Aitken Spence to build two resorts in Maldivian Islands, bullish about tourist potential

June 15, 2015 (LBO) – Sri Lanka’s Aitken Spence group said it plans to start construction of two new resorts in Maldives which will add 360 room to its portfolio and boost capacity in Maldives by 57 percent.

The group acquired two islands, Aarah Island in Raa Atoll in 2014 and Raa Fushi in Noonu Atoll in 2015 for the basis of lease, which will bring the total number of islands held by Aitken Spence in the atolls to six.

“We will commence the construction of two new resort properties on these two islands, Aarah in Raa Atoll and Raafushi in Noonu Atoll during the year ahead,” J M Brito, Managing Director of Aitken Spence told shareholders in the annual report 2014/2015.

“Our strategy of being a regional player once again paid dividends and the properties in Maldives and Oman performed remarkably, with the Maldives properties being the highest contributor to the Group, accounting for over 70 percent of our profitability,”

“We continued to be the largest single foreign operator in the Maldives in terms of resort capacity.”

The group already operates five resorts in four islands in the Maldives with 630 rooms and 1,200 beds, the company said.

The hotel brand “Adaaran” established in Maldives has continued to be the highest contributor to the group’s profitability in 2014 /15 adding more than 70 percent to profits during the year.

Revenues from these properties increased by 3.3 percent to 10 billion rupees during the year. Chinese visitors continued to make up the highest share of visitors to the Adaaran properties, the company said.

Aitken Spence said it plans to build a 160 roomed resort on Aarah in Raa Atoll where design work is ongoing and construction expected to commence this year.

A 200 roomed resort is being planned for Raa Fushi in Noonu Island, which was acquired in 2014 and design work is on-going. Construction is to commence in 2015, the company said.

Singer Finance to enter the Credit Card business

June 15, 2015 (LBO) – Sri Lanka’s Singer Finance said it plans to launch a credit card in the latter half of this year targeting rural consumers, the company told shareholders in its annual report of 2014/2015.

The company said that it has applied to the Central Bank of Sri Lanka for a license to introduce a credit card and received approval for same, which makes the company to become the first Finance Company to launch a credit card.

“Our future focus in FY 2015/16 will be on the successful launch and growth of our new credit card product,” R S Wijeweera, Chief Executive of Singer Finance told the shareholders.

“As the first financial company to launch a credit card, we have devised an innovative and aggressive marketing strategy and are fully geared to implement this in the forthcoming weeks and months,”

“Singer Finance has a captive customer base for the proliferation of the Singer credit card, keeping in mind the massive customer base of Singer Sri Lanka.”

The card will be an approved Visa card and can be used locally and internationally.

The company says the credit cards will be marketed to the Singer brand’s strong consumer base, many of whom are located in rural areas.

“The unique feature of the card is that it will empower even those in the lower income bracket to transact using the credit card,” the company said.

Singer Finance gross income grew only by 5 percent, as increase in business volumes were offset by decline in lending rates. However, net interest income grew by 14.3 percent as borrowing rates also came down.

Fees increased by 38 percent and other income increased by 27 percent, the report showed. As a result, total operating income increased by 16 percent to 1,317 million rupees.

Profit after taxes increased to 388.7 million rupees from 268.6 million rupees in the prior year.

Sri Lanka’s F L C Hydro Power commissions its fourth power plant

June 15, 2015 (LBO) – Sri Lanka’s F L C Hydro Power which has interests in building, owning, operating and maintaining hydro power generation facilities in the island has commissioned its 800Kw plant on 11 June 2015.

Newly built mini hydro power plant is owned by Thebuwana mini hydro private limited which is a wholly-owned subsidiary of F L C Hydro Power.

With the forth power plant, the total generation capacity of the company has been increased to 4.9Mw, the company said in a stock filing.

F L C Hydro Power has two plants located at Sanquhar Estate Paradeka and Delta Estate Pupuressa, with generation capacity of 1.6Mw each.

On 10 January 2014, the company commissioned the Stellenberg mini hydro plant with an installed capacity of 0.9 Mw.

Sri Lanka stocks edge up to over 1-wk high on telecoms, inflows

Sri Lanka's stock index rose to a more than one-week high on Monday, led by telecom shares and on foreign inflows, but turnover was lower as many investors were cautious about risky assets ahead of a parliamentary election.

The main stock index ended 0.25 percent up, or 17.69 points, at 7,078.97, its highest close since June 5.

"Sellers are not that desperate, they are holding on," said a stockbroker asking not to be named. "The political uncertainty remains with the delay in announcing the elections."

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reforms, including an electoral bill, are passed, but has yet to fix a date for the election.

Monday's turnover was 730.8 million rupees ($5.45 million), well below this year's daily average of about 1.1 billion rupees.

The market saw net foreign inflows of 119.8 million rupees ($894,000), but the previous 14 sessions have seen net foreign outflows from equities at 2.28 billion rupees. The bourse, however, has seen net inflows of 3.66 billion rupees into equities so far this year.

Analysts said foreign investors have been selling shares amid expectations the U.S. would hike key interest rates sooner than expected.

Shares in leading mobile phone operator Dialog Axiata Plc rose 2.7 percent, while No.1 fixed-line phone operator Sri Lanka Telecom Plc rose 0.67 percent. 

($1 = 134.0000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Prateek Chatterjee)

Sri Lanka's Maharaja group to be awarded satellite pay TV license

COLOMBO (EconomyNext) - MTV Channel (Pvt) Ltd, a terrestrial broadcaster which is a unit of Sri Lanka's Maharaja group will be awarded a direct-to-home satellite licence, the island's telecom regulator has said, as the industry is going through technological changes.

The Telecommunications Regulatory Commission of Sri Lanka said in a public notice that it is considering recommending to the President of Sri Lanka to issue a DTH license to MTV Channel for five years.

The public could make representation or objections before July 12.

Sri Lanka's Dialog Axiata group is now the considered the market leader for pay TV, with a 452,000 subscriber base which grew 36 percent in the year to March 2014.

The firm said it had 77 percent market share and penetration was only 15 percent.

Dialog TV mostly has international content, but MTV Channel is a domestic content production company.

PEO TV, a unit of Sri Lanka Telecom, uses its wireline network to offer a pay TV service.

DTH firms based in India could also be viewed in Sri Lanka, providing some cross-border competition.

Though many countries have tried to restrict their citizens' freedom to access cross-border content, newer technological innovations by private industry are reducing ruler or 'sovereign' control.

Pay TV known as 'cable' is coming under increasing pressure from cross-border internet based television.

Cable originally started in the US, as an innovation to remote or mountainous areas that could not easily be reached by terrestrial broadcasters.

Sri Lanka to make telephone records of stock orders mandatory: report

COLOMBO (EconomyNext) – Sri Lanka’s capital markets regulator, the Securities and Exchange Commission (SEC), plans to make it mandatory for stock brokers to have telephone records of orders from clients, a newspaper report said.

The Sunday Times said the SEC was taking a tough stand against wrongdoing in the past by traders that went unchecked or was covered up.

Although Colombo Stock Exchange (CSE) rules already stipulate that brokering houses use a telephone recording system to record clients’ order instructions and maintain these records for at least six years, it has not been properly implemented.

The newspaper quoted an SEC official as saying that under CSE rules the stockbrokers have the option to obtain written instructions from clients and maintain these records for at least six years.

“ . . . but now the SEC wants to make this rule mandatory as the regulator has received many complaints pertaining to client – broker transactions,” the report said, noting that there were disputes about certain instructions from clients and irregular transactions.

Currently only NDB Stockbrokers and Capital Alliance use a telephone recording system, the newspaper said.

Chemanex Group to exit or relocate to Homagama

Shirajiv Sirimane

Chemanex Group of Companies a subsidiary of CIC is looking at relocating from Ratmalana to a more economically viable factory in Homagama.

This matter is being constantly pressured by their share holders who propose to sell the Ratmalana property to a neighbouring company dealing in motor vehicles and relocate.

“We say that the Ratmalana property could fetch around Rs. 2.5 billion and the whole facility could be relocated and be up and running for less than 45% of the sale value in Homagama where CIC has a land,” a share holder said.

“We will once again bring this up at our annual general meeting that is scheduled in a few weeks,”he added.

There was also speculation that the CIC may completely sell Chemanex and shut down the plant.
www.dailynews.lk

SL apparel exports edging to US$ 5 bn

As Sri Lankan annual apparel exports closed in on the crucial $5 bn mark, South America’s largest apparel market was given a preview of Lankan fashion when the Brazil International Apparel Sourcing Show 2015 in Sao Paulo.

Lanka’s EDB and Joint Apparel Association Forum (JAAF) officials led a delegation consisting of reps from six companies to BIAS 2015, the leading international apparel show of Brazil and South America showcasing leading Asian Apparel manufacturers for worldwide exports. A B2B platform for Asian apparel manufacturers & international buyers, BIAS is also said to be “the biggest meeting place of apparel manufacturers and suppliers of Asia-Pacific focusing on buyers from USA, EU, East Asia, Australia, and New Zealand. BIAS 2015 showcased products of South Asian countries such as India, China, Bangladesh, Pakistan, Indonesia, Vietnam and Sri Lanka in over 225 stalls. BIAS 2015 attracted buyers not only from Brazil but also from other South American countries such as Chile, Peru, Uruguay, Colombia, Paraguay, Venezuela etc.

Sri Lanka delegation consisted of reps from Sumithra Garments, Garment Services Meegoda, Rakshaa, Haward Fashions, Fashion Works and Ravi Tharu Holdings.

Among the Lankan apparel items showcased at BIAS 2015 were men’s and women’s jackets, trousers, shirts, boxer shorts, men undergarments, women and girls’ blouses, dresses, pants, and casual wear.

Brazil is the largest apparel market in South America. The Brazilian apparel market stood at $42 bn in 2013/14, while the second largest South American apparel market, Mexico, was only $14 bn in the same period.

The EDB and Lankan apparel industry identified Brazil as an important emerging market for Lankan apparels.

As Sri Lankan annual apparel exports closed in on the crucial $5 bn mark and stood at $4.9 bn in 2014 growing YoY by 9.26%. Sri Lanka exported $18 mn apparels to Brazil in 2014.
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Royal Ceramics expands into North America

Royal Ceramics Lanka PLC (Rocell) will look to expand its global sales footprint with the addition of the North American market.

Laying the groundwork for the entry, Rocell participated in the Coverings’15 exhibition held in Orlando,USA in April.

‘Coverings’ is a premier international trade fair and exhibition, the largest of its kind in North America dedicated exclusively to showcasing the newest in ceramic tile and natural stone.

“The North American market is one of the largest for high quality tiles and bath ware. We have had some interaction with the North American market previously and see a lot of potential in expanding our export business. The exhibition itself gave us an opportunity to showcase our product line along side some of the best from around the world,”Rocell Bathware Marketing and Business Development Director and CEO,Tharana Thoradeniya said.

The Rocell showcase at the ‘Coverings’ exhibition attracted many foreign clients mainly from Canada, Japan, the UK, and the US. The exhibit showcased the premium range from Rocell’s tile collection of eight concepts and nine sizes. Organised by the National Trade Productions, the trade show has grown to be the largest and most important show of its kind in the U.S., featuring exhibitors from more than 35 countries and attracting thousands of distributors, retailers, fabricators, contractors and specifiers, architectural and design professionals, builders and real estate developers and enthusiasts.

Thoradeniya said this was a good opportunity to observe emerging trends in this market. ‘Coverings’ provides the industry with one of the most popular platforms for introducing some of the most innovative tile and stone products in the world.
www.dailynews.lk

Rupee down 5.8% in nine months

By Paneetha Ameresekere

Ceylon Finance Today: The present regime has wasted US$ 577.99 million of taxpayers' money in the first five months of the year by fighting a losing battle in trying to prevent the rupee from depreciating due to market forces acting upon it.

The exchange rate (ER), in foreign exchange (FX) market trading, which closed at Rs 137.80 to the US dollar in three months forwards as at 31 May, 2015, has, in the calendar year to 31 May, 2015, has seen its value decline by between Rs 5.60-5.70 or by 4.24-4.31%, having had closed the previous year at Rs 132.10/20 to the dollar in interbank "spot next" trading.

In both of these instances, the ER has been operating under CB's moral suasion diktat, in a losing battle by the CB, to prevent its depreciation. Under "perfect" conditions, the markets trade in "spot," unhindered and untrammelled by the absence of CB's moral suasion diktat.

Nevertheless, the ER, as at Friday, 12 June, 2015, has been artificially strengthened to Rs 134 interbank "spot" trading, because of CB once more "actively" intervening in the FX market since the beginning of this month.

This is done by offering dollars to them from its foreign reserves at discounted spot 
prices. The current depreciating pressure on the rupee is due to foreign exits from the government securities and stock markets due to the political inertia of the present regime particularly on matters economic, coupled with political uncertainty due to a general election pending, market sources told Ceylon FT.

Nevertheless, if the present regime wasted taxpayers' money by fighting a losing battle to save the rupee, the previous regime was no better. They wasted a massive $ 516.9 million in the four month period from September 2014 to December 2014 in trying to salvage the rupee by selling dollars also from CB's foreign reserves at discounted prices to the market.
Nonetheless, the ER, which closed end August 2014 at Rs 130.20/23 to the dollar in 'spot' trading, weakened by between 1.46% and 1.51%, or by Rs 1.90 to Rs 1.97, to close the year at Rs 132.10/20 to the dollar in interbank 'spot next' trading.

The synopsis is that though both regimes wasted US$ 1,094.89 million or US$ 1.1 billion of taxpayers' money in a short space of nine months in trying to prevent the rupee from depreciating, yet, the ER in that review period fell by between 5.81% to 5.84% or by between Rs 7.57-Rs 7.60 to the dollar, having had closed end August 2014 at Rs 130.20/23 in 'spot,' to Rs 137.80 in three months' forwards at end May 2015 in market trading.

The depreciation of the rupee at the tail end of the previous regime was caused by two factors. One was the uncertainty caused due to an impending presidential election and the other, its tinkering of interest rates in its monetary policy review of 23 September, 2014.

In order to spur credit growth, the previous regime created a two tier interest rate regime. That was done by paying banks an overnight interest rate of 6.50% for parking its excess for a maximum of three days per calendar month in its standing deposit facility window (SDFW) and a penal deposit rate of 5% on all other days of the month.
This, i.e. due to an induced low interest rate regime, led to a flight of foreign capital totalling Rs 44,208.73 million (Rs 44.2 billion) from the government securities market in the four month period to end December 2014, thereby causing further downward pressure on the ER.

The current regime however rationalized the ER regime to one. At present the rate offered by CB's SDFW is a uniformed 6%, while the rate charged as per by its standing lending facility to banks is 7.5%.
www.ceylontoday.lk

PLC Group records the highest-ever PAT of Rs. 4.1 b in FY14/15

PLC Group has achieved its highest ever profit of Rs. 4.1 billion for the FY 2014/15, representing a YoY growth of over 18%.Consequent to the increase in profitability, ROE and ROA of the Group for the year improved to 19.61% and 5% respectively.

People’s Leasing and Finance Plc (PLC) being the main contributor to the Group’s success also declared a profit after tax of Rs. 3.75 billion, the highest in its history. PLC’s profit before tax for the year increased to Rs. 5,375.11 million reflecting a 23% growth compared to the previous year.

Out of the subsidiaries, People’s Insurance contributed the largest share to the consolidated income of the Group followed by People’s Leasing Property Development Limited. PLC effectively managed the challenges posed by external vagaries to mark the best year in its history through its expertise in the industry for the past 18 years.

“FY 2014/15 was a year full of triumphs for PLC, achieving the highest-ever profits and business volume along with several accolades for its business excellence is truly remarkable in the midst of complexities within our macro landscape” stated PLC Chairman Hemasiri Fernando.

The low interest rate regime which prevailed in the country throughout the year restricted the interest income of the company to Rs. 19,247.62 million for the year ended 31 March 2015 compared to Rs. 19,533.60 million reported in the previous year.

However, through effective management of borrowing sources, PLC experienced a significant decline in the interest expense, which outpaced the reduction in interest income enabling the company to achieve a 21% growth in net interest income.

Continuing to be the highest asset base in the NBFI sector, PLC’s total assets stood at Rs. 112.32 billion as at 31 March 2015.Accomplishing the target set for the year, total disbursements of the company for the year surpassed the Rs. 60 billion mark, the highest achieved in the company and the industry so far. On account of this achievement, the loans and receivables portfolio of the company reached Rs. 98,411.20 million as at the year-end 31 March 2015, reflecting a 9.08% growth over the previous year. Whilst focusing on improving business volumes and maintaining the quality of its portfolio at the same time, PLC managed to curtail the non-performing ratio to 2.72% as at year end which is well below the industry average of 6.9%.

CEO D.P. Kumarage, commenting on the company’s future aspirations, said: “We remain focused on our business acumen to further reinforce our profitability and financial position to deliver exceptional value for our stakeholders in the upcoming years.”
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