Monday, February 28, 2011

Rubber Rebounding 32% as Reserve Drop Drives Michelin Costs

By Aya Takada and Supunnabul Suwannakij

(Updates price in seventh paragraph.)

Feb. 28 (Bloomberg) -- Rubber’s 15 percent slump in about a week may be the prelude to rallies to a record high, driving up the cost of everything from Michelin tires to surgical gloves.

Harvests in Thailand, Indonesia and Malaysia, the biggest growers, will fail to meet demand for a second year in 2011, leaving stockpiles equal to 69 days of demand, the lowest in more than a decade, Goldman Sachs Group Inc. estimates. Prices may advance as much as 32 percent to 605 yen a kilogram ($7,407 a metric ton) by December, according to the median estimate in a Bloomberg survey of 10 analysts and traders.

Bridgestone Corp. and Michelin & Cie., the world’s biggest tire makers, are boosting prices by as much as 15 percent, and Top Glove Corp., the largest rubber-glove producer, is charging more. The rally in rubber mirrors the 93 percent advance in the S&P GSCI Agriculture Index since its June low caused by floods from Canada to Australia and droughts in China and Russia.

While that’s bad news for consumers, it means “the best price I’ve ever seen,” said Saneh Panpipat, 54, who tends about 2,000 rai (320 hectares) of rubber trees in southern Thailand, the country’s main growing region. “My staff and many farmers who were unable to afford their own cars now have brand-new Toyota or Isuzu pickup trucks.”

Heavier-than-usual rain in Southeast Asia, which supplies 70 percent of the world’s rubber, disrupted harvests in the past several months. While farmers will increase supply by 9 percent this year, they won’t eliminate shortages, as demand advances to its highest level since at least 2000, according to the team of Goldman analysts, led by Tokyo-based Yuichiro Isayama.

Global Recession

Benchmark futures on the Tokyo Commodity Exchange jumped more than fourfold since reaching a six-year low of 99.8 yen in December 2008 as the global recession curbed demand. That compares with a more-than-doubling in the S&P GSCI Index of commodities and a 58 percent advance in the MSCI World Index of equities. Treasuries returned about 3.7 percent, a Bank of America Merrill Lynch index shows.

Shortages should mean prices as high as 1,200 yen by the end of the year, said Masayo Kondo, president of Tokyo-based Commodity Intelligence Ltd., the most bullish participant in the Bloomberg survey. The price gained 0.9 percent to 470.50 yen in after-hours trading today. Kondo correctly predicted prices would reach a record in September, when futures markets were anticipating gains of no more than 6 percent through this month.

Toppled Regimes

The 15 percent decline from a record 535.7 yen on Feb. 18 to 457.6 yen at the end of after-hours trading on Feb. 25 reflected the slump across commodities and equity markets amid the conflict in Libya and after the toppling of autocratic leaders in Egypt and Tunisia. Oil in New York climbed to $100 a barrel for the first time in more than two years on Feb. 23 as the MSCI World Index had its biggest weekly rout since November.

“Commodities used for industrial production including base metals and rubber may be vulnerable” if crude keeps rising, said Tomomichi Akuta, an analyst at Mitsubishi UFJ Research & Consulting Co. in Tokyo.

Oil above $120 for a sustained period would likely cause a “meaningful shortfall in global growth,” Jonathan Garner, Morgan Stanley’s chief Asia and emerging-market strategist, said in a Bloomberg Television interview in Hong Kong on Feb. 23.

Higher energy costs and record food prices are already driving up inflation. The U.K. consumer-price index, which includes tires and condoms, increased an annual 4 percent in January, twice the Bank of England’s target.

Record Food Prices

The U.S. consumer-price index gained a greater-than- forecast 0.4 percent in the same month, led by higher prices for food and fuel. Inflation will accelerate toward 2 percent over the next year, the top of the central bank’s target, Federal Reserve Bank of Philadelphia President Charles Plosser said in a speech in Alabama on Feb. 23.

Euro-region inflation accelerated to 2.4 percent last month, from 2.2 percent in December. European Central Bank council member Yves Mersch said officials may toughen their language on inflation, indicating policy makers are growing closer to raising interest rates.

The global economy can withstand higher oil prices for a short period, John Lipsky, first deputy managing director of the International Monetary Fund, said in an interview with Bloomberg Television on Feb. 22.

Rubber supplies will drop in the next few weeks, even if demand weakens. Plantations in Thailand, Indonesia and Malaysia are in their so-called wintering period, when output can drop by as much as 60 percent, according to the Kuala Lumpur, Malaysia- based Association of Natural Rubber Producing Countries. Trees shed their leaves and reduce latex production during the months from February to May.

Global Sales
For now, demand isn’t expected to slow. Global sales of light vehicles will advance 7.9 percent to a record 75.5 million this year, according to Ashvin Chotai, the London-based managing director of Intelligence Automotive Asia Ltd.

Passenger-car sales in China, the world’s biggest auto market, will grow about 10 percent to 15 percent this year, according to the China Association of Automobile Manufacturers. Total vehicle sales jumped 32 percent to 18.06 million last year. China’s economy will expand 9.5 percent this year, almost three times the rate of the U.S., according to the median of as many as 67 economist estimates compiled by Bloomberg.

The jump bolsters demand for tires, whose manufacturers use about 60 percent of the world’s rubber, according to the Singapore-based International Rubber Study Group. Surging commodity prices are also increasing their costs.

Michelin Tires

Michelin, the world’s second-largest tiremaker, said on Feb. 11 that higher raw-material costs would cut about 1.5 billion euros ($2 billion) from profit this year. The company, based in Clermont Ferrand, France, is raising some tire prices in Europe by as much as 7.5 percent and by an average 8 percent in Japan in May. Its shares rose 9.2 percent in Paris trading this year.

“We will have and we’ll show it again, a very firm and responsive pricing policy,” Jean-Dominique Senard, non-general managing partner at Michelin, told investors on a conference call Feb. 11. “We have increased quite significantly our price in the world everywhere in every segment.”

Global rubber production capacity should increase by almost 40 percent over the next decade and there is an “exuberance” in markets driven by the liquidity from government spending to encourage economic growth, Senard said.

Consumer Business

Bridgestone, the world’s largest tiremaker, said Feb. 18 it expects to report a 17 percent drop in profit this year as higher material costs and a stronger yen erode earnings. The Tokyo-based company said this month it will increase prices in North America by as much as 8 percent on April 1, and by as much as 15 percent in Japan from June 1. Its shares rose 6.7 percent in Tokyo trading this year.

“The entire industry is going through very challenging times,” D.P. Singh, vice president of consumer business at Goodyear India Ltd., a unit of Goodyear Tire & Rubber Co., said in Mumbai on Feb. 22. “Commodity prices are going up across industries but the tire industry is especially hard-hit.”

Sumitomo Rubber Industries Ltd., Japan’s second-largest tire maker, said it will boost prices by as much as 10 percent from May. The company forecast Feb. 14 that profit this year will tumble 58 percent from a year earlier.

Top Glove, based in Klang, Malaysia, has been raising prices since rubber started climbing about a year ago, Executive Director Lim Cheong Guan said. The company said in January it would spend about $52 million planting rubber trees in Cambodia to help counter the jump in latex costs.

“Rubber users don’t have much raw material stockpiled, so they have no option but to keep buying,” said Hisaaki Tasaka, a Tokyo-based analyst at brokers ACE Koeki Co.

--With assistance from Yasumasa Song in Tokyo, Ranjeetha Pakiam in Kuala Lumpur and Madelene Pearson in Mumbai. Editors: Matthew Oakley, James Poole

To contact the reporters on this story: Aya Takada in Tokyo at; Supunnabul Suwannakij in Bangkok at

To contact the editor responsible for this story: James Poole at

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Sri Lanka shares close up 1.1-pct

Feb 28, 2011(LBO) - Sri Lankan stocks closed 1.11 percent higher Monday with gains in illiquid stocks like Guardian Capital and Carson Cumberbatch and Company, brokers said.

The All Share Price Index closed at 7,797.557, up 1.11 percent (85.93 points) while the Milanka Price Index of more liquid stocks closed at 7,140.747, down 0.40 percent (28.61 points) according to stock exchange provisional figures.

Turnover was 2.2 billion rupees. There were 77 gainers and 147 losers.

Guardian Capital Partners closed at 2,913.00, up 971.10 rupees. The company's stock price saw a 50 percent price gain, Monday.

Other counters that saw a 50 percent price hikes are Autodrome closing at 1,137.00, up 379.00 and Union Chemicals closing at 1,000.50, up 333.50 rupees.

Carson Cumberbatch closed at 699.00, up 22.90 rupees.

The company's unit, Good Hope closed at 1,246.60, down 102.30 rupees and while Shalimar (Malay) closed at 895.90, down 79.10 rupees.

The Carsons group announced plans to buy minority stakes in its Malaysian oil palm units as part of a revamp to prepare for bigger investments and expansion outside the region, a stock exchange filling said Friday.

Piramal Glass Ceylon closed at 10.50, down 0.30 cents with over 6.2 million shares done.

Laugfs Gas closed at 52.80, up 0.70 cent and its non-voting shares closed at 42.30, up 0.50 cent with 4.5 million shares done.

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Sri Lanka Union Bank gets BBB rating

Feb 28, 2011 (LBO) - RAM Ratings Lanka has assigned a long-term BBB rating to Union Bank with a stable outlook and a short-term rating of P3, a statement said.

"The ratings are premised on the bank’s healthy capitalisation as well as adequate funding and liquidity positions," the rating agency said.

"On the other hand, they are constrained by the bank’s small size, limited geographical reach and its relatively concentrated loan book."

Union Bank, set up to focus on second-tier corporates and small and medium enterprises, is presently the smallest domestic licensed commercial bank.

As at end-September 2010, the bank’s asset base stood at 17.91 billion rupees, accounting for 0.75 percent of the total banking industry’s assets.

Union Bank has limited geographical reach, with 21 branches as at end-December 2010, but with plans to operate over 55 branches by 2013, using the new capital infusion, RAM Ratings said.

An initial public offer for 375 million rupees of stock in Union Bank drew record subscriptions of 84 billion rupees or 225 times last week, making it the largest oversubscription ever in the island.

RAM Ratings said loan expansion and the lower overall cost of funding had helped dilute a deep discounted bond (DDB) yielding a relatively low return of four percent the bank had got during a restructuring in 2003.

The revamp allowed it to transfer 600 million rupees of cash and 978 million of bad debts to a special-purpose vehicle.

As a result, the bank’s net interest margin (NIM) widened from 3.48 percent in 2009 to 4.73 percent in 2010.

"Excluding the impact of the DDB, the bank’s margins would have been in line with its peers’," RAM Ratings said.

As at end-December 2010, Union Bank’s return on assets clocked in at 1.90 percent, against 1.01 percent the year before, and lower than those of its peers.

"The bank’s margins are envisaged to improve as its loan books expand and further dilute the DDB’s effects, coupled with prospectively lower funding costs due to new capital infusion," the rating agency said.

"However, its overall profitability will be constrained by increased overheads arising from its branch expansion, as well as the gestation period needed for the new branches to break even."

Union Bank’s gross non-performing-loan (NPL) ratio is higher than its peers’ owing to slower loan growth due to lower demand for credit and delinquencies of a few large loans amid the weak macro economic climate in 2008 and 2009.

Union Bank’s gross NPLs had increased from 366.42 million rupees as at the end-December 31, 2008 to 866.70 million as at end-September 2010 causing the gross NPL ratio to rise from 4.91 percent to 9.30 percent.

"The jump in the gross NPL ratio was precipitated by the bank’s concentrated loan book as top 20 loans took up 38.85 percent of the loan base as at end-September 2010,' the statement said.

This was reflected in the NPLs with the top 20 NPLs accounting for 76.53 percent of gross NPLs.

"Union Bank’s efforts to rein in NPLs are bearing fruit," the rating agency said.

NPLs receded to 794.28 million rupees as at end-December 2010 enabling Union Bank’s gross NPL ratio to improve to 8.24 percent.

"The improvement in the bank’s gross NPL ratio had been driven by more recoveries, lower incidences of new NPLs as the economy improved, and the expansion of its loan books," RAM Ratings said.

"We expect the same factors to underscore further improvement in its asset quality."

RAM Ratings said 385 million rupees of NPLs had been restructured by end-December 2010, and should be returning to the “performing” category over the next 3–6 months.

If the rescheduling exercise is successful, the bank’s gross NPL ratio is expected to decrease to five percent.

"Union Bank’s funding and liquidity positions are deemed to be adequate," the statement said.

The bank’s funding base is dominated by deposits (73.00 percent as at end-December 2010).

Union Bank’s statutory liquid asset ratio clocked in at 36.31 percent as at end-December 2010, well above the regulatory minimum of 20 percent.

"On the other hand, its deposit base tilted towards more expensive time deposits and certificates of deposit," the statement said.

"This is reflected by the bank’s ratio of interest expenses over interest-bearing liabilities, which is higher than its peers’.

"However, we note that the bank’s dependence on these higher cost funding has been receding as time and certificate of deposits took up 67.51 percent of the deposit base as at end-September 2010.

This was lower than 76.07 percent recorded as at end-December 2009.

At the same time, Union Bank’s deposit base was relatively concentrated as top 20 depositors made up 28.67 percent of its total deposits.

Union Bank’s capital adequacy is deemed healthy by the rating agency.

Its tier-1 risk-weighted capital-adequacy ratio (RWCAR) and overall RWCAR clocked in at 28.59 percent and 28.97 percent as at end-September 2010 after a 1.94 billion rupee private placement exercise in June 2010.

This has also strengthened the bank’s buffer against adverse movements in its asset quality, as measured by its ratio on net NPLs to shareholders’ funds, which stood at 13.37 percent as at end-December 2010.

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Sri Lanka Dockyard Dec net up, annual profit dips

Feb 28, 2011 (LBO) - Colombo Dockyard's December 2010 quarter net profit more than doubled to 739 million rupees from a year ago despite flat sales while annual profits fell as repair work suffered from competition, a statement said.

The Sri Lankan listed ship builder's December 2010 quarter net was up 123 percent compared with the same quarter a year ago although sales were flat at 3.7 billion rupees, according to a stock exchange filing.

The yard, which books profit on vessel delivery, delivered the second of a pair of passenger vessels for an Indian government customer in October and had warned profitability could dip this year owing to the effects of recession and growing competition.

Earnings per share for the December 2010 quarter at Colombo Dockyard, a unit of Japan's Onomichi Dockyard Company, rose to 10.80 rupees from 4.85 rupees the previous year.

Colombo Dockyard revenue from ship repair fell sharply to 974 million rupees in the December 2010 quarter from 1.6 billion rupees the previous year while revenue from ship building shot up to 2.7 billion rupees from 1.9 billion rupees.

In the financial year ending December 31, 2020, net profit fell 3.3 percent to just over two billion rupees from the previous year while sales rose 7.5 percent to 14.5 billion rupees.

Annual earnings per share were 30.40 rupees compared with 31.45 rupees in 2009.

Revenue from ship repair fell sharply to 4.2 billion rupees in the 2010 financial year from 6.7 billion rupees the previous year while revenue from ship building shot up to 9.6 billion rupees from 5.6 billion rupees.

In October, when the yard delivered the passenger ferry for India's Lakshadweep islands, managing director Mangala Yapa had warned profitability could dip this year owing to the effects of recession and growing competition.

Yapa said the yard's order book for new buildings was full but it faced tough competition especially from Chinese yards in the repair business.

Dockyard's accounts showed that the Employees Provident Fund had increased its stake in the firm to 14.5 percent, making the pension fund managed by the state the yard's second biggest single shareholder.

State-run Sri Lanka Insurance Corporation had also raised its stake with its life fund and general fund holding to 10 percent of Dockyard, making it the third largest shareholder.

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Sri Lanka’s Inflation Accelerates to Highest Level in 25 Months

By Anusha Ondaatjie

Feb. 28 (Bloomberg) -- Sri Lanka’s inflation accelerated to a 25-month high in February, which may curb the central bank’s scope to lower interest rates again.

Consumer prices in the capital, Colombo, rose 7.8 percent from a year earlier after gaining 6.8 percent in January, the statistics department said on its website today. That compares with the 7.4 percent median estimate in a Bloomberg News survey of eight economists.

Central bank Governor Ajith Nivard Cabraal cut borrowing costs for the third time in seven months in January to support economic growth, contrasting with neighbors from India to China that have raised them to damp inflation. Cabraal this month kept rates unchanged, saying the island faces “less” price pressure than neighbors even after floods damaged crops.

“Sri Lanka needn’t get too worried because it isn’t yet facing demand-driven inflation,” Waruna Singappuli, head of research at NDB Stockbrokers Ltd. in Colombo, said before the report. “But the authorities may take a break on rate cuts and keep a check on supply-side price gains by other means like more tax cuts.”

The government raised electricity tariffs by 8 percent for users of more than 120 units from January, while reducing rates by 25 percent for institutions including government hospitals and schools.

Heavy rains in January and early February caused floods in the north and east of the island nation, destroying rice and vegetable crops, displacing more than one million people and killing about 50, according to government estimates.

Food Shortages

Sri Lanka may face shortages in vegetables and pulses, K.E. Karunathilaka, the top bureaucrat in the agriculture ministry, said Feb. 7. The island needs to watch inflation pressures from supply shortages “closely,” Cabraal said earlier this month.

To help keep prices under control, Sri Lanka in January almost halved import taxes on milk powder to 28 rupees (25 cents) a kilogram and slashed customs duty on gasoline by 67 percent to five rupees a liter.

Sri Lanka’s economic outlook is good, and the floods will cause a “temporary” rise in prices, Brian Aitken, the International Monetary Fund’s mission chief for Sri Lanka, said Feb. 18.

The island is aiming to accelerate economic growth to 8.5 percent in 2011 and 9 percent in 2012 from an estimated 8 percent expansion in 2010, Cabraal said last month.

Sri Lanka’s next monetary policy announcement is scheduled for March 8.

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

To contact the editor responsible for this story: Stephen Foxwell at

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John Keells Tea Report : Fair demand for Ex-Estate teas

The Western Quality season, which is witnessed in the first quarter of the year has been badly disrupted due to erratic weather conditions.

Unseasonal weather which on more than one occasion produced extremely heavy rainfall has so far not enabled estates in the Western region to produce teas with seasonal character.

It would appear that the overall quality from this sector will be disappointing, unless there is an immediate change in the weather.

In the meantime weather conditions on the Eastern sector which experienced heavy rainfall at the commencement of the month has abated, with much brighter weather being reported.

However the unusually heavy rainfall has taken a heavy toll on crop intakes with some factories shutting down operations and diverting leaf to other factories for economic reasons.

The 1.1 mkgs. of Ex Estate teas on offer met with fair demand. A few bright Western BOP and BOPFs sold well on special inquiry, whilst the others were barely steady. Nuwara Eliya BOP and BOPFs were selectively dearer with excellent demand for FBOP and Pekoe1s.

Uva BOPs were firm, where as the BOPFs were marginally lower.

Low Grown CTC PF1s were Rs 20 lower whilst the High and Medium PF1s advanced Rs 10 There was improved demand for the brokens.

The 3.4 mkgs. of Low Growns on offer this week met with widespread demand. It is evident that the unrest in the Middle East and also North Africa has not affected the tea purchases at the Colombo Auctions. In the Leafy category the bold Pekoes appreciated quite sharply with most Syrian and Russian buyers bidding strongly.

The OP and OPAs too continued its bullish trend.

The top end of the BOP1 and OP1s saw a slight market correction, whilst the Below Best and stalky varieties maintained previous levels. In the small leaf category FBOP and FBOPF1s once again met with better inquiry with prices appreciating marginally, however the Tippy sorts shed several Rupees.

There was excellent demand by Russia, Iran, Iraq, Libya and Syria, whilst Dubai, Jordon, Saudi Arabia and Middle Eastern markets too lent useful support.

After the heavy rains that were experienced in the Low Grown planting districts the weather has changed from one extreme to another with very hot and humid conditions being experienced.

Crop intakes have not shown any significant improvements, hence the volumes on offer for the future auctions would not see any drastic changes.

Western Teas

A few select Best BOPs sold well on special inquiry, other good invoices were barely steady, Below Best and plainer varieties declined Rs 5 to Rs 10.

A few Select Best BOPFs sold well on special inquiry, other good invoices declined Rs 10, Below Best and plainer varieties were firm to irregular.

Medium BOPs were irregularly dearer. BOPFs were barely steady.

Nuwara Eliya Teas

A few bright BOPs and BOPFs advanced Rs 10, others were firm irregular.

Uva Teas

BOPs were firm whilst the BOPFs were marginally lower. Uda Pussellawa BOPs and BOPFs were firm to irregular.

CTC Teas

Low Grown CTC PF1s declined Rs 15 to Rs 20 BP1s were firm to easier. High and Medium PF1s advanced Rs 10 BP1s gained Rs 15 to Rs 20.

Low Growns

Fair demand. Select Best OP1s declined Rs 5 to Rs 10, Best types too were lower by Rs 10 to Rs 20, Below Best and poor sorts were firm to Rs 5 to Rs 10 lower at times.

Select Best BOP1s were firm to Rs 5 to Rs 10 dearer, however Best types declined sharply by Rs 20 to Rs 30, Below Best and poor sorts eased Rs 10 to Rs 20 Select Best along with the Best OPs appreciated Rs 5 to Rs 10, Below Best and poor sorts maintained last levels. Select Best OPAs were irregularly dearer by Rs 5 to Rs 10, however the Best types were irregularly lower by Rs 5 to Rs 10, Below Best and poor sorts were firm. Select Best Pekoes gained Rs 10 to Rs 20, the balance too were dearer by Rs 5 to Rs 10.

Shotty Pekoe1s shed Rs 20 to Rs 30 following quality, however the Best and Below Best types were irregularly dearer by Rs 5 to Rs 10, poor types were firm. Select Best and Best BOPs moved up Rs 5 to Rs 10, Below Best types were firm, poor types gained Rs 5 to Rs 10.

Select Best and Best BOP. SPs maintained last levels, Below Best types shed Rs 5 to Rs 10, poor types were barely steady. Select Best FBOPs maintained last levels, Best and Below Best types were irregularly lower to last by Rs 5 to Rs 8, poor types gained Rs 5 to Rs 10. Select Best FBOPF1s maintained last levels, Best and Below Best types were lower by Rs 5 to Rs 8, poor types gained Rs 5 to Rs 10 Select Best tippy varieties maintained last levels, Best and Below Best types were lower to last, poor types were barely steady.

Off Grades Select Best and Best liquoring FNGS1s depreciated Rs 10, Below Best and poorer sorts eased by Rs 10 to Rs 15. Select Best and Best BMs appreciated Rs 10, Below Best and poorer sorts were firm to dearer by Rs 10. All BPs were irregularly dearer by Rs 5.

All Low Grown FNGS appreciated Rs 10 to Rs 15 and more at times. Select Best BOP1As were firm to dearer by Rs 10 to Rs 15, Best and Below Best were firm on last levels, poorer sorts however was easier by an average of Rs 5 and more at times.

Dust Select Best Dust1s were firm. Best and Below Best Dust1s appreciated Rs 10 to Rs 15 at the commencement of the sale but declined Rs 5 to Rs 10 during the closing stages, poorer sorts were firm.

Clean secondaries maintained last levels whilst the balance gained Rs 10 to Rs 15.

Best Low Grown Dust and Dust1s gained Rs 10 to Rs 15 whilst the balance too gained Rs 15 to Rs 20.

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Dry weather hurts Kenya's Jan tea output

Kenya tea production fell a record 4.5 percent to 35.9 million kg in January compared with the same month a year ago due to hot, dry weather, while exports also fell, the Kenya Tea Board (KTB) said on Thursday.

KTB data showed exports by the world's biggest exporter of black tea fell 14 percent to 33.6 million kg in January.

Sales at the Mombasa auction fell three percent to 22 million kg.

Tea was the top foreign exchange earner in east Africa's biggest economy last year when it raked in $1.2 billion.

"Lower sales were attributed to less buying interest particularly by Egyptian packers during the last three auctions of the month owing to political unrest in Egypt," KTB said in a statement.

KTB said it expected Egypt to reclaim its place as lead importer of Kenyan tea in coming months after former President Hosni Mubarak stepped down following nationwide anti-government protests.

The average price for Kenyan tea at the Mombasa auction ticked up to $3.18 in January from $3.0 a year earlier.

Tea prices at this week's auction edged up on demand from Egypt and Pakistan.

Best BP1s sold for $3.52-$3.90 which was slightly higher than the $3.50-$3.86 fetched at last week's sale, Africa Tea Brokers (ATB) said in a report. (Reuters)

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HNB’s new Head is a queen!

Top professional and former career Central Banker Dr. Ranee Jayamaha is to be appointed as the Chairperson of Hatton National Bank (HNB), the country’s second largest private sector bank.
Jayamaha’s appointment will be following the retirement of HNB’s iconic figure Rienzie T. Wijetilleke next month.

No formal announcement has been made yet but banking circles were buzzing with the news.

Along with Jayamaha, the HNB Board will also see two more new faces in the form of former public and private sector personality and top professional Mano Tittawella and top civil servant Dr. Willie Gamage.
All appointments have been cleared by the Central Bank, the Daily FT learns.

Several State funds hold a collective stake of 22% with SLIC (Life Fund) holding 12% followed by EPF (7.58%) and NSB (2.34%).

Business tycoon Harry Jayawardena-controlled companies have an estimated holding of 15%. Other major shareholders of HNB include Brown and Company (5.5%) and Sohli Captain (4%.)

The appointment of three new faces to the HNB Board is following the retirement of an equal number, including Wijetilleke.

The current Board of Directors of HNB comprises Rienzie T. Wijetilleke (Chairman), R. Theagarajah (Managing Director and CEO), Pamela Cooray, D.H.S. Jayawardena, M.V. Theagarajah, R.K. Obeysekere, R. Seevaratnam, N.G. Wickremeratne and Rose Cooray. HNB Board’s Nomination Committee comprises Wijetilleke (Chairman), Jayawardena, M.V. Theagarajah and Obeysekere.

Jayamaha currently functions as an Advisor on Banking to President Mahinda Rajapaksa. She left the Central Bank a few years ago as Deputy Governor, a post to which she was appointed in April 2004. She was also the first woman Deputy Governor in the Central Bank’s history.

Dr. Gamage is Secretary to Ministry of State Resources and Enterprise Development, whilst he was also an Additional Secretary to the Ministry of Defence and Chairman of Strategic Enterprises Management Agency (SEMA).

Tittawella has extensive experience in financial services having served as Chairman of People’s Bank as well as stints at Merchant Bank of Sri Lanka and Lanka Securities prior to taking over at PERC. He was also a Senior Advisor Senior Advisor to President Chandrika Bandaranaike Kumaratunga in addition to being Senior Director General at President’s Office during her tenure.

Tittawella is currently Chairman and CEO of Apex Consultancy, a management consultancy firm in Melbourne Australia as well a Corporate Finance Associate of the Bahrain-based MTI.

Dr. Jayamaha had an illustrious career at the Central Bank for over 30 years. She served in the Economic Research Department, Banking Development Department and as Assistant to the Governor in charge of several policy and operational departments.

A former product of Devi Balika Vidyalaya, Colombo, she holds a Special Degree in Money and Banking from the University of (Ceylon) Peradeniya, Master’s Degree in Economics from the University of Sterling, Scotland UK and Ph.D. in Monetary Economics from the University of Bradford UK.

On secondment by the Central Bank she has served as the Secretary to the Presidential Commission on Finance and Banking, Advisor to the Financial Sector Reforms Committee Ministry of Finance and Special Advisor (Economics) at the Commonwealth Secretariat, London. She also served as the Monetary Board-appointed Director on the Boards of Fitch Rating Lanka Ltd. and Lankaclear Ltd.

Internationally, she served as the coordinator of the Working Committee on the Development of Payment Systems Guidelines of the Bank for International Settlements (BIS) Basle, Switzerland and the Committee on Corporate Governance on Banking and Financial Institutions of the Commonwealth Association for Corporate Governance.

Dr. Jayamaha has provided leadership for the successful implementation of payments reforms and several key projects under the Central Bank’s modernisation programme.

She was the Secretary to the Audit Committee and has contributed towards transforming the Central Bank’s financial reporting framework to international accounting standards.

In recognition of her contribution, the Central Bank has awarded Dr. Jayamaha the ‘Outstanding Service Award’ for the year 2002.

She has authored many articles in reputed international and local journals in the areas of economics, banking and finance, debt management, etc.

The retiring Wijetilleke has served as HNB Chairman for over five years and prior to that as the Managing Director and CEO for 17 years. Late last year he completed 50 years in banking.

He is also Chairman of HNB Assurance PLC, Sithma Development Ltd., and Sunshine Holdings Plc. He is also a Director of Nawaloka Hospitals Limited, Ceylon Biscuits Limited and Mahaweli Reach PLC. He was former Chairman and Director of the Colombo Stock Exchange and also former Director of DFCC Bank.

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Union Bank record IPO, SEC moves to boost market – Brokers

The twin developments of the record-breaking IPO of Union Bank of Colombo as well as progressive moves by the Securities and Exchange Commission (SEC) last week are expected to fuel further investor momentum this week, two brokers said.

“With the beginning of a new month, we expect the week ahead to be back on track, reporting strong turnovers and healthy share volumes, hoping our investors to be alert on the Banking sector counters, which are expected to gear up along with Union Bank (breaking record, estimated to be over 225 times oversubscribed),” Asia’s Research Team said.  Union Bank’s Rs. 375 million IPO had drawn 30,100 applications worth Rs. 84.3 billion as of Friday after its closure on Thursday.

It noted that last week headwind struck the bourse which was sliding down during the early part, to revive marginally towards the later part wrapping up on a mixed note.  Trading witnessed active retail buying, on low to mid caps, whilst a prominent shift of interest from plantations, to a chicken run.

As the fundamentally strong counters currently being reasonably priced, we expect our investors to be prudent on their long term investments, whilst taking a cautious approach, especially on speculative favourites, on short positions.

Acuity Stockbrokers said trading at the Colombo bourse was dominated by retail interest in selected stocks however, on thin volumes with the indices closing on a mixed note.

“We expect the current sentiment and momentum to continue into the week ahead,” Acuity added.
It also said that an estimated 50 IPOs are planned in 2011 with approximately 10 to enter the market before April and the resulting increase in market capitalisation will strengthen the bourse.

“The SEC has also announced plans for a growth focused regulatory framework for 2011, while reducing the 10% share price band restriction from 15 to 10 days and 50% credit issue also being waived. Minimum free float requirements and regulations on private placements prior to IPOs is also expected to strengthen investor confidence,” Acuity pointed out.

Year to date the Colombo Bourse has gained by 16.2% making it Asia’s best performing.

NAMAL gets new Board

PIONEER unit trust manager National Asset Management Ltd. (NAMAL) has got a new Board of Directors following the sale of 70% stake in it by Distilleries Company of Sri Lanka to a consortium involving Union Bank of Colombo and Ennid Capital Ltd., for Rs. 455 million.

The new appointments were approved by the NAMAL Board at its meeting last week.

The new Directors who will represent Union Bank and Ennid Capital are Ajita de Zoysa, Alexis Lovell, Anil Amarasuriya, Jitendrakumar Warnakulasuriya, Yiu Joe Toh, Khoo Siew Bee and Avancka Heart whilst DFCC, which continues to own a 30% stake in NAMAL, will be represented by Nihal Fonseka and Tyronne de Silva with Manohari Gunawardena as Alternate Director to Fonseka.

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Retail rally continues

The ASPI gained 39.13 points or 0.51 percent during the week’s trading to close at 7711.62 while the MPI lost 72.81 points amounting to 1.01 percent to close the week at 7242.16.

Total turnover for the week was Rs 12.71 billion with daily averages amounting to Rs 2.54 billion as against the daily average turnover recorded last week of Rs 3.89 billion recording a decline of 34.8 percent.

Trading volumes have been thin this week with a 17.25 percent decline in volumes traded.

Turnover has been driven by activity in the Banks, Finance and Insurance sector which has contributed 20.35 percent to total turnover for the week amounting to Rs 2.58 billion led by investor interest in Sampath Bank and Commercial Bank.

The Manufacturing sector accounts for 19.26 percent of the weekly turnover amounting to Rs 2.45 billion while the Diversified sector counters also have recorded a 15.89 percent contribution to the week’s turnover.

Trading on JKH amounts to 6.7 percent of the week’s turnover value with the share trading within a price range of Rs 289 and Rs 297 to close the week at Rs 290. Market activity by volume was led by the Manufacturing sector amounting to 31.94 percent while the Banking sector counters amounted to 23.33 percent of total volumes.

The oil palm sector saw heavy retail interest during the past few weeks with the sector indices continuing to record substantial gains.

Carson Cumberbatch Plc and Bukit Darah Plc announced its intention to make a voluntary offer to the minority shareholders of Shalimar, Goodhope, Selinsing and Indo Malay.

Colombo Pharmacy topped the list of Price Gainers this week, with the share price rising by 110.6 percent over previous week’s to close at Rs 3,790.90 from opening price of Rs 1800.00. Union Chemicals also recorded a 108.1 percent gain to close at Rs 667.00 which was the highest price recorded.

The other top gainers for the week were Industrial Asphalts, Convenience Foods and Eastern Merchants.

Top losers for the week were Guardian Capital recording a 78.7 percent loss to close at Rs 1,942.20 from last week’s close of Rs 9,100.

CIT closed the week at Rs 490.00 losing 20.2 percent from the previous week’s close of Rs 614.00 while Selinsing also recorded a 15.4 percent loss in its trading price to close at Rs 1100.00.

Foreigners remained sellers this week although with less pressure as week on week net selling dropped by 60.8 percent, with the daily average net selling of Rs 171 million compared with last week’s daily average selling of Rs 438 million.

Average foreign purchase decreased by 74.9 percent to record daily average purchase at Rs 186 million as against last weeks Rs 745 million and average selling witnessed a decrease of 69 percent against last week with 1.7 million recorded this week compared to last week’s Rs 1.18 million.

Piramal Glass saw continued investor interest with the scrip being the most traded this week with 57.3 million shares changing hands adding on a value of Rs 572.87 million to Turnover.

The share was also one of the top gainers this week gaining 17.39 percent to close at Rs 10.80. SMB Leasing, Richard Pieris, Laugfs Gas and Nawaloka also were retail interest during the week.
Point of view

Trading at the Colombo bourse this week was dominated by retail interest in selected stocks however, on thin volumes with the indices closing on a mixed note. We expect the current sentiment and momentum to continue into the week ahead.

An estimated 50 IPOs are planned in 2011 with approximately 10 to enter the market before April and the resulting increase in Market Capitalisation will strengthen the bourse.

The SEC has also announced plans for a growth focused regulatory framework for 2011, while reducing the 10 percent share price band restriction from 15 to 10 days and 50 percent credit issue also being waived.

Minimum free float requirements and regulations on private placements prior to IPOs is also expected to strengthen investor confidence.

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Over 2.7 million tradings recorded: CSE remains vibrant Market capitalization tops Rs 2600 billion:

Charumini de Silva

The Colombo Stock Exchange (CSE) has been a significant contributor to the economy. As at February 25 this year the market grew by 16.2 percent with the CSE All Share Price Index (ASPI) recording 7,711. 6 while an all time high market capitalization Rs 2,600.6 billion was also recorded upto February 14, the CSE said.

These activities indicate the substantial growth of the capital market over the past two years as investor confidence is high and stable. The number of tradings, sector market capitalization’s and turnovers has also shown an impressive improvement.

According to Richard Pieris Securities statistics, the number of total tradings in the CSE during the past nine months up to December 31, 2010 has grown from 1,113,385 to 2,759,688 tradings recording a 148 percent growth compared to the corresponding period in 2009. Total tradings from January 1 to February 24 has recorded as 1,003,006.

The investment trust sector tradings have topped increasing from 15,595 to 226,453 recording a growth of 1,352 percent during the first nine months ended December 2010.

Footwear and textile sector tradings grew by 1,008 percent, while IT sector accounted an increase of 626 percent during the same period.

In the past nine months ended in December 31 last year the Banks Finance and Insurance sector recorded the highest turnover with Rs 144,688,459,594. The average daily turnover this year in this sector is recorded as Rs 813,686,863 million.

As at December 31 the CSE indexes grew considerably. The ASPI recorded 96 percent growth, Milanka Price Index (MPI) 83 percent, Banks Finance and Insurance 145 percent, Beverage, food and tobacco 104 percent, Chemicals and pharmaceuticals 91 percent, Construction and engineering 37 percent, Diversified 98 percent, Footwear and textile 100 percent, Healthcare 21 percent, Hotels and travels 80 percent, Investment trusts 11 percent, IT 114 percent, Land and property 41 percent, Manufacturing 79 percent, Motors 240 percent, Oil palms 144 percent, Plantations 110 percent, Power and energy 45 percent, Services 156 percent, Stores and supplies 321 percent, Telecommunications 30 percent and Trading 467 percent.

The highest sector market capitalization as at December 31 was recorded from the Banks, finance and insurance sector with Rs 489,116,806,382, accounting a growth of 150 percent.

Stores supplies and Investment trust sectors followed with 321 percent and 268 percent growth in market capitalization, in the same period.

As at February 24 market capitalization of Bank finance and insurance stand at Rs 551,045,561,861 the Richard Pieris Securities said.

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Trillium sees upward surge in apartment market

Trillium Residencies has announced that only a few apartments are remaining for sale in its newly-completed Sunset west wing, now on sale.

Tharanga Thenuwara, Assistant General Manager (Sales and Marketing) for Trillium, said: "We are delighted to see an upward surge in the apartment market and are buoyed by the high level of interest in our Sunset West Wing apartments. Industry experts are forecasting this positive trend to continue on the back of an end to the war and enhanced political stability in the country."

"Trillium Residencies has been a landmark achievement for us and we are proud to declare that of the 60 apartments at the Sunset West Wing, only 8 apartments are now available for sale. We were successful in selling and transferring deeds of 52 apartments to the owners within a short span of 10 months from April 2010. I would like to take this opportunity to invite potential home owners to be a part of this legendary condominium project, which is already home to many celebrities and professionals," Thenuwara added.

"We look ahead with great optimism to unveil the final wing of Trillium Residencies' East Wing to prospective buyers very soon, the completion date for which is December 2011!" she adds further

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PDL ventures into hydropower

By Keishara Perera

Property Development PLC (PDL), which is the property arm of Bank of Ceylon, has ventured into hydropower, acquiring 94.6% stake of Koladeniya Hydropower Pvt (Ltd) (KHP), according to the company's Annual Report, which also happens to be the first to be submitted to the Colombo Stock Exchange for 2010.

PDL Chairman Dr. Gamini Wickramasinghe said they were actively pursuing opportunities for prospective investments in the power generation sector. KHP has all rights to set up a mini Hydropower plant in Ambagamuwa, Ginigathhena.

However, Wickramasinhge refused to disclose the size of the investment and the manner  in which PDL raised funds to purchase the 94 percent stake.

The annual report said, the company is also looking at opportunities in the real estate development sector as well.

PDL's December 31 (2011) net profit stood at Rs. 253 million, when compared  with Rs. 292million in 2009. Earning Per Share for the period was 3.83, reflecting a decrease from the previous 4.44.

During the third quarter, net profit after tax indicated an increase of Rs. 76 million compared to Rs. 73million, the previous year. Earnings Per Share was 1.15 as against 1.11 in 2009.

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Holdings profits boosted by retail operations

CT Holdings Plc, formerly Ceylon Theatres Group has recorded a post tax profit of Rs.350 million for its December quarter, which is an increase of 180 percent compared with the same quarter of the previous financial year.

The company's profitability was boosted by the excellent performance of its retail and wholesale distribution sector which contributed Profit-After-Tax of Rs.474 million for the year, against Rs.217 million made during the previous year.

The quarterly Earnings per Share (EPS) were Rs.1.97 against the Rs.0.70 of the corresponding quarter.

The firm's food processing sector has also recorded an after tax profit of Rs.350 million against a Rs.227 million made in the previous year.

However, the profits of the ceramic and tile subsidiaries of CT Holdings were flat. Recently in a measure to consolidate its Ceramic business, the company amalgamated its two ceramic manufacturing companies, Lanka Walltile Plc and Lanka Walltile Meepe Limited.

For the nine months up to December, CT Holdings 'net profit rose 155 percent to 625 million compared with the same period last year. The EPS for the period was Rs.367.

Apart from retail, food processing and ceramics and tile sectors, the firm has interests in real estate, restaurants, plantations, packaging and entertainment.

Recently, Cargill Ceylon Plc, the retail subsidiary of CT Holdings entered into the soft liquor business in the country through the acquisition of McCallum Breweries.

Page family controlled Odeon Holdings Ceylon has a majority stake of 43 percent of the company while its Chairman Anthony Page holds 9.3 percent.

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Seylan net profit up 177 % to Rs.1.2 billion

*     Basic EPS of Rs.4.75 against Rs.2.89 in FY 09

*     Gross NPL of 21.4%; Net NPL 14.9%

*     Cost income ration of 61%

*     Provisions of Rs.1.5bn against Rs.2.4bn in FY 09

*     Deposit base of Rs.110.7 billion

"Seylan Bank, further establishing its position as the country's 'turn around brand' has completed an exceptional Financial Year 2010 (FY2010), recording a post tax profit over Rs.1 billion for the year, the bank's interim financial reports filed to the Stock Exchange show.

For the financial year 2010, Seylan's net profit rose 177 percent to Rs.1.2 billion from a year ago while the December quarter profits increased 1373 percent to Rs.390 compared with the corresponding quarter of the pervious year.

The main growth drivers of the company's performance were healthy interest margins, strong growth in its loan book, reduction in cost base and lower provisions helped by high loan recoveries.

Seylan's income during the period increased by 9.5% to Rs.10.4 billion mainly due to the healthy interest margins of 5.7% and the strong growth in the loans and advances portfolio by 13% to stand at Rs.91 billion at the end of FY2010.

Furthermore, the quality of the loan portfolio improved dramatically with Non Performing Loan (NPL) ratios improving substantially over the financial year. The Bank's Gross and Net NPL ratios stood at 21.4% and 14.9% respectively, well below what was reported at the end of FY2009.

Seylan Bank historically had much higher NPLs than its peer banks. However, with the changes that took place in the management in early 2009 and its recent performance suggest that the bank is aligning itself with the others in the industry. According to analysts the Seylan will see further improvements in NPL

  • Seylan net profit up 177 percent to Rs.1.2 billion
  • ratios as they expect higher recoveries going forward.

The operating costs of Seylan reduced marginally Year on Year (YoY) as a result of aggressive cost control measures taken by the bank since 2009.  This has contributed in improving the cost to income ratio of the bank significantly to stand at 61% in FY2010 compared to 68% in FY2009.

In Sri Lanka the banking sector cost to income ratio stand around 60% much higher than its regional peers who manages to maintain cost income ratios of around 40%- 45%. Analysts believe that Seylan is well positioned to improve on this measure further in FY2011.

However the highlight of the year for Seylan has been the drop in provisions during FY2010 and sharp increase in recoveries. The specific provisions of the bank during the 12 month period stood at Rs.1.5 billion compared to Rs.2.4 billion in FY2009.

Meanwhile the recoveries shot up by 66% to Rs.1.1 billion. Banking experts said Seylan is showing signs of a strong recovery with critical factors such as loan growth, cost efficiency and loan book quality moving in the right direction.

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Sunday, February 27, 2011

Rubber prices on a historic high


Natural rubber prices are on a historic high and increasing in the global markets due to surging demand in Asia, and short supply due to heavy rain in the main producing countries. Market sources said that speculation too is a reason for the high price.

Recently, Colombo auction prices escalated to a record high of TPC1X Rs. 700/Kg, Sole Crepe Rs.800/Kg and RSS close to Rs.600.

On February 22, auction prices slightly dropped due to some credit restriction for importers in China, the main natural rubber importer, market sources said. China has become the world’s largest rubber consumer surpassing the US.

The global rubber price increase is fuelled by high demand for tyres. Recovery in the global economy with a large number of cars produced in China, Korea and India, has sharply increased the demand for tyres but supply has not increased to meet demand, market analysts said. However, analysts said that increase of crepe rubber prices to this level is not healthy in the long run. Now crepe rubber is over 100 percent more expensive than synthetic rubber and this will lead to manufacturers moving to synthetic rubber they said.

Analysts said that this trend will continue for a long time and this is a great opportunity for Sri Lanka, if the country can extend rubber cultivation and increase production.

Growing political instability in the Middle East will lead to high oil prices and as a result the price of synthetic rubber too will increase. The International Rubber Study Group (IRSG) has projected that by 2020 there will be a three million tonne shortfall of natural rubber in the world. Projected demand and supply by 2020 is 13.5 million tonnes and 10.5 million tonnes.

Most of the traditional rubber growing countries are not in a position to increase their capacity by a large amount. Vietnam and Ivory Coast are the only countries that have plans to increase supply.High prices for rubber has prevailed for several years and has been an incentive to growers as well as tappers.

The industry faced a crisis due to shortage of tappers but today the situation has changed, growers said. High rubber prices will help boost the rural economy and already small scale growers and tappers are earning a significantly higher income.

R. Samarasena, a rubber tapper in Kegalle who gets 50 percent of the latex for his labour said now he can earn over Rs. 1000 a day if his share is two kg of rubber.

A rubber smallholder said that the cost of production of rubber is around Rs. 150/Kg and the industry has become lucrative.

To derive benefits from the opportunity, Sri Lanka should extend its rubber plantations immediately and there is potential in the country, a planter said.

The government’s focus is on the Dry Zone, specially in the Moneragala district and the Eastern province.

RRI has developed new clones to suit the dry zone and they are successful. Harvesting of 250 acres in the Eastern province started this year.

The yield from the existing plantations have increased significantly due to new clones and technology introduced by the RRI. In 2005, the total rubber production increased by six percent and production increased by 32 percent due to use of rain guarding. Tapping in abandoned lands have also commenced as a result of higher prices.

Ten years ago the average production per hectare per year was 800-900 Kg and today the average production has increased to 1050 Kg/Ha/year.

Yield of new clones introduced by RRI is higher as 2500Kg/He/year.

The latest clones such as RRISLC 205,203 and 1200 are high yield and suitable for the dry zone.

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Sunday Business News Articles







Saturday, February 26, 2011

Many companies to introduce shares to CSE, rather than make public offers

By Hiran H. Senewiratne

Sri Lanka’s booming stock exchange expects around 50 new firms to be listed this year and market analysts say many of these new listings would be through an introduction of shares rather than through initial public offerings (IPOs).

The Securities and Exchange Commission (SEC) recently said around 50 IPOs are lined-up for this year, which include 35 finance companies seeking to satisfy a Central Bank regulatory requirement requiring them to go public this year.

However, Director/General Manager Ceylinco Stock Brokers, Sriyan Gurusinghe said that many companies will go for listings by introduction rather than going for IPOs, including some of the finance companies.

"The Central Bank requirement is only to be listed on the Colombo Stock Exchange (CSE), and not necessarily go for an IPO," Gurusinghe said.

According to Gurusinghe the purpose of going for an IPO is to raise funds or capital for a company. This would broaden the ownership of the company and certain entrepreneurs or individual businessmen are not in favour of this.

Securities and Exchange Commission Director General Malik Cader speaking to The Island Financial Review said it would be entirely up to the companies to decide whether or not they wanted to go for an IPO or make an introductory listing of shares.

Some of the state-owned entities lined up for IPOs next year include national carrier SriLankan Airlines, its catering unit SriLankan Catering and Litro Gas, brokers said.

According to the SEC sources the IPO boom could lift CSE’s market capitalisation to Rs. 3 trillion (US$ 30 billion) this year.

Due to the low interest rates and the strengthening of the Sri Lankan rupee against the US dollar, several individuals and companies will come in to the stock market probably after April. This would give an additional boom to the market, financial analysts said.

The Central Bank has forecast Sri Lanka’s US$ 43 billion economy will grow 8.5 percent this year and this is expected to create an active stock market in the region.

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Market recovers towards end of the week as regulators ease off price band rules

During the week the All Share Price Index (ASPI) gained 39.13 points to close at 7,711.62 points, while the Milanka Price Index (MPI) declined by 72.81 points to close at 7,169.35 points. The daily average turnover was SLRs. 2.5bn compared to SLRs. 3.2bn last week and the week ended with foreign buying amounting to SLRs. 934mn whilst foreign selling was SLRs.1.8 bn.

Indices edged down on Monday as retail investors booked profits after the recent rally. ASPI closed down 55.3 points while MPI declined marginally by 2.84 points with a total turnover of SLRs.2.2bn. Biggest contribution to the turnover was made by Brown & Company with more than 500,000 shares trading between SLRs.290.00 and SLRs.308.00. Commercial Bank posted a turnover of SLRs.141mn which included a crossing of 185,000 shares at SLRs.277.00 while a crossing of 950,000 shares at SLRs.55.00 of Kelani Tyres took the counters' total turnover to SLRs.135mn.

Market slumped further on Tuesday as ASPI lost 102.45 points while MPI closed down 78.94 points. Total turnover for the day amounted to SLRs. 2.1bn to which the biggest contributions came from the conglomerates Aitken Spence and John Keells Holdings. Aitken Spence topped the list with a turnover of SLRs.198mn which included three crossings amounting to 778,000 shares at SLRs.710.00. John Keels Holdings posted a turnover of SLRs.176mn which included three crossings of 100,000 shares each at SLRs.292.00.

On Wednesday the indices recovered as both ASPI and MPI closed up 34.12 points and 20.75 points respectively with a total turnover of SLRs.2.4bn. John Keells Holdings posted the day's largest turnover of SLRs.319mn with more than 1mn shares traded. This included five crossing totaling to 781,600 shares at SLRs.291.00 while two crossings amounting to 257,000 shares of Cargills (Ceylon) PLC at SLRs.234.00 took the counters total turnover to SLRs.149mn. Laugfs Gas also made a significant contribution with approximately 2.6mn shares traded as the counter closed up 8% at SLRs.51.30.

Indices moved in the opposite directions on Thursday as ASPI closed up 35.56 points while MPI closed down marginally by 5.07 points with a total turnover of SLRs.2.8bn. Primal Glass Ceylon PLC was highlighted as the most heavily traded counter as well as the counter with the highest contribution to the day's turnover as approximately 22mn shares were traded generating a turnover of SLRs.224mn, while the counter closed up 7.37% at SLRs.10.20. John Keells Holdings posted a turnover of SLRs.197mn which included two crossings amounting to 317,300 shares at SLRs.292.00. Sampath Bank and Lanka Walltile PLC also made significant contributions as the two counters posted turnovers of SLRs.179mn and SLRs.167mn respectively.

Market surged on Friday as the regulators eased the rules regarding the price bands imposed on shares using an undisclosed formula. ASPI gained 128.20 points while more liquid MPI declined marginally by 6.71 points. Total turnover for the day amounted to SLRs.3bn with Primal Glass Ceylon PLC making the highest contribution for the second consecutive day with a the counter posting a turnover of SLRs.186mn. Sampath Bank generated a turnover of SLRs.176mn which included two crossing amounting to 295,000 shares at SLRs.291.50 and another crossing of 200,000 shares at SLRs.300.00. Environmental Resources Investments PLC also made a significant contribution to the day's turnover as over 1.8mn shares were traded generating a turnover of SLRs.173mn while the counter closed up SLRs.2.70 at SLRs.91.00.

As per the Directive issued by the Securities and Exchange Commission of Sri Lanka, with effect from 1st of March 2011, the period for which the price band is applicable has been reduced to 10 business days from the earlier applicable period of 15 business days.

 Further the requirement for a 50% up front cash deposit prior to purchases of securities under the price band has also been lifted.

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Carson, Bukit in unique share swap with Malaysian plantation firms

Carson Cumberbatch PLC (CCPLC) and Bukit Darah PLC (BDPLC) yesterday announced that they have made offers to the minority shareholders of the four Malaysian Plantation Companies namely Selinsing PLC, Indo-Malay PLC, Good Hope PLC and Shalimar (Malay) PLC (referred hereto as “MPCs”).

The terms of the offers are such that CCPLC and BDPLC (Offerors) offer to purchase all of the issued shares of the MPCs, i.e. the minority shareholdings which are not already owned by CCPLC, BDPLC or Goodhope Asia Holdings Ltd (GAHL), the plantation sector investments holding company of the Carsons group incorporated in Singapore. CCPLC and BDPLC currently hold 52.79% and 35.19% of the issued shares of GAHL respectively and together owns approx. 88% of GAHL.

Accordingly, CCPLC and BDPLC together with GAHL acting in concert with CCPLC and BDPLC continue to hold 75%‐85% of the four MPCs, through GAHL.

As consideration under the offers, CCPLC would offer 60% of the consideration by way of BDPLC shares held by CCPLC and 40% of the consideration would be offered by BDPLC by way of CCPLC shares held by BDPLC.

CCPLC and BDPLC have appointed ‘Corporate Services (Private) Limited’ (an affiliate company of            F. J. & G. De Saram, Attorneys-at-Law and Notaries Public), as the Trustee of the Intermediary-Trust set up to facilitate the proposed Offer.  Accordingly, the shareholders of the MPCs would be required to surrender the shares held in the MPCs, for which the Offer is accepted, to ‘Corporate Services (Private)

Limited’, the Intermediary-Trustee. In turn, shares offered as consideration by CCPLC and BDPLC would be transferred through the said Intermediary-Trustee to the shareholders of MPCs.

The value of any fractional allotment of shares of CCPLC and BDPLC to shareholders of the MPCs would be settled in cash.

For the purpose of this Offer, the shares of MPCs, CCPLC and BDPLC are priced as per the Table indicated below. These Offer prices are based on the Volume Weighted Average Price (VWAP) of the shares during the month of February 2011 (from 1 February, 2011 to 21 February, 2011 being the most recent practicable date before announcing the offer). In determining the offer prices various valuation methodologies such as VWAP, Net Asset Value, Earnings based value and Discounted Cash Flow based value were considered. The selected offer prices are the highest prices for the MPCs based on the different valuation methodologies considered above.

The above offers are a part of the internal restructuring exercise announced by CCPLC in early 2009, with respect to its long term plan to consolidate the plantation sector investments of the Carsons group under a regional holding company. Goodhope Asia Holdings Ltd. (GAHL) is the holding company incorporated in Singapore for this purpose.

CCPLC, as announced to the market through the CSE and notified to its shareholders from time to time, has taken various steps in implementing the said restructuring. Accordingly, in around 2009 ‐2010 the controlling interests held by CCPLC in the Malaysian Plantation Companies namely Selinsing PLC, Indo-Malay PLC, Good Hope PLC and Shalimar (Malay) PLC (referred hereto as “MPCs”) as well as interests of some of Carson’s Indonesian plantation companies were transferred to GAHL.  Having acquired the shares held by the Carsons group in the Indonesian plantation companies, in January 2011, GAHL also acquired a minority holding in those companies thereby increasing GAHL’s holding in the Indonesian plantation companies to approximately 90 ‐ 95% in each of the Indonesian plantation companies. Thus, all upstream plantation sector companies have now been brought under the umbrella of GAHL. Hence, GAHL now has control over a larger plantation sector asset base, both in Malaysia and Indonesia.

As the next step in the restructuring process, in a bid to further consolidate the plantation sector of the Carsons group, the directors of CCPLC and BDPLC, have decided to acquire the shares of the MPCs that are currently not held by the Carsons group of companies, through a series of offers made to the shareholders of the MPCs. As consideration for these offers, shares of CCPLC and BDPLC would be offered to the shareholders of the MPCs, enabling them to remain within the Carsons group. The shareholders of the MPCs who accept the Offers would still benefit from the plantation sector returns and also additionally enjoy the benefits of holding shares of a diversified conglomerate engaged in the business of investing in Oil Palm Plantations with exposure to a larger plantation base in Indonesia and Malaysia, Beverage, Investment Holdings, Real Estate and Leisure sectors.

As set out above, the ultimate intention of CCPLC and BDPLC in the internal restructuring of its plantation sector is to consolidate all the plantation sector investments under GAHL. Therefore, subsequent to the completion of the aforesaid offers, BDPLC and CCPLC intend to eventually transfer the MPC shares acquired in the Offers to GAHL, which currently holds the controlling interests of the MPCs.

The directors of CCPLC and BDPLC are of the opinion that the consolidated entity, GAHL, would be in a stronger position to leverage on its larger assets base to support the envisaged expansion and development plans of the plantation sector which returns are expected to enhance the value of the shares of CCPLC and BDPLC. The consolidation will also enable the Carsons group to derive greater capital, administrative and operational efficiencies.

MPC shares at present are very thinly traded and provide very little liquidity to the shareholders. The Offers would provide the opportunity for MPC shareholders to replace their relatively illiquid shares of MPCs with the shares of CCPLC and BDPLC which command a higher value, higher market capitalisation and have a greater marketability in the CSE. With the transfer of CCPLC and BDPLC shares to the minority shareholders of the MPCs, the shareholding of CCPLC and BDPLC will be broad based further enhancing their liquidity. On the completion of the offers, the rationale and need for the MPCs continuing to be listed on the CSE will be assessed. In the event CCPLC and BDPLC receive the expected level of acceptances, it is likely that the MPCs will consider delisting.

MPCs going on the strength of their smaller individual plantation estates will not be able to raise funds to the magnitude that is needed to support the expansion of large scale plantation projects, hence presently offers limited growth prospects. Therefore, growth potential of earnings to MPC shareholders is limited. Further, as small standalone companies, MPCs may not be able to attract suitable joint venture partners or strategic alliances as a basis to support growth and expansion.

GAHL, with a larger plantation assets base, would be able to raise the required finances to undertake further expansion and development in the upstream plantations as well as integrate with industry value chain via downstream opportunities. GAHL has the scale of operations to attract suitable joint venture and strategic alliance partners. This will further afford opportunities for returns from the plantation sector to be enhanced and thereby benefit its shareholders viz CCPLC and BDPLC.

GAHL owns and manages over 80,000 Ha. (combined land of MPCs is only 1,400 Ha.) of palm oil plantation land bank in Indonesia and Malaysia through which it is able to generate economies of scale, operational efficiencies and cost competitiveness. It has plans to further increase its plantation operations both within and outside Indonesia and Malaysia. Hence, GAHL is in a better position to generate synergies from the plantations operations. The benefits of the same will flow through to MPC shareholders through CCPLC and BDPLC shares. Further, the enhanced scale and diversified geographical locations of the plantation assets under GAHL will reduce the risks and volatility of plantation returns to CCPLC and BDPLC shareholders.

By holding CCPLC and BDPLC shares which have a diversified array of business portfolios the MPC shareholder can generate a more secure and enhanced return. MPC shareholders, who were subject to significant commodity risks, will continue to reap the benefits of upside movements in commodity prices whilst mitigating the downside movement in prices through the performance of other sectors of CCPLC and BDPLC. This will afford the opportunity for the MPC shareholders to minimise their risk and derive sustainable growth in shareholder wealth, via the holdings of CCPLC and BDPLC shares.

Carson Group stocks soar again

THE announcement of consolidation saw share prices of Carson Cumberbatch and its main shareholder Bukit Darah and related companies soar yet again yesterday.

Bukit rose by Rs. 110.70 to close at Rs. 1,380.40 after peaking to a high of Rs. 1,430, Carson by Rs. 51 to Rs. 676.10 (it peaked to Rs. 700), Good Hope by Rs. 61.90 to Rs. 1,348.90, Selising by Rs. 150 to Rs. 1,100 (it peaked to Rs. 1,290) Indo Malay by Rs. 66.10 to Rs. 1,345, Shalimar by Rs. 55 to Rs. 975 (it peaked to a high of Rs. 1,098), whilst Guardian Capital rose by Rs. 647.40 to Rs. 1,942.20.

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Big jump on CSE on Carson’s announcement All Share up 128 points, Milanka edges down

The All Share Price Index of the Colombo Stock Exchange moved up sharply yesterday by 128.20 points (1.69%) while the Milanka declined a marginal 6.71 points (0.09%) on a turnover of Rs.3 billion, up from the previous day’s Rs.2.89 billion, with 108 gainers ahead of 87 losers largely on account of some announcements made by the Carson’s group.

Carson’s and Bukit Darah offered to buy up minority shareholdings not owned by them in four Malaysian plantation companies for part cash and part shares in the Singapore based plantation holding company sharply sending up prices of the shares of many Carson’s companies.

Watapota was the highest gainer, up Rs.647.40 to close at Rs.1,942.20 on 3,200 shares closely followed by Colombo Pharmacy, not a member of the Carsons group, up Rs.634.60 to close at Rs.3,850 on 19,000 shares traded between Rs.3,330.10 to Rs.4,100.

Among the Carson’s companies Selinsing was up Rs.150 to Rs.1,100 on 1,400 shares, Bukit Darah up Rs.100.30 to Rs.1,370 on 34,700 shares, Indo Malay up Rs.64.70 to Rs.1,344 on 3,400 shares, Good Hope up Rs.62.90 to Rs.1,349.90 on 1,100 shares, Carson’s itself up Rs.49.90 to Rs.675 on 65,800 shares and Ceylon Brewery up Rs.37.90 to Rs.390 on 1,800 shares.

"It was a huge jump," Prashan Fernando of Acuity Stockbrokers said speaking of yesterday’s state of play on the CSE. "The market was seriously up largely on account of the Carson’s announcements with Colombo Pharmacy too moving up sharply."

Piramal Glass was the day’s biggest business generator with nearly 17.5 million shares done between Rs.10.30 and Rs.11 gaining 60 cents to close at Rs.10.80 while Sampath followed gaining Rs.4.60 to close at Rs.293.90 on nearly 0.6 million shares done between Rs.288 and Rs.295.

Brokers said that Glass was heavily retail driven while Sampath included three crossings at prices of Rs.291.50 and Rs.300.

Environment Resources Investments where there was both high net worth and retail play occurred saw over 1.8 million shares done between Rs.90.20 and Rs.98 gaining Rs.2.10 to close at Rs.91 while Lanka Walltiles, where there were two crossings, moved up Rs.4 to Rs.174 on over 0.9 million shares done between Rs.168 and Rs.174.90.

People’s Leasing Finance was up Rs.9.80 to Rs.90 on nearly 1.6 million shares done between Rs.81.50 and Rs.92.50 while JKH dropped Rs.1.50 to Rs.289 on nearly 0.9 million shares traded between Rs.289 and Rs.294.50 including three crossings at Rs.290.

Citrus Leisure gained Rs.2 to close at Rs.88 on 1.4 million shares traded between Rs.84.50 and Rs.94 with a million share parcel at Rs.92 among the trades with the balance seeing retail play.

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Carson likely to de-list subsidiaries following offers

In a bid to further restructure and ultimately de-list its Malaysian plantation subsidiaries, Carson Cumberbatch Plc (CCPLC) and Bukit Darah Plc (BDPLC) have made voluntary offers to minority shareholders of the Malaysian plantation companies (MNCs), namely, Selingsing Plc, Ondo-Malay Plc, Good Hope Plc and Shalimar Plc.

"The offers are such that CCPLC and BDPLC agree to purchase all issued shares of the MPCs, i.e. the minority shareholdings not already owned by CCPLC, BDPLC or Goodhope Asia Holdings Limited (GAHL), the plantation sector investments holdings company of the Carson group incorporated in Singgapore" Carson group said in a Stock Exchange filing.

CCPLC and BDPLC currently hold 52.79 and 35.9 percent of issued shares of GAHL respectively and together own 88 percent of GAHL. CCPLC and BDPLC together with GAHL hold 75-88 percent of the four MPCs through GAHL.

The Carson group expects to pay the shareholders of the 4 MPCs who would agree to surrender to the offer with the shares of CCPLC and BDPLC.

"CCPLC would offer 60% of the consideration by the way of BDPLC shares held by CCPLC, and 40% of the consideration would be offered by BDPLC by the way of CCPLC shares held by BDPLC" the filing said.

However, the value of any fractional allotment of shares of CCPLC and BDPLC to shareholders of the MPCs, would be settled in cash.

For this purpose , shares of MPCs, CCPLC and BDPLC are priced, based on the Volume Weighted Average Price (VWAP) during the month of February 2011.

The offer price for Selinsing shares is Rs.1099 while Rs.1421 is offered for Indo-Maly shares. The price offered for Goodhope shares was Rs. 1186 while Shalimar shares were  priced at Rs.887. The estimated share price of CCPLC was Rs.662 and for Buckit it was Rs.1203.

The filing said, in determining the offer prices, various valuation methodologies (VWAP, Net Asset Value, Earnings based value and Discounted Cash flow based value) were considered.

"The selected offer prices are the highest prices for the MPCs based on the different valuation methodologies considered above" it noted.

The filing further said, in the event CCPLC and BDPLC receive the expected level of acceptances, it is likely that the MPCs will consider delisting.

Following the restructuring, Carson group expects to expand its plantation business via GAHL.

"GAHL owns and manages over 80,000 hectares of palm oil plantation in Indonesia and Malaysia, through which it is able to generate economies of scale, operational efficiencies and cost competitiveness. It has plans to further increase its plantation operations both within and outside Indonesia and Malaysia" the filing said.

Agro Asia Pacific Limited, a unit of GAHL, which in turn a group company of Carson group has recently offered to fully acquire Arani Agro Oil Industries, Premium Vegetable Oils Sdn Bhd and Premium Fats Sdn Bhd for RM 117.95 million from Premium Nutrients Bhd.

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People’s Leasing announces Rs. 567 m Rights with warrants

People’s Leasing Plc’s Board yesterday resolved to recommend to shareholders a Rights Issue of one new ordinary share for every two held and three warrants for every 10 rights shares subscribed.

The Company will raise Rs. 567.8 million via issuance of the Rights Issue (22.71 million shares at Rs. 25 each). Its current stated capital is Rs, 819.9 million whilst its public float is 11.49%.

Funds via Rights is to boost capital adequacy to be in compliance with directions issued under the Finance Companies Act and to expand People’s Leasing business activities to strengthen financial position and profitability, the Company’s Managing Director D.P. Kumarage said.

The warrants entitlement will see an issuance of 6.81 million warrants exercisable in 2012 at Rs. 30. Each warrant will have the right to be converted into one ordinary share at the time of conversion. The warrants will ensure a fund flow worth Rs. 204.4 million in 2012.

The proposed Rights Issue with warrants attached is subject to regulatory and shareholder approval.

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Sri Lanka, rising star of Asian economy, model for others to emulate – Fox News

Which country had the best performing market in 2010? FOX NEWS asked in a special report on Sri Lanka. ‘Guess what? It was not the United States of America! The best performing stock market was Sri Lanka’s CSE which was up 96% for the year,’ they said.

Calling Sri Lanka ‘the rising star of the Asian economy,’ FOX NEWS said Sri Lanka has demonstrated economic resilience amid a global economic downturn, emerging as a success story for others to emulate.

Sri Lanka has now returned to peace and prosperity, the report said adding that the government has devoted millions of dollars to develop and restore life in the areas affected by the decades-long conflict.
‘Most people displaced by the fighting have returned home as the country focuses on healing and reconciliation’.

FOX NEWS also refers to a US Senate report which called the victory against the LTTE one of the few times in history that a terrorist group has ever been defeated.

Stating that Sri Lanka is Asian’s oldest democracy, it adds: ‘continuing its rich traditions of democracy and political freedom, elections were held in 2010 throughout the entire country for the first time since 1983’.
FOX NEWS also states that Sri Lanka is a ‘hub of religious tolerance’.

‘The natural beauty of its tropical forests, beaches, mountainous landscapes and cultural heritage make it a place of unrivaled splendor that has long been praised by travel writers,’ it adds.

Following is the FOX NEWS transcript:

Sri Lanka is an island nation with a rich cultural heritage and a written history of over 2500 years. Nestled below the Southern tip of India, Sri Lanka is home to 21 million ethnically diverse people including Sinhalese, Tamils, Muslims, Burghers and Malays.

It is Asia’s oldest democracy and a hub of religious tolerance.

Sri Lanka is also the rising star of the Asian economy situated at the centre of the global shipping routes. It plays a vital role in international trade linking East and West.

The country is famous for producing and exporting its world-renowned Ceylon teas, clothing from Asian global manufactures, rubber products, jewellery and gems such as blue sapphires and Ceylon rubies as well as coconut products, spices and a variety of herbs.

Its stock market has in recent years been one of the world’s best performing exchanges. Sri Lanka’s economy is currently on the rise as it is expected to grow by 7.2% in 2010. Amid a global economic downturn, Sri Lanka has demonstrated economic resilience emerging as a success story for others to emulate.
Tourism plays an increasingly important role in Sri Lanka’s booming economy and Sri Lanka has been recognised as a world class tourist destination. The natural beauty of its tropical forests, beaches, mountainous landscapes and cultural heritage make it a place of unrivaled splendor that has long been praised by travel writers.

In January 2010 the New York Times named Sri Lanka its top tourist destination. National Geographic also named Sri Lanka one of its 25 best trips of the year. The magazine found that; “Sri Lanka is finally starting to look like its old self, a peaceful destination where surf lineups are nonexistent despite world class waves and centuries old tea estates are lined with mountain bike –ready trails.”

During the first half of 2010, tourist arrivals doubled compared to the same time the previous year. In May 2009 Sri Lanka prevailed in decades-long conflict against the terrorist group the Liberation Tigers of Tamil Eelam (LTTE). A US Senate report called the victory one of the few times in history that a terrorist group has ever been defeated.

Sri Lanka has now returned to peace and prosperity. The government with the assistance of foreign aid has devoted millions of dollars to develop and restore life in the areas affected by the decades-long conflict. Roads and other infrastructure have been rebuilt and social development programs are in place and more are being planned. Most people displaced by the fighting have returned home as the country focuses on healing and reconciliation.

Sri Lanka gained universal suffrage in 1931 and Independence from the British in 1948. Continuing its rich traditions of democracy and political freedom, elections were held in 2010 throughout the entire country for the first time since 1983.

Sri Lankans went to the polls twice in 2010, first to elect a President and then a new Parliament. The people of Sri Lanka re-elected President Rajapaksa with a record mandate. In the April Parliamentary elections, the President’s party won two-third of the votes, a resounding victory for the President’s policies. Since May 2009 Sri Lanka has experienced a tremendous political, social and economic transformation that has benefited and rejuvenated all Sri Lankans. The country is committed to peace, reconciliation and prosperity for all with the hope of making Sri Lanka the Wonder of Asia.

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Sampath Leasing and Factoring plans aggressive growth and expansion

Sampath Leasing and Factoring Limited, a fully owned subsidiary of Sampath Bank PLC, established in 2005 announced its financial results for 2010, which signaled a turnaround in its activities, laying the platform for future growth and expansion of its activities.

The company made a pretax profit of Rs. 165.21 million and a post tax profit of Rs. 137.65 million for the 12 months ended 31 December 2010.

The first step in expansion of its activities commenced in July 2009, when Sampath Bank added impetus to the capital structure of the company with a fresh infusion of Rs. 300 million as equity capital. The re-engineering of the company’s core processes laying greater emphasis on key performance indicators was a contributory factor for the growth in profitability.

The recovery of delinquent accounts with a view to reducing the value of Non-Performing Advances (NPAs) resulted in the value of NPAs declining by Rs. 124 million for 2010, resulting in a significant clean up of the Advances portfolio and a vast improvement in the company’s NPA ratio.

The company has now orchestrated a strategic plan over a three year time horizon that seeks to achieve an exponential growth phase in its activities through a process of branch/channel expansion, aggressive and segment defined marketing programmes, diversity in product lines and improvement of credit delivery speed and processes.

Harris Premaratne, Managing Director of Sampath Bank PLC and Executive Director of the company commented:

“The company would concentrate on two fund based product categories in the main, namely the distribution of finance leases and factoring of book debts. With regard to finance leases, the target segment would envelope the Small and Medium sized Enterprises (SMEs) and corporate executives.”

“We also go for reach and extending of tailor made structured facilities for a broad spectrum of the market and asset categories viz; cars, three wheelers, low valued commercial vehicles, agricultural equipment and other commercial vehicles.

With regards to factoring we strive to offer a comprehensive service at flexible rates and reaching out to a client segment that goes beyond the SME sector. Factoring services would also include value additions such as professional sales ledger administration and debt collection.  In order that both products are at congruence with the banks overall plans a clear line of marketing platforms have been defined,” he added.
The company recently opened two branches in Peliyagoda, and Kalmunai and has set plans for further branch/channel expansion. The aggressive growth of the loan book has commenced through product lines and channel expansion.

With regards to leasing the company has tailor made products for different segments/assets. These include ‘Lifestyle’ leasing aimed at corporate executives, ‘TUK TUK’ leases aimed at the three wheeler market, ‘Agri’ leases targeted at the agricultural sector and ‘Senin Cash,’ an asset backed loan scheme. Factoring facilities have been branded under the name and style of ‘Support cash’. The principal aim of the company is to now strive to attain a market ranking that places itself within the top five players by 2014.

The company further added weight to its Board of Directors recently with the appointment of two new non-executive directors who have had extensive experience in the finance leasing and factoring industry. The two included Asoka Sirimanne (former Managing Director of Mercantile Leasing Limited) and Dr. Dilanjen Soysa (former Managing Director of Commercial Leasing Limited and a Past President of the Leasing Association of Sri Lanka).

The rest of the Board of Directors includes Arthur Senanayake (Chairman, Sampath Bank), Sunil Wijesinghe (Deputy Chairman, Sampath Bank), Harris Premaratne (Managing Director, Sampath Bank), Lakshman Hettiarachchi and Anoja Karunaratne.

In addition to the board structure the company receives the advisory services of many of the bank’s senior management, which includes Aravinda Perera, Deputy Managing Director of Sampath Bank and Ranjith Samaranayake, Group Chief Financial Officer of Sampath Bank.

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Malwatte Valley-managed Sarnia Group reaches unprecedented heights

In the past, quantity took precedence over quality in the mindset of the plantations in the Uva District. Focusing more on the need to keep the cost of production at the lowest level possible, plantation companies generally aimed at making substantial profits through focus on quantity.

However, Sarnia Estate, managed by Malwatte Valley Plantations Plc, took the road less travelled.  Sarnia, whose sale average was one of the lowest in the region at the time, took up the challenge of developing quality and quantity simultaneously. This was during the year 2004 when strategic changes were being made to manufacture teas with a completely different standard in comparison to their counterparts in the Uva region.

Plucking a high quality green leaf, Sarnia Estate exploited the bright liquoring characteristics inherent to any Uva estate and produced light liquoring leafy and semi leafy type teas throughout the season maintaining the black and neat leaf appearance required by the trade. This enabled Sarnia Estate to attract very high prices for every grade of tea produced, reaching a record sale average of Rs. 203.53 in the year 2005 with only 531,905 kg sold within that calendar year.

This was the first occasion any tea estate in Uva achieved a cumulative sale average above Rs. 200 per kg. Since then, year in and year out, Sarnia proved both parameters can be achieved simultaneously whilst maintaining top sales averages. The Estate was also able to gradually increase the volumes of teas produced.

Following the new trend set by Sarnia Estate, many other Uva RPC estates and private tea factories too changed their strategies to emulate similar standards which subsequently resulted in a boom for Uva leafy and semi leafy teas. This enabled these estates to increase their profit margins over the last few years, benefiting the tea small holder community with much higher green leaf rates.

In the year 2010, the estate recorded the best ever sales average of Rs. 380.91 and also produced the highest quantity of tea sold by a single factory in excess of 1 million kilo grammes, having sold 1,195,614 kg in the category of Uva Medium Teas. This was truly a dream come true for many of those in the trade who contributed to Sarnia’s success.

The liquoring teas of Sarnia such as FBOP / FBOP1, BOP1, Pekoe1, OP1 and FBOPF1 are some of the finest Up Country Teas made in the island and is keenly sought after by a range of well reputed tea buyers at the weekly Colombo Tea Auctions. This tremendous buyer support enabled Sarnia to attract no less than 63 Top Prices at the auctions. This achievement is truly a rare feat displayed by an estate in the history of tea plantations.

The key figure behind the success of Sarnia is Anura Weerakoon, Director, Range 2, Malwatte Valley Plantations Plc. He has built a dedicated team that exhibits commitment, courage and determination. In turn, his team is well supported by the top management of Malwatte Valley Plantations Plc led by W L Bogtstra, Managing Director and Lucas Bogtstra, Director-Operations. Some of the produce manufactured by Sarnia Group is marketed by the produce brokers John Keells Plc.

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Ceylon Leather joins MBC for Guinness record

Ceylon Leather is out to set a Guinness world record by manufacturing the largest leather cricket ball in the world to coincide with the 2011 ICC Cricket World Cup, the biggest ever sporting event in Sri Lanka. This unique leather ball has been on display at Sri Lanka's inaugural match at the Mahinda Rajapaksa International Cricket Stadium at Hambantota. 

Ceylon Leather, a company synonymous with creativity and innovation together with MBC and MTV - one of the dynamic private sector electronic media companies in the country - have come forward to pledge its support to our very own cricketing heroes at the ICC World Cup Tournament by wishing them good luck in a most innovative manner while bringing together the thousands of ardent fans of the Sri Lanka Cricket team. The ball which is made to international standards of a leather cricket ball, has as its core twine thread wound into a ball by the fans at different locations that the ball has travelled to, and has been blessed with chanting of pirith to invoke the blessings of the triple gem. The world's largest ever leather cricket ball has travelled around the country covering all provinces courtesy of MBC and MTV, where cricket fans wound the twine to make it into a giant ball.  "We are a company with many innovations to our credit, and being able to innovate around one of the most loved sports in Sri Lanka - cricket - coinciding with the ICC World Cup is indeed a significant achievement which unites thousands of fans all over the country, who together with Ceylon Leather wish our cricketers good luck" said Sitendra Senaratne-Managing Director, Ceylon Leather.

"We wanted to put Sri Lanka on the world map by recording the world's largest cricket ball in the Guinness Book of World Records, through our One Nation One Cup campaign. In this venture we approached Ceylon Leather, Sri Lanka's leading leather manufacturer to partner with us. Ceylon Leather used their expertise and experience in manufacturing to complete the production of the leather cover according to specifications provided". Said Needra Weerasinghe, Group Director-The Capital Maharaja Organization. "Today the giant ball stands at 5 ½ ft with a circumference of 17ft and 9 inches. We would like to thank Ceylon Leather for partnering with us to make this venture possible" she further added.

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