‘SL’s share market unaffected by third anti-Lanka UNHRC resolution’

By Lynn Ockersz
‘The third anti-Lanka resolution passed by the UNHRC in late March this year is having no negative impact on Sri Lanka’s share market. The market, in fact, is doing very well, Securities and Exchange Commission of Sri Lanka chairman Dr. Nalaka Godahewa said.

Speaking to The Island Financial Review in an exclusive interview Dr. Godahewa explained that he had predicted, even before the latest resolution against Lanka was passed, that it would not adversely impact this country’s share market.’We were of the view that the resolution would in no way nagatively affect our share market in the immediate or mid terms. If at all anything is to happen it would be very much later, but there is enough time before that for things to change, he said.

The chairman also said in response to a question that more and more foreign funds are entering Sri Lanka’s share market. For instance, in 2013, there was a Rs 38 billion inflow of funds to the stock market through foreigners. More and more foreign funds are entering the market and these have been growing over the past two years in both value and numbers, he explained.

The SEC chief said in answer to another question that some misconceptions about the local share market which had been doing the rounds in the past, that is, 2011 and the early 2012 period, have now all been cleared up. Since the latter part of 2012, through 2013 to date, share market operations have been free of controversy, he observed. This is a beneficial result of the SEC consistently educating the public now on how investments ought to be made in the share market.

One such misconception which abounded among some sections of the public was the notion that the share market was dominated by a few who made money while the others did not. This view was current, for instance, close on the heels of the war ending, which saw many persons willing to invest in shares. Unfortunately, share transactions were likened by some of them to gambling in a casino, for instance, where quick and easy money could be made. These people did not understand the modalities of market behaviour. They lacked a knowledge of the market and of the best investment opportunities. As a result their expectations were not fulfilled and they thought something was wrong with the market.

Whereas, nothing was wrong with the market. A prospective investor must have a sound knowledge of the market and of the products available before he invests. Rather than expecting quick and easy returns, he must have a long term vision and should be willing to wait until his investment yields the expected returns, the SEC Head said.
www.island.lk

Sri Lankan shares edge up; block deals boost turnover

(Reuters) - Sri Lankan shares ended a tad firmer on Thursday, led by telecom and banking stocks while block deals in George Steuart Finance PLC boosted turnover amid continued moderate foreign inflows into the island nation's risky assets.

George Steuart accounted for 30 percent of the day's 1.13 billion rupees ($8.65 million) turnover, the highest since April 9, and more than this year's daily average of 965.9 million rupees. The stock soared 76.24 percent to 53.40 rupees.

The company said in a disclosure to the bourse that its largest shareholder, Divasa Equity, sold 11.4 million shares, or 50.8 percent, to George Steuart & Company Limited at 28.80 rupees a share.

Sri Lanka's main stock index rose 0.09 percent, or 5.36 points, to 6,178.13.

The bourse saw net foreign inflows for an 11th straight session with offshore investors buying 355.8 million rupees worth of stocks. But they have sold a net 7.23 billion rupees of shares so far this year.

Lower interest rates have helped the market gain in the past weeks, also helping some retail investors, stockbrokers said.

The benchmark 91-day treasury bill yield dropped to its lowest since January 2007, data showed on Wednesday, a day after the central bank kept policy rates steady at multi-year lows.

Shares in Bukit Darah PLC rose 9.98 percent to 595 rupees, while Sri Lanka Telecom PLC rose 3.64 percent to 48.40 rupees. Commercial Bank of Ceylon PLC, the nation's biggest listed lender by market capitalisation, rose 0.39 percent to 127.30 rupees.

Stockbrokers expect the nation's bourse to gain in the short term due to prevailing lower interest rates.

Analysts, however, said foreign investors could shift from the island nation's risky assets depending on Sri Lanka's moves 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 had said earlier this month that the country would not cooperate with the inquiry.

($1 = 130.6250 Sri Lanka Rupees)

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Piramal Glass Proposes 38% Dividend for FY 2014

Colombo, April 21, 2014: Piramal Glass Ceylon PLC (PGC) has announced its year end results for the Financial Year 2013-14 with a the Turnover at Rs.5,220 Million and a Profit After Tax of Rs.835 Million including profit from sale of Rathmalana land of Rs. 652 Million.

Turnover & Profitability
FY 2014 closed with a Total Turnover of Rs. 5,220Mn as against Rs. 5,501Mn of FY 2013 which reflected de-growth of 5%. The Annual Turnover was contributed by Rs. 3,774 Million from the Domestic Market & Rs.1446 Million from the Export Market. These figures reflect a 6% growth in the Export Market & 9% de growth in the domestic market as against the previous year.

Sales
Of the total volume of the company’s sale the major portion is dominated by the domestic sale. This percentage of Domestic sale dropped from 76% to 68% which was one of the major contributors’s towards the reduction of company’s sale and profitability.

During the year under review the major segments where the company had a setback was from the sale of bottles to Beer & the Beverages segment which amounted to a drop of almost 10,000 tonnes of glass bottles. The other segments too remained static during the year.

Though the glass bottle are eco friendly and reusable our customers have experienced and observed a shift in trend from glass bottle to other forms of packaging which in the longer run may not be sustainable. To mange this temporary demand drop the company had to choose between the option of reducing its production or to shift the market base to export segment.

The export volumes bailed out the company amidst the drastic domestic sales decrease.

It was motivating to achieve a growth of 28% in the export volumes during the year as compared to the previous year. Yet these additional export volumes which were mainly done in the mass segment of the International market did not fetch realisations as high as the present niche market of exports thus affecting the profit figures as against last year. Yet these sales helped PGC to partly offset the decline in the domestic segment and ensure utilisation of capacity of the furnace which would have otherwise further increased the product cost.

The export market too had a few draw backs due to the currency fluctuation in India.

The Indian Rupee depreciation made the imports to India more expensive which led to price reductions having to be taken by Piramal Glass Ceylon. This also affected the profitability of the company. Still there is uncertainly in the Indian market conditions.

The company made several strides in the export market during the year under review.

Whilst it improved on both the volumes & value as against the previous year it was also successful in spreading its geographic concentration from India to other location. The Australia market grew by almost 125% in value whilst the reliance on the Indian market reduced from 76% to 65%. The stability in Australia market was gained with much endeavour as the company had to face many a hurdles & barriers in the way of Quality parameters in packaging and other hygienic conditions and to undergo stringent, time consuming approval processes.

Production
During the past 6 years of operation at the Horana plant a continuous improvement was experienced from the Production facility which contributed much to the bottom line thru its productivity improvement drives. Yet due to some repairs and maintenance work the company had to reduce it production in the 2nd half of the financial year by approximately 20% affecting the profitability. The repairs have now been successfully completed and the plant is back in 100% operation.

The above sales and production factors affected the profitability of the company drastically during the year. The profit from the operations was Rs. 184 Million after tax as against Rs. 722 Million in F2013.

All costs including Raw Material, Packing Material and other direct and indirect costs have seen a substantial increase during the year which is well reflected in the company’s profit figures. The electricity price hike in February 2013 and the erratic fluctuations of L.P.Gas price too impacted the profitability negatively The low demand and the adverse conditions of the domestic market refrained the company from taking a price increase on all segments during FY 2014. Thus PGC has absorbed the major portion of these costs which has affected the company’s performance.

“We too are not exited on the performance of this year as the company could have performed much better if we had not faced the de-growth in the domestic market segment, the reduction in the production tonnage due to plant repairs and other inflationary impacts on the cost of production which has not been compensated or passed on to customers this year as in past years. How ever we would be compelled to share part of the inflation with our customers during the Financial year FY 2015.

Though the domestic environment does not seem too thrilling we are confident and hopeful that we would see better results in the coming year with the in-roads that we have made in the international markets and the strategic initiatives taken in the domestic market ” said it’s Managing Director & CEO Mr. Sanjay Tiwari.

About Piramal Glass:
Piramal Glass Ceylon (Formerly Ceylon Glass Company) is the only Glass Bottle Manufacturing plant in Sri Lanka. It had the opportunity of coming under the Umbrella of Piramal Group in 1999. Presently Located in Horana, it has been in existence for over 55
years. The company originally at Rathmalana was relocated at Horana in 2007 as a BOI venture under the auspices of “300 factory programme of Mahinda Chintana”.

PGC at its 250 Tonne Capacity Manufacturing Facility has the capability to offer glass containers in different shapes and colours for multiple industries such as Food, Liquor, Pharmaceutical, Agro chemical & Soft drinks.

About Piramal Group:
The Piramal Group led by Ajay G. Piramal is one of India’s foremost business conglomerates. Driven by the core values of Knowledge Action Care, the Piramal Group has a formidable presence in healthcare, drug discovery & research, glass, real estate and financial services. The Piramal Group also pursues sustained community activities in healthcare, education, emergency medical services, and heritage restoration.

Sri Lanka shares closed up 0.1-pct

Apr 24, 2014 (LBO) - Sri Lanka's shares end 0.09 percent higher with telco and diversified stocks gaining amid strong foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 5.36 points higher at 6,178.13 up 0.09 percent. The S&P SL20 closed 21.01 points higher at 3,394.56, up 0.62 percent.

Turnover was 1.13 billion rupees, up from 670.86 million rupees a day earlier with 76 stocks close positive against 90 negative.

George Steuart Finance closed 1.90 rupees lower at 155.10 rupees with an off market transaction of 329.10 million rupees contributing to 29 percent of the daily turnover while trading heavily on the market.

All off market transactions accounted for 43 percent of the total turnover.

Foreign investors bought 507.23 million rupees worth shares while selling 151.40 million rupees worth shares.

Bukit Darah closed 54.00 rupees higher at 595.00 rupees and SLT closed 1.70 rupees higher at 48.40 rupees, contributing most to the index gain.

Trans Asia Hotels closed 5.70 rupees higher at 88.90 rupees and Royal Ceramics Lanka closed 4.70 rupees higher at 99.90 rupees.

Hatton National Bank closed 1.80 rupees higher at 156.90 rupees and Commercial Bank closed 50 cents higher at 127.30 rupees.

Carson Cumberbatch closed 11.00 rupees lower at 376.00 rupees and Finlays Colombo closed 46.90 rupees lower at 258.30 rupees.

Asian Hotels and Properties closed 2.60 rupees lower at 64.20 rupees and John Keells Holdings closed 1.50 rupees lower at 237.50 rupees.

JKH’s W0022 warrants closed 2.10 rupees lower at 66.90 rupees and its W0023 warrants closed 2.00 rupees lower at 73.60 rupees.

Sri Lanka Telecom in US$415mn expansion

Apr 24, 2014 (LBO) - Sri Lanka Telecom said it would invest 415 million US dollars to expand its network, build data centres, and expand its pay TV and services to businesses over the next two years.

The firm had signed an investment agreement with the Board of Investment of Sri Lanka, which give tax breaks to new investments.

SLT chairman Nimal Welgama said its investments will increase Sri Lanka's strategic geographical advantages and provide information communications technology solutions.

The agreement with the BOI covers expanding internet data centres , voice services, wholesale services to businesses, high speed broad band services, pay television expansion, fourth generation mobile, wife and fibre-to-the-home projects.

SLT said it had invested 1.3 billion US dollars since becoming a BOI company with 485 million going for infrastructure.

Galadari reports profits after huge loss

Ceylon FT: Galadari Hotels (Lanka) PLC reported a net profit of Rs 286 million for the year ended 31 December 2013, after reporting a Rs 861 million loss a year ago.

“The main contribution to this performance came from the restructuring of the company’s balance sheet, which resulted in the conversion of an Rs 7.2 billion loan of Galadari Brothers Co. LLC into equity,” Chairman Khaled Soliman told shareholders in the 2013 annual report released this week.

“Another noteworthy achievement in 2013 was the repayment of Rs 263.6 million to the Treasury as part settlement of the long outstanding loan to the Government of Sri Lanka, the remaining amount of Rs 263.6 million has been paid in 2014,” he said.

The Employees’ Provident Fund (EPF) was the third largest shareholder with a 4.73% stake as at 31 December 2014.
www.ceylontoday.lk

Rs. 1 b maiden debenture issue of Hemas oversubscribed

Hemas Holdings PLC’s five year listed unsecured redeemable debenture issue rated A+(lka) by Fitch Ratings was oversubscribed and closed in the early hours of the Issue opening day.

The initial issue was to raise Rs. 500 million with an option to increase up to a further Rs. 500 million at the discretion of Hemas in the event of an oversubscription.

In light of the oversubscription of the initial issue and due to the keen interest of investors, Hemas decided to excise the green shoe option by raising up to Rs. 1,000 million.

Hemas intends to utilise the funds raised through this issue to convert a portion of the existing floating rate borrowings of both Hemas and its subsidiary companies (Group) to fixed rate and have a combination of both fixed rate and floating rate borrowings in their respective balance sheets. This will allow the Group to be in a better position to hedge against fluctuations in market interest rates in the medium term and reduce finance costs at Group level.

Hemas CEO Steven Enderby, commenting on the success of the issue, stated: “We are delighted to witness the overwhelming response of the investors to our Group’s maiden debenture issue and appreciate the trust and confidence placed on us by those investors who will from this point onwards be our new stakeholders in our journey towards success.”

NDB Investment Bank Ltd. acted as the Financial Advisors and Managers to the issue whilst National Development Bank PLC and Bank of Ceylon acted as the Bankers to the issue and Trustee to the issue respectively.

Legal counsel to the issue was provided by Nithya Partners and SSP Corporate Services Ltd. acted as the Registrars to the issue.

Hemas Holdings PLC is a diversified conglomerate with a focus on five key sectors, namely Fast Moving Consumer Goods, Healthcare, Transportation, Leisure and Power Generation.
www.ft.lk

Remove 5% gaming tax; impose VAT, NBT, Excise Duty on casinos: Economist

By Mario Andree

Ceylon FT: Charging at the unregulated and tax free casino regime, a senior economist said that the government should remove the 5% gaming tax on casinos and implement the full tax regime which included VAT, NBT and Excise Duty.

The economist highlighted the ‘ridiculous’ attempts by the government to forcefully incorporate casinos in the country by removing VAT, NBT, Excise Duty, and introducing a low tax, while charging small scale business with high taxes.

According to him casinos should be charged all taxes which would generate revenue for the government to provide relief to those actually deserving in the country. Sri Lanka stands to lose about Rs 120 billion a year from gaming revenues from planned casinos.

Ceylon Today reported on (21) that the government was set to lose tax revenue amounting to US$ 3 billion due to the three new Gazette Notifications, which allow for the operating of three new casinos in the country.

Australian gaming kingpin James Packer has been given a 10 year tax break and an additional 12 year partial tax break for his and his partner Ravi Wijeratne’s US$ 350 million integrated resorts in D. R. Wijewardena Mawatha, while local gaming mogul Dhammika Perera too has been offered the same for his US$ 200 million project. The local blue chip John Keels Holdings would be given a 10-year tax break and an additional 15-year partial tax break for its US$ 700 million integrated Project in Glennie Street.
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