Mercantile Investments and Finance tops Rs. 10 b deposits base

Mercantile Investments and Finance plc has dedicated itself to being a versatile and trusted financial service provider in the country and celebrates 50 years in business this June. Today, MI looks to increase its current branch network of 25 to 28 facilities within the next couple of months, namely in Kegalle, Kotahena and in Moratuwa.

Director – Credit and Marketing (non-board member) Dhanushka Fonseka said, despite being in a highly competitive sector, the company was able to increase business volumes substantially. The company has increased its lending portfolio by 17% and has reached a deposit base of over 10 billion with a growth of 36% in the 2013/14 financial year. Further the loan book increased to 16 billion during the period under review. The non – performing ratio of MI stood at a very low figure of 3.69%. MI further recorded a profit before tax of Rs. 824 million and a profit after tax of 675 million for the financial year.

As the company reached the milestone of 50 years, MI was recognised as one of the best places to work in the country by the Great Place to Work Institute, an internationally recognised organisation. Dhanushka stated that the unique style of management upholds a clear open door policy that encourages a free flow of information to pass down from management to staff and vice a versa. He further stated that the main objective of the company is to be recognised and rated as the number one finance company in terms of the service that is extended to the client and to draw strength and support from their customers and the community.

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The Kingsbury enjoys first year of success; readies for more

The Kingsbury, which set a new benchmark in luxury hospitality, has completed its first year of success and the company said it was gearing for greater excellence amidst upcoming new competition including from global brands.
Chairman Mohan Pandithage told shareholders in the company’s 2013/14 Annual Report: “The year under review marked the successful completion of the first year of operations of the hotel under its new brand ‘The Kingsbury’.”
“Our efforts in positioning the hotel as a luxury city hotel in Colombo were acknowledged by the World Luxury Awards, where ‘The Kingsbury’ was bestowed with the title ‘Best Luxury City Hotel in the Indian Ocean Continent’ for the year 2013. Global recognition in the hotel’s first year of operations after refurbishment and expansion is indeed noteworthy,” he added.

Impressive revenue

The Kingsbury spa

The Kingsbury has posted an impressive revenue of Rs. 2.2 b in 2013/14, the highest-ever in its history. Operating profit for the year was Rs. 303 m. However, Profit After Tax for the year was Rs. 33 m, largely due to the significant finance costs amounting to Rs. 282 m. The hotel also successfully completed a rights issue, raising Rs. 660 m as equity during the year under review.
Pandithage said in 2013/14 the company focused on investing in people, training them in internationally accredited institutions, to keep them abreast with new trends in delivering world class service. “Throughout the year we have continually upgraded our product to consistently exceed the expectations of our international and local clientele,” he added.
Commenting on the industry performance, The Kingsbury Chairman said the Government’s strategic initiatives of targeting 2.5 million tourist arrivals per annum by 2016, with plans of doubling hotel room capacity to 45,000, augurs well for the industry.
Sri Lanka witnessed a surge in tourism this year, with 1.27 m arrivals in 2013, a growth of 26.7%. Earnings from tourism also increased, reaching $ 1.7 billion.
“Along with traditional markets in Western Europe, we are encouraged by the growth in emerging tourism sources such as South and East Asia and the Middle East. As the middle class in these economies continues to expand, the prospects for Sri Lankan tourism will be enhanced.
“The Com-monwealth Head of Government Meeting (CHO-GM), which was held in November 2013, received wide international media coverage on our beautiful country. As hosts to the international delegates, we take pride in partnering in this historical event, where Sri Lanka took over the Commonwealth Chair-in-Office amongst its 53 member states for a two year period.”

Important recommendations

Pandithage in his Chairman’s Review however did make some important recommendations.
“Whilst the industry continues to hold plenty of promise, there are still issues that need to be ironed out to ensure the realisation of this promise. Access to skilled labour in this industry is a constant challenge and it requires a concerted effort by all stakeholders to address this,” Kingsbury Chief said.
“The continued development of transportation infrastructure is essential, particularly to connect tourism hot spots in the Eastern Province along with the development of domestic air transportation,” he added. Pandithage also said the forthcoming entry of a number of international hotel chains into Sri Lanka is a reflection of the promise this industry holds. Whilst this would increase the level of competition in the market, these world renowned brands will also raise the overall profile of the Sri Lankan tourism product, which will enhance the size of the market for all players.
The ‘Port City’ that is taking shape just across the road from the hotel is looked upon as an opportunity, as the Kingsbury would be well located at the gateway to this new and exciting development.
“We are also strengthening our international marketing efforts in emerging markets in the Asian region, particularly China and India, catering to their growing affluent middleclass,” Pandithage said.

Rapid strides

The Kingsbury Managing Director MD Lalin Samarawickrama in his review in 2013/14 Annual Report also said the performance of the company has taken rapid strides during its first full year of operation, subsequent to its branding as ‘The Kingsbury’.
“Although the company succeeded in making only a nominal profit during the year, it was a remarkable recovery considering the heavy losses incurred during the previous year, mainly due to the establishment being shut down for refurbishment,” he added.
Samarawickrama said due to an accelerated strategic marketing and sales program, The Kingsbury succeeded in achieving the targeted occupancy levels during the year and the outlet facilities which includes the talk of the town Sky Lounge, the Harbour Court buffet brunch, the seafood specialty The Ocean Restaurant and the authentic Chinese Yue Chuan Restaurant attracted many a client and made considerable contributions toward the revenue of the hotel. The newly-designed banquet halls attracted many weddings and other functions.
“Overall, it is our intention to improve the standards and facilities of the hotel, meet the  ever-increasing demands of the modern day traveller and ensure The Kingsbury rating to  be at the highest possible level,” the MD added.
The Kingsbury being nominated as one of the world’s best luxury hotels and receiving the award of The Best Luxury City Hotel within the entire Indian Ocean continent has given strength to the entire management team, he said.
Samarawickrama also said extensive training programs for employees conducted by internationally renowned training companies have been able to develop the skills of the management team and staff to bring them up to the level required of a luxury hotel. Special emphasis has been made to maintain the best of health and hygiene conditions within the entire hotel premises. This too has enabled the hotel to win many accolades from local organisations.

Sunil Dissanayake bids adieu to Hayleys, Kingsbury    Sunil Dissanayake Veteran professional Sunil Dissanayake is bidding adieu to Hayleys Plc as well as The Kingsbury Plc, by end August 2014. Sunil whilst he was Hayleys Group Human Resources Head was appointed as the General Manager of The Kingsbury on 7 May 2013 whilst he was serving the Board as a Director since April 2010 when the Company was functioning as Hotel Services (Ceylon) Ltd. As General Manager and Director he played an important role during the transition of the hotel to a luxury five star and its subsequent progress. Having joined Hayleys Plc in July 2007, Sunil was appointed to the Group Management Committee in the same month. He was also responsible for Group Human Resources, Corporate Communications/Sustainability and Group Security. A Graduate in Hotel Management, Sunil as awarded the Lifetime Gold Award in 2011 and Honorary Membership in 2004 by the Institute of Personnel Management. Prior to joining Hayleys, he held several senior management positions in large private sector entities in Sri Lanka and abroad in Human Resources management and in Hotel Management. He is a former President of the Ceylon Hotel School Graduates Association and a former Member of the Hotel Classification Committee of Sri Lanka Tourism Development Authority. He is a member of the Ceylon Chamber of Commerce Steering Committee for HR and Education and is also a Steering Committee Member of the Lanka Business Coalition (LBCH) for prevention of AIDS.

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Touchwood Chief summoned after Liquidator complaint

Upon an application made by the liquidator to Court, stating the difficulties faced in proceeding with the liquidation due to the uncooperative nature of the representatives of Touchwood Investments Plc, the Judge of the Commercial High Court has ordered to issue notice on CEO L.W. Kiwlegedara to be present in Court on 31 July when the case is called next.

Soon after Sudath Kumar of Nanayakkara & Company was appointed by Court to proceed with the liquidation of Touchwood Investments PLC, investors submitted their affidavits in proof of debt to the liquidator and over 100 such affidavits have been submitted to date.

The company and its CEO Kiwlegedara have failed to handover the Statement of Accounts to the liquidator and failed to comply with the legal obligations of handing over the assets and documents pertaining to the company and its business to the liquidator.

Many who invested in the public quoted company Touchwood Investments PLC visualised their trees and their investments go up in flames upon realising that the company was nothing but a complete sham and fraud. The Commercial High Court Order pronouncement on 5 June, ordering the company be wound-up and placed in liquidation, was a ray of hope for all investors who were faced with severe financial hardship.
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HNB, Gem Investments eyeing Nation Lanka Finance

By Ravi Ladduwahetty

Ceylon FT: Hatton National Bank PLC and US-based hedge fund Gem Investments are among the buyers, who are wanting to buy Nation Lanka Finance PLC, successors to Ceylinco Securities and Financial Services PLC, sources said.

Top corporate sources said that while HNB and the US$ 3.7 billion Gem Investments Fund of the USA were eyeing Nation Lanka Finance, there was also a local finance company and another major US-based fund also in the fray to buy Nation Lanka in the consolidation process, which is now in the process. The negotiations are getting hotter now and within end August, the new buyers will be known in the market, which will be for the best corporate plan and the best price, sources said.

Gem Investments has investment portfolios in 65 countries and has already pledged investments to the tune of Rs 1.3 billion to Nation Lanka Finance, of which the first tranche was expected to come soon.

"One of the dire needs of Nation Lanka was the capital infusion of equity, which means that the cost of borrowing would be less. Another US based fund interested in Nation Lanka was looking at injecting US$ 5-10 million,"

Nation Lanka has an issued share capital of Rs 1.8 billion. The company at the time of the acquisition had a Rs 1.3 billion capital infusion, where Nawaloka Hospitals Chairman Jayantha Dharmadasa, high networth investor Asanga Seneviratne and Jayaprakash Rudra have invested in the then beleaguered finance company. Currently, Seneviratne owns 35%, while Dharmadasa and Rudra own about 7% each. The public owns 48% of the shares as well.www.ceylontoday.lk

Sixteen-year tax break

By Mario Andree

Ceylon FT: India's Tata Housing's US$ 430 million project, of which only US$ 130 million would come in the form of foreign direct investment, has been identified as a Strategic Development Project and the country's investment promotion agency has decided to grant a 16 year tax break as a good-will gesture.

The Ministry of Defence and Urban Development gave five acres to Tata Housing free of charge as the company promised to develop 562 housing units and 100 shopping units on the balance three acres cleared in Slave Island.

In a Gazette notification the Ministry of Investment Promotion identified Tata's US$ 429.5 million re-development and mixed development project as a Strategic Development Project under the SDP Act.

According to the Gazette only US$ 130 million out of the US$ 429.5 million would come in the form of foreign direct investment.

The ministry also has decided to grant the company a 16 year tax break for the project which would be completed within eight years from the date of signing the MoU with BOI.

Accordingly, the company will be fully exempted from income tax for the first 10 years, other than sale of apartments which is accepted for six years, followed by 50% exemption of corporate tax for six years.

In addition, no withholding tax would be charged on interest for foreign loans, fees to consultants, management and royalty fees below three per cent of gross revenue and 1.5% of marketing fees and further incentives for management fees below 10%.

The company has been exempted from VAT, PAL, Excise Duty, CESS and NBT during the project implementation period of eight years.

Further, the company has been exempted from the payment of Construction Industry 
Guarantee Fund Levy to the contractors and subcontractors of the project company.

The project will be carried out by locally incorporated One-Colombo Project (Private) Limited.

At the initial stage the company would construct 562 housing and 100 shopping units to relocate those displaced by the land clearance. The relocation is expected to be completed within two-and-a-half years of commencement, followed by the second phase where the company would develop a mixed development project consisting of a 150-room city hotel, 1.1 million sq. ft. of residential apartments, 530,000 sq. ft. of commercial space and 115,000 sq. ft. of retail space. 
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Sri Lanka stocks slip from 34-month high on profit taking

(Reuters) - Sri Lankan stocks slipped on Wednesday from their 34-month closing high hit the previous day as investors booked profits in diversified and banking shares, brokers said.

The main stock index ended 0.18 percent, or 12.39 points weaker at 6,783.98, slipping from their highest close since Sept. 20, 2011, hit on Tuesday. It has gained 6.35 percent so far this month.

The index had surged in the previous session as local investors moved funds from fixed income to riskier assets in view of the low interest rates.

"Today's fall is led by Keells, but the market is bullish. We are expecting earnings to be good and the economy to have slightly picked up which will give a bit of a boost for earnings also," said a Dimantha Mathew, Manager Research at First Capital Equities (pvt) Ltd.

Turnover was 1.03 billion rupees ($7.91 million), in line with this year's daily average of about 1.09 billion rupees.

Foreign investors were net buyers of 242.8 million rupees worth of shares on Wednesday, extending the year-to-date net foreign inflow in shares to 10.32 billion rupees.

Shares of conglomerate John Keells Holdings Plc fell 1.88 percent to 239.90 rupees, while biggest listed lender Commercial Bank of Ceylon Plc fell 0.28 percent to 144.50 rupees.

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

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

The index has been in the overbought region since July 3. It has risen 14.73 percent so far this year.

Foreigners have been buying risky assets because they see value in them, analysts said.

($1 = 130.2300 Sri Lankan Rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka shares close down 0.2-pct

July 23, 2014 (LBO) - Sri Lanka's shares closed 0.18 percent lower with index heavy John Keells Holdings losing ground despite net foreign buying, brokers said.

The Colombo benchmark All Share Price Index closed 12.39 points lower at 6,783.98, down 0.18 percent. The S&P SL20 closed 14.01 points lower at 3,775.14, down 0.37 percent.

Turnover was 1.03 billion rupees, down from 1.42 billion rupees a day earlier with 113 stocks closed positive against 89 negative.

National Development Bank closed 2.60 rupees higher at 211.80 rupees with market transactions of 64.89 million rupees contributing 6 percent of the turnover.

Laugfs Gas closed 1.00 rupee higher at 34.90 rupees with an off-market transaction of 35.00 million rupees changing hands at 35.00 rupees per share contributing 3 percent of the daily turnover.

The aggregate value of all off-the-floor deals represented 7 percent of the turnover.

Guardian Capital Partners closed 4.80 rupees higher at 39.00 rupees and Renuka Shaw Wallace closed 30 cents higher at 18.10 rupees, attracting most number of trades during the day.

Foreign investors bought 303.72 million rupees worth shares while selling 60.94 million rupees worth shares.

John Keells Holdings closed 4.60 rupees lower at 239.90 rupees, contributing most to the index drop.

JKH’s W0022 warrants closed 10 cents lower at 64.90 rupees and its W0023 warrants closed 60 cents lower at 72.90 rupees.

Dialog Axiata closed 10 cents lower at 10.90 rupees and Sri Lanka Telecom closed 40 cents lower at 56.00 rupees.

Lion Brewery Ceylon closed 15.90 rupees lower at 663.10 rupees and Ceylon Cold Stores closed 7.50 rupees higher at 185.20 rupees.