Sri Lanka Ashok Leyland unit eyes light commercial vehicles

EconomyNext – Lanka Ashok Leyland aims to sell more light commercial vehicles and has embarked on an aggressive expansion strategy to widen its distribution network with new showrooms across the island this year.

“Our hope is to make inroads into the light commercial vehicle segment,” Umesh Gautam, Chief Executive of Lanka Ashok Leyland said.

The firm offers the Dost, Partner and Mitr buses to augment any volatility in demand for its higher tier products in the heavy commercial and passenger transport segment, he said.

The firm, a unit of India’s Ashok Leyland, will continue the “aggressive expansion strategy” it has begun despite any political uncertainty in 2015, he told shareholders in the annual report.

“The company is aiming to seek customers by opening new showrooms in key interior population centres across the island namely in the South and the North East while several key distributor agreements are being signed to further expand our reach.”

Gautam said the company believes that the country’s core economic fundamentals will support its expansion in the medium to long term.

Lanka Ashok Leyland, which imports fully built buses, trucks, truck chassis and spares, doubled net profit to 332 million rupees in the 2014-15 financial year from the year before, supported by lower interest costs.

Dialog Axiata to invest US $ 120mn this year

Says setting up new submarine cable to boost bandwidth By Chandeepa Wettasinghe Dialog Axiata PLC, one of Sri Lanka’s leading telecommunication service providers, will be making investments of over US $ 120 million in 2015, despite the political uncertainty that has dogged the country throughout the year. 

“Political uncertainty of any form will not affect the investments of our business. Dialog is an exception to the generality. We have been investing aggressively throughout the year and we expect to accelerate,” Dialog Axiata CEO Dr. Hans Wijayasuriya said during the bell ringing ceremony at the Colombo Stock Exchange (CSE), signifying 10 years since Dialog’s public listing. 

He noted that Dialog’s confidence to invest in Sri Lanka this year is due to its history—having been founded in 1995—despite being a subsidiary of Malaysia’s Axiata Group Berhad. He said that other foreign investors have been reluctant to invest and are awaiting some political stability. 

“We’ve invested over US $ 1.7 billion, which is the biggest foreign direct investment (FDI). This year, for the first half, we’ve invested US $ 40 million in infrastructure across 3G and 4G... we’ve invested around US $ 120 million each year recently and we’re set to match that,” he said. 

However, one third of the investments so far this year have been diverted to the setting up of a new submarine cable to increase the Internet bandwidth available to the Sri Lankan customers. 

“We’re going to tap into the connection going from East Asia to the Middle East. Our investment is for the path diverting from that line into Sri Lanka. This won’t increase the speed of the Internet but it will provide greater bandwidth to the customers,” Dr. Wijayasuriya told Mirror Business. 

He added that fluctuations in speed or downtime between peak and off-peak times would greatly decrease, providing a smooth quality in the service to all customers. 

“This will be announced at the latter part of this year and will bring in the single largest infusion of international bandwidth to this country because the submarine cable has a huge capacity and upon completion, we’ll be able to provide it to all the other operators,” Dr. Wijayasuriya said. 

He noted that the Internet connectivity of the country in the past had been shared with state-owned Sri Lankan Telecom, which has been investing on submarine cables for all service providers. 

He said that other investments for the year will focus on the standard laying down of further fibre-optic cables and setting up new transmission centres to increase coverage. 

The investments are coming despite the current regime outlining a Rs.250 million tax on mobile phone operators and a Rs.1 billion one-off tax on digital television service providers, in addition to the super gain tax—all of which the minority government had not been able to pass till the dissolving of the Parliament. 

Meanwhile, Dr. Wijayasuriya expressed that positive consolidation of telecommunication operators must happen for the industry to thrive in the country. 

“The market is too small to have four to five operators in a country like ours. It’s natural to consolidate,” he said. 

However, Dr. Wijayasuriya said that Dialog has not yet identified or evaluated specific opportunities in that regard. 

www.dailymirror.lk

Four major private banks to lose Rs 50M - If Lanka Rating Agency licence is cancelled

By Ishara Gamage

Ceylon Finance Today: Four major Sri Lankan banks collectively stand to lose Rs.50 million as a result of being forced to write-off their equity investment if the Securities and Exchange Commission were to cancel the licence of the suspended Lanka Rating Agency, market sources told Ceylon FT yesterday.

This situation arises against a backdrop where global rating agencies are leaving specific regional presence due to weak or small markets were it is impractical to continue to provide such services such as happened in Indonesia where the Indian rating agency ICRA left the country recently.

While 65% of the shares of Lanka Rating Agency is held by Chairman and CEO led ICON, the aforementioned backs and financial institutes hold the remaining 35%.

The financial institutions exposed to Lanka Rating Agency are Commercial Bank, Sampath Bank, Hatton National Bank and National Development Bank. Of these, two banks have each invested Rs 14 million in Lanka Rating Agency and the other two, 7 million each. 

Additionally, the boutique investment bank Capital Alliance Group also stand to lose Rs 7 million of their investment in the same agency.

These five entities collectively represent 35% of the shares of Lanka Rating Agency with each entity owning between 5% and 10%.

Meanwhile, market sources said that the representative of India's second largest rating agency CARE is in discussion with Lanka Rating Agency for a possible takeover bid. Their representative also came and met with the regulators market sources said.

"What we found is that the previous Governor of the Central Bank Nivard Cabraal forced the aforementioned banks to invest in this agency despite some of the directors of these financial institutes refusing to do so" said a senior government official.

He also went on to say that Lanka Rating Agency was set up as a competitor to the worldwide Fitch Rating Agency since they felt that the Fitch Rating was very stringent and rigorous and had downgraded Sri Lanka's country rating during the war.

However, the Chairman of Lanka Rating Agency Preethi Jayawardena denied these accusations saying: "Our aim was to develop a local rating agency. We recently hired two well experienced international rating experts to strengthen our analysts' team but, it is most unfortunate that the prevailing situation has arisen and that is why we have decided to sell to a foreign party" he said. However, government sources pointed out that Lanka Rating Agency hired the experts due to the insistence of the regulators and not on their own initiative.

Lanka Rating Agency had more than 140 clients most of whom were finance companies. It is risky therefore, to trust their ratings since they do not have the required expertise to do so, the aforementioned government official further elaborated.
www.ceylontoday.lk

Asiri’s Horton Place Rs. 2.7 b land deal through

Asiri Hospital Holdings (ASIR) yesterday announced the completion of the sale and transfer of the land in Horton Place, Colombo 07, owned by Asiri Central Hospitals Ltd. (a subsidiary of ASIR) for a total consideration of Rs. 2.7 billion.

The decision to sell the land spanning 293 perches was first announced in August last year. In the fourth quarter of FY15 a gain of Rs. 513.4 million was recorded as change in fair value of investment property of Asiri Central Hospital at Horton Place. - See more at: www.ft.lk