Sri Lanka Newspaper 16/01/2012

ERI profit increases to over Rs 417 m
Ramani Kangaraarachchi

The Environmental Resources Investment Group (ERI) profit increased to over Rs 417 million during the year 2011 representing a 284 percent increase compared to the previous year. ERI Chairman Lalith Heengama said the year 2010/11 was very significant to the group as seven new companies came under them and the impact of these additions to the financial figures resulted in notable differences in the comparative figures.

He said as a result of the acquisitions made during the financial year the group reported revenue of Rs 2.21 billion and the main contributor for the growth in revenue was the manufacturing sector with Ceylon Leather Products recording a 198 percent growth.

The acquisition of Dankotuwa Porcelain was another contributor and the manufacturing sector represents 83 percent of the group revenue while leather products represents 57 percent generated from the manufacturing segment.

Meanwhile, DNH Financial reported a 41 percent increase in revenue during the year due to the increase in customer portfolios.

ERI’s contribution towards the group revenue amounted to Rs 252 million during the financial year which represents a 243 percent increase. From the total revenue 54 percent was generated from exports. But there was no impact to the group income statement from acquisition of South Asia Textile Industries and Olancom Pvt Ltd took place on March 31, 2011.

The group earnings per share increased to Rs 1.30 from 0.57 during the year. The diluted EPS increased by 305 percent and stood at Rs 0.41 at the end of the year and the growth is attributed to strong performance in the investment sector.

The peaceful environment in the country coupled with the political stability has attracted a vast number of investors from around the globe, creating a competitive business environment. ERI has the right formula and mix that can change the future of struggling companies by turning them around and creating a sustainable value added,” Heengama said.
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Alliance Finance has increased its profit after tax by a phenomenal 406% during the six months ended September 2011 compared with September 2010. Alliance Finance AGM - Deposits Champa Nakandala said that the company has witnessed a significant growth last year on all fronts with its deposit base reaching Rs.6 billion which reflects a 24% growth compared to 8.7% in the previous year. The diversified client base has grown to over 10,000 customers during this period.

She said that the company will continue to expand this year by converting more collection centers to branches. Currently the company operates in every province in the country with 61 service points comprising branches, collection centres, gold loan centres and window offices.

In keeping with the requirements of its expansion strategy, the company is expected to grow its deposit base further this year. The continuous and prompt payment of due interest to deposit holders over the years has built confidence amongst its clients she said. “Our first priority is the payment of interest and even the staff salaries are paid after that” as per the guidelines set by the three successive generations of the Board,” she said.

Asked how it was possible to sustain a high renewal ratio during the financial crisis in the industry, she said, although the company was compelled to pay lower interest rates to depositors during that period, Alliance Finance was able to maintain a 90% renewal ratio with hardly any premature withdrawals. As a testament to the company’s excellent performance in its core business of hire purchase and leasing, the non-performing loans (NPL) ratios which stood at 4.24% in March 2011 has reduced to 3.86% in September 2011.

In recognition of its superior performance in the industry, the company recently won a prestigious Silver Award in the Specialized Banking and Financial Services Sector category, at the National Business Excellence Awards 2011, organized by the National Chamber of Commerce of Sri Lanka.
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For a second week running, Chinese economic data will take center stage for Asia markets, with investors waiting to see whether the numbers support further monetary easing measures from Beijing.
This past Thursday, China reported that consumer inflation eased slightly to 4.1% year-on-year in December, down from November’s 4.2%, and well below the above-5% level earlier in the year.

The result, some analysts said, was low enough to provide room for the central bank to support growth with further cuts to banks’ reserve requirements, and perhaps even interest-rate cuts. See report on Chinese inflation data.

This coming Tuesday, the markets will get the other half of the picture when China reports its fourth-quarter economic growth, along with other key data, such as retail sales and industrial output.

The median forecast from a Reuters survey has tipped the quarter’s growth rate at 8.7%, which would mark a slowing from 9.1% in the July-September period, and 9.5% in April-June.

Coincidently, that forecast exactly matches a projection for total 2012 growth, made by Chinese government researcher Wang Changsheng last month. See report on Chinese economic growth forecast.

A fourth-quarter number well below the 8.7% level could rattle markets on the one hand, though some interest-rate sensitive stocks could benefit if it seals the case for monetary easing and possible fiscal stimulus.

On the other hand, gross domestic product is by nature a looking data point looking at the past, and for those seeking more recent data, HSBC will release the initial results from its January survey of manufacturers on Friday.

Last month’s HSBC survey showed the manufacturing sector in a mild contraction. See report on December HSBC China manufacturing Purchasing Managers’ Index.

The resources sector will also bear watching in the week ahead, as two of the world’s three largest miners — namely, BHP Billiton Ltd. AU:BHP -1.53% BHP -1.89% and Rio Tinto Ltd. AU:RIO -0.83% RIO -0.47% — present their fourth-quarter production reports.

BHP, which is due to issue its report Wednesday, had a banner third quarter, with its headline iron-ore output jumping 24% from a year earlier, although its copper volumes fell sharply due to a strike at a Chilean mine. See report on BHP Billiton’s Q3 production.

Rio, slated to report a day earlier, also saw strong results in the July-to-September period, with global iron-ore production up 5%. See report on Rio Tinto’s Q3 production.

http://www.marketwatch.com/story/asia-looks-for-more-clues-on-chinese-economy-2012-01-14?link=MW-FB

2011 total exports to exceed US $ 11 b
Export sector well poised to surpass target:

Sanjeevi Jayasuriya

The export sector of Sri Lanka is well poised to surpass the revenue target for 2011. According to provincial figures issued by the Export Development Board, the sector has recorded US $ 9.96 billion up to November last year. Sri Lanka recorded exports of merchandizing products to the value of US $ 9.96 billion for the first eleven months with an overall growth rate of 22 percent.

The export revenue for November was $ 895 million. Based on this results 2011 exports will be in the range of over $ 10.5 billion, Sri Lanka Export Development Board Chairman and CEO Janaka Ratnayake told Daily News Business.

The export sector performance shows a healthy growth and when the December export value is obtained the growth will remain above 22 percent. Once the ICT revenue is added to the total exports, the 2011 exports revenue will be in the range of $ 11 billion, he said.

The impressive progress in the sector has been achieved despite the world economic crisis where Sri Lanka’s largest trading partners Europe and the USA are suffering from sovereign debt crisis and recession.

Considering the sectoral growth up to November, agricultural sector recorded an overall growth of 10.8 with revenue of $ 2.4 billion mainly contributed by coconut, rubber, spices, vegetables, fruits, cut flowers and foliage with rates of 50, 23, 8, 14, 7 and 42 percent respectively.

The industrial sector, which is the largest sector in the country’s export basket recorded a substantial growth of 27 percent with revenue of $ 7.1 billion. The growth rates recorded in this sector are gem and jewellery 35 percent with revenue of $ 509 million. This is a healthy sign and the sector is expected to become a $ one billion industry soon.

The other key contributors of industrial sector growth are leather products by 20 percent, rubber and finished products by 60 percent, petroleum products by 138 percent and ship and boat building by 155 percent where it generated $ 148 million revenue.

The growth sectors are a good sign of achieving long-term objectives of export revenue as the results are exceeding the expected performance targets. This is also an indication that the Mahinda Chintana policy document is becoming a reality, he said.

An ICT value survey for 2009 and 2010 was conducted to ascertain the growth and revenue of the ICT, KPO and BPO sectors where it estimated 46 percent growth. The problem associated with this sector is that the value generated has not been recorded.

According to the survey, it recorded $ 310 million exports for 2010 and with the expectation of this trend to be continued in 2011 the exports for last year should be in the region of $ 400 million. Hence the total exports for 2011 will exceed $ 11 billion.

The Export Development Board has taken many initiatives to boost the image of Sri Lankan products and services through sustainable export development strategies with special focus on brand building.

“As we cannot engage in mass scale production to double the capacity and revenue generation, we need to produce quality products and services with value addition to cater to niche markets where there is less vulnerability to external shocks in generating more revenue,” Ratnayake said.

jayasuriya.sanjeevi@gmail.com

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Lanka’s economy should be integrated - EASL
Sanjeevi Jayasuriya

The Exporters Association of Sri Lanka (EASL) stresses the need for the integration of Sri Lanka’s economy with the global economy by promoting, financing and facilitating international trade and investment.

In addition to the existing trading models, channels and traditional banking sectors with bank loans as the main source of funding, a whole gamut of innovative enabling infrastructures such as corporate bonds, debt markets, financial instruments and commodity futures would enhance exporter performance, enabling easy access to often cheaper and more competitive trading and financing options, Exporters Association of Sri Lanka Immediate Past President Nirmali Samaratunga said.

“We look forward to the proposed Exim Bank dedicated to support exports and imports.

“With Asia emerging as the economic powerhouse of the future, Sri Lankan exports need to target the region and focus on greater regional trade to achieve higher growth,” she said.

This would involve expanding Sri Lanka’s trade through both bilateral and multi lateral agreements. Focusing on trade expansion with China and India would be to Sri Lanka’s benefit, in view of their high consumption patterns, and economic strength, appropriate strategies need to be developed to capitalize on the concessions granted by the Trade Agreements such as the Indo Lanka FTA, the Asia Pacific FTA and other Free Trade Agreements.

The exports to India account for just over 5% of Sri Lanka’s total exports at present, although there is a significant increase year on year.

“There are certain longstanding areas of concern. In an effort to facilitate and improve the cash flow of exporters, the long outstanding problem of VAT refunds was actively pursued with the authorities, and we were successful in achieving significant progress with the cooperation of the Inland Revenue Department.

“Similarly, the Association was successful in resolving the long outstanding payments under the Dahas Diriya scheme as well was the cash payments due to several exporters under the Export Development Reward Scheme,” she said.

“In view of the need for greater efficiency of the sector, our Association continued to articulate the need for the implementation of e-commerce which calls for transformation of business processing and transacting from manual to electronic medium. These were highlighted in our budget submissions.

“We welcome the proposed single electronic window at an early date which will facilitate documentation of imports and exports speedily and efficiently. In its interaction with the authorities and various submissions, EASL also focused on key areas such as support for the SME exporters in view of the pivotal role played by SMEs in the economy.

“We also highlighted the paramount importance to encourage the private sector to explore and harness potential in the newly liberated areas in the North and the East, as this would lead not only to enhancing our export base and supply capacity, particularly in agricultural products and fisheries, but more importantly,such links would enable speedier economic development of these areas leading to sustainable peace and prosperity,” Samaratunga said.

http://www.dailynews.lk/2012/01/16/bus02.asp

HNB reaches masses with 240 Customer Centres, 400 ATMs
Fostering sustainable relationships with all stakeholders is key to Hatton National Bank. During the year 2011 the bank has taken steps to improve on reaching out to the masses through the expansion in the customer centre network as well as the ATM network.

HNB has one of the largest ATM networks in the country confirms HNB Assistant General Manager P. Sridharan.

The network of HNB ATMs reached the 400th mark during the year with the installation of the 400th HNB ATM in Polgasowita. In addition to the HNB ATM network HNB customers have access to their accounts through all Sampath Bank ATMs in the country.

P Sridharan further explained that the entire ATM network averages over one hundred and fifty thousand transactions per day and HNB’s focus to provide convenience to the general public has resulted in such expansion with strategic tie ups with banks on ATM sharing.

In reaching 400 ATMs the bank took steps to install a number of stand alone ATMs both in and around Colombo and outstations.

HNB ATMs provide customers with a number of transaction options beyond cash withdrawal. They include fund transfers, utility bill payment facilities, credit card payments, ordering of cheque book requisitions, current account statement requests and many more.

He further reiterated that the bank remains firm in its belief to be an integral facet in the lives of the Sri Lankan people by providing greater customer convenience coupled with innovative technology.

The bank during 2011 reached a milestone of 240 Customer Centres and continues to maintain the largest and widest net work of customer centres among private commercial banks operating in the country.

In this venture of extensive branch expansion strategy, HNB was the first bank to venture in to Green Banking, by opening its first ever green bank branch building in Nittambuwa.

This came as a testimony to HNB’s promise to society in keeping in line with its Green Pledge.

The 35 new customer centres opened during the year covered key regions in the country including North, East, North Central, Central, South, Uva/Sabaragamuwa and North Western regions. Net Work Management - Deputy General Manager Crysanthi Thambiah said that during the year new customer centres were opened in Peliyagoda, Kolonnawa, Ingiriya, Bandaragama, Devinuwara, Dickwella, Hakmana, Hikkaduwa, Urubokka. Anamaduwa, Udappuwa, Galaha, Kundasale, Dehiattakandiya, Ginigathena, Kalawana, Siyabalanduwa, Aralaganwila, Medirigiriya, Padavi Parakramapura, Kallady, Karaitivu, Kinniya, Kalawana, Maruthamunai, Mullipotana, Muttur, Serunuwara, Uhana, Uppuveli, Achchuveli, Kodikamam, Killinochchi, Mullativu and Kaithady.

Thambiah further said that HNBs approach to branch expansion during 2011 looked at GDP growth in the regions, population density, financial inclusion and partnering greater economic progress.
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Sound and light shows in India
Sound and light shows at tourist centres, such as the one set to come up at the Poombuhaar Shipping Corporation here, will be arranged in 20 locations across the country, India Tourism Development Corporation (ITDC) Chairman Lalith K Panwar said.

Arrangements for the show, which are being made by the combined effort of ITDC and the Tamil Nadu Tourism Department at the cost of about two crore rupees, would be complete by the end of this month, Panwar said after inspecting the venue. It is planned to implement these kinds of shows in 20 tourism locations across the country at centres such as Delhi, Jaipur and Andaman and Nicobar islands, he said.

The sound and light show was being arranged as the number of tourists visiting Kanyakumari had been increasing day by day and the show would both entertain and educate them, he said. Panwar added that the show would feature, in different languages, the life histories of Swami Vivekananda, Tamil poet and philosopher Tiruvalluvar and the legend behind the Bhagavathi Amman temple here.

PTI

http://www.dailynews.lk/2012/01/16/bus06.asp

Achievers CPD launches LIT Programme
Sanjeevi Jayasuriya

The development of human resources by way of providing training and upgrading knowledge is of paramount important to increase productivity and achieve growth.

The continuous professional development could lead to innovation and growth, Achievers CPD Chairman Ravi Edirisinghe said at the official launch of the Logistics and International Trade (LIT) Programme held in Colombo last week.


Achievers CPD and SLFFA officials at the launching ceremony. Picture courtesy of Forsooth Branding

Logistics is an ever expanding industry with seamless opportunities both locally and internationally. The knowledge gained through professional programmes will enrich and transform individuals to perform better, he said. Achievers CPD joined with Sri Lanka Freight Forwarders Association (SLFFA) and the Academy of International Trade and Transport in providing the LIT programme.

Achievers CPD further diversified in to the education sector where at present it provides accounting and related education.

The new programme will cater to the growing potential where formal education is provided moving in the right track to produce professionally qualified personnel for the logistics industry.

Training and education for any industry is key for development and SLFFA facilitates human capital upgrading.

The changing global business environment and complexity in the logistics industry calls for constant knowledge updating, SLFFA Chairman Mohan S. Mohandas said.

Acquiring professional knowledge and training have become necessary to meet ever increasing customer requirements.

Professional logistics management empowers efficiency while it reduces the costs and waste.

The demand for efficient professional logistics service has created the need to capacity enhancement in related human resources, he said.Sri Lanka has not yet identified and focused to meet this need and programmes of this nature will facilitate the building of human capital, Mohandas said.

Logistics and international trade programmes are tailored to suit beginners as well as professionals.

The programme will commence next month as there are already 30 students registered for the initial programme.

There will be foundation and certificate level courses leading to advanced certification where qualifications are internationally recognized.

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Krishanthi Weerasinghe appointed new HDCC CEO
As the Chamber enters its third decade, Manager, Projects and Strategy, Bindu Krishanthi Weerasinghe has taken over the responsibilities of the Hambantota District Chamber of Commerce (HDCC) with effect from January 1, 2012 and will function as the custodian and Chief Executive Officer (CEO).


New CEO Krishanthi receiving her appointment letter from HDCC Director General Azmi Thassim, HDCC President Shaheed Usuph and Manager, IT and Business Development
Fazlim Batcha.

Announcing the appointment, the Director General of HDCC, Azmi Thassim said, "With her proven track record of six years in the Chamber, HDCC is very confident that Krishanthi will provide strong leadership to HDCC, and help us better serve the needs and promote the interests of our members as well as of the entire business community and young people in the District." Thassim further said that he will continue to support HDCC on a voluntary basis in his capacity as a past president and he has now been elected as the President of the Past Presidents' Consortium. He will also be taking up responsibilities as a consultant and advisor at the request of the management and the board.

Krishanthi served as the head of the Chamber Secretariat after joining the Chamber as an Information Executive in 2005. Krishanthi comes from the Southern Province and qualified from the Moratuwa University with a BSc in Engineering and also gained a Post Graduate Certificate in Business Administration from the Open University in Milton Keynes, UK. She also worked as a lecturer in the faculty of engineering at the Ruhuna University. During her six years in the Chamber, Krishanthi managed several projects with national and international partners, organized high profile events and took part in numerous international negotiations. She was also directly involved in the Tsunami Reconstruction Initiative for young people and in the formulation of the Women Empowering project. She attended the SIDA International Training Programme "Putting Ideas to Work - Strategies for Innovation-Led Sustainable growth" in Sweden and in Bangkok. She also attended the Gender Diversity and Development certificate course in India.

A few years ago HDCC adopted a policy of gender equality and the Chamber is very pleased that Krishanthi has been unanimously selected as Chief Executive Officer, a very responsible and prestigious position.

This is the first change of the institutional head of HDCC in twenty years as the Founder President Azmi Thassim served as the institutional head from its inception until 31st December 2011.

HDCC President Saheed Usuph said that he is very happy with the achievements of HDCC in the last two decades and confident that Krishanthi and her team will take HDCC to great success and that the organization will soon become a fully self-sustainable organization providing professional services to the business community and young people in the Hambantota District. Krishanthi is supported by the HDCC team which includes Manager IT and Business Development Fazlim Batcha, Manager - Hambantota Job Solutions Sudhammika Wickramanayake, Executive - Hambantota Youth Business Programme, Sanjeewa Guruge, Executive - Admin and Secretariat Kumudnu Ramanayake and the rest of the team of 17 members all with excellent skills and a high team spirit, and who all come from the Hambantota district.

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WSO2 cited as strong performer
"SOA Service Life-Cycle Management, Q1 2012" Report by Independent Research Firm WSO2, the lean enterprise middleware provider, last week announced that it has been cited by Forrester Research as a strong performer in The Forrester Wave: SOA Service Life-Cycle Management, Q1, 2012 report 1 published January 6, 2012. The report's findings were based on a 55-criteria evaluation of commercial and open source vendors that deliver service-oriented architecture (SOA) service life-cycle management (SLM) solutions. Significantly, out of a possible 5.00 points, WSO2 scored 4.05 points for product strategy and 5.00 points for cost of SOA service life-cycle management.

According to the Forrester Report2, "Because SOA business services model key business transactions and queries, SOA products can provide direct business benefits in the form of real-time business visibility, agility, and control. As one of the key categories of SOA specialty products, SOA SLM provides the core of one's approach to SOA governance in the form of comprehensive life-cycle controls and a central source of truth about SOA services."

"We have applied a lean, adaptive and modular architectural approach to all of our middleware and cloud products in order to deliver the high performance and flexibility that enterprises need. As a result, IT professionals can readily configure our middleware to address their specific design-time and runtime SOA governance requirements," said WSO2 co-founder and CTO Paul Fremantle.

"We are excited to be identified by Forrester as a strong performer in its SOA Service Life-Cycle Management Solutions Wave report. It further validates our commitment to reinventing middleware around the next generation of open source standards to meet enterprises' real-world demands," he said.
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Both indices close lower again
Both indices closed the week lower once again, with the ASPI losing 1.18 points (0.02%) and the MPI losing 37.06 points (0.73%). The ASPI closed the week at 5929.34 points and the MPI closed the week at 5046.09 points.

Turnover value for the week was led by Environmental Resources Investment Plc accounting for 23.67% of total turnover amid renewed interest in the counter. New entrant Asia Asset Finance Ltd along with Commercial Bank contributed 18.37% of aggregate turnover volume. Weekly turnover value for the week was LKR 3.78 billion, representing a 95.24% gain compared to last week.

The average turnover value for the week was LKR 756.61 million as against last week's average of LKR 387.53 million. Market Capitalization increased 0.09% over the week to LKR 2168.59 billion relative to last week's value of LKR 2166.58 billion.

Turnover value for the week was dominated by the Investment Trust sector contributing 28.49% or LKR 1077.73 million. The Banking and Finance sector contributed LKR 963.75 million accounting for 25.48% of turnover value; the Manufacturing sector followed, accounting for 11.79% or LKR 445.98 million.

The Banking and Finance sector yet again let the weekly turnover volume for the week, accounting for 45.71% (or 104.18 million) shares being traded.

The Investment Trust sector followed suit with 37.09 million shares changing hands (representing 16.27% of total turnover volume), while the Manufacturing sector represented 13.36% of turnover volume (or 30.45 million).

Debutant Asia Asset Finance Ltd recorded the highest price gain over the week, rising 132.00% to close at LKR 5.80 compared to its reference price of LKR 2.50. AMF Company closed at LKR 466.70 to represent a 55.31% gain, while Swisstek (Ceylon) Plc gained 20.42% to close at LKR 23.00. Sunshine Holdings Plc and Commercial Development Company were also amongst the top price gainers, rising 14.55% and 11.55% respectively.

The price losers for the week was led by Samson International Plc which lost 16.19% to close at LKR 118.00 relative to last week's close of LKR 140.80.

Hapugastenne Plantations closed at LKR 37.50 declining 10.71% and Equity Two Plc declined 10.58% to close the week at LKR 26.20.

Foreign investors closed the week in a net selling position of LKR 193.11 million, a 25.05% increase from last week's net selling position of LKR 154.42 million. Total foreign purchases for the week rose 53.07% to LKR 474.50 million while total foreign sales rose 44.15% to LKR 667.61 million.

Asia Asset Finance Ltd topped the volume list accounting for 34.87% or LKR 79.48 million of the week's aggregate share volume. Environmental Resources Investment Plc and Blue Diamonds (NV) together contributed 17.72% of the market's total share volume.

Point of view

Volumes edged up over the week, closing the week past the 1 billion mark after two weeks of hovering just below this level.

The Index however was volatile, as retail interest developed over the week but some profit-taking occurred on Friday.

The SEC's much-anticipated ruling on the relaxation of broker credit lending and price-band regulation is likely to give markets direction in the week ahead.

Policy rates were held steady for the 13th consecutive month, with the Central Bank indicating that private sector credit growth was 33.5% Y-o-Y in November.

Liquidity constraints in short-term money markets continue however, although the Central Bank reiterated that large inflows in the next two months should ease pressure on the rupee and domestic liquidity conditions.

Acuity Stockbrokers

Research - Sri Lanka Equities

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