Resus Energy gears to feed more power to national grid

Hydro electricity is the oldest and the principal source of electricity generation in Sri Lanka. Its unique geography renders the country perfectly suited for hydropower generation through large scale and mini hydropower plants. Joining the latest technologies with an environmentally responsible business proposition to generate renewable and sustainable energy, Resus Energy PLC operates several such mini hydropower plants in Sri Lanka.

While increasingly supporting the national effort to develop renewable energy resources in Sri Lanka, Resus Energy PLC last week acquired Sierra Power (Pvt) Ltd and is currently developing its hydropower project in the Nuwara Eliya district. Fed by the Madulla Oya, the project will feed an estimated 2 MW to the national grid.

The Company is also currently developing two more mini hydro power projects, both in their construction stages; the Ranwala Oya Project in the Kegalle district and Hulu Ganga Project in the Kandy District, both of which are estimated to contribute up to 700 KW and 1.9 MW respectively.

As a company that is truly interested in the people and the planet in pursuit of its primary business goals, Resus Energy PLC, believes in creating a shared value that benefits all its stakeholders. Towards this end, we consistently strive to make sure that our carbon footprint remains at an absolute minimal level even as we scale up on our operations. Resus Energy PLC gives priority to ensure that none of its operations have negative impacts on the environment, said Managing Director of Resus Energy PLC, Kishan Nanayakkara.

In the recent past Resus Energy PLC completed two more mini hydropower projects in its continuing efforts to further increase its supply to the national grid. In 2016 was the Gomale Oya mini hydropower project in Maliboda, and in 2017 was the Moragaha Oya mini hydropower project in Kandy, both generating an additional 1.4 MW and 1.5 MW respectively to the grid.

We take great pride in our hydropower generation operations and in our ability to transmit over 30GWh of electricity to the national grid that eventually powers our nation. We take great responsibility in harnessing renewable and sustainable energy and to also ensure that all our projects have little or no impact on the environment. We intend to work very hard towards more efficient extraction of power and use sustainable technology as available to do so in the future, Nanayakkara added.

Resus Energy PLC took its initial steps in renewables in 2007 with the development of 2.0MW Giddawa mini hydropower project in Teldeniya using water from the HuluGanga.

This was followed in 2010, with the acquisition 2.6MW Upper Agra Oya mini hydropower project in Lindula.

In 2011 it developed and commissioned the 2.4MW Upper Magal Ganga hydropower project in Maliboda,

While the core growth strategy of Resus Energy PLC is centred around hydropower, the company has also been consistently exploring other renewable energy sources such as solar power, wind power and biomass. Resus Energy PLC has been awarded the rights for two 01 MW each solar power plants feeding into the Ampara grid substation under the CEB’s Sooraya Bala Sangramaya Phase 1, that it is currently under pre-development stage.

Over the last few years Resus Energy PLC has been consistently recognised for its successful efforts. The company won in the Bronze category at The National Green Awards (Okanda Power Grid Pvt. Ltd.) for the Upper Magalganga Hydropower Power Project in 2017. It also won Silver at the CA Sri Lanka Annual Report Awards in 2015, 2016 and 2017, and, was a Runner Up in the SME Category at the ACCA Sustainability Reporting Awards in 2017.

Designed and developed using expert local knowledge, the latest technology and a true passion for nature conservation, Resus Energy projects are all planned and executed sustainably and responsibly. All project development budgets also include a considerable portion to develop the surrounding communities of each project.

Resus Energy PLC has provided infrastructural development to public properties, scholarship funds, community programs and employment to the surrounding communities of its projects. As a forerunner in renewable and sustainable energy and, focussed and efficient innovations, Resus Energy PLC is well placed to contribute more towards powering the nation in the future.

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Richard Pieris Finance to merge with Chilaw Finance

LBO - Sri Lanka’s Richard Pieris Finance Ltd, will merge with Chilaw Finance PLC.

The merger will see Richard Pieris Finance Ltd. asset base grow by 16 billion rupees with a projected growth of 1.7 billion rupees Profit Before Tax by 2020.

It will also see a rapid expansion of its branch network and will double its customer base.

Chevron optimistic of delivering shareholder value despite stiff competition

Although Chevron Lubricants PLC, among the higher dividend payers quoted on the Colombo Stock Exchange, had seen after-tax profits fall 26% last year to Rs. 2.565 billion, in an environment of intense competition in the lubricants market, both the company’s chairman, Mr. Rochna Kaul, and MD CEO Kishu Gomes were cautiously optimistic of the future.

Kaul attributed the decline in net earnings mainly to margin erosion as a result of increased input costs and decline in volumes due to intense competition. He noted in the company’s recent annual report that the company had declared and paid three interim dividends totaling to Rs. 10 per share and a fourth interim dividend of Rs. 2.25 per share was declared last February.

He expected competition in lubricants to further increase with the anticipated issue of licenses to new entrants remarking that the lack of an effective mechanism to control illegal operators in the industry remains. But due to the strength of their brand and access to technology advanced products, he expressed optimism that "we will be able to deliver shareholder value."

Kaul also commented favorably of the launch of a public awareness campaign by the ministry during the last quarter of 2017 to educate consumers in "choosing lubricant products cautiously without falling prey to gray market products."

Gomes described 2017 as a challenging year for Chevron with profits dipping 26% from the previous year when they were able to capitalize on favorable input costs.

"The steep rise in base oil costs, compounded by the depreciation of the LKR against the USD and the gradual increase in commodity prices, caused a significant inflationary pressure on costs during the year," he said.

While distribution costs increased substantially compared to the previous year particularly due to the 0.5% increase in the lubricant license fee (subject to a Rs. 10 million cap) to 0.75% resulting in the fee going up from Rs. 10 million to Rs. 74 million.

They had increased prices to counter mounting cost pressure but this strategy was not effective in the retail market with consumer disposable income depressed by rising inflation. Adverse weather due to prolonged drought and floods had affected several districts disrupting regular momentum of economic activities and also curtailed lubricant consumption.

They had responded to intense price competition and had achieved some volume gains during the latter part of the year but at the expense of lower margins.

But there were some noteworthy successes like a toll blending arrangement with YAMAHA to blend and supply that brand genuine oil under the YAMALUBE brand to be sold via the local YAMAHA distributor. They also had an agreement with Abans Auto to blend and supply motorcycle oils co-branded with Havoline. Among other wins, they had contracted into supplying oils to power plants.

Focus on export markets had had continued with exports to Bangladesh growing and exports to the Maldives sustained.

Commenting on the outlook, Gomes said that the country’s lubricant industry was mature and competitive with 13 players and three blending plants operating with excess capacity. The government "may" issue additional licenses during the year, further changing the competitive landscape.

"While the company has access to latest product innovations and robust channel strategy, our ability to command the right price and influence customers to purchase packed products rather than loose sales will largely determine our future profitability," he said. "Sustained growth in the export markets will also be crucial for our success."

The directors of the company are RM Kaul, Kishu Gomes, Teek Hong Kee, Deva Rodrigo, Harsha Amarasekera and Anura Perera.

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Due diligence continues on possible sale of Weligama Marriot

Financial and legal due diligence by HPL Hotels and Resorts (Pte) Ltd. Of Singapore regarding the possible acquisition of the new Marriot Hotel in Weligama has not yet been finalized, East West Properties PLC said in a Stock Exchange filing on Friday

East West which was responding to an April 11 inquiry on this matter said that they will inform the CSE of the outcome of this due diligence once the process is completed.

A stock exchange filing in early March said East West Properties had signed a letter of intent to sell 72% of the shares of Weligama Hotel Properties Ltd. to HPL Hotels and Resorts Pte Ltd Singapore.

Weligama Hotel Properties Ltd built the Marriott Weligama Bay Resort & Spa, situated in Weligama Bay, a popular tourist resort.

The resort is the first in Sri Lanka to be managed and branded by Marriott, the international hotel operator. HPL Hotels & Resorts has also made a proposal to invest in and upgrade the colonial-era Grand Oriental Hotel (GOH) overlooking Colombo port.

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Sampath follows 2017 practice in allotting additional shares in 2018 rights issue

Applicants get up to 2,100 shares plus very small percentage of balance sought

Sampath Bank’s rights issue of approx. 50.13 million shares allotted in the proportion of three for 13 shares held at a price of Rs. 250 per share has been fully subscribed with applications for additional shares comfortably absorbing the lag of unsubscribed shares.

"Refund cheques for additional share applications that could not be accommodated were sent out last week," a broker said. "Each applicant for additional shares was allotted up to a maximum of 2,100 shares and a very small percentage of the balance."

Analysts noted that with large applications for additional shares over and above entitlements coming in from many shareholders, the bank which followed the scheme of allotment utilized in the rights issue in November last year could not allot as many shares per applicant as last time.

"While up to 9,000 shares per applicant for additional were accommodated last time, this time it was possible only to allot up to a maximum of 2,100 shares plus a very small percentage of the balance," an analyst said.

Over and above the ceiling of 2,100 a small fraction of the balance sought was granted. "I got 36 shares on that account after applying for 10,000," one subscriber said.

"Given the gap between the issue price and the trading price, subscribers did very well," the analyst said.

The previous Rights Issue 2017 saw Sampath raising Rs. 7.6 billion new equity (zero cost capital) by the issue of approx. 31 million new shares, priced at Rs. 245 each, in the proportion of one new share for every six held.

This year’s rights issue saw the allotment of 50.13 million (approx) new shares issued at Rs. 250 a share on the proportion of three for 13 held to be listed on April 23.

Sampath also announced its scrip dividend dates to the CSE last week. The date of entitlement will be Apr. 26 and the share will trade XD from Apr. 27. The scrip dividend will be one new share for (approx) 19.728 shares held on April 26 trading XD from April 27.

The Sampath share traded above Rs. 300 on the CSE in recent days with Friday’s price ranging between Rs. 305.10 and Rs. 308.

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Nestle delivers Rs. 50 divided per share despite sluggish consumer demand & rocketing raw material prices

Nestle Lanka PLC, one of the country’s biggest and most profitable conglomerates, has faced a challenging 2017 but by utilizing enhanced cost saving measures and focusing on driving efficiencies across the value chain to partly mitigate the impact of weather-related consumer demand decline for its products, unprecedented increase in raw material prices and increased VAT, its chairman, Mr. Suresh Narayanan, said in the company’s recently released annual report.

Although there was a 3.1% increase in revenue to Rs. 37.6 billion from Rs. 36.46 billion a year earlier, in the year ended Dec. 31, 2017, profit after tax declined to Rs. 3.63 billion from Rs. 4.4 billion in the previous year.

Net assets per share declined to Rs. 89.58 from Rs. 102.05, earnings per share were down to Rs. 67.64 from Rs. 81.87 and dividend per share to Rs. 50 from the previous year’s Rs. 80.

"2017 proved to be another very challenging year," Ms. Shivani Hegde reported, "as we managed sluggish consumer demand and rising cost pressures. I am proud to note however that the dedication and commitment of people and business partners helped us to mitigate the significant external challenges we faced in the year."

Noting that Nestle continued to believe in the long-term prospects of the Sri Lanka market and had initiated a five billion rupee investment in early 2017 to expand production capacity for dairy and coconut based products, she said.

"This investment will be funded through a judicious combination of internal accruals and borrowings," Hegde said.

The year had seen the "renovation and innovation" of the Nestle product portfolio. They procured fresh milk supplies from nearly 20,000 dairy farmers. Their popular Maggi chicken noodles had been renovated include eight popular Lankan spices.

"I am confident that our hard work in 2017 will help us further progress this year and strengthen our ability to capture sizable opportunities in 2018," she concluded.

Nestle has introduce a range of three sauces – tomato, chilli and oyster – under the Maggi brand and a reduced sugar Nescafe premix addressing current consumer needs for healthier beverage options. Similarly their spicy Maggi ‘hot’ noodles have been reformulated with reduced salt and fat while maintaining taste.

Nestle SA with 90.82% of the company is the dominant shareholder with all other nearly 5,300 shareholders on the register owning less than 1%. The Nestle share traded at a high of Rs. 2,310 and a low of Rs. 1,600 during the year closing at Rs. 1,626.

The directors of the company are Messrs. Suresh Narayanan, Ms. Shivani Hegde, S. Duggal, JK Singla, Gurucharan Grover, Mahen Dayananda and R., Seevaratnam.

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