Profit taking was evident with the stock market declining by 15 odd points to level out at ASPI 730 levels.
Large volumes of shares were traded with significant quantities of the plantation sector coming into focus due to the treasury selling part of its holdings. Foreign institutional buying is evident with a large portion of the buyers' investment being in the development banking-sector.
With more plantations to be privatised at the end of this month it is expected that the IPOs will be successfully subscribed.
It is expected that the market will consolidate itself at ASPI 730 level before any significant upward movement occurs.
Though the market has improved nearly 30% for 1997 in certain sectors, as a whole country fundamentals for the economy have not changed for the better at the same rate. The momentum of these gains made could also be wiped out if the economy does not improve at the same speed as the market.
TB rates have declined to the 10% region and are expected to consolidate at this level.
Most probably the fully-automated system for the CSM would begin operations in the fourth week of May or the first week of June. It is to be seen how prices would be affected due to its extreme efficiency in matching prices.
Recommended shares: The Finance, Dimo, CSF, Kelani Tyre, MBSL, CIC, BATA, Richard Peiris/JK-Ltd., Hayleys, NDB, DFCC-solid foreign backed stock (high foreign participation).
Despite a booming tea market Kenya has ousted Sri Lanka as the top tea exporter of the world and we could also lose an opportunity to become an international tea blending centre unless restrictions on the import of orthodox teas were relaxed , a top tea trading company has said.
Last year Sri Lanka had exported 243.5 mn kg of tea while Kenya had exported 248.1 mn kg, becoming the world’s largest exporter of black tea.
Tea had brought in Rs 34 bn to the country last year with Colombo auction averages going up to Rs 103 mn.
“Although Sri Lanka enjoyed near boon conditions, other producing countries did not receive the same demand together with the increase in world production, the price levels of competing countries were much less attractive than Colombo,” John Keells Ltd. said in its annual tea market report.
Demand had come mainly from Russia and CIS countries, particularly 'May Tea Company', believed to be the largest Russian tea importer.
The continuous participation in trade fairs and efforts of the Sri Lankan Tea Commissioner in Moscow had also contributed to the success.
John Keells said the MJF group had played a major role in introducing Black Long Leaf and low grown Ceylon teas to these markets.
“The marketing success was near absolute, with the consumer more or less, changing their paradigm and certainly changing their perception of quality,” John Keells commented.
Last year 5.8 mn kg of tea mostly CTC teas had been imported for blending and re-export.
Only orthodox teas not produced in Sri Lanka could be imported. Though requests had been made by some blenders to import orthodox varieties they had been turned down by the authorities.
There were fears that Sri Lanka could face a market decline if unrestricted imports were permitted and Sri Lanka no longer exported blends of pure Ceylon tea.
“On the other hand many exporter have pointed out that, we would be outpricing ourselves and losing markets, if Colombo was not permitted to become an international tea blending centre,” John Keells commented.
If imports were not relaxed some Sri Lankan exporters would have to relocate their blending operations overseas in order to stay competitive in World markets.
Having averted a major power crisis, the CEB is yet far from being out of the woods, revealed an official.
Although there has been substantial rainfall, the storage capacity at the reservoirs only stands at 355 GW/h, of the maximum capacity of 1200 GW/h. Thus the CEB has been compelled to operate its own thermal plants and still heavily depend on the private plants as well.
The CEB ideally would like to have around 1000 Gw/h in storage at the reservoirs by January 1998 as a precaution against a possible monsoon failure in 1998 as the monsoons of recent times have proven highly unreliable, the official added.
To retain this level of storage by '98, the CEB has been compelled to minimise the use of hydro power and resort to more costly and pollutant thermal plants, including hired plants.
The Systems Control Division of the CEB is yet to decide as to how they plan to strike a balance between the CEB's own power plants and the hired plants, the official said.
Should the CEB decide to operate its own thermal plants they would be compelled to pay exorbitant sums as retainers to the private plants. CEB pays Aggreko company who operates thermal plants a total of 93 MW, over Rs. 34 million a week.
These plants consume over 1 million litres of diesel a week for which the fuel is supplied by the CEB at a cost of Rs. 14 million a week.
Should the CEB decide not to purchase power from Aggreko it would still, in terms at the contracts, be required to pay the company a retainer of Rs. 7 million a week.
However the Aggreko company is expected to begin dismantling plants by June and complete the operation by September 15 when their contract expires.
Koolair ventures (Pvt) Ltd. a Sri Lankan company which operates a 20 MW plant is on a 4 year contract. Koolair is paid US$ 300,000 a month while the 20 MW plant consumes 200,000 litres of diesel a day. The diesel to all these plants is provided free of charge by the CEB as per agreement.
It is also understood that the Wood Group is also to commission it's 20 MW plant at Pannipitiya shortly.
Board of Investment Chief Thilan Wijesinghe last week said that the Cabinet was expected to decide on the proposed 30 percent electricity hike based on its long term effect on the country and effect on industrial competitiveness, more than short term considerations such as cost escalations. The agreement with Aggreko in particular had come under fire for being too expensive.
"I would be the first to admit that some of the agreements that were signed were at exorbitant prices," Mr. Wijesinghe said at a recent media briefing. But their short term plants will be phased out in a matter of months," he added.
Meanwhiel a letter of intent was signed by the government of Sri Lanka and the Mitsui Engineering and Ship Building Co. Ltd. last week, for the commissioning of a 60 MW Barge Mounted power plant at Kotugoda. This plant will be constructed on a Build Own Operate (BOO) basis and will be connected to the Kotugoda Grid sub station.
It is a fact that in Sri Lanka, electrical and electronic equipment at homes, offices, factories etc., burn out due to high voltage.
A consultant in Electronics Engineering T.D.A. Wijenayake has come up with a solution to this problem. He has named this Over Voltage Protector "The Dummy Plug" as it requires no wiring at all. He has been awarded a Patent Right for this invention.
He explains that the “Dummy Plug”, OVP is a quick acting over voltage protector designed to operate in conjunction with a current balance or earth leakage type of circuit breaker to safeguard electrical and electronic equipment against premature burnout.
It’s operational theory is that the circuit continuously measures the mains voltage against a predetermined value and if greater than the latter, trips the circuit breaker off by simulating a current imbalance through an earth leakage.
It is very simple to use, claims Mr. Wijenayake. "You only have to plug it into any vacant mains outlet. It consumes practically no electricity".
One of its main features is its accuracy of +/-0.4%. Its response time is less than 10 minutes. He has tried his best to design it robust and economical so that the average wage earner too could use of it.
Mr. Wijenayake has gained experience in engineering from Russia, England and mainly, Germany. For 10 years he has been involved in research, design and manufacture of electronic equipment in Germany.
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