Sri Lanka mobile subscribers shrink

June 28, 2013 (LBO) - Sri Lanka's mobile subscriber base has started to shrink, falling by almost a million subscribers in the first quarter of 2013, the first time since the industry began its explosive growth in 1992, data from the regulator showed.
Total mobile subscribers fell 988,337 to 19,335,733 in the March 2013 quarter from December, in an island which has a population of about 20 million people, indicating that large number were users with more than one SIM or subscriber identity module.

Sri Lanka's explosive mobile sector growth began in 1992, when Celltell, a unit of Millicom International Cellular - now Etisalat Sri Lanka - launched South Asia's first mobile service, ending a state monopoly in telecoms.

Mobile subscribers grew, despite high tariffs, with waiting lists of more than 10 years at the state run incumbent.

Competition came when Australia's Telstra launched a second service as a joint venture with state-run Sri Lanka Telecom.

Dialog came in third with digital GSM technology quickly overtaking its analogue competitors.

Fixed access users also fell 3,449,391 to 2,832,464 a trend that first began in 2008, when fixed access users peaked at 3,446,411, data released by the telecom regulatory authority showed.

Both mobile and fixed access firms have been investing in broad band data connections to boost revenues. Fourth generation fixed and mobile wireless technology is now being rolled out.

The telecom regulator said what it called fixed internet subscribers grew from 423,194 to 435,758 during the March 2013 quarter, while mobile internet subscribers grew to 1,069,482 from 942,461.

http://www.lankabusinessonline.com/news/sri-lanka-mobile-subscribers-shrink/361042096

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Sri Lanka's Nawaloka Hospitals Plc in regional chain

June 29, 2013 (LBO) - Sri Lanka's Nawaloka Hospitals Plc will build a 575 million rupee hospital in Negombo, a coastal city north of the capital Colombo as part of a regional expansion, the firm said.
"Each regional hospital will provide all diagnostic facilities with 50 to 70 patient rooms for indoor patient admissions," the firm said in a stock exchange filing.

The hospital will be built through Nawaloka Medicare (Pvt) Ltd, a wholly owned unit, the company said in a stock exchange filing.

http://www.lankabusinessonline.com/news/sri-lankas-nawaloka-hospitals-plc-in-regional-chain/757982063

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LOLC ties up with world giant BRAC to buy control of Nanda Investments

BRAC, one of the world’s largest micro financing providers, entered into a ground breaking strategic alliance with LOLC, one of the largest conglomerates whose core business is financial services, to acquire the controlling interest of Nanda Investments and Finance PLC (Nanda Investments).
This transaction will transfer 90,645,057 shares with a 56.6% stake of Nanda Investments to BRAC with LOLC taking a stake of 33.4%. LOLC is expected to make this equity investment through its fully owned subsidiary, LOLC Micro Investments Ltd.

Nanda Investments yesterday saw 91.2 million of its shares traded between a high of Rs. 9 and a low of Rs. 8.40 before closing at Rs. 8.60, up by 10 cents. The BRAC-LOLC buying was at Rs. 9 per share in a deal worth Rs. 815.8 million. Strike price is above the Net Assets Value per share of Rs. 5.29 as at 31 March 2013.

Nanda Investments is a registered finance company listed on the Colombo Stock Exchange with a lending portfolio of Rs. 290 million and a fixed deposit base of Rs. 88 million. The total assets of the company as at 31 March 2013 were Rs. 663 million.
BRAC is the largest development organisation in the world in terms of the scale and breadth of its operations and was founded 10 years ago in Bangladesh by its Chairman, Fazle Hasan Ahbed.
He is one of the ‘Global Greats’ in the social sector and for his outstanding contribution to social improvement, he has received the Ramon Magsaysay Award, the UNDP Mahbub Ul Haq Award, the inaugural Clinton Global Citizen Award and the inaugural WISE Prize for Education.

BRAC reaches out to the less privileged communities across the globe through microfinance, education, healthcare, legal services, community empowerment and more, catalysing lasting change and creating an ecosystem in which the less privileged have the chance to seize control of their own lives. Through this initiative, BRAC has reached and touched the lives of an estimated 126 million people, spanning across 11 countries in Asia and Africa and the Caribbean.

BRAC, with its 100,000 employees dedicated to spreading antipoverty in the world, focuses on social and financial empowerment of women, healthcare and education, empowering farmers though inclusive financial solutions, not only catering to financial needs, but also improving livelihood and financial literacy among the less privileged.
LOLC Group is one of the largest non-banking financial institutions in Sri Lanka formed in 1980 and pioneered leasing in the country. Within the open economy, the company revolutionised SME financing of income generating. This initiative changed millions of lives of the SME sector and many of them over the last three decades have graduated to the level of medium to large scale enterprises.
With this objective achieved, LOLC moved on with its next objective of reaching the non-bankable micro sector to facilitate financing to empower the micro sector with financial solutions that not only provided the much needed seed capital but to be a partner with interests in sustainable improvement of the livelihood of this community.

LOLC Micro Credit Ltd. (LOMC) was formed with this intention in 2009 along with FMO (The Netherlands Development Finance Company) who has a stake of 20% in the company. LOMC today is one of the largest micro financing institutions in the country, serving more than 160,000 customers and is reaching the poorest of the rural community through its 128 service outlets.
In the medium term, it is expected that BRAC and LOLC will invite Triodos Bank to invest in a stake of 10% and the new shareholder is expected to spearhead the provision of micro funding to fuel portfolio growth.

Triodos Bank is one of the world’s leading sustainable banks formed 30 years ago with the mission of making money work for positive social, environmental and cultural change and transacts only with sustainable companies. The bank has transactions with more than 355,000 customers with 6.8 billion euros under its management. The bank provides financial support for more than 6,000 sustainable enterprises in 40 countries worldwide.

Nanda Investments was founded in 1961 by Sirisena Mallawarachchi and in 1990, Anura Mallawarachchi took over the management of the company as the Chairman. Later, he stepped down and managed the company as Managing Director in line with Central Bank guidelines.
BRAC together with LOLC makes a formidable partnership in acquiring Nanda Investments which is expected to be positioned as a micro finance company to reach the rural community with whom both shareholders are familiar names for sustainable financial solutions.

BRAC will extend its current business model together with the backing of its global business operations platform while LOLC will play a key role in providing the know-how on the local micro credit business. Together with Triodos Bank, this partnership will flourish as a strong microfinance company with a sustainable business model of providing financing to less privileged rural community.

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NDBS tips stock market upturn to persist

NDB Stockbrokers is forecasting the upturn in the stock market to persist aided by lower interest rates and improved corporate earnings.
“The ASPI has gained 28% since our review in May 2012. However, the rise in stock prices of 13% in 2013 (by end of May) is slightly ahead of our expectations. Accordingly we expect a lower rate of appreciation of stock prices in 2013H2 compared to 2013H1. We remain optimistic regarding the prospects in the equity market in 2014 on the premise the interest rates would ease resulting in improved corporate profitability and attraction of investors to equities (from fixed income investments). Therefore, we maintain the bull-run would continue in 2014 to reach our ASPI target of 9,000,” NDBS said in its latest Sri Lanka Equities report.
“We expect a modest increase in profits of 10% to 15% for 2013. With the pickup in economic activity and lower interest rates we expect a robust growth in profits of 20% in 2014. According to our estimates, the broad market is currently trading at a forward P/E of 12x based on 2013 expected earnings. We feel it is attractively priced compared to the regional equity markets considering the optimism and growth expectations in Sri Lanka over the next two to three years,” NDBS said. It also said as expected the market interest rates have come down in most commercial banks by 100 to 200 basis points in May 2013.
“We expect the private sector credit growth to be lower at 15% in 2013 compared to 18% in 2012. The anticipated reduction in the losses made by state owned enterprises (SOEs) and the attempt to reduce budget deficit may contain the demand for credit from Government entities. However, due to the high debt service obligations in 2013 we expect robust Government borrowing,” the company said.

“Accordingly, we do not foresee further significant reductions in interest rates in the short term. Since the government debt service obligations are comparatively less in 2014 further reductions in interest rates could be expected by early 2014 (or late 2013),” NDBS added.
Noting that global bond and equities runs may slow down, the broking firm said the interest rates in USA were maintained at historical lows since 2011 to revive the economy. Therefore, the interest rates were exceptionally low in most parts of the world. Interest rates have gained since May 2013 with the assumption that USA would scale down quantitative easing programs in view of the improving economic conditions (continuing the program eternally was not sustainable).
The global equities which were on a run from 2012 slowed down significantly in May simultaneously. “We do not expect an increase in global interest rates to have a significant upward pressure on local interest rates since the domestic market interest rates are around 5% to 10% higher than global interest rates (and also because the capital account is not fully liberalised). Accordingly, only a steep rise in global interest rates would have an upward pressure on the domestic interest rates,” NDBS said.



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John Keells Land completes super structure of ‘OnThree20’ ahead of schedule

John Keells Land yesterday announced the completion of the super structure of its high-rise apartment complex, OnThree20, ahead of schedule.
Described as “an oasis in downtown Colombo”, OnThree20 is yet another exciting residential development from John Keells Land, the property arm of the John Keells Group.

Strategically located at Union Place, in the heart of Colombo’s bustling metropolis and business district, OnThree20 consists of three towers, each 37 storeys tall, with a total of 475 apartments and enjoys close proximity to hotels, supermarkets, department stores, schools, hospitals etc.
Designed with a mélange of elegance and sophistication, OnThree20 merges the essentials of contemporary living. The apartment complex is elegantly designed to suit the aspirations of modern life where the blend of sophisticated architecture and all contemporary amenities makes it an ideal place to reside in the city.

“We are pleased that we’ve been able to ‘top-off’ this project ahead of schedule. The interior work and the finishes have already started and we will be ready to hand over the units to our customers on schedule in December 2014. There’s a lot of interest in the project and that’s evident from the success we’ve had in our sales. As at now we are 80% sold and moving at a steady pace. We are happy that over the years customers have placed their trust in our brand John Keells Land, which successfully completed several other projects in the city,” said President Property Group of the John Keells Group Suresh Rajendra.

The apartment complex will mainly consist of two to three bedroom units, ranging from 907 sq.ft. to 1312 sq.ft. Among its notable features and facilities are an extensive landscaped garden, a business centre, a walking track, a state-of-the-art gym, a steam room, a squash court, an indoor games room, a large clubhouse, three swimming pools set amid lush greenery and many other amenities, thus making it a ‘green lung’ in the heart of the city.
In addition, the comfort of air-conditioning, hot water, 24 hour security, parking facilities, standby power and a plethora of all other modern amenities make OnThree20 one of the top class condominiums in Colombo. It’s also not a surprise that almost 80% of the apartments have already been sold.

Sanken Engineer Managing Director Ranjith Gunathilake said: “As the No. 01 building constructor in Sri Lanka, with experience both in this country and overseas, we’re happy to partner with John Keells on this design-built contract. We are targeting to complete the construction ahead of schedule. I am proud to report the excellent progress of the project which is a testimony to the wide-ranging experience, the knowledge and the professional expertise of the Sanken team. We’re now confident that we can deliver the final product ahead of schedule, before Christmas 2014.”

The developer of OnThree20, John Keells Land, is a subsidiary of the highly reputed conglomerate John Keells Holdings. This is the third development of the group and more are in the pipeline.
John Keells Holdings is the largest quoted company in Sri Lanka and has a AAA(lka) credit rating from Fitch Ratings Lanka Ltd. It has interests in transportation, infrastructure, leisure, property, consumer foods and retail, information technology and financial services.



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AMW Capital Leasing and Finance ready for expansion

Opens branch in Kiribathgoda with plans to open four more

Registering an annual asset growth of 30% over the past few years, AMW Capital Leasing and Finance is all set to embark on a major expansion drive, opening up five new branches in Colombo and its suburbs by end this year.
Aspiring to spread their operations in some of the major cities in the selected area, the first branch for the year was opened in Kiribathgoda last week and will soon be followed by another branch in Kalutara. Setting up operations at No. 101, Kandy Road, Kiribathgoda, the company expects to be part of, and capture the increasing consumer demand in the locale.

There has been tremendous growth in Kiribathgoda during the recent past and the momentum surely will continue, AMW Capital Leasing General Manager Pramuditha Mendis said.
“During the last few years Kiribathgoda has emerged as one of the key fast growing markets in the country. It has also been noted as a high density area. AMW Capital Leasing and Finance is geared to work with this demand and help with the economic growth, catering to the needs of our customers while expanding our network within the country.”

The core business lines of the company – finance leasing, hire purchases, auto loans, working capital loans, operating leases, micro-finance and deposits mobilisation will be available for customers in Kiribathgoda. Exploring strategic alliances, the company has extended its portfolio to service both AMW products and non-AMW products. “This we believe is one of our key strengths,” Mendis said.
As agents of a range of vehicle brands from the lower end to the highest, the strength of the company comes from its main shareholder, Associated Motorways Ltd. (AMW), the largest and the oldest automotive dealer in the country.

Through this advantageous positioning, AMW Capital Leasing and Finance is able to provide fast and efficient services to those who desire motorcycles through Yamaha, self employment by promoting Piaggio, family vehicle through Maruti – ranking at the top in the most popular vehicle in the country, and high end comfort through Suzuki, Renault, and Nissan.
“Though we are a relatively new player in the market, we have been able to gain popularity among leasing customers within this short span of time due to the perceived value they receive – from the extremely fast service, friendliness, competitive pricing and other value added services. The company benchmarks on providing financial facilities within four hours.”

He noted that AMW Capital Leasing and Finance is a one-stop-shop providing vehicle selection, insurance and financing under one roof. The company also provides the most attractive and affordable monthly rental and requires the least documents to process a transaction.
The customers who avail leasing services from the company are offered range of benefits including special discounts on AMW brands of vehicles, insurance and other services. The customers will have the option to upgrade the vehicle at any given time during the lease period.



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LTL going great guns with more transformer exports

LTL Holdings Ltd., better known in its old name, Lanka Transformers, is one of the very few examples of a private-public partnership that has gone right in this country. The CEB is the major shareholder of LTL. The company was set up thirty years ago to manufacture an annual transformer demand of just 700 for CEB and has now expanded to supply more than 2000 transformers.
What is more striking is that they have made great strides in exports so that “LTL transformers” have today become another internationally known brand for quality transformers.
LTL’s transformer factory at Angulana, Moratuwa today looks like a battle zone. Transformers destined to be installed in many countries are being produced almost round the clock. Some major buyers of LTL Transformers are Jordan, Kenya, Uganda, Botswana, Mauritius, Tanzania, Ethiopia, Australia etc. Factory Manager Rukshika Pathberiya says this year is the most hectic year in his entire career.

In month of June, 30 container loads of transformers will be shipped to Jordan and Ethiopia. Ethiopia’s state owned power utility EEPCO early this year signed up LTL for supply of two electrification projects funded by the World Bank and African Development Bank. These orders are for more than 1,800 transformers in less than six months of production time. This order alone accounts for sale of Rs. 1,100 million and sales to CEB now accounts for less than 50% of its turnover.
Jordan Electricity Company is a customer of LTL since 2004. LTL is a regular participant in international tenders and is a consistent supplier to them. In this month, the largest capacity transformers produced in Sri Lanka for export, 1500kVA capacity, set sail to Jordan.
LTL Chief Technology Officer Dammika Nanayakkara says that the success achieved by LTL in penetrating the transformer markets of not less than 30 countries within a decade did not come easy. “At the beginning when we participated in some tenders, they did not know where Sri Lanka is. Sri Lanka was not a name for high-tech products and they were hesitant. We had to try very hard, including allowing them to install trial transformers in very harsh conditions to prove ourselves. Today we have overcome all such challenges and LTL is a very well known global brand for transformers. We have exported more than 4500 transformers during the last five years with no in-field failures reported during operations so far and this is a direct indication of the high quality of our transformers,” said Nanayakkara.


LTL has had to face tough competition in tenders. Typically there are 30-40 bidders mostly from India and China. LTL rely on better quality although its prices are higher than Chinese or Indian products. LTL transformers are produced to the designs of ABB, a global electrical giant, through a technology transfer agreement. To outwit low labour costs of their competitors, LTL has managed to improve productivity of its factory employees. “They are very happy when we get export orders since they all get productivity bonuses,” says Factory Manager Rukshika Pathberiya.
“We have faced many difficulties, challenges and criticism and for my team that is the best motivating factor, together we will make LTL a global player not only in transformers but in power generation and transmission as well. We can use the talented engineers coming out of universities more and more to give them meaningful employment as real engineers,” stated LTL CEO U. D. Jayawardana.



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Malaysia’s sovereign fund Khazana at near 10% stake in JKH

Malaysia’s sovereign fund Khazana Nasional Berhad Malaysia has increased its stake in John Keells Holdings to near 10% last week.
Via its Special Purpose Vehicle (SPV) Broga Hill Investments Ltd., Khazana bought 10 million shares or 1.16% stake in JKH for Rs. 2.65 billion adding to existing shareholding of 74.6 million shares or 8.7%. It also bought a further 90,000 shares for Rs. 24 million.

In March last year Khazana bought over 8% stake in JKH for Rs. 14.5 billion.
The seller was Janus which has been gradually shedding part of its stake of late. As at 31 March 2013, Janus Overseas Fund which sold 10 million shares on Thursday had 10.1% stake whilst Janus Aspen Series Overseas Portfolio Fund had 2.1% stake. Janus Emerging Market Fund also sold 90,000 shares.
Despite shakedown in Asian equities, foreign investors remained stable with regard to Lankan equities. The fresh investment by Khazana helped.
Last week the year-to-date net foreign inflow remained at Rs. 16 billion. Distilleries saw net buying of 1 million shares worth Rs. 210 million with Deutsche Bank AG on the buying side whilst other stocks which saw net foreign buying were JKH, NDB, Haycarb, HNB, Overseas Realty and Expolanka though relatively smaller in value.
Commercial Bank saw the highest net foreign selling worth Rs. 137.5 million whilst high net-worth investor Indra Silva picked up Rs. 325 million worth of COMBank shares from exiting foreign investors.



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