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Dr. Coomaraswamy said that already the government is acting with foresight; despite not having significant debt maturities in recent months, the government has been raising significant funds to build a buffer stock for payments over the next year.
“So whenever there’s excess liquidity we go to the market and raise and keep the money as a buffer, so that when it comes to the maturity, we are not compelled to raise that money at any market interest rates that prevail at that time. So that’s more to smoothen out that cycle than have volatility,” he said.
The Liability Management Act will allow for the government to raise a certain amount of debt above the limits specified in regular budget appropriations, in order to raise funds for debt repayment and emergency funding.
Sri Lanka also has significant contingent liabilities under the balance sheets of state-owned enterprises amounting to Rs.1.2 trillion, which form a potential debt shock source for the economy, according to the International Monetary Fund.
The Liability Management Act will also act as a contingency plan for this debt shock.
Further, the government had announced its intentions to start rolling over massive foreign debt repayments amounting to US $ 15 billion between 2019 and 2022 earlier in 2018, in order to benefit from lower global interest rates.
Dr. Coomaraswamy further went on to say that the funds earned from state asset sales, such as the Hambantota port and the proposed sale of several non-strategic enterprises, will be saved up for debt repayment.
“Hambantota money for instance will go to a foreign currency account for foreign liability management. Any rupee mobilized through divestitures will go to another account to be utilized for domestic liability management,” he said.
The Swiss multinational is grappling with how to cater to the shifting demands for less sugary and healthier products in almost all markets it operates.
While Nestle is trying to adjust its strategy towards this growing trend in most mature markets, it has so far done very little in emerging markets.
This was proven when the Sri Lankan president himself recently singled out Milo— Nestle’s most popular chocolate malted drink— for its high sugar content.
Launching a walk to mark the World Diabetic Day at Galle Face President Maithripala Sirisena said last Sunday that Milo’s sugar content had increased from 15.0 percent to 16.5 percent within five years and demanded to reduce it to below 5.0 percent or face legislative controls.
The incident perhaps marks the first in the history of Nestle where its product was singled out by a president of a country. The president’s remarks are going viral on social media and the company is yet to respond to the remarks.
Presenting his maiden budget last week Finance Minister Mangala Samaraweera proposed to impose an excise duty of 50 cents per gram of sugar contained in fizzy drinks and other beverages.
This probably was the first time in Sri Lanka’s history where a national budget contained a tangible measure to make its people healthier.
The new tax was aimed at controlling non-communicable deceases such as diabetes and obesity, specially among children.
Nestle globally has been struggling for years to maintain growth and at the beginning of the year it abandoned its 5-6 percent organic growth target as the sales have been anemic.
The multinational is also being pressured by an activist investor to maintain a profit margin and improve performance and the company in September set a trading profit operating margin of 17.518.5 percent by 2020 without extraordinary gains.
Meanwhile, the Sri Lankan unit for the nine months ended September 30, 2017, reported earnings of Rs.45.71 a share or Rs.2.46 billion, down by a sharp 31 percent YOY.
Revenue for the period was Rs.27.6 billion, slightly down by 0.7 percent YOY.
As at September 30, Nestle SA held a 90.82 percent stake in Nestle Lanka PLC.
OPEC ministers are scheduled to hold a crucial meeting in Vienna at the end of November to discuss extending the cuts deal as well as imposing the quota system on countries that have so far been exempted, namely Libya, Iran and Nigeria.
Cartel kingpin Saudi Arabia and the world’s top producer Russia have voiced support for a rollover to the deal, the duration of which remains up for debate.
OPEC Secretary General Mohammed Barkindo said the producers deal had yielded solid results as a “valid response to the worst oil price down cycle in history”.
“There are clear indications that the market is rebalancing at an accelerating pace,” he said at the conference.
Barkindo said the oil market was on track to stabilise because of a drop in crude stocks and a rise in global demand.
The OPEC chief also called on new oil producers, including US shale crude producers, to join a broader agreement to secure the future of energy.
Barkindo said talks were under way to “institutionalise” the cooperation between OPEC and NON-OPEC members to regulate the market.
“Now, we are not talking about OPEC 14 but about the global platform 24,” he said, referring to the number of oil-producing members that signed the production cut accord.
Samaraweera imposed taxes on telecom towers and text messages, and introduced a debt repayment levy of 20 cents per Rs.1,000 bank transaction with effect from April 1 next year.
“Retail investors are not clear about the budget. That is the main reason for the fall. Retail investors were not active at all,” said First Capital Holdings PLC Senior Research Analyst Atchuthan Srirangan.
“There are several taxes that are not decided if they should be borne by the customers or businesses. But eventually they will be passed to the customers, making cost of living higher.”
He also said the release of the government gazzate notification on new Inland Revenue Act will also weigh on the market in the next few days.”
Turnover was Rs.1.29 billion yesterday, more than this year’s average of around Rs.956 million.
The finance minister announced tax concessions worth a monthly Rs.1.5 billion on Wednesday to reduce the cost of living and boost consumption.
Top mobile services provider Dialog Axiata dropped 3 percent, while listed private lender Hatton National Bank fell 1.8 percent.
Finance Minister Mangala Samaraweera announced on Wednesday tax concessions worth a monthly Rs.1.5 billion.
The rupee has slipped 2.7 percent so far this year.
“The entity entered into this transaction in order to comply with the minimum public holding requirement of Softlogic Life Insurance PLC in terms of Rule 7.13.1 of the Listing Rules of the Colombo Stock Exchange,” Softlogic Capital said in a stock market filing.
The shares were divested at Rs.20.70 per share. The share closed at Rs.21.10, yesterday. As at September 30, 2017, Softlogic Life’s net asset per share stood at Rs.5.84. The company has 375 million shares in issue.
As per the same date, the company had 375 million shares in issue with a free float of only 2.77 percent.
The consumer goods segment revenue fell 3.4 percent YOY to Rs.4 billion due to higher domestic inflation and slowing consumer demand according to BRS, while the leisure, travel and aviation segment revenue fell 16.6 percent YOY to Rs.892.5 million.
Group cost of sales accelerated by 9.6 percent YOY to Rs.7.3 billion resulting in gross profits increasing 6.9 percent YOY to Rs.4.4 billion. Administrative expenses increased 13.7 percent YOY to Rs.2.1 billion.
The group asset base at end2q18 expanded to Rs.47.9 billion compared to Rs.47.3 billion at the start of the financial year, due to the group’s leisure arm purchasing a boutique villa brand and investments into expansions in the group’s logistics and healthcare sectors.
Total interest-bearing borrowings increased to Rs.4.9 billion in the same period, from Rs.4 billion.
Meanwhile, during the first half of the 2018 financial year, Hemas’ net profits fell 8 percent YOY to Rs.1.4 billion, while revenue increased 11.6 percent YOY to Rs.23 billion and cost of sales increased 13.2 percent YOY to Rs.14.4 billion.
The second half of the year too will remain challenging for Hemas.
“The overall business environment appears challenging for the second half of the year. We have developed plans to drive improved profitability and address areas of weaker performance identified during the period to September 30, 2017,” Hemas Group CEO Steven Enderby said.
The Esufally family owns just over 64 percent of shares in Hemas both directly and indirectly, shedding a negligible portion of their holdings compared to a year ago.
The Franklin Templeton Investment Funds owns 7.78 percent of the shares in Hemas, down from 9.11 percent YOY.
A new entrant to the top 20 shareholder list during the year was Norges Bank, now owning nearly 3 percent of the shares in Hemas.