Tariff hike props up Sri Lanka’s Panasian Power profits

ECONOMYNEXT - Sri Lankan hydropower developer Panasian Power said a tariff hike helped boost profits last year although it generated less electricity from its hydro power plants owing to drought.

The company, which now has a total capacity of 11.9MW with 3.5MW under construction, said net profit for the 2015 financial year rose 17 percent to 168 million rupee from the year before.

Earnings before interest and tax rose 36 percent to 220 million rupees from a year ago driven by higher output from its Rathganga Hydropower plant although power generation at the Manelwala Hydropower plant fell slightly.

Panasian Power group revenue rose 34 percent to 299 million rupees from a year ago.

“The increase in tariff together with the notable performance at Rathganga plant during the year had been instrumental for the increase,” the company said.

Chairman and Chief Executive Prathap Ramanujam said the Rathganga power plant was commissioned during the year, adding 1MW to capacity while the firm also acquired a 90 percent stake of Padiyapelella Hydropower Limited.

“We expect the Rathganga plant, being one of the power plants with high plant factor in the country, to yield high generation in the years to come,” he told shareholders in the firm’s annual report.

“Though there is a 15 percent increase to 11.7 Mn KW in power generation at Rathganga Hydropower, the contribution made by tariff for the increase was well above to the total growth in revenue,” the report said.

The average tariff during the year was 15.04 rupees a kilowatt in both dry and wet seasons compared to 11.79 rupees in the previous year.

The rainfall in the catchment area at Manelwala Hydropower project was significantly low for most of the months in the year, the company said.

Sri Lanka's new vehicle registrations up 31-pct in August; slows from July: data

LOOSE POLICY: A combination of loose monetary policy and loose fiscal policy with a state salary hike had generated an unsustainable credit bubble and imports in Sri Lanka.
ECONOMYNEXT - Sri Lanka's vehicle registrations fell to 50,555 in August 2015, from 62,221 in July 2014, but were still up 31 percent from a year earlier, an analysis of the island's vehicle registry showed.

Sri Lanka's car registrations picked up in the last quarter of 2015 as credit recovered.

In August total car registrations fell to 8,860 units from an all-time high of 9,736 in July, though up from 2,361 units in August 2014, an analysis of Sri Lanka's vehicle registry data by JB Securities, a Colombo-based brokerage showed.

Motor cycle imports fell to 25,655 units in August from 33,722 units in July 2015 though still sharply up from 18,997 in August 2014.

Though hybrid car imports slowed after a tax hike in a January budget, small car imports soared, helped by a tax cut, while three wheeler and mobike imports also got on high gear, without a tax cut.

"The primary factor fuelling the demand for vehicles is credit – once the gold bubble burst vehicles was the only remaining collateral based lending available for financial institutions..," JB Securities said in a note to clients.

Demand "skyrocketed" when some of the larger banks started giving loans at 9 to 10 percent, the note said.

A 10,000 rupee salary hike to state workers also raised income, pushing up consumption, JB Securities said.

Analysts who warned that the authorities were driving the country in to a balance of payments crisis also used car imports as a 'leading indicator' to urge tighter monetary policy.

However in June outright money printing had begun.

Hybrid car imports which picked up to 4,320 units in January 2015, were down to 3,813 units in August after a tax hike.

Small cars however picked up sharply driven by both credit and a tax cut.

However Sri Lanka's best selling car, the Maruti-Suzuki Alto, is hardly seen in Colombo roads. They are entry level cars mostly bought by people who own motorcycles and are only used on weekends.

Traffic snarls in Colombo on the other hand are caused by hybrid vehicles, which are owned by more affluent people and executives who get travel allowances. Their running costs are also about half that of conventional vehicles - which are taxed at higher rates - encouraging their use.

Observers say electric cars, which are taxed the lowest also have a presence in Colombo disproportionate to their population, indicating higher mileage compared to Altos.

Sri Lankan shares edge up, financials lead

Reuters: Sri Lankan shares edged up on Monday after two sessions of falls, led by gains in financials in low trading volume as investors were in a wait-and-see mode amid a weakening rupee and high interest rates, brokers said.

The main stock index ended 0.13 percent, or 8.95 points, firmer at 7,162.44.

Turnover stood at 696.6 million rupees ($4.99 million), well below this year's daily average of 1.13 billion rupees.

"Investors are worried about the policy and strategies of the government," said Danushka Samarasinghe, head of research at Softlogic Securities.

Investors are waiting for the budget and how the new government is going to bridge the budget deficit, Samarasinghe added.

"Investors are also expecting further depreciation in the rupee, which could be a reason for them to holding back."

The rupee touched an all-time low of 140.00 per dollar on Monday due to importer dollar demand, although it later regained some of the losses after a state bank sold dollars to arrest the fall, dealers said.

The weaker rupee curbed investor risk appetite and rising market interest rates also hit sentiment with t-bill yields at more than five-month high.

Foreign investors were net buyers of 289.9 million rupees worth shares on Monday, but they have been net sellers of 3 billion rupees worth of equities so far this year.

The country's biggest listed lender, Commercial Bank of Ceylon Plc, rose 1.14 percent and Lanka ORIX Leasing Company Plc gained 0.19 percent. Conglomerate John Keells Holdings Plc fell 0.57 percent. 

($1 = 139.6000 Sri Lankan rupees) 

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

Dairy imports spending increases by 18%, exports drop by 8%

Sri Lanka’s expenditure on dairy and dairy products imports rose by 18% from a year earlier to Rs. 44 billion during 2014, according to a new report by the Ceylon Chamber of Commerce.

Imported volumes, however, had risen by only 3% to 71 million kilograms, and the increase in import values was due to the higher import prices of dairy and dairy products.

The pickup in volumes in 2014 was on the back of a sharp decline in 2013, following issues regarding chemical contamination. Meanwhile, export volumes of dairy and dairy products from Sri Lanka in 2014 fell to 595,000kgs from the six-year high of 661,000kgs, seen in 2013.

The last year’s production was impacted by drought conditions and the spread of foot and mouth disease. The value of exports have declined by 8% in 2014, but remained above the average over the previous 7 years. The largest market for Sri Lankan dairy and dairy products exports in 2014 was the Maldives, accounting for 80%.

The report titled ‘Sri Lanka’s Dairy Sector - A Statistical Analysis’ prepared by the Economic Intelligence Unit (EIU) of the CCC is the first such report on the country’s dairy industry, and provides an in-depth statistical look across the product portfolio of the sector (Milk and cream, Milk powder, buttermilk, curdled milk, yoghurt, whey, butter and cheese).

The report comprises an overview on the international dairy sector, a detailed analysis of exports and imports of dairy products over the period 2007-2014, broken down by product categories and HS codes. The report also provides a look at the numerous changes in government policies and other measures related to the sector between 2010 and 2014, including highlighting that the duty rate for importation of milk powder changed 5 times during 2014. The report is now available for purchase at the Ceylon Chamber.
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JKH invests Rs. 1 b to boost golf tourism biz

John Keels Holdings Plc (JKH) will be investing Rs. 1 billion to boost its prospects in growing segment of golf tourism.

The company on Friday said JKH and subsidiaries have increased shareholding in Rajawella Holdings Ltd., from 16.9% to 51%.

Rajawella Holdings (RHL) operates an 18-hole, Donald Steel designed golf course in Digana. JKH said this coupled together with the overall development potential of the land bank, complements the group’s leisure and property portfolio.

The total investment of Rs. 1.04 billion comprises a partial buyouts from existing shareholders (Rs. 462 million within three years), an infusion into RHL (Rs. 421 million in total within three years), and a release of an existing sublease of land held by the JKH Group and valued at Rs. 161 million in exchange for shares.

www.ft.lk/article