Auditors can be watchdogs, we can be bloodhounds, says SEC Chairman

(LBO) – Sri Lanka’s Securities and Exchange Commission is seeking greater participation of auditors in keeping them informed of corporate malpractices, SEC Chairman Thilak Karunaratne told Lanka Business Online.

“If they see anything out of the ordinary happening in a corporate, they could warn us. Let them be the watchdogs, we can be the bloodhounds,” he said.

This matches developments in Malaysia, US, UK and Australia where the parent companies of auditing companies in Sri Lanka have agreed to do this.

“Initially it has met with resistance here. But I think they will finally come around. All their parent companies in other countries, they have agreed to do this.”

Recently, Karunaratne said he would explore the possibility of placing a legal duty on audit firms to report irregularities or improper conduct to the SEC.

The SEC, which regulates the capital market via the Colombo Stock Exchange, is in the process of amending the SEC Act. Among other powers, it will have more room to enforce civil and administrative sanctions. The current criminal proceedings it must follow carries a higher burden of proof.

The SEC wants to close loopholes in Sri Lanka’s Companies Act to provide greater protection to minority shareholders.

“Section 246, for example, of the Companies Act, was abused. We just got the AGs opinion today. Simply because you have 90 percent doesn’t mean you can buy out the rest,” he said.

A former Kalutara district parliamentarian, Karunaratne was first appointed to lead the SEC in December 2011 but later resigned accusing the government of interference in 17 ongoing cases.

Karunaratne, who has taken an honorary position in the SEC and does not accept SEC perks, said he is also reopening three investigations and boosting the investigations and enforcement division by mid November.

Commenting on the role of the auditors, Karunaratne said most audits of listed companies are performed to SEC expectations, but a few fall short.

More of his comments on audits can be viewed below.

Interview: Three cases reopened, investigation division to expand in Nov, says SEC Chairman

Author CHAMATH ARIYADASA

(LBO) – The Securities and Exchange Commission of Sri Lanka has reopened three cases as part of probes that will be carried out by an expanded investigations and enforcement division, the SEC Chairman said.

An SEC reorganization will be completed in November, and an upgraded surveillance system will be in place next year, SEC Chairman Thilak Karunaratne told Lanka Business Online.

“When the new commission took over I impressed upon them the need to revisit these cases,” he said.

After building a case for the commission on why they should be reconsidered, three cases from 2010-2012 period have been reopened, Karunaratne said. Three more are on their radar, he added.

A former Kalutara district parliamentarian, Karunaratne was first appointed to lead the SEC in December 2011 but he later resigned accusing the government of interference in 17 ongoing cases.

He resumed his role as chairman in January this year, and has taken an honorary position accepting no SEC perks.

A reorganization of the SEC, which has a staff of 80, will be completed this month to address a manpower shortage in the investigations division, he said.

“An investigation officer is a skilled job, I have asked the IGP, even the FCID and CID for trained operatives at least on a short term basis,” Karunaratne said.

“By mid November things will be in place. By then we will have a fully active investigation division going into all these matters.”

The SEC, which regulates Sri Lanka’s capital market, is in the process of revising the SEC Act which will have more powers for civil and administrative sanctions, support the setting up of a clearing house for settlement of securities, and demutualization of the Colombo Stock Exchange.

“We are looking at a completely new act,” he said.

A committee, chaired by K. Kanag-Isvaran, an architect of the Companies Act of 2007, and other advisors plan to complete the drafting of the SEC Act this month, he said.

The target for passing the new act into law, however, is end 2016, as there are several more steps such as preparation by the legal draftsman, translations, cabinet approval and parliamentary approval, Karunaratne added.

Demutualization of the Colombo Stock Exchange will be possible under the new Act. Sri Lanka currently trails behind regional peers such as India, Bangladesh and Pakistan who have demutualized their stock exchanges away from ownership by stock broking firms in recent years.

Sri Lanka’s Access Engineering to raise Rs5bn from listed debenture

(LBO) – Sri Lanka’s construction giant, Access Engineering is to raise 5.0 billion rupees from a listed debenture issue, the company said in a stock exchange filing.

The company has decided to issue 30 million debentures at 100 rupees each with an option, to issue up to a further 20 million debentures in the event of over subscription, subject to the necessary regulatory approvals.

The subscription list will be open on 12 November 2015 and NDB Investment Bank is managing the debt issue.

Sri Lanka’s Equity One to delist, offers Rs77.50 per share

ECONOMYNEXT – Sri Lankan property firm Equity One PLC said it plans to delist its shares from the Colombo Stock Exchange offering to pay 77.50 rupees for a share which last traded at 48.70 rupees.

A stock exchange filing said the delisting proposal was pending shareholder and regulatory approvals and that the firm will call an extraordinary general meeting of shareholders to vote on the decision.

It said Equity One has made arrangements with its parent, Carson Cumberbatch PLC, which holds a 96.28 per cent stake, to buy out other shareholders who wish to sell.

Sri Lanka Tea Smallholder Factories makes loss in Sept quarter

ECONOMYNEXT - Tea Smallholder Factories, which makes black tea from tea leaves bought from Sri Lankan small farmers, remained in the red in the September 2015 quarter owing to the prolonged slump in tea prices.

The company made a loss of 13 million rupees in the quarter compared with a net profit of 3.4 million rupees a year ago, according to a stock exchange filing of interim accounts.

Sales fell 39 percent to 471 million rupees. The firm made a loss per share for the quarter of 43 cents compared with earnings per share of 12 cents the year before. 

Tea Smallholder Factories slipped into the red in the June 2015 quarter as tea prices dropped owing to political instability in key markets like Russia and the Middle East. 

The losses of Tea Smallholder Factories came mainly from the Matara and Ratnapura regions while Galle and Nuwara Elya showed profits albeit at a lower level, the accounts showed. 

The firm’s three main shareholders are John Keells Holdings with a 37.62 percent stake, Akbar Brothers Limited with 24.39 percent and Central Finance Company 22.85 percent.  

Sri Lankan shares at 2-wk low; turnover slumps

Reuters: Sri Lankan stocks closed weaker on Monday while turnover slumped to a near 3-1/2-month low as investors awaited a key government policy statement and the budget for direction.

The main stock index ended down 0.18 percent at 7,029.07, its lowest close since Oct.19.

The day's turnover was 424.9 million rupees ($3.02 million), the lowest since July. 21 and less than half of this year's daily average of 1.1 billion rupees.

Prime Minister Ranil Wickremesinghe is expected to announce the country's medium term economic policy framework on Nov. 5, outlining the government's economic priorities ahead of the 2016 budget scheduled for Nov. 20.

"Everybody is waiting to see the budget and the prime minister's statement to look at the direction," said Yohan Samarakkody, head of research at SC Securities (Pvt) Ltd.

"The economic direction is what is badly needed for now."

Shares in Bukit Darah Plc fell 6.56 percent while People's Leasing & Finance Plc dropped 4.13 percent, leading the fall in the overall index.

Foreign investors, who have been net sellers of 3.68 billion rupees worth of equities so far this year, bought a net 21.4 million rupees worth shares on Monday. 

($1 = 140.7000 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Sunil Nair)

Multi Finance celebrates 41 years

Multi Finance one of Sri Lanka's financial institutions, recently celebrated its 41th anniversary.

Established in 1974, the Company embarked on a journey providing leasing and hire purchase financing for its customers together with other financial accommodations such as loan deposit facilities and fixed deposits.

Multi Finance is a financial institution licensed by the monetary board of the Central Bank of Sri Lanka. Over the years, Multi-finance has expanded its operations by increasing the number of branches covering major cities in Sri Lanka.

As reflected in its Annual Report 2014/15, Multi Finance has adopted a new strategic direction that focuses on the untapped micro-credit clientele that remains outside the scope of traditional banking and finance products.

Commenting on the Company's milestone anniversary and its new direction, Pushpike Jayasundera, Chief Executive Officer Multi Finance said, "Throughout our 41 years of operations, we have acted as a source of strength and support for people to grow and develop their lifestyles."

In recent years, Multi Finance has gone through a stringent Business Process Re-structure encompassing multiple initiatives aimed at strengthening its core competencies while generating sustainable business opportunities for its customers in order to succeed in the country's rapidly evolving macro-economic landscape.

"We have been successful in implementing this model in the rural sector. In that context, we will be making our presence felt within Sri Lanka's dynamic microfinance sector," said Jayasundera.

- See more at: http://www.dailynews.lk/?q=business/multi-finance-celebrates-41-years#sthash.jhQhCURp.dpuf

Few frontier markets will see credit quality improve: Moody’s

Moody’s Investors Service said that while the potential for economic expansion in frontier markets is strong when compared to emerging markets; only a select group of these countries is well placed for credit improvements.

The analysis is contained in its just-released report titled “Sovereigns - Frontier Markets, A Challenging Climb to Investment Grade”.

Moody’s report points out that none of the 29 rated frontier-market sovereigns in the study has seen dramatic credit improvements over the past 10 years.

For example, the current rating on just one sovereign, Bolivia (Ba3 stable), is higher than the initial rating assigned to it by Moody’s.

By contrast, nearly half are currently ranked below their original ratings, and seven carry negative outlooks versus three with positive outlooks.

Moody’s defines frontier markets as sub-investment grade countries that rely primarily on concessional financing to fund their external public debt needs.

Frontier markets typically exhibit common credit strengths, including stronger growth performance, due to their abundant natural resources, trade openness, and young populations.

At the same time, they share credit weaknesses stemming from rising debt burdens, high external financing needs, and weak institutions.

Looking ahead, only a few sovereigns appear well-positioned for credit improvements against a backdrop of rising interest rates, volatile capital flows, and slowing growth in China.

Lower commodity prices and, in some cases, geopolitical tensions, will dampen export earnings and foreign investment. These factors will weigh on growth and inflate government debt burdens relative to GDP for most frontier markets.

Moody’s report says that governments that have addressed fiscal imbalances, strengthened their institutions to create more stable and predictable operating environments stand to see credit quality advance. The ability to attract foreign direct investment will also be important to reliably fund external financing needs. In addition, countries that have export baskets with less elastic demand profiles will maintain strong growth.
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Real estate, port and logistics to see investment boom

Shirajiv Sirimane in London (shirajivs@ gmail.com)

Sri Lanka's real estate sector will see a major boom and more investments will be seen in this area, Copal Amba Sri Lanka Country Head Chanakya Dissanayake said .

Speaking at the Invest Sri Lanka Forum organised in London by the Colombo Stock Exchange in association with Bloomberg and the Sri Lanka High Commission in UK, he said in addition port related activities along with logistics too will see more opportunities opening up.

He said Sri Lanka will continue the business of transshipment even in a bigger way.

Highlighting the macro-economic overview for Sri Lanka,Dissanayake also identified tourism as another thrust area for Sri Lanka in the future. He said that Sri Lanka since last September has also seen a tremendous growth in Foreign Direct Investment.

"The main reason for this is the repositioning of the Sri Lankan foreign policy involving strong economic partners, USA, UK, EU and India.However Sri Lanka should have more bilateral agreements in place''.

Stewart Investor's Ashish Swarup said they have been investing in Sri Lanka for the past 25 years and have not had any issues.While identifying Sri Lanka as a land to watch he said they welcome the present political environment. "We like to see a government with no corruption like the present one and also a government truly democratic.'' He also said that family businesses were progressing very well and one of the best examples was the Hemas Group.

Acting High Commissioner Dr. Chanaka Talpahewa in his opening remarks said that the Forum was timely since the new Government was finalising a well-integrated economic policy to boost development.

Nearly 150 London-based fund managers, investment advisors and investors attended the event while a panel discussion moderated by Bloomberg's Head of Corporate and Investor Access Tom Tyler followed. The participating Lankan firms were John Keells Holdings, Commercial Bank of Ceylon , Hatton National Bank, National Development Bank, Dialog Axiata, Carsons Cumberbatch, Lion Brewery, People's Leasing & Finance, Softlogic Holdings, Tokyo Cement, Singer Sri Lanka, MTD Walkers and Sunshine Holdings.These firms were represented by Chairman, Managing Director or Director levels.

Finance Minister Ravi Karunanayake delivered the keynote address.
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E Channelling expands into India

E Channelling has expanded into India signing a partnership with Aster Medcity in Kochi.

Aster Medcity is a global healthcare model with high end infrastructure,cutting-edge medical technologies and knowledge partnership with healthcare innovators from different parts of the world. The delegation from Aster Medcity was in Colombo last week to sign the partnership with E Channelling which opens up an unique opportunity for Sri Lankan patients to make confirmed channel bookings with Indian Specialists at Aster Medcity via e Channelling portal www.echannelling.com. Aster Medcity comprises a team of resident and highly specialized senior consultants with a personalized approach giving ample care and time for each patient.

E Channelling Chief Marketing Officer Janaka P Attanayake said they are pleased to tie up with Aster Medcity in Kochi giving patients a wider choice to select specialist medical treatments on the eChannelling platform.

Aster DM Helathcare is headquartered in Dubai, and the Aster DM network encompasses more than 1300 doctors, 290 establishments and JCI accredited diagnostic centres with 14,000 employees.
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