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FINANCIAL CHRONICLE™ » DAILY CHRONICLE™ » Sri Lanka Newspapers Thursday 10/05/2012

Sri Lanka Newspapers Thursday 10/05/2012

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Resignation Clarified
May 09, 2012 (LBT) - Senior business leader and top professional Rajan Asirwatham who resigned from the Boards of LOLC Plc and Brown and Company clarified to LBT about his resignation.

According to Asirwathama he had resigned since it is due to conflict of interest he being in the LOLC and Browns Board when LOLC and Browns lead subsidiary Browns Investments PLC is negotiating a lease agreement with regards to the Excel World property in Colombo 10 which is owned by the Church of Ceylon.

"I am one of the seven long standing Board of Trustees of the Church of Ceylon. And in this case Church of Ceylon is the lessor and LOLC related Browns group is the lessee" Asirwatham said adding in such a circumstance considering his long term carrier he had decided to give up the directorships of LOLC and Browns and to continue as Board of Trustee of the Church of Ceylon.

He also added that Browns had commenced the development phase of Excel World property in to a mixed development project while it is not fair for him to be in the both LOLC and Browns Boards when a negotiation is going on with regards to the development and land lease. According to him Church of Ceylon has certain restrictions with regards to the various developments that are taking place in the properties that Church owns.

Until his resignation Asirwatham was serving LOLC and Browns Boards as a Non-Executive Independent Director. His resignation is yet to be announced by the respective companies and a confirmation is expected shortly. Asirwatham, who was appointed to the LOLC Board in November 2008, headed its Audit Committee as well as the Integrated Risk Management Committee as per company financials.

On the contrary, however head of Audit Committee as well as the Integrated Risk Management Committee of LOLC, Asirwatham's resignation had come at a time when reports from several sources outlined that Sri Lanka’s financial market watchdog and the Monetry Board had discussed a crucial issue that may cause another financial industry downturn in the country which would be a result of Lanka Orix Leasing Company (LOLC), according to sources.

Accordingly sources outlined that several transactions that had happened among LOLC group lead fame and new buyouts had caused LOLC sitting on a debt portfolio valued to the tune of Rs.65 billion or nearly US $ 520 million.

In mid July 2011 it was announced by the Board of Directors of Browns Investments Limited (BIL) that Browns Investments Limited purchased the entirety, save one share, of the shares of Excel Global Holdings (Private) Limited (“the Company”) on 22nd of July 2011 from Francis Chokatte, Sherly Chokatte and Excel Global Holdings Limited.

The notice further said that the Company is the majority shareholder of Millennium Development (Private) Limited, which by Lease Agreement No. 1555 dated 11th March 2003, has leasehold rights to the land on which Excel Park is presently located.

“Browns Investments Limited wishes to state that it has plans to expand the existing facilities which are presently on the premises” the notice said adding the Board of Browns Investments Limited further wishes to state that any development or improvements will be made strictly in compliance with the provisions of the aforementioned Lease Agreement and in consultation with Incorporated Trustees of the Church of Ceylon, which is the owner of the said Land. Moreover, Browns said any such improvements and developments will be made in a manner that will bring substantial value to the premises and to all stakeholders of the premises including the Incorporated Trustees of the Church of Ceylon.

However upon BIL investing in Global Holdings (Private) Limited that time Kamantha Amarasekera, Non Executive Director, BIL had told reporters that with a view making the Excel World a top entertainment park in the city of Colombo, Browns Investments (BIL) plans to invest another US $ 100 million in developing the Excel World property, probably with a few foreign parties.

“We will invest at least a minimum of another US $ 100 million to add a shopping mall, service apartments, multi-storied car park and a water park making this a mixed development project. Colombo doesn’t have a good car park, and it will be ideal to develop the existing car park at Excel World to accommodate more vehicles,” Amarasekara had told reporters at the time.

That time Amarasekara had told reporters that the original lease agreement entered into by Excel Global Holdings with the owners of the land is spanning for two terms each spreading for 40 years starting from 2003. “So we have another 72 years, according to the lease agreement to operate and run this property which is almost like an outright purchase” he said.

Upon Amarasekara's comments that were made to media in 2011 in another development representing the lawyers for Incorporated Trustees of the Church of Ceylon, Attorney at law Neelakandan in a letter to a Media Institution had informed that it is incorrect and false for anyone to claim that “they have another 72 years according to the lease agreement to operate and run the property which is almost like an outright purchase” quoting a news story titled ‘BIL to unveil mega plan for Excel World’.

However that time the stock exchange filing by Browns (BRWN) that said “Excel Global Holdings is the 100% shareholder of Millennium Development Ltd which holds the long term lease of Excel World property located at Darley Road which is in extent of over six acres for a period of 40 years, and renewable for another 40 years.” That time in 2011 when queried from Neelakandan about the correct period of the lease, Neelakandan had denied to respond, adding that he cannot disclose the terms of the lease.

Originally a land owned by Catholic Church of Colombo, in March 2003, then titled ‘Millennium Park’, the country’s only leisure and entertainment complex was earlier acquired by Excel Global Holdings (Pvt) Ltd, a cash-rich multi sectoral business group headed by Chairman Francis Chokatte and family, in major private transaction with Millennium Development (Pvt) Ltd and was renamed as ‘Excel World’.

Then ‘Millennium Park’ was owned by Millennium Development (Pvt) Ltd, the company that owned and managed the landmark five-acre Colombo complex, from Link Holdings Ltd, and the Union Bank.


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

Sri Lankan government presents supplementary allocations for vehicle purchases for parliamentary approval

May 09, Colombo: The Sri Lankan government has presented supplementary estimates for the first two months of the year for parliamentary approval.

The supplementary allocations have been used by the government to purchase vehicles for state institutions.

The money has been allocated from the Budgetary Support Services Contingency Liabilities Project under the Department of National Budget.

According to the allocations made, the highest allocation of Rs, 200 million has been made to the Justice Ministry to purchase 23 motor vehicles for Supreme Court Judges and the Court of Appeal Judges.

A sum of Rs.23 million has been allocated to purchase vehicle for the use of the Secretariat for Special Functions (Senior Ministers).

Among the government institutions that have been allocated supplementary estimates to purchase vehicles include Parliament (Rs. 8 million), Private Passenger Service Ministry (Rs. 6.4 million), Ports and Highways Ministry (Rs. 8 million), Child Development and Women's Affairs Ministry (Rs. 16 million for two vehicles), Environment Ministry (Rs. 8 million), Cooperative and Internal Trade Ministry (Rs. 3 million for car and two jeeps), Industry and Commerce Ministry (Rs. 11 million for five cabs) National Heritage Ministry (Rs. 2.5 million) Water Supply and Drainage Ministry (Rs. 5.2 million) Traditional and Rural Industries Ministry (Rs. 9.6 million), Office of Chief Government Whip (Rs. 5.7 million) Petroleum Industries Ministry (Rs. 3 million) and Cultural Affairs Ministry (Rs.7 million).


Director - Equity Analytics
Director - Equity Analytics

Can't they cut all these expenses and subsidise essential items?


Director - Equity Analytics
Director - Equity Analytics

Sri Lanka says, it will receive an estimated total of US$ 25.4 billion as foreign inflows during the year 2012, as opposed to a likely outflow of US$ 22.8 billion.

Central Bank of Sri Lanka which has revised the earlier set annual targets for both foreign inflows and outflows says, the country will earn US$ 11.7 billion via exports during the year 2012.

It estimates that the earnings from tourism will bring in US$ 1.2 billion.

The Central Bank also expects the worker remittances to reach a record figure US$ 6.5 billion during this year and FDI inflows are projected to reach US$ 2 billion.

Sri Lanka’s struggling stock market, according to the Central Bank, will see a net foreign inflow of half a billion dollars during the ongoing year.

The Bank says, US$ 1 billion will come into finance the Tier 11 capital of the Commercial Banks with US$ 800 of it has already come in, which also includes the recently raised US$ 500 million dollar bond of the BOC.

According to the CBSL, major local corporate firms are expected to source overseas funding for a tune of US$ 0.5 billion.

The Monetary Authority expects long term currency swaps to add another US$ 0.5 billion, while Net Treasury bills and bond sales is estimated to bring in another half a billion dollars.

Sri Lanka is planning to raise a US$ 1 billion by issuing an international dollar bond during the year 2012.

Meanwhile, the Central Bank says the country is likely to incur an import bill of US$ 20.9 billion during 2012, while the government is also expected to allocate US$ 1.4 billion to repay loans.

Sri Lankan investments outside the country are slated to be around US$ 0.5 billion, during the year.

5Sri Lanka Newspapers Thursday 10/05/2012 Empty Sri Lanka Newspapers Thursday 10/05/2012 Wed May 09, 2012 11:52 pm


Global Moderator

CSE continues to fall though less steeply than on Tuesday
* Crossings help sustain business volumes

The Colombo bourse continued in its falling mode for the seventh day running although yesterday’s decline was less steep than the previous day with the All Share Price Index down 38.84 points (0.73) and the Milanka 37.44 points (0.58%) on a turnover of Rs.544.1 million, up from the previous day’s Rs.428.8 million with 44 gainers trailing 156 losers.

"The decline in the market continued though not as quite as much as on Tuesday," brokers said noting that three crossings in JKH, Ascot and United motors helped business volumes. However, there was no certainty on where the market’s heded.

United Motors saw 1.7 million shares crossed at Rs.85 in a deal worth Rs.144.5 million with speculation that a big shareholder was involved. However there was no confirmation on buyers and sellers.

JKH was crossed t Rs.202 with 250,000 shares changing hands while Ascot saw 140,000 shares crossed at Rs.205.

Apart from the crossings, Commercial Bank was the most traded stock closing 10 cents up at Rs.105 on 0.5 million shares done between Rs.104.20 and Rs.105.30 generating the day’s top turnover of Rs.57.6 million.

Several large parcels of Amana Takaful were traded with a share volume of over 9 million done between Rs.11.80 and Rs.2 closing 10 cents up at Rs.1.90.

Brokers said that banking stocks held their ground with NDB, among the most traded stock, closing 60 cents up at Rs.119.90 on over 0.1 million shares, HNB up Rs.7.90 to Rs.159 on 83,608 shares and the DFCC Bank closing flat at Rs.120 on 85,244 shares.

The controversial The Finance saw a small quantity of 1,489 shares traded between Rs.28.60 and Rs.29 closing 70 cents down at Rs.28.80.

Aitken Spance announced a first and final dividend of Rs.1.40 per share for 2011/12 following shareholder approval at an AGM on June 28 with the share trading XD from June 29 and payment on July 10.

Aitken Spence Hotels announced a first and final dividend of 70 cents per share for 2011/12 following a June 28 AGM with the share trading XD from June 29 and payment on July 10.


Global Moderator

The rupee edged up slightly against the dollar yesterday with exporters seen converting their holdings as benchmark Treasury bill rates continued to move upwards.

The rupee closed at 127.65/95 against the greenback on Wednesday, strengthening slightly from an opening of Rs. 127.80/Rs. 128.

"There is still some importer demand, but exporters are seen converting their dollars as well," a currency dealer said.

However, the rupee has fallen from around Rs. 126.80/Rs. 127 to a dollar last week.

Benchmark Treasury bill rates rose across all maturities at yesterday’s primary market auction.

The Public Debt Department of the Central Bank offered maturing bills amounting to Rs. 10 billion. Of the Rs. 49.8 billion worth of bids received, the bank accepted Rs. 11.94 billion.

The three-months bill saw its yield increase to 12.19 percent from 12.11 percent the previous week. The six-months bill yield moved up to 12.30 percent from 12.20 percent and the 12-months bill from 12.36 percent to 12.49 percent.

The Central Bank has increased policy interest rates twice since February 2012 in a bid to curtail high credit growth which was fed into a balance of payments crisis.


Global Moderator

Serendib Flour Mills Pvt. Ltd (SFML) has raised Rs. 1.70 billion and US Dollars 14.50 million (a total amount equivalent to approximately US Dollars 27 million or Rs. 3.6 billion) to finance its permanent working capital requirements through a long term syndicated loan facility, the company announced yesterday.

NDB Investment Bank Limited (NDBIB) acted as the Arranger to this facility while a consortium of six banks comprising of Commercial Bank of Ceylon PLC, Hatton National Bank PLC, Indian Bank, National Development Bank PLC, Peoples’ Bank and Sampath Bank PLC participated in the syndication with Commercial Bank acting as the agency bank for the facility.

"Most of the banks which participated in the syndicated loan facility are doing so for the second time, and this is a strong vote of confidence" said Vajira Kulatilaka, CEO, NDB Investment Banking Cluster. The initial loan facility, also arranged by NDBIB, was to finance the construction of the flour mill (built on the Prince Vijaya Quay of the Colombo Port) raising Rs. 3.6 billion in 2004.

Mahendra Amarasuriya, Chairman of SFML stated that "Overcoming initial teething problems, thanks to the backing of our parent company,

8Sri Lanka Newspapers Thursday 10/05/2012 Empty Rajudin appointed as Arpico Finance MD Thu May 10, 2012 12:13 am


Global Moderator

Hafeez Rajudin has been appointed as Managing Director of Arpico Finance with effect from 1 June 2012, following S.R. Bandaranayake tendering his resignation as Jt. Manging Director of the company effective 31 May 2012.Rajudin has a Masters Degree in Business Administration awarded by St. Jose State University, California and is a Chartered Marketer – The Chartered Institute of Marketing, UK.

He has a Postgraduate Diploma in Marketing, awarded by the Chartered institute of Marketing, UK; a Postgraduate Diploma in Business and Financial Administration awarded by the Institute of Chartered Accountants of Sri Lanka in association with the Cranfield University School of Management, UK; Advanced Management Certificate in Strategic Marketing awarded by the Postgraduate Institute of Management, Sri Lanka (University of Sri Jayewardenepura); and Advanced Management Certificate in Consumer Analysis and Market Intelligence awarded by the Postgraduate Institute of Management, Sri Lanka (University of Sri Jayewardenepura) 2000

He is a Fellow Member of the Chartered institute of Marketing, United Kingdom, Institute of Commercial Management (UK) and Sri Lanka Institute of Marketing.

He has held Directorates in many companies. He is also a Senior Faculty Member/Visiting Lecturer at the Faculty of Graduate Studies, University of Colombo, and a Visiting Lecturer at the Institute of Chartered Accountants of Sri Lanka.

9Sri Lanka Newspapers Thursday 10/05/2012 Empty Vehicles and politicos Thu May 10, 2012 12:16 am


Global Moderator

Taxes are never welcomed by anyone, but if they are “for the greater good,” then they must be respected by everyone. However, recent developments in Government have shown that tax increases introduced in March to reduce vehicle imports and bridge the trade deficit is not stopping politicians from stocking up their garages.

In a rather insensitive show, the Government on Tuesday submitted a supplementary estimate of Rs. 3.47 billion to purchase 52 vehicles for several ministries and statutory boards. The supplementary estimate also seeks Rs. 200 million for purchasing cars for Supreme Court and Appeal Court Judges and another Rs. 180 million to purchase vehicles for Sri Lankan diplomatic missions in New York, the Netherlands and Singapore.

While the list is rather exhaustive, it merits mention here for the Government has decided that many ministries should have vehicles despite consumers having to go without. The extensive list includes Rs. 8 million for a vehicle for Parliament, Rs. 6.4 m for the Private Passenger Service Ministry, Rs. 8 m for the Ports and Highways Ministry, Rs. 16.5 m for two vehicles for the Ministry of Child Development and Women’s Affairs and Rs. 8 m for the Ministry of Environment.

Rs. 23 million has been allocated for vehicles for Senior Ministers who render murky service to the country. Even the oft-bungling Ceylon Petroleum Corporation has been given Rs. 3 million for a new vehicle. It is small wonder that such a list makes people feel unfairly dealt with, given that many people aspire to own a car or earn a living as three-wheeler drivers, only to see that on top of a grinding cost of living, they have to dismiss their dreams while politicians continue to reap benefits.

If the increased taxes were to bridge the trade deficit, then how is it that the policy does not apply to politicians? What happened to leading by example? Admittedly, that is a utopian ideal, but the Government is certainly not winning any fans with its double standards.

It is well known that most of the vehicles fall into the luxury category with Hummers and BMWs as well as flashy SUVs being the order of the day. The Treasury has estimated that vehicle imports would drop by as much as US$ 1 billion this year as thousands give up the chance to own a vehicle. If the public can’t, then why should politicians be any different? In the interests of fairness, the politicians should spend the full amount for their vehicles or go without as the people do.

In addition to the purchase of vehicles, the supplementary estimate seeks the approval of the House to obtain Rs. 2.5 billion to meet the shortfall of provisions on the capitalisation of SriLankan Airlines and restructuring Mihin Lanka Airline. Perhaps the latter company can be a study on throwing good money after bad since pragmatic good governance and management is not as actively promoted as requests for more public funds.

Vehicle permits for deserving public servants aside, the preferential treatment for politicians can be discouraging to the public which has elected the officials for everyone’s good and not only their own.


Global Moderator

The Government has made its strongest statement yet to prevent local tea exports from being contaminated by imported low quality teas to protect its highest foreign exchange earning crop, a top official said yesterday.

Speaking to over 200 foreign delegates at the biennial Dilmah Tea global distributor conference in Colombo, Treasury Secretary Dr. P.B. Jayasundera outlined the way forward for the Sri Lankan tea industry.

Emphatically rebutting arguments made by the Tea Industry Association (TEA) that the Government should allow the importation of cheap low-quality teas for blending with Sri Lankan tea, Dr. Jayasundera exclaimed, “Sri Lanka should not permit our product to be used in that manner.”

Dr. Jayasundera explained the Government’s position, noting that “one product we should uncompromisingly preserve and protect is Sri Lankan tea. Dilmah has shown that all facets can be developed locally. We believe Sri Lanka has a tremendous comparative advantage in tea and can make it a three billion dollar industry in the next 10 years.”

Echoing these sentiments, key stakeholders of the tea industry, which directly supports over 2.5 million Sri Lankans, warned against the TEA’s attempts to destroy the world-renowned ‘Pure Ceylon Tea’ brand by lobbying for the adulteration of this premium beverage.

The TEA, which is behind the effort to import cheap low-quality teas for blending and re-exporting from Sri Lanka, is comprised entirely of tea exporters and does not represent the hundreds of thousands of growers and workers who help sustain one of the country’s most important industries. For the past few years, the TEA has attempted to argue that the relatively high cost of Ceylon Tea prevents local players from competing with international brands.

The success of Dilmah, a truly global ‘Pure Ceylon Tea’ brand, and other Sri Lankan-owned brands, stands in stark contrast to this claim. After all, Dilmah’s premium single-origin pure Ceylon Tea has captured significant market share at the top end of key markets almost entirely through the use of the inimitable ‘Pure Ceylon Tea’ brand platform.

Instead of building powerful Sri Lankan-owned premium brands that can leverage the nation’s unbeatable reputation for quality tea while being marketed at a premium price, many exporters have unfortunately been content either to serve as suppliers and packers for foreign giants or to simply export bulk tea as a commodity.

Indeed, the TEA admits that only 12 per cent of exports are under Sri Lankan-owned brands. The remaining exports are under foreign brands or in bulk, raw form. These foreign brand owners constantly pressure suppliers to reduce prices, which leads, in turn, to price pressure on tea growers.

Refuting the TEA’s attempt to draw a comparison between the tea and apparel industry, which allows the duty free import of raw material, Dr. Jayasundera made it clear that the two industries are markedly different, noting that “tea is the opposite [of the apparel industry]. Everything is here” – a reference to the climatic advantages of growing various types of tea in Sri Lanka, as well as the smallholders who grow over 70 per cent of ‘Pure Ceylon Tea’.

Although he bemoaned the fact that, despite its many advantages, tea was not as large an export as apparel, Dr. Jayasundera sounded a hopeful note, pointing to a future scenario where the tea and apparel industries would be similar in size and together, fly the flag for Sri Lanka around the world – with tea being “a 100% value added, 100% locally sourced product with absolute integrity” and apparel integrating backwards to manufacture textiles locally and grow cotton in Sri Lanka.

Industry experts have repeatedly warned that the priceless image of ‘Pure Ceylon Tea,’ built up over more than a century, would be irreparably damaged if the free importation of foreign black teas was allowed.
Indeed, environmental watchdogs such as Greenpeace, along with consumer advocacy groups, have recently alerted the media that some multinational tea brands use Chinese-grown teas that contain dangerous levels of pesticides and toxins. If such teas are blended with fine Sri Lankan teas, which are considered the purest due to stringent controls on growers, the ‘Pure Ceylon Tea’ brand may be destroyed forever.

Acknowledging the importance of reforms in the tea industry, Dilmah Chairman Merrill J. Fernando pointed to the need for concessionary funding to help replanting by companies and smallholders alike, in order to reduce the cost of production and increase crop yields.

“These developments are the keys to increasing Sri Lanka’s export earnings in a sustainable manner,” Fernando contended. “The pure quality of ‘Pure Ceylon Tea’ is a unique, incredibly powerful selling point,” Fernando continued, calling for the creation of more Sri Lankan-owned tea brands that can outperform multinational giants, not on the basis of price but rather on the basis of taste, ethical production and heritage.

11Sri Lanka Newspapers Thursday 10/05/2012 Empty TFC buy against NSB Act: Legal experts Thu May 10, 2012 12:41 am


Global Moderator

Dealing a fresh blow to the contentious deal legal, experts say NSB’s decision to buy a 13% stake in The Finance Co. Plc (TFC) last month had contravened the National Savings Bank Act.

They said as per Section 39 of the NSB Act No. 30 of 1971, the savings giant before investing in a particular stock (other than those in which Government has controlling 50% stake) must obtain approval from Minister (of Finance) in consultation with the Monetary Board. This section deals with authorised business of the bank.

At present the Minister of Finance is President Mahinda Rajapaksa and this requirement as per the Act has added a new dimension to the NSB-TFC deal bringing the country’s Chief Executive directly in to the fiasco. However last week, he ordered the Finance Ministry to look into the deal after which the Treasury Secretary suspended NSB from paying until an inquiry is completed.

The 27 April deal of NSB a buying 13% stake in TFC for Rs. 390 million (around eight million shares at Rs. 50 each, above Rs. 20 from the prevailing market price) from a consortium of sellers including two TFC Directors, one of whom is also the CEO of the broking firm doing the transaction, has sparked widespread criticism over a host of reasons including bad corporate governance and alleged insider trading.

However, the TFC buy isn’t the first stock market deal of NSB, which has an exposure of Rs. 7 billion in listed equity investments. Market analysts said it was impractical for an institution like NSB to seek approval for each stock market investment. NSB has been a key local institutional investor in the market like in the case of EPF and ETF though by law the major exposure is to Government securities.

Speculation was rife that the deal would be cancelled with the shares going back to the sellers, who will be required to repay the settlement bank Sampath Bank which paid for the deal though NSB hadn’t remitted funds nor did it reject the buy though having the freedom to do so.

The Board of Directors of Sampath Bank, which has a Rs. 390 million overdrawn status within the Central Depositors System of the CSE on account of TFC deal fiasco, met yesterday evening on the same issue.

The CSE has also suspended NSB’s custodial bank role in view of its failure to pay for the share purchase.

12Sri Lanka Newspapers Thursday 10/05/2012 Empty CCC concern over NSB-TFC deal Thu May 10, 2012 12:42 am


Global Moderator

The Ceylon Chamber of Commerce (CCC) yesterday in a statement expressed concern over the recent transaction of approximately 13% of The Finance Company PLC.

The chamber believes that ensuring integrity and transparency are vital to maintain investor confidence in the Colombo Stock Exchange (CSE) for the capital market to remain robust.

The CCC appreciated the timely intervention by the officials in recognising the possible governance issues in the transaction and for initiating measures to conduct an inquiry.

The CCC urges policymakers and regulators to ensure that the outcome of the inquiries results in identifying any violations and that action be taken against any wrongdoers.

The Ceylon Chamber strongly believes that there should be collective efforts to ensure transparency and governance in order to enhance investor confidence in the capital markets.

13Sri Lanka Newspapers Thursday 10/05/2012 Empty U_N_P breathes fire over NSB-TFC deal Thu May 10, 2012 12:46 am



By Uditha Jayasinghe
In the wake of the controversial National Savings Bank (NSB) deal, the United National Party (U_N_P) yesterday renewed calls for a thorough investigation into that transaction as well as previous allegations of insider trading in the Bourse but stopped short of wanting it cancelled.

U_N_P MP Dr. Harsha de Silva insisted to media that the Rs. 390 million deal between NSB and The Finance Company (TFC) had unveiled the “tip of the iceberg” on insider trading within the Colombo Stock Exchange (CSE) and called for the removal of NSB Chairman Pradeep Kariyawasam.

Describing the offenders as part of the “stock market mafia,” Dr. de Silva vehemently called on the Government to conduct an investigation and reveal the offenders behind the transaction. Quoting from the Banking Act of 1988 Dr. de Silva pointed out that it clearly stated any director acting against the interests of the bank should be removed.

“To date the losses from this transaction exceed Rs.1.5 billion,” he alleged, displaying on a diagram how NSB bought shares that were 65% above the market price. “On the date the deal took place, the share price of TFC was only around Rs. 30, but there were many that sold shares for Rs. 50 or slightly less. This is an amount that is literally off the charts.”

A few days later the price returned to Rs. 30 and was trading at Rs. 29.50 on Tuesday pulling down the overall market as well. Dr. de Silva remarked that an investigation was all the more necessary as NSB’s annual report detailed an intricate approval process that was supposed to weed out suspicious deals.

“This is disgraceful for a company that dedicated pages of its Annual Report to explain the investment decision making process. According to page 89, the Investment Committee looks at the deal and then passes it on to a Management Committee. From there it moves to the Chairman and then to the Board of Directors.

There is even a separate committee to implement the decision. So how did this happen?”
Given the murkiness of the deal, Dr. de Silva demanded to know why the Board of Directors, the Chairman and other committee members did nothing to stop the transaction. He questioned whether there was outside influence to move ahead with the deal and even asked conscience-driven officials to step forward and help with the investigations. Despite many people being involved in the deal, he noted that the Chairman had to take full responsibility as the head of the organisation.

“Given the seriousness of the issue, why have the NSB officials remained quiet? Why are there no explanations from them? The NSB is the only bank in Sri Lanka with its savings guaranteed by the State, which means that any monetary fallout from the deal has to be covered by the Government. This could lead to extra taxes for the people. Moreover, NSB has around 16.7 million accounts, showing that a large part of the population’s savings are concerned in this matter. All reasons for the Government and the Securities and Exchange Commission (SEC) to take tough action.”

As the SEC is already conducting an investigation into the matter, the MP encouraged it to be as wide-ranging as possible and emphasised that it should look into previous allegations of insider trading. “I have been raising this issue in Parliament for the last two and a half years, but every time the Government has postponed reply.”

However, he did add a note of caution. “This investigation should be done carefully so as not to harm the CSE’s trustworthiness. This is also why we believe that the transaction should not be cancelled as it would reduce faith in CSE dealings. Nonetheless a transparent probe would bolster the Bourse as it would prove respect for law and order.”

14Sri Lanka Newspapers Thursday 10/05/2012 Empty MAS goes north Thu May 10, 2012 12:48 am


Global Moderator

Sri Lankan apparel giant MAS Holdings will begin its foray into the north as two major divisions formalise plans to build manufacturing facilities, MAS Intimates Vidiyal and MAS Active Vaanavil, in Kilinochchi.

The names of the facilities themselves, Vidiyal, meaning “dawn” and Vaanavil signifying “rainbows,” aptly symbolise MAS Holdings’ thinking behind this venture, the company said in a statement. Like the “rainbow,” which is a collaboration of colours, MAS’s passion is to unite communities and work together in the area to herald a new phase in the development of the region. At maturity, Vaanavil and Vidiyal together hope to provide employment for approximately 2,000 direct employees and positively contribute to the livelihoods of their families.

Many indirect employment opportunities will also open up during the construction phase; the project and peripheral activity will provide employment opportunity for other segments of the labour force.
MAS Active embarked on this project on 4 May 2012, as it laid the foundation for commencement of construction of MAS Active Vaanavil, scheduled for completion by end of 2012. The investment will develop a 14-acre site in Ariviyal Nagar, which is six km south of Kilinochchi town.

The construction of the facility is co-funded by USAID, the development arm of the US Government.
MAS Active inaugurated a temporary training and manufacturing facility in Thiru Nagar Kilinochchi concurrently. The training centre will provide employment for 100 new recruits and training on various capabilities required for complex apparel products; whilst integrating the inductees to the MAS culture.

These pioneering employees will eventually become team leaders and multi-skilled workers. The facility will be supported by experienced staff from MAS’s existing facilities with the focus on recruiting and developing local talent.

At the opening ceremony, USAID/Sri Lanka Mission Director Jim Bednar said: “Today with the opening of this training centre and laying the foundation for a new apparel factory, we have contributed to poverty reduction, assisted Government efforts in promoting reconciliation among different ethnic groups and contributed towards sustainable economic growth in the region.”

Vaanavil will primarily service performance sports-wear under the leading international brand Nike. This venture will further strengthen both organisations’ mutual alignment to “celebrating the endless possibilities of human potential”.

At maturity, the plant will provide employment for 1,000 direct employment (over 90% from the Northern Province). The plant will be on a single shift pattern and looks forward to attracting team members from the region.

MAS Active is one of the fastest growing suppliers of performance wear, competition sportswear and casual sportswear in the Asian region. A strategic partner to Nike, they also serve global brands such as Polo Ralph Lauren, Columbia Sportswear, Tezenis and Jockey.

This innovation-driven organisation contributes to global advances in performance wear through technology and provides high end performance apparel for Olympians.

Mas Holdings Director Ajay Amalean noted: “We are excited about the potential in Kilinochchi and the great opportunity this affords us to progress together by providing more than just job opportunities, but working towards the prosperity of the community. The plant name ‘Vaanavil’ epitomises MAS Holdings’ objectives in taking our inspired tradition to the north. Vaanavil represents a collaboration of colours like rainbows and we hope that this project will unite communities to build a better future for the region and nation.”


Vice President - Equity Analytics
Vice President - Equity Analytics

CSE.SAS wrote:
The CCC urges policymakers and regulators to ensure that the outcome of the inquiries results in identifying any violations and that action be taken against any wrongdoers.

The Ceylon Chamber strongly believes that there should be collective efforts to ensure transparency and governance in order to enhance investor confidence in the capital markets.
All those fancy words are fine, but...
These 'wrongdoers' need to be tied to a pillar in a public place. Baskets of rotten tomatoes need to be made available for us to throw at them. (I would have preferred something more solid instead of rotten tomatoes, but don't want to be accused of inciting violence!)

Their ill-gotten wealth should be confiscated and auctioned; the money should be distributed to the poor.


Global Moderator

The Finance Company PLC, has capped a strong period with an impressive performance in their business activities at the end of the financial year 2011/12. This follows the company's fast tracked return to a remarkable growth last year.

This upward trend had been boosted by a consistent execution of the company's strategic plan set up after the infusion of fresh capital.

Among these were branch expansion plans that included relocating a number of their key branches to more strategic locations to maximize its potential and the service to customers. Customers in Batticaloa, Vavuniya, Maharagama, Nelliady, Polonnaruwa and Anuradhapura now enjoy greater convenience and ease in fulfilling their financial needs.

The branch relocations also saw a triumphant return to their own premises in Jaffna which was the firm's first branch to be opened in the country back in 1976. Furthermore, as a part of the overall brand strategy to enhance the corporate brand image a facelift was given to many branches situated all over the country.

In addition to the backing of prominent state banking institutions such as People's Bank, Bank of Ceylon and also Seylan Bank as shareholders of the company, the Central Bank of Sri Lanka, the regulator of the industry also extends its patronage and support its endeavours.

The presence of the Governor and all senior officials of CBSL at the unveiling of the new The Finance Jaffna Branch building reflects the faith placed by regulator.

The investment area of business has been impressive with accelerated growth of 123% during the financial year.

Special emphasis on mitigating credit risk and providing more stringent controls and credit policies has had a tremendous improvement in credit quality maintaining a NPL ratio of around 1% of financial investments done during the last three years.

The pawning business of the company which was tagged as an exceptional contributor to the firm's revenues have exceeded internal expectations and recorded a growth of 237% year on year, justifying the decision to open pawning centres islandwide including the north and the east. The newest pawning centers that opened were in Batticaloa, Trincomalee, Vavuniya and Maharagama totaling the overall figure of pawning units to 36.

The Finance being one of the market leaders in real estate, has recorded an increase of 350% bringing in Rs. 2.7 billion in real estate sales in comparison to last year. Recent land projects of the company have been sold with an average profit margin of 24% bringing the annualized profit to almost 75%, with an average turnaround period of 4 months.

All new projects done during the period have brought very good returns whilst giving the customer an opportunity to own a block of land with good infrastructure at a reasonable price as oppose to creating prices, which is a result of the bargaining power the company has at the time of purchase and adding value.

The Finance concluded operations for the month of April on a high note recording a remarkable inflow of fresh deposits of over Rs. 1 billion. A high growth of 170% was seen in the new deposit intake compared to the previous financial year.


Global Moderator

Micro Cars Limited will invest US $ 6 million to automate their production assembly line in the Polgahawela factory and increase production.

Chairman Micro Cars, Dr. Lawrence Perera told Daily News Business that this would help them to increase the current production from 300 units per month to 1,200.

He said that the main aim of investing in this production line is to intensify their exports. “Currently Micro has very firm orders to Nepal,” he said.

Dr. Perera also said that they have now received orders from both Pakistan and Bangladesh. “In addition we are very serious about exporting to India despite competition from other manufactures in India,” he said.

He said that they would be concentrating on the Micro Sports Utility Vehicle (SUV) range for exports to Pakistan, Bangladesh and Indian markets since they see a demand for these high end vehicles. He said the new vehicle tax has encouraged them to produce more vehicles.

Commenting on the local market he said that the Micro Panda vehicle is in high demand due to its price being less than Rs. 1.5 million and due to its design, safety and advanced features such as ABS brakes, 1.3 engine and dual air bags. “We will soon launch the new Micro Panda SUV vehicle for both the local and foreign markets,” he said. This would be priced around Rs. 1.9 million.

The value addition for these vehicles would be around 35% and the company is looking at increasing this.

He said that vehicle manufacturing is one of the biggest industries in the world and the contribution it makes to the GDP is very high.

“With more government long term support this could be applied to Sri Lanka as well,” he said. Micro Cars also launched a low floor auto transmission, low emission luxury passenger bus with a Euro three engine and said that the next phase of this would be to totally manufacture this bus in Sri Lanka next year.

“This bus could carry 150 passengers,” he said. He said that they would invest heavily in the local transport sector as the country is now focusing on improving the fleet of buses to provide a more luxurious passenger service to the public.

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