Sri Lanka Newspapers 23/01/2012

Mobitel, Laugfs Supermarkets in partnership

Mobitel recently partnered with Laugfs Supermarkets to offer its customers the added convenience of making bill payments, purchasing Smart Prepaid recharge cards and reloads at any of the Laugfs Supermarkets in its extended retail supermarket network. As a result, Mobitel customers in both prepaid and postpaid segments can now vastly benefit from this alliance.

Mobitel extended its services to include the Laugfs Supermarket network reaching out to customers in greater Colombo and the outskirts including Negombo, Seeduwa and Marawila. This will enable all Mobitel prepaid and postpaid customers to visit any of the Laugfs Supermarket outlets at the most convenient locations and engage in reloading their connections or settling their payments, the mobile telecommunication arm of Sri Lanka Telecom PLC said in a statement.

Speaking on the partnership, Nishantha Weerakoon, Senior General Manager Finance & Procurement of Mobitel said, "Partnering with a rapidly expanding retail supermarket network such as Laugfs gives us the opportunity to extend our payment facilities to our customers who can, as a result easily access any outlet with the least amount of hassle. As a customer centric brand, our customers’ convenience and satisfaction is core to our organization and we believe that this partnership paves a way for us to deliver this offering."

Ravi Dahanayake – Director - Chief Executive Officer of Laugfs commenting on the alliance said, "It’s truly a pleasure for us to be in a partnership with a leading mobile service provider such as Mobitel and offer our service outlets to enable reload and bill payments to all their customers. We are well established as a supermarket network and will continue to expand our services and our reach to significant locations in Sri Lanka. We believe that Mobitel customers will as a result greatly benefit from this venture."
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43724

*2012 CEO Business Outlook Survey by MTI Market Research

Despite concerns about the global economic outlook, Sri Lankan businesses seem confident that the local economy and their own businesses will perform even better in 2012. However, there are some underlying concerns with regards to FDI, Inflation, Balance of Payment, Interest Rates and Governance. This is the essence of the 2012 CEO Business Outlook Survey conducted by MTI Market Research (www.mtimarketresearch.com) . The survey covered over 100 Sri Lankan CEOs from diverse sectors.



Global Worries

75% of the respondents feel that in 2012 the global economy will either remain depressed (66%) or further slide (9%). The Euro Zone and North America, which together represents 58% of the global economy still represents 46% of Sri Lanka’s exports, therefore reduced consumption levels in these markets is likely to impact Sri Lanka. In this regards, Sri Lanka’s strategy of export diversification to Asia and other emerging markets is a prudent move, but requires significant market development to convert the intent to export earnings. The fact that even the BRICS have started to downward revise their growth rates and resorted to devaluation is certainly a concern for emerging markets like Sri Lanka.

Tea, which is Sri Lanka’s second highest export earner (US$ 1.4billion) depends significantly on the Middle East, Russia and the neighboring former Soviet States. Most of these markets are likely to see a continuation of the socio-political challenges, the only consolation being that tea is an integral part of the staple diet.

Above all, another 2008 style global financial crisis remains the biggest short term threat to the global economy

Sri Lanka will march on!

By contrast, almost 90% of the respondents feel that the Sri Lankan economy will either stabilize (65%) or even accelerate (24%).This certainly is an encouraging sign of optimism and comes on the back of 2 ½ years of exceptionally high economic growth, the tangible results of this has been experienced across most sectors.

The fact that 75% expect the global economy to remain depressed or slide further, yet almost 90% feel that the Sri Lankan economy will stabilize or accelerate, is an interesting paradox! While the optimism of the local business community (even in the face of global challenges) needs to be commended, we should not lose touch with global ‘ground reality’.

The silver lining for Sri Lanka would be the strength of our apparel industry (that caters to some of the world’s top brands, while making remarkable progress in moving further on the value chain) and the tourism industry that benefits from the end of the war, the relatively undiscovered product (in Sri Lanka) and relatively low expectations from the first time traveler to the Island.

Sri Lankan businesses expect an even better 2012

Interestingly, 58% expect their business to do better in 2012 compared to their performance in 2011, while another 31% expect the same level of performance as in 2011. Only a minority of 11% expect a slide in 2012.

Business Challenges

HR retention is viewed as the single most weighing issue with a consideration of 17.5% of the respondents reflecting HR related matters as their main business challenge. High utility costs (14.6%) and Expansion (13.6%) are also considered as a challenge to businesses in the next 12 months. At the same time, adding on to the bottom line worries of the decision makers is the challenge of profit generation (12.6%).

Ground Reality – verbatim response from some of the CEOs

• To recruit the right caliber of employees to cater to our expansion plans.

• Retain customers, staff and innovate our business.

• To manage costs to ensure good margins.

• Rising interest rates, volatile commodity prices and increasing electricity tariffs.

• Financial stability in the Middle East and Europe.

• Depressed economies resulting in less buying power.

• Strengthen the fundamentals and take off to next level.

• Cost of borrowings to remain at present levels.

• Ability to respond fast to changing needs in the market
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43718

*Initial Market Cap of Rs. 4.2 billion from 700 million shares
*Growth to be expected through major acquisitions
By Ravi Ladduwahetty

Taprobane Holdings Ltd (THL), a diversified corporate in financial services established in September 2006 as the brainchild of stock market veteran Ajit Devasurendra, will go public in March.

The listing will be in March where 700 million shares will be placed on the Diri Savi Board of the Colombo Stock Exchange where the initial price offered will be Rs. 6 which will see a market capitalisation of Rs. 4.2 billion initially, Taprobane Holdings CEO Dinal Wijemanne told The Island Financial Review yesterday.

"We are in the process of finalising the application to the Colombo Stock Exchange (CSE) and the process associated with it. Though the introductory price will be Rs. 6 initially, we expect the share to be traded higher," he said.

He also said that the majority shareholders- Ajit Devasurendra and Ishara Nanayakkara were expected to be committed to the group and intended to be with the group in the long term.

THL in its relentless search for attractive investment opportunities plans to expand its wealth management and finance activities as well establishing a money market mutual fund and Insurance brokering services. The group also intends to diversify in the many other sectors in future. The group is also preparing itself to secure a listing on the Diri Savi Board of the Colombo Stock Exchange by way of an Introduction in March, Wijemanne said.

THL’s growth process, Wijemmanne said, will be through acquisitions and there will be some major acquisitions this year. However, when asked how the capital was to be raised for them and whether the company was going public following the listing, he denied it, ruling out the possibility of an Initial Public Offer right now.

THL which was incorporated in keeping with a vision of establishing a group of companies to create a large fund base by mobilizing funds by providing a range of financial products, and in turn investing such funds in the Debt Securities Market, Equity Market and Real Estate Market. The main services offered by Taprobane Holdings include Money broking, Stock Broking, Fund Management, Corporate Finance and Debt securitisation

The Taprobane group comprise of the following companies; Taprobane Investments (Pvt) Ltd, Taprobane Securities (Pvt) Limited and Browns Investments PLC (Associate Company)

THL currently owns 26% of BIL Presently the subsidiaries of Browns Investments PLC are into leisure, plantations, manufacturing, construction, agriculture and mini hydro power sectors by in turn carrying a significant shareholding of companies such as LOLC Leisure (Club Palm Garden Hotel, Riverina Hotel, Eden Hotel, Tropical Villas), Excel Global Holdings, Free Lanka Capital Holdings, Royal Fernwood Porcelain, Sierra Holdings, Sierra Construction, Agstar Fertilizers & Hydro Power Free Lanka respectively.

THL diversified into property management having acquired the full stake of Lexinton Holdings (Pvt) Ltd. Lexinton Financial Services (Pvt) Ltd a subsidiary of Lexinton Holdings (Pvt) Ltd and eventually a sub subsidiary of THL offers margin trading facilities to investors having successfully obtained licence from the Securities Exchange Commission of Sri Lanka (SEC) in late 2010.

Ajith Devasurendra accounts for more than 25 years’ experience both in Sri Lanka and Overseas. He pioneered the Money Broking and Government Securities markets in Sri Lanka and was able to bring new dimensions to the Sri Lankan Money market industry thereby known as the ‘Father of Bonds’ in Sri Lanka.

He was the first president of Sri Lanka Money Brokers Association and was also the first President of the Sri Lanka Primary Dealers Association. He was the former CEO of the First Capital group and at present he serves in the capacity of Director of Browns Group and many other Companies as well as many committees that focus on the development of the Financial Market in Sri Lanka, including the National Council for Economic Development (NCED).

The Taprobane Group chaired by Ms Rohini Nanayakkara, who was the former CEO of Bank of Ceylon and former Chairperson/Director of National Development Bank, DFCC Bank, Merchant Bank of Sri Lanka and the First Capital Group of Companies. She is presently the Chairperson of LOLC, NDB Venture Investments (Pvt) Ltd, Browns Investments PLC, Ayojana Fund Management (Pvt) Ltd and the Taprobane Investment Group of Companies. She is also a Director of Overseas Realty (Ceylon) PLC, Mireka Homes (Pvt) Ltd. and Cinnamon Lake Side PLC.

The Company’s Board of Directors comprise: Ms Rohini Nanayakkara ( Chairperson), Ajith Devasurendra (Deputy Chairman), Dinal Wijemanne (Director/CEO) and Priyantha Fernando, former Deputy Govenor of Central Bank, AshanDassanayake and Roshan Anthony.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43738

*The margin between these indicative lending and borrowing rates computed by the Central Bank has grown from 1.07 percent a year earlier to 2.69 percent.

The indicative lending rate of the banking system has outpaced the fixed deposit rate as dealers say interest rates should not spike within the next few months although there is pressure on interest rates as the Central Bank continues to intervene in the foreign exchange market and credit growth remains strong.

Rupee liquidity in the financial market remains tight. Some banks are advertising fixed deposit rates higher than 12 percent in a bid to attract more funding. The average weighted fixed deposit rate (AWFDR) reached 8.95 percent last week, up from 8.50 percent a year earlier. "This does not say much because deposit rates do not increase as fast as lending rates do," a dealer said.

While AWFDR changed by 45 basis points (bps) from last year, the average weighted prime lending rate of the banking system moved up 237 basis points (bps). "This rate applies to high net-worth individuals and institutions so the extent to which interest rates have gone up for the majority of borrowers in this country is much more," a dealer said.

The margin between these indicative lending and borrowing rates computed by the Central Bank has grown from 1.07 percent a year earlier to 2.69 percent.

"Credit growth remains very high and we are also seeing a lower growth in deposits which means people are using their money for whatever reason and demand for more credit," another dealer said. "This and Central Bank intervention in the foreign exchange market is draining rupee liquidity and putting pressure on rates."

Overnight money market interest rates have been inching upwards for weeks, however, last week rates eased somewhat with the Central Bank entering into dollar/rupee swaps with some banks which were putting liquidity into the system. The Central Bank did not carry out any cash auctions to pump in liquidity from Tuesday through Thursday, Monday being a holiday.

However, by Friday, the Central Bank had to pump in Rs. 5 billion to ease liquidity tightening.

Call money interest rates for overnight interbank borrowing without collateral inched up to 8.86 percent from 8.83 percent the previous day, but was lower than 9.04 a week earlier, the easing being on account of the currency swaps. Money market repo rates for overnight interbank borrowings against collateral, Treasury securities, inched up to 8 percent from 7.98 percent, a week earlier it was 8.20 percent. The Sri Lanka Inter Bank Offered Rate was flat at 8.97 percent.

The Central Bank has sold US$ 1.1 billion to keep the exchange rate stable during the three month period July through September. According to dealers, the a further US$ 985 million has been sold since the November 22 depreciation of the rupee.

"As long as credit growth remains high and the Central Bank intervenes in the foreign exchange market, interest rates would come under pressure. What needs to be seen now is for how long the Central Bank can sustain this intervention, both in selling dollars to keep the exchange rate steady and pumping in rupees to keep interest rates steady," a dealer said.

If inflation remains subdues, dealers believe policy interest rates may not have to be increased because the Central Bank could resort to tightening the Statutory Reserve Ratio (SRR) of commercial banks, which would increase interest rates and squeeze of credit demand.

"For now, we do not see any spike in interest rates for the short term, but the pressure continues. If the foreign currency inflows expected by the Central Bank materialise then we could see these pressures ease," a dealer said.

Despite the Central Bank forecasting slower credit growth towards the end of 2011, it hardly happened.

Private sector loans from the domestic banking sector grew 35.3 percent year-on-year to Rs. 1.764.6 billion as at end November 2011, generating new loans amounting Rs. 60.4 billion, the highest generated in a month last year, latest data published by the Central Bank showed.

New loans from the domestic banking system to the private sector amounted to Rs. 56.4 billion in October 2011. In September it amounted to Rs. 53.8 billion, in August Rs. 49.4 billion and Rs. 27.3 billion in July. New loans generated for the first eleven months of this year amounted to Rs. 436.6 billion. The new loans generated for 2010 was Rs. 290 billion.
http://island.lk/index.php?page_cat=article-details&page=article-details&code_title=43737

Sri Lanka able to import crude from Iran

Jan 23, 2012 (LBT) – A media report stated, Sri Lanka will be able to import crude from Iran for at least six months before US sanctions make it impossible for payments to be made to that country.
Talks would be held with Oman soon on oil imports after the US had informed the foreign ministry that there was a six month window before sanctions came into effect. Earlier reports said Sri Lanka would also attempt to seek a waiver from the sanctions.
Sri Lanka's state-run Ceylon Petroleum Corporation has long used Iranian light crude for its refinery, which produces a major share of the firm's retailed products. The balance is imported. The ageing refinery produces a lower proportion of light distillates, compared to more modern ones and higher proportions of heavier fuels like furnace oil which are cheaper. When the price gap between crude and refined products narrows (crack margin) during some parts of the year, the refinery makes very large losses, and officials have earlier said it is more profitable to keep it shut.http://www.lbt.lk/news/business/1054-crude-import