LOLC announces record-breaking production at Hingurana Sugar Factory

The revitalised Hingurana Sugar Factory managed under Gal Oya Plantations Ltd., a subsidiary of the LOLC Group, has recorded the highest-ever sugar production of 19,960 metric tons for the year 2014/15 through successful sugar cane cultivation spanning 3,440 ha of land.

This record-breaking production has been achieved after 38 years and is by far the largest sugar production output compared with other local producers in 2014. This is a significant achievement for the factory considering its tumultuous past.

“The Giant of Asia”
The Hingurana sugar manufacturing factory located in the Galoya valley was first built and opened in the 1960s. Gifted by the Czechoslovakian Government, the factory was fondly known as “The Giant of Asia” and was one of the largest sugar factories to be built using modern machinery in the region.

During the intervening years, it functioned as a government and semi government body providing direct employment to over 1,000 employees and livelihoods to over 4,000 cane farmers, whilst generating direct and indirect employment and revenue streams to over 20,000 people in general, until it was privatised in the 1980s.

During this time, other sugar producing factories located in Sevanagala, Pelwatte and Kantale also had successful operations, steering Sri Lanka towards becoming a self-sufficient nation in sugar production and sugar cane cultivation.

Re-establishing operations
The Hingurana factory functioned well into 1993, until it was forced to cease operations due to poor management, labour and union issues. The Sri Lankan Government at the time took over the property under its wings until an investor was found to re-establish operations. 

As a result, in 2009, restructuring of the once abandoned Hingurana Sugar Factory was begun subsequent to a joint venture between the Government of Sri Lanka and a private sector consortium led by Brown & Company PLC and LOLC.

This venture marked a milestone in history as the first public-private partnership in the country. According to this partnership, 51% of the ownership of the property was retained by the Government while 49% owned by the Browns Group together with LOLC.

The revitalised sugar factory commenced operations under the Management and Board of Directors of the new managing company, Gal Oya Plantations Ltd., which was formed in 2009. The factory, after initial renovations, commenced operations on 16 July 2012, for the first time after 15 years.

At present, the operations of the Hingurana factory are overseen by Gal Oya Plantations Chief Executive Officer Gamini Ratnayake and Chief Operating Officer Danesh Abeyrathne. Under this new management, steps have been taken towards restoring the operations of the factory from the bottom up. They reappointed skilled workers who were previously employed by the factory as they possessed vast experience and seasoned knowledge about cultivation, existing machinery, etc.

Uphill battle
Ratnayake said: “Once the Gal Oya Plantations was formed, it was an uphill battle to reinstate the Hingurana Sugar Factory to its former glory. By the time we restored operations, many of the employees and farmers who had previously engaged in sugar cultivation and production had abandoned hope due to various issues they had experienced in the past. 

Therefore, initially, great efforts and investments were made towards creating awareness among them by way of door-to-door campaigns, group discussions, meetings etc to restore their faith and confidence once more.”

Research division
In addition, the company set up a separate research division, the Agronomy Department, in 2010 to oversee and improve the production of sugar cane seeds and to conduct research on various aspects of sugar cane cultivation.

This division has been successful in multiplying eight SRI bred varieties including the popular commercial varieties in Hingurana, and maintains over 134 SRI sugarcane clones as future planting material sources as well as for trial programs.

In addition, the Agronomy Department conducts extension programs and provides regular awareness on sustainable agronomy practices to farmers to yield high, disease-free crops.

Major achievements
Illustrating major achievements to date, Ratnayake said: “By 2013/14, we have been extremely successful in cultivating more than 3,800 ha of land which is 85% of the total cultivable extent. We hope to cultivate the remaining extent of land by next year.”

According to him, new sugar cane cultivation has increased by 10 folds since 2010/11 which had only occupied 1,562 ha of land. By 2013/14, the total cultivated area had been increased by 13-fold spanning 3,440 ha of land. As a direct result of this revitalisation program, 3,718 farmers are currently engaged in sugar cane cultivation which is 82% of the total number of farmers required. The company hopes to increase this number up to 100% by next year.

Ratnayaka added: “Our objective is to uplift the income and socioeconomic standard of the farmers and the community as a whole. We have also aimed at developing domestic production of sugar and contribute towards uplifting the national economy by helping to retain outflow of foreign currency for sugar imports.”

Sugar production and demand
According to statistics made available in the Agriculture Symposium 2014, the annual sugar requirement of Sri Lanka is 600,000MT. However, the country produces only 9% of this total requirement whilst the rest is imported. In 2012 alone Sri Lanka has spent Rs. 45 b on sugar imports.

With the Government planning to increase domestic production by 40% by 2020, and with four existing sugar factories identified to be upgraded to meet this demand, the Management and Board of Directors of Gal Oya Plantations are confident of the future output of the Hingurana sugar factory, which has already demonstrated notable progress.

Third successful year
Abeyrathne said: “We are celebrating the third successful year of sugar production after commencing operations in 2012. 

Within a short period, we were able to record the highest production of sugar, the highest sugar recovery percentage from sugarcane cultivation and the highest percentage of cane crushing in Hingurana since its launch in 1960. In addition, we became the highest sugar producer in Sri Lanka for the year 2014. We expect higher output records in the near future. We have also been able to elevate our sugar cane cultivation and sugar production standards to reach global industry levels.”

As at 30 September, Gal Oya Plantations has invested Rs. 3.2 b towards the resuscitation of the Hingurana Sugar Factory. The year’s turnover has risen to Rs. 1.8 b from the previous Rs. 938 m in 2013/14. The company further hopes to invest Rs. 2.6 b towards the completion of the distillery and power generation projects currently in the pipeline.

An agreement has been already drawn for a new 21.5 KLPD distillery which is expected to commence operations in October 2015 and a power generation project to commence in May 2015.

In addition, the company already possesses capacity to produce 2MW of electricity for the factory’s usage and has a separate water treatment plant with capacity to generate up to 250,000 litres per hour. The water generated is used for factory operations while the excess purified water sold to the national water supply and drainage board.

Creating employment
Abeyrathne said that Gal Oya Plantations had been able to successfully create more than 20,000 direct and indirect employments, whilst extending employment opportunities to areas such as Ampara and Siyambalanduwa.

He added: “In addition to employment generation, the re-opening of the Hingurana Sugar Factory has uplifted livelihoods in surrounding communities and generated new revenue streams. We have witnessed development seeping into the surrounding areas during the past few years, especially in infrastructure development. Development efforts of roadways and canals have helped the communities immensely. Inner roadways have been upgraded for easy access and transportation, while canals have been renovated with the assistance of the Department of Irrigation and Drainage for irrigational purposes.”

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Arpico Insurance eyes more growth via IPO

By Senuri de Silva

Arpico Insurance has launched its initial public offering (IPO), with shares being available for subscription from 11 December 2014.

A total of 6.6 million shares will be issued, with Rs. 79.5 million to be raised upon full subscription.

The decision behind the IPO is threefold; firstly to fulfil a regulatory requirement of the IBSL, secondly to fulfil a requirement of the risk-based capital regime, and finally to fund an expansion plan of the company.

Of the funds raised, Rs. 31 million will be used for the expansion plan to open 12 new branches by the end of 2015 and widen its reach.

Richard Pieris Director Professor Lakshman R. Watawala spoke of the benefit of the IPO to the public saying, “While engaging in business we also want to ensure that a part of this success is also enjoyed by the public of this country.”

He also described how the company has not yet reached its full potential, saying “Arpico Insurance is still in its infancy. That’s why we see that there is a great future for this company.”

According to him, a large part of the untapped market for insurance remains in the rural and urban areas, which have not been focused on by other insurance companies. “This country is hardly being utilised in the Life insurance sector. Even though there are much larger companies that have built up over a period of time, they still have not been able to penetrate the rural areas and the urban areas so we will be looking at these areas.”

In its third year of operation, the organisation is said to be showing tremendous results in the insurance industry of Sri Lanka.

“Arpico Insurance started in 2012 with a new value proposition – insurance for the living. 

The company was able to set new standards in insurance with a record-breaking GWP of Rs. 100 million in the first year of operation. In the second year of operation the company made a GWP of Rs. 200 million and is targeting to surpass Rs. 340 million this year,” said Arpico Insurance Director Viville Perera.

Describing Arpico Insurance’s rapid growth, Professor Watawala said: “As a new company we have tremendous growth, a 300% growth from the first year to the third year. In the fourth, fifth and sixth year we will definitely have immense growth taking place in this company and there after we will be able to give the benefits that we derive from this company to our shareholders.”

Speaking of the valuation of the share, he said the shares being sold for Rs. 12 had in fact been valued at Rs. 16 per share. “The expert valuers valued the share at Rs. 16 but we are giving a bargain to our new customers.”

Arpico Ataraxia Vice President Tharanga Gamage spoke of future plans for the company, which includes reaching Rs. 1 billion GWP by 2017 and high retention rates by 2018. 

“Arpico Insurance hopes to earn profits in 2015. It is already on its way to achieving profits in 2015 in its third year of operation. In addition it hopes to hit a GWP of Rs. 1 billion in 2017 and have Rs. 1 billion in the Life fund by 2018. It also hopes to reach retention targets of 65% for the second year and 75% for the first year by 2018. Currently retention targets are on par with industry standards of 40-50%. It also hopes to increase the branch network and penetrate more into the market.”
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Sri Lanka encourages people in North to invest in CSE to raise capital for businesses

Dec 10, 2014 (LBO) – Sri Lanka’s Securities and Exchange Commission’s chief said that, stock market is an alternative financial tool to raise capital for business activities and therefore Northern Province should take advantage of it and derive the benefits of capital market investments.

Chairman of the SEC, Nalaka Godahewa, was quoted saying that at a investor forum held in Jaffna organized by Sri Lanka’s Securities and Exchange Commission (SEC) in collaboration with the Colombo Stock Exchange (CSE) to educate the general public on the investment opportunities available in the Capital Market.

Godahewa said that the capital market could transform savings to investment and thereby improve livelihoods.

CSE had a growth of nearly 300 percent in the market during the last five years and 27 percent growth during the current year.

According to Godahewa, the low interest rate regime will not only boost the performance of companies but also stimulate the stock market, with more investors preferring to invest in the market.

Therefore he urged investors in the Northern Province to take advantage of this scenario and derive the benefits of capital market investments.

More than 250 participants including professionals, academics and the business community participated at the forum.

Sri Lankan stocks up on buying in blue-chips

Dec 10 (Reuters) - Sri Lankan stocks rose to a one-week high on Wednesday, led by blue-chips such as John Keells Holdings Plc, though investors remained cautious ahead of the presidential poll next month.

The main stock index rose 0.5 percent, or 36.34 points, to close at 7,254.28, its highest close since Dec. 3.

Foreign investors were net sellers for the second straight session on Wednesday, offloading shares worth a net 166.7 million rupees ($1.3 million). But they have net bought 21.65 billion rupees worth of stock this year, exchange data showed.

Turnover was 1.06 billion rupees on Wednesday, according to the data, lese than this year's daily average of 1.43 billion rupees.

"Market is up on blue-chips and is positive but most of the investors are a little cautious and awaiting to see the direction with the elections," said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts said many investors were staying away ahead of the elections and the festive season.

Conglomerate John Keells Holdings Plc rose 1.52 percent, while Hemas Holdings Plc gained 5.63 percent.

Analysts expect volatility to continue and the overall index to be flat until the elections on Jan. 8, with speculation over more defections and likely violence ahead of the polls also weighing on sentiment.

Eleven loyalists from President Mahinda Rajapaksa's United People's Freedom Alliance, including former health minister Mithripala Sirisena, have defected since Rajapaksa announced snap elections last month. Sirisena resigned to contest against Rajapaksa as the consensus candidate of a united opposition.

Nineteen candidates, including Rajapaksa and Sirisena, have submitted their nominations for the polls. 

($1 = 131.0500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal; Editing by Prateek Chatterjee)

Abans posts Rs 18.87 b revenue in first half

Abans, has posted a strong second quarter showing by its electrical and retail companies in the year showing a growth of 16% over the previous year.

The growth amount includes its Central Air Conditioning Company and its Transport company. Growth was significant, in its Transport Section by 96% its Air Conditioning Products by 14.64% Consumer Electronics 12.75%, IT Products 24.23% Sanitary Ware by 121% and Communication Products by 23.9%.

The company continues to make big advances in consolidating its position in IT Products representing Apple, HP, Dell, Lenovo, Toshiba, LG and Panasonic.

Hero motorcycles which was started two years ago, enjoys the No. 2 position for its products in Sri Lanka. Abans Central Air Conditioning Division representing Mitsubishi, Trane and LG continues to have the largest turnover of any Air Conditioning Company in Sri Lanka.

Abans has heavily spent on refurbishing and renovating its showroom network, enhanced its SCM POS Systems and continues to lead the market as the largest Retailer of IT and Communication Products in Sri Lanka. Abans Finance too increased its profitability by 33% in 2014.

The Rs.18.87 billion revenue for the first half of 2014/15 financial year excludes, its Restaurant, Security, Cleaning and affiliated businesses.
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NDB Capital posts Rs 261 m profit in nine months

NDB Capital Holdings has continued its growth momentum in the first nine months of 2014 helped by efficient investment management strategies amidst a buoyant stock market and declining interest rates.

The company recorded an attractive profit of Rs. 261 million for 2014 Q3 up from Rs. 125 million a year ago, a 108% YOY growth. The consolidated quarterly profit for the Group was equally impressive with a growth of 84%, from Rs. 158 million in 2013 Q3 to Rs. 292 million in 2014 Q3.

The first 9 months' performance of the Group also recorded a similar growth trend as the revenue increased by 25% from Rs. 879 million (adjusted) to Rs. 1,102 million, whereas a 40% growth was recorded in profits to Rs. 746 million in 2014 compared to the adjusted profit of Rs. 532 million in 2013.

The reason for the adjustment is due to NCAP Group recording an extraordinary profit during the 2013Q1 owing to income from investing approximately Rs. 6.7 Billion in cash it received via the divestment of both direct and indirect stakes held in Aviva NDB Insurance PLC. However, this cash was returned to the shareholders towards the end of 2013Q1 and was not available for the Company for investments beyond that period. The outstanding performance in the first 9 months of 2014 was mainly fueled by efficient asset allocation and successful investment strategies. The Group annualized ROE also increased to 15.21% in the first 9 months of 2014 from 10.76% in 2013.NCAP is a subsidiary of National Development Bank PLC.
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Insurance co assets top Rs 39 b in 1st half

The insurance industry continued its growth during the first half 2014 with the Total Assets of insurance companies increasing to Rs. 390,918 million in the first half (up to June 30, 2014) when compared to Rs. 345,942 million recorded at June 30,2013, reflecting a growth of 13.0%.

The Insurance Board of Sri Lanka said the assets of Long Term Insurance Business amounted to Rs. 237,706 million (first half 2013: Rs. 210,475 million) while the assets of General Insurance Gross Written Premium (GWP) grew by 3.07% and total assets increased by 13.0% when compared to the first half of 2013.

The GWP for Long Term Insurance and General Insurance Businesses for the six months up to June 30,2014 was Rs. 49,216 million compared to the first six months of 2013 amounting to Rs. 47,749 million, which reflected a growth of 3.07%.

The GWP of General Insurance Business amounted to Rs. 28,761 million (first half 2013: Rs. 28,189 million) while the GWP of Long Term Insurance Business amounted to Rs. 20,455 million (first half 2013: Rs. 19,561 million) during the first half of 2014.

Thus, General Insurance Business and Long Term Insurance Business witnessed a GWP growth of 2.03% and 4.57% respectively when compared to the corresponding period of year 2013. Business amounted to Rs. 153,212 million (first half 2013: Rs. 135,467 million) indicating a growth rate of 12.94% and 13.10% respectively at the end of first six months of 2014.

At the end of first six months of 2014, the investment in Government Securities amounted to Rs. 106,192 million representing 44.67% (1st Half 2013: Rs. 97,331; 46.24%) of the total assets of Long Term Insurance Business, while such investment of the total assets of General Insurance Business amounted to Rs. 28,491 million representing 18.60% (1st Half of 2013: Rs. 26,994; 19.93%).

Accordingly, the total investment of assets of both Technical Reserve of General Insurance Business and Long Term Insurance Fund of the Life Insurance Business amounted to Rs. 134,683 million representing 34.45% (first half of 2013: Rs. 124,326; 35.94%) as at June 30, 2014.

The insurance industry regulated and supervised by the Insurance Board of Sri Lanka (Board) is empowered to investigate into and resolve disputes between insurers and claimants relating to the settlement of claims which are referred to the Board by claimants.

Out of twenty two (22) Insurance Companies (Insurers) registered with the Board as at June 30, 2014, twelve (12) are composite companies (dealing in both General and Long Term Insurance Businesses), six are registered to carry on General Insurance Business and three companies are registered to carry on only Long Term (Life) Insurance Business. Ceylinco Takaful Limited is prohibited from engaging in insurance business since 5th August 2009. AIG Insurance Limited has informed the Board that it has decided to withdraw its operations from the Sri Lankan market and is on a runoff plan currently.

Fifty seven (57) insurance brokering companies, registered with the Board, currently engage in insurance brokering business concentrating mainly on General Insurance Business. The commission income generated through General Insurance Business amounted to Rs. 788 million (1st Half 2013: Rs. 752 million) while the commission income generated through Long Term Insurance Business amounted to Rs. 08 million (1st Half 2013: Rs. 10 million).

The total commission income from both General Insurance Business and Long Term Insurance Business amounted to Rs. 796 million during the 1st half of 2014, compared to Rs. 762 million during the same period in 2013. Thus, the total commission income generated through insurance brokering business has witnessed a growth of 4.46%.
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Touchwood liquidator moves to void land sales

By J. Kurukulasuriya

Ceylon Finance Today: The liquidator of Touchwood Investments, Chartered Accountant G.K. Sudath Kumar has made a filing with the Colombo Stock Exchange informing the CSE of the progress of the liquidation and stating that he intends to set aside a sale of land by the company.

The liquidator has informed the court that the company had 'sold' 62 acres of land belonging to the company, and the transaction was voidable at the option of the liquidator, under section 373(2) a(2) of the Companies Act, and the liquidator intends to make an application to set aside this transfer of land.

Under this section, the liquidator has a 'window' period of two years within which he can act. Touchwood Investments was founded by one Roscoe Maloney, an Australian, and his Sri Lankan born wife Swarna.

Ceylon FT reported in September, that 'the Touchwood Investments PLC fraud has gone international with Sri Lankan investors duped here, in Thailand and as far afield as Hong Kong".

Sudath Kumar, the liquidator was also quoted as saying that "One of the other mysteries of the company's statements is that while the assets of the company, according to the annual report for the year ended 31 March 2013, states that it is Rs 8,095 million, in the Statement of Accounts given to the Liquidator showed Rs 694 million, and we are looking at how this discrepancy occurred".

On the website of the company, Touchwood Investments PLC's former Chairman Lanka Kiwulegedara, is described as "one of Sri Lanka's most eminent corporate personalities", although he has not held directorships in any major listed conglomerate on the Colombo Stock Exchange.

Australians Roscoe Maloney and Swarna Maloney have left the country.
www.ceylontoday.lk