Sri Lanka Newspapers - 04/01/2012

CBSL: Inflation continued to remain at single digit level in 2011


As projected in the beginning of the year the rate of year-on-year inflation, as measured by the Colombo Consumers’ Price Index (CCPI) (2006/07=100), computed by the Department of Census and Statistics, decreased to 4.9 per cent in December 2011 from 6.2 per cent in January 2011 and the annual average rate of inflation recorded as 6.7 per cent in December 2011 thus stabilising the inflation at the mid single digit level, the Central Bank announced releasing a statement earlier this week.

"The year-on-year core inflation, which is computed by excluding the items of fresh food, energy, transport, rice and coconut from the CCPI basket, also declined reaching 4.7 per cent in December 2011. The annual average core inflation reached 6.9 per cent by the year end.

Price Movements in 2011

The contribution to the annual average increase of 6.7 per cent in the Index came mainly from price increases in the sub category of Food and non alcoholic beverages (8.8 per cent). Meanwhile, average prices in the sub categories of Housing, water, electricity, gas and other fuels (4.3 per cent); Transport (7.1 per cent); Clothing and footwear (13.4 per cent); Furnishing, household equipment and routine household maintenance (4.6 per cent); Health (2.7 per cent); Education (3.5 per cent); Miscellaneous goods and services (3.9 per cent); and Recreation and culture (5.5 per cent) increased compared to the previous year. However, the prices in the sub category of Communication remained unchanged during the year.

Increases in prices of locally produced agricultural and other food commodities, especially of vegetables were significant in the first three months of the year, due to both crop destructions and transport disruptions that occurred owing to the flood situation prevailed in major producing areas. Although this situation was temporary, inflation on a year-on-year basis continued to increase until it peaked in April and then decreased with the improved supply conditions. The increase in prices of imported food commodities such as wheat flour and milk powder in the international market led to the increase in the food sub index and thereby the CCPI. Further, the upward price revisions of diesel, petrol, kerosene, LP gas and bus fares effected during the reference period also contributed both directly and indirectly to inflation.

The average price of rice was lower in 2011 when compared to 2010, despite a sharp drop in production in the Maha season. Although the prices of almost all varieties of rice recorded marginal increases during February and March 2011, prices began to decline subsequently due to availability of sufficient stocks in the market with a bumper Yala harvest. However, a gradual increase in the price of rice was observed since October 2011.

The weighted average prices of vegetables increased by 7.4 per cent in 2011, when compared to that of 2010. The prices of most varieties of both low-country and upcountry vegetables and leafy vegetables recorded significant increases during January to March 2011 on account of supply shortages that resulted from heavy rains and floods experienced in major producing areas. However, improvements in supply conditions of vegetables from April onwards helped bring down the prices of vegetables substantially although it showed an increasing trend during November and December due to seasonal factors.

Although the prices of coconut and coconut oil remained high in the first four months of the year, a clear declining trend was observed from May onwards, recording the lowest level in November. On average, the prices of both coconut and coconut oil declined by 29.2 per cent and 28.7 per cent respectively, in December from those in January 2011.

Among the other domestically produced food commodities, average prices of red onion and potatoes were higher by 61.9 per cent and 10.5 per cent respectively, while that of big onion lower by 5.9 per cent, during the year when compared to the previous year. The significant increase in the average price of red onion during the year was mainly due to the higher price prevailed during the first two months of 2011 resulted from lower supply caused by adverse weather conditions. The prices of onion, however, declined from March onwards when compared to prices that prevailed in January 2011. In the case of potatoes, an increasing trend in prices was observed from April onwards due to reduction in supply. Subsequent downward revision by the government in Special Commodity Levy (SCL) in December 2011 helped to stabilise the prices of potatoes.

Despite the growth in fish and sea food production by 15.5 per cent during the first ten months of the year, the weighted average price of fresh fish increased by 6.0 per cent in the first ten months of 2011 when compared to the corresponding period of 2010. The average price increase was 5.1 per cent in 2011 as compared to 2010. In general, the price increase was lower in the case of small fish. The prices of all varieties of dried fish showed increases in 2011, in line with the increased fish prices. Meanwhile, price of eggs remained at a lower level in 2011 when compared with that of 2010.

The upward price revisions of fuel and LP gas on several occasions during the year also had an impact on the CCPI both directly and indirectly. Consequent to the increase in the import price of crude oil, the prices of diesel, petrol and kerosene were revised on several occasions during 2011. Accordingly, the prices of these items increased by 15.1 per cent, 19.1 per cent and 39.2 per cent, respectively during the year. The bus fares were also increased by 7.6 per cent w.e.f. 01 July 2011. Meanwhile, the price of a 12.5 kg cylinder of LP gas increased on average by 29.0 per cent from January to December 2011. In addition to the direct impact, those price revisions also had an indirect impact on the CCPI through the cost of production.

In line with the price increases in the international market, domestic prices of several food commodities increased in 2011. Accordingly, the increase in the price of wheat flour by Rs. 3 per kg w.e.f. 19 April 2011 caused the price of a loaf of 450g bread to increase by Rs. 2 w.e.f. 22 April 2011. Meanwhile, the maximum selling price of a 400g packet of milk powder was increased by Rs. 20 w.e.f. 03 May 2011. This too contributed to an increase in CCPI for the period under reference," the Central Bank said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42439

RAM Ratings Lanka has assigned respective long- and short-term financial institution ratings of BB- and deleted to Divasa Finance Limited; the long-term rating has a stable outlook.

"Divasa’s ratings are moderated by its small stature, short profit track record and moderate funding position. The Company’s ratings are, however, supported by its healthy liquidity and capitalisation as well as sound asset quality," the ratings agency said in a statement yesterday.

Divasa commenced operations in 2006 as a specialised leasing company (SLC), and had initially been known as Asia Commerce Ltd. In May 2011, the Company obtained a licence as a registered finance company (RFC), assuming its present name. In 2010, Divasa secured a margin-trading licence, thus diversifying its lending portfolio. The Company underwent a change in its top management line-up in 2009, which in turn led to the implementation of new credit-approval measures.

Divasa’s asset quality is deemed good. The current management team is headed by the chief executive officer (CEO) who took over in 2009 and has been instrumental in improving Divasa’s loan-approval process. These initiatives have borne fruit, with the Company’s NPLs declining from LKR 19.09 million as at end-March 2010 to LKR 13.13 million as at end-September 2011.

This translated into a gross NPL ratio of 1.51% as at end-September 2011 (end-March 2011: 2.85%), supported by its enlarged asset base following the introduction of margin-trading facilities, which accounted for about 47% of the Company’s credit assets as at end-September 2011. Although its margin trading facilities are well collateralised by shares, Divasa’s substantial exposure to this product renders it vulnerable to single-product risk.

In the meantime, Divasa’s performance is deemed moderate. The Company had previously made marginal pre-tax profits; its performance in FYE 31 March 2011 (FY Mar 2011) was upheld by an equity gain of LKR 66.53 million, excluding which the Company would have made a pre-tax profit of LKR 7.58 million.

Our concerns thus hinge on Divasa’s short profit track record, particularly in leases and hire-purchase (HP) facilities. Following the commencement of margin-trading operations in March 2011, The Company’s net interest margins (NIM)thinned to 4.17% in fiscal 2011 (fiscal 2010: 5.05%). In 1H FY Mar 2012, its numbers were boosted by income from its margin-trading portfolio. Moreover, the Company’s flat hierarchical structure has kept costs low, leading to a cost-to-income ratio of 45.40% as at end-September 2011.

On a separate note, Divasa’s funding position is deemed moderate. The Company’s ability to garner deposits is constrained by its limited network of only 4 branches. Furthermore, Divasa is still running marketing campaigns to gain recognition for its newly coined name. Only 25.68% of its funds comprise fixed deposits. Meanwhile, the Company’s liquidity profile is viewed to be healthy, with a liquid-asset ratio of 30.42% as at end-September 2011. Going forward, we expect these ratios to be comparable to its peers’, in line with Divasa’s planned growth.

RAM Ratings Lanka opines that Divasa’s capitalisation levels are healthy. The Company’s risk-weighted capital-adequacy ratio (RWCAR) of 27.73% as at end-September 2011 was considerably stronger than those of its similarly rated peers. We note that its capitalisation was recently strengthened by a capital infusion of LKR 150 million. Meanwhile, its internal capital-generation ratio of 16.97% is also expected to boost its capitalisation. As at the same date, the Company’s ratio on net NPLs to shareholders’ funds came up to only 0.88%, i.e. better than those of its similarly rated peers," RAM Ratings said.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42440

The gap between headline statistics of falling poverty and rising income levels and the reality for many poor and vulnerable groups in Sri Lanka was highlighted recently in a discussion facilitated by the Law & Society Trust (LST) and the Movement for National Land and Agricultural Reform (MONLAR) at the Sri Lanka Foundation Institute.

The civil society consultation on 24 November 2011 gathered many of the organisations and individuals, who contributed to a shadow report on Sri Lanka’s implementation of its international obligations to the UN Committee on Economic, Social and Cultural Rights in November 2010 endorsed by over 70 national and community-based organisations, in the presence of the Human Rights Commission of Sri Lanka represented by its member, T.E. Anandarajah.

Brief presentations reviewed the recommendations of the UN Committee and the status of its implementation on a wide range of concerns ranging from the deprivation of estate communities; women’s rights; rights at work; housing, land and property rights; right to health; and right to food.

Century of Neglect

"For over a century, the plantation community of Indian Tamil origin has suffered from neglect of healthcare and education, lack of citizenship rights, housing and land rights, and labour rights", began S. Murugaiyah of the Plantation Sector Social Forum (PSSF).

Murugaiyah drew attention to the continuance of discriminatory legislation such as the 1948 Citizenship Act; the exclusion of estates from services rendered by district councils through Article 33 of the Pradeshiya Sabha Act of 1981; and ineffective implementation of the Samurdhi welfare programme.

The UN Committee has recommended implementation of the Sri Lankan government’s own National Plan of Action for the Social Development of the Plantation Community 2006; the repeal of the Citizenship Act of 1948; and proper implementation of the Grant of Citizenship to Person’s of Indian Origin Act of 2003.

Laws discriminate

Issues of gender-based discrimination, migrant women workers rights, and violence against women were raised by Anushaya Collure of the Law & Society Trust (LST). Collure underlined that "certain general and personal property laws continue to discriminate against women", contrary to the UN Committee’s recommendation of equal rights to land ownership.

The Government’s unofficial ‘ban’ on women with young children migrating for work, the pro-employer attitude of labour attaches in diplomatic missions in host countries, and the government’s lethargy in repatriating abused workers from ‘welfare camps’ in host countries were also criticized. The UN Committee’s recommendation for a comprehensive assessment of women’s labour migration and developing employment opportunities for women including innovative micro-credit schemes was hailed as "timely and essential".

Collure highlighted some of the glaring shortcomings in the Prevention of Domestic Violence Act (PDVA) of 2005. She urged its effective implementation to actively combat domestic violence combined with an increase in the numbers of women police officers trained in this area, and state funding for island-wide crisis centres and shelters for victims of domestic violence.

Double Standards

Free Trade Zone and General Services Employees Union (FTZGSEU) leader, Anton Marcus, noted the UN Committee’s observations on violations of workers and union rights. "Of 9 million workers, only 3 million are government employees", said Marcus; who went on to allege that "there are clearly double standards in the government’s treatment of public and private sector workers."

Without a ‘living wage’, a life of dignity for workers is an illusion, the trade unionist said, quoting data from the Census and Statistics Department that estimates a four member family in Colombo and the Western province requires forty-two thousand rupees (Rs42000) for its minimum consumption needs.

Marcus observed that the confidence of workers in achieving equity and justice for labour rights through the legal system has collapsed in recent years because of widespread anti-union discrimination.

Housing is a basic need

"More than 12 million people in Sri Lanka, including around 77,000 in Colombo district alone, do not enjoy adequate and secure shelter rights", claimed Vincent Bulathsinhala of Janawaboda Kendraya (JK).

He also pointed out that although housing is a basic need, it is not recognised as a fundamental right in our Constitution.

Bulathsinhala commended the UN Committee for advising the government to adopt a national strategy and plan of action on adequate housing and to "drastically increase its housing budget".

Land-Grabbing

Incidents of displacement and loss of livelihood due to acquisition of land (‘land-grabbing’) for development and security purposes were raised by KP Somalatha of the People’s Alliance on Right to Land (PARL).

She recommended sustained public participation in decision-making relating to development; sustainable environmental and tourism policies; and ensuring the right to land of cultivators and fisher-folk, and of indigenous communities.

Poor nutritional and mental health services

Sirimal Peiris and D Wimalarathna of the Peoples Health Movement (PHM) spoke on poor nutritional and mental health services especially in conflict-affected communities.

The non-enactment of the draft Mental Health Act of 2007 and the non-implementation of the National Medicinal Drugs Policy for affordable and efficacious medicines were raised as pressing issues.

The speakers observed that the UN Committee has recommended the formulation and implementation of an integrated nutritional programme; the speedy adoption of the 2007 Draft Mental Health Act; strategies to strengthen available psycho-social assistance.

The Peoples Health Movement campaigns for the right to health to be constitutionally recognised and protected.

Right to Food

"If people are starving due to unaffordable food prices, a different system should be in place where the poor can have access to food", said Sarath Fernando of the Movement for National Land and Agricultural Reform (MONLAR).

Fernando observed the growing force of international opinion on reorienting agricultural production from industrial to environmentally-friendly agro-ecological practices. While the government’s ‘Api Wawamu – Rata Nagamu’ programme rightly promotes domestic food production, its dependence on imported fertilisers and seeds is contrary to agro-ecology.

Floor discussion

During the floor discussion following the presentations, many other concerns were raised including maternity and paternal leave; the challenges to free education; the discrimination against ayurvedic medicine and practitioners; and the stigmatisation of people living with HIV/AIDs.

The acquisition of former estate land in Hantane (near Kandy) for ‘development’ was raised by one community activist. "What will happen to us? Where will they send us?" asked G. Parameshwaram on behalf of the hundreds of families who will lose their homes along with her.

Her plea was seized upon by other participants to underline the importance of the right to information, especially to record the growing number of incidents of land-grabbing.

ESC violations within
mandate of HRC

Intervening on behalf of the Human Rights Commission (HRCSL), Shirani Rajapakse (Director of Education) explained that the mandate of the national human rights institution extended to economic, social and cultural rights too. Rajapakse invited civil society activists to bring these violations to the notice of the HRCSL.

The civil society activists present resolved to continue their advocacy around the recommendations of the UN Committee on Economic, Social and Cultural Rights.

The forthcoming Universal Periodic Review of Sri Lanka in October will be an opportunity for stock-taking on the status of implementation of our international commitments towards the wellbeing of all our peoples.

(Courtesy Law & Society Trust)

http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42442

LBR: Stocks closed weaker Tuesday in very thin turnover with two newly listed hotels among the most actively traded shares, brokers said.

The main All Share Price Index fell 0.65 percent (39.22 points) to 6,035.65, while the more liquid Milanka index fell 1.25 percent (65.64 points) to 5,174.28.

Turnover fell to a low of 380 million rupees, according to stock exchange provisional figures.

Waskaduwa Beach Resort was the most actively traded stock, closing up 1.50 rupees at 14 rupees after hitting a high of 17 with almost 6.4 million shares traded.

The hotel’s shares were offered at 12.50 rupees each at its recent initial public offer.

Kalpitiya Beach Resort, the third most actively traded stock, closed 50 cents lower at 17 rupees after hitting a high of 24 with 1.7 million shares traded. Kalpitiya offered 16.2 million shares at 17.50 rupees each at its IPO.

Both companies are part of the Citrus Leisure group and raised funds to build 150 room luxury beach resorts.

John Keells Holdings was also heavily traded, closing 1.80 rupees weaker at 169.20.

http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42459

By Hiran H.Senewiratne

The Island Financial Review spoke to a few stockbrokers for their views on the ‘Road Map: Monetary and Financial Sector Policies for 2012 and Beyond’ which was released yesterday.

Central Bank Ajith Nivard Cabraal said the bank was confident that a net foreign inflow into the Colombo Stock Exchange would amount to US$ 500 million this year and that the net outflow of Rs. 19 billion in 2011 was an insignificant 0.9 percent of total market capitalisation. By the end of 2011, foreign holdings amounted to Rs. 437 billion, 20 percent of market cap.

Managing Director of Capital Trust Securities Tushan Wickramasinghe said that it was indeed encouraging that the Central Bank had formulated a specific document to be disseminated to the financial sector, which will help the industry prepare accordingly and pave the pay for a robust 2012, although developed countries continued to be deep in financial crisis.

Managing Director Bartleet Religare Stockbrokers R. Muralidaran said that it was an excellent and well presented road map for the country, which has focused on important development areas.

The road map had focused on nine different key areas including, adoption of more market oriented policies, promoting greater private sector participation in economic activity, de-regulation of interest rates, relaxation of exchange controls and establishment of new domestic private banks, which are commendable for the growth of the economy of the country and maintain an eight percent growth from medium to long term perspective, he said.

DNH Financial (Pvt) Limited General Manager/CEO Seedantha Kulatillake said that the release of a road map on financial and monetary policy by the Central Bank for the country was a forward looking approach to achieving economic goals.

He said that Central Bank governor Ajith Nivard Cabraal had specifically said that the road map was conservatively forecasting an eight percent economic growth in 2012, when other economies in the world were going through a turbulent period.

Kulatillake said that the new road map had given a lot of emphasis on developing the country’s infrastructure especially in the area of logistics, hotel construction and banking sectors, which meant as economic fundamentals were on track.

"With this road map the market will regenerate and more foreign direct investment will flow into the country and the 2012 target of achieving US $ 2billion will not be a big task with the government’s steady policies," he added.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42462

Retail giant Cargills (Ceylon) PLC (CARG), a 70%-owned subsidiary of CT Holdings with 177 outlets and armed with a commercial banking license, will be able to make good use of its extensive branch network for a profitable business offering financial services, Bartleet Religare Securities said in a special report yesterday (Jan. 03).

"We feel the market has already factored in the positives for the unit with the share trading at premium valuations of 38.4x FY 2012E and 32.8x FY 2013E earnings. We also are concerned about the pressure to the balance sheet brought about with the recent acquisitions, which may prompt some form of capital restructuring," Bartleet Religare said.

It said the banking license would bode well to the group.

"We expect the Cargills Agriculture and Commercial Bank, a joint venture between CARG and its parent CT Holdings, to capitalize on CARG’s extensive branch network and its brand reputation. Although the net returns will fall beyond the forecast period for CARG, we expect the breakeven period to be faster than for the banking industry given the ability to piggyback on the supermarkets and push down costs. However, the recent acquisitions have put significant pressure on the CARG balance sheet- with its Net Debt: Equity ratio being 93.2% as at FY 2012E, and Net Debt: EBITDA rising to 245% with further investments pending in its banking initiatives,

"CARG is the clear leader in the domestic supermarkets sector. It has more than 50% market share in the Sri Lankan super marketing sector with an optimum degree of backward integration. We expect a revenue growth of 28.3% to LKR 47.6bn and 25.4% to LKR 59.8bn in FY 2012E and FY 2013E respectively. Although Cargills has four sectors,its food and beverage sector dominates turnover with 91% of the total turnover."

"We are of the opinion that CARG supermarketing sector merits a premium over peers given the market leadership and the operating efficiencies. However, current valuations of 38.4x FY 2012E and 32.8x FY 2013E appear stretched, with much of the good news priced in. Global peers such as Tesco and Carrefour trade on lower multiples (TTM) of 12.6x and 15.4x, and we do not believe that the CARG share will materially outperform the broader market in the medium term," Bartleet Religare said.
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*Location! Location! Location!

‘Location! Location! Location!’ was how an emerging heavyweight in the country’s hospitality industry announced a major acquisition amounting to a little more than Rs. 1 billion.

LOLC Leisure on Tuesday (Jan. 03) in a jubilant press release announced the strategic acquisition of Dickwella Resort in the deep south of Sri Lanka. Located at the southern-most tip of Sri Lanka, Dickwella Resort is universally acknowledged as having the most stunning location of all beach properties in the island. LOLC Leisure purchased a 100 percent stake in the resort for a consideration of Rs. 1,014 million. LOLC Leisure is owned by LOLC and Browns Investments with a holding of 70% and 30% respectively.

Ishara Nanayakkara, Deputy Chairman, LOLC Group, the holding company of LOLC Leisure, commented: "We are proud to have acquired this beachside property situated at such a prized location. This acquisition marks another milestone in our leisure holdings and propels us into the forefront of the hospitality industry. Dickwella Resort will be another key offering in our bouquet of hotel properties along the western coast of Sri Lanka. The resort has already carved out a distinctive niche for itself on the global tourist map and we intend to upgrade the luxury facilities and enhance the room capacity in the months ahead to catapult it further into a multi-star category hotel that offers a holiday experience of a lifetime.

The Southern Expressway, now operational, has succeeded in drastically reducing travel time to the resort.

"In time to come, the completion of the Colombo-Katunayake Highway will reduce travel time to Dickwella Resort even more. LOLC Leisure remains committed to consolidating its leisure business in the years ahead and we remain in pursuit of acquiring resorts in unique stunning locations, such as Dickwella Resort, that instantly set them apart for their sheer natural beauty. We are extremely bullish about prospects for tourism in the country and our substantial holding of uniquely located properties will ensure they become the preferred choice in the local and global tourists’ itinerary."

Situated on a promontory that projects outwards into the ocean, the resort is surrounding by the sea on all three sides and has a rich pioneering history behind its origins. In 1975, Italian entrepreneur Enzo Azzola ventured out into the untouched south coast of Sri Lanka. Unable to believe his luck on discovering a beautiful location so reminiscent of the Italian riviera, he built Dickwella Resort on this spot and introduced the ‘club’ concept for the first time in Sri Lanka, in vogue in Milan at the time. The Italian collaborated with local artists and blended traditional Sri Lankan architectural styles with contemporary design, imparting a unique character to the resort. Today, Dickwella is a dream getaway for tourists seeking peace and relaxation. Celebrated sci-fi author, Sir Arthur C. Clarke has famously called Dickwella Beach "the best beach in Sri Lanka". Significantly, its equidistant location from the eastern and western shores of Sri Lanka enables tourists there to get a sensational view of sunrises and sunsets with a timeless appeal.

And yet, the resort also offers guests recreational options such as water sports, diving instruction, shipwreck sites, canoeing, etc., to choose from. The resort boasts of a world class luxury spa managed by French wellness expert, Yves. Located close to Dondra, the resort offers easy access to world famous tourist sites such as Yala, Kirinda, Mirissa beach, dolphin and whale-watching excursions and so on. However, many tourists might find it impossible to tear themselves away from the poetic beauty of the location of the 76 beautifully designed villas of Dickwella Resort, preferring perhaps to soak in the majestic splendour of the sweeping vistas of ocean, beach, blue skies and feeling of peace and serenity. LOLC Leisure intends to leverage on the vast property to expand the room capacity to 100 plus in the immediate future.

The diversified conglomerate, LOLC Group, forayed into the leisure sector with LOLC Leisure acquiring Confifi Group hotels in 2010, namely, Hotel Riverina, Club Palm Bay and Eden Resort & Spa. The two former hotels are closed for extensive renovation and will be reopened in 2013. Operating under LOLC Leisure management, Eden Resort & Spa has just completed the most successful year of operations since its inception in 2010/11. LOLC Leisure has also acquired Tropical Villas, previously owned by Jetwings and Hayleys, located alongside the other three properties, and which is also under extensive refurbishment.

Once reopened in 2013, these hotels will be managed by a reputed hotel management brand and reflect 4-star plus luxury at its best. Demonstrating its commitment to acquiring land or property situated in valuable locations, LOLC Leisure has bought another beautifully located 30-acre swathe of land in Passikudah, which is surrounded by the sea, river and lagoon, offering tremendous potential as an exotic resort in the near future. All in all, LOLC Leisure now holds 626 rooms in the country’s ‘Golden Mile’ on the western coast and in Dickwella in the deep south. The extent of room capacity makes LOLC Leisure one of the largest resort-owning companies in Sri Lanka, the company said.

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Lanka targets US $ 2 b FDIs
CB Governor highlights key sectors for 2012:
Ramani KANGARAARACHCHI
The Sri Lanka’s economy has achieved a high growth path in almost all sectors last year and it will further raise the bar in 2012, Central Bank Governor Ajith Nivard Cabraal said. Presenting the monetary and financial sector policies for 2012 and beyond (‘Road Map’) he said the country will make enormous changes in the next few years if it is positioned itself properly.


Governor
Ajith Nivard Cabraal
He said the country’s external sector will further undergo more fundamental changes making export inflow US $ 12.5 billion in 2012.

The tourism industry is expected to bring US $ 1.2 billion, workers’ remittances will bring US $ 6.5 billion and foreign direct investment is set to reach US $ 2.0 billion.

Cabraal said the major FDI projects in the pipeline are expected to play a key role with the US $ 500 million Colombo Port expansion project, Shangri-La Hotel Colombo and the Hambantota hotel project worth of US $ 400 million and US $ 400 million worth Sampur Coal power plant. The other projects include Cairn Lanka project for oil exploration which is valued to US $ 125 million and US $ 300 million worth Sheraton Group hotel project.

Another 15 investment projects worth US $ one billion also have been identified which include a sugar refinery plant, the petrol chemical plant and a fertilizer storage plant.

He said the Central Bank now has greater confidence in its ability to face new challenges and adopt new frameworks of monetary policy and therefore will move to a more advanced monetary policy framework from the traditional.

The bank will also give recognition to the major structural changes that have taken place in the economy and display a policy shift that shows greater consideration of such factors.

Meanwhile the major contributions towards growth in 2012 are expected from three sectors namely agriculture, industry and services.


The Colombo Port. Picture by Saliya Rupasinghe
The agricultural sector is expected to expand at 7.3 percent compared to 2.0 percent in 2011 with expected expansion in new cultivation in the North and East.

Another 9.8 percent growth in fishing is expected due to favourable weather conditions and improvement in marketing and infrastructure facilities.

The industry sector is expected to expand at 9.0 percent compared to 10.1 percent in 2011.

A 12.2 percent growth is expected in the construction sector in infrastructure development work by the government and the tourism sector.

An 8.2% growth is expected in domestic trade due to growth in domestic and agricultural sector. Financial services will expand by 8.2 percent owing to the expanding economic activities.

“It is also expected that Sri Lanka’s macro economic conditions and policies will be fashioned to support high growth in 2012 with prudent macroeconomic management to maintain benign fundamentals.

“Investor confidence will be strengthened and promotion of agricultural and industrial products for both traditional and non traditional export markets will take place,” he said.

The Central Bank also expects the fiscal deficit to decline to 6.2 percent of GDP from less than 7 percent of GDP in 2012.

http://www.dailynews.lk/2012/01/04/bus01.asp

Lagodan opens doors for former LTTE cadres
Jobs in Malaysia, Gulf regions:
Shirajiv SIRIMANE
For the first time in Sri Lanka rehabilitated LTTE youth are being offered foreign employment by Lagodan Pvt Ltd, one of the oldest foreign employment agencies in Sri Lanka.


Chairman/MD Ranjith Perera
Lagodan Chairman and Managing Director Ranjith Perera said he has already opened a link in Malaysia and in the Gulf for this purpose. Speaking to Daily News Business he said these openings will be for males.

“Our partners are looking for youth to work in factories, Super markets, dairies and farms,” he said.

He said that while appreciating the good work done by the government to rehabilitate ex-LTTE cadres and providing them training for self- employment, he wanted to take these youths to a new level and offer them foreign employment.

“I have already spoken to Minister Douglas Devananda, Dilan Perera and other government officials who are helping me in his regard,” he added.

Perera said they are doing this business as a social service and making money is not their priority. “We treat this as one of our CRS projects and help to build the image of the country,” he added.

He said Lagodan last year conducted a series of workshops in several rural areas to woo candidates for foreign employment at their own expense.

“We never take a fee for recruits and survive from the commission offered by the employee,” he said. Saudi Arabia which owns and operates the largest dairy and Qatar Airways are two of their largest clientele.

He said they are currently negotiating with some Australian and Korean companies for opening for Sri Lankans.

He said one of the biggest advantages, Sri Lankan skilled workers have is their skills which is in high demand in the Asian employment market.

“This is the reason one could see a sharp increase of Sri Lankan workers to Korea.”

He also expressed disappointment in the manner in which some Sri Lankan missions overseas operate. “They are not doing enough to woo more employment opportunities to Sri Lankans,” he said.

At a time when foreign employment was an ‘alien’ word to Sri Lanka, founder of the company L. A. B. Perera set up Lagodan in 1976.

The Foreign Employment Ministry is looking at categorising foreign recruitment agencies and is to be named as a five star agency.

http://www.dailynews.lk/2012/01/04/bus02.asp

LOLC Group acquires Dickwella Resort in prime location
Rs 1,014 million for 99.9% stake:
Expanding its presence in the booming tourism sector, the LOLC group through its leisure arm, LOLC Leisure Limited has acquired a 99.9% stake of Dickwella Resort for a consideration of Rs 1,014 million.


The Dickwella Resort
This unique resort hotel with 76 chalet type luxury rooms is built on around 6 acres of land which is one of the most picturesque localities in the southern coastal belt of the country.

The hotel which is much sought after by an exclusive clientele of European tourists has potential for even further expansion and offers a unique and unparalleled beach holiday experience to its guests who can enjoy the serene beauty with its surrounding view of the Indian ocean.

With this acquisition, LOLC Leisure will hold 600 plus room keys in five beach resorts making it one of the largest resort owning companies in the country.

LOLC Leisure is a 70% owned subsidiary of LOLC with the balance 30% being held by Browns Investments PLC.

LOLC Group Deputy Chairman Ishara Nanayakkara,, the holding company of LOLC Leisure, commented: “We are proud to have acquired this beachside property situated at such a prized location. This acquisition marks another milestone in our leisure holdings and propels us into the forefront of the hospitality industry.

Dickwella Resort will be another key offering in our bouquet of hotel properties along the western coast of Sri Lanka.

The resort has already carved out a distinctive niche for itself on the global tourist map and we intend to upgrade luxury facilities and enhance the room capacity in the months ahead to catapult it further into a multi-star category hotel that offers a holiday experience of a lifetime.

The Southern Expressway, now operational, has succeeded in drastically reducing travel time to the resort.

In time to come, the completion of the Colombo-Katunayake Highway will reduce travel time to Dickwella Resort even more.

LOLC Leisure remains committed to consolidating its leisure business in the years ahead and we remain in pursuit of acquiring resorts in unique stunning locations, such as Dickwella Resort.

The resort boasts of a world class luxury spa managed by French wellness expert, Yves.

Located close to Dondra, the resort offers easy access to world famous tourist sites such as Yala, Kirinda, Mirissa beach, dolphin and whale-watching excursions.

LOLC Group, forayed into the leisure sector with LOLC Leisure acquiring Confifi Group hotels in 2010, namely, Hotel Riverina, Club Palm Bay and Eden Resort and Spa.

The two former hotels are closed for extensive renovation and will be reopened in 2013. Operating under LOLC Leisure management, Eden Resort & Spa has just completed the most successful year of operations since its inception in 2010/11.

LOLC Leisure has also acquired Tropical Villas, previously owned by Jetwings and Hayleys, located alongside the other three properties, and which is also under extensive refurbishment.

http://www.dailynews.lk/2012/01/04/bus03.asp

New Commerce DG
P.D. Fernando has been appointed as the new Commerce Director General to the Commerce Department. He succeeds Gomi T. Senadhira.

Fernando has over 32 years of experience in the Department.

His overseas postings include Sri Lankan Missions in Karachi, Japan, Germany, and Brussels as a trade commissioner, and in Dubai and Sydney as the Consul General for Sri Lanka.

Before joining the Commerce Department, he has served in Sri Lanka Customs from 1976 to 1979.

Minister Rishad Bathiudeen welcomed the new Director General of Commerce, who assumed duties on the same day. Outgoing DG, Gomi T. Senadira served the SL-DoC over the past 32 years and retired in November 2011.

http://www.dailynews.lk/2012/01/04/bus04.asp

Juicy business for Ellawala mangoes
Shirajiv SIRIMANE
Ellawala Exports is on a major expansion drive to increase their mango production by over 50 percent in the next two years.


Tom Ellawala with the TJC mangoes.
Chairman Suresh Ellawala said they are tieing up with the Mahaweli Authority to woo more of their farmers to grow 360,000 mango trees in 5,000 acres in the next two to three years. "We are looking at a yield of 2,800 metric tonnes from this," he said.

"Our objective is to help Sri Lanka to achieve their national target of exporting 18,000 metric tonnes of mangoes by 2016." This figure is currently at 1,500 metric tonnes.

The company which diversified from gem exports in 1992 to formulate Ellawala Horticulture (EH) was formed to take over and develop Dambewatana Farm, which was leased from the Mahaweli Authority in 1993.

At the time of the takeover the property was abandoned and in a state of severe disrepair.

The primary crop planted on the farm was mango, with lesser acreages of banana and rice.

He said this is one of the biggest mangoes grown in Sri Lanka weighing over 600 grams and is marketed at around Rs 500 overseas. "This is the variety we want to introduce to the Mahaweli settlement areas," he said.

This mango was created by his Father Tom Ellawala and agriculturist Juan Carlos of Philippines.

In keeping with the objectives of Ellawala Horticulture in making a contribution to the economic growth and well-being of the people of Sri Lanka, Ellawala Horticulture has chosen to propagate TJC mango plants and make them available to other growers.

Ellawala Exports will be providing the trees, fertiliser, technical knowhow and most importantly will also buy back the products ensuring a market and a self employment opportunity for the farmer.

He said a tree will have a life span of over 20 years and will bare fruit from three years.

http://www.dailynews.lk/2012/01/04/bus05.asp

Sierra Cables to diversify into PVC pipes manufacturing
Hemanthi GURUGE
One of the leading cable manufacturing companies, Sierra Cables PLC, will diversify to manufacture PVC pipes by April this year.

Sierra Cables PLC Managing Director Shamendra Panditha told Daily News Business that the company will invest Rs 150 million to setup a factory to manufacture PVC and HDPE pipes at Athurugiriya.
http://www.dailynews.lk/2012/01/04/bus06.asp
The company will manufacture PVC pipes for the first phase of the project and it will start producing HDPE pipes in 2013, in the second phase of the project.

Sierra Cables has a 70 percent stake and Sierra Holdings has a 30 percent stake in the pipe making unit.

Arrangements are being made to use automated manufacturing processes to manufacture pipes.

Automation in the process controls of the manufacturing industry may enable some kind of work and complete it efficiently in less amount of time.

Sierra Cables was established in April 1978 and has now grown into one of the foremost companies. It has launched its productive and functional cables and enamelled winding wire of matchless quality, at very competitive prices.

This is one of the pioneers in the cable manufacturing industry in Sri Lanka having also obtained ISO 9001 certified organization.

Market struggles to find momentum
The ASPI and MPI drifted lower yesterday with heavier volume, which indicates that it can go lower this week. The near term support for the index is currently at 5,800.

We would hope to see the index consolidate in the range suggested in the below graph which is around 6,200 to 5,800.

CITW (Waskaduwa Beach Resort Limited) and CITK (Kalpitiya Beach Resort Limited) debuted and immediately were off to the races, and at one point were up close to 20%, however, ended the day up 12% and down 5% respectively. These are the one off rallies we are seeing in the market, and we will continue to see them day after day.

Unfortunately, the probability of picking tomorrow's upside trade is difficult, albeit it is probable to identify the stock that will move 1 or 2 weeks down the road.

Bartleet Stockbrokers

http://www.dailynews.lk/2012/01/04/bus07.asp

Jan 04, 2012 (LBO) - Sri Lanka's stocks fell 1.04 percent Wednesday in thin trade with steep falls in some small cap speculative stocks as the market failed to maintain the momentum seen in the last week of December, brokers said.

The benchmark Colombo All Share Index fell 62.90 points (1.04 percent) to 5,972.7 points and the Milanka Index of liquid stocks fell 53.39 points (1.03 points) to 5,120.8 points.
Turnover was 459 million rupees.

Colombo Stocks rose in the last week of December to top a psychological 6,000 point mark.

Environmental Resource Investments, a prolific issuer of warrants which is tightly held by insiders fell 4.10 rupees to 33.40 rupees. Its W0002 warrant fell 1.90 rupees to 12.26 and its W0003 warrant fell 2.20 to 15.20 rupees.

Asian Alliance Insurance fell 8.00 rupees to 161.00, Colombo Pharmacy fell 57.30 to 1,108.70, Colonial Motors fell 14.30 rupees to 390 rupees and Hayleys fell 17.50 to 372.50 rupees with 200 shares traded.

Beruwala Wall Inn rose 7.90 t0 153.00 rupees, Ceylinco Insurance rose 27.20 to 328.20 rupees with 110 shares traded, CDIC rose 12.90 to 322.90 with 100 shares traded

Ceylon Tobacco fell 9.00 rupees to 481.00, Commercial Bank fell 10 cents to 100.70, HNB fell 1.00 rupee to 150.00, Dialog Axiata closed flat at 7.70 rupees and Aitken Spence fell 2.60 to close at

People's Leasing Company, said its employees will transfer 54.6 million shares held by them to the parent People's Bank following approval from the regulator.

The stock was originally to have been given to employees on the firm's public listing.
http://lbo.lk/fullstory.php?nid=1317700171

Kumar wrote:Jan 04, 2012 (LBO) - Sri Lanka's stocks fell 1.04 percent Wednesday in thin trade with steep falls in some small cap speculative stocks as the market failed to maintain the momentum seen in the last week of December, brokers said.

The benchmark Colombo All Share Index fell 62.90 points (1.04 percent) to 5,972.7 points and the Milanka Index of liquid stocks fell 53.39 points (1.03 points) to 5,120.8 points.
Turnover was 459 million rupees.

Colombo Stocks rose in the last week of December to top a psychological 6,000 point mark.

Environmental Resource Investments, a prolific issuer of warrants which is tightly held by insiders fell 4.10 rupees to 33.40 rupees. Its W0002 warrant fell 1.90 rupees to 12.26 and its W0003 warrant fell 2.20 to 15.20 rupees.

Asian Alliance Insurance fell 8.00 rupees to 161.00, Colombo Pharmacy fell 57.30 to 1,108.70, Colonial Motors fell 14.30 rupees to 390 rupees and Hayleys fell 17.50 to 372.50 rupees with 200 shares traded.

Beruwala Wall Inn rose 7.90 t0 153.00 rupees, Ceylinco Insurance rose 27.20 to 328.20 rupees with 110 shares traded, CDIC rose 12.90 to 322.90 with 100 shares traded

Ceylon Tobacco fell 9.00 rupees to 481.00, Commercial Bank fell 10 cents to 100.70, HNB fell 1.00 rupee to 150.00, Dialog Axiata closed flat at 7.70 rupees and Aitken Spence fell 2.60 to close at

People's Leasing Company, said its employees will transfer 54.6 million shares held by them to the parent People's Bank following approval from the regulator.

The stock was originally to have been given to employees on the firm's public listing.
http://lbo.lk/fullstory.php?nid=1317700171

Thanks kuma, you are in the right track