Sri Lanka’s Nawaloka Hospital Enters Elder Care Service Business

June 4, 2015 (LBO) – Sri Lanka’s Nawaloka Medical Centre (Pvt) Ltd, a subsidiary of Nawaloka Hospital signed a memorandum of understanding with Harmony and Fusion International Pvt Ltd to put up elder care service business.

The joint venture will carry out the service under Nawaloka Guardina International (Pvt) Ltd, in which Nawaloka Medical Centre (Pvt) Ltd take a 60 percent stake in, through capitalizing 78 million rupees of investment.

In a filing with the stock exchange, Nawaloka said that the initial share capital of this joint venture company would be 130.37 million rupees.

The balance capital will be invested by the joint venture partner.

Sri Lanka's ETI Finance plans to raise Rs2.8bn from property sales

COLOMBO (EconomyNext) - Sri Lanka's ETI Finance Limited, an unlisted finance company, will get a 2.8 billion rupees in cash where its land holdings will be sold to a related company, which is raising debt.

ETI Finance no longer has a public rating. According to documents filed on the Colombo Stock Exchange it is now controlled by EAP Holdings.

A number of EAP Edirisinghe group companies are now directly controlled by ETI Finance Limited including Swarnamahal Jewellers Ltd (100 percent), Hotel Sapphire (Pvt) Ltd (100 percent), Hotel Concord (Pvt) Ltd (90 percent) and Swarnamahal Financial Services Plc (90 percent) which is listed.

Swarnamahal Jewellers Limited in turn owns 81 percent of EAP Films and Theatres with ETI Finance directly holding the balance 19 percent. EAP Films owns 100 percent of EAP Broadcasting Company, which runs television stations.

EAP Broadcasting owns Colombo Communications, which runs radio stations and Galalzy Landmarks Limited, a newly set up property company.

EAP Broadcasting plans to raise 3.0 billion rupees through 4 and 5 year pulbic listed debt paying 10.50 percent (annual coupon) and 11.00 percent (quarterly), which will be invested in Galaxy Landmark as equity (one billion rupees) and an intercompany loan (2.0 billion).

The loan which will carry a 12.0 percent interest rate will be settled with interest after the sale of the building at the end of 7-years.

Galaxy will pay 2,844 million rupees for a series of properties owned by ETI Finance effectively getting liquidity.

Galaxy will in turn pay 925 million rupees for a 109 perch Galle Road property housing Swarnamahal Jewellers and broadcasting complex, 200 million for a property where Impala Cinema is located, 600 million for a property in Wellawatte where Roxy Cinema is located.

It will also pay 115 million rupees for a Borella property where EAP Restaurant is located and 290 million rupees for Hotel Concord property in Dehiwala.

In addition Galaxy will also buy Cinexpo Cinema property in Kurunegala for 250 million rupees and a Cotta Road, Borella property for 214 million rupees.

The deals with inject 2.8 billion rupees to ETI Finance.

EAP Group is now chaired by Mano Tittawella, who analysts say engineered the re-structure of People's Bank, which had negative net assets and non-performing loans, when he headed the Public Enterprise Reform Commission in the late 1990s.

Tittawella is also the Deputy Chairman of EAP Broadcasting Company.

Three Sri Lankan stockbroker firms lacked funds to settle creditors

COLOMBO (EconomyNext) – Sri Lanka’s stock exchange has reported that three broker companies did not maintain enough funds in their client bank accounts to settle creditors over the three-day settlement period.

“Three broker firms did not maintain adequate funds in their respective client bank accounts to settle the creditors over the T+3 balances for several months during the period,” the Colombo Stock Exchange revealed in its 2014 annual report.

It said two of the firms were in compliance with the CSE provisions relating to the adequacy of client funds by end-2014 and the remaining firm was in the process of taking “corrective actions” to comply with the rules.

The report also revealed enforcement actions carried out in relation to key violations of CSE stockbroker rules during 2014.

It said three broker firms were found to have failed to meet the minimum net capital requirement during the year but subsequently complied with the requirement within the time-frame set out in the stockbroker rules.

The report also said three stockbroker firms had been in violation of the single client credit limit of 15 percent of credit extendable during the year.

“Two firms have subsequently taken corrective actions to comply with the requirement,” the CSE said.

“The other firm has been unable to comply with the requirement as at 31st December 2014. The CSE continues to follow up with the firm on compliance.”

The CSE report also said one broker firm had been in violation of the credit extending limit of three times of adjusted net capital in 2014 but had complied with the requirement by year-end.

Sri Lanka's Hunas Hotel goes up market, loses customers

COLOMBO (EconomyNext) – Sri Lanka's Hunas Falls Hotels Plc, a hill country hotel, said it lost customers after going to the luxury end, but aggressive marketing is underway to draw upmarket travellers.

Managing Director L. T. Samarawickrama said the property was refurbished and has been recognized as a 'Small Luxury Resort', an international classification.

"This recognition itself is a major advantage towards the new strategies adopted to market this eco friendly green resort at the highest possible level in the future," he said.

However the new positioning had lost customers, with occupancy dropping.

In the March 2015 quarter revenues dropped 12 percent to 37.0 million rupees and cost of sales fell 11 percent to 9.0 million rupees, and gross profits also fell 13 percent to 28 million rupees. Net profits fell to 286,000 rupees from 8.6 million rupees.

In the year to March revenues were down 8 percent to 139.8 million rupees, and profits were down 85 percent to 3.1 million rupees.

"The performance in terms of profitability was somewhat disturbed due to the hotel’s transformation from “ordinary 3 star to small luxury” resulting in its rejection by the typical low end market segment that used to patronize the hotel in the past, decreasing the volume of occupation.

The aggressive sales and marketing team is now very much focused on the luxury segment of the business and the intention is to gradually convert this fauna and flora rich resort into a property that would be accepted by the niche market."

Sri Lanka has seen a resurgence in tourism after the end of a 30-year war in 2009. Now large number of small hotels have come up, offering pricing more compatible with East Asian nations, which are available through booking engines, analysts say.

Sri Lanka SEC stops Lanka Rating Agency from giving new ratings

COLOMBO (EconomyNext) – Sri Lanka's Securities and Exchange Commission said it has stopped Lanka Rating Agency (LRA) from giving new ratings until it complies with regulatory requirements imposed by it.

LRA had been stopped from providing new ratings from March 25, 2015. "until the company complies with regulatory requirements imposed by the Commission," the SEC said.

"The Commission is statutorily vested with the objective of protecting the interest of investors and is empowered to do all such acts as may be incidental or conducive to attainment of the objects of the Commission," the regulator said.

LRA is one of three credit rating agencies operating in Sri Lanka along with Fitch and ICRA Lanka.

SEC said it was asked to cease giving new ratings from March 25, 2015 following a decision made at a commission meeting on March 10, 2015.

Sri Lankan shares fall for 4th session on political woes, foreign selling

Sri Lankan shares fell for a fourth straight session on Thursday and closed at their lowest in six weeks, led by conglomerate John Keells Holdings Plc as concerns over political uncertainty before parliament elections dented sentiment.

Continued foreign selling also dragged the index lower.

The main stock index fell 0.4 percent to 7,120.91, its lowest finish since April 23, erasing 12.08 billion rupees ($90.22 million) worth of market capitalisation.

"Political uncertainty has shaken small-time investors", who account for the majority number of the transactions, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts said foreign investors were selling amid expectations of U.S. interest rate hike.

Foreign investors were net sellers of 52.5 million rupees worth of shares on Thursday, extending the net foreign outflow in the past seven sessions to 1.58 billion rupees. The bourse, however, has seen net inflows of 4.36 billion rupees in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain.

Turnover was 713.5 million rupees, well below this year's daily average of about 1.13 billion rupees.

Political uncertainty has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 3.2 percent since the rate cut.

Shares in conglomerate John Keells Holdings fell 1.34 percent, while Ceylon Tobacco Company Plc dropped 0.48 percent.

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reform bills are passed. But it has not fixed a date for the election.

Analysts say investors are hoping a stable government after the election coupled with strong economic measures would boost confidence. 

($1 = 133.9000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Subhranshu Sahu)

Archer Daniels Midland to close Sri Lanka Chemcel unit

COLOMBO (EconomyNext) – Agribusiness multinational Archer Daniels Midland plans to close its Sri Lankan specialty chemicals manufacturing unit Chemcel (Pvt) Ltd. in which Chemanex PLC has a stake, a stock exchange filing said.

“Archer Daniels Midland Europe BV, the main shareholder of Chemcel, has informed us that Chemcel will cease operations based on a number of considerations,” Chemanex said in a statement.

“We currently own 23.15 percent of Chemcel and it is reflected in our books at an investment value of 272 million rupees,” it said.

“Chemcel has substantial cash balances and it is currently estimated that upon a liquidation of the company Chemanex PLC would be able to realise its investment value.”

The Chemanex statement did not elaborate on the reason for Chemcel’s closure and senior Chemcel officials were not immediately available for comment.

Dipped Products second Sri Lanka factory in court over pollution allegations

COLOMBO (EconomyNext) - A second factory in Dipped Products Plc, a unit of Sri Lanka's Hayleys group is embroiled in a court battle over pollution allegations, it has been revealed.

Dipped Products Plc, in a note to accounts on its 2014 annual report said a court case was filed against Hanwella Rubber Products Ltd by police, but the order had been appealed.

"In this regard, the Avissawella High Court stayed the Magistrates Order on Hanwella Rubber Products Ltd, based on the Appeal and Revision Application made by the Company, enabling its factory to continue operations," the note said.

"The Board of Directors is confident that there will not be an adverse outcome in this regard."

There was no disclosure in the annual report on the details of the order which is now under appeal. It is also not clear whether the firm had made a disclosure to shareholders when the court order was originally issued or on the appeal.

A court order on May 30, 2015 had directed the Hanwella Rubber was to stop operations within 14 days, according to other reports.

Dipped Products was earlier forced to shift a factory from Rathupaswela, after residents blamed it for making the water acidic, though the firm had insisted that it was not to blame.

In what was described a 'joint letter by the Chairman and Managing Director' the Dipped Products annual report said their production facility at Hanwella commissioned a 'Reverse Osmosis Plant enabling the re-use of wastewater."

"Similar technologically advanced systems are in the process of implementation at all our manufacturing locations demonstrating our strong commitment to sustainability principles and carrying out our activities in a manner that the well-being of our people and environment is guaranteed."

Richard Pieris Group records PBT of Rs 2.5 8bn in 2014/15

The Richard Pieris Group ended it's performance in the financial year 2014/15 reporting a Group Revenue of Rs 37.8b with a Profit before Tax of Rs 2.58 bn.

The reported Profit for the year does not include any Gains of a capital nature. Sectoral performance Retail Sector: The Retail Sector of the Group comprises of Arpico Super centres and the network of Arpico outlets across the island.

As usual the sector was very active during the period under review and opened its newest large format retail store in Kottawa. The sector also began commercial operations in 4 Arpico Daily outlets during this period. The "Top Tips" campaign continued to maintain its popularity amongst customers. A very vibrant and novel marketing campaign titled "Powerplay" was carried out during the cricket world cup which resulted the winners travelling to Australia to witness the cricket world cup final at MCG.

Plastics and Distribution Sector
The Plastics and Distribution Sector had a very successful year reporting growths in terms of both revenue and profits when compared with the previous year. The sector continued to dominate the market place in water tanks with heavy media campaigns to support its initiatives. The hybrid mattress introduced to the market in the 3rd quarter continued to gain momentum and is perceived as an innovative brand.

Plantation Sector
The Plantation Sector of the Group faced many challenges during 2014/15 with adverse weather conditions and low prices.

The Richard Pieris Group possesses 3 of the largest plantation companies in the country with diverse crops which includes high grown, mid grown and low grown tea, rubber, oil palm, coconut, cinnamon, cardamom, rambutan and other crops contributing to more than 15% of the Group Turnover.

The Plantation Sector was adversely affected by low prices and production volumes. There was an increase in the price of Oil Palm during the year and there was an increase in the production volumes in tea, rubber and coconut during the 4th quarter of 2014/15 financial year.

Tyre Sector
The tyre sector of the Group had a remarkable year in its history reporting a business profit in excess of Rs.500Mn. This was achieved despite the fact of an overall decline in the re-treading business of tyres. Tyre sales of the brand "Nexen" continued to maintain its popularity and several new tyre sizes were introduced by the sector during the period under review.

Rubber Manufacturing (Exports) Sector
The exports sector of the Group continued its success story with another successful year. The sector continued to focus on many marketing activities and participated at international fairs and exhibitions. Continuous improvements were made on the reduction of wastage, energy and other overheads. The latex foam business of the sector commenced commercial operations of the world's first 100% Natural Latex Continuous Sheet Latex Plant during the 4th quarter.

Financial Services Sector
Though the Group is focused in its traditional businesses, diversification into financial services was successfully ventured over the past few years. At present Richard Pieris Group consists of its own life insurance, stock broking, fund management and a finance company.

Richard Pieris Finance Limited (RPFL) continued to expand its business base reaching a fixed deposit base of Rs.2Bn within 2 years of operations. It also carried away the Gold Award for Emerging Islamic Finance Entity of the year for 2015. Arpico Insurance Company celebrated its 3rd anniversary in January 2015 and after a successful IPO, the shares commenced trading during the same month.

The Group continues to focus on its core sectors whilst considering many opportunities for further expansions both locally and globally, a spokesman for the company said.

Richard Pieris & Co. PLC is a diversified business conglomerate with a rich history of 83 years. Its flagship brand "Arpico" is one of the most powerful local household brands in Sri Lanka for over 50 years, serving the community with a diverse range of products across many sectors such as manufacturing, plantations, financial services, exports, FMCG, construction, logistics & retail.

The retail sector led by its flagship brand "Arpico Supercenters" operates a growing network of outlets spread island-wide. Arpico Supercenters takes pride in pioneering the modern hyper market retailing in Sri Lanka. Today Arpico Supercenters & Arpico Daily's are one of the largest modern trade chains in the country.

A diverse melting pot of talent, comprising a workforce of over 35,000, Richard Pieris & Company PLC is one of the largest employment providers in the private sector in Sri Lanka.
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Commercial Bank adjudged among best in Asia by FinanceAsia

* Wins ‘Best Bank’ Country Award for 5th time in 7 years

The Commercial Bank of Ceylon has been adjudged the ‘Best Bank’ in Sri Lanka in 2015 by Hong Kong based ‘FinanceAsia’, one of the most eminent financial publications in the region.

This will be the fifth ‘FinanceAsia Country Award for Achievement’ presented to Commercial Bank in the seven years since the bank became the first entity in Sri Lanka to receive this prestigious accolade in 2009.

The full list of this year’s winners is to be published in the June issue of FinanceAsia.

“The FinanceAsia awards are decided principally on performance, and follow a stringent evaluation of key performance indicators,” Commercial Bank Managing Director/CEO Jegan Durairatnam said.

“In that context, this award is a tribute of the passion, commitment and hard work of the entire Commercial Bank team, and is an important endorsement of the bank’s strength and stability for all its customers and stakeholders.”

The FinanceAsia award is based on the respective banks’ financial performance and considers capital adequacy, liquidity and cost income ratios, pre and post-tax profits, provisions for possible losses, return on equity and network of branches, agents and correspondents. The bank’s total assets, loans and deposits portfolio, vision and long term strategy, as well as market position versus its nearest competitor are also evaluated by FinanceAsia for the award.

The Country Award for Sri Lanka ranks Commercial Bank alongside the banking giants in the region such as HSBC and DBS, which were adjudged the best in Hong Kong and Singapore respectively. Other winners of FinanceAsia’s Best Bank awards in 2015 include HDFC Bank – India, MCB – Pakistan, CTBC – Taiwan, Shinhan Financial – South Korea, ICBC – China, Kasikornbank – Thailand, Vietcombank – Vietnam, Bank Mandiri – Indonesia and Public Bank – Malaysia.

First published in 1996, FinanceAsia is Asia’s leading financial publishing company and the world’s foremost information source on the Asian financial markets. Published 11 times a year in Hong Kong, FinanceAsia provides readers with the latest financial trends, interviews, features and investigative reports. The company is owned by Haymarket Media Ltd, the largest privately-owned publishing group in the UK.

With assets in excess of Rs. 800 billion, Commercial Bank is the only Sri Lankan bank to be ranked among the Top 1000 banks of the world for four consecutive years and has the highest market capitalisation among Sri Lankan banks.

The bank operates a network of 242 branches and 610 ATMs in Sri Lanka and has won multiple awards as the country’s best bank over several years; been adjudged one of the country’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013 and 2014 and been rated the Most Respected Bank in Sri Lanka by LMD for the past 10 years.

Commercial Bank has been the second Most Respected Corporate entity in the country overall for the past four years, and been rated No. 1 in Sri Lanka for Honesty in 2013 and 2014 by LMD.
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EBC announces Rs. 3 b listed debenture issue

EAP Broadcasting Company Ltd. (EBC), a member of the EAP Group of Companies, yesterday announced that it intends to issue listed, rated redeemable debentures worth Rs. 3 billion. 

The debenture issue will open on 11 June with an initial issue of 15 million debentures and an additional 15 million thereafter, at the price of Rs. 100 per debenture.

Following the initial Rs. 1.5 billion which the company intends to raise, a further Rs. 1.5 billion will be raised at the company’s discretion, only in the event of an oversubscription of the initial issue.

EBC has received a rating of ‘BBB’ by Lanka Ratings Agency for the issue and a dedicated hotline will be set up to handle queries throughout the duration of the issue.

The main objective of the debenture issue is to raise funds for EBC to invest in and redevelop the valuable properties of the EAP Group. This will be achieved by setting up a fully-owned subsidiary named Galaxy Landmarks Ltd., which will focus on property development.

Galaxy Landmarks will develop these sites into modern entertainment complexes with retail spaces, food courts, restaurants, cinemas and entertainment facilities for the entire family. The first project will be the Galaxy Impala, a seven-storey entertainment and Cineplex, which will be constructed at the location of the old Impala Theatre in Rajagiriya.

The minimum subscription for the debenture issue is one hundred debentures (Rs. 10,000) and multiples of 100 thereafter.

Type A listed rated redeemable debentures will have a fixed interest rate of 10.50% (AER 10.50%), an annual payment period and the redemption/maturity period from the date of allotment will be 48 months.

Type B listed rated redeemable debentures will have a fixed interest rate of 11.00% (AER 11.46), a quarterly payment period and the redemption/maturity period from the date of allotment has been set at 60 months (5 years).

Commenting on the debenture issue, EAP Holdings Group Chairman/Managing Director and EBC Deputy Chairman Mano Tittawella stated: “This debenture issue will enable us to continue our momentum of growth as we strive to diversify our portfolio. The funds from the issue will enable us to invest in lands and property development initiatives which will add strength to our overall offering whilst simultaneously increasing the value of our asset base. We are committed to being a beacon of innovation and sustainable change, and this new expansion will enable us to further solidify our position as a trusted leader in the media and entertainment industry.”

EBC was established in July 1992 and owns and operates one of Sri Lanka’s most popular and profitable TV stations – Swarnavahini. It also operates radio stations Shree FM and E FM. ETV and Ran FM are also two TV and radio stations owned by EBC and which will be re-launched during the course of this year.

EBC has had a record year of turnover, growth and profitability. It has also embarked on and partially completed a modernisation program, which will digitalise and automate all of its operations.

The EAP Group of Companies consist of a diversified range of businesses with operations in broadcast media (EBC TV & Radio), entertainment (EAP Films & Theatres), trading (Swarnamahal Jewellers), property (Galaxy Landmarks) and finance (ETI Finance and Swarnamahal Financial Services).

The Group has achieved significant growth over the years and is considered as a leading conglomerate, with a broad spectrum of knowledge and expertise across multiple industries.
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Bank of Ceylon ranked No. 1 Brand in Sri Lanka for 7th consecutive year

2015 Brand 

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Bank of Ceylon has once again been ranked as the No. 1 Brand in the country by Brand Finance Lanka, a subsidiary of Brand Finance (UK).

With the current rating, Bank of Ceylon has set an unrivalled record by becoming the only business to have achieved this status for seven consecutive years, the institution said in a statement.

The bank has increased its brand value up to Rs. 38 billon in 2015 from Rs. 30 billion in 2014.

Having celebrated its 75th anniversary in 2014, BOC has been continuously fulfilling its stakeholder’s aspirations successfully throughout these years, adding value to its products and services.

It has emerged as the leader in the Sri Lankan banking and financial services industry in terms of assets, advances, deposits, profits, and inward remittances.

BOC reported the highest profit made by any single institution in the country by surpassing Rs. 20 billion, a 29% growth compared to the previous year. The strength, stability and its commitment to the nation along with the bank’s performance is reflected in the brand BOC’s position in being ranked as the No. 1 brand in Sri Lanka.

“I’m glad to see that brand BOC has yet again become the No. 1 brand in the country, this time for the seventh consecutive year. Our vision is to continue being the highest contributor to the national cause through our contributions to the Government of Sri Lanka and remain as the No.1 Bank in Sri Lanka,” stated BOC Chairman Ronald C. Perera, PC.

He further thanked the bank’s customers, staff of Bank of Ceylon and all stakeholders on behalf of the bank on this achievement.

Being the banker to half of the Sri Lankan population, almost the whole country associates the brand BOC in many different ways. With over 600 inter-linked branches in its network and over 500 ATMs spread across the country it has reached every nook and corner of the country and serves people from all walks of life with its diverse portfolio, assisting customers, entrepreneurs and investors to achieve their goals.

The multi-channel, multi-faceted nature of the bank’s service enabled BOC to reach both personal and corporate customer requirements effectively. BOC has the highest single customer borrower exposure limit in the country’s banking industry. Therefore corporate businesses can rely comfortably on the bank to satisfy all their banking needs under one roof.

Apart from its wide local branch network BOC has had a presence in London since 1949 
which recently re-organised itself as a full-fledged banking subsidiary of BOC. The bank also has branches in Male, Chennai and Seychelles, becoming the Sri Lankan bank with the widest international presence.

BOC has a foreign correspondent network of over 800 foreign banks and agents across the globe, enabling the smooth functioning of its international transacting and strengthening its ties in the international banking arena.

BOC is also ranked as one of the top 1000 banks in the world (with country rank 1) by one of the world’s premier banking and finance magazines The Banker (UK). The ranking is based on recognition of the bank’s achievements as global leaders in the industry. Leveraging upon financial strength and the stability of the brand overseas the bank can proudly call itself the international Sri Lankan bank.

The bank’s recent international achievements includes its award as the only Sri Lankan brand recognised as one of Asia’s Best Brands by the Chief Marketing Officer’s Council (CMO Council) based in Mumbai- India, and the SAFA and ARC Awards for the bank’s Annual Report 2013 respectively from South Asian Federation of Accountants and ARC International.

Considering the bank’s stable financial outlook, Fitch Ratings Lanka Ltd. has awarded ‘AA+ (lka)’ and another local rating agency ICRA Lanka Ltd. also has awarded (SL) ‘AAA’. They were the highest rankings awarded by these entities to a local commercial bank.

BOC’s contribution to the national cause was recognised by Global Commerce Excellence Awards by Ceylon Chamber of Commerce in 2014 for contributing to the country’s GDP growth under ‘Public Sector Institutions’ and National Business Excellence Awards by National Chamber of Commerce for exemplary business practices recently.

Since Bank of Ceylon’s establishment in 1939, it has committed itself to enriching the lives of Sri Lankans and has since then contributed continuously to uplift the country’s economy and the social wellbeing in every possible way and enhanced its contribution to society whilst growing in financial stability and strength over time.
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