Anilana Dambulla to begin ops. by 2017

Sri Lanka’s top resorts operator, Anilana Hotels and Properties PLC is planning on commencing commercial operations at its upcoming property in Dambulla by 2017, a top official said. Since commencing operations in 2013, the luxurious hotel operator presently operates one villa and two hotels in Pasikudah and Nilaveli whilst two further hotels and several villas are currently under construction.

“Our plans for expansion are carried out in a well thought-out and systematic manner. Our 54 room hideaway in Dambulla is nearing completion and we hope to commence its commercial operations over the next 15 months,” Managing Director Asanga Seneviratne said addressing stakeholders in the group’s Annual Report 2014 released recently.

Seneviratne said he is confident that this too will be a resounding success for it is placed at the very heart of the Cultural Triangle cleverly combining the excellence of design with the impeccable service that Anilana is now renowned for.

“Our Panichchankerni project is currently well underway as well. In fact, we are nearing completion of four villas there, and set amidst breathtaking surroundings, these villas will artfully complement the location it is placed in, without detracting from the awe-inspiring beauty of the area,” the Managing Director further noted.

Meanwhile, Chairman of Anilana, Peter Amerasinghe in his message said the trend of a rapid increase in tourist arrivals to Sri Lanka witnessed in 2014 is expected to continue in 2015, despite two consecutive elections and a fast changing environment.

“There have been over 1.52 million tourist arrivals recorded in 2014, and the Government’s target of 2 million tourists for 2015 definitely seems to be within reach, as already from January to July 2015 over 1 million international travelers have visited our golden isle. When analyzing tourist arrivals further, the highest number of tourist arrivals country-wise, both in 2014 and 2015, have been from India, China and the United Kingdom.

In March 2015, the Sri Lanka Tourism Promotion Bureau has launched an aggressive promotional campaign amounting to Rs 1.2 billion, which is hoped to bring in a further influx of international travelers, and in accordance to the Chairman of the Tourism Promotions Bureau, they wish to concentrate on attracting high end travelers, a fact which indeed, bodes well for us and our country,” Amerasinghe said.
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More TFC branches now make profits – MD

The Managing Director of Sri Lanka’s oldest Finance Company, The Finance Plc, Aruna P Lekamge says 43 Branches/Service Centers/Divisions have been making monthly profits by end of March 2015 in comparison to 19 Branches/Service Centers/Divisions in the Financial Year 2014. The Managing Director also said the company has overcome the main challenge it faced in the year under review with the settlement of the public deposit liability of Rs.1.2 billion together with the interest adhering to the CBSL directions to maintain the confidence level the public have in the Non-Bank Financial Services in Sri Lanka.

“These continued improvements in the branch level bottom lines have resulted in recording a reduction in the monthly operational losses by Rs.90 million in March 2015 in compared to the previous year,” Lekamge said addressing stakeholders in the company’s recent released Annual Report.

According to financials, however, TFC has recorded a loss of Rs.1.84 billion for the year ended 31st March 2015 after recognizing the impairment of some legacy balances of Rs 158 million during the year under review against loss of Rs.1.78 billion in the previous year.

“The performance of the Company has thus far been in line with the Business Plan approved by the Monetary Board. Total lending increased by 59% resulting in the increase in the monthly Net Interest Income by 76% over the 12 months in the year under review,” Lekamge said.

Last year, TFC commenced the third phase of the restructuring program and received a credit line of Rs 6 billion from the Central Bank Liquidity Support Scheme.

“After several years of unhealthy performance, TFC, for the first time, was able to get its key performance indicator to the right direction in the FY 2014/15. In order to maintain this momentum, a vital task has to be fulfilled by the Senior Management by way of investing in human resources development, introduction of new processes with new technology, and enhancement of professionalism among the employees, given the highly complex and competitive financing business environment in the country.

In fact, the Board of Directors and the Management have already taken several measures in this regard during the period under review,” The Finance Chairman, Dr S H A M Abeyratne said.
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Vallibel One has grown into a diversified conglomerate

Vallibel One plc., the Dhammika Perera holding company with strategic investments in financial services, tile and sanitary ware manufacturing and leisure has grown into a highly diversified conglomerate, the company’s recently released annual report said.

Its sector-specific operations are carried out through several subsidiaries - Royal Ceramic Lanka plc., LB Finance plc, Delmege Ltd and Greener Water Ltd. Further, the company owns 22.2 % of Waskaduwa Beach Resorts plc, 18.02% of the Fortress Resorts plc and 14.95% of Sampath Bank plc treated as a strategic long-term investment.

The year ended March 31, 2015 had seen group turnover decline 10.5% to Rs.43.45 billion; but profit before tax was up 94.5 % to Rs.7.52 billion and the after tax profit up by 69.88% to Rs.5.2 billion. Profit attributable to equity holders of Vallibel One was up by 83.68% to Rs.8. 29 billion.

In his review in the company’s Annual Report, Perera has said that they have come to a point where the company has ‘robust visibility’ of future growth with group profitability enhanced during the year under review by an "impressive 69.88%."

Perera said that this was "the visible impact of the many strategies that drive our corporate vision."

The year under review had seen strong delivery across their core operational pillars despite many challenges they had to face. They had created strong brands with the diversity of their sectors truly being their strength.

Their brands had evolved to become world class as demonstrated by Rocell’s entry into the sophisticated Australian interior industry last year. With the launch of the brand in Melbourne, positioning it alongside other global and pan-regional top-end flooring and interior brands, they had entered a sophisticated market.

LB Finance had sustained its performance drive contributing over Rs. 2 billion to the group’s profitability. The Delmege Group, with a 165-year history in Sri Lanka acquired a few years ago, had shown signs of corporate recovery during the year under review. Delmege increased turnover 21% during the year to Rs.6.4 billion responding to various strategic maneuvers.

Perera said that they have obtained all approvals necessary to take forward the Greener Water project but had chosen to tread cautiously due to regulatory changes pertaining to tax exemptions and in view of the prevailing global and local economic as well as tourism trends.

He said that they would further evaluate the feasibility of this project this year if they deviate from the previously disclosed integrated resort concept, the company will seek shareholder approval before moving forward.

Vallibel One has added The Fortress Resorts plc as an associate company.

Claiming to be one of the most strategically diversified holding companies in the country, an operational review of the Group’s business said that LB Finance founded 44 years ago and listed on the Colombo Stock Exchange in 1998 has seen a series of ownership changes. The Company began to take off after 2003 and has posted "remarkable results" for 2014/15 with profits exceeding Rs. 2 billion - up 62.84%.

"Using a pragmatic comparison of pitching ourselves against the banking sector, we identified opportunities available and concentrated on the gaps prevalent," the review said. "For example, potential was seen in the mortgage lending business of which we took the mantle, taking our customized mortgaged lending product to the underserved customer segments."

They have diversified funding sources to reduce dependence on deposits which had led in turn to a favourable deposit mix.

Royal Ceramics’ Rocell and Rocell Bathware brands had trail-blazed pathways into tile and sanitary ware industry like no other, the review said. They had introduced new processes to reduce staining on polished tiles, an innovation developed in-house, adding value to the product manufacturing process.

Lanka Ceramics plc has become the leader in supplying essential raw materials to the local tile manufacturing sector. During the year under review they have supplied 42,617 MT from their various clay mining projects at Meetiyagoda, Dediyawala and Ovala to the ceramic sector Their mines provide them the leeway for future expansion.

Lanka Tiles plc has been exporting to highly competitive and discerning markets in Australia, New Zealand, USA, Japan, India, Maldives, Pakistan, Singapore, Canada and the UAE for over two decades. They plan to enter the North American and European markets next year.

They have seized the opportunities provided by the sharp decline in global oil prices in the latter half of the year under review enabling their gross profit margin to rise to 30% from the previous year’s 26%.

Waskaduwa Beach Resorts plc, their associate which is a subsidiary of Citrus Leisure plc, opened its doors in 2014 having being renamed Citrus Waskaduwa. This 150-room luxury resort at Waskaduwa occupying a land extent of 9.5 acres is the largest new hotel to be built in post-war Sri Lanka.

Vallibel One has paid an interim dividend of 40 cents per share for the year under review in 2014.

The company has a stated capital of Rs.27.16 billion, total assets of Rs.27.73 billion and total liabilities of Rs.20.9 million in its books.

Mr. Dhammika Perera with 63.48% is the controlling shareholder followed by the ETF (9.35%), Vallibel Investments (8.46%) and Vallibel Leisure (8.46%). The National Savings Bank and the ETF are among the top 20 shareholders.

The Directors of the Company are Messrs K.D.D. Perera (Chairman/MD), Nimal Perera (Executive Deputy Chairman), S.H. Amarasekera, J.A.S.S. Adihetty, Ms. K. Fernando and R.N. Asirwatham.

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First Capital seizes opportunities from reduced secondary market interest rates

First Capital Holdings plc, a Janashakthi Company active in the financial service industry, has posted group revenue of Rs 2.8 billion, up 53.98% from the previous year and an after-tax profit Rs. 984.9 million, up 198.37% from a year earlier translating to an earning per share of Rs. 9.33 against the previous year’s Rs. 3.13 during the year ended March 31, 2015.

The Company’s Chairperson, Ms. Manjula Mathews, attributed the exceptional performance mainly to their primary dealing arm which capitalized on the opportunities offered by the reduction in interest rates in the secondary market.

Additionally, First Capital recorded its highest ever fee income from debt and equity placements reporting an income of Rs. 127 million.

"First Capital’s Debt Structuring and Placement team recorded a business volume of Rs. 22 billion which included a placement of a corporate debenture of Rs. 5 billion, one of the largest debt placements that occurred in the market during the year," she said.

Their corporate finance advisory business had also closed its first private equity placement during the year while their group’s asset management business has tripled its assets under management mainly by the increased volumes from First Capital Wealth Fund, which was the best performing fixed income fund according to statistics of the Unit Trust Association of Sri Lanka.

They had launched three Funds - First Capital Gilt-Edged Fund, First Capital Money Market Fund and First Capital Fixed Income Fund - during the year. They expected these Funds to drive assets under management growth further in the years ahead.

"Both First Capital Equities, now a fully owned subsidiary of the Group and First Capital Markets successfully turned around during the year and began contributing positively to the Group’s bottom line," she said.

The results also included a one-off gain of Rs. 233 million arising from the deemed disposal of shares in the Orient Finance plc which is now accounted for as an associate rather than a financial investment available for sale.

Mathews said that the Group had posted losses of Rs. 294 million on the fair valuation of the financial investments held for trading resulting primarily from the decline in the value of bonds.

She expected the financial services sector growth to moderate from current levels in 2015 amidst political uncertainty. The Central Bank’s key policy rate cuts together with indications for scope for further policy relaxation could imply market rate fluctuation within a relatively low interest low regime, she said.

"As a result, trading gains from the primary dealership are likely to be moderate in the year ahead. The Company will adopt astute strategies to re-position the portfolio to take advantage of trading opportunities with efforts to strengthen the fee-based business in the year ahead," she said.

The Company has a stated capital of Rs. 227.5 million, a risk reserve of Rs. 821 million and retained earnings of Rs.1.2 billion in its books. Total assets ran at Rs. 20.46 billion and total liabilities at Rs.18.13 billion.

Dunamis Capital plc with 45.06%, 25.09% and 4.83% in First Capital in three accounts is the dominant shareholder with Janashakthi owning a further 1.94%.

The First Capital share traded at a high of Rs. 58.60 and a low of Rs. 18.60 during the year under review against a trading range of Rs. 21.60 to Rs.11 the previous year.

An interim dividend of Rs. 2 per share absorbing Rs. 202.5 million for 2014/15 has already been paid and a final dividend of Rs. 2 per share absorbing a further Rs 202.5 had been recommended by the directors for shareholder approval at the forthcoming AGM.

The Directors of the Company are Ms. Manjula Mathews (Chairperson), Dinesh Schaffter (MD), Nihara Rodrigo, Eardley Perera, Ms. Minnette Perera, Nishan Fernando and Chandana de Silva.

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Nuwara Eliya Hotels invest in Colombo city hotel

The Nuwara Eliya Hotels Company PLC (established in 1891) is investing Rs. 10 million in Fair View Hotel (Private) Ltd. which has launched a city hotel property in the south of Colombo by purchasing a million ten-rupee shares in that company, Nuwara Eliya Hotels said in a Stock Exchange filing on Friday.

The investment was described in the filing as a related party transaction.

It said that Mr. George Ondaatjie, the founder of Mercantile Investment and Finance PLC and his three children, Gerard, Angeline and Travis are directors and shareholders of both Nuwara Eliya Hotels and Fair View Hotel and are also directors and shareholders of Mercantile Investments, Nilaveli Beach Hotels, Royal Palms Beach Hotels and Tangerine Tours.

The rationale for the transaction is "to invest cash reserves in a viable project and increasing the holding of a valuable city hotel," the filing said.

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Ravi Thambiayah sees over-expansion of hotel rooms, especially in Colombo

Renuka City Hotels PLC, a largely family-owned and family-run business although quoted on the Colombo Stock Exchange, has posted what its Chairman, Mr.R. B. Thambiayah, called "another year of remarkable performance with a 90% occupancy level and an impressive profitability of Rs. 398 million."

This was up from Rs. 299.6 million the previous year and included substantial other operating income from the company’s valuable quoted share portfolio of Rs. 186.1 million, up from Rs. 67.5 million a year earlier.

The share portfolio costing Rs. 865.2 million had a market value of Rs. 2.31 billion as at March 31, 2015.

Thambiayah reported that the current tourism boom with strong growth in arrivals has created a hype and established great expectation in the future of the hotel industry resulting in a rapid over expansion of hotel rooms, especially in Colombo.

"Approximately 2,000 rooms were expected to be added to the capacity of rooms in Colombo in 2014/15," he noted.

While optimism and investment in hospitality ventures is welcome, he said there must be parallel infrastructure development such as roads, highways, rail network etc to drive this growth momentum.

"Museums, zoological gardens, elephant orphanages and historical attractions are an amusement of the past. The modern traveler looks for experiential tourism. This is the era of interaction. Our challenge is to adopt the latest methodology to be a competitive tourist destination and to outdo the neighbouring countries by transforming yesterday’s amusement to modern day attractions," he said.

Thambiayah urged that the increase in the number of rooms in the island should be better planned and dispersed within the country based on location and demand so that unhealthy price wars would not materialize.

He also stressed the need to see a real increase in the number of flights in and out of the country to facilitate the increase in tourist arrivals.

"The time has come for our industry to press the government to move forward with identified planned positive initiatives upto completion and work closely to initiate new strategies for continuous evolving attractions to drive the tourism industry to world class levels. It’s time we redirect our tourist back to Sri Lanka from Singapore, Malaysia, Maldives and similar destinations that have overtaken us over the years," he said.

He also urged that we should carry out strong promotional activities to bring back hospitality professionals who have left our shores for various reasons.

Many of them who have been overseas for a number of years now, may be more than willing to return to Sri Lanka with the required expertise, experience, knowledge and resources given the right opportunities and incentives.

"It is beneficial to identify their requirements and arrange a framework to assist their return," he said.

Renuka City Hotels incorporated in 1992 runs a four-star property on Galle Road, Kollupitiya adjacent to the original Renuka Hotel which is not quoted company.

The Directors have proposed a final dividend of Rs. 6 per share, up from Rs. 4 per share a year earlier.

The company, with a stated capital of Rs. 110 million, a general reserve of Rs. 2.51 billion, an available sale reserve of Rs.1.45 billion and retained earnings of Rs. 353.5 million has total assets of Rs.4.5 billion and total liabilities of Rs. 75 million in its books.

Renuka Hotels Ltd with 62.22 % followed by the related Cargo Board Development Company (6.51%) and J.B Cocoshell (4.63%) are the top shareholders. Several related companies are also among the top 20 shareholders.

Net asset per share had grown to Rs 632.18 during the year from the previous year’s Rs 498.35. The Renuka City share traded between a high of Rs. 374 and a low of Rs 256 during the year under review and closed at Rs. 310.

The Directors of the Company are Messrs R.B. Thambiayah (Chairman), Mrs. N.A. Thambiayah (Deputy Chairman) Ms. S.R. Thambiayah and A.L Thambiayah (Joint MDs), Mrs. M.A Jayawardene, R.S. Tissanayagam, C.S Wijeyaratne and Ms. N.R Thambiayah.

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Cargo Boat posts "highly satisfactory" 2014/15

Renuka building profits from Fort traffic arrangements

Cargo Boat Development Company plc, operating an office building on Janadhipathi Mawatha, Colombo Fort has once again turned in a ‘highly satisfactory result’ in year ended March 31, 2015 maintaining high occupancy in its Renuka Building throughout the year with high-end tenants like Julius and Creasy.

The Company’s Chairman, Mr. R.B. Thambiayah, has said in its annual report that Janadhipathi Mawatha and all other roads leading to their building was now open to traffic increasing accessibility. Beautification of the surrounding area has added value to their property placing them in a better position to command higher rentals in the future.

They had continued to maintain and upgrade their building and ensure that their property was in good condition, he said.

The owning company had posted a pre-tax profit of Rs. 152.3 million, down from Rs.266.4 million a year earlier. This was largely on account of other income comprising interest, dividends, profit on share trading and profit on disposal of assets declining to Rs. 132 million from Rs. 291.2 million the previous year.

Rental income of Rs. 55.2 million has been received during the year, down from Rs. 59.1 million the previous year. The company had booked a gain of Rs.1.1 million on the disposal of shares against Rs. 95 million on that account the previous year. Dividend income was up to Rs. 53.7 million from Rs. 47.7 million and interest income to Rs. 53.9 million from Rs. 43 million the previous year.

Cargo Boat Development continues to maintain an investment portfolio of quoted company shares costing Rs. 528.7 million and carrying a market value of Rs 1.67 billion in its books. This portfolio is carried as an available-for-sale reserve of Rs.1.14 billion on their balance sheet.

The annual report revealed that a property at No 29 Baybrooke Street in which the company had 40% ownership had been sold to Renuka Land (Pvt) Ltd during the year under review at Rs. 107.2 million.

A related company is undertaking a commercial property development project on this land having decided not to proceed with a hotel project as originally intended.

Cargo Boat Development has a stated capital of Rs. 119 million, a general reserve of Rs. 949 million, and retained earnings of Rs. 106.2 million in its books. Total assets ran at Rs. 2.35 billion and total liabilities at Rs. 35.2 million.

Lancaster Holdings Ltd with 30.13%, Renuka Properties Ltd (22.12%), Associated Electrical Corporations (10.7%) and J.B Cocoshell (6.89%) are the major shareholders of Cargo Boat Development.

The Cargo Board Development share traded at a high of Rs. 149.80and a low of Rs 160 during the year under review against the trading rate of Rs. 151 and Rs. 73.20.

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The Directors of the Company are Messrs. R.B. Thambiayah (Chairman), Mrs. N.A. Thambiayah (Deputy Chairman) Ms. N.R. Thambiayah (Managing Director), Merril J Fernando, Mrs. M.A Jayawardane, Ms. S.R Thambiayah, R.S. Tissanayagam, C.S. Wijeyaratne and Ms. A.L. Thambiayah.

Training on stock market issues for FCID

Officials of the Financial Crimes Investigation Division (FCID) were due to have followed a comprehensive training on the stock markes by the Securities and Exchange Commission (SEC) yesterday (Saturday).

This came on the back of much needed expertise on capital market fraud by the FCID. The training was on the role of the SEC, what the Colombo Stock Exchange does and on the workings of the capital market. The capital market malpractices were also (to be) discussed, an official told the Business Times.

The FCID has been calling in expertise to help with complex financial crimes dealing with the stock market, banking and finance. 

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Sept. 8 discussion on CIFL repayments

By Quintus Perera

The long-awaited arrest of Deepthi Perera, former chairman of the failed Central Finance and Investment Ltd (CIFL) last month has sparked renewed activity in the search for a durable repayment scheme for 4,000 + depositors.

Perera, nabbed at Sri Lanka’s international airport on August 10 with a bogus passport, is to be presented by prison authorities to the Central Bank (CB) on Tuesday, September 8 at 10 am to discuss a settlement plan. Also attending the meeting – along with senior CB officials – is the CIFL Depositors Association (CIFLDA).

These directives were given by Colombo Chief Magistrate Gihan Pilapitiya when the case against Perera was taken up on Thursday. The magistrate also refused an application by accused’s counsel Navin Marapana for bail after lawyers for the CIFLDA and the CB objected. Further hearing was put off for September 15 at which a settlement plan based on the September 8th meeting is expected to be submitted.

CIFLDA President K.W. Gunawardena told the Business Times that their association is preparing a study on all the crashed financial companies and its liabilities. He accused the authorities of adopting various delaying tactics while a large number of depositors who are senior citizens are dying due to their inability to meet their medical expenditure which was earlier met by the income from the deposit interest. 

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UDA’s cash crunch pushes Rs.10 bln debenture investors in a quandary

Several local and foreign investors who subscribed to the Urban Development Authority’s (UDA) debenture issue five years ago are in a quandary as to whether they would be able to redeem their bonds on maturity although there was a Treasury guarantee due to current cash flow problems of the authority.

These bonds issued to fund the housing project five years ago are maturing next month and the UDA has to repay the money to investors after the maturity date, an investor who wished to remain anonymous told the Business Times.An attempt to issue another Rs.10 billion-debenture by the UDA was halted by the Securities and Exchange Commission in March this year as the authority had failed to submit its audited accounts of 2012 and 2013.

According to interim financial statements, although UDA’s group revenue recorded an increase to Rs.709.83 million in 1Q15 compared to Rs.620.60 million during the same period last year, cash flows showed only Rs.126.09 million in rent and Rs.171.03 million in lease premiums received for 1Q15.

Administrative expenses increased to Rs.574.12 million from Rs.479.11 million (y-o-y), while other income which included interest from fixed deposits fell from Rs.276 million to Rs.99.93 million (y-o-y). The interim financial statements indicated a cash flow problem as it was not sufficient to meet even the administrative expenses of the UDA.

Under the present set up the UDA has to raise money through another debenture issue or a Treasury grant to meet its financial obligations, official sources said. The Ports Authority, Bank of Ceylon, Sri Lanka Insurance Corporation, the National Insurance Trust Fund, Seylan Bank, Commercial Bank, Sampath Bank and HNB Assurance were among the local parties who invested in UDA’s Rs.10 billion debenture issued in October 2010.

The UDA debenture was listed on the main board of the Colombo Stock Exchange (CSE) and it enables investors to liquidize their debenture before five years, a UDA official said adding that no investor has resorted to it. CITICORP Investment Bank Singapore Ltd had purchased the entire amount of Rs. 3 billion allocated for foreign investors, informed sources said adding that the money was channelled through the local branch of CITI Bank.

The Ports Authority received Rs. 1.7 billion worth of debentures; the National Insurance Trust Fund Rs. 1.045 billion, Bank of Ceylon and Sri Lanka Insurance got Rs.871 million HNB Assurance Rs.115.4 million (each) .

Three other banks, Seylan, Sampath and the Commercial Bank each received Rs. 435 million worth of debentures.
Gotabhaya Rajapaksa, the then secretary to Sri Lanka’s Defence Ministry, under which the agency operated has issued this Rs.10 billion debenture with a maturity period of five years and at an interest of 11.0 percent per annum, 10 percent monthly or a floating rate of Treasury bill plus 75 basis points every six months.

The UDA has announced at that time that the money will be used to build 65,000 housing units for unauthorised dwellers in 800 acres of high value state land in Colombo city. The plan was to use this land for commercial purposes.

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Pensions Department and CSE target Rs. 60 mln Unit Trusts from pensioners

By Duruthu Edirimuni Chandrasekera

The Colombo Stock Exchange (CSE) together with the Department of Pensions is targeting Unit Trusts (UT) worth Rs. 60 million being traded monthly by pensioners, top officials say.

This follows an awareness programme by the CSE in association with the department to educate pensioners on personal financial planning. “This is coming under the ‘Divi Aruna’ programme for pensioners which help them to generate some extra income for themselves,” Sunil Hettiarachchi, Director General Department of Pensions told the Business Times.

He said a dedicated information desk at the Department of Pensions will open this month to attract ‘new’ pensioners to UTs.
“We now have some 570,000 pensioners with 2,000 new pensioners added every month. We felt that the best way to help these new pensioners is to put their money in a low risk investment option rather than parking them in low return options or them getting attracted to risky investments as was seen in the past,” he said, adding that they are initially targeting 10 per cent of the new pensioners which is 200.

Mr. Hettiarachchi pointed out that some Rs. 13 billion is paid out as pensions by the department each month. “Out of this we are targeting 200 fresh pensioners, which mean roughly Rs. 60 million worth of UT on a monthly basis.” He was quick to add that this depends a lot on convincing them and attracting the pensioners, but was confident as the CSE has shown commitment towards this. “Reaching out to the community of retired persons is an extension of this course of action; to ensure that their savings are channelled in a manner that provides them the most sustainable returns.” www.sundaytimes.lk

CSE urges Govt. to list major SOEs

The Colombo Stock Exchange (CSE) is urging the government to go public with large state-owned enterprises (SOE)s such as the Sri Lanka Insurance Corporation (SLIC) and state banks, officials said.

“We are requesting the government to go public with these state institutions and the pension funds – Employees’ Provident Fund (EPF) and Employees’ Trust Fund (ETF),” an official said, explaining that the CSE will present a budget proposal to back its request. He said the proposal calls for 10 per cent of these entities to be listed on the CSE.

This comes on the back of the Insurance Association of Sri Lanka (IASL) writing to the Insurance Board of Sri Lanka (IBSL) in March where concerns were raised on SLIC being exempted from splitting into life and general sections and subsequent listing (as required by law). (This story is reported elsewhere in this paper).

The CSE in this backdrop is gearing to introduce a State-Owned Enterprises (SOE) board as well. “The CSE is also working to re-brand both boards (Diri Savi and the main board) and grant greater opportunities to SMEs and BOI companies,” the official said, adding that consultations with the investment banks and listed companies have already been carried out and the CSE is now speaking to other stakeholders and will soon be seeking regulator approval.

Industry analysts constantly point out that the lack of market liquidity has been a negative factor in attracting foreign investors to Sri Lanka’s capital market. “The government represents the lion’s share of our economy, controlling banking, insurance, port, aviation, transport, gas sectors. So, it is better to list at least 10 to 20 per cent of the government’s profit-making entities,” an analyst said.

State owned commercial banks, SLIC and Litro Gas are the likely SOE candidates to get listed first, according to officials. 

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