India to capture CIS market

Our giant neighbour is rumoured to be stepping up its tea exports.

Officials say that Indian tea exporters have been busy buying large quantities of tea for re- export. India is already the largest supplier of tea to Russia. It is understood that they are positioning themselves to capture a larger portion of the CIS market too.

Already a London based Indian company is buying large quantities of Sri Lankan tea to export to the CIS market.

Other than this, Indian tea exporters have been buying large quantities of tea to feed its fast growing export market. Non of theses teas however, enter India's domestic market.

In addition, Indian businessmen are moving up fast in the trading ladder and in the process is dragging all traditional businesses along with them to new heights.

Asia Siyaka Tea Broker's weekly report said last week that Tea auctions.com a Calcutta based internet company had launched its business to business (B2B) portal to offer on-line commodity auction facility to tea buyers, sellers, brokers and industry associations.

It quoted the company officials saying that their portal allowed tea buyers to bid on a virtual auction floor on the site and that that they planed to invest up to Rs. 12.5 crore into the venture by June this year.

The portal includes an auction engine, real time weather reports, statistics and industry reports and a web directory listing the buyer's , sellers, suppliers and brokers.

The site will also offer global tea prices, trends and other current news as they happen.

However, Sri Lankan companies have been slow to exploit current trends. Sri Lanka's tea exports consist mainly of bulk tea, while Indian companies are increasing their value added exports.

Exports for February consisted of 27 million kilos of bulk tea, up from 22 million in the previous year. Meanwhile, value added exports continued its decline.

Lankan exports to the Indian domestic market itself remained negligible until the Indo-Sri Lankan Free Trade Agreement was signed recently. Under the agreement, Sri Lanka has been allocated 15 million kilos of tea exports to India per year.

CIS continued to be Sri Lanka's largest tea buyer followed by the UAE. CIS upped its purchases from 6.8 million kilos in 1999 to 10. 2 million kilos to the end of February.

Bitter times ahead

The accumulated average tea prices per kilogram to date seem to have picked up over Rs. 20 year on year. However, considering the saturated market conditions that prevailed in the early part of 1999, the increase is inflated.

Record production levels and a slack demand during 1998 due to the Russian and Asian economic crisis, sent tea prices down during most of last year. However, prices perked up during the later part of the year with both economies improving and an over 100 million kilo short fall in production recorded by all producing countries.

Sri Lanka proved to be the exception among the large exporting countries, recording a marginal gain over 1998.

However, we are approaching a lean period for the tea industry, as historic data indicate that tea prices drop during the next few auctions. This phenomenon is the result of changing weather patterns.

Local officials hope that tea prices would not drop too far as they are in the midst of another wage hike. The plantation worker's wage hike was initially scheduled for January, but was postponed due to various problems including the death of the Plantation Minister and negotiator for the plantation workers, the late Mr. Saumyamurthy Thondaman. A meeting was held subsequently, but was a flop as officials felt that all parties involved were not represented. The issue took life last week as some parties organised a protest, but subsequently called it off. However, the issue is expected to be taken up shortly

On the other hand, last week's auction concluded uneventfully. No significant price changes were recorded. Most grades held strong, but failed to gain over previous price levels.

Next week's auction has been advanced to Monday and Tuesday, while the week afters auction, a one day auction will be held on April 10, 2000.

Call money high

The inter-bank call money market and the overnight repo market

As the liquidity position in the market failed to recover, the inter-Bank call money rate remained at comparatively high levels. During the week ended March 30, the call money rate fluctuated in between 12.75% and 13.75%. Despite the Central Bank intervention last week, the overall liquidity level remained short and tight as a substantial quantum of money departed the banking system due to festive spending. Although the Central Bank continues to intervene in the bill auctions with the intention of improving liquidity and thereby sustaining the rates, liquidity is likely to be tight in the near future. The weekly weighted average was 13.33%, 8 basis points higher than the previous week.

No significant movement was observed in the overnight repo rate as it ranged bound between 13% and 13.25%. The unchanged Central Bank's reverse repo rate of 13.3% remained as the cap of the overnight repo market. The weekly average sustained at 13.13%.

For the 9 consecutive week Central Bank's overnight window rates remained unchanged at 9% and 13.3%. In the absence of lenders in the market place, the borrowers had to bank on the last resort, the Central Bank, resulting in high volumes in the Central Banks reverse repo window. The total reverse repos at the Central Bank's widow during the week were Rs. 9.69 bn, with a daily average of Rs. 1.94 bn. The repo window continues to play a passive role and reported only Rs. 0.364 bn for the week

Treasury Bill auction

The Government of Sri Lanka borrowed Rs. 2.99 bn in treasury bill last during the week. With the intention of securing rates and pumping much needed liquidity to the market, the Central bank financed 72.2% of the bill auction. The total Central Bank intervention in the bill auction was approximately Rs. 2.1 bn. Though the liquidity short fall in the market is likely to apply pressure on the treasury bill yields, the Central Bank is likely to intervene whenever it is necessary to protect the rates. Therefore, despite the liquidity shortfall in the market, the treasury bill yields are likely to be range bound in the near future.

The treasury bill yields in the auction held March 29, remained unchanged.

Treasury Bond auction

In the last auction of March, Rs 1 bn worth of five-year bonds were offered to the market. Amidst the prevailing liquidity shortfall and the comparatively high short-term interest rates the longer-term interest rate continued to decline. The weighted average of the five-year bond was restricted to 12.71%, from the 12.77% of the last week's auction. The yield curve becomes flatter as the market foresees a lower interest rate regime in the medium term.

Foreign exchange - dollar spot movement

In spite of the strong hold of the dollar, the comparatively high short-term rupee interest rate that was prevailing in the market through out March, has been able to hold back the rupee depreciation. The annualized rupee depreciation as at end of March stood at 6.2% on Central Bank middle rate while 8.8%on the market spot rate. The comparative figures as at end of February was 7.5% and 10.6% respectively.

The Central Bank middle rate closed at 73.165, same as the last week's closing. During the week, the spot reached new high's and closed at 73.84. The market spot rate moved between 73.67 and 73.84. The three months forward rate was at Rs. 1.10 to 1.20 premium to the spot.

ASPI plunges

Stock Market

The All Share Price Index (ASPI) plunged below the 500 mark to close at 498.3 on Thursday, with a dwindling turnover of Rs.12.4 mn. Locals continued to sell mid week on rumours of foreign selling which materialised at the end of the week. However brokers said there was buying interest in the manufacturing sector whose performance is not closely correlated to that of the economy but said parcels were not available at current price levels.

The week saw the ASPI fall 4.1 per cent to close at 494.5 while the Milanka Price Index dropped 5.7 per cent to register 845. The MBSL Midcap Index lost 0.9 per cent to close at 889.3. Net foreign outflows were Rs. 96.5 mn and average turnover was Rs. 40.5 mn.

"A further downside to the market would depend on the level of foreign selling in the market heavy weights John Keells Holdings, National Development Bank and DFCC Bank which have fairly substantial foreign shareholding," Head Of Research, Asia Securities, Dushyanth Wijayasingha said.

Further declines are unlikely and consolidation is on the cards because current declines can not be justified on sentiment or fundamentals, Head of Research, MMBL Phillip Securities, Nouzab Fareed said. "People sell based on the illusion that the market has no worth but the coming weeks will prove them wrong," he said.

Since the market has dropped below the 500 level technical charting indicates that the next support levels are 491 and 482, Head of Research, CDIC Sassoon Cumberbatch, Diluk Desinghe said. "We are hoping the491 support level holds and will not slide down to 482 but this will depend on foreign selling," he said.

SAGT misses the point

By Gunapala Ranasinghe

South Asian Gateway Terminals (Pvt) Ltd's CEO, John Buckley has, through a circular to shipping lines and principals bypassing local agents, instructed that payment for stevedoring tariffs are to be collected directly from Singapore in US dollars.

Buckley declared that confirmation has been received from both the Government and Exchange Control permitting payment for services to foreign principals to be collected in USD.

The circular further states that payments are to be collected effective April 17, 2000. The ensuing payment is to be made to a specified dollar account. The ensuing payment is to be made to a specified dollar account prior to April 24, 2000.

A CASA spokesman remarked that the circular is not only damaging to the growth of the local economy, but is also a gross misinterpretation of Exchange Control and Government regulations. The spokesman further stated that valuable tax rupees will be lost due to this practice. After extensive deliberations CASA's Executive Committee has decided to enter into dialogue with the appropriate governmental body to resolve the issue.

Lufthansa Cargo to dazzle customers

Lufthansa Cargo launched its TD Services in Sri Lanka recently. Present at the occasion was Joseph Matta, Regional Director for Lufthansa Cargo who introduced the two new services on offer.

These services are Time Definite Service and the operation of an MD-11 freighter from Colombo to Frankfurt.

While TD Services came into effect the MD-11 freighter, which will double the existing capacity out of Colombo, began operations on March 28.

At the occasion Lufthansa Colombo presented awards to agents who supported the carrier last year. Matta presented the Gold, Silver and Bronze awards to Expolanka Freight Ltd., Expeditors Lanka (Pvt) Ltd., and Rical Express Lanka (Pvt) Ltd., respectively.

Lufthansa will continue on its path to be the industry's innovation leader through their local agent Messrs Lewis Brown Air Services, an associate company of the Delmege Group.

Jordanian cargo volume up

Cargo volumes on Royal Jordanian Airways to Amman, Jordan, in November were up on last year with 231,932 tonnes carried as compared to 224,829 tonnes in the same month last year.

The carrier, which operates a daily A310 flight out of London Heathrow to Amman, was faced with reduced cargo capacity over the summer on the back of record passenger traffic which reduced the volume devoted to cargo.

Royal Jordanian Airlines cargo sales manager Elias Akkawi said: "On the passenger front we were choc a bloc over the summer, which impacted the cargo volumes we could carry."

Jordan has announced ambitions to turn its international airport at Amman into a regional hub and increase its transit traffic from the Far East and the West.

Royal Jordanian has been awarded the rights to fly onward from Ireland's Shannon airport to the US and is currently looking at possible dates of flights.

Air Memphis, an Egyptian all-cargo carrier, has appointed Sky Link Italia as its Italian GSA for its twice weekly B707 Ostend to Cairo freighter operation.

First Jap maritime Internet portal in business

Japan's first maritime Internet portal, marine-net.com has started business following the completion of various procedures for incorporation in early March.

The new Internet-based information service provider, a joint venture of Japan's six leading companies in their respective areas of business, will deliver integrated business information and on-line trading to subscribers.

Banding together in the pioneering project are Itochu Corporation, Kaiji Press, the publisher of Seaborne Commerce ASIA, Mitsui OSK Lines, Kawasaki Kisen Kaisha, Hitachi Ltd. and Fujitsu Ltd.

The project is already enjoying industry support and encouragement far greater than expected.

Contship Container lines, SCI set date

Contship containerlines and the Shipping Corporation of India have signed heads of Agreement and set March 08, 2000 as the date for the first sailing of their first direct full container shipping service from Sri Lanka to the US East Coast.

Each line will provide two ships initially and will move to an eight ship system as soon as possible in order to implement a fixed day weekly call.

With the direct transit time of 25 days between Colombo and US East Coast this premier service will provide one of the fastest options available currently to local shippers.

Most of the existing lines in this trade route have been offering a service with at least one transshipment.

The port rotation includes Colombo, Nhava Sheva New York Norfolk

Savannah/Cherrystone Giora Tauro Port Said, Jeddah, Colombo Born Contship and SCI believe that the shippers in this trade would immensely benefit with the fast transit they richly deserve.

The partner lines are highly regarded in this region and the Agreement is seen as an opening for cooperation in other areas in the future, CMA CGM will also join the partners in the near future.

CGM will also join the partners in the near future.

International Container Shipping Line, Contship Container lines is represented locally by Contship Agencies Ltd.

Nippon Maru on world cruise

The Nippon Maru, a luxury cruiser owned by Mitsui OSK Lines of Japan, arrived in Colombo recently, while on a round-the-world tour. No stranger to the Port of Colombo, the vessel has touched Colombo many times over the last few years on The Ship for World Youth Programme.

The vessel, designed to carry 600 passengers is a Japanese built luxury cruiser clearly displaying the achievements of modern technology and Japanese expertise in ship building.

It comes equipped with an expansive sports deck - which can be used for games, as well as open air parties - an elegant plaza and a large main hall. In addition, the Nippon Maru also offers a beauty salon, library, fitness centre, swimming pool, boutiques and a clinic.

Mitsui OSK Lines Ltd., are represented in Sri Lanka by Delmege Forsyth & Co. (Shipping) Ltd. The local agents extended their thanks and gratitude to the SLPA, and in particular the Harbour Master and Chief Security Manager, who extended their fullest cooperation, making this visit from the Nippon Maru a success.

The Finance Bonus offer

The Finance Company Limited (TFC) has said they will pay up-front cash bonuses to depositors who invest in the company's "Ran Thilina" fixed deposit scheme in April.

TFC's Chief Executive Director Senaka Bandaranayake said in a news release that these bonus payments are in addition to attractive interest payments on the deposits and the opportunity for depositors to participate in the " Ran Thilina" grand draw to be held in May. The cash bonus is caluculated on the value of the deposit made in April.

TFC has to-date issued over 50,000 fixed deposit certificates to 8000 depositors to the value of over Rs 500 million.

The company recently conducted the 10th draw of the "Ran Thilina' scheme. Over the past 10 months the company has awarded prizes ranging from gold sovereigns, mountain and sports bicycles, gas cookers, vacuum cleaners, diamond jewellery, pedestal fans, semi and fully automatic washing machines and VCRs to depositors. The scheme culminates with a grand prize of a Honda City car in May .

'Ran Thilina' is a value added fixed deposit scheme which pays an above-average interest of 14.0 per cent per annum to those who purchase FD certificates in denominations of Rs 10,000 from any The Finance branches.

Satellite service from CeyCom for Stock Brokers

CeyCom Global Communication Limited has introduced VSAT to Colombo's Stock Brokers. The satellite link will assist brokers with expedition of trading time, expansion of on-line information, provide more opportunities for interaction with brokers and providing, cutting-edge facilities that will also help increase the turnover.

CeyCom's VSAT package has been custom designed to meet the needs of the steadily increasing activity in the Colombo Stock Market, and the expansion of trading activities to cities outside Colombo, a company release said.

CeyCom, has a joint venture with Hughes for VSAT Services, Hutchison for international satellite services, British Telecom & Lorel Orian for data services, covering the European and American sectors.

Hughes Space and Communications has designed and manufactured more than 40% of all satellites now in space, the release adds.

Closer home, at present India's National Stock Exchange, the Bombay Stock Exchange and the Delhi Stock Exchange operate on VSAT.

The world's single largest network in Financial Securities, the Edward Jones Network, has over 3500 VSATs operational. It is a network that combines three other networks. Two of them have 1500 remotes each while the other has 500 remotes.

The CeyCom solution now available for stock traders in Sri Lanka assures instant connection to all 15 Stock Brokers and Regional Stock Exchanges located in the neighbouring countries. It will ensure equal opportunity to all members on the network across the country, and will also have a built-in capacity to match target and future volumes.

Kontiki at WTC

Kontiki( Pvt) Ltd.,was launched recently and set up operations at the World Trade Centre. The company provides a comprehensive range of travel services which includes ticketing, exclusive destintion package tours, cruise packages, travel consultancy, local and international hotel and apartment bookings, international rail and air passes, theatre, entertainment, gallery and museum bookings. Kontiki also has the exclusive representation for festival cruise lines in Sri Lanka. Festival offers luxury cruises in the Mediterranean, Greek islands, the Caribbean, the Northern seas and Atlantic crossings.

Kontiki is a subsidiary of United Holdings Ltd.

Cathay Pacific adds summer flights

Cathay Pacific Airways will add extra flights to 12 destinations during its new Summer Schedule for 2000. Starting from July, the airline will add frequencies to Cebu, Bahrain, Dubai, Rome and Seoul. Starting September, flights will be added to Amsterdam, Bangkok, Jakarta, Johannesburg, Kuala Lumpur, Los Angeles, Seoul and Singapore. This increase would mark a total of 24 extra return flights a week. The new Summer Schedule is effective from 26th March until 28th October, a company release said.

The decision to increase flights was taken due to the strong upturn in passenger numbers across the region over the past 12 months. This improvement has been particularly strong in countries such as Korea, the Philippines and the United States of America.

The Cathay Pacific network covers 48 destinations in 28 countries and territories. Their fleet, one of the youngest in the world, consists of 62 aircraft made up of 19 Boeing 747-400s, 2 Boeing 747-400 freighters, 4 Boeing 747-200 freighters, 7 Boeing 777-300s, 4 Boeing 777-200s, 14 Airbus Industrie A340-300s and 12 Airbus Industrie A 330-300s.

'Cat Super' to branch out

The Commercial Bank of Ceylon's Credit Card Centre was recently relocated at the Bank's new high-rise building at No.1, Union Place, Colombo 2.

The Bank recently tied up with MasterCard, to launch the dual purpose Debit and Automated Teller Machine Card "CAT Super".

The card has a lower than average interest of between 2 per cent to 2.4 per cent per month easy availability of applications through all Commercial Bank branches across the island, facilities for making payments at all these branches, and an option for cardholders to decide on their own settlement date. The Bank also hopes to enhance these facilities by enabling cardholders to make payments through ATMs as well as via the tele-banking system in the near future, a company release said.

The Bank hopes to set up a merchants network .

In Sri Lanka, "CAT Super" and the Combank MasterCArd provide access to more than 500 Maestro Merchants and nearly 150 ATMs landwide, including 69 Commercial Bank ATMs (CAT).

Eagle declares Loyalty Dividend of 8 precent

Eagle Insurance has announced on loyalty dividend of up to 8% to policyholders.

This is in addition to the normal annual dividend of 9.5% to all insurance living policyholders, a company release said.

The first loyalty dividend was declared in 1995 and this is the second to be awarded to policyholders who have commenced their policy on or before December 31, 1996 and have been paying their premiums regularly. The longer a policy has been in force, the higher the loyalty dividend they are entitled to. For example if a policy has been inforce since 1988, the policyholder is entitled to 8%.

Mahaweli Marine Cement sales top 6m tonnes

Mahaweli Marine Cement Company Ltd has achieved a target of 6 mn tonnes of cement sales. The company also celebrated two decades of service, a company press release said. The sales peak was attributed to a consistent product if high quality and consistent image by a company spokesman. Mahaweli Marine was set up initially for the Mahaweli Project and is owned by Marine Cement Ltd, based in zug, Switzerland.

15% interim dividend from UML

For the first nine months of the financial year 1999/2000, United Motors Lanka Ltd (UMLL) has reported a consolidated net profit after Tax (PAT) of Rs. 88.7 million from a turnover of Rs. 893.4 million. Whilst group turnover recorded a growth of 7.6% over the corresponding period of the last financial year, post tax profits were marginally lower.

The company has declared a 15% interim dividend for the financial year 1999/2000.

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