Sri Lanka Newspapers - 07/01/2012

Bourse slips further to close the week
*ERI to extend validity period of 2012 warrants

The Colombo Bourse closed the week yesterday continuing to edge downwards, although the dip was not as sharp as on Thursday, on a thin turnover of Rs.336.7 million, down from the previous day’s Rs.341.6 million, with both indices down – the All Share by 9.23 points (0.16%) and the Milanka by 10.31 points (0.20%) with losers and gainers on even keel at 77 each.

"The market was down yesterday too as it was basically during the whole week," Prashan Fernando of Acuity Stockbrokers said. "Turnover was also thin with business mainly generated by Commercial Bank, JKH and ERI, both the ordinary shares as well as the 2012 warrants."

ComBank gained 20 cents to close at Rs.100 on nearly 0.6 million shares done between Rs.99.80 and Rs.100.50 generating the day’s top turnover of Rs.56 million. A crossing of 500,000 shares at Rs.100 was among the trades.

"Although there was no confirmation, it is likely that there was a foreign seller in Commercial Bank," a broker said.

JKH continued to be actively traded losing Rs.1.30 to close at Rs.168 on nearly 0.3 million shares done between Rs.167.50 and Rs.169.10 contributing the second highest turnover of Rs.43.7 million.

Nearly 1.1 million ERI was traded closing 20 cents up at Rs.32 trading between Rs.31.70 and Rs.33.50 while the ERI warrants was up Rs.1.to close at Rs.15 on slightly over 1.6 million done between Rs.14 and Rs.16.20.

ERI announced that the 2012 cutoff date of the warrants of Feb. 3, 2012 would be extended to Sept. 6, 2013

The company said in a Stock Exchange filing that an EGM of shareholders and a meeting of warrant holders will be summoned on Feb.1 to consider, and if thought fit, to pass the necessary special resolutions for this purpose.

``This is probably due to the current market downturn,’’ and analyst said. ``There is a conversion price of Rs. 33 per warrant. Also, the main shareholders may not have the liquidity to fund the conversion.’’
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42623

The Board of A. Baur & Co. (Pvt) Ltd., has appointed Kuda Herath as a Director along with three alternate Directors and a General Manager with effect from 1st January 2012, the company announced.

Herath was born in 1967 and graduated from the University of Loughborough, UK. His experience in the field of marketing of FMCG products spans over a period of 15 years.

The three alternate Directors are Ms. Anoja Basanayake born in 1967, a graduate from the University of Colombo in Information Technology, with 17 years of experience in Information Communication Technology and Project Management. Chandima Athukorala born in 1972, graduated from G.B. Pant University of Agriculture & Technology, India, with 13 years experience in Agri Input Business. Nishantha Weerasinghe born in 1969 with a higher diploma in Supply Chain & Management and over 15 years of experience in the Health Care Industry.

Stefan de Run born in 1959 has been appointed as General Manager Operations (Agri Inputs). He has 19 years of experience in the Tea Industry, enhanced with experience in administration and 11 years experience in the manufacturing and logistics of Fertilizer blends and Agrochemicals.

With the appointment of new Directors and a General Manager all of whom have a proven track record, Baurs is taking a step in rejuvenating its management in view of ensuring the continuity of its organisation which has been in Sri Lanka since 1897.
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By Andrew Sheng
President of Fung Global Institute

Looking back, the gods of risk mocked investors. The fastest growing economies, India and China, had the worst performing stock markets. Both economies managed to achieve 7-9% growth last year, but the Sensex and the A share markets were down 24.6% and 21.7% respectively. In contrast, the advanced economies that were supposed to be in crisis, but the US Dow Jones Industrial Average was up 5.5%. True, the European index lost 25% and the Nikkei declined 17.3%, but many of the emerging markets did just as badly.

At first sight, the usual macro numbers did not suggest that 2011 was that serious a crisis year. US annual GDP had a slowdown to 1.8%, whilst Euro area annual GDP growth was 1.5%. But the Eurozone has a sharp downturn in the fourth quarter of -2%. Japan did slip into -0.9% growth, due to the disruptive effects of the tsunami and nuclear disasters.

What caught everyone by surprise was the European debt crisis, which unfolded like a supertanker crash in slow motion. The delays in getting political consensus and leadership brought the financial markets to brink of panic, but by year end, the combined leadership of German Chancellor Merkel and French President Sarkozy finally stitched together a package that brought some temporary relief to the Italian bond rates. With new austerity coalition governments in Greece and Italy, there is some hope that the political problems will temporarily not add to the panic.

Taking a more detached perspective, we should treat the period 2007 to 2011 as a double dip crisis. Recent data showed that the crisis really started when European banks expanded far too fast in the period 2002-2007, particularly after the creation of the Euro, relying excessively on inter-bank funding and in US dollars. European banks invested heavily in US AAA-rated but toxic products and it was the July 2007 intervention in inter-bank markets by the Fed and European central banks that marked the true beginning of the global crisis. The quantitative easing restored liquidity in the system but did not address the core structural problems, which resurfaced in 2011.

The double peak effect can be seen by the behaviour of inflation. Inflation peaked in July 2008, before it was stopped by the Lehman crash. In the wake of quantitative easing, inflation returned, causing the emerging markets to begin raising interest rates again. Inflation fears have receded with declining oil and gold prices, which topped at $1,888.70 per ounce in August 2011, before closing the year at $1,565.80. Almost all other commodity prices fell in the wake of fears that the Chinese economy was slowing down.

Economic forecasts are by nature biased on the optimistic side, with only lagged recognition that deflation has set in. For example, the Institute of International Finance (IIF) acknowledged that their forecasts in 2011 had to be adjusted downwards. They expect the US economy to strengthen somewhat from 1.7% growth in 2011 to 2% in 2012 and further to 3.5% in 2013. They are cautious on Europe with a decline of 0.6% in 2012 and a recovery of 1.7% in 2013. For Japan, they see a recovery of 2.1% growth in 2012, compared with a decline of 1% in 2011. For the emerging markets, they see slower growth, as exports and capital flows would also slow. The IIF thinks that India would grow only by 6.5% in 2012, rather than 7.8% projected earlier.

The good news for 2011 is that global re-balancing is finally happening. The US current account deficit has been falling to the range of $400 billion annually, roughly 2-3% of GDP. Similarly, the Chinese current account surplus has also moderated to around 3% of GDP. My personal assessment is that the moderation in the Chinese current account surplus will continue faster than most analysts predict, partly due to some deterioration in public sector savings because of the need to deal with the domestic adjustments, and also shifting demand towards domestic consumption.

What can throw these forecasts completely out?

The general consensus is the European crisis. The IIF thinks that 2012 will be a make or break year for the Euro. The European governments confront ugly politics, with tough choices whether or not a slimmer version of the Eurozone is likely to survive. The stark problem is that the twin banking and fiscal crisis has not gone away. The European banks need to rebuild their capital and they are already cutting back their international loan books.

To reduce risks, many of the European banks are putting funds with the European Central Bank (ECB) for fear of counter-party credit risks with each other. Ironically, central banks in the advanced countries have de facto replaced their banking systems as the primary engine of credit during crisis. Mandated only with the target of price stability, the ECB has to deal with the liquidity of both the banking system, as well as the borrowing rates of the key member countries such as Italy.

This is a situation that cannot continue forever, as rising interest rates reflect a lack of confidence in the system, whilst higher rates will accelerate the pace of insolvency. Ultimately, the integrity of the Eurozone hangs on the solvency of the whole. If the interest rate and debt burden is too heavy, it will break.

Hence, the Eurozone politicians basically face an unpalatable choice. They have to solve the fiscal union and bite the fiscal pain, but the question is whether their electorate will tolerate that pain.

My real concern is that ECB is the only credible institution that can act fast enough to deal with the liquidity situation, but it does not have the fiscal powers to tax and pay its way out of the mess. That is ultimately in the hands of the politicians. The triggers for crisis tend to happen when your eyes are off the ball and they come from areas you did not suspect.

2012 is likely to be full of such surprises.
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The first BOI apparel manufacturer to enter Mannar, Timex & Fergasam Group (T&FG), will be investing $ 5 million for its two factories in the region.

The foundation stone laying ceremony for T&FG’s manufacturing facilities will take place in the afternoon today at the Mannar Industrial Zone.

“The two new garment factories, once built, will also provide employment for more than 2,000 at its full capacity,” said Minister of Industry and Commerce Rishad Bathiudeen, after he met with the top officials of Times and Fergasam Group.

According to company officials, the firm is a $ 60 m Sri Lankan apparel producer, within the top five apparel manufacturers of Sri Lanka. T&FG won the 2006 NCE Export Award and the All Star Award 2007.

Minister Bathiudeen will inaugurate the commencement of the groundwork for T&FG’s two factories today at Mannar Industrial Zone, Mannar. “This is the first BOI apparel venture to start in Mannar area,” he said.

Officials of Timex & Fergasam said that the upcoming factories will be the 17th and 18th manufacturing facilities to be set up by the apparel group.According to them, the project will be in two phases – the first factory will provide employment for 1,200 and the second for 800.

Timex & Fergasam currently employs more than 8,000 across its 16 manufacturing facilities with offices in UK and Hong Kong. Company officials also revealed that the first Mannar factory to start production will begin operations by mid-October 2012.

Among the company’s clients are such top labels as Marks & Spencer, Victoria’s Secret, House of Frazer, Diesel, H&M and SUZI Chin.
http://www.ft.lk/2012/01/07/timex-fergasam-expands-to-mannar-with-5-m-investment/

Top apparel manufacturer invests US$ 5mn in 2 factories

*Timex & Fergasam expands to Mannar
January 6, 2012, 7:25 pm



The first BOI apparel manufacturer to enter Mannar, Timex and Fergasam Group (T&FG), is investing US$ 5 million on two factories in the region. The foundation stone laying ceremony for T&FG’s manufacturing facilities will take place today (Jan. 07) at the Mannar Industrial Zone.


"The two new garment factories, once built, will also provide employment for more than 2,000 at its full capacity," said Rishad Bathiudeen, Minister of Industry and Commerce of Sri Lanka on 03 January. "This is the first BOI apparel venture to venture into Mannar."


Bathiudeen said this after he met with the top officials of Times and Fergasam Group, the US$ 60 million apparel manufacturer in Sri Lanka. According to the officials of the group, the apparel producer is within the top five apparel manufacturers in the country today. T&FG has won the 2006 NCE Export Award and the All Star Award 2007.


Officials of Timex and Fergasam said that the upcoming factories will be the 17th and 18th manufacturing facilities to be set up by the apparel group. According to them, the project will be in two phases; the first factory will provide employment for 1,200 and the second, for 800. The group currently employs more than 8,000 across its 16 manufacturing facilities across the gloabe with offices in UK and Hong Kong. The Times and Fergasam officials also revealed that the first Mannar factory to start production will begin operations by mid-October 2012.


Among the clients of Timex and Fergasam Group are top labels such as Marks & Spencer, Victoria’s Secret, House of Frazer, Diesel, H&M and SUZI Chin.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=42620

Nations Lanka Finance in Rs. 500mn rights issue
January 6, 2012, 7:28 pm


Nation Lanka Finance PLC, a specialized leasing company under the supervision of the Central Bank of Sri Lanka, received share holder approval for a Rs. 500 million Rights Issue at an extraordinary general meeting earlier this week.


The Rights are offered at Rs.10 on a 1-4 ratio to existing share holders as at December 2011. The company plans to utilize the proceeds of approx Rs. 500 million for expansion in the core activities of leasing, real estate and credit.


The Rights Issue of Nation Lanka Finance PLC (NLF), together with certain structural changes that have been put in place by the company, subsequent to the entry of a consortium of investors led by investor Access (Pvt) Ltd, comprising high net worth investors Asanga Senevirathne, Jayantha Dharmadasa (Chairman) and Jayaprakesh Rudra, and also the reduction of its operational costs, would auger well for its bottom line, the company said.


It also proposes investing in subsidiary companies namely Nation Lanka Capital Ltd, a licensed margin provider regulated by the Securities and Exchange Company of Sri Lanka (SEC). In addition, an investment will be made in the aforementioned subsidiary which will be engaged in the business of Unit Trust Fund Management after obtaining approval from the SEC and Central Bank of Sri Lanka.


In its short term strategic plan, the company hopes to concentrate in the business of financial services and micro credit obtaining three licenses for a Registered Finance Company, Stock Broking and Margin Provider, and also housing through one of its largest subsidiaries Millennium Housing Developers Ltd (MHDL).


With the license as a registered finance company and also an enhancement of its core capital to Rs. 780 million, the company will be on a better footing to expand it’s branch network to other strategically located areas within the year.


MHDL the promoters of Athurugiriya Mega Housing Project has performed creditably this year in terms of sales and profits. The company plans to venture in to medium scale luxury housing, manly in Colombo, which will facilitate the diversification its product portfolio and reach up market segments. MHDL currently has a net asset portion of approx Rs 400 million.

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Union Bank unveils new HQ
January 6, 2012, 7:29 pm

Union Bank unveiled its new state-of-the-art head office yesterday morning.

"The new head office marks another momentous occasion for Union Bank, bringing together a combination of state of the art technology, competitive financial solutions and superior service delivery under one roof. As the preferred bank for the Small and Medium Enterprises, Union Bank continues to add value in strengthening the sector and the opening of the new head office further signifies its pledge in delivering flexibility and efficiency to the Bank’s customers in order to fuel their growth to greater heights. The new head office will also house the bank’s subsidiary companies including National Asset Management Limited, offering customers easy access to a wider portfolio of value added products and services," the bank announced yesterday.


Central Bank Governor Ajith Nivard Cabraal ceremonial declared open the new premises located at No. 64 Galle Road, Colombo 03.


"With the predicted high economic growth rates, the banking and finance sector will contribute positively in driving the country’s way forward. In this context, Union Bank has leveraged on its strong financial position and has comfortably surpassed the regulatory requirements on capital adequacy placed by the Central Bank of Sri Lanka and is already nearing the Rs. 5 billion mark required by 2015 enabling more space to continue bank operations safely and to remain steady and resilient," the bank said in a statement.


With the bank’s new strategic direction and expansion plans taking positive strides in a short period of time, 2011 highlighted several significant events for Union Bank with its IPO receiving the highest over subscription and it’s diversification plans being consequential with the acquisition of National Asset Management Ltd and The Finance and Guarantee Company Limited.


The opening of the new head office earmarks a stepping stone to 2012, a new year that holds many plans to further strengthen the Bank’s position as the preferred Bank for the Small and Medium Enterprises. The Bank’s strong financial position and Investor portfolio continues to support Union Bank to emerge even stronger in a challenging environment. It offers a comprehensive SME and retail product portfolio to customers. The bank has a branch network of 30 branches including 07 branches in the North and East.

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AIA partners with The Knowledge Factory ZoomBookmarkSharePrintListenAspirations International Academy (AIA) partnered with The Knowledge Factory (TKF), one of the leading providers of management and business education in Sri Lanka further strengthening the marketing education offering to the local student base. Through the alliance, The Knowledge Factory will be offering the best opportunity to students who wish to obtain a CIM qualification coupled with an excellent new faculty, an ultra-modern delivery environment and additional English language support for students who wish to follow CIM.

AIA partners with The Knowledge Factory ZoomBookmarkSharePrintListenAspirations International Academy (AIA) partnered with The Knowledge Factory (TKF), one of the leading providers of management and business education in Sri Lanka further strengthening the marketing education offering to the local student base. Through the alliance, The Knowledge Factory will be offering the best opportunity to students who wish to obtain a CIM qualification coupled with an excellent new faculty, an ultra-modern delivery environment and additional English language support for students who wish to follow CIM.

http://epaper.dailymirror.lk/epaper/viewer.aspx

SMED holds electrical energy management seminar ZoomBookmarkSharePrintListenSmall and Medium Enterprise Developers (SMED), the technical arm of the Federation of Chambers of Commerce and Industry (FCCISL) successfully conducted a seminar on Managing Electrical Energy of Business Enterprises and Industry recently, at the FCCISL Auditorium. This seminar held at the end of 2011 was an effective New Year message and a wakeup call to all businesses and industry on the importance of managing electrical energy which is also directly connected to climate change and sustainability issues.

http://epaper.dailymirror.lk/epaper/viewer.aspx

Leading corporates commit to embedding Global Compact ZoomBookmarkSharePrintListenThe recently held two-day training course entitled ‘ Embedding Global Compact and Sustainability into your Organisation’ organised by Global Compact Network Ceylon and the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) Investors for Development Project in Colombo attracted 36 participants from some of the country’s leading companies.

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