Wednesday, June 30, 2010

Colombo Dockyard expands

Harshini PERERA

The Colombo Dockyard PLC (CDPLC) will shift some of its activities to a new site in Mattakkuliya, adjoining the Kelani river.

The new venture to the site will give extra mileage to CDPLC to work on a spacious environment at the Sri Lanka Ports Authority premises, Colombo Dockyard PLC Managing Director/CEO Mangala Yapa told Daily News Business.

The total investment for the project will be around Rs 400 million while it is spent on the site development and to accomplish the new International Maritime Organization (IMO) resolution on Performance Standard for Protective Coatings (PSPC) on vessels.

The IMO resolution has come into force for newly built ships that is called PSPC. It needs to be developed inside the Dockyard with special facilities. The shifting of some of the activities to the new site will be a support for current activities.

The activities such as reprocess of steel materials prior to the production of new ships, pipe fabrication and most of the heavy engineering work will be accomplished at the new site.

"CDPLC has limitations inside the Sri Lanka Ports Authority for some activities and we made this decision as an immediate action to take some of our activities out which will enable us to grow further while supporting the current activities," Yapa said.

He said compared to last year, there is a dip in the ship constructions and therefore company had an impact in its performance. "Since the market situation is improving at present, we can expect a recovery in the industry at the end of this year."

The new site will enhance the capacity and thus the quality of the CDPLC can be improved as a further step to cater to the international market more aggressively.

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JKSB, Asia Securities recommend subscription to Odel IPO

 Two leading brokers have strongly recommended the subscription to the Initial Public Offering (IPO) of Odel, the country's iconic and successful lifestyle store chain.

The IPO of ODEL Ltd issuing 16.7 million ordinary voting shares at Rs. 15 each is now on whilst its official opening is 5 July. Via the issue, Odel will be raising Rs. 250.5 million to fund retail branch expansion and to reduce borrowings as well as improve working capital. Given the stature of the company as well as the prospects in the business segment it operates in along with attractive valuation and future upside, the IPO is expected to draw a massive demand
Two brokers John Keells Stock Brokers as well as Asia Securities were quick to come out with their research last week on the IPO.

"At an issue price of Rs. 15 per share the counter trades a P/E multiple of 11.97x FY11E, which amounts to a 16.7% discount to market. We have prudently retained gross margins at 34% for our forecasts. An improved product mix and reduced need for promotional and discount sales would likely result in GP margin improvement. Our forecasts indicate a 27% increase in EPS above our forecasts to Rs. 1.52 for FY11E for a 200bp improvement in gross margins. We recommend subscribe," John Keells Stock Brokers said.

"In terms of earnings based valuations the share is attractive valued on 11.5X forecast FY11 net profit (based on the issue price of LKR15 per share) which is at a plus 20% discount to the forward market earnings multiple. Further on a free cash flow to the firm (FCFF) valuation, intrinsic value per share is circa LKR18 (given a cost of capital rate of 18%). Further strong upside for the share could be expected with steady income streams and Odel's brand image coupled with strong investor appetite for IPOs thus we recommend subscribe," Asia Securities said in its detailed Research Report.

John Keells Stock Brokers (JKSB) said with the cessation of the war, the Company's medium term focus is on expanding retail reach.

ODEL has successfully entered into several suburbs in the outskirts of the Colombo city filling in a void of quality high end retail stores.

The company intends to leverage on the strength of its brand to take advantage of untapped market potential for mid to high end clothing in urban cities in the Western Province and outstation cities following market surveys and feasibility studies conducted in ear marked locations. Our forecasts have only factored in 3 new branches in the current financial year, although several more may be opened in FY12 and beyond.

The company is expected to benefit significantly from the upturn in domestic demand and the expected increase in spending power of the Sri Lankan consumer which would filter down to increased footfall at stores and an incremental increase in average basket values.

 This is already apparent with successive new stores opened having recorded average daily revenues above initial pre-launch estimates.

The company intends to carry their own line of clothing in the new stores along with a range of innovative and stylish merchandise retaining the brands identity with the same elegant interiors and exteriors and unique ambience created at its flagship store.

Odel reported earnings of Rs. 141mn for FY10, which JKSB estimates to amount to Rs. 112m excluding exceptional items that included capital gains from the sale of land and impairment losses from ODEL Lanka Pvt Ltd. "We expect the company to post earnings of Rs. 182m for FY11 stemming from increased sales volumes stemming from a sharp rise in tourist arrivals to the Ward Place and Airport stores as well as increased domestic spending across the range of stores in the suburbs of Colombo. We have factored a modest 5% increase in local footfall each year and an 8% inflationary increase in average basket size for our revenue forecasts," JKSB said.

The Company holds an extensive freehold land bank including 219.21 perches in Ward Place, Colombo 7 and 52 perches in Rajagiriya and leasehold property amounting to 112.2 perches in Ward Place, Colombo 7 and 35.69 perches in Rajagiriya, the broker added.

Asia Securities in its report said Odel Unlimited (ODEL), one of the nation's largest fashion, apparel and cosmetics retailers, will use the proceeds of the issue to support the expansion programme (LKR150.5 m) of the company and the rest (LKR100 m) would be employed to settle part of outstanding loans.

The Company focuses on delivering maximum fashion and value to its shoppers by offering compelling selections. Odel stores offer a broad selection of merchandise and feature products from both local and exclusive international brand sources. The Company operates 12 stores spanning within the three districts of the Western Province and plans to open three more stores during the year 2010 (possibly in Wattala, Battaramulla and Kandy).

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Sri Lanka to reform taxes, phase out unequal incentives

June 29, 2010 (LBO) - Sri Lanka has a complex tax structure which is discouraging savings and the government is expecting a comprehensive tax reform plan in August, deputy finance minister Sarath Amunugama said.
An interim report from a presidential tax commission has recommended a simplified tax structure which is more equitable and is being planned for the medium term, Amunugama said.

Taxes on cars and some imports have already been cut on interim recommendations, he said.

Amunugama said different tax treatments of firms coming under the Board of Investment, the investment promotion agency, and other companies in the country would be reduced.

"The government also proposes in the medium term to bring down excessive tax rates on personal and corporate income as well as banking and financial institutions and do away with ad hoc and unproductive tax concessions offered by the Board of Investment and in terms of income tax laws," the budget speech said.

"The dichotomy between the BOI and non-BOI regimes will be corrected to create a level playing field."

Banks and financial sector firms were also facing very high tax rates, he said.

The government was planning to raise the tax take to 17.0 percent of gross domestic product in the medium term with tax reforms.

In 2010 the government was expecting a revenue to GDP ratio of 14.9 percent up from 14.5 percent in 2009.

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Tuesday, June 29, 2010

Colombo Stock Exchange recorded gains: Foreigners were Net buyers for the day

                 DAILY MARKET REVIEW

29/06/2010 (S.L.S.Picks) – Colombo Stock Market recorded gains in both indices today ending the profit taking period by the retail investors & the debt clearing operations carried out by the brokering firms during last couple of days.

There were renewed buying interest for the Land & Property sector companies & the improved quarterly reports published by many listed companies for the JAN – MARCH 2010 quarter (03 months) reflected above average results. The earnings by the listed companies during the first quarter 2010 alone has risen 170% so far, & will definitely help to bring down the market valuations to below 15 levels.

All share price index was up by 38.69 points to close at 4612.98 & the more liquid Milanka price index was up by substantial 42.55 points to close at 5300.08 points. The investor sentiment was boosted by the news of the approval of US$ 400m.n IMF loan facility for the Country.

Turnover for the day was healthy Rs 2.8 b.n

Foreign participation was at moderate levels. However foreigners were net buyers for the second consecutive day today by Rs 49m.n. Foreigners purchased Rs 481m.n. worth of shares & sold shares to the tune of Rs 432m.n.for the day.

Land & property sector rose by massive 12.70% due to the share price increase in companies listed in Property sector such as Equity One , Equity Two, York Arcade, Overseas Reality, Colombo Land & Building, East west Properties etc, followed by the IT sector. Hotels & Travels sector was heading the negative performers list.

There were 106 positive contributors as against 42 negative contributors for the day.



  • Many low valued stocks recorded gains today & both top volumes counter & most active trades counters were filled with low valued shares.
  • Equity One a Carson group property company recorded massive price appreciation today to close at Rs 60.75 up by Rs 23.00 for the day.
  • Colombo Land & Development Company has further potential to go up in near future. There were "Rumors" in the market that their lands were revalued & Net Assets Value per share has improved  above Rs 30.00 levels. 
  • Share price of Cargills(ceylon ) came down to Rs 123.00 levels & recovered closed at Rs 128.00 today due to the selling pressure of few investors. However we believe that this share has a huge upside potential purely on the basis of its future growth prospects. 
  •  Foreigners were net buyers for the second consecutive day today. 
  • Ceylinco Securities & Finance
  • Cargills (ceylon)
  • Dunamis Capital
  • Colombo Land & Development
  • Sunshine Holdings 
  • Coco Lanka
  • Kotagala plantation
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Rs. 8.6 b rights issue by Ceylon Leather

Ceylon Leather Products PLC (CLP) announced a 1:1 rights issue along with attached warrants on 23 June amounting to over Rs. 8 billion.

Initially 12.5 million ordinary shares will be issued at Rs. 73 per share for the purpose of raising fresh capital to payoff present debts, expansion of business and for various investment opportunities in both publicly listed as well as private assets in Sri Lanka.

The subsequent tranches in the form of warrants will focus on the various investment opportunities. The company recorded strong profits during 4th quarter of 2009 and 1st quarter of 2010.

The company is known for manufacturing and selling genuine leather goods such as military and industrial shoes and boots, but has recently expanded into high quality shoes, ladies bags, brief cases, unique leather fashion accessories and toys for the local market.

CLP's recently revamped showroom in Colpetty has tripled its sales since the launch. The company plans to open many such showrooms at strategic locations in the near future with the next one in Galle Face Court in Colombo with state of the art architecture and tastefully designed interior creating a magnificent ambience.

Ceylon Leather Products Ltd currently employs a workforce of over 400 people. When Environmental Resources Investment PLC (ERI) acquired the controlling interest of Ceylon Leather Products Ltd in 2009, it was making significant financial losses.

ERI has since restored the company's financial health with careful planning and far-sighted management. As a result, the company was able to increase its production and sales which made it not only a viable business entity but also a thriving one.

"During this crucial period of revamping and revitalising the company, we were indeed fortunate that we were able to restore the company to profitability without having to retrench even a single member of the workforce" said Sitendra Senaratne - MD/Chief Executive Officer of Ceylon Leather Products Ltd.

"This feat was possible due to the good governance policies and strategic approach that ERI steadfastly adopted for the restructuring of the company, and as a result we are now blessed with a highly motivated work force which will be a positive factor in progressing to our next phase of accelerated growth," he added. Environmental Resources Investment PLC owns 72% of Ceylon Leather PLC and strives to be a socially responsible business entity which firmly believes in the positive and far-reaching effects of good governance policies.

 ERI provides financial management, strategic guidance and strong management discipline to help re-structure companies.

"ERI was the driving force behind the restructuring and resurgence of Ceylon Leather PLC to make it profitable, and continues to provide vision for our newly-revived company in Sri Lanka. We are very excited for the prospects of our future," continued Senaratne.

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Related Articles - Income Statement

Silver lining for Dankotuwa

 Dankotuwa Porcelain PLC, the reputed porcelain/tableware manufacturing company in Sri Lanka, entered into a strategic partnership with a consortium comprising Sri Lanka's premier investment holding company - Environmental Resources Investment PLC (ERI) and Ceylon Leather Products Ltd (CLP) - with the issue of 48 million plus shares at Rs. 9 per share in a private placement.

The placement will infuse a staggering Rs. 433.5 million of fresh capital into Dankotuwa Porcelain, which will be utilised to restructure and expand its operations. Accordingly, ERI will hold 42 million plus shares and CLP six million plus shares, reflecting 58.36% and 8.31% respectively of the issued ordinary shares of Dankotuwa Porcelain PLC.

Dankotuwa Porcelain manufactures and sells high quality tableware with over 85% of its production being exported all over the world with the main export markets being USA and Europe. Dankotuwa Porcelain's product quality is recognised as being amongst the best in the world due to many superior characteristics of its body - such as very high whiteness, high translucency, high resistance to chipping and scratching, and also because of the high quality of its adornments.

Dankotuwa Porcelain products can be found in many top department stores in the world including Macy's of USA, Bhs of UK, El Corte Ingles of Spain, Migres of Switzerland, Isetan of Japan and Jashanmal of Dubai.

"The company was facing a challenging and turbulent period due to financial and labor issues and we are very glad that ERI & Ceylon Leather both decided to assist us in our time of need," said Sunil Wijesinha, Chairman and Managing Director of Dankotuwa Porcelain PLC.

"The fresh capital infusion from the ERI/CLP consortium has come just in time - as only a short while ago the company was considering liquidation. We are confident that with the assistance of ERI and its consortium, they will help our company to not only overcome these issues, but we will be able to expand our operations and fortify our position as a leading global manufacturer and exporter of high quality tableware/lifestyle products," he continued.

Dankotuwa Porcelain employs over 1,000 people who are experienced and highly skilled, and considered as experts in the field of porcelain. The company has won many accolades, both local and foreign, for its excellent quality lifestyle/tableware products.

ERI's investment in Dankotuwa follows on the heels of their investment and successful turnaround of Ceylon Leather Products PLC. ERI strives to be a socially responsible business entity which firmly believes in the positive and far-reaching effects of good governance policies. ERI provides financial management, strategic guidance and strong management discipline to help restructure companies.

"We will use ERI's plan for Ceylon Leather's restructuring. One main point we really value is ERI's mindset of not retrenching our staff, as our work force is a main factor for Dankotuwa producing such high quality products," Wijesinha further added.

"We are very pleased to be able to add such a well regarded and internationally-recognised brand into our portfolio," said G.S. Munasingha, Director, ERI. "We like the synergies Dankotuwa has with our existing companies and we are also quite excited about their future prospects," he continued.

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Sri Lanka May Focus on Reducing Budget Gap After Civil War Ends

By Anusha Ondaatjie

June 29 (Bloomberg) -- Sri Lanka’s budget will aim to cut the fiscal deficit and provide incentives for investments, Deputy Finance Minister Sarath Amunugama said, as the island nation seeks faster growth after the end of a 26-year civil war.

“We are very focused on reducing the budget deficit,” Amunugama said by phone in Colombo yesterday ahead of the budget announcement in Parliament today. “It will be an investor- friendly budget,” he said, without elaborating.

President Mahinda Rajapaksa is under pressure to show fiscal restraint after the International Monetary Fund set it as a condition to release the next installment of a $2.6 billion loan. Even so, the end of the war gives Sri Lanka an opportunity to attract investors by lowering tax rates.

“They should marginally bring down taxes in sectors that are taking off like banks, tourism, agriculture and fisheries to spur growth,” said Bimanee Meepagala, a Colombo-based analyst at NDB Aviva Wealth Management Ltd., the nation’s biggest non- state fund. “Tax collections will rise as businesses expand.”

Sri Lanka is due to unveil the budget at 2 p.m. today.

The government may narrow its fiscal gap to 8 percent of gross domestic product in 2010 from 9.8 percent in the previous year, Meepagala and Standard Chartered Plc economist Samantha Amerasinghe estimated. Government finances have been the focus of investors worldwide as the debt crises in Greece, Portugal and Spain threaten the global economy.

Lower Taxes

Sri Lanka this month halved the import tax on cars and cut levies on electronics goods to spur growth to the targeted 7 percent this year, the fastest pace since 2006.

The effective tax rate on banks after including company and service levies is 60 percent, NDB’s Meepagala said. For hotels, it’s about 35 percent, said Sarath Rajapakse, director of research at Capital Trust Securities Ltd. in Colombo.

Tax revenue may climb to 18 percent of GDP in 2010 from 14.5 percent in the previous year if the economy expands at the targeted pace, said Saminda Weerasinghe, research manager at Acuity Stockbrokers Pvt. in Colombo.

Sri Lanka may also bring in more individuals under the tax net in a country where only 3 percent of the 20 million people pay taxes, Weerasinghe said.

The South Asian nation turned to the IMF in 2009 to replenish its foreign-exchange reserves, which in March this year climbed to $5.2 billion, or equivalent to about 6 months of imports.

IMF Loan

The Washington-based lender said last month it may release the next loan tranche of about $330 million after Sri Lanka pledged to trim its budget deficit.

Sri Lanka’s benchmark Colombo All-Share Index has climbed 36 percent this year, lagging behind only Mongolia and Bangladesh in the Asia Pacific region. The Sri Lankan rupee has gained about 1.3 percent since the war ended in May 2009.

This year’s budget has been delayed by about seven months as presidential and parliamentary elections were called after the government defeated the separatist Liberation Tigers of Tamil Eelam.

Peace is also aiding the Indian Ocean island nation as overseas companies plan investments and tourists return.

Emirates Telecommunications Corp., the United Arab Emirates’ biggest phone company, started services this year in the northern Jaffna peninsula after buying Tigo Pvt., the Sri Lankan unit of Millicom International Cellular SA.

Foreign Investments

HSBC Holdings Plc opened the first branch by any foreign bank in Jaffna, the former stronghold of the Tamil Tigers, while Minor International Pcl, Thailand’s biggest hotel operator, announced plans in May to invest in Sri Lanka.

Tourist arrivals jumped 42 percent in May from a year earlier, according to the Sri Lanka Tourist Board.

Consumption is also getting a fillip as central bank Governor Nivard Cabraal holds interest rates at the lowest level in almost five years. Sri Lanka’s reverse repurchase rate is 9.75 percent.

Higher tax receipts will help President Rajapaksa to rebuild war-hit regions while reining in the budget deficit, said Sanjitha Rajasekaran, head of research at Asia Securities Ltd. in Colombo. Rajapaksa plans to spend $1 billion a year on infrastructure including roads and power.

--Editors: Cherian Thomas, Stephanie Phang

To contact the reporter on this story: Anusha Ondaatjie in Colombo at

To contact the editors responsible for this story: Stephen Foxwell at Chris Anstey at

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Sri Lanka IMF deal extended, US$400mn released

June 29, 2010 (LBO) - The International Monetary Fund has released 407.8 million US dollars to Sri Lanka held back after a budget went off the rails, and extended the deal by a year on the promise of more responsible fiscal management.

The IMF held back the disbursement of a third tranche in a two year program in February 2010 after a lavish spending pushed budget deficit to 9.8 percent of gross domestic product from a planned 7.0 percent.

The government is due to present a formal budget to parliament today and has already raised several taxes.

"Despite the weaker-than-programmed 2009 fiscal performance, the government’s 2010 budget proposal, if carried out, would significantly address past fiscal slippages, mainly through comprehensive tax reforms and sizeable cuts in recurrent spending," Naoyuki Shinohara, IMF's deputy managing director said in a statement.

"At the same time, the budget would allow for much needed reconstruction-related infrastructure investment, while protecting the society’s most vulnerable and addressing the humanitarian needs of those adversely affected by the conflict."

Sri Lanka is recovering from a 30-year war. The government has appointed a tax commission whose recommendations were originally expected to be implemented during a 2010 budget.

Sri Lanka has given sweeping tax holidays to some companies under an investment regime operated by the Board of Investment dating back 30 years.
Over the past few years the state has also undermined a neutral value added tax regime and slapped ad hoc import taxes and 'cesses' to restrain the people's freedom of exchange and help vocal special interest groups.

The country's income tax regime itself is discriminatory. Salaries and pensions of Sri Lanka's rulers and state workers have been freed from income taxes and it is now an exclusive oppressive burden on private citizens.

Recently the state cut excessive taxes on motor vehicles which has almost halted new imports and also reduced taxes on some other imported goods.

"The authorities’ efforts to reform trade and excise taxes and the Board of Investment’s tax concession regime are a signal that they recognize the importance of a broader tax base and higher revenue in achieving the program’s original goals of fundamental and sustainable reduction of the deficit and the public debt," Shinohara said.

"These efforts should be followed by important steps to permanently reform tax concessions and broaden the VAT and income tax bases to be introduced as part of the 2011 budget."

The release of 407.8 million US dollars to Sri Lanka would bring the total disbursements from the program to 1,019.4 million US dollars, the IMF said.

The full program, started in July 2009 for 1,653.6 special drawing rights (SDR) is valued at 2,446.7 million US dollars at current exchange rates.

IMF said the two year deal has been extended by one year at Sri Lanka's request and future disbursements would be seven quarterly tranches of 137.8 million special drawing rights or 203.9 million US dollars.

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Breaking News - IMF Approves 3rd Tranche of $2.6 Billion Sri Lanka Loan

COLOMBO (Reuters) - The International Monetary Fund said on Tuesday it had approved the disbursement of the delayed third tranche of a $2.6 billion loan to Sri Lanka.

Read the story

Havelock City records 300 percent increase: Keen interest to purchase apartments now

Indunil Hewage

The Havelock City project sees marked increase in sales
Sri Lankan expatriates have shown keen interest to purchase luxury and semi-luxury apartments in the country in the past year. Most of these expatriates have realized the importance of investing in apartments as the prices of land and apartments are rising at an unprecedented rate.

Havelock City, one of the leading residential projects in the country plans to build a shopping mall and a clubhouse within the Havelock City premises before the end of this year.

Overseas Realty Manager Mario Stubbs said sales within the Havelock City apartments have recorded 300 percent increase up to now.

Stubbs said the global demand for luxury and semi-luxury apartments had decreased in the face of the economic recession. However, the housing industry in the country was not hit hard by the global economic turmoil. The decrease in mortgage rates in the country has increased the demand for housing apartments. However, most of the customers are purchasing luxury and semi-luxury apartments paying cash.

The extent of Havelock City project is 19 acres and consists of various facilities such as luxury apartments, supermarkets, and restaurants. Havelock City consists of two apartment towers and these towers consist of 226 apartments each.

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Monday, June 28, 2010

Dankotuwa Porcelain share price up: Colombo stock Exchange is down today


28/06/2010 (S.L.S.Picks) - Colombo Stock Exchange was down on a start of a fresh week today due to continuous profit taking by the retail investors & due to month end debt clearing operations by the most of brokering firms.

Colombo Stock Exchange is the best performing stock market in Asia so far for year 2010 with more than 35% return.Colombo Stocks are still attractive for long term investors where earnings by the listed companies during the first quarter 2010 alone has risen 170% so far, will definitely help to bring down the market valuations to below 15 levels. This is a clear indication of the future growth potential available to the investors who have faith in investing at Colombo Stock Exchange Sri Lanka.

Still you can find a lot of undervalued companies & sectors in the market. However we can expect a short term correction in the market where we can see that some of companies are trading at much higher prices. Just to mention, a market correction at different intervals is expected in every stock exchange.

All share price index was down by 27.26 points to close at 4574.29 & the Milanka index was down by 32.64 points to close at 5257.53

Foreign participation was at improved levels. Foreigners purchased shares worth of Rs 734m.n & sold shares worth of Rs 285m.n reflecting a net foreign in flow of Rs 449m.n.

Investor interest was focused towards the Dankotuwa Porcelain Company after its deal with Environmental Resources Company & Ceylon Leather Products Companies for a much needed cash infusion of Rs 433m.n This investment is by way of a private placement of 48,163,828 ordinary shares at Rs 9.00 /share. The consortium will  hold 66.67% of the issued ordinary shares of the DPL Company after the share issue.

There were some interest to the Plantation sector companies as well & the main focused was towards the Rubber plantation companies. The rising oil prices in the world market will directly benefit the Rubber plantation companies.

Services sector was the highest gainer among all sectors today by registering a growth of 0.51% followed by the Plantation sector. Foot Ware & Textiles sector was down by 2.58% was the leading negative growth sector.

Turnover reported for the day was healthy Rs 2.5b.n

There were 46 gainers as against 97 losers for the day.

  •  Distilleries Company has announced Rs 2.50 final dividend
  •  Sampath Bank has announced a Scrip Dividend for its share holders as well as a sub division of it's shares on the basis of 02 shares for every single share.

  • Shares of Dankotuwa Porcelain Company representing the top 10 gainers list, top trades list & top volumes list today after the company secured a deal for a cash infusion of Rs 433m.n for the future development of the company. We can expect a future price improvement in this share in medium to long run. DPL share was up by Rs20.75 to close at Rs 41.75
  • There were some positive movements in the shares of Rubber Plantation companies today. Rubber Plantation Companies are expected to perform well in the medium to long run due to the ever increasing world oil prices.
  • Foreigners were net buyers in today’s trading session by Rs 449m.n. This is a positive sign for the Colombo Market as investors are waiting to see foreign purchasing in the Colombo Stock Exchange in near future.
  • Most of future growth stocks have come to attractive price levels. Further downward trend in prices of these companies will be good for bargain hunters.
  • Dankotuwa Porcelain
  • Colombo Land & Development
  • Kotagala Plantation
  • Agalawatte Plantation
  • Cargills(Ceylon)
  • Dunamis Capital
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    Cargills mulls Rs 400 million rice-bran oil project

    By Dilshani Samaraweera

    Cargills Ceylon, the supermarket chain, is looking at setting up a Rs 400 million milling facility to produce oil from rice bran. The mill is to be located in the war-recovering Ampara district. The company is now in the process of testing the consumer market for rice-bran oil, which it claims has many health and cost benefits.

    “To test the market reaction we will be importing rice-bran oil from India and will retail the oil at selected Cargills outlets, from next week. Initial tests indicate that people are willing to try rice-bran oil because of the many health benefits,” Cargills consultant in agricultural business activities, Dr Jagdish Katyal told the Business Times.

    Rice bran oil is a vegetable oil extracted from the outer covering of unpolished rice. The oil contains a number of vitamins including vitamin E, nutrients and antioxidants and is free of trans-fat, says Cargills. Its qualities are seen as particularly good to fend off heart diseases.

    The oil is also seen as cost effective as it has good cooking qualities like the highest smoke-point among vegetable oils. This allows the oil to be re-used more often. The oil is also thin in consistency meaning less of it can be used for more, compared to other cooking oils.

    Once market tests are over, Cargills is looking at setting up its rice oil manufacturing facility in Ampara to produce the oil locally. The company has already been allocated 3 acres of land by the government for the project.

    “We selected the Eastern Province because the rice production is high and because we want to help these people with livelihoods. We hope to provide about 100 jobs at the mill. We will mainly buy the bran from millers. These are mainly small scale mill operators,” said Dr Katyal.

    Cargills says its rice oil will not hurt the domestic coconut oil industry but will only supplement it. The company says local production of rice oil will reduce costs of importing vegetable oils and will make a healthy oil available at reasonable prices for local consumers. Cargills is also looking at another Rs 35 million investment in the Eastern Province to manufacture health foods.

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    Dankotuwa Porcelain revives With new capital infusion:

    Sunil G. Wijesinha
    The Board of Directors of Dankotuwa Porcelain PLC announced to Colombo Stock Exchange last Thursday that the company entered into an agreement with two local investors.

    Environmental Resources Investments PLC (ERI) and Ceylon Leather Products PLC (CLP). The consortium has agreed to invest a sum of Rs 433 million in the company through a private placement of 48,163,828 ordinary shares at Rs nine per share. The consortium will thus hold 66.67 percent of the issued ordinary shares, after the share issue.

    ERI will be issued 42,163,000 ordinary shares (58.36 percent of the issued ordinary shares of the company after the issue) and CLP will be issued 6,000,828 ordinary shares (8.31 percent of the issued ordinary shares, after the issue). “We will sign a collective agreement soon with the investors, when the money starts pumping in, Dankotuwa Porcelain Chairman Sunil G. Wijesinha said. The unions are corporating and the Japanese investor too will continue to pump finances,” he said.

    Asked by Daily News Business as to whether the company will introduce a Voluntary Retirement Scheme (VRS) to downsize workforce, he said the new investors wish to continue with the total existing workforce towards restructuring the company.

    The investments will be utilized to restructure and expand operations of the company, with the emphasis made on purchasing state-of-the-art machinery, Dankotuwa Porcelain Corporate Affairs Manager Giyanie Fernando said.

    The present liquidity status of the company as at March 31, 2010 is Rs. 246,169,771 represented by 24,081,914 fully paid ordinary shares, a communique said. The present debt position of Dankotuwa Porcelain is around Rs 430 million.

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    GDP records 7.1 percent growth in Q1

    The economic output of Sri Lanka as measured by Gross Domestic Product (GDP) for the first quarter (Q1) (January-March), of 2010 at constant (2002) prices is estimated at Rs. 643,539 million as against Rs. 601,084 million in the first quarter of 2009, registering a 7.1 percent growth, the Census and Statistics Department said.

    The three major sectors of the economy namely, agriculture, industry, and services registered significant growth as 9.0 percent, 6.9 percent, and 6.7 percent respectively, in the first quarter of 2010 over the same quarter of the previous year.

    The sub sectors which registered relative significant growth among the sectors in the first quarter of 2010 are ‘Tea’ 47.2 percent, ‘Rubber’ 11.7 percent, ‘Minor Export Corps’ 118.2 percent, ‘Construction’ 8.5 percent, ‘Hotels and Restaurant’ 61.0 percent, and ‘Transport and Communication’ 10.4 percent.

    The percentage share of the three major sectors, the Agriculture, Industry and Services to the total GDP more or less remain unchanged being 13.8 percent, 28.4 percent and 57.8 percent respectively.

    The index number of GDP implicit price deflator rose from 191.7 in the first quarter of 2009 to 213.2 in the same quarter of 2010, giving an inflation rate as 11.2 percent for the Q1 2010.

    Colombo Consumers’ Price Index (2002=100) which reflects average price level of consumers goods increased to 216.0 in the Q1 2010 from 202.7 in the first quarter of 2009.

    Accordingly, the inflation rate is recorded as 6.6 percent in the first quarter of 2010 whereas it was 7.8 percent in the same quarter 2009.

    The ‘Agriculture, Forestry and Fishing sector’ showed a 9.0 percent growth during the first quarter of 2010 as against the growth of 3.6 percent during the same quarter previous year.

    The real terms value added of the industry sector grew by 6.9 percent in the Q1 2010 compared with a 1.9 percent growth in Q1 of 2009. The manufacturing sector which is the largest portion of industry sector grew by 5.8 percent in the first quarter of 2010. The export value of precious stones was increased by 27.9 percent during the reference period. The factory industry grew by 5.4 percent Department said.

    Food and beverages industry registered exceptional growth of 6.8 percent. Textile, wearing apparel, and leather products grew by 0.8 percent for the reference period.

    The service sector recorded 6.7 percent higher growth rate has been achieved Q1 2010 due to recovering position of its major subsectors such as Wholesale and Retail trade, Hotels and Restaurants, and Transport, and Communication sectors. The growth rate in the same quarter of 2009 however, was as low as 1.0 percent.

    The export trade sector recorded a 4.0 percent decrease due to lower export volumes. Export earnings recorded as US $ 1,764 million in the first quarter of 2010 against US $ 1,647 million in the first quarter of 2009 indicating a 7.1 percent growth.

    The import trade sector grew by 5.8 percent in the reference period.

    The import expenditure recorded to US $ 3,225 million in Q1 2010 against US $ 2,312 in the same quarter of previous year recording 39.5 percent increase. Import expenditure fell by 30.3 percent for the same quarter of 2009.

    Domestic trade sector grew by 8.3 percent higher rate compared with Q1 2009 which was only 3.8 percent.

    source -

    John Keells Tea Market Report: Demand for Low Growns remain high

    Auction quantities will soon start showing signs of easing with intakes from most Western/Eastern planting districts recording significant drops compared to May intakes.

    Low Grown on the other hand continues to be healthy with crops recording steady increases due to favourable weather conditions experienced during the month. Quantities on offer towards the middle of July and into August will be much lower, but we should see improved seasonal quality coming through from the Eastern sector.

    Sri Lanka Tea Crop for the month of May 2010 at 30.2 mkgs is once again significantly higher compared to the corresponding month of 2009 at 25.5 mkgs.

    As at end May, the increase over last year, stands at 28.6 mkgs with the bulk of the contribution coming from Medium and Low grown elevations.

    Interestingly in comparison to the year 2008, which was the highest on record of 318 mkgs, the deficit shows a negative variance of only 10 mkgs to end May.

    If favourable weather prevails during the balance period of the year, there is every likelihood that Sri Lanka Crop in 2010 will come very close to the record year of 2008.

    The 1.3 mkgs of Ex estate teas that came up for sale today met with fair demand. Better Western High Grown BOP/BOPFs were Rs 5 to Rs 10 dearer, whilst the below best types were Rs 5 to Rs 10 easier and irregular. Plainer types were firm to irregularly lower.

    Nuwara Eliya BOP mostly maintained, whilst the BOPFs were a little easier. Uva BOP/BOPFs declined Rs 10 on average. Low grown PF1s gained

    Rs 10 to Rs 20, whilst High and Medium types tended lower.

    There was good demand for the Low Growns. The 3.2 mkg that were on offer this week by any means is quite a large volume, and despite this the interest and demand that was displayed was quite encouraging. In the Leafy category, the select best BOP1/OP1s shed a few rupees, however the best types in these two categories sold above last levels. The OP/OPAs advanced Rs 5 to Rs 10 whilst the Pekoe’s too gained in value.

    In the Small leaf category, the FBOPs and FF1s more or less maintained last levels, however the interest displayed for the best Tippy varieties was pleasing and yet again prices were stronger. However the poor types were a weaker feature.

    Excellent demand prevailed from Russia, Iran, Iraq and Turkey, whilst Dubai, Syria, Saudi Arabia and other Middle Eastern markets were quite active.

    Western Teas

    Select best BOPs were firm to marginally easier, Other Good Invoices shed Rs 5, Below Best sorts eased Rs 5 to Rs 10, plainer varieties were firm to irregular.

    Select Best BOPFs were firm to easier, other good invoices gained Rs 5 to Rs 10, Below Best sorts eased Rs 5 to Rs 10 on average, plainer varieties were firm to easier. Medium BOP/BOPFs advanced Rs 5 to Rs 10.

    Nuwara Eliya Teas
    BOPs were firm to Rs 5 easier. BOPFs shed Rs 5 on average.

    Uva Teas

    Coloury BOPs declined Rs 15 to Rs 20, others were mostly firm. Coloury BOPFs declined Rs 5, others were firm to easier. Udapussellawa BOP/BOPFs declined Rs 10 to Rs 15.

    CTC Teas

    Low Grown PF1s advanced Rs 10 to Rs 20. BP1s shed Rs 10. High and Medium PF1s were firm to marginally lower. BP1s were Rs 5 to Rs 10 easier.

    Low Growns

    Fair demand. Select Best OP1s eased Rs 5 to Rs 10, Best types maintained last levels, however the Below Best and poor sorts tended low Rs 5 to Rs 10 following quality. Select Best BOP1s shed Rs 10 to Rs 20, Best types along with the Below Best types were fully firm, poor types too low by Rs 5 to Rs 10. Select Best OP/OPAs were mainly firm, Best types met with excellent demand and gained sharply by Rs 10 to Rs 15, Below Best sorts were steady, poor stalky varieties shed Rs 5 to Rs 10 and more at times. Select Best Pekoes varieties appreciated Rs 10 to Rs 20, the balance were steady. Shotty Pekoe1s were firm to Rs 5 to Rs 10 dearer, however the balance were firm on last levels.

    Select Best and Best BOPs maintained last levels, Below Best types were firm, poorer sorts advanced Rs 5. Select Best and Best BOP.SPs maintained last levels, Below Best and poorer types were lower by Rs 5 to Rs 10. Select Best FBOPs were firm, Best types were slightly lower to last, Below Best types were firm, poorest were lower by Rs 5 to Rs 10. Select Best FBOPF1s eased Rs 5 to Rs 10, however the Best and Below Best types moved by Rs 5 to Rs 10, whilst the poorer types were easier by Rs 5 to Rs 10. Select Best tippy varieties met with good demand and advanced above last levels, Below Best and poor sorts were irregularly lower to last.

    Off Grades

    Select Best liquoring Fngs1s depreciated Rs 10, Below Best and Best were lower by Rs 10, poorer sorts were easier to last by Rs 10. Select Best BMs appreciated Rs 5 to Rs 10, whilst the Best moved up Rs 10, Below Best and poorer sorts were irregularly dearer by Rs 5. All clean BPs appreciated Rs 5, poorer sorts depreciated Rs 10 and more at times.

    All Low Grown Fngs appreciated Rs 10 to Rs 15. Select Best and Best BOP1As were firm to dearer by Rs 5 to Rs 10, whilst Below Best and others were lower to last by an average of Rs 10.


    Low demand. Select Best Dust1s declined Rs 5 to Rs 10, others in the Best and Below Best category declined Rs 10 to Rs 15, whilst the poorer sorts declined further. Clean secondaries shed Rs 5 to Rs 10, whilst the balance were firm. Best Low Grown Dust/Dust1s appreciated Rs 15 to Rs 20, whilst the balance eased Rs 10 to Rs 15.

    source -

    Related news - Tea market gains last week brought in good results

    Capital market calling

     By By Cassandra Mascarenhas

    Sri Lankans are entirely too dependent on the banking sector in the country and do not realise the potential of investing in the capital market, which is the key issue facing our economy at the moment stated Dr. Dissa Bandara.

    Dr. Bandara – who is the Director of the Financial Services Academy of the Securities and Exchange Commission and a senior lecturer at the University of Sri Jayawardenepura – expressed these views at a lecture held last week at the Centre for Banking Studies, discussing the current situation regarding Sri Lanka’s post war capital market.

    Expressing his ideas on future prospects open to the economy, he started off by quoting from President Mahinda Rajapaksa’s speech given at the Victory Day celebrations that “our public service has six times the manpower of the armed forces. They are also our own children born in our own villages. If our public servants make a commitment for four years similar to that made by our heroic forces, we will be able to make this country the Wonder of Asia.”

    Dr. Bandara, drawing from this, explained that there was no longer any need to differentiate between the public and private sector and that it is now the turn of the general public to uphold the work of the forces and help build and strengthen our economy.

    Highlighting the current situation of the country’s economy, Dr. Bandara used a series of statistics to demonstrate Sri Lanka’s present standing on a global platform.

    With decreasing interest rates, unemployment rates and a GDP growth rate of 6.2 at the end of 2009, Sri Lanka is doing well in comparison with Japan, China and India amongst other countries.  Japan has a rate of 4.6, China 1.9, Australia 2.7 and North America and Latin American countries 2 to 3%.

    Compared to them, our country is doing well soon after the war. Sri Lanka is also currently in the third place amongst the best performing indices in the world and the Colombo market is also one of the best performing markets globally.

    Although the Sri Lankan economy is thriving at the moment, it is now time to think about future prospects and how the current growth and development could be further extended, said the lecturer.

    With the end of the war came a very good environment for investors as investor confidence has now been regained. Further account openings could be observed with investor education.

    “Investor education programmes were conducted by SEC with university students, general public, employees of large organisations taking part. This information related to some of the attempts taken by the regulators soon after the war in 2009; we conducted more programmes more facilities towards investor education,” shared Bandara.

    There is a very promising increase in the trend for opening new accounts and around 30,000 new accounts are expected to be opened by the end of this year alone. Most of the accounts have been opened by locals, surprisingly from the rural community – an unexpected development.

    Still, 76% of our investments are currently placed in the banking sector and just 24% in the capital market – an unusual situation if compared with almost any developed country where the capital markets tend to be two to three times the size of their banking sector, with even the banks highly involved in capital market activity.

    “I don’t see a single bank in Sri Lanka dealing with capital market activity,” Bandara pointed out. “That’s the key issue we have and it is the turning point for us. The banking sector is too popular here because people are not aware of the advantages and higher returns from dealing with the capital market.

    Banks too should take initiative and introduce capital market services”.

    He stressed that the focus should now be on attracting people from the banking sector to the capital market instead. The capital market should also be seen as the main source of financing infrastructure development projects in the future.

    It is pleasing to note, however, that even with the influx of foreign investments in the country recently, the domestic participation in the capital market have been much larger than foreign participation throughout the post-war era.

    A problem currently encountered though is that the benefits of the market is not distributed evenly across the country as when evaluating the situation by comparing it to the country’s total population, less than 1% of the population deals with the capital market which results in just a handful of people gaining from it.

    After the war, the ability of listing companies enhanced with around 10 to 15 companies listing in 2010 although official statistics currently name only four. With more listed companies in our market, there will be more shares available for purchase which in turn foreigners could be encouraged to buy.

    A problem the market is currently facing is the reluctance of companies to list – the Registrar of Companies details over 39,000 companies registered in Sri Lanka, in spite of these only 235 companies are currently listed in the CSE. In comparison to the Bombay stock exchange which has about 4,900 companies and 2390 in Tokyo, this is not promising for the country and should be amended in the near future.

    There has also been a 200% growth in the activities of registered stock broking companies. There are currently 21 brokers in the market and there is a growing demand for opening more brokering companies. The CSE has received 12 applications of which five have been agreed to at the moment.

    Sri Lankan brokers are very busy at the moment with market development especially in the north and the east creating more employment opportunities. Branches have already been opened in Jaffna and Vavuniya and have received a good response from the northern region.

    “We have opened more branches in rural areas to address the growing needs of the market. The development in the capital market is different from the pre-war situation. Earlier the SEC and the CSE would always say that things could not be done because of war. Now it’s time to open our eyes and think about positive strategies to develop,” Bandara encouraged.

    Other post-war initiatives discussed by Dr. Bandara were market expansion in rural areas, market development and awareness creation across the country especially in the north and east, human resources component to double at the earliest thereby creating more employment opportunities, amongst others.

    source -

    Sunday, June 27, 2010

    Sri Lanka Tourism Another update - Sri Lanka: After civil wars and tsunamis, Haputale's Wildflower Cottage is a haven

    By Fiona Barton

    I am woken in the middle of the night by the silence. A world away from the all-night cabaret that is the bus stop outside our London flat, I have been disturbed by the absence of noise of any description. When I step on to the veranda, the night sky is crowded with stars, the moon is a sliver and the hills that surround our cottage are lost in darkness.

    They are back in the morning, edges blurred by early mist, but stretching out as far as the eye can see. Karan, our houseman, says you can see the sea on a clear day, but not today.

    Wildflower Cottage sits in the middle of hundreds of acres of tea, a tiny remnant of Rule Britannia, surrounded by terraces of sturdy green bushes on the slopes of Sri Lanka's hill country.

    The tragedies that have afflicted this teardrop-shaped island off India's south-east coast are well documented. Three decades of civil war have left deep scars on Sri Lanka and her people, while the 2004 tsunami brought fresh wounds. It is little wonder that tourists have stayed away.

    But following the end of the war a year ago, visitors are returning to Sri Lanka, perhaps unable to resist her wonderful array of beaches, jungle and culture. The figures tell the story: visitor numbers were up 60 per cent (year on year) last February - and even the New York Times has picked Sri Lanka as its No 1 holiday destination for 2010.

    Many will come for the beaches and surf culture of the west coast, flitting between the laid-back charms of Hikkaduwa, Bentota and newly spruced-up Unawatuna and Mirissa down south. But after an overnight stop by the Indian Ocean we ignored the draw of the sea and headed inland.

    Early indications were not auspicious. Our trip had begun in Colombo, the least prepossessing in a long line of cities that have been Sri Lanka's capital. From the airport, the hour's drive south took us through indistinguishable suburbs, with an accompanying tinnitus of bus horns (low, persistent, bone-shaking) and revving trishaws (high, persistent, eardrum-shattering).

    But on the ocean's edge, the Galle Face Hotel, still proffering a splendidly stiff upper lip, welcomed us in. That evening we watched illicit lovers, umbrellas lowered to cover forbidden kisses, and kite-fliers on Galle Face Green before repairing to the hotel's famous chequer-board terrace for a Hollywood sunset.

    The following day, it took five hours to reach Haputale (pronounced Ha-poo-tah-lay), 5,000ft above sea level on the southern edge of the hill country. But it felt much longer.

    Our minibus driver had taken the hairpins without feeling the need for brakes or, indeed, any element of the Highway Code.

    Here, the rules have been simplified: horn-blowing and overtaking on a blind corner are mandatory, trishaws and cyclists can be run off the road without a backward glance and red (state-run) buses stop for nothing, even if - in fact, especially if - they are careering towards you on the wrong side of the road.

    We arrived at the narrow, stony track to Wildflower Cottage feeling as though we had survived a prolonged ride on an Alton Towers rollercoaster. Which served to make the magical scene unfolding before us even more wonderful.

    Waiting on the steps, Karan, in white dhoti and jacket, smiled broadly and offered us cold towels to wipe the fear off our faces before we were led down a stone path, bordered by irises, snapdragons and impatiens, to Wildflower Cottage.

    It sits on the edge of the escarpment, 5,000ft up, looking out at an unimpeded view of valleys, lakes and jungle. The building is one of three green-roofed, time-capsule bungalows on the estate (the others are Rose Cottage and Aerie Cottage) but each lies in splendid isolation in its own grounds and is looked after by its own houseman.

    Inside, the living room has chintz, a fireplace and Reader's Digests from 1963. The only thing missing was a flagpole.

    Outside is The View. From our two terraces, we sit and watch the plantation come to life each morning as the women tea-pickers appear on the terraces below.

    It is a silent occupation, with hardly a word exchanged between the workers, so often our breakfast is accompanied only by the sound of thumbs and fingers plucking the perfect bud and two leaves from the bushes.

    There are no telephones, no televisions, no internet, no mobile-phone trills. If we need anything, we have a huge hand bell to ring. Karan told us solemnly that each cottage was equipped with a different-sounding bell to avoid confusion.

    We rang ours only once, hugely embarrassed to be making a fuss, and discovered that it clanged like a school bell.

    We are fed by Stanley, the cook from Kandy (another former capital of Sri Lanka). He appears each morning, in kitchen whites and chef's hat, to ask what we would like for dinner. And each evening, to ask what we would have for breakfast.

    There is much negotiation and head-waggling on Stanley's part, but we usually plump for the national dish of rice and curry.

    This entails a spread of six or seven dishes, including sambol (grated coconut with red chillis and onions), chicken curry, brinjal fry (deep-fried aubergine simmered in coconut milk with chillis and spices), snake gourd curry, sliced okra with mustard seeds, pumpkin curry (all vegetables fresh from the garden) and sublime dahl (red lentils flavoured with garlic, coconut, chilli and ghee). All this - plus nursery-style creme caramel or pineapple cake - cost us about a fiver a head.

    Our days are spent lolling on the veranda and talking, but we manage to extricate ourselves from the depths of the sofa to visit the Dambatenne Tea Factory, built by Sir Thomas Lipton (he of the yellow labels) in 1890.

    When we arrived for a guided tour, full production had yet to begin for the day, but it meant that better-informed tourists had stayed away and we had the place to ourselves.

    We saw the fresh tea leaves emptied out of the pickers' sacks to be air-dried in 'withering trays' and inhaled the green peppery scent as they were piled into vast troughs.

    The smells changed and darkened as the process - which has remained unchanged for more than 100 years - wound down through the lower floors.

    Here the leaves are twisted, chopped and chopped again, sifted, dried in wood-fired ovens, graded and shovelled into paper sacks for despatch.

    After the visit, we felt honour-bound to find Lipton's Seat, a famous viewpoint frequented by Mr Tealeaf himself, and walked the last mile or so when the route defeated even the intrepid trishaw driver.

    We were not alone - a group of teenagers had trekked up with drums and guitars for a picnic - and we retreated to our own seats back on the terrace to see if the sea was visible yet.

    On another day, we travelled to the pretty little village of Ella to see Rawana Ella waterfall, a 82ft torrent. Low rainfall meant it was not in full spate but it gave us the chance to clamber over rocks and dip our feet in its icy waters without being washed away.

    We were pursued by touts offering us pieces of coloured glass and other tat, but escaped to join a family of four Sri Lankans in the natural pool.

    They were, they told us, on holiday too and swam fully clothed while we hovered at the edge. Later, they unpacked suitcases and did their washing in the clear water, with a bar of Sunlight soap.

    That night, it was cool enough for a fire and Karan brought wood and a coconut shell of kerosene. It felt surreal after the heat of the day - a constant 30 degrees.

    On the last morning, we meant to paint our own nameboard - a Wildflower Cottage tradition - and nail it up on the big signpost alongside those produced by other blissed-out customers.

    But we were too busy standing and staring. Still no sea on the horizon but I have no doubt we will see it next time. We can wait.

    source & photo credit -

    Pelawatte milk powder soon

    by Shirajiv Sirimane

    The Pelawatte Sugar Company will manufacture 100 percent locally produced milk powder for the first time in Sri Lanka and it will be available in the local market from next month.

    Chairman, Master Divers and Pelawatte Sugar Company, Ariyaseela Wickramanayake told the Sunday Observer that ‘Pelawatte milk powder’ would be considerably cheaper than the imported milk powder and it would have a big impact on imported milk products.

    He said that the Pelawatte Sugar Company has invested Rs. 1.8 billion to launch the project and in addition to powdered milk, other by-products such as butter, yoghurt, cheese and liquid milk too will be available.

    “The state-of-the-art machinery was imported from Denmark and the factory is one of the best in the world.” He said that it was unfortunate that the country spends over Rs. 3.2 billion to import milk annually when Sri Lanka can be self-sufficient in dairy products.

    “This was one reason for us to invest in local milk production and we hope to cater to 20 percent of the local requirements in three years,” he said.

    The project will provide direct employment opportunities to over 100 persons while it would also create over 1,000 jobs for dairy farmers. Wickramanayake said that the Government’s decision to ban the slaughter of cows too has helped the industry in a big way.

    source -

    Sri Lanka’s crown jewels - doll yourself up for Jaffna’s out islands

     Text and pix by Juliet Coombe

    The calm after the storm. Now the war is over tourists are flooding back into Jaffna and discovering its myriad of hidden delights. Guide book writer Juliet Coombe sets sail for Sacred Nainativu, one of Jaffna’s seven out islands and found herself surrounded by miniature dolls.
    My classic Morris Minor hired in Jaffna old town glistens in the sun, which rises above dark ominous clouds, passing old men throwing fishing nets into a picturesque lagoon, or riding bicycles piled high with goods for the islands. Little boats bob on the water either side of the causeway and ox drawn carts pass me with the stately grandeur of an ancient world that is just starting to reawaken from a very long sleep. Only matched by fit looking old guys riding in the opposite direction on classic Singer bicycles with huge loads of firewood and other raw building materials to be sold in Jaffna old town, where rebuilding is evident everywhere.
    From time to time a red Indian bus passes by carrying Hindu and Buddhist pilgrims to Nainativu-- Nagadipa Island. As the car reaches the ferry dock, pretty blue and green painted boats come into view, moored safely waiting to take the next band of pilgrims to the different out islands and I notice a long line of women waiting patiently in the shade for the next boat to sacred Nainativu.

    Living on Nainathivu

    As the ferry chugs into shore covered in hand-painted blue and pink flowers, complete with shrine to Ganesh, one feels transported to India and places like the city of learning and burning Varanassi. Puffs of smoke come from joss sticks stuck in the wood surround the shrine and fruit offerings that have been made that morning to the sea. Clambering through the main hatch I sit down on an old oak bench next to a couple of pilgrims exchanging stories of their travels and above I can hear sun-seekers who have clambered onto the roof looking for the best spot to catch the sea breeze. On closer inspection I notice the other women sitting around me from the pier are clasping in their hands all manner of miniature dolls.
    As I take all this in, one original islander sitting next to me reminisces about her childhood living on Nainativu. Her eyes light up when her husband talks about the free vegetarian temple food served at lunchtime on banana leaves with island-grown red rice and delicious Jaffna vegetables. Always, he says pointing out the building in the distance at one o’clock on the dot. Just the experience of seeing the giant steaming bowls of food is worth waiting around on the island to try the local food, and meet the people who see this as such an important pilgrimage site.
    I discover from Ranjini another inhabitant that sadly the number of people living on Nainativu has dwindled over the last three decades to less than a thousand, and most of them are either elderly, work in the temple as volunteers or in the island’s oldest profession - (no, not that one) - fishing. In June, however, there is a major 18-day Hindu temple festival when thousands flock to the island.
    The temple Sri Naga Pooshani Amman is a few minutes walk from where we land and on either side of it are little stalls run by young lads selingl island nuts, shells and coconuts. Inside the grounds, pilgrims put a red dot on their foreheads before entering the inner sanctum and at exactly 12 o’clock a large drum and oboe blare out, accompanied by bells and trumpet music to celebrate the day’s most sacred midday puja, when special offerings are made. These include donations of plantin, beetle, arrack nut, coconuts, Jaffna mango “karuthakolumban, red rice and joss sticks which are also lit daily as the music is played the pilgrims pray, are blessed in turn and take comfort in the ancient temple surroundings.
    Broody women or couples with fertility issues have been flocking to the temple for thousands of years, because this is the sacred Naga serpent temple of Meenakshi, who is closely related to Shiva, goddess of fertility. After the midday puja they ceremonially hang little boxes with miniature dolls inside carried as I had seen with loving care on the boat from the mainland, and others with handwritten notes folded up hang them in the trees to the left of the main complex. After more prayers, special wishes are made as the coconut husk is burnt at the top, and then the women smash them to complete the ceremony and make a special wish, asking the Naga goddess for fertility and a blessing on their family. If the coconut breaks they know that their wish will be granted, but not if it stays in one piece.

    A small museum

    The temple and its very large grounds with smaller complexes is packed with all sorts of other things to see, like the sacred well, a small museum, a library with history and philosophy books, a carving centre with Indian workers and a large dining area with rolled up palmyra mats that are put out every day to serve the free temple lunch. As you walk round you will find snake statues placed in the strangest of places and this is to remind you that the Naga serpent goddess is ever present.
    Over the daily free temple lunch I talk to the female pilgrims about the dolls and discover that the success rate for having children afterwards is nearly 90 per cent. Pretty good compared to IVF and Western methods of dealing with infertility. The families tell me about the other six islands, and in particular Delft a firm favourite with original island families.
    Delft is a much more bleak and remote an out island, a surreal outpost with an equally intriguing history, and friendly island people, ancient Buddhist ruins and a strange, windswept landscape. An island which once had its own royal ruler, King Vaidyarasan, and has a mixed population of Hindus, Catholics and Protestants. However, the problems of recent times and the political turmoil led many people to migrate further south. It takes about four hours to circle the whole island on a tractor, the only form of motorised transport on Delft currently. Alternatively, if you fancy your horse-whispering skills, try harnessing Delft pony, the wild horses left over from Portuguese colonisation!
    Returning to the mainland watching the sun set over the islands as the ferry chugs back into port I can see why the likes of the writer Leonard Wolf fell in love with the place. One American senator said of Jaffna’s recent tourism revival: “Jaffna is struggling, kicking and fighting back to life and is in my opinion one of the most exciting places to be right now in Asia.” The islands described by many a guidebook writer over the centuries as Sri Lanka’s crown jewels, are gems of places to spend time because the people are so hospitable and kind its impossible not to fall in love with the place. Looking out to sea and the beautiful surrounding coastline, one can see why such a prized area has been so heavily fought over.
    Jumping back into my Morris Minor I head for Jaffna town and an ice-cream spot at Lingam Cream Shop and have the local specialty jelly, fruits and ice-cream mixed together and served in a glass bowl, which is a bargain at 60 rupees and a perfect way to cool off at the end of a day island hopping.

    For further information

    For further information on things to see and do in Jaffna buy a copy of Sri Lanka’s Other Half published by; Sri Serendipity Publishing House, Galle Fort, Sri Lanka. Web site: Sri to place an order. You can also pick up a copy in five star hotel in Colombo: Barefoot, Odel and all leading bookshops. Galle: Barefoot and The Galle Fort Hotel. Price: Rs 3500. Pages: 278. Format: Colour, paperback.
    Island hopping fact box:
    For people who want to get off the grid check out Kayts, Karaitivu, and Pungudutivu and Mandativu islands. Kayts also known as Leiden in Dutch is a small island where you can chill out and organise trips to the surrounding areas with local fishermen. Always check the current Ministry of Defence position as they still control these waters.
    The prettiest one is Pungudutivu Island. Most of the residents are Hindu Tamils with a minority practicing Christianity. It is one of the most off the beaten track places to visit in the peninsula; a small island with a surprisingly lively and hospitable bunch of villagers, but no hotels to stay in. The only option is to get permission to camp, or take a day trip from the mainland. One of the joys of this place is the island cooking and being able to order fresh fish straight out of the sea - so fresh you can still taste the sea salt. This is travel at its most raw!
    The war meant that a large number of young people and families left the islands so don’t expect any nightlife and the only young people around are the navy guys stationed across the peninsular. Plus staying on the islands is still very limited.

    source & photo credit -

    World Rubber Market Update - India rubber prices stretching to Rs.220?

    By Rutam Vora (Commodity Online)

    At a time when rubber prices in India have touched the all time high levels of Rs.173.5 per kg in recent trades, the rubber economics in the country hints at further rise in the prices of the plantation commodity.

    Looking at the nature of the India’s rubber plantation it is evident that production is subject to climatic conditions in the growing regions. The rubber plantation in India, which holds about 9% of the world rubber production, is located in the single tropical region, Kerala, which increases the vulnerability of the plantation against the seasonal fluctuations.

    At the onset of monsoon in the rubber growing regions in Southern region of India, which holds over 90% of the rubber production in the country, the production slackens resulting into reduced arrivals of rubber in the markets.

    In an interaction with CommodityOnline, Anand James, Chief Analyst, Geojit Comtrade maintained that reduced arrivals in Kerala's natural Rubber are more of a seasonal pattern. “The supply side will improve only with long term plans, with increase in replantation of old trees, increasing yield and acreage under cultivation etc. However, situation faced is more of a demand spike rather than a supply crunch,” James maintained.

    Giving the overview of the present rubber demand condition in India and overseas, James informed that total vehicle sales in India grew 30% in May, while exports grew 30%. Vehicle Sales in Japan, US, and China have all registered scintillating growth YoY, underscoring the fact that these economies are resilient after the recent global financial crisis and that consumer demand is on the bullish side.

    The rising demand is also reflected from the falling warehousing status on rubber exchanges. India’s leading commodity exchange Naitonal Multi Commodity Exchange (NMCE) warehouses have witnessed a sharp fall in the stocks, which fell from over 7000 two months back to less than 700 now. Shanghai warehouse stocks have fallen from over 30000 T to less than 10000 now.

    When asked where the rubber prices are headed towards in coming months, James said, “Indian Natural Rubber prices should trend towards 200-220 levels in the next quarter.”

    However, considering the woes of rubber consumers, which was reflected from their agitation to the government seeking a ban on futures trade in rubber and asking for import relaxation, James maintained that extremities in prices are always harmful to one participant in the value chain. High prices affect consumers, while low prices affect producers.

    “For the sake of a vibrant market it is inevitable that both of these participants or the intermediaries for that matter do not get wiped off due to extremeties in prices. However, it is equally important, if not more, that these participants remain reasonably informed and equipped to adjust to price volatility,” the analyst maintained.

    “Indian Rubber Futures trading is an excellent platform to the extent that it has enabled the participation of almost all stakeholders in the value chain, including farmers to speculators/traders to investors to hedgers to actual tyre manufacturers. Most crucially, this platform has enabled a price transparency across India, and information dissemination (like price/warehouse info of Shanghai, Bangkok etc.), which were earlier restricted to a few,” said James adding that if a ban would be imposed, this would be the first causality of that move.

    “Import Duty's relaxation in its isolation will not dissolve the price situation, either,” he maintained adding that in case of sugar and wheat the restrictive measures did not help much to bring down prices, or improve the demand-supply mismatch for that matter.

    Globally, natural rubber prices continued rising. The uptrend was seen for the third straight day on Friday with fears that heavy rains will hurt output in Thailand.

    Tokyo rubber futures rose 1.5% on Thursday after a 3.8% rise earlier in the week. Thailand, the world’s largest natural rubber producer, continues to receive heavy rains in key rubber plantation area and the rains are not expected to dissipate any sooner.

    On the Tokyo Commodity Exchange (TOCOM), NR for November delivery was up by 4.3 yen to 285.2 yen/kilogram ($3,184/metric ton) before settling at 284.7 yen Friday.

    Meanwhile, the global demand for natural rubber is expected to continue tight with China, the world’s largest importer of natural rubber, is believed to increase its imports of NR to 1.68 million tons this year, up from 1.59 million in 2009. Analysts expect rubber prices to increase roughly 26% next year.

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    2,000 MT to be brought down from Brazil Govt. to go ahead with chicken imports despite local industry protests

    By Suresh Perera

    The government has decided to import 2,000 metric tons of chicken from Brazil, notwithstanding vehement protests from key industry players who have warned of a detrimental impact on the local trade and the threat of the highly pathogenic bird flu.

    A dearth of chicken has sent prices zooming, with a kilo fetching 450 to 500 rupees in the open market as the local poultry industry struggled to normalize supplies disrupted by escalating production costs coupled with import restrictions on maize.

    "Importing chicken at this juncture will be disastrous as a glut is anticipated by early August with the industry stepping up production to meet the shortage", says Dr. D. D. Wanasinghe, Chairman, All Island Poultry Association.

    It would take at least four weeks to take delivery of the consignment of chicken the Marketing Development, Co-operatives and Consumer Services Ministry is contemplating to import from Brazil, he pointed out. "And by that time, there will be a surplus of the produce in the local market".

    "This could push the local poultry industry down the precipice", Dr. Wanasinghe cautioned. "Imports are not the solution to the problem".

    "We have decided on imports as a temporary measure to meet the prevailing shortage", a senior Ministry official said. "It will not be done as a practice as the government is committed to safeguarding the interests of local farmers plus consumers".

    "When there is no chicken available in the market, we have to take action to rectify the situation as consumers suffer", he pointed out. "That’s why we are pushing ahead with moves to temporarily import stocks".

    Asked whether imports at this point could lead to a surplus in the market, the official said the monthly demand for chicken is in the range of 11,000 metric tons, whereas local production is around 8,000 metric tons.

    He said that the imports will be handled by the CWE to ensure transparency. "There will be no private parties involved".

    Dr. Wanasinghe said the shortage of chicken has eased to a great extent, and it will be possible to restore market normalcy by end June. "This shows there is no need for imported stocks".

    Why not? There is no chicken in the market and prices have shot up because of the shortage, the official interjected. "While protecting local farmers, we also have a duty to look after consumer interests".

    Even if the Ministry went ahead with imports, is there a storage facility to hold 2,000 metric tons under the correct temperature?", Dr. Wanasinghe asked. "A competitive pricing structure will also have to be worked out for these stocks to be brought down from far-away Brazil".

    "We have sufficient cold rooms for storage – that’s not an issue", the official assured. "On pricing, the imported stocks will be sold at the controlled price of 350 rupees per kilo".

    "As there is mass production in Brazil, we can procure at competitive prices, but we will not sell below the controlled rate as it will be unfair by local producers", he said.

    Sri Lanka has remained free of the deadly Avian Influenza, which hit even neighbouring India, due to the rigid ban on imported poultry products, the Poultry Association chief noted. "We must continue to exercise caution to keep this threat at bay".

    "That’s why we are importing from Brazil which was one of the countries unaffected by bird flu", the official explained. "We are conscious of the looming threat".

    Dr. Wanasinghe has written to Minister Johnston Fernando expressing his Association’s concerns on the move to resort to imports at a critical time the industry is struggling to recover. "There are one million self-employed people dependent on this industry".

    "The job security of these people and the protection of the local poultry industry are our top priorities", the official said. "We have decided to import to meet the shortfall in local production – it is just a temporary measure".

    Asked why chicken prices still remained high if there was no dearth as claimed, Dr. Wanasinghe said processed whole chicken with skin in branded bags have to be sold at the controlled price of 350 rupees per kilo, but the unregulated live market maintains a hefty profit.

    "Live birds sold by producers at 280 rupees per kilo are, in turn, ‘cleaned’ and sold at prices ranging from 450 to 500 rupees per kilo", he noted. "It’s not the producer who benefits by this".

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    Sri Lanka welcomes surfers as shadow of war recedes

    Just over a year after the end of the long war between the Sri Lankan military and the Tamil Tiger rebels, the country has played host to its first surfing championship. And as the BBC's Charles Haviland discovered, both surfers and local residents hope it will not be the last.

    As dawn breaks over Arugam Bay, a fisherman casts his net into the lagoon near the long, low bridge that links the remote village to the rest of the country.

    By 0700, Arugam's other main industry is storming into life at the southern end of the beach.

    On the massive waves breaking in a blue-green sea, contestants in the Sri Lankan Airlines Pro Surf 2010 "surf their brains out", to quote one of the live commentators.

    They ride the waves in virtuoso performances, astonishingly staying upright - mostly.

    "Oh, and he's disappeared!" roars the Aussie commentator as a losing semi-finalist disappears into a wave that looks 20 feet tall.

    "Oh my gosh - just 40 seconds remaining - it was do or die - he had to roll the dice, had to have a go!"

    'Cool experience'

    By now there are just two surfers left, of the 128 that started a week earlier. The final winner is a 21-year-old Australian, Julian Wilson.

    Top-notch surfing - this is known as a six-star contest - has come to Sri Lanka and Wilson says he feels "unreal" to have won.

    "It's been such a cool experience over here," he tells the BBC.

    "The local people have taken such good care of us; the waves have been good every day," he says. He hopes to return next year.
    Continue reading the main story Abu Saleem Muzzamil, tuk-tuk driver

    The locals of Arugam and Pottuvil, including groups of well-behaved schoolchildren and their teachers, have flocked to see the surfing.

    Early in the morning some clamber up the dunes for the best view.

    I foolishly follow them when the sun is higher and am forced to retreat from the burning heat of the sand.

    It is better under the big canopy where drinks are on hand and where the reggae and hip-hop music is being pumped out.

    "We really appreciate the surfers coming here," Abu Saleem Muzzamil, a tuk-tuk driver, says.

    "It gives us a lot of business - tuk-tuks, restaurants, hotel rooms, vegetable shops.

    "They're really friendly: they talk to the local people and the kids. For us, it is like meeting long-lost friends."

    Local surfers

    The moment Julian Wilson is out of the water and receiving his trophy, Sri Lankans are in the sea as members of the Arugambay Surfing Club "reclaim" their surf point.

    Twenty-four locals were given spots in the tournament and two received prize money.

    The Association of Surfing Professionals (ASP) donates some surfboards to their local colleagues and the club's 26-year-old chairman, Fawas Lafeer, is grateful.

    "We have really good skilled surfers but we don't have any lessons, no surf coaches or anything," he says.

    But the club, whose members sport a uniform of black, red-trimmed T-shirts, are doing their own teaching for young local people, including swimming training.

    They hope to increase their strength from 35 to 60 quite soon, says Fawas.
    Sri Lankan surfer, Arugam - June 2010 Two Sri Lankans won prizes in the surfing championship

    He says the membership completely cross-cuts the ethnic and religious divisions in this very mixed part of the country.

    Never far away

    The long dead-end coast road leading south from Arugam enters some of Sri Lanka's remotest - and driest - country.

    There are paddy fields and lagoons but also massive rock outcrops and arid-land vegetation, the hinterland to sweeps of golden beach and more roaring waves.

    It would be reminiscent of Africa but for the temples.

    We get welcomed by visitors to the remote forest hermitage of Kudimbigala, a Sinhalese Buddhist retreat for thousands of years, and then at the Tamil Hindu temple at Okanda further south.

    Much of this is a nature reserve, and mongooses scamper across the road. Brilliantly coloured birds dart around.

    Members of an elite security force wing are never far away. It seems surprising that the state's war with the Tamil Tigers came this far south.

    "The whole area suffered," I learn from the chairman of the Arugam Bay Tourist Association, MHA Raheem.

    "There were no jobs, it was difficult to farm, we couldn't go and work in the jungle, even collect firewood, independently.
    Schoolchildren and teachers, Arugam - June 2010 Schoolchildren from Arugam and Pottuvil were taken to watch the surfing

    "And the ASP couldn't get travel insurance."

    Now people travel around freely, he says, and room occupancy is up in the low-rise, hippy-like accommodation that dominates Arugam.

    Mixing well

    Some local people say they would like to see bigger, more high-end hotels built here.

    Mr Raheem feels differently, saying that the tourists who come here may not be rich but they mix well with local society.

    He fears that would not happen if it became a package destination.

    As the current type of tourism grows, he says, more fish, rice and vegetables are brought from local producers, strongly benefiting the community.

    Late at night, there is a party on the beach.

    "I guess [Arugam Bay] is not as developed as some other surfing areas," says the ASP's Jake White.

    "But I think surf tourism here is really going to boom after this event put it on the map."

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