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Slippery Future

July 25, 2008 (LBO) - Fitch Ratings said the future of the bunkering business of Sri Lanka's John Keells Holdings was uncertain after a court ordered the return of land which held a tank farm, but said its 'AAA(lka)' rating was unchanged.
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Fitch Ratings said the firm may be able to either re-negotiate access to the property which has a tank farm and which belongs to Sri Lanka Ports Authority, or become a user along with others of a common infrastructure facility, with higher competition.
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The firm may also even be forced to shift to bunkering using off-shore barges, Fitch said.

The highly profitable Lanka Marine Services, which had an effective monopoly for bunkering in Colombo port, was also ordered to pay taxes from the financial year 2002/2003 onwards.

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Fitch says the final tax liability will depend on the rate set by Sri Lanka's Inland Revenue Department.


A court order quoting LMS annual reports said the firm had made 2,458 million rupees in profits in the four years to the end of 2005/2006 financial year.
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Fitch said the 'AAA(lka)' long term rating of John Keells Holdings would not be affected as the firm was cash rich with liquid assets of 12.6 billion rupees.

JKH owns 99.4 percent of LMS.

Fitch said

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