Sri Lanka cuts tax on smaller electric cars, Tesla EV prices to soar

ECONOMYNEXT - Sri Lanka has cut taxes on popular mid-sized electric cars from 2.7 million to about 1.7 million rupees and sharply raised levies on luxury larger brands such as Tesla, which are expected to go up steeply in price.

The price of the Nissan Leaf, Sri Lanka's most popular electric cars is expected to come down by about a million rupees.

However luxury Tesla models are expected to go up steeply under a sharply progressive tax system.

Under new tax rates announced this week, electric cars with a motor of less than 50kiloWatt will be charged 15,000 rupees per kW and those up to 100kW, 25,000 rupees.

Cars of between 100 and 200 kW will be charged 35,000 per kilowatt and those above 200 kW will be charged 45,000 rupees per kW.

A Tesla Model S with a motor of at least 270kW will now be charged taxes of 12.1 million rupees. The street value of the car is expected to top 20 million rupees, motor trade officials said.



Sri Lanka had an interventionist policy of charging very high rates of taxes from motor cycles, three-wheelers and small motor cars and charging low rates of taxes from electric cars.

Under the new rates announced this week, cars with hybrid and reciprocal engines are also taxed not simply on a non-discriminatory proportionate basis but under a sharply progressive system from this week, based on engine capacity.

In Sri Lanka the elected ruling cars pay no tax on their cars and state workers also get tax slashed cars while the ordinary citizens are squeezed with high taxes in the style of a neo-serfdom re-established after the end of British rule.

Under British rule both slavery and serfdom were abolished.

Sri Lanka Hemas March net down, annual profit up 38-pct

ECONOMYNEXT – Sri Lanka’s Hemas Holdings March 2016 quarter net profit fell 3.5% to 744 million rupees from a year ago with sharp increases seen in administrative expenses and finance costs.

Hemas group sales went up 9.4% to 9.7 billion rupees in the period, interim results ffiled with the stock exchange showed.

Diluted earnings per share were 1.32 rupees for the quarter. In the year to 31 March 2016 EPS was 4.71 rupees with net profit up 38% to 2.7 billion rupees while sales grew 17% to almost 38 billion rupees.

Hemas Holdings Chief Executive Steven Enderby said the group earned an additional interest income of 280 million during the year from investing the proceeds of the rights issue.

“We continue to focus on driving growth from our core Consumer and Healthcare businesses while seeking continuous innovation, and strong profitability for the year ahead,” he said.

Hemas group FMCG sector total annual revenues grew 20% to 14.3 billion rupees from the year before with earnings up 37.2% to 1.4 billion rupees.

“The strong performance was underpinned by our Bangladesh operation maintaining excellent revenue and profit growth, as well as strong sales across all our major brands in the domestic market,” Enderby said.

Hemas also benefitted from relatively weak commodity prices for key raw material inputs.

Group healthcare sector revenue for the twelve months rose 16% to 16.1 billion rupees with earnings up 22.8%.

Enderby said Hemas unit JL Morison earnings grew 43.4% for the twelve months ended March 31, 2016.

“Revenue growth was largely driven by the increase in sales from the buyback arrangement with Government of Sri Lanka and sales growth in key diagnostics agencies,” he said.

“The significant growth in operating profit resulted from increases in revenues in both consumer/OTC products and pharmaceuticals segments, efficiency and capacity gains at the plant, after a period of closure of the plant in Q1 2014/15 and a restructured distribution network.”

Hemas group leisure business made a loss during the year although sales grew 13% to 3.4 billion rupees.

“Our newest property, the luxury hotel Anantara Peace Haven Tangalle Resort, opened in December, finished its first operating quarter with an encouraging performance,” Enderby said.

Serendib Hotels posted a revenue growth of 12.2%, driven by strong performance from the popular Dolphin Hotel which recorded year-round occupancy of 83%.

Transportation sector revenue grew 17% to 1.8 billion rupees.

This was driven by “higher volumes through domestic logistics operations with warehouses operating at high levels of capacity, higher volume throughput at our container depot and new 3PL customers, specifically Hemas Logistics which was able to secure a warehouse and distribution agreement for Sathosa,” Enderby said.

“With subdued revenue growth from the aviation segment, the transportation sector registered an operating profit of 500 million rupees, a growth of 10.7% over the previous year.”

Japan to give budget support to Sri Lanka; loan US340mn for power and water

ECONOMYNEXT - Japan fund a 38 billion yen (340 million dollar) expansion of Sri Lanka's power and water supply system and also provide a budget support loan, a statement following a meeting with President Maithripala Sirisena and Prime Minister Shinzo Abe said.

The power loan will be used to construct transmission lines in Sri Lanka's former war torn Eastern Province and the North Central Province, the home district of President Sirisena.

A transmission line to carry power from planned power plants in Sri Lanka's Eastern Province to the capital will also be provided.

In addition to the 38 billion yen project loan a budget support loan "which supports policy and institutional reform in macro-economic and public financial management, as well as the promotion of the private sector," will be provided. The loan amount was not disclosed.

Sri Lanka was expected to get several budget support loans from the World Bank, Asian Development Bank, Japan and Korea in tandem with a deal with the International Monetary Fund to fix the islands' finances which were damaged in a January 2015 revised budget.

Sri Lanka Laugfs March net down 74-pct

ECONOMYNEXT – Sri Lankan liquid petroleum gas supplier Laugfs Gas said March 2016 quarter net profit fell 74% to 97 million rupees from a year ago as costs rose sharply.

Sales rose 42% to 3.9 billion rupees in the quarter, according to interim accounts filed with the stock exchange.

The accounts showed sharp increase in selling and distribution sxpenses and administrative expenses and finance costs.

Earnings per share for the March 2016 quarter were 25 cents.

Laugfs Gas EPS for the year ended 31 March 2016 was 3.32 rupees with net profit down 11% to 1.3 billion rupees while sales rose 15% to 13.3 billion rupees.

The accounts showed profits from its energy sector of Laugfs Gas fell during the year while the power business profits rose sharply as did proftts from transportation and logistics.

The group’s leisure sector losses reduced during the year but property development business losses rose.

Sri Lanka's Kelani Valley expands to cinnamon as tea loses shine

ECONOMYNEXT - Kelani Valley Plantations, a unit of Sri Lanka's Hayleys group said it is expanding into cinnamon cultivation as tea and rubber prices fall.

Kelani Valley Chairman Mohan Pandithage told shareholders that the firm had invested 43 million rupees to grow cinnamon in 58 hectares out of which 33 was in Kitulgala.

Kelani Valley was until the mid-1990 state-owned and the sector was a burden to the ordinary people with their taxes being used to pay salaries, until it was privatized.

Along with other privatized planations it started paying lease rentals and taxes to the Treasury.

Pandithage said the company was developing Oliphant Bungalow in Nuwara Eliya into a plantation boutique hotel.

Hayleys Global Beverages (Pvt) Ltd, which will make value added teas for export is expected to start operations in 2016. Pandithage said Mabroc Teas (Pvt) Ltd, a branded tea marketer also made a profit.

The firm was also perusing direct exports of rubber.

Global commodity prices are falling as the US Federal Reserve tightened monetary policy sending the dollar up and pushing down prices of oil, gold, metals and food commodities.

Countries like Russia, which depend on oil exports, also printed money and saw their currencies collapse.

Countries like Saudi Arabia and UAE which do not follow active monetary policy but mimic US interest rates, have maintained their strongly pegged exchange rates.