Dialog to suffer Rs.6.3bn

Sri Lanka’s top telecommunication services provider, Dialog Axiata Plc is to take a triple-blow to their bottom line in comparison to four other telecom operators as a result of the interim Budget proposals. According to analysts at Bartleet Religare Securities (BRS), the firm is estimated to take a total hit of a massive approximately Rs.6.3 billion for this year. BRS said that however the Rs.6.3 billion estimate includes the onetime 25% taxation of their FY 2013/14 bottom line of Rs.5.2 billion.

The proposals affecting Dialog Axiata Plc are the imposition of a one off levy of Rs.1 billion on companies engaged in commercial operations of the Direct-to-Home via satellite operators having more than 50,000 subscribers in Sri Lanka and generating Rs.2 billion, Impose a one off levy of Rs.250 million on all licensed mobile telephone operators in Sri Lanka generating Rs.1,250 million and the decision by the government to desist mobile facility operators from passing the tax of 25% payable on reload to customers “The telecom sector, with margins already suffering from harsh competition, took severe blows in the interim budget. Out of the three taxes, the more important one will be the recurring absorption of 25% of taxes on pre-paid reloads. The recurring element of this would only be the 25% tax absorption of reloads, which for 2014 we estimate to be about Rs.3.75 billion for the industry. In estimating Dilaog’s impact, we assumed a Rs.500 drop per user per month on DIAL’s current 8.3 million pre-paid subscriber base,” BRS Head
of Research, Nikita Tissera said.

He noted that with the existing rules, the only way forward for telecommunication operators to survive as a going concern in the long run would now be to seriously consider consolidation among the five operators in the industry.
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CIFL depositors look to new Govt. for relief

By Quintus Perera

Depositors of the failed Central Investment and Finance Ltd (CIFL) who say they didn’t get proper direction from the Central Bank are now taking their case to the present government for redress.

According to Wijeya Gunawardena, President, CIFLDA – the association representing the interest of depositors, the members who are mostly senior citizens are in serious trouble due to their inability to meet their medical bills. These depositors depended on the interest they received on their deposits from CIFL to pay medical bills.

Mr. Gunawardena told the Business Times that they have submitted the pertinent documents to President Maithripala Sirisena and are hoping to meet him. In the meantime, they have met Thilak Ranaviraja, Advisor to the President on Non-Banking Financial Intuitions and he has asked CIFLDA to meet him after two weeks.

CIFLDA also had the opportunity to meet Dr Harsha De Silva, Deputy Minister of Policy Planning and Economic Development and the latter has assured them that a committee would be appointed to look into the matters of all the failed financial institutions and ensure speedy solutions.
Mr. Gunawardena said that they would wait for about one month and if they do not get some tangible relief, they would commence their agitation campaign.
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SEC – bringing sanity into the market

By Duruthu Edirimuni Chandrasekera

Sanity is slowly being restored at the 28th and 29th floors in the East Tower of the World Trade Centre.

The Securities and Exchange Commission (SEC) situated on these floors with new Chairman Thilak Karunaratne in the hot seat is regaining its lost integrity, according to those close to the regulatory authority.

A new Commission together with a new Director General is likely to be appointed this week. Mr. Karunaratne is to call up a commission meeting in a few days time, informed sources say. A new Director General has also been zeroed in on according to them.

Mr. Karunaratne has held discussions with the departments individually last week. SEC sources said that he wasn’t in favour of the roadshows and investment promotion efforts by the SEC during the past.

“He probably won’t continue with them as there’s been a colossal amount of cash spent on them by the SEC,” a source told the Business Times. Next up was the roadshow to Australia – probably next month, which was to be targeted at the Diaspora. Meanwhile the Colombo share market was positive on Friday with analysts saying that high valued shares were the order of the day.

The core All Share gained by 1.61 per cent to close at 7,160.84 while the S&P SL index ended up by 2.52 per cent at 3,950.94 points on Rs. 2 billion in turnover. Investors reacted adversely to the ‘super gain tax’ of 25 per cent on companies or individuals who earned over 2 billion rupees profits with the market sliding but recovering on Thursday and Friday.

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Textured Jersey third quarter profits up

Textured Jersey Lanka PLC (TJL) reported a net profit of Rs. 376 million for the quarter ended December 31, 2014 (3Q FY2014-15), a significant increase of 25% compared to the corresponding period of last year.

The company's strong cash position has allowed TJL to maintain its trend of generous dividend pay-outs with Rs. .50 per share being declared as an interim dividend for FY2014-15.

According to TJL Chairman, Bill Lam, a combination of increased margins and strong revenue growth enabled TJL to post this impressive result this quarter.

Lam said that with demand from its main customers back on track, TJL recorded strong revenue growth of 12% year-on-year for 3Q FY2014-15 and reported Rs. 3.8 billion in sales.

The better demand conditions also enabled TJL to improve its product mix and achieve higher levels of production efficiencies through optimal capacity use and planning.

This in turn allowed the company to expand its gross profit margins to 12.8% from 10.6% last year, causing gross profits to rise 34% amounting to Rs. 481 million for 3Q, FY2014-15.

The strong performance at gross profit level also enabled TJL to post an operating profit of approximately Rs. 354 million and record 34% year-on-year growth at the operating profit level as well.

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