Sri Lankan asbestos producers resist proposed ban

ECONOMYNEXT – Sri Lankan manufacturers of asbestos roofing sheets have urged the government not to go ahead with a proposed generic ban on all asbestos-related products, saying they are not harmful if used with proper care.

The four manufacturers that have formed the Fibre Cement Product Manufacturers Association to raise awareness of asbestos said the material was used in many countries and that alternative roofing material was more costly.

Anton Edema, co-ordinator of the association, said there was no scientific basis for a generic ban on asbestos products.

“We use only white asbestos which, if it enters the body, is not retained and is not harmful like blue or brown asbestos,” he told a news conference.

He said there were two basic types of asbestos; amphibole and serpentine.

“We use serpentine or white asbestos – called chrysotile – which lasts only a short while in the body.

“The other type, amphibole, is cancerous and lasts longer in the body if absorbed. We have asked the World Health Organisation to make a distinction between the two.”

Priyantha Jayasinghe, marketing manager, Rhino Roofing Products Ltd., part of the St Anthony’s group, said the proposed ban had led to the spread of myths about asbestos and cause alarm among consumers and users.

The Fibre Cement Product Manufacturers Association said in a statement that local consumers have trusted fibre cement sheets that contain a small amount of chrysotile for decades due to their long lasting, durable, easy to use, affordable and tropical weather resistant qualities.

“The products manufactured locally contain 70 percent cement, 22 percent water and only 8 percent chrysotile fibres,” it said.

“The blue and brown variants are not used in Sri Lanka at any of the manufacturing plants currently supplying roofing sheets and other fibre cement based products,” it said.

“Alternative products do not carry the same capabilities as roofing sheets do and come at a much higher cost.”

The association said more research in to safe manufacturing processes, usage and recycling practices, alleged health risks and the viability of alternative products in comparison with chrysotile based fibre cement products must be carried out before any arbitrary ban.

Sri Lanka shares hit over 1-week low; budget uncertainty lingers

Reuters: Sri Lankan shares fell for a third straight session on Thursday to their lowest in more than a week despite foreign buying, while speculation and uncertainty over the upcoming budget dented investor sentiment.

Brokers said total trading volume was low because investors were on the sidelines awaiting policy direction from the annual budget scheduled for Nov. 20.

The main stock index ended down 0.18 percent, or 12.88 points, at 7,006.35, its lowest close since Nov. 4.

"Activity levels are drying down. Everybody is waiting for the budget as they are concerned over the possible taxes from the budget," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

Finance Minister Ravi Karunanayake said market speculations on many uncertainties including further rupee weakening would be addressed once the clarity is given through the budget.

He also said the upcoming budget will be "capital oriented" and will aim for revenue that is higher than recurrent expenditure.

Foreign investors, who have been net sellers of 3.55 billion rupees worth of equities so far this year, bought a net 93.9 million rupees ($661,500) worth of shares on Thursday.

The day's turnover was 579.8 million rupees, about half of this year's daily average of 1.1 billion rupees.

Shares in Commercial Bank of Ceylon Plc fell 0.65 percent, while Dialog Axiata Plc fell 0.89 percent, dragging the overall index. 

($1 = 141.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Expolanka Holdings Sept quarter net profit up 196-pct

ECONOMYNEXT – Expolanka Holdings, a Sri Lankan logistics firm controlled by Japan’s SG Holdings, said September 2015 quarter net profit rose 196 percent to 397 million rupees from a year ago.

Sales rose almost eight percent to 13.9 billion rupees, interim results filed with the stock exchange showed.

Earnings per share for the September quarter rose to 20 cents from seven cents.

“The quarter’s positive results were mainly driven by the sustained performance of the Indian sub continent region,” Hanif Yusoof, Expolanka Group chief executive, said in a stateemnt.

“The US trade lane continues to deliver healthy growth in volumes along with better yields supported by key customer performance.”

Yusoof said the East Asian market too performed well with healthy volume growth in airfreight business.

Vietnam, Indonesia, Hong Kong and China recorded “notable performances” contributing to the overall growth in the sector, he added.

Expolanka EPS for the six months ending 30 September 2015 doubled to 32 cents from the year before with sales up 10 percent to 27.8 billion rupees from the year before.

“The positive results indicate the concentrated efforts on business growth in the Group’s core sectors including operational efficiencies and restructuring efforts,” Yusoof said.

Sri Lanka needs to lure big real estate investors, funds: Platinum1’s Kishore Reddy

(LBO) – Sri Lanka’s real estate market’s full potential needs to be tapped through big investments funds which can pave the way for the island to join its regional counterparts, a property developer said.

“The big real estate investment funds and investors have not come to Sri Lanka yet and some of them haven’t even heard of us yet,” Kishore Reddy, managing director, Platinum1said.

“They are yet to tap our market, but when this happens only then will Sri Lanka’s real potential in the sector will be seen.”

This is why Sri Lanka’s real estate market has not seen the boom that other regional markets have seen in the recent past, he said. “We need to create new marketing tools to attract the big investors and the funds.”

Sri Lanka is only catering to a small market, Reddy says adding he sees a lot of room for the market to grow.

“With tourism picking up this is another market that can be tapped.”

Colombo’s real estate market still mainly focuses on residential properties in the upper-income and premium sectors as the country is heading towards upper middle income status which is backed by low mortgage rates, better pay and bonuses, and optimism about the islands economic future.

Data estimates that upto 80 percent of real estate sector investments are by large firms and are concentrated around high-end apartment developments. Buyers are typically Sri Lankan returnees living overseas, retirees, individual investors and Sri Lankan expatriates.

Analysts say that however there are is a new market space opening up around this core to serve institutional investors, real estate firms and Real Estate Investment Trusts (REITs).

Reddy adds that Sri Lanka is one of the best countries to live in compared to other South Asian countries as our pollution levels are very low and Gross Domestic Product and per capita income is also higher than most countries in the region.

He also said that when comparing market prices in the region’s main cities, Sri Lanka is cheaper and that there is potential to grow further.

Especially if people start buying apartments he said then we will see the local market growing.

“With the long war over there is no reason why there would be no demand for apartments in the future.”

Reddy’s firm Platinum1 is a real estate venture by Platinum Realty Investments, a BOI registered Sri Lankan company with more than 30 million US dollar of capital investment from Sri Lankan investors and Foreign Direct Investments from Paharpur Mauritius Ltd, a fully owned subsidiary of the Paharpur Cooling Towers and Pragnya Fund, a Mauritius Based Equity Fund.

The apartments are a 20 storey complex located at Colombo 03, comprising 66 apartments plus 4 penthouses with facilities such as a swimming pool, gym, spa and restaurant.

Lanka IOC unit records Rs373mn loss in Sept quarter

(LBO) – Lanka IOC, a unit of Indian Oil Company, has reported 373 million rupees loss in September 2015 quarter against 1.1 billion rupees profit reported a year earlier, interim accounts showed.

The firm reported negative basic earnings of 0.70 rupees per share in the quarter compared to positive earnings of 2.13 rupees per share a year ago.

Revenue at Lanka IOC fell 22 percent in the quarter to 17.4 billion rupees amidst falling global oil prices.

Sales costs dropped by 17 percent to 16.8 billion rupees reporting a gross profit of 544 million rupees for the quarter, a 72 percent drop of gross profits against a year earlier.

Finance costs were up by 6.7 folds in the quarter to 258 million rupees and distribution costs were also up by 21 percent to 559 million rupees.

Super gain tax liability for the company has been estimated at 1.4 billion rupees and first installment of 480 million rupees has been paid on 30 October 2015.

Lanka IOC closed at 41.60 rupees on the Colombo Stock Exchange on Wednesday.

Sri Lanka’s Janashakthi Insurance September net down 56-pct

(LBO) – Sri Lanka’s Janashakthi Insurance net profits dropped 56 percent to 102 million rupees in the September quarter against a year earlier amid increased benefits and claims, the firm’s interim accounts showed.

Gross written premiums rose 15 percent to 2.5 billion rupees with net premiums also up by 15 percent to 2.2 billion rupees.

Gross written premiums comprised of 606 million rupees of total life premiums and 1.9 billion rupees of total non-life premiums.

Fee and commission incomes were up 20 percent to 72 million rupees and investment incomes dropped 13 percent to 362 million rupees.

Underwriting and net acquisition costs were up 15 percent to 426 million rupees while net benefits and claims were also up by 20 percent to 1.3 billion rupees.

Total benefits, claims and net acquisition costs rose 15 percent to 2.0 billion rupees.

Janashakthi Insurance as part of segregation requirement of Insurance Board has transferred 635 million rupees of assets to the Life Fund of former National Insurance Corporation (NIC) maintained separately to bridge the Policyholders’ Fund deficit.

The NIC Policyholders’ Fund had a negative solvency of 39 million rupees for the quarter ended 30 September 2015.

“The solvency deficit reported for this period was mainly due to the Policyholders’ liability not being valued for the purpose of calculating solvency margin, quarterly.” the firm said.

The Total Assets of the company as at 30 September 2015 was 23 billion rupees out of which 72 percent is represented by financial investments placed by the company.

In October 2015, Janashakthi Insurance entered into a share purchase agreement with AIA Insurance to acquire the entire shareholding of its subsidiary, AIA General Insurance.

The firm purchased the entire share comprising 18,780,167 ordinary shareholding of AIA General Insurance for a total consideration of 3.2 billion rupees.

The firm is to have a rights Issue of one new ordinary share for every two ordinary shares held in the capital of the company at a price of 18.50 rupees per share.

Sri Lanka's Distilleries group net down despite stronger sales

ECONOMYNEXT - Profits at Sri Lanka's Distilleries group which has interests in alcohol, insurance and plantation fell 22 percent to 1.49 billion rupees, amid higher expenses charged, despite strong revenue growth, interim accounts showed.

The firm reported earnings of 4.83 rupees per share.

At the core alcohol firm revenues rose 45 percent with taxes to 16.5 billion rupees, and net revenues also grew 26 percent to 5.0 billion rupees. But direct costs charged rose 56 percent to 2.9 billion rupees, shrinking gross profits 0.78 percent.

At group level net revenue rose 15 percent to 8.0 billion rupees, cost of sales and benefits paid rse 35 percent to 5.0 billion rupees and gross profits fell 7 percent to 2.97 billion rupees.

In the six months to September, beverages brought 4.0 billion rupees of pre-tax profits, while plantations lost 177 million rupees, down from an 80 million rupee profit a year earlier.

Telecoms lost 278 million rupees down from 109 million rupees and financial services made profits of 155 million rupees up from 55 million rupees. Diversified sector made profits of 542 million rupees down from 586 million rupees.

Sri Lanka rejects bids for Treasuries action; fears for currency

ECONOMYNEXT - Sri Lanka sold only 5.7 billion rupees of Treasuries at an auction Wednesday, rejecting other bids, data from the state debt office showed, raising fears of more money printing and pressure on the currency.

The debt office which is a unit of the central bank rejected bids for 3 and 6-month bills and accepted only 5.78 billion rupees of bids after offering 20 billion rupees of Treasuries for auction.

There is an estimated 30 billion rupees of more of bills maturing this month.

In the bills are repaid with printed money, the excess demand from the newly created money will put more pressure on the currency, analysts say.

The Central Bank will then have to depreciate the rupee, or mop up the rupees in the forex markets by spending its forex reserves.

LOLC Group Credit Rating upgraded to [SL]A with Stable Outlook by ICRA Lanka

ICRA Lanka Limited, a Group Company of Moody’s Investor Services has upgraded the credit rating of LOLC (Lanka ORIX Leasing Company PLC) and its financial services subsidiaries LOLC Finance PLC (LOFC) and Commercial Leasing & Finance PLC (CLC) to [SL] A with stable outlook from [SL] A- with stable outlook.

"The ratings continue to factor LOLC Group’s long track record in the retail finance sector, its leadership position in the Sri Lankan retail finance market, professional and experienced management team and adequate risk management systems with strong retail franchise."

"ICRA Lanka’s assessment to revise the ratings follows the improvement in the asset quality and profitability indicators of LOLC over the last 12-18 months. The group GNPAs improved to 2.8% as in March 2015 as compared to 4.9% in March 2014 and the consolidated Return on Assets (RoA) improved to 3.1% for FYE2015 as compared to 1.9% in FYE2014."

Along with the upgrade of the credit rating of the company, ICRA Lanka has upgraded the credit rating of the LKR 5,000 Mn Long Term Senior Unsecured Redeemable Debenture program and LKR 750 Mn Long Term Unsecured Redeemable Debenture program to [SL]A (pronounced SL A) with stable outlook from [SL]A- (pronounced SL A minus) with stable outlook.

The Group Managing Director, Kapila Jayawardena stated that the upgrade of LOLC’s credit rating reflects the trust and confidence placed on the group by the public as a premier financial services provider in the country. With a wide array of product offerings ranging from microfinance, leasing working capital finance and Islamic finance the LOLC Group is in the forefront of providing access to finance. LOLC Finance PLC has the largest deposit base among non-bank financial institutions and LOFC and Commercial Leasing and Finance uses cutting edge technological innovation to enhance customer experience being the only non-bank financial institutions allowing real time digital fund transferring using CEFTS. Further, both LOFC and CLC provides internet and mobile digital financial facilities on SLIPS (Sri Lanka Interbank Payment System) and CEFTS.The Group provides general insurance including motor, marine, fire & engineering and casualty as well as life insurance. The upgrade of the credit rating of LOLC Finance PLC continues to factor the company’s robust franchise, healthy competitive position given its superior market share and its professional and experienced management team. ICRA Lanka has taken note of the improvements in LOFC’s Asset-Liability Maturity (ALM) profile in terms of moderation in shorter term ALM gaps and improvement in the overall profitability levels. 

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