Financial Times

Securities trading associate boosts Regnis profit
Regnis (Lanka) Limited made a record profit last year, much of it made by its securities trading associate, but has warned it would be difficult to face an expected influx of cheap Indian imports once duty on refrigerators is eliminated under the free trade pact.

Regnis reported a net profit of Rs. 114 million for the financial year ended December 31, 2003, its highest ever, with most of it coming from its associate First Capital Ltd which made windfall gains from securities trading in a falling interest rate scenario.

Regnis chairman Hemaka Amarasuriya said in his annual report to shareholders that the record profit was due to the increase in profits of its associate company First Capital Limited, which was reported at Rs. 96 million.

First Capital concentrates on trading on gilt-edged securities and the company has gained maximum benefits from lower interest rates to declare unexpected returns, which are not expected to be repeated, he said.

Amarasuriya also said Regnis had asked the government to reconsider its decision to eliminate import duty on Indian refrigerators as cheap Indian imports could drive domestic manufacturers out of business.

Under the free trade agreement between India and Sri Lanka, the duty on refrigerators is to be progressively reduced and will come down to zero by the end of 2007.

Regnis had asked the government to include refrigerators in the negative list when the India-Sri Lanka free trade agreement was being negotiated, "but the stronger Indian lobby has prevailed over us," Amarasuriya said.

He stressed that while Regnis Lanka supports free trade agreements, such agreements should be prepared in a way to ensure successful domestic industries can continue and that jobs are not transferred to other regions of the world.

Regnis Lanka has been manufacturing refrigerators since 1988. Last year, the company increased its production by 43 percent from the previous financial year and growth in production this year is estimated to increase a further 24 percent.

The company has bought land adjacent to its existing factory to support expanding production by constructing an Injection Moulding Plant to manufacture internal accessories for the refrigerators.

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