Touchwood’s bogus address cons CSE, investors

By Sunimalee Dias

Thai investors ('touch wood') seek justice in Sri Lanka
The Touchwood company crisis has spread outside the shores of Sri Lanka with investors in Thailand suing the company there while in Colombo an attempt to deceive investors has been bared in a Business Times (BT) investigation.

The ‘new’ address of the Touchwood Lanka office as intimated to the Colombo Stock Exchange on February 28 is a bogus one, a BT investigation revealed.

The address given as No. 220, Nawala Road, Nawala belongs to the wife of Kapila Ariyananda who when contacted informed the newspaper that there is no Touchwood office at this location.

According to the BT investigation, Touchwood organisation’s Thai investors plan to file action in Sri Lankan courts in late April. Mr. Ariyananda said the CEO of Touchwood Lanka Kiwlegedara had approached him regarding the premises but “he was never a tenant or operating” from this location. “He came to see the house but he did not pay the rent and we didn’t sign an agreement,” Mr. Ariyananda said. The BT photographer visiting the site of the new address only found an old caretaker who informed him there was no office there.

Mr. Ariyananda said he had already informed the post office not to deliver letters addressed to the Touchwood Group to his address as it was becoming a “nuisance.” In fact, he would be writing to the Colombo Stock Exchange (CSE) through his lawyer to inform of this incorrect address given.

He also revealed that when Mr. Kiwlegedara was contacted on Thursday he was told by him that the latter had already informed the CSE that Touchwood was not at this location but that he was operating from a private address in Horton Place. No such notice has been posted on the CSE website.

Touchwood depositors have gone to the old office premises at Bambalapitiya which was empty and then based on the CSE announcement gone to the Nawala address which also drew a blank. Touchwood details on the CSE website as at Friday still gave the office address as – No. 220, Nawala Road, Nawala and the telephone no. as 4721448. When investors called the no. 0777-077324, which was listed in the February 28 CSE announcement, the response was rude and unpleasant. “One man who picked the phone… I don’t know whether it was Kiwlegedera because they didn’t identify themselves … said I should not bother calling anymore,” one depositor said. The company was owned by Roscoe Maloney and his wife, Swarna who then sold out to a group of investors led by Mr. Kiwlegedera who promised to reignite the crisis-hit firms.

The Maloneys arebelieved to be in Cambodia but wanted for questioning in Colombo.

Thai investors in the Touchwood Forestry Company in Thailand say they were duped by Roscoe Maloney to invest in plantations. They have formed a group and were looking at the possibility of filing action in the Sri Lankan courts against the Touchwood organisation, lawyer and Co-ordinator of the Sri Lanka Touchwood Stakeholders Association, G.S. Lakshan Dias said in an interview with the Business Times.

He noted that most of the Thai investors represented by their organizer Tim Randall would be looking at filing action against the Maloneys in late April. Through the website created for the Thai investors Mr. Randall had highlighted that about 60 per cent comprises Thai nationals who had invested in the properties owned by the Touchwood Forestry Company and about 40 per cent were overseas investors. Currently, there is already a case being heard in the Thai courts against Roscoe Maloney, the website stated. In the meantime, on the winding up case CHC/31/2013/CO against Touchwood in the Commercial High Court, judgment is due on May 5. During the March hearing of the case the Central Bank had joined the case as an intervening party.

Mr. Dias also said that, according to their information. Touchwood’s Hong Kong office would also be closing down in addition to the Dubai office.

The company has offices in Sri Lanka, Australia, Thailand and Dubai according to its website.
www.dailymirror.lk

Sri Lanka stocks close at 2-1/2-month high; banks in focus

(Reuters) - The Sri Lankan share index rose to a near 2-1/2-month peak on Thursday and posted its biggest gain in almost seven weeks with high net worth investors buying banking shares on hopes of high profits due to an expected rise in private sector credit in the second half of the year.

The main stock index ended up 1.01 percent at 6,180.76, its highest close since Feb. 5 and the biggest daily gain since Feb. 28.

"There was a lot of interest in banks," a stockbroker said on condition of anonymity. "We expect the market to gain in the coming week as well after the holidays."

Both currency and stock markets will be closed on Friday for Good Friday after they were shut on Monday and Tuesday for the Sinhala-Tamil new year and a special bank holiday.

The day's turnover was 664.1 million rupees ($5.09 million), less than this year's daily average of 976.1 million rupees. Shares in banks and financials accounted for 62 percent of the day's turnover, bourse data showed.

With a lower interest rate regime, both Sri Lanka's central bank and finance ministry have said private sector credit growth will rise in the second half of this year. Analysts expect rising credit demand to help boost banks' profits.

The bourse saw net foreign inflows for a seventh straight session. Offshore investors bought 3.3 million rupees worth of stocks, though they have sold a net 8.04 billion rupees of shares so far this year.

Top lender Commercial Bank of Ceylon and second largest lender Hatton National Bank ended 0.1 percent and 1.7 percent firmer respectively. Large cap Ceylon Tobacco Company PLC gained 3.8 percent.

Analysts said foreign investors could shift from the island nation's risky assets if Sri Lanka does not cooperate in an international probe by the Office of the United Nations' High Commissioner for Human Rights into the country's alleged war crimes and human rights abuses.

Sri Lanka's foreign minister said last week that the country would not cooperate with the inquiry. 

($1 = 130.5750 Sri Lanka Rupees)

(Reporting by Shihar Aneez; Editing by Anupama Dwivedi)

Sri Lanka rubber growers hit by plunging prices

Apr 17, 2014 (LBO) - Sri Lanka's rubber growers are being hit by falling world prices with production volumes also dropping due to a drought within the country, an industry association said.

Deputy Chairman Planters’ Association of Ceylon (PA) and CRTA Vice Chairman S. S. Poholiyadde said in a statement that rubber prices have halved over the past three years.

Colombo Rubber Traders’ Association (CRTA) Chairman, M S Rahim said that latex crepe reached record highs of 600 rupees a kilo in 2011 but ended 2012 at 385 rupees and remained around 400 rupees in 2013.

From January 2014 rubber prices have fallen again with latex crepe down around 305 rupees, he said.

In April the average price for latex crepe at Colombo auction was 300 to 230 and ribbed smoked sheets were unquoted, the statement said.

Global commodity prices including oil plunged after a credit and economic bubble broke in the US and EU in 2009 ending a so-called 'food crisis'.

But in 2010 and 2011 prices picked up again and have been very volatile following excessive money printing programs by the US Federal Reserve know known as 'quantity easing', despite slow economic activity around the world.

But with the Fed set to 'taper' or gradually end its excessive money printing, commodity prices, precious metals and oil prices have moved down , as the inherent strength of the paper US dollars increases against real assets, economic analysts have said.

Gold prices have fallen sharply over 2012. In the past few months as 'tapering' took hold, volatility in commodity prices increased.

World coffee prices have also fallen in terms of the US dollar. But tea prices have held so far.

This month New Zealand milk powder prices plunged after a recent spike.

Commodity and precious metals are falling as the US economy recovers and many European economies also beginning to show strong growth and unemployment is starting to fall, though China's economy is slowing.

Economic analysts say a similar situation was also seen in the 1980s with a strong dollar pushing down commodity and food prices benefitting the poor.

At the time, European governments came up with price support schemes leading to the so-called 'butter mountains and wine lakes.'

With 2014 expected to be an El Nino year, agricultural output may fall, giving some price support.

Meanwhile the in the Planters Association statement, Damitha Perera, Director Rubber, Forbes and Walkers Commodity Brokers said China was not aggressive in markets, which was not good for Sri Lanka.

"Crepe and RSS is stagnant as this is the lean period and off season. A boom in prices is not expected for a few months," Perera said.

April 09, TRS20 which covers Thai, Indonesian and Malaysian rubber grades

Reuters, a new agency said on April 09, TRS20 which covers Thai, Indonesian and Malaysian rubber grades was near the lowest since 2009 on Singapore's SICOM exchange. Tokyo rubber futures have fallen more than 18 percent this year.

Thailand's STR20 grade was said to have been traded around 1.90 US dollars, with producers claiming that at below 2 dollars they were in losses.

Reports that the Thai government was planning to sell down a rubber stock pile were later denied.

Sri Lanka's rubber industry says cost of production continues to escalate.

Planters’ Association of Ceylon's S Poholiyadde says recent collective agreement with trade unions which raised salaries had increase cost of production by 20 to 25 rupees a kilogram.

Asoka Nugawela, Professor of Plantation Management at Sri Lanka's Wayamba University was quoted as saying that wages will increase further in the future, requiring more productivity gains.

In 2012 however Sri Lanka's rupee fell to 130 to the US dollar from 110 reducing real wages.

The Rubber Traders Association fears that small holder farmers may convert rubber lands to other crops due to weak rubber prices.

Large plantations firms were also feeling the pinch, the statement said.

Other analysts have noted that protectionist import taxes on vegetable oil were also making palm oil artificially profitable in Sri Lanka at the expense of export crops like rubber.

Poholiyadde said land acquisitions were shrinking the areas available for cultivation. There was a shortage of tappers, with young people not wanting such work.

Poholiyadde claimed that a "protectionist strategy was crucial", without elaborating.

In 2011 Sri Lanka slapped hiked export taxes on rubber, with farmers big and small denied the world price, penalizing them for honest work, while manufacturing businesses profited at their expense.

But analysts warn that any state intervention to push up domestic rubber prices higher than elsewhere in the world would discourage new investments in rubber based factories and may even cause a shift of production outside the country.

Rs 3.5B Richard Pieris debt issue gets CSE nod

Ceylon FT: The Colombo Stock Exchange yesterday (16) approved in principle the Rs 3.5 billion debt issue of Richard Pieris and Company PLC. 

The company will issue 30 million rated, unsecured, redeemable debentures at Rs 100 each and will exercise an option to raise another Rs 500 million upon over subscription by offering five million more debentures.The debenture issue opens on 7 May 2014, the Stock Exchange said.
www.ceylontoday.lk

Related News:

http://www.cse.lk/cmt/upload_cse_announcements/8961397628032_.pdf

Kuruwita shareholders approve delisting

A majority of the shareholders of Kuruwita Textile Mills PLC last week approved a delisting move proposed by the Board of Directors.

The company said that 97% of shareholders present by person and proxy voted in favour of the delisting move at the EGM held on 9 April.

The delisting is at Rs. 30 per share which the Directors have arranged to buy the shares of any shareholder who wishes to sell their shares. Brandix Textile Holdings is the majority shareowner with a 77.7% stake directly and via related parties 80.26%.

As at 31 March 2013, the company had 1,217 shareholders of whom, 1,034 or 85% held between 1 and 1,000 shares accounting for 0.75% and a further 148 shareholders holding between 1001 and 10,000 shares or a 1.99% stake. Other major shareholders include JB Cocoshell (5.22%), L.P. Hapangama (3.6%), and T. Al Nakib (3.48%).

Kuruwita last traded on 13 February 2013 at Rs. 20.90.

In its original announcement, the Kuruwita Board said: “Over the last four years management of Kuruwita Textiles has taken several steps to turn around the company and return to profitability. However, these steps have not been successful and the net assets per share of the company reduced from Rs. 43.09 as at 31 March 2011 to Rs. 24.10 as at 31 December 2013.”

Retained loss as at 31 December 2013 was Rs. 409.5 million at group level and Rs. 249.3 million at company level.

In the quarter ended 31 December 2013, the company witnessed a profit for the period in keeping with the historical trend of seasonality. However revenue recorded a decline of 21% during the quarter in comparison to the same quarter of FY 12/13 pointing to the fact that performance is not up to the desired mark. Revenue for the nine month period two recorded a decline of 10% to Rs. 5.3 billion.

Gross profit for the period was Rs. 133 million down 12% in comparison to the same period for FY 12/13. However for the nine month period the company had fared worse off in comparison to the same period of FY 12/13 recording a loss of Rs. 98 million in comparison to a profit of Rs. 224 million.

Reductions in semi-variable costs accounted under administrative and distribution expenses by 53% enabled the company to improve its operating and net profit figures in comparison to the same period of FY 12/13. However on a cumulative basis the company recorded a net loss of Rs. 448 million for the nine month period to December 2013 in comparison to a net loss of Rs. 133 million as at December 2012. This was an increase in the loss in excess of three fold.

These continuous negative results reported, have resulted in the net assets of the company eroding continuously, creating a reduction in share holder wealth. Net assets per share which stood at Rs. 43.09 in March 2011 declined to Rs. 24.10 over the corresponding period due to the losses recorded. This was in spite of a number of changes made by the management and steps taken, in their attempt to turn around the company.

The Board of Directors of Kuruwita Textile Mills PLC comprises of M.A. Omar (Chairman), G. Bandaranayake (Managing Director), U. Liyanage, F. Omar, H.A. Ariyaratne (nominee of DFCC) and H. Premaratne.
www.ft.lk

Sri Lanka stocks close at more than two-month high on blue chips, inflows

(Reuters) - The Sri Lankan share index rose to a more than two-month high on Wednesday, led by blue chips and foreign inflows.

The main stock index ended up 0.44 percent at 6,118.85, its highest close since Feb. 11.

Though the day's turnover at 745.2 million rupees ($5.7 million) was less than this year's daily average of 980.6 million rupees, foreign buying accounted for 64.6 percent of turnover.

Many local investors were in a holiday mood as the stock and currency markets are trading only on Wednesday and Thursday this week due to the Sinhala-Tamil new year, followed by Good Friday.

The bourse saw net foreign inflows for a sixth straight session. Offshore investors bought 276.3 million rupees worth of stocks, though they have net sold 8.04 billion rupees of shares so far this year.

Top conglomerate John Keells Holdings, which accounted for around 40 percent of the day's turnover, ended steady at 238 rupees. Commercial Bank of Ceylon, the top listed private lender, edged up 0.16 percent to 127 rupees.

Analysts said the outlook was still positive due to prevailing lower interest rates.

Brokers said the stock market, valued at $19.62 billion as of Wednesday's close, is gradually attracting investors who are looking for higher returns than the deposit rates of around 6-6.5 percent offered by banks and financial companies.

Analysts, however, expect foreigners could shift from the island nation's risky assets if Sri Lanka does not cooperate in an international probe conducted by the Office of the United Nations' High Commissioner for Human Rights on the country's alleged war crimes and human rights abuses.

Sri Lanka's foreign minister said last week that the country would not cooperate with the inquiry.

The bourse has seen 3.9 billion rupees in outflows since a UN resolution voted for an international probe.

($1 = 130.6000 Sri Lanka Rupees) 

(Reporting by Shihar Aneez in Colombo; Editing by Prateek Chatterjee)

Jefferies to Distribute JB Securities Equity Research on Companies in Sri Lanka

NEW YORK & LONDON & HONG KONG & COLOMBO, Sri Lanka, Apr 13, 2014 (BUSINESS WIRE) -- Jefferies today announced that it is entering into a cooperation agreement with JB Securities (Pvt) Limited to distribute JB Securities equity research on companies in Sri Lanka on a co-branded basis to Jefferies’ global institutional client base.

JB Securities provides comprehensive equities research and stock brokering services in Sri Lanka. The firm is a member of the Colombo Stock Exchange and is part of the Jafferjee Brothers Group.

Over the last year, Jefferies has formed similar alliances in South Korea, Australia, Malaysia, Indonesia and Thailand to broaden Jefferies' equity research offering to its global client base. These alliances now include more than 50 analysts covering some 315 companies in the region.

Michael Alexander, Chief Executive Officer of Jefferies Asia, commented, “We are pleased to align with JB Securities as we continue to grow our Pan-Asian equities business to better serve our diverse and global client base. We continue to expand our business across the region with a focus on delivering top-tier and targeted research coupled with superior execution and distribution.”

“This alliance demonstrates Jefferies’ strong commitment to serving our clients with best-in-class research and execution capabilities globally," added Peter Forlenza, Global Head of Equities at Jefferies.

Murtaza Jafferjee, Chairman and CEO of JB Securities, commented, “We are excited to partner with Jefferies to deliver our research product to a broader institutional client base.”

Not including the research alliances, Jefferies’ global equity research business consists of 138 analysts covering nearly 1,750 stocks from research centers in London, Hong Kong, Mumbai, Singapore, Tokyo, Houston, Nashville, New York and San Francisco. The firm’s global coverage includes Economics & Strategy, Business Services, Consumer, Energy, Financial Services, Insurance, Healthcare, Industrials, Internet and Interactive Entertainment, Maritime, Media, Metals & Mining, MLPs, REITs, Technology, Telecommunications, Travel & Leisure and Utilities.

To learn more about Jefferies equity research capabilities or to receive Jefferies research, please contact your Jefferies representative.

Jefferies, the global investment banking firm focused on serving clients for over 50 years, is a leader in providing insight, expertise and execution to investors, companies and governments. The firm provides a full range of investment banking, sales, trading, research and strategy across the spectrum of equities, fixed income, foreign exchange, futures and commodities, as well as wealth management, in the Americas, Europe and Asia. Jefferies Group LLC is a wholly-owned subsidiary of Leucadia National Corporation LUK -2.27% , a diversified holding company.

SOURCE: Jefferies

Jefferies
Richard Khaleel, +1-212-284-2556
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