Sri Lanka’s Nawaloka Hospital Enters Elder Care Service Business

June 4, 2015 (LBO) – Sri Lanka’s Nawaloka Medical Centre (Pvt) Ltd, a subsidiary of Nawaloka Hospital signed a memorandum of understanding with Harmony and Fusion International Pvt Ltd to put up elder care service business.

The joint venture will carry out the service under Nawaloka Guardina International (Pvt) Ltd, in which Nawaloka Medical Centre (Pvt) Ltd take a 60 percent stake in, through capitalizing 78 million rupees of investment.

In a filing with the stock exchange, Nawaloka said that the initial share capital of this joint venture company would be 130.37 million rupees.

The balance capital will be invested by the joint venture partner.

Sri Lanka's ETI Finance plans to raise Rs2.8bn from property sales

COLOMBO (EconomyNext) - Sri Lanka's ETI Finance Limited, an unlisted finance company, will get a 2.8 billion rupees in cash where its land holdings will be sold to a related company, which is raising debt.

ETI Finance no longer has a public rating. According to documents filed on the Colombo Stock Exchange it is now controlled by EAP Holdings.

A number of EAP Edirisinghe group companies are now directly controlled by ETI Finance Limited including Swarnamahal Jewellers Ltd (100 percent), Hotel Sapphire (Pvt) Ltd (100 percent), Hotel Concord (Pvt) Ltd (90 percent) and Swarnamahal Financial Services Plc (90 percent) which is listed.

Swarnamahal Jewellers Limited in turn owns 81 percent of EAP Films and Theatres with ETI Finance directly holding the balance 19 percent. EAP Films owns 100 percent of EAP Broadcasting Company, which runs television stations.

EAP Broadcasting owns Colombo Communications, which runs radio stations and Galalzy Landmarks Limited, a newly set up property company.

EAP Broadcasting plans to raise 3.0 billion rupees through 4 and 5 year pulbic listed debt paying 10.50 percent (annual coupon) and 11.00 percent (quarterly), which will be invested in Galaxy Landmark as equity (one billion rupees) and an intercompany loan (2.0 billion).

The loan which will carry a 12.0 percent interest rate will be settled with interest after the sale of the building at the end of 7-years.

Galaxy will pay 2,844 million rupees for a series of properties owned by ETI Finance effectively getting liquidity.

Galaxy will in turn pay 925 million rupees for a 109 perch Galle Road property housing Swarnamahal Jewellers and broadcasting complex, 200 million for a property where Impala Cinema is located, 600 million for a property in Wellawatte where Roxy Cinema is located.

It will also pay 115 million rupees for a Borella property where EAP Restaurant is located and 290 million rupees for Hotel Concord property in Dehiwala.

In addition Galaxy will also buy Cinexpo Cinema property in Kurunegala for 250 million rupees and a Cotta Road, Borella property for 214 million rupees.

The deals with inject 2.8 billion rupees to ETI Finance.

EAP Group is now chaired by Mano Tittawella, who analysts say engineered the re-structure of People's Bank, which had negative net assets and non-performing loans, when he headed the Public Enterprise Reform Commission in the late 1990s.

Tittawella is also the Deputy Chairman of EAP Broadcasting Company.

Three Sri Lankan stockbroker firms lacked funds to settle creditors

COLOMBO (EconomyNext) – Sri Lanka’s stock exchange has reported that three broker companies did not maintain enough funds in their client bank accounts to settle creditors over the three-day settlement period.

“Three broker firms did not maintain adequate funds in their respective client bank accounts to settle the creditors over the T+3 balances for several months during the period,” the Colombo Stock Exchange revealed in its 2014 annual report.

It said two of the firms were in compliance with the CSE provisions relating to the adequacy of client funds by end-2014 and the remaining firm was in the process of taking “corrective actions” to comply with the rules.

The report also revealed enforcement actions carried out in relation to key violations of CSE stockbroker rules during 2014.

It said three broker firms were found to have failed to meet the minimum net capital requirement during the year but subsequently complied with the requirement within the time-frame set out in the stockbroker rules.

The report also said three stockbroker firms had been in violation of the single client credit limit of 15 percent of credit extendable during the year.

“Two firms have subsequently taken corrective actions to comply with the requirement,” the CSE said.

“The other firm has been unable to comply with the requirement as at 31st December 2014. The CSE continues to follow up with the firm on compliance.”

The CSE report also said one broker firm had been in violation of the credit extending limit of three times of adjusted net capital in 2014 but had complied with the requirement by year-end.

Sri Lanka's Hunas Hotel goes up market, loses customers

COLOMBO (EconomyNext) – Sri Lanka's Hunas Falls Hotels Plc, a hill country hotel, said it lost customers after going to the luxury end, but aggressive marketing is underway to draw upmarket travellers.

Managing Director L. T. Samarawickrama said the property was refurbished and has been recognized as a 'Small Luxury Resort', an international classification.

"This recognition itself is a major advantage towards the new strategies adopted to market this eco friendly green resort at the highest possible level in the future," he said.

However the new positioning had lost customers, with occupancy dropping.

In the March 2015 quarter revenues dropped 12 percent to 37.0 million rupees and cost of sales fell 11 percent to 9.0 million rupees, and gross profits also fell 13 percent to 28 million rupees. Net profits fell to 286,000 rupees from 8.6 million rupees.

In the year to March revenues were down 8 percent to 139.8 million rupees, and profits were down 85 percent to 3.1 million rupees.

"The performance in terms of profitability was somewhat disturbed due to the hotel’s transformation from “ordinary 3 star to small luxury” resulting in its rejection by the typical low end market segment that used to patronize the hotel in the past, decreasing the volume of occupation.

The aggressive sales and marketing team is now very much focused on the luxury segment of the business and the intention is to gradually convert this fauna and flora rich resort into a property that would be accepted by the niche market."

Sri Lanka has seen a resurgence in tourism after the end of a 30-year war in 2009. Now large number of small hotels have come up, offering pricing more compatible with East Asian nations, which are available through booking engines, analysts say.

Sri Lanka SEC stops Lanka Rating Agency from giving new ratings

COLOMBO (EconomyNext) – Sri Lanka's Securities and Exchange Commission said it has stopped Lanka Rating Agency (LRA) from giving new ratings until it complies with regulatory requirements imposed by it.

LRA had been stopped from providing new ratings from March 25, 2015. "until the company complies with regulatory requirements imposed by the Commission," the SEC said.

"The Commission is statutorily vested with the objective of protecting the interest of investors and is empowered to do all such acts as may be incidental or conducive to attainment of the objects of the Commission," the regulator said.

LRA is one of three credit rating agencies operating in Sri Lanka along with Fitch and ICRA Lanka.

SEC said it was asked to cease giving new ratings from March 25, 2015 following a decision made at a commission meeting on March 10, 2015.

Sri Lankan shares fall for 4th session on political woes, foreign selling

Sri Lankan shares fell for a fourth straight session on Thursday and closed at their lowest in six weeks, led by conglomerate John Keells Holdings Plc as concerns over political uncertainty before parliament elections dented sentiment.

Continued foreign selling also dragged the index lower.

The main stock index fell 0.4 percent to 7,120.91, its lowest finish since April 23, erasing 12.08 billion rupees ($90.22 million) worth of market capitalisation.

"Political uncertainty has shaken small-time investors", who account for the majority number of the transactions, said Reshan Kurukulasuriya, chief operating officer of Richard Pieris Securities (Pvt) Ltd.

Analysts said foreign investors were selling amid expectations of U.S. interest rate hike.

Foreign investors were net sellers of 52.5 million rupees worth of shares on Thursday, extending the net foreign outflow in the past seven sessions to 1.58 billion rupees. The bourse, however, has seen net inflows of 4.36 billion rupees in equities so far this year.

Despite political uncertainty, stockbrokers said better corporate earnings would help the market gain.

Turnover was 713.5 million rupees, well below this year's daily average of about 1.13 billion rupees.

Political uncertainty has been a drag on the market, though the trend reversed after the central bank cut key monetary policy rates to record lows on April 15.

The index has gained 3.2 percent since the rate cut.

Shares in conglomerate John Keells Holdings fell 1.34 percent, while Ceylon Tobacco Company Plc dropped 0.48 percent.

President Maithripala Sirisena's government has said it would dissolve parliament once some crucial reform bills are passed. But it has not fixed a date for the election.

Analysts say investors are hoping a stable government after the election coupled with strong economic measures would boost confidence. 

($1 = 133.9000 Sri Lankan rupees) 

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

Archer Daniels Midland to close Sri Lanka Chemcel unit

COLOMBO (EconomyNext) – Agribusiness multinational Archer Daniels Midland plans to close its Sri Lankan specialty chemicals manufacturing unit Chemcel (Pvt) Ltd. in which Chemanex PLC has a stake, a stock exchange filing said.

“Archer Daniels Midland Europe BV, the main shareholder of Chemcel, has informed us that Chemcel will cease operations based on a number of considerations,” Chemanex said in a statement.

“We currently own 23.15 percent of Chemcel and it is reflected in our books at an investment value of 272 million rupees,” it said.

“Chemcel has substantial cash balances and it is currently estimated that upon a liquidation of the company Chemanex PLC would be able to realise its investment value.”

The Chemanex statement did not elaborate on the reason for Chemcel’s closure and senior Chemcel officials were not immediately available for comment.