Sri Lanka not the only deficit tea producer, Assam, Tripura, Nilgiri & Kenya join the club

By Steve A. Morrell

Reduced quantities of tea in world auction centers would mean price increases would be sequential, were very nearly universal views of most brokers end last week.

They said price trends were better than the same period last year but reduced crop would mean less tea on retailer shelves and a counter productive phenomenon of increased costs would emerge nullifying the price pluses.

John Keells’ Tea Market Report quoting the Assam Tribune and Economic Times (of India) said heat and scanty rains spoiled cropping opportunities in Assam; similarly Nilgris, and Kenya as well.

Deficit crop variance of approximately 10 % to end March meant that irrespective of price increases at Colombo auctions, costs at production were high. Ultimately plantations would find it difficult to make ends meet, these sources said.

High growns and Westerns have recorded high deficit results while low growns and mediums were less stressed. Tea smallholders were affected, but not to the extent they could not manage their properties. There are now in excess of 400,000 tea smallholders supplying leaf to factories and although such bulk leaf is less than what it was last year, they said they could yet manage their land profitably.

Commenting on these remarks, Colombo sources said this was no surprise, because most smallholdings were family owned and overheads were minimal. Currently prices paid per kilo for bought leaf at approximately Rs. 95 per kilo was a good one.

The crop deficit recorded to end March was 8.1 million kilos. High growns lost 11 % from a year earlier. As revealed at a recent interview, CEO Watawala Plantations Dr. Dan Seevaratnam, said unless the prevailing model of plantations management is changed, plantations will continue to run at ‘thundering’ losses.

Crops harvested to end April 2014 was 73 . 5 milion kilos against 81.6 million kilos in the comparative period the previous year .

Meanwhile Brokers and the tea trade were reticent on increased prices. They agreed the industry did benefit from increased prices but such increase failed to translate to viability.

January to April prices were that low growns sold at an average of Rs. 508 per kilo, up about Rs. 64 per kilo a year earlier which was good by any standard, the brokers said.

www.island.lk

Japanese company assured of 51% of Expolanka

Kassims will sell down further in event of shortfall

(L to R): Mr.Hanif Yusoof, Group CEO/Director, Expolanka Holdings PLC, Mr.Osman Kassim, Chairman, Expolanka Holdings PLC, Naosuke Kawasaki – Managing Director, Sagawa Holdings Global, Singapore, Nobuaki Kondo – Representative Director, Sagawa Holdings, Japan exchanging the share purchase agreements.

Japan’s SG Holdings which on Friday concluded a US$ 49 million deal (Rs.6.3 billion) on the Colombo Stock Exchange to buy 30% of the Expolanka Holdings PLC has been assured that they will be given a controlling stake of over 50% by the major shareholders of the company who retained 42.6% of Expolanka after Friday’s deal.

"There is an understanding that SG will get their 50% although there is no formal agreement on this matter," one sources said.

However there was a Stock Exchange filing later Friday which indicated that the Kassims have undertaken not to exercise their selling rights under the mandatory offer being made by SG Holdings except to make good any shortfall of the 51% control of the company.

If the public shareholders do not come up with the balance 21% needed to gain control, the Kassim family which on Friday sold down 5.75% each of the company with the group CEO, Mr. Hanif Yusoof selling 7% will further sell down to make good the difference, these sources said.

Four other directors, the brothers Osman Kassim, Satter Kassim, Shafik Kassim and Farook Kassim sold 5.75% each from their existing stakes while Yusoof who is related to the Kassim’s sold 7%.

SG Holdings, the buyer, was described in a Stock Exchange filing as a leading logistics company in Japan with a presence in the Asian region.

"With the view of consolidating its operations in Sri Lanka and strengthening its global presence, SG Holdings intends to purchase majority shares of the company in total once the mandatory offer is approved," the filing said.

Expolanka said that this far reaching and strategic deal would see both parties working towards growing and strengthening the company’s position in the global logistics industry.

Hanif Yusoof will continue as group CEO, it was announced in the Stock Exchange filing.

When Expolanka obtained a quotation on the CSE through an IPO, its shares were sold to the public at Rs. 14, less than the mandatory offer price of Rs. 10.70. But the cost per share to the majority shareholders would have been much less, analysts said.

``They are making a handsome capital profit on the deal and also retaining a fair slice of the company which the Japanese are expected to drive much faster than the founders could have,’’ one analyst said.

Commenting on the deal, Yusoof said: "With the Sri Lankan economy moving forward in the positive direction, there is a great potential for export growth as well as global expansion in the freight and logistics industry. In view of this, the partnership with SG Holdings will get us closer to our vision of being a strong freight and logistics player in the region.

"This was a very big decision for the top five shareholders as they have been part of Expolanka; managing the business over 30 years, and they felt that this partnership was important for the long term success of the organization.’’

Freight and logistics is a core business of Expolanka Holdings which has over the last three decades established itself as a premier provider of freight forwarding and supply chain management solutions in Sri Lanka and the Indian subcontinent with a cluster of companies focusing on multi-modal freight and transport solutions and a global footprint, spanning four continents and 18 countries.

SG Holdings currently owns 24 locally-incorporated subsidiaries in 10 countries outside Japan, including China, Vietnam, and Singapore. The Group has identified strengthening their overseas operation in the area of global freight forwarding as one of the core pillars.

Mr. Nobuaki Kondo, Representative Director of SG Holdings said, "We saw great value in Expolanka Holdings and especially the strength and the strategic fit in the freight and logistics business. This acquisition will certainly help Sagawa to further increase and strengthen our foot print in Asia."

"This move further endorses and supports our groups’ strategy of focusing on our core business of freight and logistics. We also believe that the Synergies that can be achieved through this new partnership will propel Expolanka towards achieving our objectives faster with a more focused & clearer vision" Yusoof concluded.

Expolanka Holdings PLClisted in the Main Board of the Colombo Stock Exchange as a diversified conglomerate commenced operations in 1978. With diversified interests in freight & logistics, travel & leisure, international trading & manufacturing and investments & services sectors, the Group, has a global presence in over 18 countries and 45 cities.

Expolanka Holdings PLC posted a consolidated revenue of Rs.50 billion in the FY 12-13. www.expolanka.com.

www.island.lk

Sri Lanka's Dialog Television grows revenues, profits up

May 10, 2014 (LBO) - Sri Lanka's Dialog Axiata, a unit of Malaysia's Axiata group said its pay television business made profits of 132 million rupees in the March 2014 quarter up from a loss of 14 million rupees a year earlier.

Television revenues rose 27 percent from a year earlier to reach 1.1 billion rupees, Dialog said in a statement. Earnings before interest and tax rose 118 percent to 260 million rupees, the firm said.

The firm had earlier said its subscribers rose 26 percent to reach 332,000 by end December 2013, no subscriber data was given for end March 2014.

In 2013, revenues grew 21 percent to reach 3.6 billion rupees the firm said, but it lost 302 million rupees after a one-off write down of assets.

Separately Dialog Axiata said it had 9.3 million mobile phone subscribers by end March 2014.

Japan’s SG Holdings buys Expolanka Holdings’ 30% stake for Rs. 6.3 b

Japan’s SG Holdings has entered into an agreement with the top five shareholders of Expolanka Holdings PLC to buy a 30% stake in the company for a purchase consideration of Rs. 6.3 billion or $ 49 million.

The stake amounting to 586 million shares was done at RS. 10.70 each. Existing four directors Osman Kassim, Satter Kassim, Shafik Kassim, Farook Kassim shed 5% each from their existing stakes of 14.5% each whilst Group CEO Hanif Yusoof sold 7% stake. Buying broker for the deal was Nawara Securities (formerly New World Securities) and the selling broker was Asia Securities.

SG Holdings, the holding company for the Sagawa Group, is a leading logistics company in Japan with a presence in the Asian region. With the view of consolidating its operation in Sri Lanka and strengthening its global presence, SG Holdings intends to purchase majority shares of the company in total once the mandatory offer is approved.

Having triggered the SEC’s takeovers and mergers code with the 30% acquisition, SG announced a mandatory offer to remaining shareholders of EXPO at Rs. 10.70 per share. 

EXPO ended the day unchanged at Rs. 10.30 after hitting an intra-day high of Rs. 10.60.

In a statement Expolanka said this far-reaching and strategic deal would see both parties working towards growing and strengthening the company’s position in the global logistics industry.

It was also stated that Hanif Yusoof will remain as the Group CEO to guide the company in the direction of becoming a stronger force as a Sri Lankan company in the global arena.

Commenting on the move, Expolanka Holdings PLC Group CEO/Director Hanif Yusoof said: “With the Sri Lankan economy moving forward in the positive direction, there is a great potential for export growth as well as global expansion in the freight and logistics industry. In view of this, the partnership with SG Holdings will get us closer to our vision of being a strong freight and logistics player in the region.”

Yusoof added: “This was a very big decision for the top five shareholders as they have been part of Expolanka, managing the business over 30 years, and they felt that this partnership was important for the long term success of the organisation.”

Freight and logistics is a core business of Expolanka Holdings which has over the last three decades established itself as a premier provider of freight forwarding and supply chain management solutions in Sri Lanka and the Indian subcontinent. With a cluster of companies focusing on multi-modal freight and transport solutions and a global footprint spanning four continents and 18 countries, SG Holdings currently owns 24 locally-incorporated subsidiaries in 10 countries outside Japan, including China, Vietnam, and Singapore. The group has identified strengthening their overseas operation in the area of global freight forwarding as one of the core pillars.

Nobuaki Kondo, Representative Director of SG Holdings said: “We saw great value in Expolanka Holdings and especially the strength and the strategic fit in the freight and logistics business. This acquisition will certainly help Sagawa to further increase and strengthen our footprint in Asia.”

“This move further endorses and supports our groups’ strategy of focusing on our core business of freight and logistics. We also believe that the synergies that can be achieved through this new partnership will propel Expolanka towards achieving our objectives faster with a more focused and clearer vision,” Yusoof concluded.

Expolanka Holdings PLC is listed on the Main Board of the Colombo Stock Exchange as a diversified conglomerate having commenced operations in 1978.

With diversified interests in freight and logistics, travel and leisure, international trading and manufacturing and investments and services sectors, the group, has a global presence in over 18 countries and 45 cities. Expolanka Holdings PLC posted consolidated revenue of Rs. 50 billion in FY 12-13.



www.ft.lk