SEC gets tough on ‘too smart’ investors

By Duruthu Edirimuni Chandrasekera

The Securities Exchange Commission (SEC) is keeping a close watch through its ‘surveillance’ mechanism and has warned a few stockbrokers for trying to be ‘too smart’. Informed sources said that warning comes on the back of the regulator bracing itself for an internal restructure in a bid to enhance its efficiency level while getting some pending issues sorted fast.

“The SEC has warned a few stockbrokers verbally since January for ‘derailing’. They had identified the misdemeanours and albeit small had called them to say they are on the watch,” a source told the Business Times. He added that the regulator has done a Gap analysis and identified a few weak areas which it plans to strengthen. According to the source, this will entail creating new divisions for specific subjects and most importantly transferring certain personnel to different areas of expertise.

The SEC has come under fire recently – especially pertaining to certain probes, with stakeholders claiming that the regulator is lagging behind with pending investigations. The source added that SEC in this instance also wants to strengthen its investigations unit and bring in staff that isn’t susceptible to external forces. “It’ll basically be a new organizational chart to tackle the ‘pending’ matters more efficiently and fast-track them.”
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Two more high profile, former CIFL officials arrested

Two more high profile suspects have been arrested and joins Deepthi Perera, former chairman of the failed Central Investments and Finance Co (CIFL), in temporary custody over the CIFL crash.

CID took into custody J.K. Wickramaratne, former CEO and S. B. Kondadeniya, a former Director, CIFL and produced them before Colombo Chief Magistrate Gihan Pilapitiya on Tuesday who ordered that they be remanded till September 23.

In the meantime, Deepthi Perera, in hiding in Cambodia and arrested on arrival in Sri Lanka on August 10 with a bogus passport, on Tuesday presented to court – through his lawyers – a restructure plan to revive the collapsed finance company.

He submitted the plan (based on his promise) after a court-directed meeting with the Central Bank last week.The Magistrate gave one week’s time for the Central Bank and the CIFL Depositors Association (CIFLDA) to go through the plan and make their observations and re-fixed the case for 23 September.

Hundreds of depositors of CIFL were left high and dry after the company – like many finance companies that failed – were unable to pay, first their interest and then their deposits, some years ago. Under the plan, a loan amounting to Rs. 1 billion will be sought from the Central Bank Insurance Fund while a foreign investor is to invest Rs.1 billion which however would be ploughed into CIFL only after nine months. Mr. Perera plans to settle the existing deposits amounting to Rs. 3,400 million spread over five years.

According to the plan the first payment of Rs 75 million would be paid after 11 months of the CIFL revival. Thereafter in the next year Rs. 510 million would be paid to depositors, Rs. 820 million in the second year, Rs. 1,205 million in the third year and Rs. 865 million in the fourth year.
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Pan Asia Bank completes $20 mln funding from Europe-based financier

Pan Asia Banking Corporation PLC (Pan Asia Bank) in its mission to contribute towards helping to create a climate friendly economy has embarked on a green lending drive to fund small, medium and large scale renewable energy and energy efficiency project, a media release by the bank said.

“To this end, the bank has completed a funding arrangement with the Europe based green financier, the Global Climate Partnership Fund (GCPF) to obtain a refinancing facility of US $ 20 million (Rs.2.8 billion) for green lending activities. In view of our strong balance sheet and also proven ability to focus on funding small, medium and large scale green projects, they (GCPF) have indicated willingness even to commit much larger refinancing facilities to us (Pan Asia Bank),” Deputy General Manager, Treasury, Richie Dias was quoted as saying. The release said that the bank is on the green lending drive and is also to assist the government to achieve its national energy objective of increasing the share of renewable energy up to 20 per cent of the energy portfolio by 2020 based on power generation.

“Expanding their mission to further reduce Sri Lanka’s carbon emissions, Pan Asia Bank has now diversified its green lending portfolio in to areas such as solar, wind and hydro power generation,” the release said. According to Mr. Dias, any energy saving project or a trade which minimizes the carbon foot print significantly, could now apply for facilities under this loan scheme.

“When we initially started green lending few years ago, the biggest challenge we had was to design products which are in line with green concept and to educate the market on the availability of green financing because this was something new to this market back then. Today the hybrid market is matured but the renewable energy generation financing market is still in its infancy. So, now we are looking at diversifying our portfolio in to these areas which have a significant potential,” he was quoted as saying.

The release said that one significant benefit that the borrowers receive from green lending is the lower interest rates that they can enjoy compared to conventional borrowing. “This special benefit is offered in view of the fact that funds are expected to be used in environmentally friendly projects which have minimum environmental impact. Meanwhile the borrowers also have the option of choosing between fixed rates and floating rate depending on their risk appetite.”
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Richard Pieris plantation revenues flat

The plantation sector at Richard Pieris Group comprising three regional plantation companies saw its revenue being flat year on year (YOY) Rs. 1882.5 million in 1QFY16 mainly on the back of continuous hostile conditions in the plantation industry, analysts say.

Namunukula Plantations with a topline dip of 18 per cent YoY to Rs. 486.6 million saw improved performance in the oil palm segment relative to its other segments, a Softlogic Stockbrokers report has said. It said that the revenue of upcountry tea plantation, Maskeliya dipped by 6 per cent YoY to Rs. 921.8 million n 1QFY16 whilst Kegalle Plantations topline also declined by YoY to Rs. 555.4 million during the quarter under consideration.

The operating profits of the plantation sector declined by 114 per cent YoY to record an operating loss of Rs. 22.4 million in 1QFY 16. “Low commodity prices along with demand conditions in the global platform together with adverse weather patterns and low production volumes caused the sector to report a poor performance during the period,” the report said, adding that the downward trend of rubber prices together with the wage hike in the overall sector which comes into effect once in two years has intensified pressure on the sector bottom line.

Richard Pieris Plastics sector top line rose by 32.5 per cent YoY to Rs. 1445.1 million 1QFY16 whilst operating profits increased significantly by 90 per cent YoY to Rs. 291.5 million.

Tyre retreading sector revenue increased by 20 per cent YoY and 5 per cent QoQ to Rs. 684.4 million in 1QFY16 whilst operating profit grew by 44 per cent YoY to report Rs. 148.2 million. The report added that the tyre sales of the brand “Nexen” continued to maintain its popularity whilst several new tyre sizes were introduced by the sector during 4QFY15. “In the current economic scenario transportation costs has witnessed a notable decline making it more affordable for the low income segment of the economy to replace tyres with expensive branded tyres. Arpidag Tyres are priced 60-50 per cent lower than brand new tyres hence creating a niche market for the company and as such the outlook of the tyre retreading sector is positive coupled with the increasing disposable income levels of the population,” the report has added.

Rubber sector revenue edged up by 14 per cent YoY Rs. 854 million and operating profit also rose by 36 per cent YoY to Rs. 164.6 million during 1QFY16. Retail sector saw a 17.7 per cent YoY growth in revenue to Rs. 044.5 million in 1QFY16 chiefly led by improved sales volumes.

The company’s continuous commitment towards expanding the supermarket chain based on the inelastic demand and accumulative disposable income levels at present would help the sector to be the growth driver for the group, according to the report, which highlighted that during 4QFY15 the group opened its newest large format retail store in Kottawa whilst it also began commercial operations in four Arpico daily outlets during the period.
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