Financial Times

Business brief

Lankan Govt. seizes TRO funds

A sum of approximately Rs 71 million lying to the credit of the Tamil Rehabilitation Organization (TRO) at the time its funds were frozen, has been transferred to the state, the Central Bank said on Tuesday.
The Bank also warned the public against financial dealings with the TRO, generally perceived as a LTTE-front organisation.

The TRO accounts were suspended in Sri Lanka in terms of the provisions of the Financial Transactions Reporting Act and the Convention on the Suppression of Terrorist Financing Act in August 2006. “Such suspension was carried out on the grounds that the large sums of money received by the TRO from time to time from international non-governmental organizations, individuals, foreign entities and TRO branches in several foreign locations, purporting to be funds for humanitarian projects in Sri Lanka, were, according to intelligence reports, mainly used to finance terrorist activities, and that the money, securities or credits which were lying to its credit were being used or intended to be used for such purposes,” the statement said.

Investigations are yet in progress to trace and forfeit any further funds and assets belonging to the TRO. “Accordingly, the general public is cautioned that they should not have any financial transactions or any other links with the TRO, or with any of its officers, since any involvement including any financial connection with a proscribed organization, is a criminal offence,” the Bank said.

Seminar on “Poland and the emerging economy in the EU”

A high level seminar on “Poland –The Emerging Economy in the EU” is being organized by the Sri Lanka-Poland Business Council, in partnership with the Embassy of Poland in New Delhi and the Export Development Board on December 3 at Hotel Taj Samudra.

It is part of the ‘Poland Days’ Programme organized by the Embassy of Poland and the Hon. Consul General for Poland in Sri Lanka. The objective on the seminar is to create greater awareness of the growing potential existing for developing trade and investment between Sri Lanka and Poland, according to the Council.

Consul for Poland, Ken Balendra is the chief guest while the keynote speaker is Dariusz Karwowski, Commercial Counsellor-Head of Trade and Investment, Embassy of Poland in New Delhi, who will speak on “Business Opportunities in Poland”. Other speakers include representatives of leading Polish business organizations and representatives from the embassy’s Economic Section. Deputy Director- Sri Lanka Tea Board Ranjith Abeykoon, Director Commerce Department Ms. Sonali Wijeratne are among others who will speak.

Fitch on Trade Finance and Investments' National Rating

Fitch Ratings said it has affirmed Sri Lanka's Trade Finance and Investments Ltd's (TFI) National Long-term rating at 'BB+(lka)'. TFI's rating factors its high capitalisation in terms of its size of operations and good profitability. The rating is constrained by TFI's small asset base, limited product diversity and its narrow funding base, the rating agency said.

Three-wheelers accounted for approximately 90% of assets financed at the six-month period ended September 2008 (H109). In 2007, due to emission concerns, the government of Sri Lanka imposed a ban on the imports of two-stroke Bajaj three-wheelers with effct from early 2008, with a further ban on spare part imports from 2011; this restricted fresh imports to just the four-stroke three-wheelers.

Despite the ban, the second hand market for the two-stroke three wheelers remains robust due to perceived cost considerations in maintenance vis-a-vis the four-stroke engine and significant market stocks of spare parts. Fitch expects this demand to ultimately decline and be replaced by the Four Stroke product. Given this context, TFI's loan book shrank by 4.7% in H109, with incremental lending coming from repeat customers. As such, Fitch will monitor the development of the second hand four stroke market and TFI's incremental growth with respect to financing such, and any progress with regard to lending diversification, the agency said.

Fitch on Seylan Merchant Leasing's rating

Fitch Ratings Lanka has affirmed Seylan Merchant Leasing PLC's (SML) National Long-term rating at 'BB+(lka)' saying it reflects its modest financial profile, short operating history and small asset base.
Fitch said in a press release that in February 2007, SML obtained a license to operate as a Registered Finance Company, enabling it to raise fixed and savings deposits from the public. As a result, deposits increased to 57% of the funding base at FYE07. Funding from borrowings decreased to 19% at FYE07 from 75% at FYE06, mainly through the conversion of a majority of promissory notes - hitherto the main source of funding - to deposits. The company has satisfied the statutory liquid assets requirement on deposits since May 2007.

SML's portfolio contracted by 2.6% in FY07 as challenging economic conditions prompted the company to reduce growth. Leases dominated its portfolio at 96% at FYE07, contrary to the growth in hire purchase observed throughout industry. The company's profiability in terms of ROA decreased to 1.8% in FY07 from 2.3% in FY06, which was below the sector's 2.3%, due to higher interest costs and operating expenses, Fitch said.

SML's capital base of Rs 375 million exceeded the minimum capital requirement of Rs 200 million; its core and total capital adequacy ratios of 20.03%, stood above the minimum 5% and 10% thresholds, respectively, at FYE07. Equity/assets decreased to 18% at FYE07 from 19.2% at FYE06, affected by a dividend payout of 65%.

CIMA EGM halts abruptly

An extra-ordinary General Meeting (EGM) of the Chartered Institute of Management Accountants (CIMA) on Tuesday was adjourned even before it started, as the CIMA President announced that there was a 'difference in views’, according to some members who attended the EGM on Tuesday.

"Gowrie Shankar, President CIMA said there was a 'difference in views' but of whom she did not say. She said that she cannot divulge anything and that she cannot also go ahead with the meeting," a member who was at the EGM told The Sunday Times FT.

The EGM was called to discuss the discriminatory and unprofessional way Aruna Alwis, former CIMA Director Operation's suspension case was handled. The member said except for one member, all others (there were about 60 members) agreed to what Ms. Shankar said and after the CIMA Council left, the members started a meeting of their own. "Ms. Shankar did not say who had dissenting opinions, but the guess was that CIMA UK may have put pressure on the local council," he said quoting from the discussion. Mr Alwis was reinstated, but he resigned recently. CIMA Sri Lanka Division CEO Bradley Emerson, (a new position at CIMA Sri Lanka Divison) and his 'suitability' to hold the present position was discussed, according to the member.

Ceylinco Life donates classrooms to 5 rural schools

Hundreds of children from underprivileged rural schools are now studying in better conditions following Corporate Social Responsibility initiatives by Ceylinco Life. The company’s latest Schools Development Project begun earlier this year has to date benefited six rural schools for which the company has built classrooms and donated furniture and other needs, a Ceylinco Life press release said.

Four of these schools, the Saliyapura School in Mollipathana, Ruwanwella Maha Vidyalaya in Ruwanwella, Wegedera Junior School in Maho and Rambakanyagama Vidyalaya in Anamaduwa received new classroom buildings. A fifth school, Thanjanthenna Vidyalaya in Balangoda received a special sound-proof classroom for deaf children, while the Pitarathmale Tamil School in Haputale was provided with a water supply facility, it said.

“We view this project as an investment in the future generation,” Ceylinco Life’s Chief Executive Director R. Renganathan said. “In many remote areas of the country, rural schools are struggling to survive and urgently need help to develop basic facilities.” Mr. Renganathan said that the company’s extensive network of 150 branches continues to identity needy schools in rural areas.

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