Rs 220 B collection from vehicle import taxes

Vehicle imports have set a new record in terms of revenue collection for the treasury.
As per media reports, customs have recorded LKR 229 billion in tax collections in 2015 surpassing the previous record set in 2011 of approximately LKR 134 billion. The amount collected in 2015 is perhaps double that collected in 2014. The treasury is projecting to collect LKR 280 billion in 2016 which is a 22% increase over 2015 and a 140% increase over 2014 – this is a near impossibility, according to a report compiled by Murtaza Jafferjee, a financial analyst among others.

One of his firms JB Securities has said, all indications are that the realistic estimate in 2016 will be lower.

"I am estimating it to be around LKR 180 billion (potential downside error) – 35% lower that the treasury estimate for 2016 and 20% lower than 2015. My reasons are as follows: Credit extension fuelled the previous boom – LTVs reaching 90% and low interest rates. Both of these factors have been recently reversed, LTV cap is back at 70% - this will reduce demand from those who don't have the minimum 30% upfront collateral and interest rates are rapidly increasing. The categories that are highly dependent on credit – 3-wheelers, mini trucks and small cars will see sizeable contractions.

The currency has depreciated by 8% relative to the US dollar, it has declined further to the Euro and Yen due to their recent strength. This has pushed up prices of not only cars but ALL other items sapping purchasing power.Hybrid vehicles have seen a significant increase in prices, in most categories a 30-35% increase. Demand is NOT inelastic; some will trade down for a cheaper vehicle or hold back hoping the treasury will revise the tariff rates down.


Market demand is also saturated for some of the heightened demand witnessed in 2015 were from potential buyers expediting their purchases anticipating an increase.Permit transfers have been restricted, the limit has been reduced from USD 30,000 to USD 25,000. The finance minister has justified this change on the basis of it being a tax expense. Although I do agree that permits should be done away with due to its distortionary impact on the playing field it made premium cars much more affordable – but it reduced the duties from a ridiculous 172% to a more realistic 126.5% (USD 30,000 permit). Many of the BMW 5-series that were sold for around LKR 10-11 million were on this basis, they will cost an additional LKR 2 million. Either these buyers will trade down to a less premium model or delay their decision or buy another durable with less incidence of taxes, e.g. duty free speed boats," said Jafferjee. (IG)

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Janashakthi sells Staples Street lease to Sanken in Rs. 1.9 bn. deal

In a real estate transaction due to be completed in two months (by March 25), Janashakthi Insurance PLC has struck a Rs. 1.93 billion deal with Sanken Construction (Private) Ltd. to assign its No. 24, Staple Street Colombo-2 leasehold land and premises to Sanken.

The purchaser (Sanken) had on Dec. 23, 2015, paid a 50 percent advance of Rs. 965,340 million to Janashakthi.

In a Stock Exchange filing on Friday, Janashakthi announced that the profit generated from the transaction is approximately Rs. 940 million.

Capitol Developers, a member of the Sanken group, will build a 388 apartment block on this land. (See separate story on this page)

The agreement requires Janashakthi to obtain all UDA approvals as well as cabinet approval for the assignment of the leasehold rights of the property to Sanken and also approval for Sanken to build residential condominium apartments and sell convey freehold rights of such apartments to prospective buyers.

Sanken is one of the biggest property developers in Colombo and are partners with the JKH group in the Cinnamon Red Hotel on Green Path in which holds a major stake.

Separately, Janashakthi informed the Stock Exchange that Janashakthi General Insurance Ltd. and AIA General Insurance Lanka Ltd., which is acquired last year and is now a subsidiary of Janashakthi has been merged in terms of the company law with the amalgamation taking effect on Jan. 29.

AIA General Insurance Lanka Ltd. will be removed from the Company Register by the Registrar General of Companies, the Stock Exchange filing said.
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CAL goes online with mobile app for Trading in Sri Lanka

Capital Alliance (CAL), Sri Lanka’s leading full service investment bank is about to turn a page in Sri Lanka’s financial markets. In today’s world, people can do almost anything with their smartphones or tablet devices. From checking email, to staying connected via social media, to turning off the lights in the house while out on the town, people rely heavily on their handheld devices. Adding another to this list CAL is launching its new and unique mobile application for trading ‘CAL ONLINE’, the company media release revealed.

”CAL ONLINE”, is the one stop shop for your trading and investment needs. The app provides you access to real-time information on Equity and Debt markets at your fingertips and the ability to trade real-time in a seamless manner off your mobile or your tablet,” the media release quoted Ajith Fernando – Managing Director, CALas saying. The users are not required to hold an account with CAL to use the app and gain access to market data on shares, bonds and CAL’s unit trusts.

However CAL account holders are provided with premium features such as the ability to trade on-the-go, CAL investment recommendations to clients on a real-time basis and the ability to manage individual portfolios. With the launch of this app anyone who has a smartphone will be able to test their hand at trading and investing. You can essentially buy, sell or just stay in touch with all your investments while you wait, it may be while you’re traveling or even when you’re stuck at a meeting.

‘CAL ONLINE’ also provides customers financial independence, granting access to the capital markets at their own discretion without having to rely on intermediaries, Mr. Fernando said. ‘CAL ONLINE’ will be available for both iOS and anroid platforms on App Store and Google Play. The CAL Group of companies deliver integrated and customized financial and investment solutions for a diverse portfolio of clients. CAL’s service offering also includes investments and wealth management, fixed income securities, investment banking and equity brokering.

www.sundaytimes.lk

CSE to launch US dollar denominated board this quarter

Foreign firms will be able to trade on the Colombo Stock Exchange (CSE) soon. The CSE has plans to launch a separate board for dollar denominated securities this quarter where foreigners can trade and the rules pertaining to this are being formulated , oficials said. ”We obtained exchange control approval to list foreign companies in the CSE and now we’re awaiting the Securities and Exchange Commission’s (SEC) nod,” an official told the Business Times. He said rules will be drafted and they will canvass for foreign firms to trade. “It’s restricted to foreigners and we’ll provide infrastructure for foreign fund managers,” he said, adding that some large Maldivian hoteliers are interested.

He added that CSE has entered into a Memorandum of Understanding (MoU) with the Maldives Stock Exchange to introduce dollar denominated securities and a CSE team trained their Maldivian counterparts last month on (Maldivian firms) going public on CSE along with different aspects on clearing, trading and settlement, he said. “The MoU facilitated this.” Analysts say that encouragement to list US Dollar denominated securities of foreign firms will help Sri Lankan Capital Market achieve hub status in the region.

 

According to the CSE officials, the CSE is also extending its reach beyond borders to cooperate commercially with its peer exchanges in the region and similar efforts in roping in firms such as in the Maldives will be explored in countries like Bangladesh and Bhutan.

www.sundaytimes.lk

EPF back to old games?

Questions are raised in the capital market about the recent behaviour of the Employees’ Provident Fund (EPF) pertaining to a blue-chip company with many pointing fingers at the state pension fund for manipulating the share market. ”The EPF has called more than four stockbrokers and placed ‘sell’ orders on John Keells Holdings (JKH) in a bid to bring its price down,” an analyst said. According to brokers the EPF is eyeing a larger parcel at a lower price. “They quoted Rs. 140 per share for a large block, but didn’t specify the quantity. This selling down is actually dumping and will bring the market down which shouldn’t happen.”

Another analyst pointed out that this was tantamount to manipulation. “The EPF, the largest fund in South Asia is not the private fund of a few people who decide on its investments; particularly questionable transactions in the CSE where allegations of ‘pump and dump’ have been made.”

The new plan of the present government is to set up a public trust to independently manage the Employees Trust Fund and EPF by amalgamating them to create a new national pension fund that will have a combined worth of Rs. 1.7 trillion.

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CSE’s plans on SME board face a snag

The Colombo Stock Exchange’s (CSE) plans to set up a separate trading board for Small and Medium Enterprises (SME) have come up with a snag involving taxation by the recent budget. 

Officials said that the recent budget proposal to raise the annual registration fee of public quoted companies is a dampener on SME vying to list on the CSE. 

“If not listed, the Registrar of Company’s annual fee is Rs. 60,000. The Rs. 500,000 is a deterrent for SME to go public,” a SME owner told the Business Times. 

 The CSE has made some representations to the Treasury requesting for a waiver, but they’re yet to get a response.

www.sundaytimes.lk

Touchwood liquidator reveals attempts to dupe creditors again

By Sunimalee Dias

A former top Touchwood Investments official was recently found to have established a new company and carrying out maintenance of the liquidated company’s properties and charging fees from its creditors to the dismay of liquidator Sudath Kumar. Touchwood Investments Liquidator Kumar said in an interview with the Business Times on Thursday that a new company titled Sintec Plantation Management of which former Touchwood Investments CEO Channa Abeygunawardena is currently a Director has been carrying out maintenance work on the Touchwood properties and illegally obtaining fees in this regard from creditors.

These latest developments came into light in October and it was noted that Mr. Kumar would be filing a court case in this regard against Mr. Gunawardena and the said company. Mr. Kumar further stated that on the other hand, JAT Holdings which was previously contracted by Touchwood Investments to carry out maintenance work of the company’s properties had since a year back been collecting fees from the creditors in this regard. The liquidator pointed out that creditors need to be aware that any maintenance work could only be carried out with the permission of the liquidator who was currently in charge of the company.

Further, JAT Holdings had stated that they were owners of certain properties of Touchwood Investments where it was found that they had entered into transactions with smaller investors owning from about five to 40 perches of land for which they laid claim However, once the court case was going on they proposed to purchase the properties as advertised by the liquidator for the maintenance of the lands to pay off the investors. As a result the case was put off till February 24 and prior to which the company is expected to submit their proposal to Liquidator Kumar on how they were proposing to pay for the rights to the company lands that would make them owners of the properties of Touchwood Investments.

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Sri Lanka inflation slows to 0.9-pct in January

ECONOMYNEXT – Inflation in Sri Lanka rose 0.9 percent in January 2016, slowing from 2.8 percent the previous month, the Department of Census and Statistics said.

The Colombo Consumer Price Index (CCPI) fell 0.2 percent in January 2016 compared with December 2015. In December, the CCPI had risen 0.3 percent.

The statistics department said the CCPI for all items for the month of January 2016 was 184.9, down 0.3 index points or 0.16 percent compared to the month of December 2015.

On the month-on-month basis this was due to the decrease of food items by 0.27 percent and increase of non‐food items by 0.10 percent.

Sri Lanka JKH December net down 10-pct to Rs3.9bn

ECONOMYNEXT – Sri Lanka’s John Keells Holdings said group net profit fell 10 percent to 3.9 billion rupees in the December 2015 quarter from a year ago when a hefty capital gain was included in earnings.

Group sales were flat at 24.7 billion rupees with its insurance unit, Union Assurance General Limited being classified as an associate company from January 2015 onwards, and bunkering business hit by the steep fall in oil prices, a stock exchange filing said.

December quarter diluted earnings per share fell to 3.26 rupees. Diluted EPS for the nine months to December 2015 rose to 8.23 rupees, with net profit up five percent to 9.55 billion rupees from the year before.

JKH group had made capital gains of 610 million rupees in the December 2014 quarter.

“Excluding the impact of the capital gain, the adjusted profit attributable to shareholders for the quarter and the first nine months are an increase of 5 percent and 17 percent, above the corresponding periods in the previous financial year,” JKH chairman Susantha Ratnayake said.

JKH’s transportation industry group profit before tax fell 32 percent to 464 million rupees in the December quarter from the previous financial year mainly because of a lower contribution from the bunkering business and to a lesser extent the ports business.

“The Port of Colombo witnessed a year on year growth in excess of 5 per cent overall, which underscores the potential and augurs well for capacity led growth,” Ratnayake said.

The bunkering business maintained its market share during the quarter but sales and profitability were “significantly impacted” by the steep reduction in global oil prices where inventory purchased at higher prices had to be sold at prevailing market prices, he said.

JKH group’s hotels business pre-tax profit fell 13 percent to 1.22 billion rupees in the December quarter from the year before because of lower occupancy in its city hotels with the exception of Cinnamon Red.

This was because of higher competition with the more hotels being built in Colombo and the lower volumes of business and conference guests.

“The Sri Lankan resorts sector witnessed an increase in average room rates although occupancies declined marginally due to increased room inventory coupled with a decrease in arrivals from the Russian market,” Ratnayake said.

Tourist arrivals in to the Maldives were also hit by the political uncertainties and travel advisories to the country.

JKH’s property business pre-tax profits rose 48 percent to 558 million rupees in the December from the previous year mainly owing to sales of apartments in its “7th Sense” residential development project.

The construction of Cinnamon Life has seen “”some unforeseen delays” and is expected to be completed in 2019.

The group’s consumer foods and retail business pre-tax profit shot up 86 percent to 1.08 billion rupees in the December 2015 quarter from the previous year.

“The improved performance is mainly attributable to the double digit volume growth on account of positive consumer sentiment,” Ratnayake said.

Sri Lankan shares rise to near one-week high

Reuters: Sri Lankan shares rose for a second straight session on Friday, hitting near one-week highs as local investors picked up battered large-cap stocks.

The main stock index ended 0.32 percent, or 20.16 points, higher at 6,340.05, its highest since close since Jan. 25.

The index has fallen over 8 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

"Local investors were largely active on the bourse," TKS securities said in a note to investors.

Foreign investors sold a net 34.5 million rupees ($239,666.55) worth of shares on Friday, extending the year-to-date net foreign outflow to 2.71 billion rupees worth of equities.

Turnover was 387.3 million rupees, around half of this year's daily average of 748.2 million rupees.

The central bank rejected all bids at an auction on Wednesday, signalling it would not tolerate much increase in yields after the yield on the 364-day t-bill jumped 32 basis points to a more than two-year high of 7.80 percent last week.

This move could help investors return to the market, analysts said.

Shares of Distillers Company of Plc rose 2.83 percent, while Nestle Lanka Plc advanced 2.43 percent.

Lanka ORIX Leasing Co Plc rose 2.17 percent, while conglomerate John Keells Holdings Plc gained 0.72 percent. 

($1 = 143.9500 Sri Lankan rupees) 

(Reporting by Ranga Sirilaland Shihar Aneez; Editing by Anand Basu)

RBI extends Sri Lanka US$1.1bn swap deal

ECONOMYNEXT – Reserve Bank of India has agreed to extend the 1.1 billion US dollar swap deal with Sri Lanka’s central bank which was to expire in March 2016, Finance Minister Ravi Karunanayake said.

The deal has been extended for one year, Karunanayake told a news conference.

Inflows of dollars currently being received by the island will help support the rupee, Karunanayake said.

Sri Lanka Trans Asia Hotels December quarter net down 53-pct

ECONOMYNEXT - Trans Asia Hotels, a unit of Sri Lanka’s John Keells Holdings, which operates the five-star Cinnamon Lakeside Hotel, said December 2015 quarter net profit fell 53 percent to 82 million rupees from a year ago.

Sales fell 11 percent to 703 million rupees, the company said in a stock exchange filing.

Distribution and operating expenses rose while tax costs fell.

In the nine months ending 31 December 2015, et profit fell 97 percent to 12 million rupees with sales down 30 percent to 1.7 billion rupees.

Omani firms eye tourism, property investments in Sri Lanka

ECONOMYNEXT – Investors from Oman are keen on big projects in Sri Lanka including in property and tourism, the Ceylon Chamber of Commerce said.

It said in a statement it hosted a visit by the Omani Chamber of Commerce and Industry.

“We like to invest in big projects, which Sri Lanka is planning to launch. Give us information on those projects,” Omani Chamber of Commerce and Industry Chairman Said Saleh Said Al Kiyumi was quoted as saying.

Kiyumi and his team, in the country to attend the Eastern Investment forum, said that they are willing to look at projects in the areas of tourism, property development and SME development.

Transparent bids for Sri Lanka airport duty free shops

ECONOMYNEXT – Companies wanting to operate duty free shops at Sri Lanka’s Bandaranaike International Airport in Katunayake, earlier given to two firms without bids, will now have to go through a transparent bidding process, a government spokesman said.

Duty free shops play a key role in airport trade activities and the maintenance of these shops in the arrival and departure terminals had been given as a franchise right shared among two operators, said Health Minister Rajitha Seneratne.

“No tender procedure or calling for competitive bidding had been done in the selection,” he told a news conference.

The Cabinet of minister approved a proposal by Minister of Transport and Civil Aviation Nimal Siripala de Silva to appoint a Cabinet Appointed Procurement Committee and Technical Evaluation Committee to award duty free shop operations for a five-year period.

“This will be done according to the tender procedure in a more transparent manner with the intention of gaining more benefits to Airport and Aviation Services Limited,” Senaratne said.

CSE suspends PCH share trading with immediate effect

The Colombo Stock Exchange (CSE) today (28 January) decided to suspend the trading of PC House PLC and PC Pharma PLC due to non-submission of Annual Reports for the year ended 31 March 2014 and 31 March 2015 to the CSE in compliance with CSE Listing Rules and Sri Lanka Accounting Standards.

Several weeks ago, the CSE suspended trading of Entrust Securities PLC and the suspension is yet to be lifted.

Meanwhile, this morning the CSE also halted the trading of Lanka Ashok Leyland PLC pending a clarification from the Company regarding a press article on the financial results as at 31 December 2015. Subsequently, this trading halt was lifted at 11.00 am today (28 January) after the interim financial statements as at 31 December 2015 were uploaded on the CSE website.

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Sri Lankan shares snap three-session losing streak

Reuters: Sri Lankan shares snapped a three-session losing streak and closed marginally higher on Thursday as investors picked up some beaten-down large-cap stocks.

The main stock index ended 0.05 percent, or 3.43 points, higher at 6,319.89, after posting its lowest close since Jan. 20 on Wednesday.

The index had fallen 8.4 percent so far this year through Wednesday as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

Foreign investors sold a net 13.9 million rupees ($97,081) worth of shares on Thursday, extending the year-to-date net foreign outflow to 2.71 billion rupees worth of equities.

Turnover was 548.4 million rupees, lower than this year's daily average of 768.3 million rupees.

The central bank rejected all bids at an auction on Wednesday, signalling it would not tolerate much increase in yields after the yield on the 364-day t-bill jumped 32 basis points to a more than two-year high of 7.80 percent last week.

This move could help investors return to the market, analysts said. The central bank, as expected, kept its key policy interest rates unchanged on Monday.

Shares of Lanka ORIX Leasing Company Plc rose 3.85 percent, while Ceylon Tobacco Company Plc gained 0.60 percent.

Dialog Axiata Plc rose 0.99 percent, while conglomerate John Keells Holdings Plc ended steady . 

($1 = 143.1800 Sri Lankan rupees) 

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

IRCON sees Sri Lanka rail upgrade investments at US$1.5bn

ECONOMYNEXT – Sri Lanka will need investments of about 1.5 billion US dollars to upgrade the rest of its railway network to modern standards, said S L Gupta, Country Head of IRCON International Ltd.

The Indian government-owned firm has completed all the major projects it was hired to do and will bid for any new ones offered, he told a news conference.

“There is a need to further improve rail transportation in Sri Lanka,” Gupta said. “Rail transportation is a capital intensive business – you need a lot of money.”

He said he estimates investments of 1.5 billion dollars are needed to upgrade parts of the railway that had so far not been included in the post-war modernization of infrastructure underway.

IRCON started its work in the island when it was hired to rebuild rail tracks on the south coast that was devastated by the December 2004 Indian Ocean tsunami.

After the island’s 30-year ethnic war ended in 2009, IRCON was also given the contract to repair and modernise the rail network in the north.

“We will be only too happy to have more projects,” said Gupta. “I am a railway man. I will always suggest to any government to go for rail transportation which is cheaper and more efficient and comfortable than road travel. Rail transport is backbone of any economy.”

Rejection causes fall

Ceylon Finance Today: Yesterday's rejection of bids at the Treasury (T)-Bill primary auction (see connected story found elsewhere on this page), resulted in treasury yields fall in secondary market trading afterwards, sources told this reporter.

While the shorter tenures (ie those maturing this year) declined sharply by 20 basis points (bps) those of the longer tenures decreased by 10 bps (after going up by around 50 bps on Monday), they said.

Meanwhile, Central Bank of Sri Lanka (CBSL) on behalf of the Government of Sri Lanka (GoSL) will hold a T-Bond auction for the sale of Rs 15,000 million worth of T-Bonds to the market today .Those comprise Rs 2,000 million worth of T-Bonds maturing in 2020 (four years and 10 months), Rs 3,000 million worth of......T Bonds of 2026 maturity (maturing on 1 June, 2026), Rs 5,000 million worth of 2030 maturities (14 years and three months) maturing on 15 May, 2030 and Rs 5,000 million worth of 2045 maturities, i.e. 29 years an one month, maturing on 1 March, 2045 respectively.

When this announcement was made on Monday, that caused the yields of the longer tenures, which market sources said that there was no demand, to rise by 50 bps in secondary market trading on that day, while on the following day Tuesday, the market was placid, probably waiting for the outcome of yesterday's T Bill auction before making their next move.
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Ashok Leyland ups nine month revenue driving sales volume up 40% YOY

Lanka Ashok Leyland recorded a top line of Rs 7.4 bn, a 27% increase over Rs 5.8 bn recorded for the same period last year.

The third quarter recorded a turnover of Rs 2.7bn with robust demand from the private sector driving sales volume up 40% year on year.

Profitability was squeezed as import costs rose with the weakening rupee and some additional provisioning resulted in a profit before tax of Rs 242.5mn, a 51% decrease on 2014/15. The gross profit margin fell from 11% to 8% while the net profit margin fell to 2% from 6% for the same period last year, the depreciation and lack of currency stability is a key factor to us.

“We continue to have a sizeable outstanding amount due from the Government sector which has put pressure on our working capital, resulting increased borrowings which rose 22% to Rs 2.0 bn. Finance costs, net of exchange rate losses and gains remained flat year on year at Rs 37.8 mn.

Lanka Ashok Leyland CEO Umesh Gautam said they are thrilled with the demand response from the private sector and the robust sales performance is indicative of that.

“We are buoyed by our efforts to increase and improve our sales in the light commercial vehicle segment. Sales have jumped 104% year on year but we still have bigger inroads to make in this segment. We have built up our inventory levels since 1Q2014 and this will act as a hedge against the USD volatility if the volatility continues and we cut down our imports till it becomes stable again.

www.dailynews.lk

Tea production declines to three year low in 2015

Sri Lanka's tea production in 2015 has declined to a three year low of 328.96 Mn kg, down nine Mn kg (-3%) on the 2014 figure of 338.03 Mn kg.

The highest annual production was 340 Mnkg recorded in 2013. Since 2010 national production has hovered around these levels.

According to published data by the Sri Lanka Tea Board (SLTB) analyzed by Siyaka Research, both High and Low Growns declined year on year with the latter elevation accounting for almost 85% of the national crop loss in 2015.

Medium production figures however were maintained, likely through movement of tea from other elevations. In the Low country sub districts Galle accounted for 50% of the production loss in 2015 YoY 2014. Deniyaya and Ratnapura too recorded losses, but were around a third of the Galle figure.

Amongst the higher elevations Demodara / Hali Ella / Badulla recorded the sharpest losts. Other districts recorded nominal crop losses on the 2014 figures. A key factor would be the dry conditions projected for Q1 2016 and this could play a significant part in Q2 as well. Reduced fertilizer subsidy and banning of cost effective weedicide would place both Estate and SmallHolders under pressure considering the added restriction of lower prices.

Continuing uncertainty over wage negotiations could trigger disruption of work on estates. On the other hand, any negotiated wage increase would further pressurize the Regional Plantation Companies and will have a domino effect of increasing costs for Small Holders; struggling with low green leaf prices.

Overall the country would need exceptional growing conditions and revival in the market at least through a depreciation of the Rupee; if 2016 annual production figure is to reach a 330 + Mnkg level.

The El Nino Phenomenon could cause extremes of weather ranging from drought to excessive rain and storms.

www.dailynews.lk

New Hilton Board, Cabinet to decide today

A new Board of Directors is to be appointed by the government to the management of Colombo Hilton soon. The appointments are to be made by Highways and Investment Promotion Minister, Kabir Hashim.

Some of the board members have refused to resign despite the Prime Minister's office making representations for them to resign and pave way for the appointment of a new board.

They had maintained that they were appointed by the Finance Ministry and a directive has to be issued by the ministry if they were to resign. The final decision is to be taken at today's Cabinet meeting.

www.dailynews.lk

Rs 580 mn Heights Residencies begins work

M. C. Urban Developers Ltd, a subsidiary of Millennium Housing Developers PLC, will invest Rs. 580 million to build The Heights Residencies at Edmonton Road, Colombo 5.

The project will be completed in 18 months. 'The Heights', which marks their foray into the world of vertical living, will comprise 30 apartments with 3 bedrooms each, boasting a host of luxury, fitness, safety and environment-friendly features. The price range will be from Rs. 22 million upwards.

Millennium Housing Developers Chairman Sisira Weerabahu said that already 12 apartments have been sold out. He said they have several ground breaking features. "Solar panels provide electricity for use in all common spaces, thereby reducing the apartment owners' financial contribution towards their maintenance. Rainwater harvesting is another feature, which provides water for maintenance of common spaces, including the gardens and all greenery within the apartment complex."

Nawaloka Holdings Director and CEO Harshith Dharmadasa and Millennium Housing Developers Chairman Sisira Weerabahu at the ground breaking.

In addition to 24-hour security within the apartment complex and standby generators,each apartment comes with video doors. The images from the video doors can be accessed by smartphone.

Well-known brands such as Grohe, Toshiba, Mitsubishi, American Standard and Elba are represented in the apartments' fixtures and fittings, which lend them a touch of elegance, in addition to reliability and durability. Wi-fi and satellite TV facilities are available for all residents.

A jogging track, on the rooftop, provides ample space for jogging and brisk walking, while a fully equipped gymnasium with treadmills, machines and free-weights cater to the needs of manytypes of fitness enthusiasts. A separate area has been allocated for aerobics and yoga, which helps in maintaining all-round fitness.

The apartments are ergonomically designed in a manner that maximises the efficient the use of space, resulting in larger bedrooms and living spaces, as well as more natural lighting and ventilation. It also optimises the feeling of 'homeliness', while living in an apartment. The barbeque area is ideal for residents to get together and socialise on those special occasions or whenever they are in a mood to have a good time. A well-stocked library also adds to joy of being among those with similar cerebral pursuits.

M C Urban Developers Ltd, a subsidiary of Millennium Housing Developers PLC, has undertaken The Heights as a BOI project, which is governed by BOI laws.

It is also a Public Quoted Company, thereby assuring apartment owners of ample legal protection. This project is backed by the Nawaloka Holdings. (SS)

www.dailynews.lk

Court action bars Seylan Bank from dissolving share owning schemes

Zahida Rizvi

Seylan Bank, has failed to dissolve the share owning schemes before March 1, 2015.A Colombo Stock Exchange statement listed the reasons as to why the Bank did not meet with the said requirements.

Six share owning trust companies were established in 1995, 1999 and 2000 which have acquired shares of the Bank from time to time at the market prices prevailed at that time. The Bank was the Settlor of the trusts and the purchase of the shares were fully funded by the Bank. These six trust companies currently hold a total of 12,752,994 shares of the Bank's Ordinary (Voting) Shares. These shares are the subject matter of Court actions where the contention of the Bank and the Trust Companies is that the shares which are held in the Trust Companies are not being held for the benefit of employees and consequently the shares need to be sold and the proceeds credited to the Bank.

The Companies will not be able to dispose of or transfer these shares until the final determination of the Court actions as there are interim injunctions which have been issued by the District Court preventing each of the above trust companies from transferring the shares held.

Therefore, the Bank is not in a position to comply the Listing Rules of the CSE until final determination of the said court actions.
www.dailynews.lk

Sri Lanka central bank gets new deputy governor

ECONOMYNEXT - Assistant Governor of Sri Lanka’s central bank S. Lankathilake has been promoted to the post of Deputy Governor with effect from 24th January 2016.

A statement said Lankathilake has more than 30 years of experience in the central bank in the areas of economic and price stability, financial system stability and agency functions.

Prior to this appointment he held the position of the Assistant Governor in-charge of Bank Supervision, Supervision of Non-Bank Financial Institutions and Financial Sector Research Departments and Financial Intelligence Unit.

Lankathilake holds an MA in Economics and a Postgraduate Diploma in Economics from the University of Manchester, U.K., and a B.Com degree with 1st Class honours from the University of Peradeniya.

Lankathilake has also served as a member of the Board of Directors of Sri Lanka Export Credit Insurance Corporation, Board of Management of the Title Insurance Fund of Registrar General's Department, and National Labour Advisory Committee.

Sri Lanka to sack defiant 'Hilton' board

By ECONOMYNEXT Political Correspondent

ECONOMYNEXT - Sri Lanka's government is set to sack the board of the state-acquired enterprise which owns the Colombo Hilton building after they defied calls to step down, official sources said.

The Cabinet of Ministers are expected to discuss the removal of the board headed by Sagarica Neelamani Kumari Delgoda who has refused to resign despite repeated calls by Prime Minister Ranil Wickremesinghe.

"The board insisted that they were appointed by the Secretary to the treasury and as such they could not be removed by anyone else," a government source said. "But since the previous government expropriated Hotel developers, the board comes under a Competent Authority."

The government sanction is sought to get the Competent Authority to sack the entire board and allow Minister Kabir Hashim to make new appointments.

The directors who are fighting to stay on had been named when Ravi Karunanayake had charge of the company. But under the new government following August parliamentary elections, the subject of the hotel went to Hashim.

It has also been brought to the notice of the cabinet that a "settlement" in respect of the long-standing Hilton dispute may be illegal and any monies paid to shareholder and former director Nihal Ameresekere may be illegal.

Ameresekere's daughter Dheeshana Swarnarajini Ameresekere had been made a director of the Hotel Developers board by the new government despite the controversies surrounding them.

Sri Lanka's Aitken Spence to buy Oman's Al Falaj Hotel

ECONOMYNEXT - Sri Lanka's Aitken Spence Hotels said it had reached a deal to buy Al Falaj Hotel in Oman for 14 million Omani Riya;s (36 million US dollars).

The hotel, owned by Oman Hotels and Tourism Company has been managed by Aitken Spence since 2008.

Spence said the deal was subject to due diligence and regulatory approvals.

The Al Falaj hotel would be acquired though Aiken Spence Hotels International (Pvt) Ltd, a subsidiary company.

Aitken Spence said it was also managing four other hotels including Desert Nights Camp in Oman.

Sri Lankan shares fall for 3rd day to 1-wk closing low

Reuters: Sri Lankan stocks fell for a third straight session on Wednesday to a one-week closing low amid foreign outflow as investors worried over volatile global markets and rising returns on risk-free assets.

The main stock index ended 0.1 percent, or 6.41 points, lower at 6,316.46, the lowest close since Jan. 20.

"Even though market is still on a falling trend, there could be bounce back with the start of the earnings season and after the recent sharp fall," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

The index has fallen 8.4 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

Foreign investors sold a net 414.2 million rupees ($2.89 million) worth of shares on Wednesday, extending the year-to-date net foreign outflow to 2.69 billion rupees worth of equities.

The day's turnover was at 613.9 million rupees, less than this year's daily average of 781.2 million rupees.

The central bank rejected all bids at an auction on Wednesday, signalling it would not tolerate much increase in yields after the yield on the 364-day t-bill jumped 32 basis points to a more than two-year high of 7.80 percent last week.

This move could help investors return to the market, analysts said.

The central bank, as expected, kept its key policy interest rates unchanged on Monday.

Shares of Ceylinco Insurance Plc fell 3.57 percent while Trans Asia Hotel Plc lost 4.92 percent. Dialog Axiata Plc dipped 0.98 percent.

Shares in conglomerate John Keells Holdings Plc dropped 0.13 percent, while Commercial Bank of Ceylon Plc , the country's biggest listed lender, declined 1.09 percent. 

($1 = 143.1500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Biju Dwarakanath)

Commercial Bank partners with Bank Muscat Oman

Instant, real-time fund transfers between Oman and Sri Lanka have become possible as a result of a tie-up between the Commercial Bank of Ceylon and Bank Muscat, the leading financial services provider in the Sultanate.

Commercial Bank is the first Sri Lankan bank to link with Bank Muscat for this purpose.

Account holders of Bank Muscat can now use the Bank’s all-new feature-rich mobile banking app to send cash remittances to recipients in Sri Lanka or transfer money to accounts at Commercial Bank 24/7.

They may also transfer funds to accounts at other banks in Sri Lanka via Commercial Bank.

“Commercial Bank was already a key facilitator of remittances to Sri Lanka from Oman,” the Bank’s Chief Manager e-Banking& Remittances, Pradeep Banduwansa said.

“With this partnership with Bank Muscat, the remittances arrive in Sri Lanka instantly and become available to recipients within minutes.”

Users of the Speed Transfer facility offered by Bank Muscat’s mBanking app can send up to 500 Omani Riyals a day to Sri Lanka. The app already has more than 350,000 registered users, including Omani nationals and expatriate account holders.

Commercial Bank recently launched a similar instant funds transfer facility between Bahrain and Sri Lanka by integrating its web system with that of Bahrain Financing Co. (BFC), enabling real time remittances via BFC’s EzRemit service to beneficiaries in Sri Lanka.

Commercial Bank is one of the most active players in Sri Lanka in the field of remittances, offering customers a range of options. Remitters can send money even without having an account in the Bank. The Bank has its own Business Promotion Officers (BPOs) in key markets around the world where significant numbers of Sri Lankans are employed.

The only Sri Lankan bank to be ranked among the Top 1000 banks of the world for five consecutive years, Commercial Bank operates a network of 246 branches, and a network of 618 ATMs in Sri Lanka. The Bank was ranked the most valuable private sector brand in Sri Lanka in 2014 and has also won multiple awards as Sri Lanka’s best bank from a number of international publications over several years. The Bank was adjudged one of Sri Lanka’s 10 best corporate citizens by the Ceylon Chamber of Commerce in 2013 and 2014.

www.dailynews.lk

Waters Edge in Rs 13 bn mega hotel project

Shirajiv Sirimane (shirajivs@gmail.com )

Waters Edge Private Ltd owned and operated by Urban Development Authority (UDA) will invest Rs. 13 billion to build a five star hotel and apartment complex.

This is the biggest hotel project to be constructed in Sri Lanka with local funding this year. The introduction of the hotel will also make the venue a one stop shop for Meeting Incentive Conference and Exhibitions (MICE).

The hotel will have 186 rooms and 225 apartments and will be built at the Waters Edge venue in Battaramulla.

Waters Edge Chairman Chamath De Silva said that a unique feature of this complex will be that the government will not have to invest any money for it. The UDA is expected to call for local and international tenders to build this hotel.

“We will raise the entre capital of for the complex by selling apartments.” However the management will borrow Rs. 6 billion to maintain the cash flow for the project.

DeSilva said the Waters Edge will also build a modern sports complex in similar fashion in an adjoining land of 12 acres.

“This will cater to 18 sports and here again it would be built by the private sector,” he added. He said that the Waters Edge also earned a record Rs. 200 million net profit for 2015. “We are aiming for a Rs, 1.3 billion revenue and a profit of Rs. 230 million for 2016.”

The institution which was taken over by the government subsequent to a court order in 2005, from a private entrepreneur is planning to go paperless from 2017.

In addition we also hope to diversify to entertainment and recreation to meet the future demands of the country. The management is also looking at introducing a special Sri Lankan dish with global acceptance similar to Kentucky Chicken and Pizza. “We have hired a special Research and Development arm for this and will invest around Rs. 10 million to meet this goal.”

The Water’s Edge also boasts of a sea plane landing facility, a pontoon to cater to 40 guests, many specialty restaurants and a large garden area for dining and hosting parties and weddings and many other facilities which helps the property to be marketed as a high end resort.

Today it has seven restaurants and seven banquets halls and is also building a business hotel in Colombo Fort which is expected to be opened in 2016. 

www.dailynews.lk

Single applicant dominates Sri Lanka Orient Finance IPO

ECONOMYNEXT –A single applicant accounted for over two-thirds of applications for shares in the initial public offer of Sri Lanka’s Orient Finance on its opening day, a stock exchange filing showed.

Orient Finance offered 71.5 million shares at 15 rupees each to raise 1.07 billion rupees.

The statement said the company got 263 applications for almost 65.8 million shares worth 987 million rupees with one application alone for 56.7 million shares worth 850.9 million rupees.

The other 262 applications were for just over nine million shares worth 136 million rupees, the company said.

Sri Lanka Watawala Plantations December net profit up 28-pct

ECONOMYNEXT – Sri Lanka’s Watawala Plantations said net profit for the December 2015 quarter rose 28 percent to 188 million rupees from a year ago as costs and tax expense fell while tea and palm oil generated profits.

Earnings per share for the quarter were 75 cents. Sales fell 15 percent to 1.4 billion rupees, a stock exchange filing said.

EPS for the nine months to December 2015 rose to 1.85 rupees from 1.73 rupees the year before although sales fell.

Tea plantations made a profit of 30 million rupees in the December 2015 quarter against a loss of 54 million rupees the year before and profits from tea exports rose while palm oil profits fell to 122 million rupees from 198 million rupees.

Watawala Plantations Managing Director Vish Govindasamy said its tea plantations business reduced losses to 213 million rupees in the nine months to December 2015 from 253 million rupees a year ago.

“The decline in the tea sector performance is attributed to the decrease in production year-on-year,” he said.

Palm oil sales fell four percent in the nine months to 1,179 million rupees from the year before mainly because of a reduction in crop and Crude Palm Oil production, while prices fell marginally with the drop in global palm oil prices.

“However the segment made a significant contribution to company’s profitability, having made a net profit of 558 million rupees compared to 619 million rupees (the year before),” Govindasamy said.

Sri Lankan shares fall for 2nd day to near 1-wk closing low

Reuters: Sri Lankan shares fell for a second straight session on Tuesday to their near one-week closing low in thin trade after the central bank kept its key policy rates unchanged and as investors worried over volatile global markets and rising returns on risk-free assets.

Turnover slumped to 341.3 million rupees, the lowest since Dec. 31, and well below this year's daily average of 791.7 million rupees.

The main stock index ended 0.5 percent, or 31.96 points, lower at 6,322.87, the lowest close since Jan. 20.

"There is nothing much happening. The market is lying on the back of retailers," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

"It'll try to consolidate at these levels with the earning season to start. But the market cannot sustain unless proper measures are taken to draw more foreign investment."

The index has fallen 8.3 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

Foreign investors, who have been net sellers of 2.28 billion rupees worth of equities so far this year, were net buyers of 3.79 million rupees worth of shares on Tuesday.

The central bank, as expected, kept its key policy interest rates unchanged after market hours on Monday, saying the effects of previous adjustments were still trickling down into the economy and expected private sector credit growth to decelerate slowly.

The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.

Shares of conglomerate John Keells Holdings Plc dropped 2.1 percent, Ceylon Cold Stores Plc fell 3.65 percent and Distilleries Company of Sri Lanka Plc declined 2.10 percent.

Commercial Bank of Ceylon Plc, the country's biggest listed lender, declined 0.47 percent. 

($1 = 143.9000 Sri Lankan rupees) 

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

Sri Lanka No. 1 importer of Japanese used cars

ECONOMYNEXT – Sri Lanka was the top importer of used cars from Japan in terms of value in 2015 with imports being relatively new cars, mainly hybrids and electrics, an analysis of vehicle registry data has showed.

The main reason for the heightened demand for this category of vehicles was “aggressive” lending by commercial banks, according to the analysis of vehicle registry data by JB Securities, a Colombo based equities brokerage.

The sharp fall in financing rates last year increased affordability which coupled with an overvalued exchange rate till September “fuelled a massive increase in demand,” JB Securities said.

Imports by Malaysia, the next highest importer of used Japanese cars, was almost 40 percent lower than Sri Lanka, according to an analysis of January to November 2015 statistics.

JB Securities said the largest volume of Japanese used car imports was to New Zealand but the unit value was low since the shipments were mostly old cars.

Since the local agents for new cars in Sri Lanka don’t have the same offerings available in the Japanese domestic market, “the demand is heavily skewed towards Japanese used car imports,” the report said.

Sri Lanka imported 48,402 Japanese used cars in the January to November 2015 period with a unit value if 1.75 million yen and a total value of 84,547 million yen.

Malaysia was the next highest in terms of value, importing 19,409 units with a unit value of 2.58 million yen and a total value of 49,994 million yen.

The largest volume of used Japanese cars was to New Zealand – 102,487 units - but the unit value was a low 0.46 million yen with the total value being 47,280 million yen.

Sri Lanka Laugfs group starts e-commerce business

ECONOMYNEXT - Sri Lanka Laugfs Holdings group said it had started an e-commerce business offering a range of over 2,000 products and services with free delivery within the Colombo city.

A statement said Lfinity Pvt Limited launched the clickNshop.lk ‘Virtual Hyper Mall’with guaranteed 2-3 day island-wide delivery.

“With increasing traffic congestion, parking tolls on some of the main shopping areas and hectic time schedules leaving little time for shopping, people are increasingly choosing online shopping,” said a company spokesperson.

ClickNshop features an extensive range of products and services, including electronics, household appliances, clothing and cosmetics, automobile accessories and kitchen appliances, the statement said.

It offers Cash-On-Delivery and Pay & Pickup services, product warranties by vendor partners as well as return and refund policies for faulty or damaged goods.

“We are currently working on a Grocery Box feature, to serve our customers’ daily grocery needs through the simple process of ‘click, pack and deliver’ to their doorstep,” the spokesperson added.

ESOP to be dissolved

Ceylon Finance Today: Richard Pieris and Company plc recently informed the Colombo Stock Exchange (CSE) that it will be dissolving its employee share scheme on 24 August, 2018 as per CSE's listing rules.

The number of shares currently available under the Employee Share Option Plan (ESOP) is 7.42 million at an option price of Rs 3.15 a share which could be exercised up to 24 August, 2018 by eligible optionees, and those would be listed. Richard Pieris' shares last week closed at Rs 7.90 a share.

The company further said that when the ESOP was first adopted, which was on 29 July, 2005; it allowed the issuing of shares equal to 5% of the issued capital of the company, which at that time comprised 2.96 million shares. The option price at that time was Rs 100 a share. Consequent to further issues by the company, the number of option shares and the option price of the ESOP were revised. (PGA)

www.ceylontoday.lk

Rajaiyas up stake

Ceylon Finance Today: Renuka Foods plc upped its stake in Renuka Agri Foods plc to 56.27%, after buying 34.76 million shares of the latter company from Gracekennedy Ltd., of Jamaica for a total consideration of Rs 139.02 million. These shares were bought at Rs 4 per share. 

The Renuka Group of companies is controlled by its Executive Chairman Dr. S. R. Rajiyah and his wife I.R.Rajaiyah, its Executive Deputy Chairperson. (PGA)

www.ceylontoday.lk

FMO gets 14% stake

Ceylon Finance Today: Softlogic Finance plc, a company controlled by business magnate Ashok Pathirage, from a US$ four million loan received from FMO, a development bank controlled by the Netherlands Government, has converted $ two million of this loan to equity, accordingly giving FMO a 13.95% stake in the company.

The conversion is equivalent to the acquisition of 8.24 million shares of Softlogic Finance at Rs 34.96 a share for a total consideration of Rs 288.09 million. The pricing is based on the book value of this finance company's shares as at 31 March, 2014. Conversions have been made, on the basis that one US dollar is equivalent to Rs 144.05.

Prior to this acquisition, Softlogic Finance had a total number of 50.83 million issued shares, of which the public holding constituted 17.62 million or a 34.66% equity stake in the company, while 32.19 million shares were held by Softlogic Capital plc.

After the acquisition, the public holding in Softlogic Finance has been diluted to 29.83%. (PGA)
www.ceylontoday.lk

Listing of Sri Lanka non-strategic investments may take a year, says Eran

(LBO) – Sri Lanka’s government is putting in place processes to list some of its non-strategic investments on the Colombo Stock Exchange, although this may not take place immediately, Eran Wickramaratne, deputy minister of Public Enterprise Development, told Lanka Business Online.

“Within a year that’s possible. But whatever we are doing, we want to do it properly and transparently and we are putting the processes in place,” he said.

In budget plans for 2016, the government said it wants to streamline its portfolio of investments and will exit partially or fully from investments in Lanka Hospitals, Hotel Developers PLC (Colombo Hilton), Hyatt Residencies, Waters Edge, Grand Oriental Hotel, Ceylinco Hospital and Mobitel by listing such investments on the Colombo Stock Exchange.

The government’s portfolio includes enterprises engaged in maintaining and controlling strategic infrastructure in power generation, transmission, ports, airports, water supply etc., as well as non-strategic investments in hotels, condominiums etc.

The government is also coming up with an institutional framework to manage investments in commercial ventures, Wickramaratne said.

“We are simultaneous looking at models in other countries and in the region, but we have to come up with a model that suits our needs,” he said. “If the government is investing in commercial enterprises, they can be managed by professionals who can make professional decisions.”

In terms of advisors for these processes, Harvard University’s Center for International Development recently supported holding the Sri Lanka Economic Forum, and advisors would be sought on a case by case basis, he said.

“We had the economic summit, and we had professors who could be consulted on economic matters.”

“It depends on what the area is. Different institutions, as the need is there, get local or foreign consultants. We are open to getting expertise wherever we think there is a gap,” he said.

Monetary Policy Review – January 2016 - Policy Rates Unchanged

 Broad money supply (M2b) continued to expand at a high rate with a year-on-year growth of 17.2 per cent in November 2015, following the growth of 17.0 per cent in the previous month. In November 2015, the net foreign assets (NFA) of the banking sector improved with the receipt of the proceeds of the International Sovereign Bond (ISB) of US dollars 1.5 billion issued on 27 October 2015. The issuance of the ISB also facilitated a reduction of net credit obtained by the government (NCG) from the banking sector during the month of November, while credit obtained by public corporations also declined. Meanwhile, credit extended to the private sector by commercial banks remained the key driver of broad money growth, recording an increase of 27.0 per cent (year-on-year) in November 2015, compared to the growth of 26.3 per cent in October. In absolute terms, the monthly increase in private sector credit was Rs. 91.2 billion, leading to a cumulative expansion in private sector credit of Rs. 647.7 billion during the first eleven months of 2015. 

In order to arrest the possible build-up of demand pressures on inflation through excessive credit creation, the Central Bank increased the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1.50 percentage points to 7.50 per cent with effect from 16 January 2016. Accordingly, excess rupee liquidity in the domestic money market, which averaged around Rs. 90 billion in December 2015 and in the first two weeks of January 2016, declined to around Rs. 42 billion, on average, thereafter. The increase in SRR also induced an upward adjustment in market interest rates, and the growth of credit extended to the private sector by commercial banks is expected to decelerate in the period ahead, albeit with a time lag. 

In spite of the high growth of broad money, inflation remained subdued supported by low international commodity prices and broadly favourable domestic supply conditions. Colombo Consumers’ Price Index (CCPI, 2006/2007=100) based headline inflation decelerated to 2.8 per cent, on a year-on-year basis, in December 2015 from 3.1 per cent in November 2015, and annual average headline inflation was 0.9 per cent. Headline inflation based on the National Consumer Price Index (NCPI, 2013=100) decelerated to 4.2 per cent, on a year-on-year basis, in December 2015 from 4.8 per cent in the previous month, and registered a value of 3.8 per cent on an annual average basis. CCPI based core inflation edged up in December 2015, recording 4.5 per cent, on a year-on-year basis, in comparison to 4.3 per cent in the previous month. 

On the external front, export earnings contracted by 9.3 per cent in November 2015 causing a cumulative decline of 4.4 per cent during the first eleven months of the year. Import expenditure also recorded a decline of 11 per cent in November 2015, and the cumulative decline in expenditure on imports was 2.1 per cent during the first eleven months of 2015. Reflecting these developments, the deficit in the trade account narrowed for the fifth consecutive month in November 2015. Nevertheless, on a cumulative basis, the trade deficit expanded marginally by 1.0 per cent to US dollars 7,566 million during the first eleven months of the year. Earnings from tourism are estimated to have increased by 17.8 per cent during 2015, although workers’ remittances declined by 0.5 per cent during the year, mainly reflecting a decline of receipts from the Middle East. Gross official reserves were estimated at US dollars 7.3 billion by end 2015, while the Sri Lanka rupee, which depreciated by 9.0 per cent against the US dollar in 2015, recorded a marginal appreciation thus far during 2016. 

At its meeting held on 25 January 2016, the Monetary Board observed that the policy adjustments made on the monetary and external fronts are still being transmitted gradually to the macro economy, and accordingly, decided to maintain the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank unchanged at 6.00 per cent and 7.50 per cent, respectively. 

Sri Lankan shares fall ahead of policy rate decision

Reuters: Sri Lankan shares fell on Monday to snap a two-session winning streak ahead of the central bank's monetary policy decision later in the day and as investors worried over volatile global markets and rising returns on risk-free assets.

Six out of 11 analysts surveyed by Thomson Reuters expected the Central Bank of Sri Lanka to keep key policy rates steady, while the rest predicted a hike.

The central bank is scheduled to announce its monetary policy rate decision at 1400 GMT on Monday.

The main stock index ended 0.43 percent, or 27.41 points, lower at 6,354.83, after posting its highest close since Jan. 14 hit on Friday.

"The trend is a declining one and not necessarily on the local, but the global events also," said Danushka Samarasinghe, research head at Softlogic Stockbrokers in Colombo.

The index has fallen 7.83 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

Foreign investors were net sellers of 10.5 million rupees ($72,967.34) worth of equities on Monday, extending the year-to-date net foreign outflow to 2.28 billion rupees.

The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.

Turnover was 374.1 million rupees on Monday, well below this years daily average of 821.7 million rupees.

Shares of Lanka ORIX Leasing Company Plc fell 1.91 percent, conglomerate John Keells Holdings Plc dropped 0.70 percent and Commercial Bank of Ceylon Plc, the country's biggest listed lender, declined 0.77 percent. 

($1 = 143.9000 Sri Lankan rupees) 

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

Hirdaramani opens Rs.450 mn factory in Puthukkudiyiruppu

Hirdaramani Group opened their latest addition to the North, the Hirdaramani Clothing Puthukkudiyiruppu with an investment of Rs.450 million.

The new factory which employs over 1000 employees was opened by President Maithripala Sirisena yesterday.

"We have around 1,050 employees from this region working for us. It was when we opened our first factory in Vavuniya that we realised the dearth of employment opportunities for the youth in the North. Thus it has been our mission to push away into regions away from the Western Province so as to develop these areas. We may expand this company as we have in Vavuniya but it will all be in good time," Director, Hirdaramani Group, Janak Hirdaramani told Daily News Business. He also said that this endeavour while creating direct employment, to also create indirect job opportunities for the community in Mullaitivu such as occupation in terms of shops and transport. Through providing community members with a variety of job opportunities, the factory has been instrumental in supporting the recovery and development of Mullaitivu which is the largest and the most war-torn area in the north.

President Maithripala Sirisena was the Chief Guest of the opening of Hirdaramani factory.

Following the opening of its new factory, the Hirdaramani Group has become the only large-scale regular employer in the area, providing employees with stable incomes, a positive working environment, free meals and custom-made training programmes that strengthen their skill sets. Currently employing over 500 sewing machine operators (SMOs), the factory utilizes over 320 machines that deliver a monthly capacity of over 150,000 garments.
www.dailynews.lk

Sharp reduction in vehicle registration in Dec

Vehicle registration momentum has come down in December with the reinstatement of the LTV rule and higher incidents of duty on vehicles, according to a JB Securities Report.

Total motor car registrations recorded 7,177 units in December down

from 10,084 units in November but significantly up from 4,311 units recorded 12 months ago.

Brand new car registrations recorded 5,015 units in December down from the record set in November of 6,732 units but significantly up from 1,939 units recorded 12 months ago. Small cars (< 1,000 cc) accounted for 95% of volumes. Maruti accounted for 3,882 units (mainly Alto) followed by Micro with 522 units (Panda), Tata with 215 units (Nano Twist and Indica) and Hyudai with 191 units (Eon). Financing share in small cars is a high 75%. The 70% LTV rule is applicable to approvals not disbursements, thus the high finance share in December may be due to the spill over of November leasing approvals.

Meanwhile pre-owned car registrations recorded 2,162 units in December significantly down from 3,352 units in November and down from 2,372 units recorded 12 months ago.

www.dailynews.lk

Sri Lankan shares rise to over 1-week high; financials lead

Reuters: Sri Lankan share index rose for a second straight session on Friday, as retail investors bought financial stocks, but brokers said the rally will be short lived due to volatile global markets and rising returns in risk free assets.

The gains helped the index recover further lost ground from its lowest close in more than 20 months hit on Wednesday.

The main stock index ended 0.51 percent or 32.53 points up at 6,382.24, its highest close since Jan. 14.

It had lost 4.5 percent in a four-session losing streak through Wednesday as some investors sold their holdings to settle margin calls, while others switched to treasury bills amid rising debt yields.

"We saw a bit of recovery today also. But I don't think it'll sustain. We are at a stage where the market is trying to consolidate, but it is difficult," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd.

Sri Lankan stocks have fallen over 7 percent so far this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

Foreign investors were net sellers of 157.7 million rupees ($1.1 million) worth of equities on Friday extending the year-to-date net foreign outflow to 2.27 billion rupees.

The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.

Some market analysts expect a rate hike in the central bank's January monetary policy rate decision scheduled at 1400 GMT on Monday.

Shares in Commercial Bank of Ceylon Plc, the country's biggest listed lender, rose 2.36 percent, while conglomerate John Keells Holdings Plc rose 0.83 percent. ($1 = 143.9000 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anand Basu)

Sri Lankan shares recover from over 20-mth closing low

Reuters: Sri Lankan shares rose more than 1.4 percent on Thursday led by heavyweight stocks, recovering some ground from its lowest close in more than 20 months in the previous session.

The market had fallen for the four previous sessions as some investors sold their holdings to settle margin calls and others switched to treasury bills amid rising debt yields, brokers said.

The main stock index closed up 88.53 points at 6,349.71.

"It was push-up on large cap shares after margin calls," said Danushka Samarasinghe, research head at Softlogic Stockbrokers in Colombo. "(But) I don't think this momentum is sustainable."

Sri Lankan stocks have fallen nearly 10 percent this year as foreign investors, unnerved by global concerns over China's economy, have cut their exposure.

The yield on one-year T-bills rose 32 basis points to a more than two-year high of 7.80 percent at a weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem.

On Thursday the 14-day relative strength index rose to 24.173, still in oversold territory, versus Wednesday's 12.070, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

Foreign investors were net buyers of 251.2 million rupees ($1.75 million) of equities on Thursday. They have been net sellers of 2.11 billion rupees so far this year.

Stockbrokers said some foreign funds have started selling blue-chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon.

On Thursday, conglomerate John Keells rose 0.32 percent and Commercial Bank of Ceylon gained 1.20 percent.

Daily turnover was 986.9 million rupees, the highest since Jan. 12, and more than this year's average of 870.8 million.

Shares in Lanka ORIX Leasing Company Plc rose 8.45 percent while Ceylon Cold Store Plc rose 6.55 percent.

($1 = 143.9500 Sri Lankan rupees) (Reporting by Ranga Sirilal and Shihar Aneez; editing by John Stonestreet)

Sri Lanka 12-month gilt yield sharply up

ECONOMYNEXT - Sri Lanka's 12-month Treasuries yields rose 32 basis points to 7.80 percent at Wednesday's auction in one of the steepest one day gains seen in recent years, data from the state debt office showed.

The 6-month yield rose 13 basis points to 7.19 percent.

The cut-off rate in the 12-month bills are estimated to be around 8.0 percent.

The debt office sold 12 billion rupees in 6-month bills and 3.7 billion rupees in 12-month bills totalling 15.7 billion rupees. Three-month bills were not offered.

The central bank especially around June last year had bought large volumes of Treasury bills with printed money, injecting unsustainable demand into the economy and generating balance of payment pressure.

There are fears that despite the rate rise more money may be printed this week as well, negating any benefit of a rise in rates to the exchange rate.

The debt office offered 24 billion rupees of bills for auction this week. There are an estimated 32 billion rupees of bills maturing.

Since the first week of December 6-month yields have risen 89 basis points and 12-month auction yields have risen 94 basis points.

Analysts call Sri Lanka's standard practice of printing money until the exchange rate collapses and then allowing rates to move up as the 'rawulath ne kendath ne' strategy.

In 2015 the budget deteriorated with steep hike in state salaries and subsidies. The deficit in the 2016 budget is also high.

Sri Lankan shares fall for 4th session to over 20-mth closing low

Reuters: Sri Lankan shares fell for a fourth straight session on Wednesday to their lowest close in more than 20 months due to rising yields and as investors sold their holdings to settle margin trading, brokers said.

The main stock index erased early gains and closed 0.35 percent, or 22.06 points, weaker at 6,261.18, its lowest close since May 7, 2014.

The stock market had shed about 9.2 percent this year through Wednesday's close due to foreign outflows, triggered by global concerns over China's economy and rising market interest rates locally.

The yield on one-year t-bills rose 32 basis points to a more than two-year high of 7.80 percent at the weekly auction on Wednesday. Analysts expect market interest rates to rise in tandem with t-bill yields.

"The market could not sustain the morning buying interest. But the good sign is that the selling did not come in a big way," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"It looks like the prices are attractive at these levels. So, it may consolidate at these levels."

The bourse dipped further into an over sold territory with the 14-day relative strength index at 12.070 points versus Tuesday's 12.533, Thomson Reuters data showed. A level between 30 and 70 indicates the market is neutral.

Foreign investors were net sellers of 11.33 million rupees ($78,707.88) worth of equities, extending the year-to-date net foreign outflow to 2.36 billion rupees.

Stockbrokers said some foreign funds have already started selling blue-chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon .

Turnover was 606.95 million rupees, the lowest since Jan. 8, and lower than this year's daily average of 861.2 million rupees.

John Keells shares fell 0.50 percent and Commercial Bank of Ceylon dropped 0.85 percent. 

($1 = 143.9500 Sri Lankan rupees) 

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

CCP by first quarter 2017: CSE Chairman

(LBO) – Sri Lanka’s Colombo Stock Exchange aims to establish the Central Counter Party (CCP) system, a new risk management system, by early 2017, a senior official said.

“We have to properly draft the laws. This is a difficult task but we are doing that with the help of some consultants,” Vajira Kulathilake, chairman Colombo Stock Exchange said.

“I expect by 2017 first quarter it will come and through this we can bring in new products to attract foreign investor too.”

The CCP will allow delivery upon settlement and establishing a derivatives market including short selling which will raise the Colombo bourse to international standards.

Kulathilake says that the proposed Securities and Exchange Commission act will be the legal back bone for the CCP while the proposed demutualization process would help with the governance side.

“The SEC act will be the legal back bone of the all the things that we are proposing to do, not only criminal but also civil proceedings,” he said.

“We will start the demutualization process soon and this will help the governance side.”

Analysts say that the present SEC Act was introduced in 1987 and though there were three amendments thereafter, an overall review of the provisions to align it to the global market trends has not been done.

“It has been a long time – changes have happened new products have come in and people have found ways to avoid regulation. So it is time that all this is covered,” he said.

“So actually the new act is a must to regulate these things.”

ASCOT Holdings warrants conversion after January 28

(LBO) – ASCOT Holdings warrants conversion is to be carried out after January 28 as the warrants will cease to trade today, the company said in a stock exchange filing.

The holders of the warrants are entitled to exchange their warrants with an equal number of ordinary shares of the company at 25.00 rupees per share during the exercise period commencing January 28 to February 18.

“Warrants in respect of which the right to convert into ordinary shares are not exercised on or before 4.00 p.m. on expiration date shall have no right thereafter.” the company further said.

Sri Lanka sells US$235mn in floating rate bonds

ECONOMYNEXT - Sri Lanka has sold 235 million US dollars of floating rate bonds for settlement on January 21, with one year bills being sold most, data from the state debt office showed.

The debt office sold 233 million dollars of 12-month bills, at 358.64 percent above the 6-month London Interbank Offered Rate.

The debt office also sold 2.0 million dollars of 2-year 3-month bills at 417.5 basis points above the London Interbank Offered Rate.

The date of settlement is January 21, 2016.

Sri Lanka Krrish deal tax breaks to be lowered

ECONOMYNEXT - A mixed development project by India's Krrish group which ran into a controversy during the last regime can still go ahead but as a new project with tax incentives revised lower, an official said.

"It came as a strategic investment that required certain undertakings from their part," Director General of Sri Lanka's Board of Investment, Duminda Ariyasinghe told reporters.

"Obviously some of them haven't been met. We are revising downwards the incentives that we offer."

The Krrish group has submitted a fresh investment proposal that the BOI is discussing, he said.

Under Sri Lanka's Strategic Investment Law companies were able to get sweeping tax breaks, with up to 15 to 20 year tax holidays but the new administration has said the law will not be used.

Bank of Tokyo - Mitsubishi UFJ opens office Thursday

The Bank of Tokyo- Mitsubishi UFJ will open its first representative office in Sri Lanka on Thursday January 21.

This is the first approval granted to a Japanese bank by the Central Bank of Sri Lanka.Through the new representative office in Colombo, the bank will continue to further enhance its financial solutions and offerings to better meet the needs of its customers operating in or trading with Sri Lanka by making the most of its extensive network, which is the largest among Japanese banks.
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RPC shareholder nod for ESOP

The Shareholders of Richard Pieris and Company PLC (the Company) at an Extraordinary General Meeting held on July 29, 2015 approved the Employee Share Option Plan (ESOP).

This is by way of a Special Resolution thereby allowing issue of shares under this scheme, which is equivalent to 5% of the Issued Capital of the Company. (2,959,639 Ordinary Shares at the date of passing the Resolution) The Board of Directors of the Company at a meeting held on 24th August 2005 resolved to implement the ESOP and to issue 1959,639 shares, which is equivalent to 5% of the Issued Capital of the Company at an option price of Rs. 100per share.

The Scheme would be dissolved on August 24, 2018 as the Company will not be permitted to make any further extensions to the Scheme.

(SS)
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TRC revises mobile call, SMS rates

The Telecom Regulatory Commission (TRC) has introduced a new common floor rate for the Sri Lanka telecom industry. This will be with effect from February 1. “The idea is to set a new minimum rate creating a level playing field for all operators,” an official from the TRC said. “It will enable small time operators also to be competitive.”

Under the circular issued by TRC, Short Messages (SMS’) will be increased from the current cents 10 to 20. In addition call charges within the same network between two subscribers too will be increased by cents 50. (Rs. 1.50) This will be for post paid users (on per minute billing.) In the pre paid segment, a call made to a different operator will be reduced from the current Rs. 2.50 to Rs. 1.80. As for the pre paid users with the network the tariff will be increased from Rs. 1.50 to 1.80.

(SS)


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Sri Lankan shares fall for 3rd straight session on rising yields

Reuters: Sri Lankan shares fell for a third straight session on Tuesday to their lowest close in nearly 19 months due to rising yields and as investors sold their holdings to settle margin trading, brokers said.

The main stock index pared early losses and closed 0.65 percent, or 41.37 points, weaker at 6,283.24, its lowest close since June 27, 2014.

The stock market had shed about 8.9 percent this year through Tuesday's close due to foreign outflows, triggered by global concerns over China's economy.

"Market is coming down because of overacting of local investors and the fall has little to do with the fundamentals," said Yohan Samarakkody, head of research, SC Securities (Pvt) Ltd, adding margin calls were seen as local investors sold in response to foreign selling.

Foreign investors, who have sold a net 2.35 billion rupees worth of equities so far this year, bought a net 5.5 million rupees ($38,194.44) on Tuesday.

Stockbrokers said some foreign funds have already started selling blue chips, including market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon .

Turnover was at 765.3 million rupees ($5.31 million).

The yield on 91-day t-bills rose 40 basis points to a more than three-month high of 6.78 percent in three weekly auctions since the Dec. 30 monetary policy announcement.

Shares of Cargills (Ceylon) Plc fell 5.88 percent, Bukit Darah Plc dropped 5.48 percent and Hatton National Bank Plc declined 0.41 percent.

Sri Lanka Telecom Plc fell 1.23 percent, Commercial Bank of Ceylon Plc dropped 0.85 percent and John Keells shed 0.50 percent. 

($1 = 144.0000 Sri Lankan rupees) 

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

Sri Lankan shares fall to near 19-month low on rising rates

Reuters: Sri Lankan share index fell about 2 percent to near 19-month low on Monday due to rising yields and as investors sold their stocks to settle margin trading, brokers said.

The main stock index ended 1.89 percent, or 121.59 points weaker, at 6,324.61, its lowest close since June 27, 2014.

The market has lost about 8.3 percent this year through Monday's close due to foreign outflows triggered by global concerns related to China's economy.

"On one hand, large quantities of foreign selling is available in the market. But on the other hand nobody is coming forward to buy the market," said Dimantha Mathew, research manager at First Capital Equities (Pvt) Ltd.

"The fall has already triggered margin calls for everybody. There is also lack of positive news and there is nothing concrete taking place on the government side, while interest rates are also slowly on the rise though the central bank is tightly holding them," he said.

Foreign investors sold a net 151.3 million rupees ($1.05 million) worth of equities on Monday, extending net outflows to 2.36 billion rupees so far this year. Last year, the island nation saw a net outflow of 4.43 billion rupees.

Stockbrokers said some foreign funds have already started selling blue chips including the market heavyweight John Keells Holdings and lender Commercial Bank of Ceylon .

The turnover was at 812.7 million rupees ($6.81 million).

The yield on 91-day t-bill rose 40 basis points to an over three-month high of 6.78 percent in three weekly auctions since the Dec. 30 monetary policy announcement.

Conglomerate John Keells fell 2.7 percent, while Lanka Orix Leasing Co lost 7.2 percent, dragging the overall index.

($1 = 144.0000 Sri Lankan rupees) 

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

Prices of imported vehicles soar by Rs 500,000 to Rs 1.2 mn each unit

By Hiran H.Senewiratne

Speedily appreciating major foreign currencies against the dollar are likely to push up the prices of imported motor vehicles by around Rs. 500,000 to 1.2 million each unit, Motor Vehicle Importers’ Association of Sri Lanka chairman Indika Merenchige said.

"The US dollar is deprecating in Japan resulting in the price of a Japanese Yen increasing. Therefore, the unit cost of a car would increase by between Rs 500,000 to Rs 1.2 million because the Yen price is moving up against the US dollar in Japan, which is a big price to pay for the Sri Lanka customers, Merenchige told The Business Financial Review.

He said for each vehicle with the Customs from November 20, 2015 to date, a charge of around Rs. 70,000 has to be paid. Similarly, following President Maithripala Sirisena’s statements most expected that they would be able to buy vehicles at lower prices.

"However, the President’s decision was for a very limited group, Merenchige said.

After releasing the vehicles from Customs under the earlier system, the vehicle had to be registered under the name of the person who had opened the Letter of Credit. This registration is under the condition that this vehicle would not be transferred to any other for a period of five years, he said.

"The government has the right to increase levies. We cannot exert any pressure on that. However, our association believes that it is the duty of the government to protect the country’s entrepreneurs, he added further.

Hence, the association requests future buyers to purchase their motor vehicles as soon as possible, he added.

When looking at the budget proposal, it seems everything is all right, but new taxation, the valuation system and the depreciation on currency will jack up the price of vehicles at very high levels, Merenchige said.

He said that the tax on hybrid vehicles has been increased to 10 per cent and electric cars to 50 per cent from 5 per cent. This will result in an increase for electric cars by Rs.2 million, he added. Motor traders will have to pay an additional fee of Rs.15,000 for each unit when opening Letters of Credit to import vehicles, he added.

Prices of small cars, including Marutis, will also go up due to the introduction of a vehicle import fee to obtain a Vehicle Entitlement Certificate for each vehicle.

The Vehicle Importers’ Association of Sri Lanka had made a proposal some time back to the Finance Minister to support them to shift their business to African countries by devising a clear-cut policy towards this end, he said.

The Association has made a suggestion to appoint a high powered committee comprising representatives of the Treasury, Sri Lanka Customs, Motor Traffic Department, Exchange Control Department and motor traders associations to devise a re-export policy for used and old vehicles, Merenchige added.

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Amana Takaful Maldives in share swap

Amana Takaful PLC announced that Amana Global Limited, a fully owned subsidiary of Amana Takaful PLC, has transferred 10,402,558 shares of Amana Takaful (Maldives) PLC being 51.39% of the total shares of Amana Takaful (Maldives) PLC to Amana Takaful PLC without any purchase consideration.

The shares of Amana Takaful (Maldives) PLC are fair valued at Maldivian Rufiyaa Six (MVR 6/-) per share upon being transferred to Amana Takaful PLC in conformity with the Sri Lanka Accounting Standards.

The transaction was effected on December 31, 2015. The rationale for effecting the transaction has been for the purpose of restructuring the Amana Takaful Group. In 2015, the Life operation was segregated as a wholly owned subsidiary of Amana Takaful PLC under the name and style of Amana Takaful Life Limited. (IH)
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