankan apparel exporter Brandix, one of the leading textile players in the South Asian region.

“These acquisition also offer prospects of margin improvements through business and production synergies,” TJL said.

Ocean India is a joint venture between Brandix Lanka and Leading Investment Holdings, in which the Brandix is the largest shareholder with management control, the three other partners being Jacob BAC (a subsidiary of Brandot), Compagnie Mauricienne de Textile Ltd (Mauritius) and Pioneer Elastic Holdings Ltd. (Hong Kong).

TJL is to issue 35,197, 368 shares by way of a share swap to the selling shareholders in return for the transfer of 17.8 million shares – half of Ocean Mauritius – with a cash value of just over a billion rupees (7.5 million dollars).

Brandix Lanka, which now holds 29.81 percent of TJL, will be paid 11.28 million dollars, and raise its stake in TJL to 32.11 percent with the share swap.

TJL said it has been told by Pacific Textured Jersey Holdings and Brandix Lanka – major shareholders of TJL - that they are acting in concert and agreed to maintain a collective shareholding in TJL of not less than 51 percent for five years from 1 April 2015.

Pacific Textured Jersey Holdings, which now has 39.65 percent of TJL, plans to sell about 10 percent of its stake, the stock exchange filing said.