Sri Lankan stocks gain for second day on banking share

Oct 24 (Reuters) - Sri Lankan stocks gained on Friday for the second straight session as investors bought banking shares, but the turnover was moderate as the market awaited cues from 2015 budget announcement.

Sri Lanka in 2015 will trim its value added tax and reduce its budget deficit to the lowest level since 1977, President Mahinda Rajapaksa told parliament on Friday while presenting the 2015 budget.

Sri Lanka's main stock index rose 0.33 percent, or 23.97 points, to 7,213.48, further moving away from its lowest since Sept. 9 hit on Tuesday.

"Foreign activity picked up from yesterday with buying interest in large cap counters," said Dimantha Mathew, manager, research at First Capital Equities (Pvt) Ltd.

The day's turnover was 870.7 million rupees ($6.7 million), less than this year's daily average of 1.36 billion rupees.

Foreign investors bought a net 260.7 million rupees worth of shares on Thursday, extending the year-to-date net foreign inflows to 10.56 billion rupees, exchange data showed.

The gains were led by Carsons Cumberbatch Plc, which rose 1.65 percent to 443.90 rupees, while the Commercial Leasing & Finance Plc added 2.17 percent to 4.7 rupees.

Nestle Lanka Plc rose 0.98 percent to 2,099 rupees.

Stockbrokers said trading in local shares may be volatile due to the revised poll schedule and a possible bottoming out of interest rates. 

($1 = 130.8000 Sri Lankan rupee) 

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

Central Bank to end foreign exchange controls

The Central Bank of Sri Lanka (CBSL) will be completely removing its capital account foreign exchange controls for locals within the next 2-3 years to realize the government’s goal for t he country as a global business hub.“Global business means there can be no foreign exchange controls. People will deal with any currency. Next 2-3 years our country will also be a global business centre. There will not be exchange controls and we will be operating in the global economy,” CBSL Deputy Governor P. Samarasiri said at the launch of the Lanka Money Transfer service.

He said that current account transfers for any amount have been fully liberalized, while in capital account transfers, foreigners are free to invest and take out their money with no restriction, and almost liberalized capital account transfers for locals investing abroad.“If we don’t remove capacity controls on residents, of course, they will undertake the same investment approach through other channels because of the IT we have these days,” he said of informal, black market transactions.According to Samarasiri, CBSL will be removing certain documentation requirements in the immediate future as well.“In the next few months, we will take out some more reportings,” he noted.Samarasiri also called for further stimulating of capital account activities.“I don’t know why people are fearful of capital transactions, because capital transfer is the most important economic activity in the country,” he stated.Meanwhile he said that professionals such as lawyers, consultants, and even bankers still contact CBSL’s Exchange Control Department for permission on the liberalized current account transactions, and we asked them to use their own discretion and not waste the CBSL’s time.He said the only problem that could be of concern is the source of funds.“The source of money, how it comes in and goes out; KYC (know your customer) is a different subject,” he expressed.Foreign exchange controls were established during World War II to protect economies, and most Western countries removed such restrictions following its conclusion.

“Countries all over the world continued with exchange controls lovingly for whatever reason. That kept our countries out of global business. That is one of the reasons for our countries to stay low income,” Samarasiri said.The country followed provisions of the 1949 Monetary Law Act and the 1953 Exchange Control Act until 1977, when significant relaxation occurred.After accepting the IMF articles of agreement in 1994, current account transfers were almost fully liberalized.Certain relaxations in capital account transfers were made in 2010, but the greatest progress was made in June 2013 when remaining current account capacities for migrants and travellers were greatly increased, along with the lifting of most capital account restrictions for nonresidents and foreigners.
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Kanrich Finance raises Rs. 750 m from capital market to expand micro finance operations

Kanrich Finance raised Rs. 750 million to fund its micro finance operations through an issue of asset receivable backed trust certificates.

Kanrich’s micro finance portfolio of over Rs. 5 billion generates substantial amount of cash receivables on a weekly basis, enabling the company to issue asset receivable backed trust certificates.

Director/CEO Shiran Weerasinghe stated that securitising a part of the portfolio gave the company a path to broad base its funding sources and added that the objective of the transaction is to further expand the operations whilst effectively managing the portfolio balance.

First Capital Ltd. and the Bank of Ceylon acted as the Manager of the facility and the Trustee respectively to the transaction.

Weerasinghe added: “We appreciate the confidence placed on us by the managers, trustees and the pool of investors and trust that we will be able to raise further funds from the market based on our recent performances and keep expanding the company.”

Kanrich’s monthly lending that was under Rs. 50 million at the beginning of 2012 and increased to Rs. 1 billion a month within three years, which resulted in its interest income increasing to Rs. 1,296 million in FY 2013/14 from Rs. 175 million in FY2011/12. The total income increased from Rs. 204 million in FY2011/12 to Rs. 1,441 million by FY 2013/14 recording a growth of 604% in two years.
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Renuka Shaw Wallace rebrands as Renuka Foods

Renuka Shaw Wallace Plc, a subsidiary of diversified conglomerate Renuka Holdings Plc, rebranded itself as Renuka Foods Plc to better reflect the food and beverage category it operates in locally and internationally.

Renuka Foods Plc is the parent company for the group’s food and beverage entities, namely Renuka Agri Foods Plc, Renuka Organics Ltd., Renuka Teas Ceylon Ltd., Richlife Dairies Ltd., Shaw Wallace Ceylon Ltd. and Kandy Plantations Ltd.

“Our new name focuses and conveys the complete spectrum of the businesses we are in and are known for. Renuka Foods brings together a portfolio of food and beverage companies which are respective leaders in their segments, especially coconut, dairy, fish and snacks.

“Our progressive and sustained path coupled with aggressive expansion of production capacity and product portfolio, unlocking synergies and further controlling the value chain over the last two years has shown dividends in our overall performance both locally and internationally,” Renuka Foods Executive Director Shamindra Rajiyah said.

The corporate rebranding strategy brings together the company’s many household brands in Sri Lanka such as Captain Jack Mackerel, Captain Soya Meat, Renuka Coconut products, Richlife Dairy products, Plaza Mackerel and Mr. Pop snacks.

It also aims to enhance the overall identity for its foreign clientele which includes reputed distributors, supermarket chains and international brand owners, as they see the organisation as a one-stop shop for a range of quality, locally value added products especially in the coconut category.

Renuka Foods operates seven state-of-the-art factories and warehouses, eight collection and processing centres and two plantations, all catering towards servicing the wants and needs of clients spread across 61 countries worldwide and over 65,000 outlets throughout Sri Lanka.

Furthermore, Renuka Foods has an out-grower network of 7,000 farmer families and contributes Rs 1.4 billion to the rural economy annually. The organisation also directly employs 1,227 people.

Speaking further Rajiyah said: “With our current product portfolio and production capabilities we certainly do have the right platform to service the needs and wants of our customers. The plans for the next level of growth of Renuka Foods will focus on consolidating direction and taking all its home grown brands to the global marketplace, while adding value to the country’s agriculture and marine resources.
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