Business
BOC to break negative cycle and grow its SME loan book by Rs. 5 billion-and counting
Rs. 4 billion for SMEs Rs. 1 billion for startups
Interest rates as low as 12.0- 12.5% over 5 years 5% below market rates
By Sanath Nanayakkare
The Bank of Ceylon (BOC) yesterday called a press conference at a short notice to break good news for Sri Lanka’s SME sector, women-led businesses and startups hungry for capital to give impetus to their growth plans after Sri Lanka has gone through a tough cycle of crises.
The Bank has just rolled out an SME fund of Rs. 5 billion at 12.0 -12.5% interest rates which the Bank said would certainly increase if there is more demand from the businesses to take their businesses to the next level.
BOC Chairman, President’s Counsel Ronald C. Perera addressing the media at BOC head office said,” As you know the past few years have been a huge challenge for the whole country including the banking sector. The interest rates went up sky-high and now after the domestic debt optimization (DDO) interest rates have started coming down. We are hopeful it will kick off the business sector so that entrepreneurs will be able to borrow funds at reasonable rates to carry out their commercial activities.
We at the Bank of Ceylon have especially thought about the Small and Medium Enterprise sector (SMEs) not only in the western province but also in all other provinces because they are the backbone of the economy of the country. Before the DDO was announced, interest rates hovered around 25-28%, and by August 9, 2023 it had come down to 16.9%. Now we have worked out a special SME loan scheme totaling Rs. 5 billion to be disbursed at 12% which is 5% below the market rate. Each qualifying SME in this loan scheme can seek a loan up Rs. 25 million. If they have collateral, they will get their loan at 12% and those without collateral will get it at 12.5%. According to the demand, we will certainly increase the SME loan volume beyond Rs. 5 billion. Let’s first see how things would turn out in the initial phase.”
“Further, there is another loan scheme to support the startups with up to Rs. 2 million rupees at the same interest rates. Both these loans are given for 5-year periods. We are looking to give priority to young entrepreneurs and businesses headed by women. We have allocated 4 billion rupees for SME loans and 1 billion rupees for the startups. This means a total of Rs. 5 billion will be disbursed in this exercise. We hope it will help drive SMEs catering to the local market as well as export-oriented SMEs and startups that need financing to grow into the next phase. The fund allocation will be implemented in a first-come first-served basis. One customer can get only one loan under this category.
This financing is provided for new businesses and not for settlements or re-pricing of existing businesses. We will abide by the normal banking practices stipulated by the Central Bank such as getting CRIB reports of borrowers and guarantors. The applicants must demonstrate that they have necessary qualifications and experience in the relevant field and have a valid business registration. They need to be able to produce environmental compliance reports etc., in case it would be required.
The borrowers would be required to provide 25% equity of their respective projects. We will not permit the purchase of land or vehicles under this scheme, but the funds can be used to put up infrastructure with the approval and due diligence by the Bank. The applicants have to come up with a business plan to show how he or she will maintain the operational activities of the business and the cashflow in a stable manner.”
“These loan schemes have just rolled out this week. Actually this was initiated after the government and the Central Bank asking us to reduce interest rates and support the economic recovery as the time is right to do so. In fact, we have gone beyond the desired levels and are offering these loans 5% below the market rate.”
“There are already a number of other SME financing facilities given at concessionary interest rates which had started earlier. In addition to that, we provide non-financial assistance to SMEs under the BOC SME Circle. It gives them the know-how to operate their businesses successfully and to expand their businesses,” BOC Chairman said.
BOC General Manager/CEO Russel Fonseka said that the Bank was able to safeguard their customers during the multiple crises and when the interest rates shot up to very high levels, because they didn’t shift that burden on to their customers, but absorbed that loss into the Bank and provided a cushion for the troubled businesses.”
“That was how BOC able to keep its customers battling the economic crisis to survive and to keep our non-performing loans (NPLs) at a very low level. We have always stayed true to our core value of ‘thin margins, high volumes’ which has worked for the benefit of the Bank, its customer base and the overall economy,” the GM said.
Business
‘Hemas Holdings boosts profitability through efficiency in a challenging market’
Hemas Holdings PLC reported a cumulative revenue of Rs. 54.4 billion, with operating profits of Rs. 5.0 billion and earnings of Rs. 2.5 billion. The decrease in revenue compared to same period last year was a result of cautious consumer spending accompanied by several strategic downward price adjustments, particularly in the Consumer Brands segment.
However, the Group’s ongoing commitment to efficiency improvements alongside favourable foreign exchange movements, contributed to enhanced profitability margins. Additionally, the initiatives aimed at optimising working capital combined with the advantages of a declining interest rate environment, led to a further reduction in finance costs thereby boosting earnings.
The country’s GDP recorded a growth of 4.7 per cent while the local currency demonstrated resilience, appreciating against the United States Dollar to 299.36. Furthermore, the Average Weighted Prime Lending Rate (AWPLR) closed at 9.3 per cent. The Colombo Consumer Price Index experienced a deflation of 0.5 per cent, primarily due to easing of food inflation. However, despite these positive indicators, people faced considerable pressure on purchasing power due to high direct and indirect taxes, resulting in ongoing affordability challenges.
Consumer Brands
During the quarter, the strengthening of the domestic currency and declining global commodity prices have led to aggressive pricing and promotion strategies among industry players, intensifying competition in key categories. A strong focus on value-for-money (VFM) options continues, reflecting the current constraints on purchasing power.
The stationery market experienced heightened competition as new brands continue to emerge. This influx has prompted some players to reduce prices, often at the cost of compromising quality. As consumers navigate this landscape, their focus remains firmly on affordability, leading to a gradual shift in their purchasing habits. More specifically, there is a notable trend toward VFM offerings, as consumers seek products that deliver both quality and cost-effectiveness.
The Consumer Brands Sector reported a cumulative revenue of Rs. 19.9 billion while the operating profit and earnings Rs. 2.5 billion and Rs. 1.8 billion for the year respectively.
The Sector reported a revenue of Rs. 11.0 billion for the quarter, while the operating profits and earnings increased to Rs. 1.7 billion and Rs, 1.2 billion respectively due to the improved profitability margins compared to the last year. Despite the decline in revenue compared to the same period last year, a combination of margin improvement and cost rationalization initiatives led to overall growth for the businesses.
Home and Personal Care
Although overall industry demand declined, company witnessed improvements in overall market share, consumer reach and product availability this quarter. Increased emphasis on personal and beauty care, along with efficiency enhancements and supply chain optimisations resulted in increased profitability margins.
While competitive pricing and promotions were introduced in key categories, new product launches gained positive momentum, enhancing brand visibility and consumer engagement. This quarter marked the successful re-launch of Vivya, strengthening the brand’s presence in the market.
Business
Browns Hotels & Resorts rings in a Tropical Christmas with festive cake mixing ceremony
Browns Hotels & Resorts welcomed the holiday season with a vibrant Christmas cake mixing ceremony at Occidental Eden Beruwala, embracing the theme of ‘Christmas Made Tropical for You’. Known for its diverse portfolio featuring beachfront retreats, scenic highland hideaways and cultural destinations throughout Sri Lanka, Browns Hotels & Resorts (BHR) welcomed the season in style by promising an array of holiday events that will blend effortlessly with the island’s paradisal charm.
The annual cake mixing ceremony featured a delightful combination of exotic fruits, aromatic spices and a selection of spirits, all combined with festive flair. Hosted by Channa Ekanayake, General Manager of Occidental Eden, the ceremony brought together General Managers from BHR properties across the island, in-house guests and team members, each contributing to the lively celebration.
Guests enjoyed Santa’s arrival and dynamic dance performances that set the tone for the vibrant season ahead, along with festive cocktails crafted to enhance the holiday atmosphere. The cake mixing ceremony was a symbol of warmth and goodwill, reflecting Browns Hotels & Resorts’ commitment to creating joyful moments for all guests.
Speaking on the occasion, CEO Eksath Wijeratne remarked, “At Browns Hotels & Resorts, we are dedicated to customising your Christmas experience to suit your needs, all while infusing it with our unique tropical charm. We’re ready with a fantastic seasonal line-up and new food and beverage offerings that will make this holiday season truly memorable.”
This year, Browns Hotels & Resorts has planned a bespoke ‘Tropical Christmas’ celebration at each of its stunning destinations, including Dickwella Resort, Hotel Sigiriya, The Calm Resort Pasikuda, Thaala Bentota, Club Hotel Dolphin Waikkal, Occidental Eden Beruwala and Occidental Paradise Dambulla, ensuring that guests can experience the festive spirit infused with the warmth of the tropics wherever they choose to celebrate.
Business
ComBank and Hayleys Solar donate solar power system
The Commercial Bank of Ceylon and Hayleys Solar recently donated a photovoltaic solar panel power supply system for the use of the Sri Kavantissa Vocational Training Centre in Tissamaharama and the Tissamaharama Raja Maha Vihara.
The 40kW on-grid solar power system benefits the students receiving vocational training at the centre as well as devotees from all around the island that visit the temple, and helps the two institutions to reduce their electricity costs.
The donation by the two companies flows from a strategic collaboration between Commercial Bank and Hayleys Solar to provide concessionary terms under the Bank’s ‘Diribala Green Development Loan’ scheme for businesses to purchase solar power systems from Hayleys Solar with a number of exclusive benefits.
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