An Echelon Media Company
Thursday June 1st, 2023

Auditors qualify Sri Lanka’s Mercantile Shipping Company accounts

ECONOMYNEXT – Auditors have given a qualified opinion on the accounts of Sri Lanka’s Mercantile Shipping Company with the group’s current liabilities exceeding assets owing to mounting losses at a ship-owning subsidiary which has defaulted on loan repayments.

There was ‘material uncertainty related to going concern’ of the Mercantile Shipping group, auditors Ernst & Young chartered accountants said in its annual report.
It issued a qualified opinion on the accounts as there were delays in getting information on the subsidiary Mercantile Emerald Shipping (Private) Limited’s (MESL) renegotiation of a loan from Bremer Landesbank-Germany, now merged with Norddeutsche Landesbank.

Mercantile Shipping Company group incurred a net loss of 330 million rupees for the year ended 31 March 2018, up from 279.6 million the year before.

The group’s current liabilities exceed its current assets by 4,051 million rupees and group net assets have become a negative of 1,849 million.

The group is in talks with Bremer Landesbank on rescheduling the loan of its subsidiary Mercantile Emerald Shipping (Private) Limited which it has guaranteed.

Mercantile Emerald Shipping has deferred loan instalment payments amounting to almost six million US dollars.

Mercantile Shipping Company group chairman H A R K Wickrematileka told shareholders in the annual report that the firm was taking action to turn the firm around.

“The group’s negative financial position is mainly due to the challenges faced by Mercantile Emerald Shipping (Pvt) Ltd its fully owned subsidiary. A significant impact was also created by the escalating interest rates,” he said.

Emerald Shipping’s two vessels have successfully completed the first dry docking and got all class-renewals.

The two ships were affected by the shipping recession and fall in charter rates.

“Hence the vessels will be in a well-maintained position and will not incur major repair and maintenance expenses within the next 5–7 years period (and) some reduction in operational costs (i.e. repair and maintenance costs) could be expected,” Wickrematileka said.

The bank has financed the dry docking of both vessels despite adverse market conditions and vessels were back in operation and has continued to cooperate with the company in dealing with the servicing of the loan, Wickrematileka said.

The report said the company has entered into a pool agreement for the ships with Industrial Maritime Carriers L.L.C (USA) so it can earn fixed earnings per day.

The bank has continued to allow the company to pay loan instalments on a “pay as you earn” basis.

“The increased overdraft allows MESL to meet all short-term liabilities and would certainly not be granted in the absence of a going concern,” the report said.

“In the opinion of the directors, foreclosure of the vessels will not be viable to the bank as the arket value of the vessels are less than the loan amount payable to the bank.”
(COLOMBO, 10 September, 2018)


Leave a Comment

Your email address will not be published. Required fields are marked *

Leave a Comment

Leave a Comment

Cancel reply

Your email address will not be published. Required fields are marked *

Sri Lanka exports down in April, trade deficit up from March, rupee stronger

ECONOMYNEXT – Sri Lanka’s exports fell 12.6 percent from a year ago to 849 million US dollars in April 2023, amid weaker external demand, while imports were down 15.8 percent to 1,431 million Us dollars, central bank data showed.

Exports also fell 1,037 million dollars in March 2023, amid seasonal effects.

The trade deficit expanded to 583 million US dollars in April from 412 million US dollars in March 2023. Imports were at 1431 million US dollars in April from 1,450 million dollars in March.

Imports can pick as tourism, worker remittances and net inflows to government go up.

The rupee continued to appreciate.

“Exchange rate showed a notable appreciation during April 2023 with the continued improvement in liquidity in the domestic foreign exchange market, the discontinuation of the daily guidance on exchange rates,” the central bank said.

Up to April exports were down 9 percent to 3.8 billion rupees and imports were down 28 percent to 5.2 billion rupees and the trade deficit was 1.4 billion rupees.

Investment goods imports were down in April amid a contraction in credit.

“Almost all types of goods listed under the three main investment good categories, namely machinery and equipment, building material and transport equipment, recorded a decline,” the central bank said.

Continue Reading

Sri Lanka cuts petrol to Rs318 a litre, kerosene to Rs245

ECONOMYNEXT – Sri Lanka has cut petrol 92-Octane by 15 rupees to 318 rupees a litre and kerosene by 50 rupees to 245 rupees a litre from midnight May 31, the Ministry of Energy said.

Petrol 95 Octane will be raised by 20 rupees to 385 rupees, and Lanka Super Diesel 4 Star Euro 4 will be raised by 10 rupees to 340 rupees a litre.

Lanka Industrial Kerosene will be cut by 60 rupees a litre to 270 rupees.

Kerosene which is similar to jet fuel is usually the most expensive fuel in international markets followed by diesel and petrol is usually the cheapest.

Kerosene which is substantially cheaper than diesel is also used by buses to cut costs. (Colombo/May31/2023)

Continue Reading

Sri Lanka opposition slams purported licence-cancelling broadcast authority

ECONOMYNEXT – A purported Broadcast Authority in Sri Lanka that will allegedly have the power to cancel licenses issued to the media have come under criticism from the opposition.

Opposition Tamil National Alliance (TNA) legislator and lawyer M A Sumanthiran told reporters on Wednesday May 31 that the bill on the establishment of this statutory body, if enacted, could violate several fundamental rights including the people’s right to information.

“Everyone knows that there have been many attempts in recent times to impose constraints on people’s right to information. This authority will decide which information is true and whether it can be broadcast,” he said.

The proposed act will also empower the authority to cancel broadcast licenses of those who already hold them, said Sumanthiran.

The MP said that a similar attempt to bring in such legislation in 1997 was thwarted after then opposition United National Party (UNP) MP Gamnii Athukorala challenged it in the Supreme Court, which determined on May 05 that year that the bill would need a referendum in addition to a two-thirds majority in parliament for it to become law.

“The Supreme Court determined that it went against Article 10 of the Constitution,” said Sumanthiran.

“What we can see is that this violates several fundamental rights, so we strongly oppose this bill.

“It’s not just the media, but the people’s right to information is also challenged by this,” said Sumanthiran.

Main opposition Samagi Jana Balawegaya (SJB) MP Harsha de Silva said the purported bill is undemocratic.

“If these people are given the power to cancel a license – this isn’t objective, it’s subjective, meaning four or five people will decide this,” said the MP.

Authorising a person to censor the content of a broadcast channel would be wholly undemocratic, he said.

“They tried to do this through the Counter Terrorism Act but failed, so it seems they’re now trying to bring it in with this,” said de Silva.

“We see it as a death blow to democracy,” he said, urging the government not to go ahead with it.

“If not, we will oppose it vehemently and fight for the people’s democratic rights,” he said.

Meanwhile, the ruling Sri Lanka Podujana Peramuna (SLPP) said that, while it supports media freedom, the abuse of that freedom cannot be permitted.

SLPP general secretary and MP Sagara Kariyawasam told reporters on Wednesday that some media organisations abused their freedom to make false allegations against the party leadership.

“We are of the firm stand that the media must be independent and that that independence must be facilitated, but if anyone abuses media freedom as a sort of freedom of the wild ass, measures must be taken against that too,” said Kariyawasam.

“We saw how that freedom was enjoyed in the recent past making allegations with no basis. We saw how there were severe allegations made through the media that the Rajapaksas had engaged in thievery,” he said.

The MP claimed that the people voted in the UNP-led Yahapalana government in 2015 to investigate these allegations.

“But that government realised that there wasn’t even a single incident,” he said. (Colombo/May31/2023)

Continue Reading