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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka Newspapers - 15/01/2012

Sri Lanka Newspapers - 15/01/2012

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1Sri Lanka Newspapers - 15/01/2012 Empty Sri Lanka Newspapers - 15/01/2012 Sat Jan 14, 2012 8:44 pm


Global Moderator

Stock market awaits direction from SEC ruling on Monday

Retail participation propped the Colombo bourse last week with turnover topping the billion rupee mark two days running after two weeks of low level activity although the price indices remained volatile, brokers said.

"The SEC’s much-anticipated ruling on the relaxation of broker credit lending and price-band regulation is likely to give market’s direction this week," Acuity Stockbrokers said in a market report.

The brokerage reported that once again both indices had closed the week lower – the ASPI losing a marginal 1.18 points (0.02%) while the Milanka lost 37.06 points (0.73%) with the ASPI at 5,929.34 points remaining below the 6,000 point resistance barrier.

Last week’s turnover was led by Environment Resource Investments (ERI) accounting for 23.67% of the total turnover amid renewed interest in the counters," Acuity said.

New entrant, Asia Asset Finance, along with Commercial Bank contributed 18.37% of the week’s total turnover.

The market report noted that the weekly turnover value of Rs.3.78 billion was almost double (up 95.24%) the previous week’s with the average daily turnover at Rs.756.61 million against the previous week’s average of Rs.387.53 million.

Brokers said that foreigners were continuing to sell Commercial Bank with Acuity reporting that Asia Asset Finance which began trading last week was up 132% to close at Rs.5.80 against its reference price of Rs.2.50.

Foreign investors remained net sellers last week with a net outflow of Rs.193.1 million posted against the previous week’s net selling position of Rs.154.4 million. However, foreign purchases for the week were up 53.07% to Rs.474.5 million while foreign sales were up 44.15% to Rs.667.6 million.

Acuity said that Asia Asset Finance topped the volume list accounting for 34.87% of the shares traded during the week or Rs.79.48 million in rupee terms. ERI and Blue Diamonds (non-voting) together contributed 17.72% of the market’s total share volume last week.

John Keells Stockbrokers (JKSB) said in its weekly report that the market saw a sharp improvement in the middle of last week before ending on a negative note. Trading had been driven by speculative buying in ERI and Asia Asset Finance with the two counters collectively contributing a third of the week’s turnover.

"Activity levels remained strong during the week while net foreign participation resulted in a net outflow," JKSB said.


Global Moderator

Sampath Bank and Nations Trust Bank last week announced that they have come together to enhance customer convenience by joining hands to provide their customers access to over 1,500 ATM’s across the island.

Having introduced the concept of ATM’s to Sri Lanka in 1987, Sampath Bank revolutionized the banking industry and was responsible for pioneering the strategy of sharing the ATM network in Sri Lanka enabling significant saving for customers in the form of fees paid to foreign financial institutions for ATM usage, a news release issued in connection with the partnership said.

Now partnering with NTB, described as ``Sri Lanka’s fastest growing bank,’’ the island wide ATM network which is powered by Sampath Bank will include the 61 ATMs of NTB as well. The partnership adds to the already large network of shared ATM’s which includes those of Bank of Ceylon, Hatton National Bank, National Savings Bank, Union Bank, DFCC Vardhana Bank, Pan Asia Bank, HDFC Bank and NDB Bank, the release noted.

``NTB customers will now have easy access to their accounts, 24 hours a day, across the island, through this large network, making transactions even more convenient. Customers of all banks within the network will be able to transact through any ATM belonging to a partner bank at a very minimal service charge. In addition it will enable the American Express Card Members to obtain card cash advances via the Sampath Bank ATM network,’’ it said.

As a Bank that prides itself as the benchmark of convenience, Nations Trust Bank is a young and dynamic financial institution that many professionals can identify with. It strives to offer its customers greater convenience and easy banking at all times in keeping with its customer centric profile.

"With this partnership with the Sampath Bank ATM network, we will be able to further assist our customers in their quest for convenient and fast paced banking. Having access to their bank accounts via 1500 ATM’s spread throughout all corners of the island maximizes reach and flexibility of our customers" said Mr. Saliya Rajakaruna, Director/CEO of NTB at the ceremony for the signing of the agreement with Sampath Bank on Tuesday.

Meanwhile speaking of its future plans, Mr. Aravinda Perera, Managing Director of Sampath Bank said that they would continue to expand the network through partnerships with other financial institutions thereby giving customers more opportunities to fulfill their day to day needs.


Global Moderator

By R.M.B. Senanayake

When a conflict is over in a country which raised the numbers of its armed forces to fight the war would need to downsize the numbers by demobilization of troops. A large army is not only unnecessary but the previously large army is no longer affordable. We finished the conflict in 2009 but nobody even suggests that the army should be reduced in numbers. The reason is because such demobilization causes social problems for the economy cannot absorb a large number to the civilian work force. But demobilization of excess troop capacity after war helps to release financial resources for post-war reconstruction to get the development process restarted. The government has opted for a different model where instead of demobilizing, the army will be used for development work.

So the government continues to increase the size of the defense budget. It spends about 20% of the budget on the forces and the defense budget as a ratio of the GDP is over 5% which is high. In the budget for 2012, there is a nearly seven percent increase in military expenditure. Government spokesmen say that the extra funds voted for the Ministry of Defense is to pay for weapons purchased on credit during the war. Unfortunately there are no figures of the value of such purchases on credit which are outstanding. The government budgeting system is on a cash basis and it does not provide data regarding the accrued expenses outstanding and what proportion of them are to be paid during the course of the year. But can a government which is committed to bring down the fiscal deficit increase defense expenditure in this way? What about the needs for higher expenditure in other areas like education and health? Military spending will be almost double the combined expenditure on health and education. At 74 and 57 billion rupees respectively, they constitute only 3.3 percent and 2.5 percent of total spending

The government has also taken the unusual step of combining the defense ministry with the urban development authority and renamed it as the Ministry of Defense and Urban Development. Now the army is considering building and operating a luxury five star hotel in Colombo. The model for the army seems to be that of the Chinese Army.

The Chinese Army called the Peoples Liberation Army has played a role in economic development practically from its inception. Even as early as the late 1930s the Red Army raised its own food. After 1949 the PLA became involved in economic reconstruction tasks - building railroads and factories, reclaiming wasteland, digging irrigation canals, establishing state farms, planting millions of trees and participating in disaster relief operations. It became a force in economic construction and devoted segments of its structure, such as the Engineering Corps, Railway Engineering Corps, Capital Construction Engineering Corps, Signal Corps, and Production and Construction Corps to building up the national infrastructure.

From economic point of view there is nothing inherently wrong in using the army in development projects. It is better than having an army which is allowed to idle and merely preparing for the next war which in unlikely to happen. The use of the army in this way in peace time is not confined to China. Several other countries like Pakistan and Indonesia have done so too. In these countries the military runs banks, schools and even industrial ventures. It is difficult to evaluate their economic performance since the apportioning of costs does not seem to include all the overheads of the military. The salaries and logistical costs of military personnel who work on economic projects are actually being met from the central defense budget and are not charged to the economic projects they are engaged on. So the projects may not be contributing to profit in the commercial sense. But from the macro-economic standpoint they do contribute to investment and growth. The only issue is what other activities have to be starved for funds to give the money to the military. Thus education and health care do not get the required funds even to maintain their existing standards since the inflation adjusted expenditure for education is below that of the previous year and the education level cannot even be maintained.

There is however a poser for democratic norms and economic benefits to the people particularly when the military carries out such projects in the north and east. There is undoubtedly the need for a massive reconstruction program in these areas. It is also true that there is a shortage of labor since soldiers have been killed during the war. But there are allegations that the military in the north is not conducting its economic activities for the benefit of the army as a whole but for the benefit of individual officers. In short that the army in the North is corrupt and the returns from its economic activities are going to fill the pockets of individual officers rather than the institution.

The recent report of the Tamil National Alliance in Parliament states that "The military is increasingly involved in economic activity in the North and East. Through its system of checkpoints, the military ensures that its proxies control the transportation of fish from the Northern coastal areas. Large sections of beach front land in the Eastern province have been parceled out to companies which are headed by military officers. The military has established a string of restaurants along the main Jaffna highway. An entire military tourism industry catering to Southern visitors is run by the military establishment. The Navy uses state resources to run ferry services for the Southern tourist industry. Military personnel also run various quasi-commercial enterprises such as shops and salons that are highly irregular and impact negatively on the local economies.

The Chinese model did not allow such corruption and the military high ups must stamp out such misuse of public resources for private benefit. The practice is more like that of the African armies where soldiers demand kappan (bribes) and impose illegal charges on civilian economic activities. There is also the issue of the army being under central government and these activities cannot be controlled by the local people and their political representatives. If the army is firmly under civilian control and is held accountable to democratic representatives of the people there would perhaps be less opposition for they are being looked upon as a Sinhala army rather than a national army. Of course the allocation of land must not be allowed for the army. It should be vested with the Provincial Council under supervision by the National Land Commission.

Three of Sri Lanka’s international cricket stadiums, including the newly built stadiums in Pallakelle and Hambantota, have been handed over to the military indefinitely because Sri Lanka Cricket is unable to afford the maintenance costs. There is no other institution which could fork out the resources for the purpose since the Cricket Board has been bankrupted by the acolytes of the politicians. The military spokesperson is quoted by the media as saying that "the military will not charge Sri Lanka Cricket since armed service members are paid by the government.’’

The Military should train its soldiers in modern technical skills

Some months ago the government deployed troops to sell vegetables and bring down the cost of living for the country’s urban population at a time when drought conditions had made vegetable prices soar. There is no harm in doing so although a better service would be to establish warehouses in the producing areas and transport produce to centers to the city in competition with the private sector. Today the Air Force operates commercial flights to various places within the country and the navy conducts whale-watching tours for tourists. Are these activities against the public interest? I don’t think so. But I think there is another model that can be copied from the Chinese Army.

The Peoples Liberation Army of China operated a large-scale program of training, whereby PLA personnel learned skills useful to the growing economy. Under this program, officers and soldiers received military training and training in specialized skills such as livestock breeding, cultivation, processing, construction, machine maintenance, repair of domestic appliances, motor vehicle repair, and driving. In 1986 the PLA trained more than 650,000 soldiers in 25,000 courses at over 6,000 training centers. In early 1987 surveys indicated that over 70 percent of demobilized PLA personnel left the armed forces with skills they could use as civilians. Chinese military academies provide courses in science and technology for the soldiers and promotions to higher ranks depend on the acquisition of such knowledge. The military may then become a modernizing force given the parlous condition of civilian public administration.

Harold Lasswell the political scientist referred to the’ garrison state’ and emphasized the dangers of the military engaging in non-military activities during peace time. This is to prevent the military usurping power where the army is large and well funded. But what is required is perhaps to keep the army out of politics and the ruling political party influence. Some even say it is better to get the Army involved in such activities for then they would be preoccupied in policy making rather than planning coups.


Global Moderator

* Listing end January
* First ever five star resort at Nilaveli in April

By Ravi Ladduwahetty

Anilana Hotels and Properties Ltd, a group controlled by entrepreneur and frontline Asset Manager Asanga Seneviratne and his family, will shortly launch eight hotel and property development projects with investments totaling to US$ 122 million.

The group successfully raised capital through a private placement of US $ 70 million early last year, will apply for a listing on the Colombo Stock Exchange end January, Seneviratne said.

The former boutique hotel chain moved out of the "small hotel " category in 2010 and invested heavily in property, mainly in the East coast and now will open the first ever five star resort on the world famous Nilaveli stretch in Trincomalee and another project in Passikudah, both in April, he said yesterday.

"The stunning 70 - suite five star resort at Nilaveli boasts of state of the art technology and design and has two 30-metre swimming pools , an open kitchen, two restaurants , roof top dinning and Spa’s designed by a world renowned specialist. The 60 room five star Resort in Passikudah is similar in style and the chalets are a few metres away from the ocean,’’ he said

Two other properties are under construction in Dambulla and Panichankerni and are set to open early 2013. The developments under design are Blue Lagoon in Trincomalee , Vakarai, Kalkudah and Colombo, he said.

The Chairman of the Group is Peter Amerasinghe who heads the Aristons Group of Companies and its Board comprises leading hotelier and promotor Prassana Jayawardene and former Bank of Ceylon Chairman Gamini Wikramanayake.

The group COO in charge of the hotels operations is British National Trevor Burton who counts over 23 years of experience with the Grand Hyatt Group of Hotels and has launched many Hyatt properties around the world.

The construction operations is headed by Gihan Zoysa who successfully built over 800 houses in the east coast after the tsunami.

5Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sat Jan 14, 2012 9:15 pm


Vice President - Equity Analytics
Vice President - Equity Analytics

You are one day ahead.
I can remember the TV series "Early edition".It is for our members.


Global Moderator

The Colombo Stock Exchange (CSE) in an effort to improve the country’s image as a destination to invest in stocks, has embarked on a mega media initiative, seeking proposals from leading ad agencies for this campaign, according to sources.

"This campaign aims to enhance liquidity, strengthen risk management systems and raise the awareness of investment opportunities available through the CSE," one source told the Business Times. The media campaign aims to address different stakeholders of CSE such as investors, local and foreign; existing potential, media, and issuers, both existing and potential, according to the source. Grants McCann Ericsson, Lowe Lintas, Leo Burnett, Bates Strategic Alliance, Phoenix Ogilvy, Triad and 7th Frontier were the agencies invited to send in proposals.

Amongst the initiatives for 2012 and beyond, educating local investors, both existing and potential, bringing awareness of investing in equity and unit trusts, strengthening CSE’s position among the emerging markets with systems such as Delivery Vs. Payment (DVP), risk management and upgraded Automated Trading System (ATS) are topmost.

The campaign aims to promote Sri Lanka as a value proposition for foreign funds, fund managers, investors and other institutional investors, to increase the number of listings both from the private and public sector, increase the number of products available for investors to diversify their portfolios and also instruments available for issuers to raise capital and to showcase the CSE via media especially with assisting the investors and issuers to familiarize themselves with the mechanisms of the stock market, among others.

“These initiatives are the focal points in the effort to make CSE the ‘preferred choice for creation of wealth and value’ and needs aim and directions, in terms of a creative and PR concept which can drill down to advertising campaigns, awareness building efforts, launch plans, presentations, event co-ordination and others,” the source added.

Since the start of the fresh year, the bourse has been struggling, but it showed some signs of a rebound on Thursday, on the back of Securities and Exchange Commission (SEC meeting on Wednesday to give concessions to the brokers on credit.

7Sri Lanka Newspapers - 15/01/2012 Empty LAUGFS smiles on leisure Sat Jan 14, 2012 9:44 pm


Global Moderator

LAUGFS Gas PLC, more than a year after its Initial Public Offering (IPO) is bullish on the leisure sector and once their Chilaw resort hotel is completed, will scout for other sites for more connected projects, officials said.

“The Chilaw hotel was originally a Rs. 700 million, 100-room hotel, but now the costs have risen to Rs. 1 billion. We will start operations on this hotel this December. After completing this, we’ll look for more sites to build hotels,” W.H. Wegapitiya, Chairman LAUGFS Holdings Ltd told the Business Times.
He added that the company has plans to complete some leisure projects in time for the 2016/17 season and also expand into managing hotels that fall under the “Small Luxury Sector” category. The company at present manages Emerald Bay Hotel, a 50 room property and also Temple Tree and Spa, a small luxury hotel consisting of 10 rooms - both in Induruwa.

LAUGFS Gas’s Maya Avenue building complex which was initially planned as a condominium complex will be converted to an office complex as the demand for the latter was greater. "This town is being developed as a commercial area and it was prudent to change it to a commercial complex and this will be completed in 2013,” Mr. Wegapitiya said, adding that this will cost Rs. 450 million. LAUGFS subsidiary, LAUGFS Eco Systems Ltd was supposed to go public this year, but Mr. Wegapitiya noted that the share market isn’t quite encouraging at present for the company to list.

He also noted that their investments in Reefcomber, Colombo Pharmacy and Grain Elevators which have crashed at the stock market (which the company was getting a lot of criticism for) but they are long term investments. “These are long term in our opinion and we see potential in these shares,” he added.
Mr. Wegapitiya said that this year LAUGFS, whose main business is in import, storage and distribution of Liquefied Petroleum Gas (LPG) and related products expects a 20% growth in the gas market. LAUGFS currently has a distributor network of 1,600 dealers across the island.

The Government aims to double per capita income by 2016 yielding a 12% yearly growth over the same period and according to Mr. Wegapitiya there’s a shift in cooking methods in the country, where a greater household income enables lower income consumers to shift their cooking fuel from wood to LPG, thereby greatly increasing air quality and reliability.

He said that LPG is still at a low penetration with only 25-30% of the households currently using LP Gas (with the preferred alternative being firewood). “This provides substantial upside for the industry and now we have 550,000 cylinders in circulation," he added.

By 2015, the company expects 50 supermarkets and hopes to increase it up to 100 by 2020.
Mr. Wegapitiya added that LAUGFS will change their supermarket segment to a different arena such as standalone large units. “We see immense growth here,” he said. He said LAUGFS has grown into some 18 firms in diversified sectors within the last 15 years since it started. “This year we’ll only go for consolidation,” he said.


Global Moderator

Sampath Bank will see its loan book growing at 30%-35% year on year over the next two years, with the bank already exploiting vast opportunities arising in tourism and infrastructure related developments, a report by Arrenga Capital Securities said.

It added that the bank’s exposure in the tourist sector, which is currently at a low level, is expected to increase over the next few years. “Sampath continues to develop innovative products offered at highly competitive rates which give them an edge over the competitors,” the report highlighted.

Sampath’s credit card business has also shown outstanding growth during a period when most banks witnessed a decline in new issues and expects to reach a total of 100,000 issued cards within next 3 years, from a 60,000 cards in 2009, targeting to regain leadership in the credit card business by 2013.
The report noted that Sampath's centralized credit model (credit model being centralized to current 16 regional branches), will continue to contribute enormously to the soundness of asset quality of the bank. It said that the current non performing loans ratios of the bank remain well below the peer averages.

Sampath continues to be the pioneer in IT developments in the country’s banking sector, and the bank recently became the first bank in the South Asian region to introduce online real time cheque deposit ATMs. "Currently having installed four such ATMs, the bank expects to add around 10 more by end 2012. The bank’s IT led efficiencies has enabled it to maintain its cost to income ratio at acceptable levels even during a time of rapid expansion," the report said. It also said that the total number of staff remain well below its peers averaging six per new branch opened. "As such with a slowdown in the expansions, the cost to income ratio will improve considerably where the bank expects to keep it below 50%," it added. Sampath's net earnings grew by an impressive 45.6% year on year during 2011 third quarter to Rs. 1,149.23 million taking the cumulative nine months earnings to Rs.3, 264.08 million.

The growth was triggered primarily by the outstanding 18.3% year on year growth showed in the bank’s Net Interest Income amidst a challenging interest rate environment well coupled with the 91.8% year on year surge in non interest income. Sampath’s interest income on loans & advances grew by a steady 34.8% year on year to Rs. 4,895.53 million, whilst interest expenses on deposits were at Rs. 2,674.05 million with an 18.9% year on year growth. Sampath registered a net provision reversal of Rs.226.9 million during the third quarter compared to a reversal of Rs.342.9 million registered during this quarter.


Global Moderator

By Duruthu Edirimuni Chandrasekera

Access Engineering, which raised Rs 4.5 billion last July through a private placement, plans to make an initial public offer this March in a bid to exploit a post-war construction boom, officials said.

“Access Engineering issued 180 million new shares at Rs 25 per share which is an 18% stake to local and institutional and high-net-worth investors in July last year and we will issue a further 2% through an Initial Public Offering (IPO) by end February or early March - subject to regulatory approval," Sumal Perera, Chairman Access Engineering told the Business Times. He also said that the IPO prospectus will be out by end February.

Around 10 investors including John Keells Holdings, Carsons Group, MAS Holdings, Dhammika Perera's Vallibel One Ltd., the Associated Electricals Company and the Hirdramani Group subscribed to the private placement.

Mr. Perera noted that around Rs. 600 million will be used to retire bank loans and the balance to finance working capital for already contracted projects and part fund future investments, which include township and other infrastructure projects under public-private partnerships.

Mr. Perera added that 80% of the projects that Access Engineering handles are multilateral or bilateral donor funded, which gives security to a healthy cash flow situation for the company. Access Engineering’s order book is full for the next three years and these orders are Rs 30 billion worth.
Mr. Perera added that 50% of these orders are roads and bridges construction and water and flood retention, low cost housing along with piling constitutes the balance.

“With more projects in the pipeline as well as those which we are planning, we see good prospects especially in the construction industry. By injecting Rs. 4.5 billion through the private placement, our balance sheet is stronger to tap the high growth potential as well as launch new innovative projects," he explained. He said that around Rs. 600 million will be used to retire bank loans and the balance to finance working capital for already contracted projects and part fund future investments, which include township and other infrastructure projects under public-private partnerships.

Access Engineering was incorporated in 2001 and functions as the holding company of Access Engineering Group which includes a fully owned subsidiary, Access Realties (Pvt) Ltd (ARL). AEL carries out the group’s engineering business whilst ARL owns, Access Towers. The company has emerged as a leading entity in the engineering and construction arena by winning over 100 major civil engineering projects island-wide.

Access Engineering has also set sights on renewable energy and also property development sectors. “We feel that renewable energy is the way forward and the future because Sri Lanka is quite dependant on oil. The country can't take the economic impact of an oil price increase," Mr. Perera explained. While noting that Access Engineering is the only Sri Lankan owned construction and engineering industry/ sector firm to go public, he noted that Access Engineering is also one of the first local Greenfield firms to list.

He also said that Access Engineering has gifted 120 million shares (total value of Rs 3 billion) to its over 1000 employees. This gifting of shares to its employees together with the Rs 4.5 billion private placement are among the initiatives taken by the company to broad base the ownership of the company, Mr. Perera noted.


Global Moderator

Share market analysts pin down overvaluation of the stock market as the primary reason for its fall in the past year but say that lack of policy stability such as currency devaluation and the expropriation law are also a source of concern. They say future growth in the market will largely depend on these two factors.
“There's nothing to be worried about when the market falls as it is natural. Market is overvalued when it goes to 20 times earnings so it has to go through a natural process of correction. The economic fundamentals still remain strong in the market but the policy stability (Government and Regulatory) is a concern," Deshan Pushparajah, Manager Corporate Finance, Capital Alliance told the Business Times.

Wavering policy
Many say that while they won't comment on appropriateness of policy, there have over the last few months been serious inconsistencies in policies at various levels. “We need this to settle down for a few months before we invoke foreign interest again. Policies that harm business confidence currency have also been a major negative,” an analyst noted.

Mr. Pushparajah pointed out those recent fears of a further devaluation of the currency pose a further threat for foreign investors to come in. “They would rather hold a wait and see attitude on the developments within the country,” he said.

But he also noted that markets over 20 times valuations are considered expensive but it doesn't mean that they cannot be attractive. "There could be situations where higher multiples would not deter investors buying, given that there is strong growth or a super macro opportunity in the market," he explained further.

He also pointed out that for Sri Lanka the economic indicators display improving performance, but that doesn't mean that economic performance cannot be better.

Exchange rate phobia
Further in the recent past few adhoc policies may have dampened investor sentiment, especially the under utilized asset take over bill and currency devaluation, the analyst noted.

Others say that we are just another country competing for portfolio and Foreign Direct Investments (FDI). “Similar to any investor the foreign investors - let it be portfolio or FDI-, would want profits and advantageous positions for themselves. Therefore at the point of entry they would want a weak rupee and at exit would want a strong rupee for the selfish reason that they want to maximize their dollar returns. In such a case the rupee devaluation has adversely affected the prevailing foreign investors but it also entices fresh foreign money to enter the island,” Dhanushka Samarasinghe, Director Research TKS Securities told the Business Times.

However, other analysts said that the fear factor amongst the overseas investors is the future exchange rate policy of the island.

Predictability and consistency
“Any investor likes predictability and consistency whilst they would like surprises only if they are positive. Therefore in the current context possibilities of future rupee devaluation would only delay foreign investments since overseas investors would want to see the local currency bottom out for them to enter the country,” Mr. Samarasinghe noted. He also added that with the change in the rupee defence, a stronger local currency strategy followed by the Central Bank is the only way to maximize the potential of overseas investments would be to allow the free float of the currency.

“Then there would be no ambiguity concerning exchange rates; the investors would be able to absorb the risk rather than face the additional risk of changing economic policy,” he said. He also noted that the free float of the currency opens a new paradigm of risks associated with global hot money flows. "Then Sri Lanka would no longer be (somewhat) decoupled from the global economy as it has been in the past," he noted.

11Sri Lanka Newspapers - 15/01/2012 Empty Winning streak from Asia Asset Finance Sat Jan 14, 2012 9:49 pm


Global Moderator

Stockmarket Review
By Elton P. Ebert
A much welcome wave of enthusiasm engulfed the Colombo bourse from Wednesday after a spell of inexplicable depression. This flame was further ignited the next day with the debut of Asia Asset Finance which delivered substantial profits on day one to its ubscribers, not seen for more than a year.

Analysts were also juxtaposed as a result of the trading pattern of this stock which was not oversubscribed on day one itself unlike other IPOs and with the market sentiment not as good as before. A substantial 38.5 million shares were transacted on the first day, and continued to shock everyone the next day when it raced to Rs.6.30, in dealings of over 40 million shares - unbelievable for a share issued to the public at Rs.2.50!

As the week came to a close both indices were slightly discounted from the start of the day.
Directors of companies which postponed their IPO.s due to the unfavourable share market conditions may have heaved a sigh of relief because of this success. However any IPOs should be investor friendly with the reasonable pricing and the company should have a perfect track record.

Many are still smarting following the failure of erratically-priced IPOs like Softlogic Holdings and Expolanka, which are now langushing at very low levels. Softlogic issued 139 million shares at Rs 29 in June 2011 while Expolanka issued 172 million shares at Rs.14 in May 2011. Browns Investments, Free Lanka Capital Holdings, Textured Jersey, and People’s Leasing were also disappointing, but in this group the price disparity is not so great.

The diversified Richard Pieris has embarked into insurance through Arpico Insurance which is a joint venture with Ataraxia, an investment banking company in Australia, and in association with reinsurer Munich Re.

During the week Environmental Resources Investments’ normal shares and its warrants were heavily traded although with varied price movement, while Commercial Bank, Free Lanka Capital and Textured Jersey were also ingredients of the high turnover. On Friday a near three million shares in Marawila Resorts were transacted.Alliance Finance improved to Rs. 800, Associated Motor Finance gained to reach Rs.460 while Nuwara Eliya Hotels was at Rs 1350. But Colombo Pharmacy was static at Rs.1100.
Changes in directorates: Asia Asset Finance Ltd - Dayananda Muthukumarana resigned as Chairman and from the board, Manohara Nanayakkara was appointed Chairman, Nirosh de Silva was appointed a Non-Executive Independent Director and Ms D Priyanthi Pieris a Director; Peoples Merchant PLC - Tushan Wickramasinghe, G. Ramanan and Anil P Weerasinghe were appointed Directors.

Turnover for the week was much better at Rs.3.7 billion when compared to Rs.1.9 billion last week. Both indices ended fractionally lower than last week, the All Share Price Index losing just 1.18 points or 0.05% to end at 5929.34 while the Milanka was 37.06 points or 0.1% lower to close at 5046.09.

12Sri Lanka Newspapers - 15/01/2012 Empty PCH prepares with confidence for 2012 year Sat Jan 14, 2012 9:50 pm


Global Moderator

PC House PLC, the leader in ICT in Sri Lanka, has taken stock of the strategic changes and developments that took place within the company last year and is forecasting the strategies in business operations, distribution and retail that will be seen in 2012.

S.H.M. Rishan, Chairman/CEO of PCH said in a statement that, “the contribution of the new branches is intense... In the first six months of the financial year 2011/2012 PCH has increased its turnover by 25 % declaring a turnover of Rs.1.95 billion, spurring a growth in gross profit of 16 %. Looking at the numbers it is hard to deny the positive effect of the expanded distribution network on the bottom-line.”

In 2011, the PCH regional network expanded strategically adding seven new branches located throughout the island, and the upgrading of the Kandy branch to a 9-to-9 super-store, making the total branch network to 38. The new branches were opened in Matale Kegalle, Galle, Batticaloa, Mullativu, Nuwara Eliya, and Monaragala.

Apart from the regional distribution, PCH possesses a chain of retail outlets situated in the heart of Colombo, catering to the urban clientele offering a comprehensive ICT products and solutions portfolio. Recently, PCH established a new SBU that focuses the niche market of small and medium scale businesses.

The company said it’s poised to enter into new partnerships with few other international ICT brands in the near future to further enrich their assortment of products and services.

13Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sat Jan 14, 2012 9:54 pm


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics

soileconomy wrote:CSE.SAS.
You are one day ahead.
I can remember the TV series "Early edition".It is for our members.

That is the think he is trying to do.(posting the news before the original newspapers put live on)
Well done CSE.SAS.
So many gossips went on this forum, but some of us appreciate these guys effort.
Thanks a lot for the posting the news earlier than providers.

14Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sat Jan 14, 2012 10:48 pm



Kumar wrote:
soileconomy wrote:CSE.SAS.
You are one day ahead.
I can remember the TV series "Early edition".It is for our members.

That is the think he is trying to do.(posting the news before the original newspapers put live on)
Well done CSE.SAS.
So many gossips went on this forum, but some of us appreciate these guys effort.
Thanks a lot for the posting the news earlier than providers.
Really a good job.
Keep it up.

15Sri Lanka Newspapers - 15/01/2012 Empty Six Reasons For Bourse’s Demise Sun Jan 15, 2012 1:58 am


Global Moderator

Well the bourse went up on Thursday after suffering a bear run for several consecutive days, but it was pushed up by junk stocks, a market source told this reporter, a day which also saw a net foreign outflow of Rs. 24 million on thin foreign activity. This increased to Rs. 60 million the following day Friday.

And, due to the very brittleness of its rise, the bourse fell again the following day Friday, with those self same junk stocks contributing to its turnover on Friday as well.

“It’s the expectation that broker credit would once more be revived when the Securities and Exchange Commissioners meet up tomorrow to discuss this issue that pushed the market up on Thursday,” he said.

Among some of the heavily traded stocks that day were 38.5 million shares of Asia Asset, 8.4 million shares of the troubled Environmental Resources which had its recent warrants issue not fully exercised (similar to a rights issue of a company not fully taken up), 5.7 million of Blue Diamonds, 3.7 million shares of Tess Agro and so on.

Junk stocks are those stocks which are classified as stocks which show little or no promise, especially in regard to providing shareholder returns. The opposite of it are blue chip stocks, stocks such as John Keells Holdings plc, Hatton National Bank plc, Sampath Bank plc, Chevron Lubricants Lanka plc and the Carson Cumberbatch Group.

The stockmarket continued with its downward spiral, losing 57.58 points (0.97%) on the benchmark ASI and 62.72 points (1.23%) on the more liquid MPI at Monday’s trading as well, on a low Rs. 434.5 million turnover.

And the fall was replicated the following day Tuesday, before gaining slightly on Wednesday and making a rapid turnaround the following day Thursday where the two indices gained by 77.41 and 55.46 points respectively, before falling again on Friday.

However since the beginning of the year the bourse has lost 131.95 points (2.2%) on the ASI and 163.48 points (3.1%) on the MPI as at Thursday.
Several reasons have been attributed to this downturn, six of which are Sri Lanka’s high price to earnings ratio (PER) (it was 15.8 times at last year end whereas in another emerging market, ie in Vietnam it was a low 7 times. A higher PER may be a gauge as to how over-valued stocks are in a market).

Another is the instability of the local currency, with the Central Bank of Sri Lanka (CBSL) and the Treasury giving different signals in regard to the same. While CBSL is of the opinion that a weak local currency would cause other problems such as making Government’s interest payments more expensive (see also the business pages of this publication’s last week’s issue); the Treasury is of the view that the rupee should come down further, on the back of a 3% devaluation made in November (see the business pages of this publication’s January 1, 2012 issue).

An unstable local currency, ie when there is pressure for it to weaken, deters foreign investors from investing in the stockmarket and also in the government securities (T Bills and T Bonds) market due to fears that when they do want to exit, they would then suffer from a capital loss by such an action.

The US dollar ($) in inter-bank trading was being continued to be protected at the Rs. 113.90 level per $ by CBSL throughout last week.

Meanwhile the third reason being touted for the bourse being deemed an unattractive instrument for investments is that commensurate with the weakening of the rupee, it has also brought to bear pressure on interest rates to rise, making investors to believe that a better proposition is to invest in fixed income instruments rather than in the stockmarket.

While three other reasons touted for the bourse’s downturn being the recently passed Expropriations Act where even public quoted companies may be taken over under the said law, the Euro Zone debt crisis which makes investors, particularly from that region to pull out their monies invested elsewhere, such as from Sri Lanka, and take it home because they feel that that is a safer haven than elsewhere despite all the problems at home.

Sri Lanka in particular felt this during the time of the recent global recession, when investors, particularly in government securities pulled out from the market in 2008, thereby causing pressure on the rupee to depreciate and interest rates to rise.

While the sixth reason being given for the bourse’s decline is that the integrity of the market being at stake after the recent removal of the Securities and Exchange Commission’s Chairman and Director General for doing their job!

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Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Indo-Lanka trade talks in March


India and Sri Lanka are keen to resume talks on the Indo- Sri Lanka Free Trade Agreement (ISFTA) and Comprehensive Economic Partnership Agreement (CEPA) in March, said Ministry of Trade and Commerce sources.

Indian Trade and CommerceMinister Anand Sharma said that he is likely to lead the high level Indian business and official delegation to the Sri Lanka Expo 2012 in March. Both countries agreed to dedicate the forthcoming session to pending matters pertaining to the Indo-Lanka FTA and Indo-Lanka CEPA.

Being the first FTA for India and Sri Lanka, the 1998 Indo – Sri Lanka Free Trade Agreement carries substantial sentimental value for Sri Lanka.

“Both countries can play a major role in elevating Indo-Sri Lanka economic relations from the current level to a much higher level” Trade and Commerce Ministry sources said.

The private sector is upbeat over the successful outcome on Sri Lanka’s show at Partnership Summit 2012, in Hyderabad.

The 18th Partnership Summit 2012, was attended by high-profile ministers from several countries and a large number of industry leaders, representing 47 countries.

Minister Bathiudeen led the Sri Lanka delegation to the Summit. Apart from officials of the Ministry, the Department of Commerce, the Lankan delegation included representatives from Sri Lanka’s private sector (those engaged in imports, exports and investments with India) as top apparel maker Brandix Lanka Ltd (which has garment manufacturing facilities in Andra Pradesh providing employment to 14,000 Indian nationals), International Foodstuffs Co (Pvt) Ltd, Mushan International, a top Lankan gem exporter to India and elsewhere, and E-W Information Systems (EWIS).

Trade relations between Sri Lanka and India marked a historic milestone with the signing of the Indo–Sri Lanka Free Trade Agreement or the ISFTA in 1998, being the first FTA for India and Sri Lanka, the ISFTA also carries substantial sentimental value for Sri Lanka.

Following the ISFTA, which became operational in 2000, trade between the two countries increased in an unprecedented manner. The value of two-way trade had grown from about 650 million US dollars in 2000 to over three billion dollars by 2010. It will reach four billion dollars very soon. The Indian FDI started moving into Sri Lanka in 1982, when Ashok Leyland decided to set up a bus assembling plant in collaboration with the Government of Sri Lanka.

Substantial Indian investments began flowing in from the mid-1990s. They included investments in construction materials such as steel, cement, paint industries and roofing sheets. The third wave of Indian investment followed the Indo-Lanka FTA and the developments in air traffic and relaxation of visas for Indian nationals. The cumulative Indian investment in Sri Lanka, which stood around a mere 24 million US dollars in 2000, has increased to a staggering 600 million dollars by 2011.

Today, India ranks within the top five foreign investors in Sri Lanka. Several Indian companies such as Indian oil, Bharti Airtel, ICICI bank, Asian Paints and Ashok Leyland, have benefited immensely by investing in Sri Lanka.

Meanwhile, companies such as Taj Hotels and CEAT have become household brands among Sri Lankans. Indian investors have also been enjoying the benefits of the constitutional guarantee of investments, duty-free market access under the ISFTA, Double Taxation and Investment protection treaties. The conquest of Indian investors further triggered in the recent past, when major firms such as Primal Glass, Fortis Healthcare, Mphasis, TATA communication, First Source IT, Dabur consumer products and Axis Bank, expanded operations into the island.

Sri Lanka and India have recorded an impressive performance on the tourism front as well. 250,000 Sri Lankans visited India during 2010, while India topped the list of tourist arrivals in Sri Lanka in the same year. India continued to be at the top in 2011 recording 138,000 tourist arrivals from January – October 2011. This registers a spectacular growth of 45% compared to the corresponding period in 2010.

17Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:26 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Real estate shows significant growth -KPMG

The market for real estate assets in Sri Lanka has shown significant growth since 2009 with a marked increase in price levels of real estate including bare lands, residential housing, commercial premises and condominium apartments, a KPMG report stated. Increased foreign investment interest in prime blocks of commercial land in Colombo, acquisition and resale of leisure properties by private investors and a general increase in confidence levels of household investors has fuelled the development of Sri Lanka’s property market during the past 24 months, the report said. The changing landscape of Sri Lanka’s real estate market is likely to be further elaborated by shifting lifestyles of real estate buyers.

including broader acceptance for apartment style living, further cities becoming accessible and equipped with necessary infrastructure and a growing leisure sector across a number of districts in Sri Lanka. Further transformation is likely to take place and Colombo could emerge as a trade hub for South Asia.

Recent growth trends have shown increasing activity in the construction industry, housing, property sales and apartment projects. Individuals are also likely to have benefited from increasing property prices and appear to continue to invest in real estate.

The city’s landscape is currently in a state of transition with the government pursuing a policy of transformation that will beautify the capital’s landscape.

Unlike most emerging economies the urban population in Sri Lanka has not increased over the past five decades and only 15 percent of the population live in cities.

The Report stated that despite issues regarding the classification of urban and rural areas a vast majority of the population live in rural areas.

The population in the city is estimated around 900,000 while the floating population is around 500,000.

18Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:27 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Micro Cars wins Global Excellence Award

Micro Cars received the Global Commerce Excellence Award recently at a glittering event at the Ceylon Continental Hotel attended by many heads of reputed corporate companies.

This was initiated by the Central Bank to award companies that have made a positive contribution to the economy. Chairman of Micro Cars Dr. Lawrence Perera and Director Guhasanka were presented with the Global Commerce Excellence Award by Secretary to the President Lalith Weeratunga and Governor of the Central Bank of Sri Lanka, Nivard Cabraal.

Keeping to the vision of the ‘Mahinda Chinthana Idiri Dekma’ these companies have invested in capital and manpower to keep the economy afloat. Commenting on the achievement Guhasanka said that “this award has immense value because it is a testament to the resilient spirit and the never give-up attitude of the organisation.

We have invested a great deal during war times and we were always willing to stand-by the government and the people.

Bringing a better way of life has always been the objective of the Micro Car company, and it will be so in the future“.

Guhasanka also said that receiving this award has been extremely encouraging it could not have been achieved without the collective effort and positive attitude of the entire staff at Micro Cars.

The Global Commerce Excellence Awards was organised in conjunction with the Shippers Academy of Colombo and the Technical Cooporation of the Central Bank of Sri Lanka, a worthy recognition as these organisations have positively contributed to growth and shifting Sri Lanka to a middle income nation that it is today.

19Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:28 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

India opens retail sector to foreign stores

The Indian government has allowed single-brand foreign retailers to open stores, clearing the way for companies such as Starbucks and Ikea. Retailers can now invest beyond the previous limit of 51 percent ownership. However, they are required to buy 30 percent of their goods from domestic small industries. The move is a step forward after plans to open up the lucrative supermarket, or multi-brand sector, were delayed following a political outcry.

The cabinet approved the plan to allow wholly foreign-owned “single brand stores” in December. A government notification was issued announcing its implementation. Large domestic retailers were happy with the agreement, which was pushed through by the government recently. “This is a welcome move with a clear potential to lift the general mood in the economy,” said Rajan Bharti Mittal, managing director of Bharti Enterprises which partners with Wal-Mart supermarkets.

Previous attempts to open up the retail sector have met with mass protests in the country and within the government. Prime Minister Manmohan Singh reversed a decision in December to let multi-brand companies such as Wal-Mart and Carrefour to open supermarkets in India. Those against the move said it would hurt small local businesses. Minister Singh has said he will renew the attempt to open up the sector after regional elections in 2012. (BBC)

20Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:28 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Nestlé Lanka to invest Rs 250m


Nestle Lanka PLC will invest Rs. 250 million on the expansion of the Ultra Heat Treated milk line within the next two months, said Nestle Lanka PLC Managing Director Alois Hofbauer.

Nestlé employees at the state-of-the- art noodle factory in Kurunegala. Pic: Kavindra Perera

Nestle Lanka committed Rs. 10b last year for a period of five years to expand the dairy, food and beverage and culinary sectors in keeping with the company’s mission to create shared value.

The company invested Rs. 800m on the noodle brand drier last year under the first phase of the investment plan.

In another groundbreaking move the company committed Rs. 1.1b on the state-of-the-art noodle plant at the Kurunegala factory recently.

Hofbauer said the new plant is the first investment for 2012 and added that it will revolutionise the food and beverage sector in Sri Lanka which is growing at a pace.

The Nestlé Lanka procures an average of 104 tonnes of milk daily from around 15,000 local dairy farmers and has been supporting the Sri Lankan dairy sector since 1982.

Rural milk collecting points and chilling centres were first established close to the Kurunegala factory.

The number of collection points has doubled since 2009 to 1200.

A Company official said that even during the conflict, Nestlé remained active in northern Sri Lanka , operating four chilling centres at the edge of the government-controlled areas which are supplied by collection points further north.

In 2010, Nestlé Sri Lanka was able to extend its milk collection to resettlement areas, providing a stable market and much-needed income for dairy farmers returning to the area.

Four new chilling centres have been set up in the war-ravaged north of the country since June 2010, reflecting our on-going commitment to developing the country’s dairy sector and accelerating economic development and prosperity in rural communities.

Under traditional dairy farming practice in this region, cattle are free to graze on what they can find naturally, but as many dairy farmers had to leave their livestock behind when they fled, the area has a lot of free-roaming cattle. Productivity is extremely low – an average of 1.5 litres of marketable milk per cow per day – so not surprisingly, despite possessing an estimated 40 percent of the country’s cattle, the north and east together produce only 22 percent of the nation’s milk.

In addition to milk collection and chilling facilities, Nestlé is helping farmers to improve the quality of their herds through breeding with stud bulls, artificial insemination and the cultivation of green fodder.

21Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:29 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

A- and P2 ratings for Janashakthi

Janashakthi Insurance PLC continues to drive forward with consistent growth as revealed by RAM Ratings Lanka.

The Company rated Janashakthi's long - and short-term claims-paying-ability ratings at A- and P2 respectively, a testament to Janashakthi's consistent service delivery and tenacity within the competitive market.

Janashakthi has the highest paid-up capital among quoted insurance companies and has shown high profitability and growth amidst tough market conditions. "We seek to continuously improve our performance and consistently deliver on our ethos of building consumer trust" said Janashakthi Managing Director, Prakash Schaffter.

"The ratings by RAM is a reflection of our performance and strength and an endorsement of all the hard work we put into reach where we are today in this highly competitive industry which has recently seen the entry of many new players".

22Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:30 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Digital movie camera to revolutionise film industry
by Jayampathy JAYASINGHE

Digital technology will revolutionise the local film industry in the near future. Mrs Sumithra Peries, director of the new film titled Vaishnavee said that she and her husband Lester James Peris had the idea of producing Vaishnavee for quite some time.

She said "being in the film industry for some time my husband and I are venturing out with the new technology."

Vaisnawee the new film based on folklore will be shot with the latest digital camera called the Red Epic, she said.

Chairman, Mano Nanayakkara of Asia Digital Entertainment Company said he agreed to produce Vaishnavee with Dr. Lester James Peries using digital technology.

23Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:31 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

Range Rover sponsors top authors for GLF
Contemporary British motoring élan is to be showcased in Galle later this month at the Galle Literary Festival (GLF).

Two British writers will be among the eminent authors participating in the 2012 edition of the festival courtesy Range Rover, a first-time Gold sponsor of this annual event.

Novelist Joanna Trollope OBE and playwright Tom Stoppard are sponsored by Frontier Automotive (Pvt) Ltd, sole agent in Sri Lanka for Land Rover and Range Rover, in celebration of the arrival in the country of the Range Rover Evoque, Land Rover's SUV.

24Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:32 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

ERI gets Diamond Eye Award

Chairman ERI – Lalith Heengama receives the award from President OMAC – France, Charbel S. Tabet. Director ERI, Gamini Sarath Munasinghe and OMAC officials are also present.

Environmental Resources Investment PLC, Sri Lanka was presented with the prestigious international Diamond Eye Award for Quality and Excellence by Otherways Management Association Club-France OMAC at an awards ceremony held in Geneva, Switzerland recently.

ERI is the first Sri Lankan business entity to be presented with the Diamond Eye award and was also awarded the certificate for T.Q.M. (Total Quality Management) at the ceremony. This international award for quality and excellence was initiated in Europe to recognise and reward companies from all parts of the world which have proved themselves in the field of quality and excellence.

25Sri Lanka Newspapers - 15/01/2012 Empty Re: Sri Lanka Newspapers - 15/01/2012 Sun Jan 15, 2012 10:33 am


Assistant Vice President - Equity Analytics
Assistant Vice President - Equity Analytics

ICTA plays major role in Visa Online System
The ICT Agency of Sri Lanka (ICTA) played a major role in 'Visa Online' by linking the Lanka Gate Internet Payment Gateway (IPG) for making online payments. Also known as Electronic Travel Authorisation (ETA), Visa Online introduced in its trial version on October 1 , 2011 became a regular procedure with the dawn of the New Year.

The Immigration and Emigration Department had introduced the trial version of the Electronic Travel Authorisation (ETA) facility. The ETA facility became fully operational from January1 2012.

According to the Immigration and Emigration Department, foreign nationals, who intend to visit Sri Lanka for a short stay up to six months, must obtain ETA, prior to their arrival from January1 2012. The ETA is issued through the on-line system. No passport copies, documents or photographs are required.

There is no requirement to endorse the ETA in the passport. Nationals of the Maldives and Singapore who visit Sri Lanka for short visits up to 30 days are exempted from ETA as reciprocities.

Foreign nationals who intend to visit Sri Lanka for official or diplomatic purposes should forward their applications to the Immigration and Emigration Department through relevant Sri Lanka Government Ministries and Agencies or Sri Lanka Overseas Missions. Gratis (Free of Charge) basis is applicable only for diplomatic and official passport holders.

The Gratis ETA is granted for normal passport holders, if arrangements have been made between the Government of Sri Lanka and the respective countries.

For personal visits, Diplomatic and Official passport holders should follow the normal ETA application procedure, Immigration and Emigration Department sources said.

The online visa system for tourists arriving into the country was introduced instead of the hitherto implemented on arrival visa. Accordingly, all visitors to Sri Lanka including transit passengers will have to apply for travel authorisation online prior to their visit to the country.

This new system has replaced the previously implemented 'on arrival visa' at the ports of entry while a fee of $ 10 and 20 would be levied from travellers from SAARC countries and other passport holders.

The Electronic Travel Authorisation has been introduced to grant prior approval for visa online for foreign nationals from 78 countries.

Controller of Immigration and Emigration W.A.C. Perera said foreign nationals visiting the country for tourism, medical treatments, sports, cultural shows, business conferences and discussions, training programs and seminars can apply for the Electronic Travel Authorization via

The ICT Agency of Sri Lanka CEO Reshan Devapura said the newly introduced Online Visa System was a major breakthrough ICTA had made in 2009 by introducing the eRevenue Licence Project to the Lanka Gate IPG:" the precursor for ETA 2012 is said to be a breakthrough ICTA had made in 2009.

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