Sri Lanka Piramal Glass to expand capacity, annual profit up 50-pct

ECONOMYNEXT – Sri Lankan glass bottle maker Piramal Glass Ceylon said net profit during the year ended 31 March 2016 rose almost 50 percent with strong domestic sales although earnings dipped in the fourth quarter.

The firm, a unit of India’s Piramal Glass Ltd., said annual profit rose 49 percent to 654 million from a year ago with sales up 17 percent to 6.8 billion rupees.

“The revenue growth was mainly contributed by the domestic sales which saw a significant growth of 23 percent from 4,422 million rupees to 5,436 million rupees,” a stock exchange filing said.

“The major portion of growth was backed by food and beverage segments.”

Annual earning per share were 0.69 cents against 46 cents the year before.

“The Board of Directors has proposed a 35 percent dividend maintaining its consistent policy of dividend pay-out ratio,” the statement said.

In the March 2016 quarter EPS fell to 21 cents from 22 cents the year before with net profit at 200 million rupees although sales grew 18 percent to 1.9 billion rupees.

Piramal Glass Ceylon said it had “exceptional sales during the festive season.”

Sanjay Tiwari, Managing Director of Piramal Glass Ceylon, said the company’s furnace which was built in 2007 is to be rebuilt and relined during F2017 with an investment of three billion rupees.

Capacity will be increased to 300 tonnes a day from the existing 250 tonnes.

“The company is also doubling the facility for producing colour bottles through colouring forehearth. This expansion also includes further investment in more sophisticated down-stream facilities.”

Sri Lanka shares end near 2-week low ahead of cenbank policy

Reuters: Sri Lankan shares fell to a near two-week low on Monday as cautious investors waited for cues from the central bank's decision on interest rates and talks on a loan deal with the International Monetary Fund.

The central bank's April monetary policy announcement is scheduled for 1130 GMT on Tuesday, and expectations are that it would keep key interest rates steady, a Reuters poll showed.

However, a surprise hike is not ruled out as five out of 11 analysts expect the central bank to raise the policy rate to keep government borrowing in check through tighter financing conditions.

The central bank has twice tightened rates since December to ease the pressure on a fragile rupee.

The benchmark stock index ended 0.67 percent or 43.12 points weaker at 6,379.53, its lowest close since April 12.

"The selling pressure was there and we expect it to continue over the week due to the high interest rates and also the poor economic conditions," said Dimantha Mathew, head of research, First Capital Equities (Pvt) Ltd.

A visiting IMF mission said it expected to complete negotiations with Sri Lanka for a three-year loan programme in the next two weeks.

Foreign investors were net buyers of 102.2 million rupees ($702,646.96) worth of equities on Monday, but have been net sellers of 3.04 billion rupees so far this year.

Turnover stood at 437.1 million rupees, less than this year's daily average of around 776.3 million rupees.

Shares in John Keells Holdings Plc fell 2 percent, while those in Commercial Bank of Ceylon Plc dropped 1.50 percent.

($1 = 145.4500 Sri Lankan rupees) 

(Reporting by Ranga Sirilal and Shihar Aneez; Editing by Anupama Dwivedi)

‘No consistent state policy on driving CSE’

By Hiran H.Senewiratne

The government does not have a proper direction or consistent policy to drive the Colombo Stock Exchange (CSE) to boost investor confidence, which is now dropping drastically, president, Colombo Stock Brokers Association (CSBA) Ravi Abeysuriya said.

"The government should have proper strategies and policies to meet all the government expenses and to address macro economic issues, which is now the need of the hour to salvage the economy from this bad situation, Abeysuriya told The Island Financial Review.

He said that when it comes to the CSE per se, the market is not performing well but there are some good stocks which need to be picked and choosen carefully before buying. Further, the global economic depression is adding insult to injury, Abeysuriya said.

"The All Share Price Index (ASPI) is more popular at the Colombo Stock Exchange compared with S&P Sri Lanka 20 and these two indicators play a major role in Sri Lanka's stock market performance. We can predict in which direction the Colombo Stock Exchange would move, looking at these indicators, he said.

"These indicators are useful to have an idea of Sri Lanka stock market performance but a lack of proper direction and inconsistent policies put the market into uncertainty.This makes investors to think twice before investing, Abeysuriya explained.

He also said that under these conditions it is not prudent to invest in the CSE heavily because of its high market volatility. "Therefore, my advice to the investors is don't jump in to the market without understanding value added stocks, he said.

The CSBA president also said that the IMF financial facility would bring some financial discipline to the country, because of it being a long term financial bail out.

The CSE Chief Executive Officer Rajeeva Bandaranaike said that the CSE is now in a positive improvement mode compared to the last few months. This will continue for some time.

"We have seen the market moving into positive territory, which will continue for some time. Under these conditions, foreign investors will be active in the market due to other markets in the region not performing well,he said.

The CEO said that the market will move forward due to the new government's economic policies, which will come into force in the future.

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Union Assurance declares higher dividends

Union Assurance declared a 9.5% dividend rate on their Life Advantage Plan for 2015.

This is a significantly higher rate than the minimum guaranteed rate of 8% for 2015, a rate that is still higher than the average market interest for 2015, which stood at 5.99%.

The year’s bonus payout is consistent with the Company’s practice of providing policyholders with a significantly higher return than promised. This is the third year running that Union Assurance presented its policy holders with a higher than expected dividend rate.

Policyholders of ‘Union Life Advantage’ policies were able to enjoy this rate of dividend, which is based on the investment earnings on the life fund attributable to the dividend-based products of the company.

The investment account maintained for each individual dividend based policyholder is credited with the dividend on monthly compounding basis.

The Company’s “With Profit” policyholder’s who were in force as at December 31,2015 will receive an annual bonus for 2015, which will be added to their policy. The company has been able to pay higher benefits to its valued policyholders due to its continued growth in 2015 by earning over Rs. 6.9Bn in gross written premiums.

General Manager, Life Operations, Iroshini Tittagalla said, “The Company’s performance in 2015 continued in the upward trajectory and it has considerably strengthened its position over that of 2014. The outlook for Union Assurance in 2016 continues to be extremely positive. The strong numbers this year demonstrates our determination to achieve, and our commitment to rewarding the trust and confidence placed upon us by our loyal customers.

Union Assurance operates on the platform of Trust, which enforces the brand values of convenience, respect, and transparency. Union Assurance believes that sustainable growth can be achieved and maintained through the use of correct strategies that ensure that the right people and the best processes are in place to provide an all-round customer experience.

This customer-centric approach has resulted in steady and continuous growth over the years, with excellent end-year financials results in 2015 reinforcing the Company’s reputation as a trusted service provider.

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Sanasa Bank PBT tops Rs.1 bn with impressive growth

Sanasa Development Bank (SDB) has recorded an impressive performance with the bank’s net profit before tax surpassing Rs.1 billion mark for the first time in the history.

This is an exceptional 48% growth compared to the previous year and ended up with a post-tax profit of Rs.720 million for the financial year ended December 31, 2015.

This growth was led by interest income coupled with the responsible interest expenses management. This healthy profitability performance was recorded under challenging market conditions and it demonstrates Bank’s prudent management policies in managing the external forces.

Chairperson Samadanie Kiriwandeniya said the SDB is now poised for a quantum leap through a transformation process leading to a significant revenue enhancement.

Chief Executive Officer Nimal C. Hapuarachchi said 2015, being a year with several political and regulatory postures being changed, which had mixed impact on the financial services sector, achieving a phenomenal growth amidst such macroeconomic challenges, affirms SDB’s position as a resilient financial institution in the market”, Hapuarachchi said.

During the year bank increased its interest income by 36.2% and interest expense increased by only 34.9%. This resulted in net interest income of the bank growing by 37.5% to Rs. 3.3 billion, despite the banking sector margins continuing to drop in 2015.

Net interest income contributed 93% to the total operating income during the year as against 86% contribution during 2014.

Gross income, comprising of interest income, net fee and commission income, net gains/(losses) from financial assets held through fair value through profit and loss and other operating income recorded a 31% increase to reach Rs 6.8 bn for the year.

Operating expenses which comprises personnel cost, depreciation and amortization and other operating expenses increased by 30.6% and posts Rs. 2.2 billion compared to the level of Rs. 1.6 billion posted in the previous financial year.

The primary drivers for this growth were personnel costs and office administration and establishment expenses accounting for 46% and 21% respectively of the total operating expenses.

The growth in personnel cost was driven largely by the increased head count, taken for future expansions as well as the periodic salary revision made in June 2015. These changes have been made amidst the expected aggressive business transformation across the bank, the benefits of which will accrue over the coming years. Although the overall operating expenses reflected an increasing trend, it is noteworthy that the cost to income ratio was controlled at 60.4% from 62.6% in financial year 2014, demonstrating the bank’s shrewd management of expenses.

Impairment charge for loans and receivables of the bank was Rs. 49.5 million and compares with a charge of Rs. 204.3 million in 2014, a decrease of 75.7% over 2014. This substantial decline represents the bank’s sound judgment in assessing the fair value of the impaired loans, based on objective evidence of future recoveries and is in accordance with bank’s stringent risk management policies.

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Thai giant to pump Rs 500 mn on fish canning plant

One of Asia’s largest fish canning factories in Asia, Anuorn Group Thailand will be investing Rs. 500 million to set up a fish canning plant and a dry ice manufacturing factory in Eastern Sri Lanka.

Anuorn Group Thailand Chairman and Thai Overseas Fisheries Association President Aphisit Techanitisawad said that they have already visited Sri Lanka last March and the project has been accepted by the International Trade Relations Ministry after having discussions with Ministers Malik Samarawickreme and Daya Gamage.

He said that they are initially planning to market about 80% of their products in Sri Lanka and the rest to the region. “With the EU ban in fish exports now being lifted we will now look at exporting to the EU region as well and we will pump in more capital again.”

He said that they conduct their operations in a unique manner where they partner around 600 fishermen who have their own boats. “We provide them modern equipment, technical assistance, training and come to a forward agreement to buy their ‘catch’.

“Our training, the GPS and other equipment we offer will also give them a higher catch. As we have a forward agreement with them they are assured that they sell directly to the buyer thus eliminating the middle man and also getting a better price for their catch.”

“This is the model that we will be implementing in Sri Lanka and it will offer direct employment for over 1,200 fishermen.

He that said that Sri Lanka still imports fish and this is a very sad scenario and the reason for this is the outdated technology Sri Lankan fishermen adopt. “In addition fish prices in Sri Lanka too are high and we hope our entry to the country would be a game changer for the fishing industry.”

Thailand is the world’s biggest tuna packer and we are ready to share our expertise to firstly make Sri Lanka self sufficient and then a major player in the export sector. According to the Thai Department of Fisheries, Thailand’s seafood exports to the EU alone are worth 30 billion baht (US$ 887.4 million) annually.

He said that their company which has five fish canning plants in coastal areas in Thailand is also in the restaurant business. “We many also look at expanding this business to Sri Lanka as well.” He however said that though they also own fishing vessels they will not introduce it to Sri Lanka since they want the Sri Lankan fishermen also to grow with them.

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Vehicles permits for public servants soon

Public Administration Ministry is to secure Cabinet approval soon for giving duty free vehicle permits to public servants entitled for the benefit, Minister Ranjith Madduma Bandara said.

Already, the Finance Ministry has submitted the Cabinet memorandum in this regard. Minister Bandara said his Ministry also made its observations in this regard.

“We hope we will be able to issue duty free vehicle permits to the entitled public servants very soon. The Cabinet approval can be secured soon,” he said.
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