Sri Lanka shares recover after election announcement

Sri Lankan shares recovered on Monday from a near 2-1/2 month low hit in the previous session after President Maithripala Sirisena dissolved parliament and announced elections, but trading volume slumped due to the political uncertainty.

Sirisena dissolved the parliament on Friday and scheduled the elections for Aug. 17, in an effort to consolidate power and push through political reforms, ending a months-long deadlock.

The main stock index ended 0.23 percent, or 15.95 points, higher at 7,032.15, recovering from its lowest close since April 15 hit on Friday.

The day's turnover was 394.3 million rupees ($3 million), just over a third of this year's daily average of 1.07 billion rupees.

"There is uncertainty over who is going to win the election and if there will be political stability after the election," a stockbroker said on condition of anonymity.

"So there will be volatility until the elections are over. Possible split in Sirisena's own party and predictions over a Prime Minister-led ruling party not getting a majority in the parliament are some concerns at the moment."

The market saw net foreign inflow of 26.3 million rupees on Monday, after suffering net outflows of 4.09 billion rupees over the past 23 sessions through Friday.

Top mobile phone operator Dialog Axiata edged up 0.2 percent, while fixed line operator Sri Lanka Telecom ended 0.5 percent firmer.

The market shrugged of the central bank's key monetary policy decision announcement as there were no surprises, traders said. 

($1 = 133.7000 Sri Lankan rupees) 

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

Singer Sri Lanka to buy control of related firms from parent

ECONOMYNEXT - Singer (Sri Lanka) Plc said it was buying out its parent in listed two captive manufacturing units with control of one unit coming below market price.

The firm said it was buying 5.58 million shares of Regnis (Lanka) Plc for 110 rupees from its foreign parent Singer (Sri Lanka) BV. The stock was quoted at 133.90 in intra-day trade Monday. Regnis mainly manufactures refrigerators.

Singer Sri Lanka Plc was also buying 3.21 million shares in Singer Industries for 206.00 rupees a share. On Friday Singer Industries fell to 192 rupees, down 7.90 rupees.

Singer Asia Limited had decided to sell the firms as part of a restructuring of the group.

The firm said the pricing was decided by an independent valuation, but the valuation report or the basis of valuation was not disclosed.

Will call for Sri Lanka parliament's probe on bond deal to be made public: Eran

COLOMBO (EconomyNext) - Deputy Investment Promotions Minister Eran Wickremeratne said he will call for the proceedings of a parliamentary committee on a controversial bond deal to be made public.

Wickremeratne said the Committee on Public Enterprises (COPE), of which he was himself a member had called questioned persons involved, including primary dealers, officers of the Central Bank, the Treasury and even retired persons.

"We started collecting information," Wickremeratne told reporters in Colombo.

"It was in the midst of all this that the parliament was dissolved. The interim committee could not come to a final decision."

"I plan to call for the proceedings to be made public, in the interest of transparency. We have nothing to hide. If the report is published, all of you can come to a decision."

He was responding questions from reporters who asked how the public can be assured of wrongdoers of the last regime being punished, when there was no assurance that wrong doers of the current regime being punished either, as was seen in an alleged fraud involving the Central Bank.

In the alleged fraud, a primary dealer connected to Central Bank Governor Arjuna Mahendran's family bid over 250 basis points above market rates at an auction for 30-year bonds and was given five times the initial action volume.

There were also allegations of insider dealing in the secondary market, ahead of the bond sale, as well as questions over monetary tightening outside the monthly rate announcement.

The actions shell-shocked gilt markets, bring trading to a standstill for almost two days, while market participants were unable price any bond across the yield curve.

Prime Minister Rani Wickremesinghe has vigorously defended the deal, much to the disappointment of good governance activists, who spoke out against corruption during the last regime, and helped bring the new administration to power expecting a change.

Reporters also raised questions about allegations that Prime Minister Wickremesinghe had also interfered in the event, asking what the party nominations committee would do amid such allegations.

"There is no allegation against the Prime Minister, I can say that categorically," Wickremeratne said.

"The COPE chairman DEW Gunesekera himself said the Prime Minister can make his views known especially on policy.

"This is just a mud throwing attempt by the opposition."

Bartleet Finance Plc Sri Lanka and Orient Finance merger approved

ECONOMYNEXT- A merger with Bartleet Finance Plc, Orent Finance had been approved by shareholders, Orient Finance listed company said in a stock exchange listing.

Existing shareholders could get one share of Bartleet Finance or 14.97 rupees for every existing share of or Orient Finance.

In a related deal, First Capital Holdings Plc said it had accepted an offer by Bartleet Finance Plc for a 25 percent stake in Orient Finance for 432.7 million rupees.

First Capital Holdings will make a 23 million rupee profit on the deal.

Controversial CIFL Chairman due soon - Alleged to have defrauded Rs. 1.6 Billion

By Ishara Gamage

Ceylon Finance Today- Sri Lanka's failed Central Finance and Investments (CIFL) controversial former Group Chairman Deepthi Perera will come back to Sri Lanka soon, Presidents Counsel Tilak Marapana confirmed to Ceylon FT yesterday.

Colombo Chief Magistrate, Gihan Pilapitiya, recently gave him a temporary court clearance for his visit, he said.

"He was under an international arrest warrant for a while. As his lawyer, I appeared before the court and convinced the court that he was unaware of such situation, so he is willing to come to Sri Lanka and support the ongoing CIFL investigation," Marapana remarked.

Following this court direction, I hope that he will back to Colombo soon and listen to CIFL grievances, he said.

However, depositors claim that Perera will be back in Sri Lanka either next week or around July 5.

The Fraud Bureau in late 2013 started special investigations against this Deepthi Perera alias Chulaka Gunawardena who is married to a Thai Woman while running some Colombo night clubs and later took off money from CIFL leaving CIFL bankrupt and its depositors to run off on the streets.

The CIFL Depositors' Association says that a former chairman of CIFL had defrauded a sum of Rs.1.6 billion from the depositors.

The CIFL Depositors Association noted that 4200 persons had deposited a sum of around Rs. 3.5 billion in the company. A majority of the depositors are pensioners who had deposited their gratuity payments.

The Colombo Stock Exchange recently inquired from the regulator- the Securities and Exchange Commission about the possibility of the suspension of the CIFL shares which are now trading at 70 cents.

Meanwhile, when contacted the Securities Exchange Commission of Sri Lanka officials said that, they had submitted CIFL & Touchwood Investment PLC cases to the Attorney General's Department for legal action.

"Our investigations found severe fraud and fraudulent activities among those two listed companies. So, we hand over such cases to the Attorney General's Department but more than one and half years past now, we didn't get any response, the SEC official said.

The SEC also started special investigation against auditors and accountants of two companies who were misguided the investor community by submitting fake account details, he said.

We don't have powers to punish those auditors, but we can act against those wrong information, he said. Four independent directors of the troubled Central Investments and Finance PLC (CIFL) recently alleged that there had been many manipulated figures in the financial statements of the company since 2004.

The numbers presented to the board meetings we attended as independent directors from end 2012 have been completely distorted, these four independent Directors told Ceylon FT on the basis of anonymity.

They alleged that the former Central Bank Governor Ajit Nivard Cabraal ignored all the revival proposals which were put forward by them in 2013.
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NDBIB structures first listed zero coupon debenture

NDB Investment Bank Limited (NDBIB), the premier investment bank in Sri Lanka, yet again demonstrated their commitment to introduce novel products to the market by structuring the first ever zero coupon debenture to be listed on the Colombo Stock Exchange.

This innovation was successfully introduced to the market through the recently concluded Rated Unsecured Subordinated Redeemable Debenture issue of National Development Bank PLC (NDB) amounting to LKR 10 Billion.

Commenting on the successful issuance of this pioneering instrument, Chief Executive Officer of NDBIB, Darshan Perera said, “We, at NDBIB, are committed to introduce new products to the capital market and the Listed Zero Coupon Debenture is yet another innovative security to the Colombo Bourse.

The Instrument was well received by the market and the entire quantum was quickly snapped up by provident funds, insurance funds and high net worth individuals”.

Zero Coupon instrumentsdo not carry periodic interest paymentsand are issued at a discount to theFace Value.

The expected return to the investor is generated through capital gains.In thecase of NDB Debentures, the Zero Coupon instruments with Face Value of LKR 100/- were issued at a discount price of LKR 63.8136 each providing the investors an Annual Effective Rate of 9.40% for a tenure of 5 Years.

Commenting on the issuance of this Zero Coupon instrument, Chief Operating Officer of NDBIB, Kaushini Laksumanage said, “Zero Coupon Instruments offer benefits to both investors and issuers alike. In a plain vanilla Debt Instrument, investorsneed to reinvest the periodic interest receiptsat the same interest rate offered initially in order to realize theoriginal Annual Effective Rate of the Instrument.”

“As such, if the prevailing interest rates are lower than the rate offered initially, the Investors face the risk of earning a lower Annual Effective Rate on the investment.

This risk is referred to as the “Reinvestment Risk”.

Commenting further on the Zero Coupon instrument, Kaushini Laksumanage said, “from the issuers’ point of view, Zero Coupon Instruments will have no cash flow obligations until redemption,thereby enabling better cash flow management.Furthermore, Zero Coupon Instruments enable issuers to minimize duration mismatches in their asset and liability portfolios.”

“This can also be useful for investors such as provident and insurance funds and banks in order to achieve better management of assets and liabilities”.
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Browns Investments completes Ajax Engineers acquisition

Browns Investments PLC said it had completed the balance 49% acquisition of Ajax Engineers (Pvt) Ltd.

Brown Investments indicated in a stock filing that it had paid Rs.100 million for the balance 49% percent stake, making it a wholly owned subsidiary.

Ajax is classified as an F 1 Super Contractor by ICTAD and is also a market leader dealing in aluminum construction materials and is a fully owned subsidiary of Brown Investments PLO.

The 30 year old Company has a fully equipped modem workshop in Ragama which is equipped with German and Austrian machines. 
www.dailynews.lk

Rs 5 b CESS fund unutilized - CTTA

Ananda Kannangara (anandakannangara12@gmail.com)

The CESS fund of nearly Rs. 5 billion collected from Tea exporters to promote Ceylon Tea brand globally is left unutilized, said Anselm Perera, Chairman of the Colombo Tea Traders Association.

“Tea industry is facing a crisis as prices have dropped and this is the time a globe promotion is urgently needed, he said speaking at the Colombo Tea Traders’ Association (CTTA) Annual General Meeting in Colombo.

The funds had been used so far only to promote Ceylon tea using the Sri Lanka Cricket team and in the Dubai Airport advertising board. “We need more to be done.”

“Political problems in key markets like Russia and the Middle East had reduced demand for Sri Lankan tea. Russia is one of the largest single importers and the devaluation of the Russian Ruble by 70% has badly affected to our auction prices”

He said the country’s key export markets in the Middle East are in turmoil and Iran, Iraq and Libya are in conflict.

“Sri Lanka has seen a progressive decline in tea auction prices since the third quarter of 2014 but it was only for a short period.

Chairman Perera further said the tea trade is most skeptical about the decision to pay the small- holders who cultivate less than 10 acres of tea as they get a guaranteed price of Rs. 80 for green leaf.

“On the positive side, with the world population exceeding 7.3 billion within the next few years and continuing to grow rapidly, we would expect the consumption of tea to register an upward movement,”

He also said the Colombo Trade contributes US Dollars 1.6 billion to the national income and planned to improve this to four billion US Dollars in the next 3 to five years.

Talking about the global tea production, he said although Sri Lanka produced 338 million kilo of tea in 2014, the country still remains the fourth largest producer in the world with China, India and Kenya are ahead of us.

Chairman Perera finally said the country will celebrate the 150th year of Ceylon tea in 2007 and arrangements have been made to celebrate the event by conducting an Exhibition and an International Convention. “This exhibition will help to popularize our tea among countries,”.

Dr. Dayan Jayatilleke observed on the Government’s new foreign policy, particularly with regard to the major buyers of Sri Lankan tea including USA, the European Union and also issues in relation to the Middle East, Russia and other CIS nations will open doors for our tea trade once again. Over 200 members of the CTTA attended the AGM to elect the new committee for the year 2015/2016. 
www.dailynews.lk

CDB PAT grows 25% to Rs 701 mn

Citizens Development Business Finance PLC (CDB) posted a noteworthy 25% growth in Profit After Tax to notch Rs. 701 Mn as profit, as detailed by interim results released to the Colombo Stock Exchange.

The upward trajectory in performance continues as CDB’s Balance Sheet showcases growth of 13% standing at Rs. 38.01 Bn, the Loan Book detailing an incline of 14% displayed at Rs. 29.38 Bn and the Deposits & Savings portfolio growing by 10% to be notched at Rs. 27.07 Bn.

Net Assets is recorded at Rs. 4.30 Bn reflecting a growth of 20%. Revenue recorded a growth of 9%, commendable given the low interest backdrop experienced, while Net Interest Income also moved upwards by 23% to stand at Rs. 2.87 Bn.

Profit Before VAT on Financial Services, Crop Insurance Levy, Nation Building Tax and Income Tax surpassed a milestone of Rs. 1 Bn, showcased at a historic Rs. 1.04 Bn, reflecting a growth of 33%. Despite an increase of 48% in Income Tax, the Company showcased an impressive Rs. 701 Mn in Profit After Tax.

Earnings Per Share recorded a figure of Rs .12.92, while Net Asset Value Per Share is detailed at Rs. 79.22. Having always been a company that has remained well above par in its compliance culture, Capital Adequacy Ratios for both Tier I and Tier II remained well above the regulatory requirement of 5% and 10% respectively.

Tier I is now at 10.14%, while Tier II is at 12.92%. Liquidity Ratio is posted at 14.66%, compared to the required 10%, which once again is above the regulatory directive.

Non-Performing Loans (NPL) stood at 5.78% and 3.19% on gross and net basis respectively.

Aligned with the directives instituted within the Financial Sector Consolidation Programme, CDB acquired 86.26% stake in Laugfs Capital Ltd, a specialized leasing Company during the period under review.
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